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Item 2. Management’s Discussion and Analysis

2024-05-01 compared with 2023-10-25 · 124 added, 315 removed, 283 unchanged (61% of the section changed)

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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 September 30, 2023, we owned or had an ownership interest in a portfolio of 450 Properties located throughout the United States and Canada containing 171,707 individual developed areas (“Sites”).

As of March 31, 2024, we owned or had an ownership interest in a portfolio of 451 Properties located throughout the United States and Canada containing 172,464 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 ten miles of the coastal United States.

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It is estimated that approximately 10,000 baby boomers are turning 65 daily through 2029.

In addition, the population age 55 and older is expected to grow 17% within the next 15 years.

These individuals, seeking an active lifestyle, will continue to drive the market for second-home sales as vacation properties, investment opportunities or retirement retreats.

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

Total Sites as of September 30, 2023

Total Sites as of March 31, 2024

MH Sites 73,000

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Generally Accepted Accounting Principles (“GAAP”), we assess and measure our overall financial and operating performance using certain Non-GAAP supplemental measures, which include:

(i) FFO, (ii) Normalized FFO, (iii) Income from property operations, (iv) Income from property operations, excluding deferrals and property management, and (v) Core Portfolio income from property operations, excluding deferrals and property management (operating results for Properties owned and operated in both periods under comparison).

(i) FFO, (ii) Normalized FFO, (iii) Income from property operations, (iv) Income from property operations, excluding property management, and (v) Core Portfolio income from property operations, excluding property management (operating results for Properties owned and operated in both periods under comparison).

We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies.

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Results Overview

For the quarter ended September 30, 2023, net income available for Common Stockholders increased $9.8 million to $77.0 million, or $0.41 per fully diluted Common Share, compared to $67.2 million, or $0.36 per fully diluted Common Share, for the same period in 2022.

For the nine months ended September 30, 2023, net income available for Common Stockholders increased $10.7 million, to $222.3 million, or $1.19, per fully diluted Common Share, compared to $211.6 million, or $1.14 per fully diluted Common Share, for the same period in 2022.

Net income available for Common Stockholders for the nine months ended September 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 $3.6 million recognized during the nine months ended September 30, 2023 primarily related to flooding events at certain Properties in California.

For the quarter ended September 30, 2023, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased $5.3 million, or $0.02 per fully diluted Common Share, to $139.7 million, or $0.71 per fully diluted Common Share, compared to $134.4 million, or $0.69 per fully diluted Common Share, for the same period in 2022.

For the nine months ended September 30, 2023, FFO available for Common Stock and OP Unit holders increased $10.2 million, or $0.05 per fully diluted Common Share, to $407.1 million, or $2.08 per fully diluted Common Share, compared to $396.9 million, or $2.03 per fully diluted Common Share for the same period in 2022.

For the quarter ended March 31, 2024, net income available for Common Stockholders increased $27.5 million to $109.9 million, or $0.59 per fully diluted Common Share, compared to $82.4 million, or $0.44 per fully diluted Common Share, for the same period in 2023.

For the quarter ended March 31, 2024, FFO available for Common Stock and Operating Partnership unit (“OP Unit”) holders increased $27.1 million, or $0.14 per fully diluted Common Share, to $167.4 million, or $0.86 per fully diluted Common Share, compared to $140.3 million, or $0.72 per fully diluted Common Share, for the same period in 2023.

For the quarter ended March 31, 2024, Normalized FFO available for Common Stock and OP Unit holders increased $12.2 million, or $0.06 per fully diluted Common Share, to $152.7 million, or $0.78 per fully diluted Common Share, compared to $140.5 million, or $0.72 per fully diluted Common Share, for the same period in 2023.

For the quarter ended March 31, 2024, our Core Portfolio property operating revenues increased 5.8% and property operating expenses, excluding property management, increased 3.9%, from the same period in 2023, resulting in an increase in income from property operations, excluding property management, of 7.1%, compared to the same period in 2023.

Management's Discussion and Analysis (continued)

For the quarter ended September 30, 2023, Normalized FFO available for Common Stock and OP Unit holders increased $2.9 million, or $0.01 per fully diluted Common Share, to $139.7 million, or $0.71 per fully diluted Common Share, compared to $136.8 million, or $0.70 per fully diluted Common Share, for the same period in 2022.

For the nine months ended September 30, 2023, Normalized FFO available for Common Stock and OP Unit holders increased $10.2 million, or $0.05 per fully diluted Common Share, to $413.7 million, or $2.12 per fully diluted Common Share, compared to $403.5 million, or $2.07 per fully diluted Common Share, for the same period in 2022.

For the quarter ended September 30, 2023, our Core Portfolio property operating revenues, excluding deferrals, increased 4.7% and property operating expenses, excluding deferrals and property management, increased 5.1%, from the same period in 2022, resulting in an increase in income from property operations, excluding deferrals and property management, of 4.4%, compared to the same period in 2022.

For the nine months ended September 30, 2023, our Core Portfolio property operating revenues, excluding deferrals, increased 5.4% and property operating expenses, excluding deferrals and property management, increased 6.5% from the same period in 2022, resulting in an increase in income from property operations, excluding deferrals and property management, of 4.5% 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 94.9%, 95.1% and 95.2% for the quarters ended September 30, 2023, December 31, 2022 and September 30, 2022, respectively.

For the quarter ended September 30, 2023, our Core Portfolio occupancy increased by 42 sites, which included an increase in homeowner occupancy of 225 sites and a decrease in rental occupancy of 183 compared to June 30, 2023.

Our Core Portfolio average occupancy includes both homeowners and renters in our MH communities and was 94.9% for each of the quarters ended March 31, 2024, December 31, 2023 and March 31, 2023.

