x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 36-3857664 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
Two North Riverside Plaza, Suite 800, Chicago, Illinois | 60606 |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | o |
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o |
Emerging growth company | o |
Page | ||
Item 1. | Financial Statements | |
Index To Financial Statements | ||
Consolidated Balance Sheets as of March 31, 2017 (unaudited) and December 31, 2016 | ||
Consolidated Statements of Income and Comprehensive Income for the quarters ended March 31, 2017 and 2016 (unaudited) | ||
Consolidated Statements of Changes in Equity for the quarter ended March 31, 2017 (unaudited) | ||
Consolidated Statements of Cash Flows for the quarters ended March 31, 2017 and 2016 (unaudited) | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. |
March 31, 2017 | December 31, 2016 | ||||||
(unaudited) | |||||||
Assets | |||||||
Investment in real estate: | |||||||
Land | $ | 1,163,987 | $ | 1,163,987 | |||
Land improvements | 2,903,564 | 2,893,759 | |||||
Buildings and other depreciable property | 635,248 | 627,590 | |||||
4,702,799 | 4,685,336 | ||||||
Accumulated depreciation | (1,429,999 | ) | (1,399,531 | ) | |||
Net investment in real estate | 3,272,800 | 3,285,805 | |||||
Cash | 73,248 | 56,340 | |||||
Notes receivable, net | 34,239 | 34,520 | |||||
Investment in unconsolidated joint ventures | 19,187 | 19,369 | |||||
Deferred commission expense | 31,357 | 31,375 | |||||
Escrow deposits, goodwill, and other assets, net | 40,210 | 51,578 | |||||
Total Assets | $ | 3,471,041 | $ | 3,478,987 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Mortgage notes payable, net | $ | 1,859,890 | $ | 1,891,900 | |||
Term loan | 199,431 | 199,379 | |||||
Unsecured lines of credit | — | — | |||||
Accrued expenses and accounts payable | 85,554 | 89,864 | |||||
Deferred revenue – upfront payments from right-to-use contracts | 82,264 | 81,484 | |||||
Deferred revenue – right-to-use annual payments | 13,316 | 9,817 | |||||
Accrued interest payable | 8,212 | 8,379 | |||||
Rents and other customer payments received in advance and security deposits | 77,398 | 76,906 | |||||
Distributions payable | 45,230 | 39,411 | |||||
Total Liabilities | 2,371,295 | 2,397,140 | |||||
Equity: | |||||||
Stockholders’ Equity: | |||||||
Preferred stock, $0.01 par value, 9,945,539 shares authorized as of March 31, 2017 and December 31, 2016; none issued and outstanding. | — | — | |||||
6.75% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value, 54,461 shares authorized and 54,458 issued and outstanding as of March 31, 2017 and December 31, 2016 at liquidation value | 136,144 | 136,144 | |||||
Common stock, $0.01 par value, 200,000,000 shares authorized as of March 31, 2017 and December 31, 2016; 86,841,775 and 85,529,386 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively | 866 | 854 | |||||
Paid-in capital | 1,117,628 | 1,103,048 | |||||
Distributions in excess of accumulated earnings | (216,724 | ) | (231,276 | ) | |||
Accumulated other comprehensive loss | (1 | ) | (227 | ) | |||
Total Stockholders’ Equity | 1,037,913 | 1,008,543 | |||||
Non-controlling interests – Common OP Units | 61,833 | 73,304 | |||||
Total Equity | 1,099,746 | 1,081,847 | |||||
Total Liabilities and Equity | $ | 3,471,041 | $ | 3,478,987 |
Quarters Ended | ||||||||
March 31, 2017 | March 31, 2016 | |||||||
Revenues: | ||||||||
Community base rental income | $ | 120,692 | $ | 114,076 | ||||
Rental home income | 3,605 | 3,545 | ||||||
Resort base rental income | 61,068 | 55,434 | ||||||
Right-to-use annual payments | 11,252 | 11,054 | ||||||
Right-to-use contracts current period, gross | 3,206 | 2,532 | ||||||
Right-to-use contract upfront payments, deferred, net | (775 | ) | (302 | ) | ||||
Utility and other income | 22,126 | 20,793 | ||||||
Gross revenues from home sales | 7,027 | 8,214 | ||||||
Brokered resale revenues and ancillary services revenues, net | 1,661 | 1,418 | ||||||
Interest income | 1,770 | 1,660 | ||||||
Income from other investments, net | 757 | 1,723 | ||||||
Total revenues | 232,389 | 220,147 | ||||||
Expenses: | ||||||||
Property operating and maintenance | 68,054 | 62,954 | ||||||
Rental home operating and maintenance | 1,551 | 1,525 | ||||||
Real estate taxes | 14,037 | 13,198 | ||||||
Sales and marketing, gross | 2,690 | 2,493 | ||||||
Right-to-use contract commissions, deferred, net | (84 | ) | 104 | |||||
Property management | 12,560 | 11,763 | ||||||
Depreciation on real estate assets and rental homes | 30,109 | 28,656 | ||||||
