Third Quarter 2026 Results - EQUITY LIFESTYLE PROPERTIES INC

Financial Performance:

• Third quarter normalized FFO was $0.79 per share, meeting guidance expectations.
• Core portfolio NOI grew 6.7% in the quarter, driven by a 5.7% increase in core community-based rental income.
• Occupied sites increased by 99 in the quarter and 166 year-to-date; RV annual occupancy grew by 444 sites.
• Base rental income growth for the quarter exceeded guidance midpoint, with MH rent growth at 5.6%.
• Membership dues subscription revenue grew 9.2% (quarter) and 10.8% (year-to-date), contributing to a 9.5% rise in net membership contribution to $52.8 million.
• Core property operating expenses rose 1.3% in the quarter and 2% year-to-date, remaining roughly 135 basis points below CPI.
• Non-core portfolio generated $3 million in operating income for the quarter and $8.8 million year-to-date.

Guidance and Future Outlook:

• Full-year 2026 normalized FFO guidance remains at $3.18 per share (midpoint of $3.15–$3.21 range).
• Q4 2026 normalized FFO per share guidance is $0.78–$0.84.
• Preliminary 2027 expectations include core MH rent growth of 5.1% and combined RV/marina rent growth of 0.9%–1.5%, with RV annual rent growth assumed at 5.0% midpoint.
• 2027 revenue assumptions are based on notices already issued and do not yet include occupancy gains or mark-to-market turnover impacts.
• Management anticipates continued growth in 2027 for both manufactured housing and RV portfolios.

Business Segments and Product Lines:

• Manufactured Housing (MH): Occupancy gains primarily driven by Florida markets (Fort Lauderdale, West Palm Beach, Vero Beach, Fort Myers, Punta Gorda) and expansion sites in Arizona (Phoenix, Mesa); sold 97 new homes in Q3.
• RV and Marina: Annual RV occupancy grew by 444 sites; "100 Days of Camping" social media campaign achieved record 100M+ views.
• Membership: 107,000+ Thousand Trails members across 80 properties; average dues base increased from $580 to $650; 14% of annual home sales and 7% of new memberships were conversions from seasonal/transient guests.
• Product Innovation: Launched a redesigned MH website driving double-digit increases in tour requests; highlighted HUD home innovations and the "Road to Housing Act" passing 50th anniversary at the Homes on the Hill Showcase.

Market and Competitive Landscape:

• Long-term demographic tailwinds supported by 10,000 daily baby boomer retirements and Gen X customers (now 61+) seeking flexible, low-maintenance lifestyles.
• Acquired market share through data-driven lead flow and long-standing relationships with booking platforms.
• Competitive environment characterized by high demand for age-qualified MH assets, resulting in muted transaction activity and fragmented ownership.
• "Road to Housing Act" is viewed as a future driver for innovation and entitlement processes, though regulatory interpretation is ongoing.

Risks and Challenges:

• Fourth quarter guidance reflects a slowdown in seasonal and transient RV revenue pacing compared to prior expectations, attributed to summer-to-winter shoulder season dynamics.
• Utility expense volatility noted in Q3 due to higher-than-expected cooling degrees in the North and water leaks, though full-year tax forecasts in Florida have improved.
• Insurance costs remain a variable expense component, though recent market softening offers some relief.
• No material impact from recent Florida hurricanes was noted on Q3 results.

Management Commentary and Tone:

• Tone was confident and positive, emphasizing the durability of the business model and strong community-focused value proposition.
• Management highlighted the successful transition of customers from transient to annual stays and the strategic shift of Gen X into the core customer base.
• Emphasis placed on capital allocation priorities: accretive acquisitions and site expansion over share buybacks, given the lack of attractive transaction volume in the current market.
• Management reaffirmed the company's distinct "lifestyle" positioning versus competitors like single-family rentals or multifamily senior living.

Analyst Questions and Answers:

• RV Guidance & Hurricanes: Clarified no hurricane impact; Q4 transient/seasonal decline reflects conservative pacing through the shoulder season rather than a fundamental demand shift.
• MH Rate Growth: 2027 rate guidance is based on issued notices only; excludes future turnover/mark-to-market. Lease portfolio consists of 50% market-based, 25% CPI/rent control, and 25% long-term Florida agreements.
• Expense Outlook: Core expenses expected to step down to ~2% growth in 2026 due to favorable Florida real estate tax updates; utilities and payroll remain CPI-correlated.
• Conversion Trends: Year-to-date conversion rates remain strong (14% of annual sales from seasonal/transient); management focuses on migrating transient guests to high-yield annual stays.
• Capital Allocation: M&A market is thin; priority is on expansion and development for accretive growth.
• Product Comparison: Differentiation from build-to-rent and senior multifamily lies in ownership of the home structure and resort-style community lifestyle.

Other Key Points:

• Balance sheet is robust with no secured debt maturing until 2028, weighted average maturity of nearly seven years, and a debt-to-EBITDA ratio of 4.3x.
• $1.2 billion available via line of credit and ATM programs provides liquidity for capital allocation.
• 50% of communities maintain occupancy levels above 98% for extended periods.
• Florida real estate tax preliminary notices for Q3 indicated lower-than-expected increases, positively impacting full-year expense guidance.