For the quarter ended March 31, 2024, our Core Portfolio occupancy increased by 19 sites, which included an increase in homeowner occupancy of 123 sites and a decrease in rental occupancy of 104 compared to December 31, 2023.

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 September 30, 2023, we had 2,345 occupied rental homes in our Core MH communities.

RV and marina base rental income in our Core Portfolio increased 2.0% for the quarter ended September 30, 2023, compared to the same period in 2022 driven by an increase in Annual RV rental income, partially offset by a decline in Seasonal and Transient RV rental income.

Core RV and marina base rental income from annuals represents 66.1% of total Core RV and marina base rental income and increased 8.0% for the quarter ended September 30, 2023, compared to the same period in 2022 due to a 7.8% increase in rate and 0.2% increase in occupancy.

Core seasonal RV and marina base rental income decreased 8.5% for the quarter ended September 30, 2023, compared to the same period in 2022.

Core transient RV and marina base rental income decreased by $2.3 million, or 7.6% for the quarter ended September 30, 2023, compared to the same period in 2022.

Since September 30, 2022, we have increased our Core RV and marina annual site count by approximately 40% resulting in a reduction in the number of transient sites available for use.

We also experienced local storm events across the portfolio during the quarter ended September 30, 2023, particularly in the North, Northeast and California, which impacted our transient RV and marina base rental income.

As of March 31, 2024, we had 2,158 occupied rental homes in our Core MH communities.

RV and marina base rental income in our Core Portfolio increased 5.8% for the quarter ended March 31, 2024, compared to the same period in 2023 driven primarily by an increase in Annual RV rental income.

Core RV and marina base rental income from annuals represents 63.2% of total Core RV and marina base rental income and increased 8.0% for the quarter ended March 31, 2024, compared to the same period in 2023 due to an 8.7% increase in rate, offset by a 0.7% decrease in occupancy.

Core seasonal and transient RV and marina base rental income increased 2.4% and 1.4%, respectively for the quarter ended March 31, 2024, compared to the same period in 2023 due to higher demand, particularly in our Florida portfolio.

Demand for our homes and communities remains strong as evidenced by factors including our high occupancy levels.

We closed 285 new home sales during the quarter ended September 30, 2023, compared to 331 new home sales during the quarter ended September 30, 2022, a decrease of 13.9%.

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

Our gross investment in real estate increased $255.9 million to $7,625.5 million as of September 30, 2023 from $7,369.6 million as of December 31, 2022, primarily due to capital improvements and an acquisition during the nine months ended September 30, 2023.

Management's Discussion and Analysis (continued)

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

We closed 191 new home sales during the quarter ended March 31, 2024, compared to 176 new home sales during the quarter ended March 31, 2023, an increase of 8.5%.

The increase in new home sales during the quarter ended March 31, 2024 was primarily in the Florida and Arizona markets.

Our gross investment in real estate increased $47.0 million to $7,753.3 million as of March 31, 2024 from $7,706.3 million as of December 31, 2023, primarily due to capital improvements during the quarter ended March 31, 2024.

The following chart lists the Properties acquired from January 1, 2023 through March 31, 2024 and Sites added through expansion opportunities at our existing Properties:

Location Type of Property Transaction Date Sites

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Acquisition Properties:

Blue Mesa Recreational Ranch Gunnison, Colorado Membership February 18, 2022 385

Pilot Knob RV Resort Winterhaven, California RV February 18, 2022 247

Holiday Trav-L-Park Resort Emerald Isle, North Carolina RV June 15, 2022 299

Oceanside RV Resort Oceanside, California RV June 16, 2022 139

Hiawasee KOA JV Hiawassee, Georgia Unconsolidated JV November 10, 2022 283

Whippoorwill Campground Marmora, New Jersey RV December 20, 2022 288

Red Oak Shores Campground

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Sites added (reconfigured) in 2023 994

Sites added (reconfigured) in 2023 236

Ground Lease Termination:

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

Total Sites as of September 30, 2023 (1)

Total Sites as of March 31, 2024 (1)

______________________

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

Management's Discussion and Analysis (continued)

Income from Property Operations and Core Portfolio

We use income from property operations, income from property operations, excluding deferrals and property management, and Core Portfolio income from property operations, excluding deferrals and property management, as alternative measures to evaluate the operating results of our Properties.

We use income from property operations, income from property operations, excluding property management, and Core Portfolio income from property operations, excluding property management, as alternative measures to evaluate the operating results of our Properties.

Income from property operations represents rental income, membership subscriptions and upgrade sales, utility and other income less property and rental home operating and maintenance expenses, real estate taxes, membership sales and marketing expenses and property management expenses.

Income from property operations, excluding deferrals and property management, represents income from property operations excluding property management expenses and the impact of the GAAP deferrals of membership upgrade sales upfront payments and membership sales commissions, net.

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.

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

Management's Discussion and Analysis (continued)

Our Core Portfolio consists of our Properties owned and operated during all of 2023 and 2024.

Core Portfolio income from property operations, excluding deferrals and property management, is useful to investors for annual comparison as it removes the fluctuations associated with acquisitions, dispositions and significant transactions or unique situations.

Our Non-Core Portfolio includes all Properties that were not owned and operated during all of 2022 and 2023.

This includes, but is not limited to, four RV communities and one membership RV community acquired during 2022 and one RV community acquired during 2023.

The Non-Core Properties also include Fish Tale Marina, Fort Myers Beach, Gulf Air, Palm Harbour Marina, Pine Island, Ramblers Rest, Rancho Oso and Turtle Beach.

Core Portfolio income from property operations, excluding property management, is useful to investors for annual comparison as it removes the fluctuations associated with acquisitions, dispositions and significant transactions or unique situations.