Amortization of in-place leases | 1,032 | 335 | ||||||
Cost of home sales | 7,119 | 8,281 | ||||||
Home selling expenses | 925 | 834 | ||||||
General and administrative | 7,373 | 7,407 | ||||||
Property rights initiatives and other, net | 219 | 654 | ||||||
Interest and related amortization | 24,879 | 25,634 | ||||||
Total expenses | 170,464 | 163,838 | ||||||
Income before equity in income of unconsolidated joint ventures | 61,925 | 56,309 | ||||||
Equity in income of unconsolidated joint ventures | 1,150 | 881 | ||||||
Consolidated net income | 63,075 | 57,190 | ||||||
Income allocated to non-controlling interests – Common OP Units | (3,890 | ) | (4,310 | ) | ||||
Series C Redeemable Perpetual Preferred Stock Dividends | (2,297 | ) | (2,297 | ) | ||||
Net income available for Common Stockholders | $ | 56,888 | $ | 50,583 | ||||
Consolidated net income | $ | 63,075 | $ | 57,190 | ||||
Other comprehensive income (loss) (“OCI”): | ||||||||
Adjustment for fair market value of swap | 226 | (608 | ) | |||||
Consolidated comprehensive income | 63,301 | 56,582 | ||||||
Comprehensive income allocated to non-controlling interests – Common OP Units | (3,904 | ) | (4,262 | ) | ||||
Series C Redeemable Perpetual Preferred Stock Dividends | (2,297 | ) | (2,297 | ) | ||||
Comprehensive income attributable to Common Stockholders | $ | 57,100 | $ | 50,023 |
Quarters Ended | ||||||||
March 31, 2017 | March 31, 2016 | |||||||
Earnings per Common Share – Basic: | ||||||||
Net income available for Common Stockholders | $ | 0.66 | $ | 0.60 | ||||
Earnings per Common Share – Fully Diluted: | ||||||||
Net income available for Common Stockholders | $ | 0.65 | $ | 0.60 | ||||
Distributions declared per Common Share outstanding | $ | 0.488 | $ | 0.425 | ||||
Weighted average Common Shares outstanding – basic | 86,048 | 84,321 | ||||||
Weighted average Common Shares outstanding – fully diluted | 93,011 | 92,041 |
Common Stock | Paid-in Capital | 6.75% Series C Cumulative Redeemable Perpetual Preferred Stock | Distributions in Excess of Accumulated Earnings | Non- controlling interests – Common OP Units | Accumulated Other Comprehensive Loss | Total Equity | |||||||||||||||||||||
Balance, December 31, 2016 | $ | 854 | $ | 1,103,048 | $ | 136,144 | $ | (231,276 | ) | $ | 73,304 | $ | (227 | ) | $ | 1,081,847 | |||||||||||
Conversion of Common OP Units to Common Stock | 12 | 15,339 | — | — | (15,351 | ) | — | — | |||||||||||||||||||
Issuance of Common Stock through employee stock purchase plan | — | 403 | — | — | — | — | 403 | ||||||||||||||||||||
Compensation expenses related to restricted stock | — | 1,755 | — | — | — | — | 1,755 | ||||||||||||||||||||
Adjustment for Common OP Unitholders in the Operating Partnership | — | (2,885 | ) | — | — | 2,885 | — | — | |||||||||||||||||||
Adjustment for fair market value of swap | — | — | — | — | — | 226 | 226 | ||||||||||||||||||||
Net income | — | — | 2,297 | 56,888 | 3,890 | — | 63,075 | ||||||||||||||||||||
Distributions | — | — | (2,297 | ) | (42,335 | ) | (2,895 | ) | — | (47,527 | ) | ||||||||||||||||
Other | — | (32 | ) | — | (1 | ) | — | — | (33 | ) | |||||||||||||||||
Balance, March 31, 2017 | $ | 866 | $ | 1,117,628 | $ | 136,144 | $ | (216,724 | ) | $ | 61,833 | $ | (1 | ) | $ | 1,099,746 |
Quarters Ended | |||||||
March 31, 2017 | March 31, 2016 | ||||||
Cash Flows From Operating Activities: | |||||||
Consolidated net income | $ | 63,075 | $ | 57,190 | |||
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | |||||||
Depreciation | 30,398 | 28,935 | |||||
Amortization of in-place leases | 1,032 | 335 | |||||
Amortization of loan costs | 898 | 979 | |||||
Debt premium amortization | (655 | ) | (885 | ) | |||
Equity in income of unconsolidated joint ventures | (1,150 | ) | (881 | ) | |||
Distributions of income from unconsolidated joint ventures | 1,115 | 553 | |||||
Stock-based compensation | 1,755 | 1,914 | |||||
Revenue recognized from right-to-use contract upfront payments | (2,426 | ) | (2,230 | ) | |||
Commission expense recognized related to right-to-use contracts | 1,090 | 1,002 | |||||
Long term incentive plan compensation | 337 | (4,314 | ) | ||||
Recovery for uncollectible rents receivable | (53 | ) | (178 | ) | |||
Changes in assets and liabilities: | |||||||
Notes receivable activity, net | (45 | ) | 164 | ||||
Deferred commission expense | (1,072 | ) | (895 | ) | |||
Escrow deposits, goodwill and other assets | 18,316 | 7,746 | |||||
Accrued expenses and accounts payable | (5,526 | ) | 6,209 | ||||
Deferred revenue – upfront payments from right-to-use contracts | 3,206 | 2,532 | |||||
