What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-01-23 compared with 2024-01-23 · 111 added, 265 removed, 333 unchanged (53% of the section changed)

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Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Form 10-K/A.

Certain items within this Management’s discussion and analysis have been updated as a result of the amendment, as described in further detail in the “Explanatory Note”.

Certain items within this Management's discussion and analysis have been updated as a result of the amendment and

restatement of this Quarterly Report on Form 10-Q/A, as described in further detail in the “Explanatory Note.” For further detail regarding the restatement, also see Part I.

Financial Statements and Supplementary Data—Note 3, Restatement of Previously Issued Consolidated Financial Statements and Item 4.

Controls and Procedures.

Overview and Outlook

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We are a fully integrated owner of lifestyle-oriented properties (“Properties”) consisting of property operations and home sales and rental operations primarily within manufactured home (“MH”) and recreational vehicle (“RV”) communities and marinas.

As of June 30, 2023, we owned or had an ownership interest in a portfolio of 450 Properties located throughout the United States and Canada containing 171,706 individual developed areas (“Sites”).

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.

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The following table shows the breakdown of our Sites by type (amounts are approximate):

Total Sites as of June 30, 2023

Total Sites as of March 31, 2023

MH Sites 72,700

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Results Overview

For the quarter ended June 30, 2023, net income available for Common Stockholders increased $1.4 million to $62.9 million, or $0.34 per fully diluted Common Share, compared to $61.5 million, or $0.33 per fully diluted Common Share, for the same period in 2022.

For the six months ended June 30, 2023, net income available for Common Stockholders increased $0.9 million, to $145.3 million, or $0.78, per fully diluted Common Share, compared to $144.4 million, or $0.78 per fully diluted Common Share, for the same period in 2022.

Net income available for Common Stockholders 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 and an impairment charge of approximately $2.6 million recognized during the quarter ended March 31, 2023 related to flooding events at certain Properties in California.

For the quarter ended June 30, 2023, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased $2.4 million, or $0.01 per fully diluted Common Share, to $118.6 million, or $0.61 per fully diluted Common Share, compared to $116.2 million, or $0.60 per fully diluted Common Share, for the same period in 2022.

For the six months ended June 30, 2023, FFO available for Common Stock and OP Unit holders increased $5.3 million, or $0.03 per fully diluted Common Share, to $258.9 million, or $1.33 per fully diluted Common Share, compared to $253.6 million, or $1.30 per fully diluted Common Share for the same period in 2022.

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 $2.9 million, or $0.02 per fully diluted Common Share, to $140.3 million, or $0.72 per fully diluted Common Share, compared to $137.4 million, or $0.70 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 $2.6 million, or $0.01 per fully diluted Common Share, to $140.5 million, or $0.72 per fully diluted Common Share, compared to $137.9 million, or $0.71 per fully diluted Common Share, for the same period in 2022.

For the quarter ended March 31, 2023, our Core Portfolio property operating revenues, increased 6.3% and property operating expenses, excluding property management, increased 7.3%, from the same period in 2022, resulting in an increase in income from property operations, excluding property management, of 5.6%, compared to the same period in 2022.

Management's Discussion and Analysis (continued)

For the quarter ended June 30, 2023, Normalized FFO available for Common Stock and OP Unit holders increased $5.0 million, or $0.03 per fully diluted Common Share, to $124.9 million, or $0.64 per fully diluted Common Share, compared to $119.9 million, or $0.61 per fully diluted Common Share, for the same period in 2022.

For the six months ended June 30, 2023, Normalized FFO available for Common Stock and OP Unit holders increased $7.6 million, or $0.04 per fully diluted Common Share, to $265.4 million, or $1.36 per fully diluted Common Share, compared to $257.8 million, or $1.32 per fully diluted Common Share, for the same period in 2022.

For the quarter ended June 30, 2023, our Core Portfolio property operating revenues increased 5.4% and property operating expenses, excluding property management, increased 7.1%, from the same period in 2022, resulting in an increase in income from property operations, excluding property management, of 3.9%, compared to the same period in 2022.

For the six months ended June 30, 2023, our Core Portfolio property operating revenues increased 5.9% and property operating expenses, excluding property management, increased 7.3% from the same period in 2022, resulting in an increase in income from property operations, excluding property management, of 4.8% compared to the same period in 2022.

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 94.8%, 95.1% and 95.1% for the quarters ended June 30, 2023, December 31, 2022 and June 30, 2022, respectively.

For the quarter ended June 30, 2023, our Core Portfolio occupancy decreased by 23 sites, which included an increase in homeowner occupancy of 151 sites and a decrease in rental occupancy of 174 compared to March 31, 2023.

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 June 30, 2023, we had 2,528 occupied rental homes in our Core MH communities.

RV and marina base rental income in our Core Portfolio increased 2.3% for the quarter ended June 30, 2023, compared to the same period in 2022 driven by an increase in Annual and Seasonal RV rental income, partially offset by a decline in Transient RV rental income.

Core RV and marina base rental income from annuals represents more than 71.6% of total Core RV and marina base rental income and increased 7.8% for the quarter ended June 30, 2023, compared to the same period in 2022 due to a 7.3% increase in rate and 0.5% increase in occupancy.

Core seasonal RV and marina base rental income increased 1.6% for the quarter ended June 30, 2023, compared to the same period in 2022.

Core transient RV and marina base rental income decreased by $2.9 million, or 13.9% for the quarter ended June 30, 2023, compared to the same period in 2022.

Since June 30, 2022, we have increased our Core RV and marina annual site count by approximately 240 resulting in a reduction in the number of transient sites available for use.

We also experienced significant weather events during the quarter ended June 30, 2023 in California, the Pacific Northwest, and the East Coast, which impacted our transient RV and marina base rental income.

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 226 new home sales during the quarter ended June 30, 2023, compared to 365 new home sales during the quarter ended June 30, 2022, a decrease of 38.1%.

The decrease in new home sales during the quarter ended June 30, 2023 were primarily in the Florida and Arizona market.

Our gross investment in real estate increased $179.8 million to $7,549.3 million as of June 30, 2023 from $7,369.6 million as of December 31, 2022, primarily due to capital improvements and an acquisition during the six months ended June 30, 2023.

Management's Discussion and Analysis (continued)

The following chart lists the Properties acquired or sold from January 1, 2022 through June 30, 2023 and Sites added through expansion opportunities at our existing Properties:

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

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Westwinds San Jose, California MH August 31, 2022 (723)

Total Sites as of June 30, 2023 (1)

Total Sites as of March 31, 2023 (1)

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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 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 and Normalized FFO.

These Non-GAAP financial measures as determined and

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 and Normalized FFO.

We believe investors should review Income from property operations and Core Portfolio, FFO and Normalized FFO 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 and Normalized FFO, and a reconciliation to net income, are included below.

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

Income from Property Operations and Core Portfolio

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Income from property operations, excluding property management, represents income from property operations excluding property management expenses.

Property management represents the expenses associated with indirect costs such as off-site payroll and certain administrative and professional expenses.

For comparative purposes, we present bad debt expense within Property operating and maintenance in the current and prior periods.

Property management represent the expenses associated with indirect costs such as off-site payroll and certain administrative and professional expenses.

We believe exclusion of property management expenses is helpful to investors and analysts as a measure of the operating results of our properties, excluding items that are not directly related to the operation of the properties.For comparative purposes, we present bad debt expense within Property operating and maintenance in the current and prior periods.

We believe that this Non-GAAP financial measure is helpful to investors and analysts as a measure of the operating results of our properties.

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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

Management's Discussion and Analysis (continued)

RV communities and one membership RV community acquired during 2022 and one RV community acquired during 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.

During the quarter ended June 30, 2023, we designated Rancho Oso and Turtle Beach as Non-Core properties as operations at these properties have been suspended due to storms and flooding events in California.

FFO and Normalized FFO

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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.

In some cases, we provide information about identified non-cash

Management's Discussion and Analysis (continued)

components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items.

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 and six months ended June 30, 2023 and 2022:

Management's Discussion and Analysis (continued)

Quarters Ended June 30, Six Months Ended June 30,

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 2023 2022

Computation of Income from Property Operations:

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

Redeemable preferred stock dividends 8 8 8 8

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

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(1) 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.

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 and six months ended June 30, 2023 and 2022:

Quarters Ended June 30, Six Months Ended June 30,

(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.

Management's Discussion and Analysis (continued)

Quarters Ended March 31,

(amounts in thousands)

2023 2022 2023 2022

Computation of FFO and Normalized FFO:

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Transaction/pursuit costs (1)

— 3,082 117 3,082

Accelerated vesting of stock-based compensation (2)

6,320 — 6,320 —

Lease termination expenses (2)

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

(2) Represents 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.

(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 expense in the Consolidated Statements of Income and Comprehensive Income.

Administrative expenses in the Consolidated Statement of Income.

Management's Discussion and Analysis (continued)

Results of Operations

This section discusses the comparison of our results of operations for the quarters and six months ended June 30, 2023 and June 30, 2022 and our operating activities, investing activities and financing activities for the six months ended June 30, 2023 and June 30, 2022.

For the comparison of our results of operations for the quarters and six months ended June 30, 2022 and June 30, 2021 and discussion of our operating activities, investing activities and financing activities for the six months ended June 30, 2022 and June 30, 2021, refer to Part I.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022, filed with the SEC on July 26, 2022.

Comparison of the Quarter Ended June 30, 2023 to the Quarter Ended June 30, 2022

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.

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 June 30, 2023 and June 30, 2022:

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 June 30, Quarters Ended June 30,

Quarters Ended March 31, Quarters Ended March 31,

(amounts in thousands) 2023 2022 Variance %

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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) Membership upgrade sales revenue is net of deferrals of $5.7 million and $6.4 million for the quarters ended June 30, 2023 and June 30, 2022, respectively.

(2) Membership upgrade sales revenue is net of deferrals of $4.5 million and $4.1 million for the quarters ended March 31, 2023 and March 31, 2022, respectively.

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

(4) Membership sales and marketing expense is net of sales commission deferrals of $0.9 million and $1.0 million for the quarters ended June 30, 2023 and June 30, 2022, respectively.

(4) Membership sales and marketing expense is net of sales commission deferrals of $0.7 million and $0.6 million for the quarters ended March 31, 2023 and March 31, 2022, respectively.

(5) See Part I.

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 June 30, 2023, increased $10.2 million, or 6.8%, from the quarter ended June 30, 2022, driven by an increase of $6.2 million, or 4.3%, from our Core Portfolio, and an increase of $4.0 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, primarily in MH base rental income, Utility and other income and RV and marina base rental income, partially offset by an increase in property operating and maintenance expenses.

The increase in income from property operations from our Non-Core Portfolio was primarily due to business interruption income related to Hurricane Ian recognized during the quarter ended June 30, 2023 and higher RV and marina base rental income, partially offset by MH base rental income.

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, primarily in MH base rental income and RV and marina base rental income, partially offset by an increase in property operating expenses, excluding 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.

Management's Discussion and Analysis (continued)

Property Operating Revenues

MH base rental income in our Core Portfolio for the quarter ended June 30, 2023 increased $10.5 million, or 6.7%, from the quarter ended June 30, 2022, which reflects 7.0% growth from rate increases and a decline of 0.3% in occupancy.

The average monthly base rental income per Site in our Core Portfolio increased to approximately $806 for the quarter ended June 30, 2023 from approximately $753 for the quarter ended June 30, 2022.

The average occupancy for our Core Portfolio was 94.8% for the quarter ended June 30, 2023 and 95.1% for the quarter ended June 30, 2022.

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 June 30, Quarters Ended June 30,

Quarters Ended March 31, Quarters Ended March 31,

(amounts in thousands) 2023 2022 Variance %

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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 June 30, 2023 increased $2.2 million, or 2.3%, from the quarter ended June 30, 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 7.8% was driven by an increase in rate of 7.3%.

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 June 30, 2023 increased $2.3 million, or 8.6%, from the quarter ended June 30, 2022.

The increase was primarily due to a $1.4 million and $1.0 million increase in utility income and other property income, respectively.

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

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 property management, in our Core Portfolio for the quarter ended June 30, 2023 increased $9.6 million, or 7.1%, from the quarter ended June 30, 2022, driven by increases in property operating and maintenance expenses of $8.9 million.

Core property operating and maintenance expenses were higher in 2023 primarily due to increases in insurance of $3.3 million, repair and maintenance of $2.1 million and utility expenses of $2.1 million.

Property operating expenses, excluding property management, in our Core Portfolio for the quarter ended March 31, 2023 increased $9.1 million, or 7.3%, 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.

Management's Discussion and Analysis (continued)

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

Quarters Ended June 30,

Quarters Ended March 31,

(amounts in thousands, except home sales volumes) 2023 2022 Variance %

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(1) Total new home sales volume for the quarter ended June 30, 2022 includes 29 home sales from our ECHO JV.

Gross revenues from new home sales decreased $10.8 million and Cost of new home sales decreased $9.2 million during the quarter ended June 30, 2023, compared to the quarter ended June 30, 2022, primarily due to a decrease in new home sales.

(1) Total new home sales volume for the quarter ended March 31, 2022 includes 22 home sales from our ECHO JV.

Gross revenues from new home sales decreased $7.2 million and Cost of new home sales decreased $6.7 million

during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to a decrease in new home sales.

Management's Discussion and Analysis (continued)

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

Quarters Ended June 30,

Quarters Ended March 31,

(amounts in thousands, except rental unit volumes)

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Gross investment in new manufactured home rental units $ 252,204 $ 226,890 $ 25,314 11.2 %

$ 257,978 $ 221,251 $ 36,727 16.6 %

Gross investment in used manufactured home rental units $ 14,056 $ 15,004 $ (948) (6.3) %

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Number of occupied rentals – new, end of period 2,389 2,908 (519) (17.8) %

2,236 2,742 (506) (18.5) %

Number of occupied rentals – used, end of period 313 402 (89) (22.1) %

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

Approximately $6.1 million and $7.1 million for the quarters ended June 30, 2023 and June 30, 2022, respectively, of Site rental income is included in MH base rental income in the Core Portfolio Income from Property Operations table.

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.

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

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

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

(4) Occupied rentals as of the end of the period in our Core Portfolio.

Included in occupied rentals as of June 30, 2022 were 185 homes rented through our ECHO JV.

Rental operations revenues were $1.0 million or 9.6% lower during the quarter ended June 30, 2023, compared to the quarter ended June 30, 2022, primarily due to a decrease in the number of occupied rentals.

Other Income and Expenses

The following table summarizes other income and expenses, net:

Quarters Ended June 30,

(amounts in thousands, expenses shown as negative)

2023 2022 Variance %

Depreciation and amortization $ (51,464) $ (50,796) $ (668) (1.3) %

Interest income 2,259 1,722 537 31.2 %

Income from other investments, net 2,473 2,617 (144) (5.5) %

General and administrative (16,607) (11,679) (4,928) (42.2) %

Other expenses (1,381) (4,205) 2,824 67.2 %

Early debt retirement — (640) 640 100.0 %

Interest and related amortization (33,122) (28,053) (5,069) (18.1) %

Total other income and expenses, net $ (97,842) $ (91,034) $ (6,808) (7.5) %

Total other income and expenses, net increased $6.8 million for the quarter ended June 30, 2023 compared to the quarter ended June 30, 2022, primarily due to higher interest and related amortization expense as a result of an increase in interest rates and general and administrative expense as a result of accelerated vesting of stock-based compensation expense.

Casualty-related charges/(recoveries), net

During the quarter ended June 30, 2023, we recorded $1.8 million of expenses for debris removal and cleanup costs and an offsetting insurance recovery revenue of $1.8 million related to Hurricane Ian.

Management's Discussion and Analysis (continued)

Comparison of the Six Months Ended June 30, 2023 to the Six Months Ended June 30, 2022

Income from Property Operations

The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the six months ended June 30, 2023 and 2022:

Core Portfolio Total Portfolio

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

(amounts in thousands) 2023 2022 Variance %

Change 2023 2022 Variance %

MH base rental income (1)

$ 330,662 $ 310,196 $ 20,466 6.6 % $ 330,969 $ 316,025 $ 14,944 4.7 %

Rental home income (1)

7,554 7,758 (204) (2.6) % 7,577 7,775 (198) (2.5) %

RV and marina base rental income (1)

204,802 196,815 7,987 4.1 % 213,461 207,102 6,359 3.1 %

Annual membership subscriptions 31,496 30,052 1,444 4.8 % 32,159 30,749 1,410 4.6 %

Membership upgrade sales (2)

6,796 5,790 1,006 17.4 % 7,119 6,235 884 14.2 %

Utility and other income (1)

58,712 53,875 4,837 9.0 % 71,189 59,866 11,323 18.9 %

Property operating revenues 640,022 604,486 35,536 5.9 % 662,474 627,752 34,722 5.5 %

Property operating and maintenance (1)(3)

228,850 210,554 18,296 8.7 % 235,044 218,308 16,736 7.7 %

Real estate taxes 35,874 35,448 426 1.2 % 37,148 38,639 (1,491) (3.9) %

Rental home operating and maintenance 2,117 2,611 (494) (18.9) % 2,118 2,628 (510) (19.4) %

Membership sales and marketing (4)

10,226 9,647 579 6.0 % 10,359 9,783 576 5.9 %

Property operating expenses, excluding property management 277,067 258,260 18,807 7.3 % 284,669 269,358 15,311 5.7 %

Income from property operations, excluding property management (5)

362,955 346,226 16,729 4.8 % 377,805 358,394 19,411 5.4 %

Property management 38,823 36,969 1,854 5.0 % 38,823 36,970 1,853 5.0 %

Income from property operations (5)

$ 324,132 $ 309,257 $ 14,875 4.8 % $ 338,982 $ 321,424 $ 17,558 5.5 %

__________________________

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

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

(2) Membership upgrade sales revenue is net of deferrals of $10.1 million and $10.5 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

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

(4) Membership sales and marketing expense is net of sales commission deferrals of $1.6 million and $1.5 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

(5) See Part I.

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

Total Portfolio income from property operations for the six months ended June 30, 2023 increased $17.6 million, or 5.5%, from the same period in 2022, driven by an increase of $14.9 million, or 4.8%, from our Core Portfolio and an increase of $2.7 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 primarily in MH base rental income, RV and marina base rental income and Utility and other income, partially offset by an increase in property operating and maintenance expenses.

Property Operating Revenues

MH base rental income in our Core Portfolio for the six months ended June 30, 2023 increased $20.5 million, or 6.6%, from the same period in 2022, which reflects 6.8% growth from rate increases and 0.2% decline in occupancy.

The average monthly base rental income per Site increased to approximately $801 for the six months ended June 30, 2023 from approximately $750, for the six months ended June 30, 2022.

The average occupancy for the Core Portfolio was 94.9% for the six months ended June 30, 2023 compared to 95.1% for the six months ended June 30, 2022.

Management's Discussion and Analysis (continued)

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

Core Portfolio Total Portfolio

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

(amounts in thousands)

2023 2022 Variance %

Change 2023 2022 Variance %

Annual $ 136,066 $ 125,837 $ 10,229 8.1 % $ 142,038 $ 130,986 $ 11,052 8.4 %

Seasonal 36,483 33,407 3,076 9.2 % 37,446 36,098 1,348 3.7 %

Transient 32,253 37,571 (5,318) (14.2) % 33,977 40,018 (6,041) (15.1) %

RV and marina base rental income $ 204,802 $ 196,815 $ 7,987 4.1 % $ 213,461 $ 207,102 $ 6,359 3.1 %

RV and marina base rental income in our Core Portfolio for the six months ended June 30, 2023 increased $8.0 million, or 4.1%, from the same period in 2022 primarily due to increases in Annual and Seasonal RV and marina base rental income, partially offset by a decrease in Transient RV base rental income.

The increase in Annual RV and marina base rental income of $10.2 million, or 8.1% was seen across all regions, primarily in the South, West and Northeast.

The increase in Seasonal RV and marina base rental income of $3.1 million, or 9.2% was driven by increases in the South and West regions during the first quarter where we had 15.0% and 9.1% increases, respectively.

Since June 30, 2022, we have increased our Core RV and marina annual site count by approximately 240 sites resulting in a reduction in number of transient sites available for use.

We also experienced significant weather events during the six months ended June 30, 2023 in California, the Pacific Northwest, and the East Coast, which impacted our transient RV and marina base rental income.

Utility and other income in our Core Portfolio for the six months ended June 30, 2023 increased $4.8 million, or 9.0%, from the same period in 2022.

The increase was primarily due to an increase in utility income of $3.4 million.

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

The utility recovery rate (utility income divided by utility expenses) for 2023 and 2022 was approximately 46% and 45%, respectively.

Property Operating Expenses

Property operating expenses, excluding property management, in our Core Portfolio for the six months ended June 30, 2023 increased $18.8 million, or 7.3%, from the same period in 2022, driven by increases in property operating and maintenance expenses of $18.3 million.

Core property operating and maintenance expenses were higher during the six months ended June 30, 2023, compared to the same period in 2022 due to increases in utility expenses of $6.2 million, repair and maintenance expenses of $4.7 million, insurance of $3.9 million, and property payroll expenses of $3.4 million.

Management's Discussion and Analysis (continued)

Home Sales and Rental Operations

Home Sales and Other

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

Six Months Ended June 30,

(amounts in thousands, except home sales volumes)

2023 2022 Variance %

Gross revenues from new home sales $ 41,352 $ 59,378 $ (18,026) (30.4) %

Cost of new home sales 37,474 53,346 (15,872) (29.8) %

Gross revenues from used home sales 2,209 2,365 (156) (6.6) %

Cost of used home sales 2,055 2,847 (792) (27.8) %

Gross revenue from brokered resales and ancillary services 27,485 30,647 (3,162) (10.3) %

Cost of brokered resales and ancillary services 12,880 15,477 (2,597) (16.8) %

Home selling and ancillary operating expenses 14,094 14,066 28 0.2 %

Home sales volumes

Total new home sales (1)

402 626 (224) (35.8) %

Used home sales 168 169 (1) (0.6) %

Brokered home resales 335 451 (116) (25.7) %

_________________________

(1) Total new home sales volume for the six months ended June 30, 2022 includes 51 home sales from our ECHO JV.

Gross revenues from new home sales decreased $18.0 million and Cost of new home sales decreased $15.9 million during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to a decrease in new home sales.

Rental Operations

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

Six Months Ended June 30,

(amounts in thousands, except rental unit volumes)

2023 2022 Variance %

Rental operations revenue (1)

$ 20,085 $ 22,216 $ (2,131) (9.6) %

Rental home operating and maintenance expenses 2,117 2,611 (494) (18.9) %

Depreciation on rental homes (2)

5,549 5,017 532 10.6 %

Gross investment in new manufactured home rental units (3)

$ 257,978 $ 221,251 $ 36,727 16.6 %

Gross investment in used manufactured home rental units $ 13,491 $ 14,571 $ (1,080) (7.4) %

Net investment in new manufactured home rental units $ 215,087 $ 191,048 $ 24,039 12.6 %

Net investment in used manufactured home rental units $ 7,806 $ 7,673 $ 133 1.7 %

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

2,236 2,742 (506) (18.5) %

Number of occupied rentals – used, end of period 292 375 (83) (22.1) %

______________________

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

Approximately $12.5 million and $14.5 million of Site rental income for the six months ended June 30, 2023 and 2022, respectively, are included in community base rental income within the Core Portfolio Income from Property Operations table.

The remainder of home rental income is included in rental home income within the Core Portfolio Income from Property Operations table.

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

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

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

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

(4) Occupied rentals as of the end of the period in our Core Portfolio.

Included in occupied rentals as of June 30, 2022 were 185 homes rented through our ECHO JV.

Rental operations revenues were $2.1 million or 9.6% lower during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to a decrease in the number of occupied rentals.

Management's Discussion and Analysis (continued)

Gross rental operations revenue was $10.3 million for the quarter ended March 31, 2023, a decrease of $1.1 million, compared to $11.3 million for the quarter ended March 31, 2022.

The decrease in gross rental operations revenue was 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:

Six Months Ended June 30,

Quarters Ended March 31,

(amounts in thousands, expenses shown as negative)

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Total other income and expenses, net $ (92,040) $ (86,831) $ (5,209) (6.0) %

Total other income and expenses, net increased $12.0 million during the six months ended June 30, 2023 compared to the six months ended June 30, 2022, primarily due to higher interest and related amortization expense as a result of an increase in interest rates and general and administrative expense as a result of accelerated vesting of stock-based compensation expense.

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 six months ended June 30, 2023, we recorded $10.3 million of expenses for debris removal and cleanup costs and an offsetting insurance recovery revenue of $10.3 million related to Hurricane Ian.

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

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.

Management's Discussion and Analysis (continued)

Liquidity and Capital Resources

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Accessing long-term low-cost secured debt continues to be our focus.

As of June 30, 2023, we had available liquidity in the form of approximately 413.7 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.

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.

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Financial Statements—Note 10.

Derivative Instruments and Hedging .

Management's Discussion and Analysis (continued)

Derivative Instruments and Hedging Activities .

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”).

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Borrowing Arrangements for further details.

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

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.

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 six months ended June 30, 2023, in connection with the amendment to the Credit Agreement, we replaced the LIBOR benchmarked swap with a SOFR benchmarked swap.

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.

Financial Statements—Note 10.

Derivative Instruments and Hedging for further details.

Derivative Instruments and Hedging Activities for further details.

We previously entered into a $200.0 million senior unsecured term loan agreement.

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Financial Statements—Note 10.

Derivative Instruments and Hedging for further details.

Derivative Instruments and Hedging Activities 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 June 30, 2023, our LOC had a borrowing capacity of $295.0 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.

As of March 31, 2023, our LOC had a borrowing capacity of $288.0 million.

Management's Discussion and Analysis (continued)

The following table summarizes our cash flows activity:

Six Months Ended June 30,

For the quarters ended March 31,

(amounts in thousands) 2023 2022

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(1) Amounts are restated.

Item 1.Financial Statements – Note 2.

Summary of Significant Accounting Policies:

(e) Prior Period Correction for more information

Financial Statements—Note 3.

Restatement of Previously Issued Consolidated Financial Statements for more information.

Operating Activities

Net cash provided by operating activities decreased $36.9 million to $266.8 million for the six months ended June 30, 2023 from $303.8 million for the six months ended June 30, 2022.

The decrease in net cash provided by operating activities was primarily due to a net increase in manufactured homes and the net change in other assets, net and accounts payable and other liabilities.

Net cash provided by operating activities increased $4.4 million to $159.0 million for the quarter ended March 31, 2023 from $154.6 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 change in accounts payable and other liabilities and compensation expense related to incentive plans, partially offset by a net increase in manufactured homes, net.

The following table summarizes our purchase and sale activity of manufactured homes:

Six Months Ended June 30,

Quarters Ended March 31,

(amounts in thousands)

2 unchanged sentences

Manufactured homes, net $ (19,574) $ (1,378)

Management's Discussion and Analysis (continued)

Investing Activities

Net cash used in investing activities decreased $97.7 million to $153.6 million for the six months ended June 30, 2023 from $251.4 million for the six months ended June 30, 2022.

The decrease was due to a decrease in spending on acquisitions of $102.7 million and a decrease in investments in unconsolidated joint ventures of $9.0 million, partially offset by an increase in capital improvement spending of $18.7 million.

Net cash used in investing activities decreased $16.1 million to $66.4 million for the quarter ended March 31, 2023 from $82.5 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.

Capital Improvements

The following table summarizes capital improvements:

Six Months Ended June 30,

For the quarters ended March 31,

(amounts in thousands) 2023 2022

2 unchanged sentences

Improvements and renovations (2)

19,691 18,034

Property upgrades and development 33,204 30,302

Site Development (3) (4)

20,176 10,657

Total property improvements (4)

60,878 52,607

Corporate 96 8,351

1 unchanged sentence

$ 60,974 $ 60,958

______________________

(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) Includes capital expenditures to improve the infrastructure required to set manufactured homes.

(3) Includes expenditures to improve the infrastructure required to set manufactured homes.

(4) Amounts are restated.

Financial Statements—Note 3.

Restatement of Previously Issued Consolidated Financial Statements for more information.

Financing Activities

Net cash used in financing activities decreased $25.9 million to $107.5 million for the six months ended June 30, 2023 from $133.4 million for the six months ended June 30, 2022.

The decrease was primarily due to a decrease in net debt repayments of approximately $67.9 million, compared to the same period in the prior year, partially offset by a decrease in proceeds from the sale of common stock under our prior at-the-market equity offering program of approximately $28.4 million.

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.

Management's Discussion and Analysis (continued)

Contractual Obligations

3 unchanged sentences

Off-Balance Sheet Arrangements

As of June 30, 2023, we have no off-balance sheet arrangements.

As of March 31, 2023, we have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

1 unchanged sentence

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Form 10-K/A 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 June 30, 2023.

There have been no significant changes to our critical accounting policies and estimates during the quarter ended March 31, 2023.

Forward-Looking Statements

3 unchanged sentences

• 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);

Management's Discussion and Analysis (continued)

• our ability to maintain historical or increase future rental rates and occupancy with respect to properties currently owned or that we may acquire;

21 unchanged sentences

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.

Management's Discussion and Analysis (continued)

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.

Quantitative and Qualitative Disclosures About Market Risk

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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/A

Item 2. Management’s Discussion and Analysis