Our Non-Core Portfolio includes all Properties that were not owned and operated during all of 2023 and 2024, including six properties in Florida impacted by Hurricane Ian and two properties in California that were impacted by storm and flooding events.

FFO and Normalized FFO

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We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do.

We receive non-refundable upfront payments from membership upgrade contracts.

In accordance with GAAP, the non-refundable upfront payments and related commissions are deferred and amortized over the estimated membership upgrade contract term.

Although the NAREIT definition of FFO does not address the treatment of non-refundable upfront payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO.

We believe FFO, as defined by the Board of Governors of NAREIT, is generally a measure of performance for an equity REIT.

While FFO is a relevant and widely used measure of operating performance for equity REITs, it does not represent cash flow from operations or net income as defined by GAAP, and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performance.

We define Normalized FFO as FFO excluding non-operating income and expense items, such as gains and losses from early debt extinguishment, including prepayment penalties, defeasance costs and transaction/pursuit costs, and other miscellaneous non-comparable items.

We define Normalized FFO as FFO excluding non-operating income and expense items, such as gains and losses from early debt extinguishment, including prepayment penalties, defeasance costs, transaction/pursuit costs and other, and other miscellaneous non-comparable items.

Normalized FFO presented herein is not necessarily comparable to Normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount.

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Management's Discussion and Analysis (continued)

The following table reconciles net income available for Common Stockholders to income from property operations for the quarters and nine months ended September 30, 2023 and 2022:

Quarters Ended September 30, Nine Months Ended September 30,

The following table reconciles net income available for Common Stockholders to income from property operations for the quarters ended March 31, 2024 and 2023:

Quarters Ended March 31,

(amounts in thousands)

2023 2022 2023 2022

Computation of Income from Property Operations:

Net income available for Common Stockholders $ 109,905 $ 82,371

Redeemable preferred stock dividends — — 8 8

Income allocated to non-controlling interests – Common OP Units 5,366 4,088

Consolidated net income 115,271 86,459

Equity in income of unconsolidated joint ventures (283) (524)

Income before equity in income of unconsolidated joint ventures 80,080 69,044 231,091 219,260

Loss on sale of real estate and impairment, net (1)

949 3,747 3,581 3,747

Total other expenses, net 91,094 90,755 280,976 268,617

Gain from home sales operations and other (4,160) (5,243) (8,703) (11,897)

Income tax benefit

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

Gross revenues from home sales, brokered resales and ancillary services (30,053) (32,133)

Interest income (2,168) (2,088)

Income from other investments, net (2,038) (2,091)

Property management 19,710 19,464

Depreciation and amortization 51,108 50,502

Cost of home sales, brokered resales and ancillary services 21,967 23,141

Home selling expenses and ancillary operating expenses 6,147 6,924

General and administrative 11,989 11,661

Casualty-related charges/(recoveries), net (1)

Other expenses 1,331 1,468

Interest and related amortization 33,543 32,588

Income from property operations, excluding property management 211,442 198,003

Property management (19,710) (19,464)

Income from property operations $ 191,732 $ 178,539

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(1) During the nine months ended September 30, 2023, we recorded impairment charges of approximately $3.6 million primarily 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 nine months ended September 30, 2023 and 2022:

Quarters Ended September 30, Nine Months Ended September 30,

(1) Represents insurance recovery revenue for reimbursement of capital expenditures related to Hurricane Ian.

Quarters Ended March 31,

(amounts in thousands)

2023 2022 2023 2022

Computation of FFO and Normalized FFO:

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Income allocated to non-controlling interests – Common OP Units 5,366 4,088

Membership upgrade sales upfront payments, deferred, net 7,044 7,777 17,178 18,228

Membership sales commissions, deferred, net (1,178) (1,206) (2,728) (2,746)

Depreciation and amortization 51,108 50,502

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FFO available for Common Stock and OP Unit holders 167,430 140,312

Early debt retirement 68 — 68 1,156

Transaction/pursuit costs (1)

— 302 117 3,384

Accelerated vesting of stock-based compensation (2)

Lease termination expenses (3)

— 2,073 90 2,073

Deferred income tax benefit (239) —

Transaction/pursuit costs and other (1)

Insurance proceeds due to catastrophic weather event (2)

Normalized FFO available for Common Stock and OP Unit holders $ 152,731 $ 140,518

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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.

(3) 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.

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

(2) Represents insurance recovery revenue for reimbursement of capital expenditures related to Hurricane Ian.

Management's Discussion and Analysis (continued)

Results of Operations

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

For the comparison of our results of operations for the quarters and nine months ended September 30, 2022 and September 30, 2021 and discussion of our operating activities, investing activities and financing activities for the nine months ended September 30, 2022 and September 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 September 30, 2022, filed with the SEC on October 21, 2022.

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

This section discusses the comparison of our results of operations for the quarters ended March 31, 2024 and March 31, 2023 and our operating activities, investing activities and financing activities for the quarters ended March 31, 2024 and March 31, 2023.

Our Core Portfolio consists of our Properties owned and operated during all of 2023 and 2024.

For the comparison of our results of operations for the quarters ended March 31, 2023 and March 31, 2022 and discussion of our operating activities, investing activities and financing activities for the quarters ended March 31, 2023 and March 31, 2022, refer to Part I.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Quarterly Report on Form 10-Q/A for the fiscal quarter ended March 31, 2023, filed with the SEC on January 23, 2024.

