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Item 2. Management’s Discussion and Analysis

2024-07-30 compared with 2024-05-01 · 227 added, 78 removed, 329 unchanged (48% of the section changed)

5 unchanged sentences

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

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”).

As of June 30, 2024, we owned or had an ownership interest in a portfolio of 452 Properties located throughout the United States and Canada containing 172,866 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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The following table shows the breakdown of our Sites by type (amounts are approximate):

Total Sites as of March 31, 2024

Total Sites as of June 30, 2024

MH Sites 73,000

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Results Overview

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.

(amounts in thousands) Quarters Ended June 30,

2024 2023 $ Change % Change (1)

Net Income per fully diluted Common Share $ 0.42 $ 0.34 $ 0.08 24.3 %

FFO per fully diluted Common Share and OP Unit $ 0.69 $ 0.61 $ 0.08 13.5 %

Normalized FFO per fully diluted Common Share and OP Unit $ 0.66 $ 0.64 $ 0.02 2.9 %

Six Months Ended June 30,

2024 2023 $ Change % Change (1)

Net Income per fully diluted Common Share $ 1.01 $ 0.78 $ 0.23 29.5 %

FFO per fully diluted Common Share and OP Unit $ 1.55 $ 1.33 $ 0.22 16.6 %

Normalized FFO per fully diluted Common Share and OP Unit $ 1.44 $ 1.36 $ 0.08 5.9 %

_____________________

Calculations prepared using actual results without rounding.

Core property operating revenues increased 4.6% and Core income from property operations, excluding property management increased 5.5% for the quarter ended June 30, 2024, compared to the same period in 2023.

For the six months ended June 30, 2024, Core property operating revenues increased 5.2% and Core income from property operations, excluding property management increased 6.4% compared to the same period in 2023.

Management's Discussion and Analysis (continued)

We continue to focus on the quality of occupancy growth by increasing the number of manufactured homeowners in our Core Portfolio.

Our Core Portfolio average occupancy includes both homeowners and renters in our MH communities and was 94.9% 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.

Our Core Portfolio average occupancy includes both homeowners and renters in our MH communities and was 94.9% for each of the quarters ended June 30, 2024 and December 31, 2023 and 94.8% for the quarter ended June 30, 2023.

For the quarter ended June 30, 2024, our Core Portfolio occupancy increased by 29 sites, which included an increase in homeowner occupancy of 171 sites and a decrease in rental occupancy of 142 compared to March 31, 2024.

While we continue to focus on increasing the number of manufactured homeowners in our Core Portfolio, we also believe renting our vacant homes represents an attractive source of occupancy and an opportunity to potentially convert the renter to a new homebuyer in the future.

We continue to expect there to be fluctuations in the sources of occupancy depending on local market conditions, availability of vacant sites and success with converting renters to homeowners.

As of March 31, 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.

As of June 30, 2024, we had 2,016 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 June 30, 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 73.9% of total Core RV and marina base rental income and increased 6.6% for the quarter ended June 30, 2024, compared to the same period in 2023 due to an 8.3% increase in rate, offset by a 1.7% decrease in occupancy.

Core seasonal and transient RV and marina base rental income decreased 16.7% and 5.6%, respectively, for the quarter ended June 30, 2024, compared to the same period in 2023 due to non-returning Hurricane Ian workers at our Florida properties, decreased reservation extensions at our Sun Belt locations due to a mild winter and returning competitor supply, partially offset by California properties recovering from weather disruption events in the second quarter of 2023.

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

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:

We closed 255 new home sales during the quarter ended June 30, 2024, compared to 226 new home sales during the quarter ended June 30, 2023, an increase of 12.8%.

The new home sales during the quarter ended June 30, 2024 were primarily in the Florida market.

Our gross investment in real estate increased $98.8 million to $7,805.1 million as of June 30, 2024 from $7,706.3 million as of December 31, 2023, primarily due to capital improvements during the six months ended June 30, 2024.

