ELS Reports Higher Q2 Revenues
Equity LifeStyle Properties Inc. (ELS) reported higher funds from operations (FFO) for the second quarter and six months ending June 30.
During the quarter ending June 30, the company sold its 25% interest in four Morgan portfolio joint ventures known as New Point in New Point, Va., Virginia Park in Old Orchard Beach, Maine, Club Naples in Naples, Fla., and Gwynn’s Island in Gwynn, Va. A gain of approximately $1.6 million was recognized and is included in ELS’s income of unconsolidated ventures.
ELS has two all-age properties held for disposition, which are in various stages of negotiations for sale.
Today (July 15) Tropical Palms, a 541-site property located in Kissimmee, Fla., will be leased to a new operator for 12 years. The lease provides for an initial fixed annual lease payment of $1.6 million, which escalates at the greater of the Consumer Price Index or 3%. For the year ended Dec. 31, 2007, Tropical Palms property operating revenues were approximately $4.0 million and its property operating expenses were approximately $2.5 million.
During the second quarter, ELS accrued approximately $400,000 of potential future estimated costs associated with the testing and expected remediation of contamination in the soil at certain locations within Appalachian, a 357-site resort property located in Shartlesville, Pa. As previously announced, ELS temporarily closed the property while it performs further testing of the soil and determines the best course of action. Both Tropical Palms and Appalachian are excluded from core operating results discussed above.
Due to the ELS's more favorable view regarding the qualification of membership income for REIT gross income test purposes, the company has commenced negotiations for the acquisition of the assets and operations of Privileged Access and its subsidiaries. There can be no assurance of a potential transaction.
According to a news release, ELS reported that for the quarter FFO was $21.7 million compared to $18.1 million for the same period in 2007. For the six months, FFO was $54.3 million compared to $49.6 million for the same period in 2007.
FFO, a widely used gauge of real estate operating performance, adds depreciation and amortization expenses, as well as other non-operating items, back to net income.
For the second quarter, net income available to common stockholders totaled $4.1 million compared to $1.6 million for the same period in 2007. For the first six months, net income totaled $16.8 million compared to $17.8 million for the same period in 2007.
In another measure of its performance, ELS reported that second quarter 2008 property operating revenues were $94.3 million, compared to $90.3 million in the second quarter of 2007. Property operating revenues for the first six months were $200.7 million, compared to $190.9 million for the same period in 2007.
Among recent transactions, the company said:
Equity LifeStyle Properties Inc. owns or has an interest in 309 properties in 28 states and British Columbia consisting of 112,002 sites. The company is a self-administered, self-managed, real estate investment trust (REIT) with headquarters in Chicago