Income from Property Operations

The following table summarizes certain financial and statistical data for our Core Portfolio and total portfolio for the quarters ended September 30, 2023 and September 30, 2022:

The following table summarizes certain financial and statistical data for our Core Portfolio and total portfolio:

Core Portfolio Total Portfolio

Quarters Ended September 30, Quarters Ended September 30,

Quarters Ended March 31, Quarters Ended March 31,

(amounts in thousands) 2024 2023 Variance %

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Annual membership subscriptions 16,215 15,789 426 2.7 % 16,215 15,970 245 1.5 %

Membership upgrades sales current period, gross 10,375 10,204 171 1.7 % 10,788 11,085 (297) (2.7) %

Membership upgrades sales (2)

3,947 3,466 481 13.9 % 3,947 3,505 442 12.6 %

Utility and other income (1)

31,179 29,521 1,658 5.6 % 34,778 35,331 (553) (1.6) %

Property operating revenues, excluding deferrals 335,715 320,682 15,033 4.7 % 347,610 332,756 14,854 4.5 %

Property operating revenues 345,412 326,381 19,031 5.8 % 353,728 334,823 18,905 5.6 %

Property operating and maintenance (1)(3)

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Rental home operating and maintenance 1,369 959 410 42.8 % 1,378 959 419 43.7 %

Membership sales and marketing, gross 6,773 6,619 154 2.3 % 6,874 7,143 (269) (3.8) %

Property operating expenses, excluding deferrals and property management 149,533 142,319 7,214 5.1 % 153,894 148,879 5,015 3.4 %

Income from property operations, excluding deferrals and property management (3)

Membership sales and marketing (4)

5,296 4,820 476 9.9 % 5,297 4,838 459 9.5 %

Property management 19,887 19,003 884 4.7 % 19,887 19,003 884 4.7 %

Income from property operations, excluding deferrals (3)

Property operating expenses, excluding property management 139,286 133,997 5,289 3.9 % 142,286 136,820 5,466 4.0 %

Income from property operations, excluding property management (5)

206,126 192,384 13,742 7.1 % 211,442 198,003 13,439 6.8 %

Membership upgrade sales upfront payments and membership sales commission, deferred, net 5,866 6,571 (705) (10.7) % 5,866 6,571 (705) (10.7) %

Property management 19,710 19,464 246 1.3 % 19,710 19,464 246 1.3 %

Income from property operations (5)

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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 $3.6 million and $4.5 million for the quarters ended March 31, 2024 and March 31, 2023, respectively.

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

(4) Membership sales and marketing expense is net of sales commission deferrals of $0.4 million and $0.7 million for the quarters ended March 31, 2024 and March 31, 2023, 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 September 30, 2023, increased $9.7 million, or 6.1%, from the quarter ended September 30, 2022, driven by an increase of $7.6 million, or 5.0%, from our Core Portfolio, and an increase of $2.0 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, excluding deferrals, 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 and real estate taxes.

Total portfolio income from property operations for the quarter ended March 31, 2024, increased $13.2 million, or 7.4%, from the quarter ended March 31, 2023, driven by an increase of $13.5 million, or 7.8%, from our Core Portfolio, offset by a decrease of $0.3 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, RV and marina base rental income, partially offset by an increase in real estate taxes and property operating and maintenance expenses.

Management's Discussion and Analysis (continued)

Property Operating Revenues

MH base rental income in our Core Portfolio for the quarter ended September 30, 2023 increased $10.7 million, or 6.8%, from the quarter ended September 30, 2022, which reflects 7.1% 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 $813 for the quarter ended September 30, 2023 from approximately $759 for the quarter ended September 30, 2022.

The average occupancy for our Core Portfolio was 94.9% for the quarter ended September 30, 2023 and 95.2% for the quarter ended September 30, 2022.

MH base rental income in our Core Portfolio for the quarter ended March 31, 2024 increased $10.5 million, or 6.4%, from the quarter ended March 31, 2023, which reflects 6.3% growth from rate increases and 0.1% from occupancy gains.

The average monthly base rental income per Site in our Core Portfolio increased to approximately $847 for the quarter ended March 31, 2024 from approximately $797 for the quarter ended March 31, 2023.

The average occupancy for our Core Portfolio was 94.9% for both the quarters ended March 31, 2024 and March 31, 2023.

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

Core Portfolio Total Portfolio

Quarters Ended September 30, Quarters Ended September 30,

Quarters Ended March 31, Quarters Ended March 31,

(amounts in thousands) 2024 2023 Variance %

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RV and marina base rental income $ 115,628 $ 109,340 $ 6,288 5.8 % $ 120,167 $ 111,592 $ 8,575 7.7 %

RV and marina base rental income in our Core Portfolio for the quarter ended September 30, 2023 increased $2.1 million, or 2.0%, from the quarter ended September 30, 2022, driven by an increase in Annual RV and marina base rental income, partially offset by a decrease in Transient and Seasonal RV and marina base rental income.

The increase in Annual RV and marina base rental income of 8.0% was driven by an increase in rate of 7.8%.

The decrease in Transient RV and marina base rental income of 7.6% was primarily due to a decrease in Transient RV revenue as a result of a reduction in the number of Transient sites available and local storm events across the portfolio, particularly in the North, Northeast and California during the quarter ended September 30, 2023.

Utility and other income in our Core Portfolio for the quarter ended September 30, 2023 increased $1.8 million, or 6.0%, from the quarter ended September 30, 2022.

The increase was primarily due to a $1.3 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 and electric income in all regions except California and sewer income in all regions except the Northeast.

RV and marina base rental income in our Core Portfolio for the quarter ended March 31, 2024 increased $6.3 million, or 5.8%, from the quarter ended March 31, 2023, driven primarily by an increase in Annual RV and marina base rental income.

The increase in Annual RV and marina base rental income of 8.0% was driven by an increase in rate of 8.7%, offset by a decline of 0.7% in occupancy.

The increase in Seasonal and Transient RV and marina base rental income of 2.4% and 1.4%, respectively, for the quarter ended March 31, 2024, compared to the same period in 2023, was due to higher demand, particularly in our Florida portfolio.

