What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-04-25 · 213 added, 88 removed, 412 unchanged (42% of the section changed)

3 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 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 March 31, 2023 and December 31, 2022;

Preferred stock, $ 0.01 par value, 10,000,000 shares authorized as of June 30, 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.

Common stock, $ 0.01 par value, 600,000,000 shares authorized as of June 30, 2023 and December 31, 2022;

186,273,876 and 186,120,298 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively.

Paid-in capital 1,638,354 1,628,618

9 unchanged sentences

(amounts in thousands, except per share data)

Quarters Ended March 31,

Quarters Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Rental income $ 288,655 $ 275,330 $ 585,106 $ 560,395

Annual membership subscriptions 16,189 15,592 32,159 30,749

Membership upgrade sales current period, gross 7,975 7,151

Membership upgrade sales upfront payments, deferred, net ( 4,470 ) ( 4,084 )

Membership upgrade sales 3,614 3,168 7,119 6,235

Other income 17,911 14,195 35,625 27,736

5 unchanged sentences

Real estate taxes 18,832 19,182 37,148 38,639

Sales and marketing, gross 5,517 4,914

Membership sales commissions, deferred, net ( 679 ) ( 583 )

Membership sales and marketing 5,521 5,452 10,359 9,783

Property management 19,359 19,099 38,823 36,970

13 unchanged sentences

Income allocated to non-controlling interests – Common OP Units ( 3,121 ) ( 3,073 ) ( 7,209 ) ( 7,217 )

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

Net income available for Common Stockholders $ 62,920 $ 61,509 $ 145,291 $ 144,415

1 unchanged sentence

Other comprehensive income (loss):

Adjustment for fair market value of swap ( 3,978 ) 9,924

Adjustment for fair market value of swaps 2,186 2,793 ( 1,792 ) 12,717

Consolidated comprehensive income 68,235 67,383 150,716 164,357

Comprehensive income allocated to non-controlling interests – Common OP Units ( 3,225 ) ( 3,207 ) ( 7,124 ) ( 7,823 )

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

Comprehensive income attributable to Common Stockholders $ 65,002 $ 64,168 $ 143,584 $ 156,526

7 unchanged sentences

(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

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

Balance as of December 31, 2022 $ 1,916 $ 1,628,618 $ — $ ( 204,248 ) $ 19,119 $ 72,080 $ 1,517,485

9 unchanged sentences

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

Issuance of Common Stock through employee stock purchase plan — 504 — — — — 504

Compensation expenses related to restricted stock and stock options — 8,584 — — — — 8,584

Adjustment for Common OP Unitholders in the Operating Partnership — ( 503 ) — — — 503 —

Adjustment for fair market value of swap — — — — 2,186 — 2,186

Consolidated net income — — 8 62,920 — 3,121 66,049

Distributions — — ( 8 ) ( 83,357 ) — ( 4,135 ) ( 87,500 )

Other — ( 97 ) — — — — ( 97 )

Balance as of June 30, 2023 $ 1,916 $ 1,638,354 $ — $ ( 225,640 ) $ 17,327 $ 71,155 $ 1,503,112

Balance as of December 31, 2021 $ 1,913 $ 1,593,362 $ — $ ( 183,689 ) $ 3,524 $ 71,061 $ 1,486,171

10 unchanged sentences

Balance as of March 31, 2022 $ 1,916 $ 1,619,164 $ — $ ( 177,158 ) $ 13,448 $ 72,967 $ 1,530,337

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

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

2 unchanged sentences

(amounts in thousands)

Quarters Ended March 31,

Six Months Ended June 30,

Cash Flows From Operating Activities:

13 unchanged sentences

Changes in assets and liabilities:

Manufactured homes ( 30,402 ) ( 2,136 )

Notes receivable, net ( 2,054 ) ( 1,223 )

16 unchanged sentences

(amounts in thousands)

Quarters Ended March 31,

Six Months Ended June 30,

Cash Flows From Financing Activities:

4 unchanged sentences

Common OP Unitholders ( 7,934 ) ( 7,185 )

Preferred Stockholders ( 8 ) ( 8 )

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

Principal payments and mortgage debt repayment ( 32,814 ) ( 103,734 )

Mortgage notes payable financing proceeds 88,753 200,000

Term loan proceeds — 200,000

7 unchanged sentences

Cash and restricted cash, end of period $ 28,107 $ 42,426

Quarters Ended March 31,

Six Months Ended June 30,

Supplemental Information:

Cash paid for interest, net $ 64,068 $ 53,987

Net investment in real estate – reclassification of rental homes $ 15,907 $ 21,311

Other assets, net – reclassification of rental homes $ ( 15,907 ) $ ( 21,311 )

Cash paid for manufactured homes $ 66,562 $ 50,698

Real estate acquisitions:

16 unchanged sentences

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

ELS is the sole general partner of the Operating Partnership, has exclusive responsibility and discretion in management and control of the Operating Partnership and held a 95.3 % interest as of March 31, 2023.

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

9 unchanged sentences

Certain prior period amounts have been reclassified on our unaudited interim consolidated financial statements to conform with current year presentation.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies

16 unchanged sentences

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.

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.

5 unchanged sentences

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.

Revenue 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.

2 unchanged sentences

(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.

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.

As of June 30, 2023 and December 31, 2022, restricted cash consisted of $ 20.7 million and $ 19.7 million, respectively, primarily related to cash reserved for customer deposits and escrows for insurance and real estate taxes.

Certain prior period amounts have been reclassified to conform to the current year presentation.

(d) Insurance Recoveries

We carry comprehensive insurance coverage for losses resulting from property damage and environmental liability and business interruption claims on all of our properties.

We record the estimated amount of expected insurance proceeds for property damage, clean-up costs and other losses incurred as an asset (typically a receivable from our insurance carriers) and income up to the amount of the losses incurred when receipt of insurance proceeds is deemed probable.

Any amount of insurance recovery in excess of the losses incurred and any amount of insurance recovery related to business interruption are considered a gain contingency and will be recognized in the period in which the insurance proceeds are received.

During the six months ended June 30, 2023, we recognized expenses of approximately $ 10.3 million related to debris removal and

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies (continued)

cleanup related to Hurricane Ian and an offsetting insurance recovery revenue accrual of $ 10.3 million related to the expected insurance recovery as a result of Hurricane Ian which is included in Casualty-related charges/(recoveries), net in the Consolidated Statements of Income and Comprehensive Income.

During the six months ended June 30, 2023 we received insurance proceeds of approximately $ 36.6 million of which $ 8.0 million was identified as business interruption recovery revenue.

(e) Prior period correction

During the six months ended June 30, 2023, the Company identified and corrected an immaterial error related to the classification of cash outflows associated with the purchase of MHs in the Consolidated Statements of Cash Flows.

Previously, the Company classified these cash outflows within investing activities in the Consolidated Statements of Cash Flows to align with the balance sheet classification.

Based on the predominance principle in ASC 230-10-45-22, the Company determined that all of the cash flows associated with the purchase and sale of manufactured homes should be classified within operating activities in the Consolidated Statements of Cash Flows.

Based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletins 99, Materiality and 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements , the Company concluded that this error was immaterial to the Consolidated Statements of Cash Flows as presented in the Company’s previously filed Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.

There was no impact to the Consolidated Statements of Income and Comprehensive Income, Consolidated Balance Sheets, or Consolidated Statements of Changes in Equity for any periods presented.

In preparing the Company’s Consolidated Statements of Cash Flows for the six months ended June 30, 2023, the Company made appropriate revisions to its Consolidated Statements of Cash Flows for historical periods for purposes of comparability to the current period.

Such changes are reflected for the six months ended June 30, 2022, included in these financial statements, and will also be reflected in the historical periods included in the Company’s subsequent quarterly and annual consolidated financial statements.

The impact of the revisions on the line items within the Consolidated Statements of Cash Flows for the six months ended previously filed in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 is as follows (in thousands):

Six Months Ended June 30, 2022

Operating Activities As Reported Effect of Revision As Revised

Manufactured homes $ — ( 2,136 ) $ ( 2,136 )

Other assets, net $ 44,339 ( 48,562 ) $ ( 4,223 )

Net cash provided by operating activities $ 354,463 ( 50,698 ) $ 303,765

Investing Activities

Capital improvements $ ( 181,035 ) 50,698 $ ( 130,337 )

Net cash used in investing activities $ ( 302,050 ) 50,698 $ ( 251,352 )

The impact of the revisions on the line items within the Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 previously filed in the Annual Report on Form 10-K for the year ended December 31, 2022 is as follows (in thousands):

Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020

Operating Activities As Reported Effect of Revision As Revised As Reported Effect of Revision As Revised As Reported Effect of Revision As Revised

Manufactured homes $ — ( 27,419 ) $ ( 27,419 ) $ — ( 4,963 ) $ ( 4,963 ) $ — ( 10,280 ) $ ( 10,280 )

Other assets, net $ 92,458 ( 96,103 ) $ ( 3,645 ) $ 53,913 ( 81,062 ) $ ( 27,149 ) $ 34,048 ( 38,845 ) $ ( 4,797 )

Net cash provided by operating activities $ 599,336 ( 123,522 ) $ 475,814 $ 595,052 ( 86,025 ) $ 509,027 $ 466,537 ( 49,125 ) $ 417,412

Investing Activities

Capital improvements $ ( 372,799 ) 123,522 $ ( 249,277 ) $ ( 290,290 ) 86,025 $ ( 204,265 ) $ ( 217,082 ) 49,125 $ ( 167,957 )

Net cash used in investing activities $ ( 525,589 ) 123,522 $ ( 402,067 ) $ ( 914,455 ) 86,025 $ ( 828,430 ) $ ( 450,379 ) 49,125 $ ( 401,254 )

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 3 – Leases

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.

The leases entered into between a 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.

4 unchanged sentences

(amounts in thousands)

As of March 31, 2023

As of June 30, 2023

2023 $ 62,533

1 unchanged sentence

Total $ 349,960

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

We lease land under non-cancelable operating leases at 10 Properties expiring on 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.

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

For the quarters ended June 30, 2023 and 2022, total operating lease payments were $ 1.7 million and $ 2.9 million, respectively.

For the six months ended June 30, 2023 and 2022, total operating least payments were $ 3.2 million and $ 5.5 million, respectively.

As of June 30, 2023

(amounts in thousands)

9 unchanged sentences

Total lease liabilities $ 5,706 $ 21,170 $ 26,876

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.

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 $ 24.6 million and $ 26.9 million, respectively, as of June 30, 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 June 30, 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.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

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,

The following table sets forth the computation of basic and diluted earnings per share of common stock (“Common Share”) for the quarters and six months ended June 30, 2023 and 2022:

Quarters Ended June 30, Six Months Ended June 30,

(amounts in thousands, except per share data) 2023 2022 2023 2022

13 unchanged sentences

The following quarterly distributions have been declared and paid to Common Stockholders and the Operating Partnership unit (“OP Unit”) holders since January 1, 2022:

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

4 unchanged sentences

$ 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.

$ 0.4475 June 30, 2023 June 30, 2023 July 14, 2023

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.

During the six months ended June 30, 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

1 unchanged sentence

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.

During the six months ended June 30, 2023, we recorded an impairment charge of approximately $ 2.6 million related to flooding events at certain Properties in California.

Equity LifeStyle Properties, Inc.

1 unchanged sentence

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

The following table summarizes our investments in unconsolidated joint ventures (investment amounts in thousands with the number of Properties shown parenthetically as of June 30, 2023 and December 31, 2022 , respectively):

Investment as of Income/(Loss) for the Six Months Ended

Investment Location Number of Sites Economic

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

June 30, 2023 December 31, 2022 June 30, 2023 June 30, 2022

Meadows Various (2,2) 1,077 50 % $ 330 $ 158 $ 1,272 $ 858

8 unchanged sentences

_____________________

(a) The percentages shown approximate our economic interest as of March 31, 2023.

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

(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.

We received approximately $ 3.6 million and $ 2.0 million in distributions from our unconsolidated joint ventures for the six months ended June 30, 2023 and 2022, respectively.

Approximately $ 1.1 million and $ 0.8 million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the six months ended June 30, 2023 and 2022, respectively, and as such, were recorded as income from unconsolidated joint ventures.

Note 8 – Borrowing Arrangements

2 unchanged sentences

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

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

As of June 30, 2023 As of December 31, 2022

(amounts in thousands)

1 unchanged sentence

Mortgage notes payable, excluding deferred financing costs $ 2,155,809 $ 2,773,996 $ 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.

The debt encumbered a total of 114 of our Properties as of June 30, 2023 and December 31, 2022, and the gross carrying value of such Properties was approximately $ 2,914.6 million and $ 2,868.3 million, as of June 30, 2023 and December 31, 2022, respectively.

Unsecured Debt

4 unchanged sentences

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.

As of June 30, 2023, the Company has no remaining LIBOR based borrowings.

Equity LifeStyle Properties, Inc.

1 unchanged sentence

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.

The LOC had a balance of $ 205.0 million and $ 198.0 million outstanding as of June 30, 2023 and December 31, 2022, respectively.

As of June 30, 2023, our LOC had a remaining borrowing capacity of $ 295.0 million.

As of June 30, 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.

In May 2023, we locked rate on a $ 375.0 million secured financing at a weighted average interest rate of 5.05 % with a weighted average term to maturity of 7.5 years.

We expect to close in the third quarter of 2023.

In June 2023, we closed on a secured financing transaction generating gross proceeds of $ 89.0 million (the “June 2023 financing”).

The loan represents an incremental borrowing from an existing secured facility, has a fixed interest rate of 5.04 % per annum and matures in 10 years.

In July 2023, we repaid all debt scheduled to mature in 2023 and 2024 with proceeds from the June 2023 financing and our unsecured line of credit.

In July 2023, we also closed on an $ 80.0 million tranche of the $ 375.0 million secured financing, and we expect to close on the remaining $ 295.0 million in the third quarter of 2023.

Note 9 – Derivative Instruments and Hedging

6 unchanged sentences

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.

Based on the leverage as of June 30, 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.

Based on the leverage as of June 30, 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,

As of June 30, As of December 31,

(amounts in thousands) Balance Sheet Location 2023 2022

Interest Rate Swap Other assets, net $ 15,141 $ 19,119

Interest Rate Swaps Other assets, net $ 17,327 $ 19,119

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 quarters ended March 31, Location of (gain)/ loss reclassified from

for the six months ended June 30, 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,

for the six months ended June 30,

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

Interest Rate Swap $ 523 $ ( 9,661 ) Interest Expense $ ( 3,455 ) $ 263

Interest Rate Swaps $ ( 6,081 ) $ ( 12,719 ) Interest Expense $ ( 7,874 ) $ ( 2 )

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 9 – Derivative Instruments and Hedging (continued)

During the next twelve months, we estimate that $ 16.9 million will be reclassified as a decrease to interest expense.

1 unchanged sentence

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.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

As of June 30, 2023, we had not posted any collateral related to the 2021 Swap or 2023 Swap.

Note 10 - Deferred Revenue from Membership Upgrade Sales and Deferred Commission Expense

The components of the change in deferred revenue from membership upgrades and deferred commission expense were as follows:

(amounts in thousands)

Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

Deferred revenue - upfront payments from membership upgrade sales, beginning $ 174,407 $ 163,957

Membership upgrade sales, gross 17,253 16,686

Revenue recognized from membership upgrade sales upfront payments ( 7,119 ) ( 6,236 )

Net increase in deferred revenue - upfront payments from membership grade sales 10,134 10,450

Deferred revenue - upfront payments from membership upgrade sales, ending (a)

$ 184,541 $ 174,407

Deferred commission expense, beginning $ 48,806 47,349

Deferred commission expense 3,723 3,527

Commission expense recognized ( 2,186 ) ( 2,070 )

Net increase in deferred commission expense 1,537 1,457

Deferred commission expense, ending 50,343 48,806

_____________________

(a) Included in Deferred membership revenue on the Consolidated Balance Sheets.

Note 11 – Equity Incentive Awards

5 unchanged sentences

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.

During the quarter ended June 30, 2023 we awarded to certain members of our Board of Directors 60,391 shares of restricted stock at a fair value of approximately $ 4.1 million and options to purchase 8,450 shares of common stock with an exercise price of $ 68.01 .

These are time-based awards subject to various vesting dates between October 25, 2023 and April 24, 2026.

Stock-based compensation expense, reported in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income, was $ 8.6 million and $ 2.7 million for the quarters ended June 30, 2023 and 2022, respectively, and $ 11.1 million and $ 5.3 million for the six months ended June 30, 2023 and 2022, respectively.

Stock-based compensation expense of $ 11.1 million for the six months ended June 30, 2023 includes accelerated vesting of stock-based compensation expense of $ 6.3 million recognized during the quarter ended June 30, 2023, as a result of the passing of a member of our Board of Directors.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Commitments and Contingencies

9 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 ended March 31, 2023 or 2022.

All revenues were from external customers and there is no customer who contributed 10% or more of our total revenues during the quarters and six months ended June 30, 2023 or 2022.

The following tables summarize our segment financial information for the quarters and six months ended June 30, 2023 and 2022:

Quarter Ended June 30, 2023

(amounts in thousands) Property

Operations Home Sales

Operations Consolidated

Operations revenues $ 336,629 $ 28,653 $ 365,282

Operations expenses ( 177,450 ) ( 24,914 ) ( 202,364 )

Income from segment operations 159,179 3,739 162,918

Interest income 1,616 637 2,253

Depreciation and amortization ( 48,662 ) ( 2,802 ) ( 51,464 )

Income from operations $ 112,133 $ 1,574 $ 113,707

Reconciliation to consolidated net income:

Corporate interest income 6

Income from other investments, net 2,473

General and administrative ( 16,607 )

Other expenses ( 1,381 )

Interest and related amortization ( 33,122 )

Equity in income of unconsolidated joint ventures 973

Consolidated net income $ 66,049

Total assets $ 5,304,804 $ 281,183 $ 5,585,987

Capital improvements $ 41,350 $ 10,551 $ 51,901

Equity LifeStyle Properties, Inc.

1 unchanged sentence

Note 13 – 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

Quarter Ended June 30, 2022

(amounts in thousands) Property

6 unchanged sentences

Depreciation and amortization ( 48,297 ) ( 2,499 ) ( 50,796 )

Income from operations $ 102,012 $ 3,285 $ 105,297

Reconciliation to consolidated net income:

Income from other investments, net 2,617

General and administrative (1)

Other expenses (1)

Interest and related amortization ( 28,053 )

Equity in income of unconsolidated joint ventures 1,253

Early debt retirement ( 640 )

Consolidated net income $ 64,590

Total assets $ 5,150,884 $ 248,704 $ 5,399,588

Capital improvements $ 64,690 $ 4,689 $ 69,379

______________________

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

Six Months Ended June 30, 2023

(amounts in thousands) Property

Operations Home Sales

Operations Consolidated

Operations revenues $ 678,366 $ 52,689 $ 731,055

Operations expenses ( 342,473 ) ( 45,057 ) ( 387,530 )

Income from segment operations 335,893 7,632 343,525

Interest income 3,182 1,151 4,333

Depreciation and amortization ( 96,417 ) ( 5,549 ) ( 101,966 )

Loss on sale of real estate and impairment, net ( 2,632 ) — ( 2,632 )

10 unchanged sentences

Capital improvements $ 128,826 $ 20,176 $ 149,002

Quarter Ended March 31, 2022

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 13 – Reportable Segments (continued)

Six Months Ended June 30, 2022

(amounts in thousands) Property

20 unchanged sentences

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

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,

The following table summarizes our financial information for the Property Operations segment for the quarters and six months ended June 30, 2023 and 2022:

Quarters Ended June 30, Six Months Ended June 30,

(amounts in thousands) 2023 2022 2023 2022

1 unchanged sentence

Annual membership subscriptions 16,189 15,592 32,159 30,749

Membership upgrade sales current period, gross 7,975 7,151

Membership upgrade sales upfront payments, deferred, net ( 4,470 ) ( 4,084 )

Membership upgrade sales 3,614 3,168 7,119 6,235

Other income 17,911 14,195 35,625 27,736

3 unchanged sentences

Real estate taxes 18,832 19,182 37,148 38,639

Sales and marketing, gross 5,517 4,914

Membership sales commissions, deferred, net ( 679 ) ( 583 )

Membership sales and marketing 5,521 5,452 10,359 9,783

Cost of ancillary services 7,039 9,138 12,336 14,874

3 unchanged sentences

Income from property operations segment $ 159,179 $ 148,928 $ 335,893 $ 319,363

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,

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 13 – Reportable Segments (continued)

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters and six months ended ended June 30, 2023 and 2022:

Quarters Ended June 30, Six Months Ended June 30,

(amounts in thousands) 2023 2022 2023 2022

Rental income (a)

Rental income (1)

$ 3,705 $ 3,814 $ 7,577 $ 7,775

7 unchanged sentences

______________________

(a) Rental income within Home Sales and Rentals Operations does not include base rent related to the rental home Sites.

(1) 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 .

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

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