ELS Plans to Expand ‘RV Footprint’ in 2013
Equity LifeStyle Properties Inc. (ELS), the nation’s largest operator of RV parks and manufactured housing communities, is seeking to expand its RV footprint this year.
During a conference call to investors on Tuesday (Jan. 29), ELS President Marguerite Nader said the company’s RV footprint “appeals to both the Baby Boomers who are just considering retirement and those who are well under way into retirement.”
She said ELS, which serves RVers through its Encore and Thousand Trails resorts, has “an extremely loyal and vibrant customer base ranging from members who had been with us for more than 20 years to annual customers who have spent a decade with us to the RV customer who is just starting out exploring the RV lifestyle. We can meet the demand of the RVers for a quality, affordable vacation experience.”
Nevertheless, the data show these sites are underutilized, she implied.
Its right-to-use membership continued a four-year decline in 2012 and totaled 96,687 at year-end, down from 105,850 in 2009. Company guidance projects the number to decline to 95,000 this year. Members enter into right-to-use contracts with the company, which entitle them to use certain properties on a continuous basis for up to 21 days.
Paul Seavy, CFO, noted that membership dues revenue in 2012 was 4.4% less than 2011 and approximately $500,000 below company guidance. “We continue to see net attrition in the member base,” he said.
Right-to-use annual payments dropped to $47,662,000 in 2012, down about $3 million from 2009.
“Increasing utilization can be achieved by increasing our annual customers, increasing our member count and promoting additional transient business,” Nader said. “I believe in order to realize this increased utilization, it is necessary to expand our customer base through deeper relationships with distribution channels, to increase marketing campaigns for our properties and to focus on the younger customer demographic.”
This effort will encompass determining the best ways to communicate with customers from social media to grass root efforts and understanding the amenities that drive their decisions to stay at a particular property, she added.
At the same time, ELS sold approximately 10,200 Zone Park passes during the year, including approximately 1,200 membership activated as a result of the RV dealer program, which was launched in 2012.
The Zone Park Pass program, which allows access to up to four zones of the United States and requires annual payments, started in 2010 with 4,487 members. The program grew to 10,198 members in 2012 and is expected to reach 12,000 this year.
At the end of December, ELS acquired two RV resorts in the Rio Grande Valley of Texas for $25 million, or approximately $14,000 per site.
Also, ELS sold the former Cascade property in Washington State, which yielded a sale price of $49,000 per RV site. The high return prompted one investment caller to ask Nader whether the high return made the company management think its RV resorts might be more valuable than first thought. Nader implied “no,” because the sale “was a unique situation.”
Nader said there are no other RV park sales currently in the pipeline “but we certainly look at offers as they come in.”
Earlier, ELS reported favorable results for the fourth quarter and year-end 2012. Fourth-quarter funds from operations or FFO were $50.3 million, or $1.11 per share, up from $44.8 million, or $0.99 per share in the year ago quarter.
Net income available to common stockholders totaled $24.3 million or $0.58 per share, compared to a net loss of $200,000 for the same period in 2011.
Total revenue for the fourth quarter increased to $171.93 million from $162.32 million in the year ago quarter. Property operating revenues, excluding deferrals, were $167.9 million, compared to $161.1 million in the same period of 2011.