Utility and other income in our Core Portfolio for the quarter ended March 31, 2024 increased $1.7 million, or 5.6%, from the quarter ended March 31, 2023.

The increase was primarily due to a $1.1 million and $0.6 million increase in other property income and pass-through income, respectively.

The increase in other property income compared to the same period last year was mainly due to $0.8 million of amenity and other income.

The increase in pass-through income was driven by increased real estate tax pass-throughs to customers.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the quarter ended September 30, 2023 increased $7.2 million, or 5.1%, from the quarter ended September 30, 2022, driven by increases in property operating and maintenance expenses of $4.8 million.

Core property operating and maintenance expenses were higher in 2023 primarily due to increases in insurance of $2.0 million, repair and maintenance expenses of $1.8 million and utility expenses of $1.4 million.

Property operating expenses, excluding property management, in our Core Portfolio for the quarter ended March 31, 2024 increased $5.3 million, or 3.9%, from the quarter ended March 31, 2023, driven by increases in real estate taxes of $2.6 million and property operating and maintenance expenses of $1.8 million.

Core real estate taxes were higher in 2024, primarily in the South and North regions, driven by tax increases that were effective in 2023.

Property operating and maintenance expenses were higher in 2024 primarily due to an increase in insurance expense of $1.9 million due to higher insurance premiums following our property and casualty insurance renewal in the second quarter of 2023.

Management's Discussion and Analysis (continued)

Home Sales and Rental Operations

Home Sales and Other

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

Quarters Ended September 30,

Quarters Ended March 31,

(amounts in thousands, except home sales volumes) 2024 2023 Variance %

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New home sales 191 176 15 8.5 %

285 331 (46) (13.9) %

Used home sales 54 102 (48) (47.1) %

Brokered home resales 109 134 (25) (18.7) %

_________________________

(1) Total new home sales volume for the quarter ended September 30, 2022 includes 21 home sales from our ECHO JV.

Gross revenues from new home sales decreased $5.2 million and Cost of new home sales decreased $5.3 million during the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022, primarily due to a decrease in new home sales.

Gross revenues from new home sales decreased $0.6 million and Cost of new home sales decreased $1.3 million during the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023, primarily due to lower average selling prices and lower average cost of home sales, respectively.

Rental Operations

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

Quarters Ended September 30,

Quarters Ended March 31,

(amounts in thousands, except rental unit volumes)

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Gross investment in new manufactured home rental units $ 238,963 $ 252,204 $ (13,241) (5.3) %

$ 249,568 $ 221,840 $ 27,728 12.5 %

Gross investment in used manufactured home rental units $ 11,744 $ 14,056 $ (2,312) (16.4) %

Net investment in new manufactured home rental units $ 197,641 $ 209,673 $ (12,032) (5.7) %

$ 207,303 $ 180,299 $ 27,004 15.0 %

Net investment in used manufactured home rental units $ 7,118 $ 8,094 $ (976) (12.1) %

Number of occupied rentals – new, end of period 1,922 2,389 (467) (19.5) %

2,086 2,594 (508) (19.6) %

Number of occupied rentals – used, end of period 236 313 (77) (24.6) %

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

Approximately $5.9 million and $6.7 million for the quarters ended September 30, 2023 and September 30, 2022, respectively, of Site rental income is included in MH base rental income in the Core Portfolio Income from Property Operations table.

Approximately $5.6 million and $6.4 million for the quarters ended March 31, 2024 and March 31, 2023, 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 September 30, 2022 was $19.0 million.

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

Included in occupied rentals as of September 30, 2022 were 165 homes rented through our ECHO JV.

Management's Discussion and Analysis (continued)

Rental operations revenues were $1.0 million or 9.7% lower during the quarter ended September 30, 2023, compared to the quarter ended September 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 September 30,

(amounts in thousands, expenses shown as negative)

2023 2022 Variance %

Depreciation and amortization $ (50,968) $ (52,547) $ 1,579 3.0 %

Interest income 2,276 1,865 411 22.0 %

Income from other investments, net 2,333 2,399 (66) (2.8) %

General and administrative (9,895) (11,086) 1,191 10.7 %

Other expenses (1,338) (1,627) 289 17.8 %

Early debt retirement (68) — (68) — %

Interest and related amortization (33,434) (29,759) (3,675) (12.3) %

Total other income and expenses, net $ (91,094) $ (90,755) $ (339) (0.4) %

Total other income and expenses, net increased $0.3 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022, primarily due to higher interest and related amortization expense as a result of an increase in interest rates, partially offset by decreases in depreciation and amortization and general and administrative expenses.

Casualty-related charges/(recoveries), net

During the quarter ended September 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 Nine Months Ended September 30, 2023 to the Nine Months Ended September 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 nine months ended September 30, 2023 and 2022:

Core Portfolio Total Portfolio

Nine Months Ended September 30, Nine Months Ended September 30,

(amounts in thousands) 2023 2022 Variance %

Change 2023 2022 Variance %

MH base rental income (1)

$ 498,442 $ 467,233 $ 31,209 6.7 % $ 498,906 $ 475,070 $ 23,836 5.0 %

Rental home income (1)

11,096 11,487 (391) (3.4) % 11,130 11,519 (389) (3.4) %

RV and marina base rental income (1)

311,228 301,112 10,116 3.4 % 326,280 316,984 9,296 2.9 %

Annual membership subscriptions 47,738 45,885 1,853 4.0 % 48,832 47,003 1,829 3.9 %

Membership upgrade sales current period, gross 27,305 26,445 860 3.3 % 28,041 27,771 270 1.0 %

Utility and other income (1)

