Third Quarter 2026 Results - EQUITY LIFESTYLE PROPERTIES INC

Explicit Guidance:

• Full-Year 2026 Normalized FFO: Maintained at midpoint of $3.18 per share (range $3.15–$3.21).
• Full-Year 2026 Core Portfolio Property Operating Income Growth: Projected at 6% midpoint.
• Full-Year 2026 Non-Core NOI: Projected between $8.3 million and $12.3 million.
• Full-Year 2026 Property Management & G&A Expenses: Range $118.9 million to $124.9 million.
• Full-Year 2026 Core Growth Rates (Midpoints): Core revenues 4.3%, core expenses 1.9%, core NOI 6.0%.
• FY2026 Core MH Rent Growth: Assumed range 5.4% to 6.0%.
• FY2026 RV & Marina Rent Growth: Assumed range 0.9% to 1.5% (Annual RV growth midpoint 5.0%).
• Q4 2026 Normalized FFO per Share: Range $0.78 to $0.84.
• Q4 2026 Core NOI Growth: Range 5.7% to 6.3%.
• Q4 2026 Core MH Rent Growth: Midpoint 5.7%.
• Q4 2026 RV & Marina Rent Growth: Midpoint 2.8%.
• Q4 2026 Core Expense Growth: Midpoint 1.8%.
• Preliminary 2027 MH Rent Growth: Assumed 5.1% (based on issued notices and mid-2026 increases; excludes occupancy/mark-to-market impacts).
• Preliminary 2027 RV Annual Rent Growth: Assumed 4.7%.
• 2027 Guidance Caveat: These are preliminary assumptions for budgeting; actual guidance to be provided in January after budget completion.

Business-Segment Outlook:

• Manufactured Housing (MH):
  • Demand Drivers: Long-term tailwind of ~10,000 people turning 65 daily; Gen X (ages 61+) increasingly adopting communities for low-maintenance, active lifestyles.
  • Growth Outlook: Expect continued growth in 2027 across MH portfolio.
  • Conversion Rates: YTD ~14% of annual home sales and ~7% of Thousand Trails memberships are conversions from seasonal/transient guests.
  • Expansion: Phoenix and Mesa (AZ), Fort Lauderdale, West Palm Beach, Vero Beach, and Fort Myers (FL) cited as key growth markets; ongoing site expansion.
  • Technology: Redesigned MH website launched to improve lead generation; community/home tour requests up double digits YoY.
• RV & Marina:
  • Seasonality: Winter "snowbird" season focus anticipated; 4Q seasonal/transient revenue decline expected due to slower reservation pace compared to prior summer season assumptions.
  • Annual vs. Seasonal: Annual base rental income (approx. 75% of RV revenue) outperformed guidance (+5.3% Q3 vs. expected ~5.3%); seasonal/transient rent declined 4.4–5.8% in Q3.
  • Membership (Thousand Trails): 80 properties, 24,000 sites, 107,000+ members; entry-level pass ~$700; average dues base increased from ~$580 to $650 via upgrade programs; online upgrade sales launch underway.
  • 2027 Outlook: Anticipate better attrition rates in 2027 vs. 2026; robust pipeline for converting seasonal guests to annuals.
• Non-Core Portfolio: Expected to generate NOI in line with prior guidance ($8.3M–$12.3M for 2026).

Market and Competitive Outlook:

• Pricing Power: Moderate RV rate growth assumed for 2027 (4.7%) following years of robust increases; MH rate growth assumptions (5.1%) reflect market-based lease evaluations.
• Competitive Set: MH market bands show narrow increase variance (~30 bps); RV markets facing slower reservation pacing for summer season.
• Infrastructure: Focus on capital improvements (amenities, infrastructure, common areas) to sustain high occupancy (50% of communities >98% occupied).
• Regulatory Impact: "Road to Housing Act" passage expected to drive innovation in HUD homes (removal of permanent chassis) and facilitate entitlements, though rulemaking and state tailoring will take years to fully materialize.
• Alternative Housing: Management views 3D-printed homes and senior multifamily as distinct from ELS value proposition (shared walls vs. private home + community lifestyle); interest in expanding single-family rental portfolio (currently ~2,200 units).

Macro / Industry Outlook:

• Demographics: Structural demand supported by Boomer and Gen X migration to age-restricted, amenity-rich communities.
• CPI & Expenses: Core property operating expenses expected to correlate with CPI for utilities, R&M, and payroll; insurance and real estate taxes (particularly Florida) noted as volatile categories.
• Insurance/Real Estate Taxes: Softening in insurance market anticipated to continue; Florida real estate tax preliminary notices reviewed and adjusted downward for FY2026 guidance.
• Interest Rates/Debt: No secured debt maturing until 2028; weighted average maturity ~7 years; current 10-year loans quoted 6.1%–6.6% (55–70% LTV, 1.4–1.65x DSCR); life companies and GSEs showing strong interest.

Strategic Initiatives:

• Capital Allocation Priority: 1. Expansion/Development (sites); 2. Accretive M&A (market remains fragmented and activity muted).
• M&A Stance: No specific acquisition targets announced; teams engaged with owners but transaction activity remains low due to asset quality retention.
• Revenue Management: Focus on converting transient/seasonal guests to annual stays to stabilize revenue; new online upgrade sales channel for Thousand Trails.
• Technology: Continued investment in digital platforms to enhance customer experience and lead nurturing.

Risks and Headwinds to Outlook:

• Seasonal/Transient Volatility: Q4 2026 guidance assumes decline in seasonal/transient revenue due to slower-than-anticipated reservation pace for the winter season; potential for "waiting" guests to not convert.
• Expense Inflation: Utility usage (electric/water) can spike due to weather (cooling degree days) or leaks; real estate tax and insurance markets remain unpredictable.
• Regulatory Uncertainty: Impact of "Road to Housing Act" on local entitlements and adoption timelines is undefined.
• Storm Events: No assumption made in guidance for material storm events (e.g., recent Florida hurricane had no impact on Q3 results, but future events remain a risk).
• Pricing Power: Moderate rate growth assumptions reflect a natural cycle following years of robust increases.

Management Tone on the Future:

• Confidence Level: High confidence in the "durability of the platform" and "superior operating performance."
• Outlook: Cautiously optimistic; emphasizes long-term demographic tailwinds while acknowledging short-term cyclical headwinds in RV seasonal pacing.
• Hedges: Explicitly states preliminary 2027 numbers exclude occupancy growth and mark-to-market impacts; actual guidance deferred to January.
• Comparison: No material changes to FY2026 full-year FFO guidance despite Q3 beats; 2027 preliminary rates remain flat vs. prior year guidance levels despite higher CPI, driven by lease mix (long-term agreements in FL).

Miscellaneous:

• Financial Position: Debt-to-EBITDA ~4.3x; Interest coverage ~5.7x; Access to ~$1.2B via line of credit and ATM programs.
• Membership Dues: Subscription revenue grew 9.2% (Q3) and 10.8% (YTD); net contribution from membership business grew 9.5% to $52.8M (YTD).
• Utility Recovery: 48.5% (Q3) and 49.7% (YTD) recovery rates; YTD recovery up 160 bps YoY.