The following chart lists the Properties acquired from January 1, 2023 through June 30, 2024 and Sites added through expansion opportunities at our existing Properties:

Location Type of Property Transaction Date Sites

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Sites added (reconfigured) in 2023 994

Total Sites as of March 31, 2024 (1)

Sites added (reconfigured) in 2024 401

Total Sites as of June 30, 2024 (1)

______________________

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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 ended March 31, 2024 and 2023:

Quarters Ended March 31,

The following table reconciles net income available for Common Stockholders to income from property operations for the quarters and six months ended June 30, 2024 and 2023:

Quarters Ended June 30, Six Months Ended June 30,

(amounts in thousands)

2024 2023 2024 2023

Computation of Income from Property Operations:

Net income available for Common Stockholders $ 78,297 $ 62,920 $ 188,202 $ 145,291

Redeemable perpetual preferred stock dividends 8 8 8 8

Income allocated to non-controlling interests – Common OP Units 3,822 3,121 9,188 7,209

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

(6,170) — (21,013) —

Other expenses 1,387 1,381 2,718 2,849

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

The following table presents a calculation of FFO available for Common Stock and OP Unitholders and Normalized FFO available for Common Stock and OP Unitholders for the quarters ended March 31, 2024 and 2023:

Quarters Ended March 31,

Quarters Ended June 30, Six Months Ended June 30,

(amounts in thousands)

2024 2023 2024 2023

Computation of FFO and Normalized FFO:

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Depreciation on unconsolidated joint ventures 1,200 1,081 2,251 2,216

Gain on unconsolidated joint ventures — (416)

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

(Gain)/Loss on unconsolidated joint ventures — — — (416)

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

FFO available for Common Stock and OP Unit holders 134,663 118,586 302,093 258,898

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Insurance proceeds due to catastrophic weather event (2)

(6,170) — (21,013) —

Accelerated vesting of stock-based compensation (3)

— 6,320 — 6,320

Normalized FFO available for Common Stock and OP Unit holders $ 128,493 $ 124,906 $ 281,224 $ 265,425

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

(3) 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.

Management's Discussion and Analysis (continued)

Results of Operations

This section discusses the comparison of our results of operations for the quarters ended March 31, 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.

This section discusses the comparison of our results of operations for the quarters and six months ended June 30, 2024 and June 30, 2023 and our operating activities, investing activities and financing activities for the six months ended June 30, 2024 and June 30, 2023.

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

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.

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.

For the comparison of our results of operations for the quarters and six months ended June 30, 2023 and June 30, 2022 and discussion of our operating activities, investing activities and financing activities for the six months ended June 30, 2023 and June 30, 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 June 30, 2023, filed with the SEC on January 23, 2024.

Comparison of the Quarter Ended June 30, 2024 to the Quarter Ended June 30, 2023

Income from Property Operations

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Core Portfolio Total Portfolio

Quarters Ended March 31, Quarters Ended March 31,

Quarters Ended June 30, Quarters Ended June 30,

(amounts in thousands) 2024 2023 Variance %

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Annual membership subscriptions 16,336 16,128 208 1.3 % 16,369 16,189 180 1.1 %

Membership upgrades sales (2)

Membership upgrade sales (2)

4,040 3,607 433 12.0 % 4,050 3,614 436 12.1 %

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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.

(2) Membership upgrade sales revenue is net of deferrals of $4.7 million and $5.7 million for the quarters ended June 30, 2024 and June 30, 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.

(4) Membership sales and marketing expense is net of sales commission deferrals of $0.9 million for both the quarters ended June 30, 2024 and June 30, 2023.

(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 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.

Total portfolio income from property operations for the quarter ended June 30, 2024, increased $5.2 million, or 3.2%, from the quarter ended June 30, 2023, driven by an increase of $9.4 million, or 6.2%, from our Core Portfolio, offset by a decrease of $4.2 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 and real estate taxes.

Management's Discussion and Analysis (continued)

Property Operating Revenues

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.

MH base rental income in our Core Portfolio for the quarter ended June 30, 2024 increased $10.3 million, or 6.2%, from the quarter ended June 30, 2023, which reflects 6.0% growth from rate increases and 0.2% from occupancy gains.

The average monthly base rental income per Site in our Core Portfolio increased to approximately $854 for the quarter ended June 30, 2024 from approximately $806 for the quarter ended June 30, 2023.

The average occupancy for our Core Portfolio was 94.9% and 94.8% for the quarters ended June 30, 2024 and June 30, 2023, respectively.

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

Core Portfolio Total Portfolio

Quarters Ended March 31, Quarters Ended March 31,

Quarters Ended June 30, Quarters Ended June 30,

(amounts in thousands) 2024 2023 Variance %

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RV and marina base rental income $ 100,562 $ 98,631 $ 1,931 2.0 % $ 103,363 $ 101,869 $ 1,494 1.5 %

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.

RV and marina base rental income in our Core Portfolio for the quarter ended June 30, 2024 increased $1.9 million, or 2.0%, from the quarter ended June 30, 2023, driven primarily by an increase in Annual RV and marina base rental income.

The increase in Annual RV and marina base rental income was partially offset by decreases in Seasonal and Transient RV and marina base rental income of 16.7% and 5.6%, respectively, for the quarter ended June 30, 2024, compared to the same period in 2023.

Utility and other income in our Core Portfolio for the quarter ended June 30, 2024 increased $2.0 million, or 6.6%, from the quarter ended June 30, 2023.

The increase was primarily due to a $1.2 million and $0.8 million increase in utility income and pass-through income, respectively.

The utility recovery rate (utility income divided by utility expenses) for 2024 and 2023 was approximately 46% and 45%, respectively.

Property Operating Expenses

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.

Property operating expenses, excluding property management, in our Core Portfolio for the quarter ended June 30, 2024 increased $5.0 million, or 3.4%, from the quarter ended June 30, 2023, driven by increases in property operating and maintenance expenses of $2.7 million and real estate taxes of $1.2 million.

Core property operating and maintenance expenses were higher in 2024 primarily due to an increase in utility expense of $1.5 million.

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

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 March 31,

Quarters Ended June 30,

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

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Brokered home resales 152 201 (49) (24.4) %

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.

Gross revenues from new home sales decreased $0.3 million and Cost of new home sales decreased $1.2 million during the quarter ended June 30, 2024, compared to the quarter ended June 30, 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 March 31,

Quarters Ended June 30,

(amounts in thousands, except rental unit volumes)

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

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.

Approximately $5.2 million and $6.1 million for the quarters ended June 30, 2024 and June 30, 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.

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.

Rental operations revenues were $1.2 million, or 12.5%, lower during the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023, primarily due to a decrease in the number of occupied rentals.

Management's Discussion and Analysis (continued)

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The following table summarizes other income and expenses, net:

Quarters Ended March 31,

Quarters Ended June 30,

(amounts in thousands, expenses shown as negative)

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Total other income and expenses, net $ (92,703) $ (97,842) $ 5,139 5.3 %

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.

Total other income and expenses, net decreased $5.1 million for the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023, primarily due to lower general and administrative expenses as a result of an accelerated stock-based compensation expense in 2023, partially offset by higher interest and related amortization.

Casualty-related charges/(recoveries), net

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.

During the quarters ended June 30, 2024 and June 30, 2023, we recognized expenses of approximately $0.7 million and $1.8 million, respectively, related to debris removal and cleanup costs related to Hurricane Ian and we recognized an offsetting insurance recovery revenue accrual of $0.7 million and $1.8 million, respectively, related to the expected insurance recovery.

During the quarters ended June 30, 2024 and June 30, 2023, we also recognized insurance recovery revenue in excess of expenses and business interruption proceeds of approximately $6.2 million and zero, respectively, within Casualty-related charges/(recoveries), net.

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.

Management's Discussion and Analysis (continued)

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

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, 2024 and 2023:

Core Portfolio Total Portfolio

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

(amounts in thousands) 2024 2023 Variance %

Change 2024 2023 Variance %

MH base rental income (1)

$ 351,468 $ 330,662 $ 20,806 6.3 % $ 351,807 $ 330,969 $ 20,838 6.3 %

Rental home income (1)

6,879 7,556 (677) (9.0) % 6,903 7,577 (674) (8.9) %

RV and marina base rental income (1)

216,190 207,971 8,219 4.0 % 223,530 213,461 10,069 4.7 %

Annual membership subscriptions 32,551 31,917 634 2.0 % 32,584 32,159 425 1.3 %

Membership upgrade sales (2)

7,987 7,073 914 12.9 % 7,997 7,119 878 12.3 %

Utility and other income (1)

62,531 58,919 3,612 6.1 % 69,458 71,189 (1,731) (2.4) %

Property operating revenues 677,606 644,098 33,508 5.2 % 692,279 662,474 29,805 4.5 %

Property operating and maintenance (1)(3)

235,234 230,658 4,576 2.0 % 240,513 235,044 5,469 2.3 %

Real estate taxes 40,112 36,305 3,807 10.5 % 40,886 37,148 3,738 10.1 %

Rental home operating and maintenance 2,926 2,117 809 38.2 % 2,941 2,118 823 38.9 %

Membership sales and marketing (4)

11,405 10,334 1,071 10.4 % 11,423 10,359 1,064 10.3 %

Property operating expenses, excluding property management 289,677 279,414 10,263 3.7 % 295,763 284,669 11,094 3.9 %

Income from property operations, excluding property management (5)

387,929 364,684 23,245 6.4 % 396,516 377,805 18,711 5.0 %

Property management 39,146 38,824 322 0.8 % 39,146 38,823 323 0.8 %

Income from property operations (5)

348,783 325,860 22,923 7.0 % 357,370 338,982 18,388 5.4 %

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(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 $8.3 million and $10.1 million for the six months ended June 30, 2024 and June 30, 2023, respectively.

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

(4) Membership sales and marketing expense is net of sales commission deferrals of $1.3 million and $1.6 million the six months ended June 30, 2024 and June 30, 2023, 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, 2024 increased $18.4 million, or 5.4%, from the same period in 2023, driven by an increase of $22.9 million, or 7.0%, from our Core Portfolio, offset by a decrease of $4.5 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 and real estate taxes.

Property Operating Revenues

MH base rental income in our Core Portfolio for the six months ended June 30, 2024 increased $20.8 million, or 6.3%, from the same period in 2023, which reflects 6.1% growth from rate increases and 0.2% from occupancy gains.

The average monthly base rental income per Site increased to approximately $850 for the six months ended June 30, 2024 from approximately $801 for the six months ended June 30, 2023.

The average occupancy for the Core Portfolio was 94.9% for both the six months ended June 30, 2024 and June 30, 2023.

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)

2024 2023 Variance %

Change 2024 2023 Variance %

Annual $ 147,347 $ 137,341 $ 10,006 7.3 % $ 152,048 $ 142,038 $ 10,010 7.0 %

Seasonal 35,996 36,871 (875) (2.4) % 37,510 37,446 64 0.2 %

Transient 32,847 33,759 (912) (2.7) % 33,972 33,977 (5) — %

RV and marina base rental income $ 216,190 $ 207,971 $ 8,219 4.0 % $ 223,530 $ 213,461 $ 10,069 4.7 %

RV and marina base rental income in our Core Portfolio for the six months ended June 30, 2024 increased $8.2 million, or 4.0%, from the same period in 2023 primarily due to an increase in Annual RV and marina base rental income, partially offset by a decrease in Seasonal and Transient RV base rental income.

The increase in Annual RV and marina base rental income was $10.0 million, or 7.3%.

The decrease in Seasonal RV and marina base rental income was $0.9 million, or 2.4%.

The decrease in Transient RV and marina base rental income was $0.9 million.

Utility and other income in our Core Portfolio for the six months ended June 30, 2024 increased $3.6 million, or 6.1%, from the same period in 2023.

The increase was primarily due to an increase in utility income, pass-through income and other property income.

The utility recovery rate (utility income divided by utility expenses) for 2024 and 2023 was approximately 46% and 45%, respectively.

The increase in pass-through income was due to increases in real estate tax pass-throughs to customers in Florida.

Property Operating Expenses

Property operating expenses, excluding property management, in our Core Portfolio for the six months ended June 30, 2024 increased $10.3 million, or 3.7%, from the same period in 2023, driven by increases in property operating and maintenance expenses of $4.6 million and real estate taxes of $3.8 million.

Core property operating and maintenance expenses were higher during the six months ended June 30, 2024, compared to the same period in 2023 primarily due to increases in insurance of $2.5 million and higher utility expenses.

The increase in Core real estate taxes was driven by higher real estate assessments in our Florida portfolio in 2023.

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)

2024 2023 Variance %

Gross revenues from new home sales $ 40,406 $ 41,352 $ (946) (2.3) %

Cost of new home sales 35,048 37,474 (2,426) (6.5) %

Gross revenues from used home sales 2,078 2,209 (131) (5.9) %

Cost of used home sales 1,644 2,055 (411) (20.0) %

Gross revenue from brokered resales and ancillary services 25,134 27,485 (2,351) (8.6) %

Cost of brokered resales and ancillary services 12,925 12,880 45 0.3 %

Home selling and ancillary operating expenses 13,619 14,094 (475) (3.4) %

Home sales volumes

New home sales 446 402 44 10.9 %

Used home sales 113 168 (55) (32.7) %

Brokered home resales 261 335 (74) (22.1) %

Gross revenues from new home sales decreased $0.9 million and Cost of new home sales decreased $2.4 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to lower average selling prices and lower average cost of home sales.

Management's Discussion and Analysis (continued)

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)

2024 2023 Variance %

Rental operations revenue (1)

$ 17,655 $ 20,085 $ (2,430) (12.1) %

Rental home operating and maintenance expenses 2,926 2,117 809 38.2 %

Depreciation on rental homes (2)

5,060 5,549 (489) (8.8) %

Gross investment in new manufactured home rental units $ 227,569 $ 257,978 $ (30,409) (11.8) %

Gross investment in used manufactured home rental units $ 11,521 $ 13,491 $ (1,970) (14.6) %

Net investment in new manufactured home rental units $ 187,382 $ 226,759 $ (39,377) (17.4) %

Net investment in used manufactured home rental units $ 7,124 $ 9,616 $ (2,492) (25.9) %

Number of occupied rentals – new, end of period 1,790 2,236 (446) (19.9) %

Number of occupied rentals – used, end of period 226 292 (66) (22.6) %

______________________

(1) Consists of Site rental income and home rental income in our Core Portfolio.

Approximately $10.8 million and $12.5 million of Site rental income for the six months ended June 30, 2024 and 2023, 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.

Rental operations revenues were $2.4 million or 12.1% lower during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to a decrease in the number of occupied rentals.

Miscellaneous Other Income and Expenses

The following table summarizes other income and expenses, net:

Six Months Ended June 30,

(amounts in thousands, expenses shown as negative)

2024 2023 Variance %

Depreciation and amortization $ (102,452) $ (101,966) $ (486) (0.5) %

Interest income 4,588 4,347 241 5.5 %

Income from other investments, net 4,668 4,564 104 2.3 %

General and administrative (20,974) (28,268) 7,294 25.8 %

Other expenses (2,718) (2,849) 131 4.6 %

Interest and related amortization (69,580) (65,710) (3,870) (5.9) %

Total other income and expenses, net $ (186,468) $ (189,882) $ 3,414 1.8 %

Total other income and expenses, net decreased $3.4 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to lower general and administrative expense primarily as a result of accelerated vesting of stock-based compensation expense in 2023 partially offset by interest and related amortization.

Casualty-related charges/(recoveries), net

During the six months ended June 30, 2024 and June 30, 2023, we recognized expenses of approximately $1.2 million and $10.3 million, respectively, related to debris removal and cleanup costs related to Hurricane Ian and we recognized an offsetting insurance recovery revenue of $1.2 million and $10.3 million, respectively, related to the expected insurance recovery.

During the six months ended June 30, 2024 and June 30, 2023, we also recognized insurance recovery revenue in excess of expenses and business interruption proceeds of approximately $21.0 million and zero, respectively, within Casualty-related charges/(recoveries), net.

Management's Discussion and Analysis (continued)

Liquidity and Capital Resources

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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.

As of June 30, 2024, the full capacity of our ATM equity offering program remained available for issuance.

As of June 30, 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

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 and Note 13.

Subsequent Events .

Derivative Instruments and Hedging .

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, issuances of equity under our ATM equity offering program and our LOC.

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

As of June 30, 2024, our LOC had a borrowing capacity of $485.9 million.

We expect to meet certain long-term liquidity requirements, such as scheduled debt maturities, property acquisitions and capital improvements, using long-term collateralized and uncollateralized borrowings including the existing LOC and the issuance of debt securities or the issuance of equity including under our ATM equity offering program.

The following table summarizes our cash flows activity:

For the quarters ended March 31,

For the six months ended June 30,

(amounts in thousands) 2024 2023

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Operating Activities

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.

Net cash provided by operating activities increased $75.1 million to $341.9 million for the six months ended June 30, 2024 from $266.8 million for the six months ended June 30, 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.

Management's Discussion and Analysis (continued)

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

For the quarters ended March 31,

For the six months ended June 30,

(amounts in thousands)

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Investing Activities

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)

Net cash used in investing activities decreased $49.0 million to $104.6 million for the six months ended June 30, 2024 from $153.6 million for the six months ended June 30, 2024.

The decrease was due to a decrease in capital improvement spending of $31.8 million, a decrease in spending on acquisitions of $9.2 million, and an increase in Hurricane Ian proceeds in 2024 compared to same period in 2023.

Capital Improvements

The following table summarizes capital improvements:

For the quarters ended March 31,

For the six months ended June 30,

(amounts in thousands) 2024 2023

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Improvements and renovations (2)

15,173 19,691

Property upgrades and development (3)

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

(3) Includes $10.4 million of restoration and improvement capital expenditures related to Hurricane Ian for the six months ended June 30, 2024.

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

Financing Activities

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.

Net cash used in financing activities increased $124.1 million to $231.6 million for the six months ended June 30, 2024 from $107.5 million for the six months ended June 30, 2023.

The increase was primarily due to a higher line of credit, net repayment of $24.0 million and a decrease in mortgage note financing proceeds of $88.8 million.

Contractual Obligations

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Off-Balance Sheet Arrangements

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

As of June 30, 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 March 31, 2024.

There have been no significant changes to our critical accounting policies and estimates during the quarter ended June 30, 2024.

Management's Discussion and Analysis (continued)

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of our acquisitions.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:

When used, words such as “anticipate,” “expect,” “believe,” “project,” “estimate,” “intend,” “may be” and “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include, without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of our acquisitions.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement due to a number of factors, including, but not limited to:

• our ability to control costs and real estate market conditions, our ability to retain customers, the actual use of Sites by customers and our success in acquiring new customers at our Properties (including those that we may acquire);

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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;

3 unchanged sentences

• effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions;

• our ability to execute expansion/development opportunities in the face of changes impacting the supply chain or labor markets;

• the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto;

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• other risks indicated from time to time in our filings with the Securities and Exchange Commission.

For further information on these and other factors that could impact us and the statements contained herein, refer to Part I.

Risk Factors in the 2023 Form 10-K and Part II.

Risk Factors herein .

These forward-looking statements are based on management’s present expectations and beliefs about future events.

6 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