90,062 83,457 6,605 7.9 % 107,029 92,612 14,417 15.6 %

Property operating revenues, excluding deferrals 985,871 935,619 50,252 5.4 % 1,020,218 970,959 49,259 5.1 %

Property operating and maintenance (1)(2)

351,319 328,194 23,125 7.0 % 361,282 340,821 20,461 6.0 %

Real estate taxes 54,403 52,025 2,378 4.6 % 56,165 56,373 (208) (0.4) %

Rental home operating and maintenance 3,879 4,094 (215) (5.3) % 3,883 4,117 (234) (5.7) %

Membership sales and marketing, gross 18,549 17,806 743 4.2 % 18,783 18,466 317 1.7 %

Property operating expenses, excluding deferrals and property management 428,150 402,119 26,031 6.5 % 440,113 419,777 20,336 4.8 %

Income from property operations, excluding deferrals and property management (3)

557,721 533,500 24,221 4.5 % 580,105 551,182 28,923 5.2 %

Property management 58,710 55,972 2,738 4.9 % 58,710 55,973 2,737 4.9 %

Income from property operations, excluding deferrals (3)

499,011 477,528 21,483 4.5 % 521,395 495,209 26,186 5.3 %

Membership upgrade sales upfront payments and membership sales commission, deferred, net 14,450 15,482 (1,032) (6.7) % 14,450 15,482 (1,032) (6.7) %

Income from property operations (3)

$ 484,561 $ 462,046 $ 22,515 4.9 % $ 506,945 $ 479,727 $ 27,218 5.7 %

__________________________

(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) Includes bad debt expense for all periods presented.

(3) 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 nine months ended September 30, 2023 increased $27.2 million, or 5.7%, from the same period in 2022, driven by an increase of $22.5 million, or 4.9%, from our Core Portfolio and an increase of $4.7 million from our Non-Core Portfolio.

Property Operating Revenues

MH base rental income in our Core Portfolio for the nine months ended September 30, 2023 increased $31.2 million, or 6.7%, from the same period in 2022, which reflects 6.9% growth from rate increases and 0.2% decline in occupancy.

The average monthly base rental income per Site increased to approximately $805 for the nine months ended September 30, 2023 from approximately $753 for the nine months ended September 30, 2022.

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

Management's Discussion and Analysis (continued)

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

Core Portfolio Total Portfolio

Nine Months Ended September 30, Nine Months Ended September 30,

(amounts in thousands)

2023 2022 Variance %

Change 2023 2022 Variance %

Annual $ 206,440 $ 191,018 $ 15,422 8.1 % $ 216,163 $ 198,994 $ 17,169 8.6 %

Seasonal 44,518 42,186 2,332 5.5 % 45,908 45,576 332 0.7 %

Transient 60,270 67,908 (7,638) (11.2) % 64,209 72,414 (8,205) (11.3) %

RV and marina base rental income $ 311,228 $ 301,112 $ 10,116 3.4 % $ 326,280 $ 316,984 $ 9,296 2.9 %

RV and marina base rental income in our Core Portfolio for the nine months ended September 30, 2023 increased $10.1 million, or 3.4%, 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 $15.4 million, or 8.1% was primarily due to the South, Northeast and West regions.

The increase in Seasonal RV and marina base rental income of $2.3 million, or 5.5% 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 September 30, 2022, we have increased our Core RV and marina annual site count by approximately 40% resulting in a reduction in the number of transient sites available for use.

We also experienced significant weather events during the nine months ended September 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 nine months ended September 30, 2023 increased $6.6 million, or 7.9%, from the same period in 2022.

The increase was primarily due to an increase in utility income and other property income of $4.7 million and $2.1 million, respectively.

The increase in utility income was primarily due to increases in trash, sewer and electric income.

The utility recovery rate (utility income divided by utility expenses) for 2023 and 2022 was approximately 45% and 44%, respectively.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the nine months ended September 30, 2023 increased $26.0 million, or 6.5%, from the same period in 2022, driven by increases in property operating and maintenance expenses of $23.1 million.

Core property operating and maintenance expenses were higher during the nine months ended September 30, 2023, compared to the same period in 2022 due to increases in utility expenses of $7.6 million, repair and maintenance expenses of $6.5 million, insurance of $5.9 million, and property payroll expenses of $2.9 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:

Nine Months Ended September 30,

(amounts in thousands, except home sales volumes)

2023 2022 Variance %

Gross revenues from new home sales $ 69,036 $ 92,228 $ (23,192) (25.1) %

Cost of new home sales 61,542 82,726 (21,184) (25.6) %

Gross revenues from used home sales 3,229 3,337 (108) (3.2) %

Cost of used home sales 2,987 3,594 (607) (16.9) %

Gross revenue from brokered resales and ancillary services 43,576 49,372 (5,796) (11.7) %

Cost of brokered resales and ancillary services 21,351 25,574 (4,223) (16.5) %

Home selling and ancillary operating expenses 21,258 21,146 112 0.5 %

Home sales volumes

New home sales (1)

687 957 (270) (28.2) %

Used home sales 252 250 2 0.8 %

Brokered home resales 495 674 (179) (26.6) %

_________________________

(1) Total new home sales volume for the nine months ended September 30, 2022 includes 72 home sales from our ECHO JV.

Gross revenues from new home sales decreased $23.2 million and Cost of new home sales decreased $21.2 million during the nine months ended September 30, 2023, compared to the nine months ended September 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:

Nine Months Ended September 30,

(amounts in thousands, except rental unit volumes)

2023 2022 Variance %

Rental operations revenue (1)

$ 29,491 $ 32,635 $ (3,144) (9.6) %

Rental home operating and maintenance expenses 3,879 4,094 (215) (5.3) %

Depreciation on rental homes (2)

8,275 7,538 737 9.8 %

Gross investment in new manufactured home rental units (3)

$ 249,568 $ 221,840 $ 27,728 12.5 %

Gross investment in used manufactured home rental units $ 12,606 $ 15,226 $ (2,620) (17.2) %

Net investment in new manufactured home rental units $ 207,303 $ 180,299 $ 27,004 15.0 %

Net investment in used manufactured home rental units $ 7,481 $ 8,657 $ (1,176) (13.6) %

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

2,086 2,594 (508) (19.6) %

Number of occupied rentals – used, end of period 259 355 (96) (27.0) %

______________________

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

Approximately $18.4 million and $21.1 million of Site rental income for the nine months ended September 30, 2023 and 2022, respectively, are included in MH 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 September 30, 2022 was $19.0 million.

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

Included in occupied rentals as of September 30, 2022 were 165 homes rented through our ECHO JV.

Rental operations revenues were $1.2 million, or 11.7%, lower during the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023, primarily due to a decrease in the number of occupied rentals.

Management's Discussion and Analysis (continued)

Rental operations revenues were $3.1 million or 9.6% lower during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily due to a decrease in the number of occupied rentals.

Other Income and Expenses

Miscellaneous Other Income and Expenses

The following table summarizes other income and expenses, net:

Nine Months Ended September 30,

Quarters Ended March 31,

(amounts in thousands, expenses shown as negative)

5 unchanged sentences

Other expenses (1,331) (1,468) 137 9.3 %

Early debt retirement (68) (1,156) 1,088 94.1 %

Interest and related amortization (33,543) (32,588) (955) (2.9) %

Total other income and expenses, net $ (93,765) $ (92,040) $ (1,725) (1.9) %

Total other income and expenses, net increased $12.4 million during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily due to higher interest and related amortization expense as a result of an increase in interest rates and higher general and administrative expense primarily as a result of accelerated vesting of stock-based compensation expense.

Total other income and expenses, net increased $1.7 million for the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023, primarily due to higher interest and related amortization expense as a result of an increase in interest rates, as well as increases in depreciation and amortization and general and administrative expenses.

Casualty-related charges/(recoveries), net

During the nine months ended September 30, 2023, we recorded $12.1 million of expenses for debris removal and cleanup costs and an offsetting insurance recovery revenue of $12.1 million related to Hurricane Ian.

Loss on sale of real estate and impairment, net

During the nine months ended September 30, 2023, we recorded an impairment charge of approximately $3.6 million primarily related to flooding events at certain California properties.

During the quarters ended March 31, 2024 and March 31, 2023, we recognized expenses of approximately $0.5 million and $8.5 million, respectively, related to debris removal and cleanup costs related to Hurricane Ian and we recognized an offsetting insurance recovery revenue accrual of $0.5 million and $8.5 million, respectively, related to the expected insurance recovery.

During the quarter ended March 31, 2024, we also recognized excess insurance recovery revenue of approximately $14.8 million within Casualty-related charges/(recoveries), net for reimbursement of capital expenditures.

The debris and cleanup costs and offsetting recovery accrual and reimbursement of capital expenditures are reflected in Casualty-related charges/(recoveries), net on the Consolidated Statements of Income and Comprehensive Income.

Liquidity and Capital Resources

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We expect similar demand for liquidity will continue for the short-term and long-term.

Our primary sources of cash include operating cash flows, proceeds from financings, borrowings under our unsecured line of credit (the “LOC”) and proceeds from issuance of equity and debt securities.

One of our stated objectives is to maintain financial flexibility.

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

As of September 30, 2023, we had available liquidity in the form of approximately 413.6 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.

Management's Discussion and Analysis (continued)

On February 28, 2024, we entered into a new at-the-market (“ATM”) equity offering program, 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, 2024, the full capacity of our ATM equity offering program remained available for issuance.

As of March 31, 2024, we had available liquidity in the form of approximately 413.5 million shares of authorized and unissued common stock, par value $0.01 per share, and 10.0 million shares of authorized and unissued preferred stock registered for sale under the Securities Act of 1933, as amended.

We also utilize interest rate swaps to add stability to our interest expense and to manage our exposure to interest rate movements.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The changes in the fair value of the designated derivative are recorded in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets and subsequently reclassified into earnings on the Consolidated Statements of Income and Comprehensive Income in the period that the hedged forecasted transaction affects earnings.

For additional information regarding our interest rate swap, see Part I.

Financial Statements—Note 9.

Derivative Instruments and Hedging .

We previously entered into a Third Amended and Restated Credit Agreement (“Credit Agreement”), pursuant to which we have access to a $500.0 million unsecured LOC and a $300.0 million senior unsecured term loan (the “$300 million Term Loan”).

On March 1, 2023, we amended the Credit Agreement to transition the LIBOR rate borrowings to Secured Overnight Financing Rate (“SOFR”) borrowings.

Financial Statements—Note 8.

Borrowing Arrangements for further details.

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

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 ten years.

In July and August 2023, we closed on three secured financing transactions generating gross proceeds of $375.0 million.

The loans are secured by 20 MH and RV properties, have a weighted average fixed interest rate of 5.05% per annum and a weighted average maturity of approximately eight years.

During the quarter ended September 30, 2023, proceeds from the four secured financing transactions were used to repay $100.4 million of principal on three mortgage loans that were due to mature in 2023 and 2024 and the remaining outstanding balance on the LOC.

The repaid mortgage loans had a weighted average fixed interest rate of 4.94% per annum and were secured by 14 MH and RV properties.

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

Financial Statements—Note 9.

Derivative Instruments and Hedging for further details.

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

In connection with our $200 million Term Loan, in April 2023, we entered into a Swap Agreement (the “2023 Swap”) allowing us to trade the variable interest rate for a fixed interest rate.

The changes in the fair value of the designated derivative are recorded in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets and subsequently reclassified into earnings on the Consolidated Statements of Income and

Management's Discussion and Analysis (continued)

Comprehensive Income in the period that the hedged forecasted transaction affects earnings.

For additional information regarding our interest rate swaps, see Part I.

Financial Statements—Note 8.

Derivative Instruments and Hedging for further details.

We expect to meet our short-term liquidity requirements, including principal payments, capital improvements and dividend distributions for the next twelve months, generally through available cash, net cash provided by operating activities and our LOC.

As of September 30, 2023, our LOC had a borrowing capacity of $500.0 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.

Derivative Instruments and Hedging and Note 13.

Subsequent Events .

As of March 31, 2024, our LOC had a borrowing capacity of $493.9 million.

The following table summarizes our cash flows activity:

Nine Months Ended September 30,

For the quarters ended March 31,

(amounts in thousands) 2024 2023

Net cash provided by operating activities $ 198,748 $ 158,980

$ 418,658 $ 405,123

Net cash used in investing activities (51,292) (66,447)

(237,519) (316,186)

Net cash used in financing activities (130,112) (84,219)

Net increase (decrease) in cash and restricted cash $ 37,333 $ (92,888)

______________________

(1) See Part I.

Financial Statements – Note 2.

Summary of Significant Accounting Policies:

(e) Prior Period Correction for additional information.

Net increase in cash and restricted cash $ 17,344 $ 8,314

Operating Activities

Net cash provided by operating activities increased $13.5 million to $418.7 million for the nine months ended September 30, 2023 from $405.1 million for the nine months ended September 30, 2022.

The increase in net cash provided by operating activities was primarily due to a net increase in proceeds from insurance claims and higher income from property operations, partially offset by an increase in Manufactured homes, net.

Management's Discussion and Analysis (continued)

Net cash provided by operating activities increased $39.8 million to $198.7 million for the quarter ended March 31, 2024 from $159.0 million for the quarter ended March 31, 2023.

The increase in net cash provided by operating activities was primarily due to net increases in manufactured homes, net, accounts payable and other liabilities and other assets, net, partially offset by a reduction in proceeds from insurance claims, net.

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

Nine Months Ended September 30,

For the quarters ended March 31,

(amounts in thousands)

3 unchanged sentences

Investing Activities

Net cash used in investing activities decreased $78.7 million to $237.5 million for the nine months ended September 30, 2023 from $316.2 million for the nine months ended September 30, 2022.

The decrease was due to a decrease in spending on acquisitions of $109.9 million and a decrease in investments in unconsolidated joint ventures of $10.0 million, partially offset by an increase in capital improvement spending of $45.3 million.

Net cash used in investing activities decreased $15.1 million to $51.3 million for the quarter ended March 31, 2024 from $66.4 million for the quarter ended March 31, 2023.

The decrease was due to a decrease in spending on acquisitions of $8.8 million, a decrease in investments in unconsolidated joint ventures of $0.4 million and a decrease in capital improvement spending of $6.3 million.

Management's Discussion and Analysis (continued)

Capital Improvements

The following table summarizes capital improvements:

Nine Months Ended September 30,

For the quarters ended March 31,

(amounts in thousands) 2024 2023

2 unchanged sentences

Improvements and renovations (2)

29,505 26,950

Property upgrades and development (3)

1 unchanged sentence

Site development (4)

22,596 16,683

Total property improvements 50,987 60,878

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(2) Includes enhancements to amenities such as buildings, common areas, swimming pools and replacement of furniture and site amenities.

(3) Includes $28.3 million of restoration and improvement capital expenditures related to Hurricane Ian for the nine months ended September 30, 2023.

(3) Includes $5.6 million of restoration and improvement capital expenditures related to Hurricane Ian for the quarter ended March 31, 2024.

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

Financing Activities

Net cash used in financing activities decreased $38.0 million to $143.8 million for the nine months ended September 30, 2023 from $181.8 million for the nine months ended September 30, 2022.

The decrease was primarily due to a decrease in net debt repayments of approximately $90.6 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 increased $45.9 million to $130.1 million for the quarter ended March 31, 2024 from $84.2 million for the quarter ended March 31, 2023.

The increase was primarily due to a line of credit, net repayment of $39.0 million.

Contractual Obligations

3 unchanged sentences

Off-Balance Sheet Arrangements

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

As of March 31, 2024, we have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

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Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Form 10-K for a discussion of our critical accounting policies.

There have been no significant changes to our critical accounting policies and estimates during the quarter ended September 30, 2023.

Management's Discussion and Analysis (continued)

There have been no significant changes to our critical accounting policies and estimates during the quarter ended March 31, 2024.

Forward-Looking Statements

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• our ability to renew our insurance policies at existing rates and on consistent terms;

Management's Discussion and Analysis (continued)

• home sales results could be impacted by the ability of potential homebuyers to sell their existing residences as well as by financial, credit and capital markets volatility;

5 unchanged sentences

• unanticipated costs or unforeseen liabilities associated with recent acquisitions;

• the effect of Hurricane Ian on our business including, but not limited to the following:

(i) the timing and cost of recovery, (ii) the condition of properties and the impact on occupancy demand and related rent revenue and (iii) the timing and amount of insurance proceeds;

• the effect of potential damage from natural disasters, including hurricanes and other weather-related events, which could result in substantial costs to our business;

• our ability to obtain financing or refinance existing debt on favorable terms or at all;

2 unchanged sentences

• the dilutive effects of issuing additional securities;

• the potential impact of, and our ability to remediate, material weaknesses in our internal control over financial reporting;

• the outcome of pending or future lawsuits or actions brought by or against us, including those disclosed in our filings with the Securities and Exchange Commission;

8 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis