What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-04-25 compared with 2022-10-21 · 94 added, 243 removed, 406 unchanged (45% of the section changed)

3 unchanged sentences

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Investment in real estate:

22 unchanged sentences

Stockholders' Equity:

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

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 September 30, 2022 and December 31, 2021;

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

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.

Paid-in capital 1,629,866 1,628,618

9 unchanged sentences

(amounts in thousands, except per share data)

Quarters Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Quarters Ended March 31,

Rental income $ 296,451 $ 285,065

16 unchanged sentences

General and administrative 11,661 12,072

Casualty-related charges/(recoveries), net — —

Other expenses 1,468 1,048

7 unchanged sentences

Income allocated to non-controlling interests – Common OP Units ( 4,088 ) ( 4,144 )

Redeemable perpetual preferred stock dividends — — ( 8 ) ( 8 )

Net income available for Common Stockholders $ 82,371 $ 82,906

4 unchanged sentences

Comprehensive income allocated to non-controlling interests – Common OP Units ( 3,899 ) ( 4,616 )

Redeemable perpetual preferred stock dividends — — ( 8 ) ( 8 )

Comprehensive income attributable to Common Stockholders $ 78,582 $ 92,358

7 unchanged sentences

(amounts in thousands)

Common Stock Paid-in Capital Redeemable Perpetual Preferred Stock Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interests – Common OP Units Total Equity

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

1 unchanged sentence

Issuance of Common Stock through employee stock purchase plan — 363 — — — 363

Issuance of Common Stock 3 28,367 — — — 28,370

Compensation expenses related to restricted stock and stock options — 2,549 — — — 2,549

6 unchanged sentences

Balance as of March 31, 2023 $ 1,916 $ 1,629,866 $ ( 205,203 ) $ 15,141 $ 71,666 $ 1,513,386

Issuance of Common Stock through employee stock purchase plan — 1,388 — — — — 1,388

Compensation expenses related to restricted stock and stock options — 2,681 — — — — 2,681

Adjustment for Common OP Unitholders in the Operating Partnership — ( 303 ) — — — 303 —

Adjustment for fair market value of swap — — — — 2,793 — 2,793

Consolidated net income — — 8 61,509 — 3,073 64,590

Distributions — — ( 8 ) ( 76,179 ) — ( 3,812 ) ( 79,999 )

Other — ( 54 ) — — — — ( 54 )

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

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

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

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

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

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

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

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

Other — ( 98 ) — — — — ( 98 )

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

Equity LifeStyle Properties, Inc.

Consolidated Statements of Changes in Equity

(amounts in thousands)

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

1 unchanged sentence

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 fair market value of swap — — — — 129 — 129

Consolidated net income — — — 65,240 — 3,747 68,987

Distributions — — — ( 66,087 ) — ( 3,796 ) ( 69,883 )

Other — ( 116 ) — — — — ( 116 )

Balance as of March 31, 2021 1,813 1,411,813 — ( 180,370 ) 129 70,961 1,304,346

Exchange of Common OP Units for Common Stock 14 9,310 — — — ( 9,324 ) —

Issuance of Common Stock through employee stock purchase plan — 605 — — — — 605

Compensation expenses related to restricted stock and stock options — 2,821 — — — — 2,821

Adjustment for Common OP Unitholders in the Operating Partnership — ( 1,641 ) — — 1,641 —

3 unchanged sentences

Other — ( 645 ) — — — ( 645 )

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

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

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

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

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

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

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

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

Other — ( 193 ) — — — — ( 193 )

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

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.

2 unchanged sentences

(amounts in thousands)

Nine Months Ended September 30,

Quarters Ended March 31,

Cash Flows From Operating Activities:

22 unchanged sentences

Real estate acquisitions, net ( 8,803 ) ( 15,402 )

Proceeds from disposition of properties, net — ( 7 )

Investment in unconsolidated joint ventures ( 1,752 ) ( 7,912 )

Distributions of capital from unconsolidated joint ventures 1,012 374

Proceeds from insurance claims 1,405 2,048

Proceeds from insurance claims, net 4,070 1,405

Capital improvements ( 96,455 ) ( 83,647 )

4 unchanged sentences

(amounts in thousands)

Nine Months Ended September 30,

Quarters Ended March 31,

Cash Flows From Financing Activities:

4 unchanged sentences

Common OP Unitholders ( 3,799 ) ( 3,373 )

Preferred Stockholders ( 8 ) ( 8 )

Share based award tax withholding payments ( 1,932 ) ( 3,449 )

Principal payments and mortgage debt repayment ( 16,443 ) ( 29,592 )

Mortgage notes payable financing proceeds 200,000 270,016

Term loan repayment — ( 300,000 )

Term loan proceeds — 200,000

3 unchanged sentences

Other ( 99 ) ( 644 )

Net cash (used in) provided by financing activities ( 181,825 ) 240,559

Net (decrease) increase in cash and restricted cash ( 92,888 ) 16,212

Cash and restricted cash, beginning of year 123,398 24,060

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

Nine Months Ended September 30,

Quarters Ended March 31,

Supplemental Information:

6 unchanged sentences

Other assets, net 14 —

Deferred revenue - sale of right-to-use contracts 315 —

Accrued expenses and accounts payable — 8,432

Deferred membership revenue — 315

Other liabilities — 79

1 unchanged sentence

Real estate acquisitions, net $ ( 8,803 ) $ ( 15,402 )

Real estate dispositions:

Investment in real estate $ — $ 52

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

Real estate dispositions, net $ — $ ( 7 )

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

5 unchanged sentences

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 have a unique business model where we own the land which we lease to customers who own manufactured homes and cottages, RVs and/or boats either on a long-term or short-term basis.

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 September 30, 2022.

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

19 unchanged sentences

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 to combine the lease and non-lease components.

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.

20 unchanged sentences

(b) Restricted Cash

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

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.

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

6 unchanged sentences

(amounts in thousands)

As of September 30, 2022

As of March 31, 2023

2023 $ 86,670

2 unchanged sentences

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

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

Financial Statements —Note 11.

Commitments and Contingencies.

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

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

For the quarters ended March 31, 2023 and 2022, total operating lease payments were $ 1.5 million and $ 2.6 million, respectively.

Equity LifeStyle Properties, Inc.

1 unchanged sentence

Note 3 – Leases (continued)

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

As of September 30, 2022

As of March 31, 2023

(amounts in thousands)

9 unchanged sentences

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 $ 25.9 million and $ 27.9 million, respectively, as of September 30, 2022.

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

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 seven years and the weighted average incremental borrowing rate was 3.8 % at December 31, 2021.

The weighted average remaining lease term for our operating leases was nine years and the weighted average incremental borrowing rate was 3.8 % at 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 for the quarters and nine months ended September 30, 2022 and 2021:

Quarters Ended September 30, Nine Months Ended September 30,

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

22 unchanged sentences

$ 0.4475 March 31, 2023 March 31, 2023 April 14, 2023

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

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

Equity Offering Program

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.

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

The following table presents the shares that were issued under our prior ATM equity offering program during the quarter ended March 31, 2022.

(amounts in thousands, except share data)

Shares of common stock sold 328,123

Weighted average price $ 86.46

Total gross proceeds $ 28,370

Commissions paid to sales agents $ 389

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

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

As of March 31, 2023, the full capacity remained available for issuance under our ATM equity offering program.

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

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

On February 18, 2022, we completed the acquisition of Blue Mesa Recreational Ranch, a 385 -site membership RV community located in Gunnison, Colorado, and Pilot Knob RV Resort a 247 -site RV community located in Winterhaven, California for a combined purchase price of $ 15.9 million.

The acquisition was funded with available cash.

On June 1, 2022, we completed the acquisition of a nine acre vacant land parcel in Sarasota, Florida, adjacent to one of our properties, for a purchase price of $ 2.3 million.

The acquisition was funded with available cash.

On June 15, 2022, we completed the acquisition of Holiday Trav-L-Park Resort, a 299 -site oceanfront RV community located in Emerald Isle, North Carolina for a purchase price of $ 50.7 million.

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

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.

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.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 6 – Investment in Real Estate (continued)

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

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

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

The acquisition was funded with available cash.

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

The acquisition was funded with available cash.

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

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

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

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

Note 7 – Investments in Unconsolidated Joint Ventures

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

Investment as of Income/(Loss) for

the Nine Months Ended

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

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

March 31, 2023 December 31, 2022 March 31, 2023 March 31, 2022

Meadows Various (2,2) 1,077 50 % $ 232 $ 158 $ 374 $ 260

1 unchanged sentence

Voyager Arizona (1,1) — — % (c)

138 141 39 544

ECHO JV Various — 50 % 2,773 2,963 ( 190 ) 177

1 unchanged sentence

60,036 60,323 ( 353 ) ( 421 )

Mulberry Farms Various — 50 % (e)

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 September 30, 2022.

(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.

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

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

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

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

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

(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 is classified as Level 2 in the fair value hierarchy.

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:

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 8 - Borrowing Arrangements (continued)

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

As of March 31, 2023 As of December 31, 2022

(amounts in thousands)

1 unchanged sentence

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 September 30, 2022, was approximately 3.7 % per annum.

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

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

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

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

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

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

The net proceeds from the transaction were used to repay all debt scheduled to mature in 2022 and to repay amounts outstanding on the Line of Credit (“LOC”).

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

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

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

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

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

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

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.

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

3 unchanged sentences

We do not enter into derivatives for speculative purposes.

We have a three-year LIBOR Swap Agreement (the “Swap”) allowing us to trade the variable interest rate associated with our variable rate debt for a fixed interest rate.

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

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

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 September 30, As of December 31,

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

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 9 – Derivative Instruments and Hedging (continued)

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

1 unchanged sentence

in OCI on derivative

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

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 nine months ended September 30,

for the quarters ended March 31,

(amounts in thousands) 2023 2022 (amounts in thousands) 2023 2022

1 unchanged sentence

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 LIBOR changes.

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

As of March 31, 2023, we had not posted any collateral related to the 2021 Swap.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 10 – Equity Incentive Awards

1 unchanged sentence

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 27, 2023, January 26, 2024 and January 31, 2025, 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 27, 2023, January 26, 2024 and January 31, 2025, respectively, upon meeting performance conditions as established by the Compensation Committee in the year of the vesting period.

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.

During the quarter ended June 30, 2022 we awarded to certain members of our Board of Directors 51,522 shares of restricted stock at a fair value of approximately $ 4.1 million and options to purchase 7,210 shares of common stock with an exercise price of $ 79.72 .

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

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

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

4 unchanged sentences

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

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

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

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

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 11 - Commitments and Contingencies (continued)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The arbitration that was previously stayed pursuant to an agreement between the Operating Partnership and the Nicholsons was set for a hearing on October 31, 2022 with respect to the Nicholsons’ claim that the Operating Partnership is required to indemnify the Nicholsons with respect to the claims brought by the interested parties in the Superior Court proceeding and a claim by the Operating Partnership for recovery of fees incurred in connection with the Nicholsons’ failed motion to compel arbitration.

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

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

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

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

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

Note 12 - Reportable Segments

3 unchanged sentences

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

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

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.

Equity LifeStyle Properties, Inc.

1 unchanged sentence

Note 12 – Reportable Segments (continued)

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

Quarter Ended September 30, 2022

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

18 unchanged sentences

Capital improvements $ 51,412 $ 45,043 $ 96,455

Quarter Ended September 30, 2021

(amounts in thousands) Property

Operations Home Sales

Operations Consolidated

Operations revenues $ 312,239 $ 31,954 $ 344,193

Operations expenses ( 162,234 ) ( 28,787 ) ( 191,021 )

Income from segment operations 150,005 3,167 153,172

Interest income 1,320 483 1,803

Depreciation and amortization ( 41,761 ) ( 2,653 ) ( 44,414 )

Income (loss) from operations $ 109,564 $ 997 $ 110,561

Reconciliation to consolidated net income:

Corporate interest income 2

Income from other investments, net 1,238

General and administrative ( 10,401 )

Other expenses ( 797 )

Interest and related amortization ( 27,361 )

Equity in income of unconsolidated joint ventures 851

Consolidated net income $ 74,093

Total assets $ 4,723,386 $ 258,474 $ 4,981,860

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

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)

Nine Months Ended September 30, 2022

Quarter Ended March 31, 2022

(amounts in thousands) Property

6 unchanged sentences

Depreciation and amortization ( 46,877 ) ( 2,517 ) ( 49,394 )

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

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

Income from operations $ 124,938 $ 1,135 $ 126,073

Reconciliation to consolidated net income:

9 unchanged sentences

Capital improvements $ 54,990 $ 28,657 $ 83,647

______________________

(1) Prior period amounts have been reclassified to conform to the current period presentation.

Equity LifeStyle Properties, Inc.

1 unchanged sentence

Note 12 – Reportable Segments (continued)

Nine Months Ended September 30, 2021

(amounts in thousands) Property

Operations Home Sales

Operations Consolidated

Operations revenues $ 891,166 $ 81,191 $ 972,357

Operations expenses ( 448,432 ) ( 73,088 ) ( 521,520 )

Income from segment operations 442,734 8,103 450,837

Interest income 3,720 1,566 5,286

Depreciation and amortization ( 130,169 ) ( 7,958 ) ( 138,127 )

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

Income (loss) from operations $ 316,226 $ 1,711 $ 317,937

Reconciliation to consolidated net income:

Corporate interest income 28

Income from other investments, net 3,396

General and administrative ( 31,141 )

Other expenses ( 2,295 )

Interest and related amortization ( 80,767 )

Equity in income of unconsolidated joint ventures 2,786

Early debt retirement ( 2,784 )

Consolidated net income $ 207,160

Total assets $ 4,723,386 $ 258,474 $ 4,981,860

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

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

Quarters Ended September 30, Nine Months Ended September 30,

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

15 unchanged sentences

Income from property operations segment $ 176,714 $ 170,438

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)

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

Quarters Ended September 30, Nine Months Ended September 30,

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

12 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements