Highlights from Equity LifeStyle's 10-K Filing
Editor's Note: Following are some highlights from the 10-K document Equity LifeStyle Properties Inc. filed recently with the Securities and Exchange Commission (SEC). These comments appear in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations."
- Closed on the acquisition of 74 manufactured home communities and one RV resort for a purchase price of approximately $1.5 billion including assumed debt. The newly acquired properties were located in 16 states and contain 30,129 sites.
- Issued 6 million shares of common stock in an equity offering for proceeds of approximately $344 million, net of offering costs.
- Closed on approximately $200 million of secured financing with a weighted average interest rate of 5.02 percent per annum maturing in 2021.
- Closed on a $200 million term loan that matures on June 30, 2017.
- Amended the company's line of credit to increase the borrowing capacity from $100 million to $380 million and extended the maturity date to Sept. 18, 2015.
- Raised the annual dividend to $1.50 per share, up from $1.20 per share in 2010.
Overview and Outlook
Occupancy in the company's properties as well as its ability to increase rental rates directly affects revenues. The company's revenue streams are predominantly derived from customers renting its sites on a long-term basis.
The company has approximately 95,100 annual sites, approximately 9,000 seasonal sites, which are leased to customers generally for three to six months, and approximately 9,700 transient sites, occupied by customers who lease sites on a short-term basis. The revenue from seasonal and transient sites is generally higher during the first and third quarters.
The company expects to service over 100,000 customers at its transient sites and the company considers this revenue stream to be its most volatile as it is subject to weather conditions, gas prices and other factors affecting the marginal RV customer's vacation and travel preferences. Finally, the company has approximately 24,300 sites designated as right-to-use sites, which are primarily utilized to service the approximately 105,000 customers who have right-to-use contracts.
The company also has interests in properties containing approximately 3,100 sites for which revenue is classified as equity in income from unconsolidated joint ventures in the Consolidated Statements of Operations.
ELS has introduced low-cost membership products that focus on the installed base of almost eight million RV owners. Such products may include right-to-use contracts that entitle the customer to use certain properties. The company is offering a Zone Park Pass (ZPP), which can be purchased for one to four zones of the United States and requires annual payments of $499. This replaces high cost products that were sold at properties after tours and lengthy sales presentations. The company historically incurred significant costs to generate leads, conduct tours and make the sales presentations.
A single zone pass requires no upfront payment while passes for additional zones require modest upfront payments. For the year ended Dec. 31, 2011, the company sold approximately 7,500 ZPPs.