Deferred revenue – right-to-use annual payments | 3,499 | 3,737 | |||||
Rents received in advance and security deposits | 492 | (147 | ) | ||||
Net cash provided by operating activities | 114,286 | 101,766 | |||||
Cash Flows From Investing Activities: | |||||||
Real estate acquisition | — | (7,387 | ) | ||||
Investment in unconsolidated joint ventures | — | (5,000 | ) | ||||
Repayments of notes receivable | 2,461 | 2,712 | |||||
Issuance of notes receivable | (2,212 | ) | (1,874 | ) | |||
Capital improvements | (24,354 | ) | (22,495 | ) | |||
Net cash used in investing activities | (24,105 | ) | (34,044 | ) | |||
Cash Flows From Financing Activities: | |||||||
Proceeds from stock options and employee stock purchase plan | 403 | 5,323 | |||||
Distributions: | |||||||
Common Stockholders | (36,364 | ) | (31,612 | ) | |||
Common OP Unitholders | (3,047 | ) | (2,703 | ) | |||
Preferred Stockholders | (2,297 | ) | (2,297 | ) | |||
Principal payments and mortgage debt payoff | (31,887 | ) | (19,535 | ) | |||
Debt issuance and defeasance costs | (49 | ) | (8 | ) | |||
Other | (32 | ) | (41 | ) | |||
Net cash used in financing activities | (73,273 | ) | (50,873 | ) | |||
Net increase in cash and cash equivalents | 16,908 | 16,849 | |||||
Cash, beginning of period | 56,340 | 80,258 | |||||
Cash, end of period | $ | 73,248 | $ | 97,107 |
Quarters Ended | |||||||
March 31, 2017 | March 31, 2016 | ||||||
Supplemental Information: | |||||||
Cash paid during the period for interest | $ | 25,618 | $ | 26,535 | |||
Capital improvements – used homes acquired by repossessions | 77 | 317 | |||||
Net repayments of notes receivable – used homes acquired by repossessions | (77 | ) | (317 | ) | |||
Building and other depreciable property – reclassification of rental homes | 6,967 | 7,257 | |||||
Escrow deposits and other assets – reclassification of rental homes | (6,967 | ) | (7,257 | ) | |||
Real estate acquisitions: | |||||||
Investment in real estate, fair value | $ | — | $ | (7,375 | ) | ||
Accrued expenses and accounts payable | — | 8 | |||||
Rents and other customer payments received in advance and security deposits | — | (20 | ) | ||||
Real estate acquisitions, net | $ | — | $ | (7,387 | ) |
(a) | Consolidation |
(b) | Identified Intangibles and Goodwill |
(c) | Restricted Cash |
(d) | Fair Value of Financial Instruments |
(e) | New Accounting Pronouncements |
Quarters Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Numerator: | ||||||||
Net Income Available for Common Stockholders: | ||||||||
Net income available for Common Stockholders – basic | $ | 56,888 | $ | 50,583 | ||||
Amounts allocated to dilutive securities | 3,890 | 4,310 | ||||||
Net income available for Common Stockholders – fully diluted | $ | 60,778 | $ | 54,893 | ||||
Denominator: | ||||||||
Weighted average Common Shares outstanding – basic | 86,048 | 84,321 | ||||||
Effect of dilutive securities: | ||||||||
Redemption of Common OP Units for Common Shares | 6,588 | 7,208 | ||||||
Stock options and restricted shares | 375 | 512 | ||||||
Weighted average Common Shares outstanding – fully diluted | 93,011 | 92,041 | ||||||
Earnings per Common Share – Basic: | ||||||||
Net income available for Common Stockholders | $ | 0.66 | $ | 0.60 | ||||
Earnings per Common Share – Fully Diluted: | ||||||||
Net income available for Common Stockholders | $ | 0.65 | $ | 0.60 |
Investment as of | Joint Venture Income for the Quarters Ended | ||||||||||||||||||||||||
Investment | Location | Number of Sites | Economic Interest (a) | March 31, 2017 | December 31, 2016 | March 31, 2017 | March 31, 2016 | ||||||||||||||||||
Meadows | Various (2,2) | 1,077 | 50 | % | $ | 208 | $ | 510 | $ | 548 | $ | 246 | |||||||||||||
Lakeshore | Florida (2,2) | 344 | 65 | % | 59 | 56 | 77 | 83 | |||||||||||||||||
Voyager | Arizona (1,1) | 1,801 | 50 | % | (b) | 3,602 | 3,376 | 500 | 539 | ||||||||||||||||
ECHO JV | Various | — | 50 | % | 15,318 | 15,427 | 25 | 13 | |||||||||||||||||
3,222 | $ | 19,187 | $ | 19,369 | $ | 1,150 | $ | 881 |
(a) | The percentages shown approximate our economic interest as of March 31, 2017. Our legal ownership interest may differ. |
(b) | Voyager joint venture primarily consists of a 50% interest in Voyager RV Resort and 33% interest in the utility plant servicing the Property. |
Quarter Ended March 31, 2017 | |||||||||||
Property Operations | Home Sales and Rentals Operations | Consolidated | |||||||||
Operations revenues | $ | 218,988 | $ | 10,874 | $ | 229,862 | |||||
Operations expenses | (97,257 | ) | (9,595 | ) | (106,852 | ) | |||||
Income from segment operations | 121,731 | 1,279 | 123,010 | ||||||||
Interest income | 729 | 1,038 | 1,767 | ||||||||
Depreciation on real estate assets and rental homes | (27,410 | ) | (2,699 | ) | (30,109 | ) | |||||
Amortization of in-place leases | (1,032 | ) | — | (1,032 | ) | ||||||
Income (loss) from operations | $ | 94,018 | $ | (382 | ) | $ | 93,636 | ||||
Reconciliation to Consolidated net income: | |||||||||||
Corporate interest income | 3 | ||||||||||
Income from other investments, net | 757 | ||||||||||
General and administrative | (7,373 | ) | |||||||||
Property rights initiatives and other | (219 | ) | |||||||||
Interest and related amortization | (24,879 | ) | |||||||||
Equity in income of unconsolidated joint ventures | 1,150 | ||||||||||
Consolidated net income | $ | 63,075 | |||||||||
Total assets | $ | 3,247,523 | $ | 223,518 | $ | 3,471,041 | |||||
Capital improvements | $ | 13,198 | $ | 11,156 | $ | 24,354 |
Quarter Ended March 31, 2016 | |||||||||||
Property Operations | Home Sales and Rentals Operations | Consolidated | |||||||||
Operations revenues | $ | 204,726 | $ | 12,038 | $ | 216,764 | |||||
Operations expenses | (90,512 | ) | (10,640 | ) | (101,152 | ) | |||||
Income from segment operations | 114,214 | 1,398 | 115,612 | ||||||||
Interest income | 718 | 918 | 1,636 | ||||||||
Depreciation on real estate assets and rental homes | (25,965 | ) | (2,691 | ) | (28,656 | ) | |||||
Amortization of in-place leases | (335 | ) | — | (335 | ) | ||||||
Income from operations | $ | 88,632 | $ | (375 | ) | 88,257 | |||||
Reconciliation to Consolidated net income: | |||||||||||
Corporate interest income | 24 | ||||||||||
Income from other investments, net | 1,723 | ||||||||||
General and administrative | (7,407 | ) | |||||||||
Property rights initiatives and other | (654 | ) | |||||||||
Interest and related amortization | (25,634 | ) | |||||||||
Equity in income of unconsolidated joint ventures | 881 | ||||||||||
Consolidated net income | $ | 57,190 | |||||||||
Total assets | $ | 3,176,748 | $ | 238,377 | $ | 3,415,125 |
Quarters Ended | ||||||||
March 31, 2017 | March 31, 2016 | |||||||
Revenues: | ||||||||
Community base rental income | $ | 120,692 | $ | 114,076 | ||||
Resort base rental income | 61,068 | 55,434 | ||||||
Right-to-use annual payments | 11,252 | 11,054 | ||||||
Right-to-use contracts current period, gross | 3,206 | 2,532 | ||||||
Right-to-use contract upfront payments, deferred, net | (775 | ) | (302 | ) | ||||
Utility and other income | 22,126 | 20,793 | ||||||
Ancillary services revenues, net | 1,419 | 1,139 | ||||||
Total property operations revenues | 218,988 | 204,726 | ||||||
Expenses: | ||||||||
Property operating and maintenance | 68,054 | 62,954 | ||||||
Real estate taxes | 14,037 | 13,198 | ||||||
Sales and marketing, gross | 2,690 | 2,493 | ||||||
Right-to-use contract commissions, deferred, net | (84 | ) | 104 | |||||
Property management | 12,560 | 11,763 | ||||||
Total property operations expenses | 97,257 | 90,512 | ||||||
Income from property operations segment | $ | 121,731 | $ | 114,214 |
Quarters Ended | ||||||||
March 31, 2017 | March 31, 2016 | |||||||
Revenues: | ||||||||
Gross revenue from home sales | $ | 7,027 | $ | 8,214 | ||||
Brokered resale revenues, net | 242 | 279 | ||||||
Rental home income (a) | 3,605 | 3,545 | ||||||
Total revenues | 10,874 | 12,038 | ||||||
Expenses: | ||||||||
Cost of home sales | 7,119 | 8,281 | ||||||
Home selling expenses | 925 | 834 | ||||||
Rental home operating and maintenance | 1,551 | 1,525 | ||||||
Total expenses | 9,595 | 10,640 | ||||||
Income from home sales and rentals operations segment | $ | 1,279 | $ | 1,398 |
(a) | Segment information does not include Site rental income included in Community base rental income. |
Total Sites as of March 31, 2017 | ||
Community Sites | 71,000 | |
Resort Sites: | ||
Annual | 26,600 | |
Seasonal | 11,200 | |
Transient | 10,500 | |
Right-to-use (1) | 24,100 | |
Joint Ventures (2) | 3,200 | |
146,600 |
(1) | Includes approximately 5,700 Sites rented on an annual basis. |
(2) | Joint ventures have approximately 2,300 annual Sites, approximately 400 seasonal Sites and approximately 500 transient Sites. |
Property | Location | Type of Property | Transaction Date | Sites | |||||
Total Sites as of January 1, 2016 | 143,938 | ||||||||
Acquisitions: | |||||||||
Rose Bay | Port Orange, Florida | RV | January 27, 2016 | 303 | |||||
Portland Fairview | Fairview, Oregon | RV | May 26, 2016 | 407 | |||||
Forest Lake Estates | Zephryhills, Florida | RV, MH | June 15, 2016 | 1,168 | |||||
Riverside RV | Arcadia, Florida | RV | October 13, 2016 | 499 | |||||
Expansion Site Development and other: | |||||||||
Net Sites added (reconfigured) in 2016 | 295 | ||||||||
Net Sites added (reconfigured) in 2017 | (1 | ) | |||||||
Total Sites as of March 31, 2017 | 146,609 | ||||||||
Total Portfolio | |||||||||
Quarters Ended March 31, | |||||||||
2017 | 2016 | ||||||||
Computation of Income from Property Operations: | |||||||||
Net income available for Common Stockholders | $ | 56,888 | $ | 50,583 | |||||
Series C Redeemable Perpetual Preferred Stock Dividends | 2,297 | 2,297 | |||||||
Income allocated to non-controlling interests - Common OP Units | 3,890 | 4,310 | |||||||
Equity in income of unconsolidated joint ventures | (1,150 | ) | (881 | ) | |||||
Income before equity in income of unconsolidated joint ventures | 61,925 | 56,309 | |||||||
Total other expenses, net | 61,085 | 59,303 | |||||||
Income from home sales operations and other | (644 | ) | (517 | ) | |||||
Income from property operations | $ | 122,366 | $ | 115,095 |
Quarters Ended March 31, | ||||||||
2017 | 2016 | |||||||
Computation of FFO and Normalized FFO: | ||||||||
Net income available for Common Stockholders | $ | 56,888 | $ | 50,583 | ||||
Income allocated to common OP units | 3,890 | 4,310 | ||||||
Right-to-use contract upfront payments, deferred, net | 775 | 302 | ||||||
Right-to-use contract commissions, deferred, net | (84 | ) | 104 | |||||
Depreciation on real estate assets | 27,452 | 26,008 | ||||||
Depreciation on rental homes | 2,657 | 2,647 | ||||||
Amortization of in-place leases | 1,032 | 335 | ||||||
Depreciation on unconsolidated joint ventures | 447 | 290 | ||||||
FFO available for Common Stock and OP Unit holders | 93,057 | 84,579 | ||||||
Transaction costs | 104 | 200 | ||||||
Normalized FFO available for Common Stock and OP Unit holders | $ | 93,161 | $ | 84,779 | ||||
Weighted average Common Shares outstanding – fully diluted | 93,011 | 92,041 |
Core Portfolio | Total Portfolio | ||||||||||||||||||||||||||||
2017 | 2016 | Variance | % Change | 2017 | 2016 | Variance | % Change | ||||||||||||||||||||||
Community base rental income | $ | 119,579 | $ | 114,076 | $ | 5,503 | 4.8 | % | $ | 120,692 | $ | 114,076 | $ | 6,616 | 5.8 | % | |||||||||||||
Rental home income | 3,605 | 3,545 | 60 | 1.7 | % | 3,605 | 3,545 | 60 | 1.7 | % | |||||||||||||||||||
Resort base rental income | 56,850 | 55,208 | 1,642 | 3.0 | % | 61,068 | 55,434 | 5,634 | 10.2 | % | |||||||||||||||||||
Right-to-use annual payments | 11,252 | 11,054 | 198 | 1.8 | % | 11,252 | 11,054 | 198 | 1.8 | % | |||||||||||||||||||
Right-to-use contracts current period, gross | 3,206 | 2,532 | 674 | 26.6 | % | 3,206 | 2,532 | 674 | 26.6 | % | |||||||||||||||||||
Utility and other income | 21,684 | 20,781 | 903 | 4.3 | % | 22,126 | 20,793 | 1,333 | 6.4 | % | |||||||||||||||||||
Property operating revenues, excluding deferrals | 216,176 | 207,196 | 8,980 | 4.3 | % | 221,949 | 207,434 | 14,515 | 7.0 | % | |||||||||||||||||||
Property operating and maintenance | 66,343 | 62,822 | 3,521 | 5.6 | % | 68,054 | 62,954 | 5,100 | 8.1 | % | |||||||||||||||||||
Rental home operating and maintenance | 1,551 | 1,525 | 26 | 1.7 | % | 1,551 | 1,525 | 26 | 1.7 | % | |||||||||||||||||||
Real estate taxes | 13,570 | 13,177 | 393 | 3.0 | % | 14,037 | 13,198 | 839 | 6.4 | % | |||||||||||||||||||
Sales and marketing, gross | 2,689 | 2,493 | 196 | 7.9 | % | 2,690 | 2,493 | 197 | 7.9 | % | |||||||||||||||||||
Property operating expenses, excluding deferrals and Property management | 84,153 | 80,017 | 4,136 | 5.2 | % | 86,332 | 80,170 | 6,162 | 7.7 | % | |||||||||||||||||||
Income from property operations, excluding deferrals and Property management (1) | 132,023 | 127,179 | 4,844 | 3.8 | % | 135,617 | 127,264 | 8,353 | 6.6 | % | |||||||||||||||||||
Property management | 12,560 | 11,763 | 797 | 6.8 | % | 12,560 | 11,763 | 797 | 6.8 | % | |||||||||||||||||||
Income from property operations, excluding deferrals (1) | 119,463 | 115,416 | 4,047 | 3.5 | % | 123,057 | 115,501 | 7,556 | 6.5 | % | |||||||||||||||||||
Right-to-use contracts, deferred and sales and marketing, deferred, net | 691 | 406 | 285 | 70.2 | % | 691 | 406 | 285 | 70.2 | % | |||||||||||||||||||
Income from property operations (1) | $ | 118,772 | $ | 115,010 | $ | 3,762 | 3.3 | % | $ | 122,366 | $ | 115,095 | $ | 7,271 | 6.3 | % |
Core Portfolio | Total Portfolio | ||||||||||||||||||||||||||||
2017 | 2016 | Variance | % Change | 2017 | 2016 | Variance | % Change | ||||||||||||||||||||||
Annual | $ | 31,239 | $ | 29,864 | $ | 1,375 | 4.6 | % | $ | 32,096 | $ | 30,010 | $ | 2,086 | 7.0 | % | |||||||||||||
Seasonal | 16,383 | 16,159 | 224 | 1.4 | % | 18,499 | 16,215 | 2,284 | 14.1 | % | |||||||||||||||||||
Transient | 9,228 | 9,185 | 43 | 0.5 | % | 10,473 | 9,209 | 1,264 | 13.7 | % | |||||||||||||||||||
Resort base rental income | $ | 56,850 | $ | 55,208 | $ | 1,642 | 3.0 | % | $ | 61,068 | $ | 55,434 | $ | 5,634 | 10.2 | % |
2017 | 2016 | Variance | % Change | ||||||||||||
Gross revenues from new home sales (1) | $ | 4,943 | $ | 5,399 | $ | (456 | ) | (8.4 | )% | ||||||
Cost of new home sales (1) | (4,772 | ) | (5,452 | ) | 680 | 12.5 | % | ||||||||
Gross profit from new home sales | 171 | (53 | ) | 224 | 422.6 | % | |||||||||
Gross revenues from used home sales | 2,084 | 2,815 | (731 | ) | (26.0 | )% | |||||||||
Cost of used home sales | (2,347 | ) | (2,829 | ) | 482 | 17.0 | % | ||||||||
Loss from used home sales | (263 | ) | (14 | ) | (249 | ) | (1,778.6 | )% | |||||||
Brokered resale revenues and ancillary services revenues, net | 1,661 | 1,418 | 243 | 17.1 | % | ||||||||||
Home selling expenses | (925 | ) | (834 | ) | (91 | ) | (10.9 | )% | |||||||
Income from home sales and other | $ | 644 | $ | 517 | $ | 127 | 24.6 | % | |||||||
Home sales volumes | |||||||||||||||
Total new home sales (2) | 120 | 121 | (1 | ) | (0.8 | )% | |||||||||
New Home Sales Volume - ECHO JV | 37 | 34 | 3 | 8.8 | % | ||||||||||
Used home sales | 285 | 311 | (26 | ) | (8.4 | )% | |||||||||
Brokered home resales | 168 | 186 | (18 | ) | (9.7 | )% |
2017 | 2016 | Variance | % Change | ||||||||||||
Manufactured homes: | |||||||||||||||
New Home | $ | 6,563 | $ | 6,141 | $ | 422 | 6.9 | % | |||||||
Used Home | 5,785 | 6,390 | (605 | ) | (9.5 | )% | |||||||||
Rental operations revenue (1) | 12,348 | 12,531 | (183 | ) | (1.5 | )% | |||||||||
Rental home operating and maintenance | (1,551 | ) | (1,525 | ) | (26 | ) | (1.7 | )% | |||||||
Income from rental operations | 10,797 | 11,006 | (209 | ) | (1.9 | )% | |||||||||
Depreciation on rental homes (2) | (2,657 | ) | (2,647 | ) | (10 | ) | (0.4 | )% | |||||||
Income from rental operations, net of depreciation | $ | 8,140 | $ | 8,359 | $ | (219 | ) | (2.6 | )% | ||||||
Gross investment in new manufactured home rental units (3) | $ | 128,301 | $ | 115,639 | $ | 12,662 | 10.9 | % | |||||||
Gross investment in used manufactured home rental units | $ | 49,991 | $ | 56,455 | $ | (6,464 | ) | (11.4 | )% | ||||||
Net investment in new manufactured home rental units | $ | 99,845 | $ | 92,323 | $ | 7,522 | 8.1 | % | |||||||
Net investment in used manufactured home rental units | $ | 21,617 | $ | 33,616 | $ | (11,999 | ) | (35.7 | )% | ||||||
Number of occupied rentals – new, end of period (4) | 2,467 | 2,247 | 220 | 9.8 | % | ||||||||||
Number of occupied rentals – used, end of period | 2,297 | 2,716 | (419 | ) | (15.4 | )% |
(1) | Rental operations revenue consists of Site rental income and home rental income. Approximately $8.8 million and $9.0 million for the quarters ended March 31, 2017 and March 31, 2016, respectively, of Site rental income are included in Community base rental income in the Income from Property Operations table. The remainder of home rental income is included in Rental home income in the Income from Property Operations table. |
(2) | Included in depreciation on real estate and other costs in the Consolidated Statements of Income and Comprehensive Income. |
(3) | New home cost basis does not include the costs associated with our ECHO JV. Our investment in the ECHO JV was $15.3 million and $15.4 million at March 31, 2017 and March 31, 2016, respectively. |
(4) | Includes 228 and 131 homes rented through our ECHO JV during the quarters ended March 31, 2017 and March 31, 2016, respectively. |
2017 | 2016 | Variance | % Change | ||||||||||||
Depreciation on real estate and rental homes | $ | (30,109 | ) | $ | (28,656 | ) | $ | (1,453 | ) | (5.1 | )% | ||||
Amortization of in-place leases | (1,032 | ) | (335 | ) | (697 | ) | (208.1 | )% | |||||||
Interest income | 1,770 | 1,660 | 110 | 6.6 | % | ||||||||||
Income from other investments, net | 757 | 1,723 | (966 | ) | (56.1 | )% | |||||||||
General and administrative (excluding transaction costs) | (7,269 | ) | (7,207 | ) | (62 | ) | (0.9 | )% | |||||||
Transaction costs | (104 | ) | (200 | ) | 96 | 48.0 | % | ||||||||
Property rights initiatives and other | (219 | ) | (654 | ) | 435 | 66.5 | % | ||||||||
Interest and related amortization | (24,879 | ) | (25,634 | ) | 755 | 2.9 | % | ||||||||
Total other income and expenses, net | $ | (61,085 | ) | $ | (59,303 | ) | $ | (1,782 | ) | (3.0 | )% |
Quarters ended March 31, | |||||||
2017 | 2016 | ||||||
Net cash provided by operating activities | $ | 114,286 | $ | 101,766 | |||
Net cash used in investing activities | (24,105 | ) | (34,044 | ) | |||
Net cash used in financing activities | (73,273 | ) | (50,873 | ) | |||
Net increase in cash | $ | 16,908 | $ | 16,849 |
Quarters Ended March 31, (1) | |||||||
2017 | 2016 | ||||||
Recurring Capital Expenditures (2) | $ | 7,160 | $ | 7,337 | |||
Property upgrades and site development | 5,423 | 2,229 | |||||
New home investments (3)(4) | 10,151 | 11,041 | |||||
Used home investments (4) | 1,005 | 1,671 | |||||
Total Property | 23,739 | 22,278 | |||||
Corporate | 615 | 217 | |||||
Total Capital improvements | $ | 24,354 | $ | 22,495 |
Total (5) | 2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | |||||||||||||||||||||
Long Term Borrowings (1) | $ | 2,072,866 | $ | 45,781 | $ | 233,336 | $ | 234,820 | $ | 351,984 | $ | 211,540 | $ | 995,405 | |||||||||||||
Interest Expense (2) | 624,925 | 72,277 | 87,573 | 72,751 | 57,382 | 49,489 | 285,453 | ||||||||||||||||||||
Operating Lease | 9,985 | 1,631 | 2,221 | 2,062 | 2,011 | 1,711 | 349 | ||||||||||||||||||||
LOC Maintenance Fee (3) | 1,051 | 611 | 440 | — | — | — | — | ||||||||||||||||||||
Ground Lease (4) | 16,529 | 1,489 | 1,980 | 1,983 | 1,984 | 1,987 | 7,106 | ||||||||||||||||||||
Total Contractual Obligations | $ | 2,725,356 | $ | 121,789 | $ | 325,550 | $ | 311,616 | $ | 413,361 | $ | 264,727 | $ | 1,288,313 | |||||||||||||
Weighted average interest rates - Long Term Borrowings | 3.87 | % | 3.52 | % | 4.60 | % | 4.40 | % | 4.49 | % | 4.39 | % | 4.25 | % |
(1) | Balance excludes note premiums of $4.8 million and deferred financing costs of approximately $18.4 million. Balances include debt maturing and scheduled periodic principal payments. |
(2) | Amounts include interest expected to be incurred on our secured debt and Term Loan based on obligations outstanding as of March 31, 2017. |
(3) | As of March 31, 2017, assumes we will not exercise our one year extension option on July 17, 2018 and assumes we will maintain our current leverage ratios as defined by the LOC. |
(4) | We also lease land under non-cancelable operating leases at certain of the Properties expiring in various years from 2017 to 2054. The majority of the lease terms require twelve equal payments per year plus additional rents calculated as a percentage of gross revenues. |
(5) | We do not include insurance, property taxes and cancelable contracts in the contractual obligations table. |
• | our ability to control costs, real estate market conditions, the actual rate of decline in customers, the actual use of Sites by customers and our success in acquiring new customers at our Properties (including those that we may acquire); |
• | our ability to maintain historical or increase future rental rates and occupancy with respect to Properties currently owned or that we may acquire; |
• | our ability to retain and attract customers renewing, upgrading and entering right-to-use contracts; |
• | our assumptions about rental and home sales markets; |
• | our ability to manage counterparty risk; |
• | in the age-qualified Properties, home sales results could be impacted by the ability of potential home buyers to sell their existing residences as well as by financial, credit and capital markets volatility; |
• | results from home sales and occupancy will continue to be impacted by local economic conditions, lack of affordable manufactured home financing and competition from alternative housing options including site-built single-family housing; |
• | impact of government intervention to stabilize site-built single-family housing and not manufactured housing; |
• | effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions; |
• | the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto; |
• | unanticipated costs or unforeseen liabilities associated with recent acquisitions; |
• | ability to obtain financing or refinance existing debt on favorable terms or at all; |
• | the effect of interest rates; |
• | the dilutive effects of issuing additional securities; |
• | the effect of accounting for the entry of contracts with customers representing a right-to-use the Properties under the Codification Topic "Revenue Recognition"; |
• | the outcome of pending or future lawsuits or actions brought against us, including those disclosed in our filings with the Securities and Exchange Commission; and |
• | other risks indicated from time to time in our filings with the Securities and Exchange Commission. |
Item 3. | Quantitative and Qualitative Disclosure of Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosure |
Item 5. | Other Information |
Item 6. | Exhibit Index |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
101 | The following materials from Equity LifeStyle Properties, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Cash Flow, and (v) Notes to Consolidated Financial Statements, filed herewith. |
EQUITY LIFESTYLE PROPERTIES, INC. | ||
Date: May 3, 2017 | By: | /s/ Marguerite Nader |
Marguerite Nader | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: May 3, 2017 | By: | /s/ Paul Seavey |
Paul Seavey | ||
Executive Vice President, Chief Financial Officer and Treasurer | ||
(Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Equity LifeStyle Properties, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 3, 2017 | By: | /s/ Paul Seavey |
Paul Seavey | ||
Executive Vice President, Chief Financial Officer and Treasurer |
1. | I have reviewed this quarterly report on Form 10-Q of Equity LifeStyle Properties, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 3, 2017 | By: | /s/ Marguerite Nader |
Marguerite Nader | ||
President and Chief Executive Officer |
1. | the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Equity LifeStyle Properties, Inc. |
Date: May 3, 2017 | By: | /s/ Paul Seavey |
Paul Seavey | ||
Executive Vice President, Chief Financial Officer and Treasurer |
1. | the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Equity LifeStyle Properties, Inc. |
Date: May 3, 2017 | By: | /s/ Marguerite Nader |
Marguerite Nader | ||
President and Chief Executive Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Apr. 27, 2017 |
|
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | ELS | |
Entity Registrant Name | EQUITY LIFESTYLE PROPERTIES INC | |
Entity Central Index Key | 0000895417 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 86,842,419 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Preferred Stock, Par or Stated Value Per Share (usd per share) | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 9,945,539 | 9,945,539 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share (usd per share) | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Issued | 86,841,775 | 85,529,386 |
Common Stock, Shares, Outstanding | 86,841,775 | 85,529,386 |
6.75% Series C Cumulative Redeemable Perpetual Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share (usd per share) | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 54,461 | 54,461 |
Preferred Stock, Shares Issued | 54,458 | 54,458 |
Preferred Stock, Shares Outstanding | 54,458 | 54,458 |
Consolidated Statements of Changes In Equity - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands |
Total |
Common Stock |
Paid-in Capital |
6.75% Series C Cumulative Redeemable Perpetual Preferred Stock |
Distributions in Excess of Accumulated Earnings |
Non- controlling interests – Common OP Units |
Accumulated Other Comprehensive Loss |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2016 | $ 1,081,847 | $ 854 | $ 1,103,048 | $ 136,144 | $ (231,276) | $ 73,304 | $ (227) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Conversion of Common OP Units to Common Stock | 12 | 15,339 | (15,351) | ||||
Issuance of Common Stock through employee stock purchase plan | 403 | 403 | |||||
Compensation expenses related to restricted stock | 1,755 | 1,755 | |||||
Adjustment for Common OP Unitholders in the Operating Partnership | 0 | (2,885) | 2,885 | ||||
Adjustment for fair market value of swap | 226 | 226 | |||||
Net income | 63,075 | 2,297 | 56,888 | 3,890 | |||
Distributions | (47,527) | (2,297) | (42,335) | (2,895) | |||
Other | (33) | (32) | (1) | ||||
Balance at Mar. 31, 2017 | $ 1,099,746 | $ 866 | $ 1,117,628 | $ 136,144 | $ (216,724) | $ 61,833 | $ (1) |
Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||
Summary of Significant Accounting Policies | Basis of Presentation Equity LifeStyle Properties, Inc., a Maryland corporation, together with MHC Operating Limited Partnership (the “Operating Partnership”) and other consolidated subsidiaries (“Subsidiaries”) are referred to herein as “we,” “us,” and “our.” Capitalized terms used but not defined herein are as defined in our Annual Report on Form 10-K (“2016 Form 10-K”) for the year ended December 31, 2016. These unaudited Consolidated Financial Statements have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, they do not include all of the information and note disclosures required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements and should be read in conjunction with the financial statements and notes thereto included in the 2016 Form 10-K. The following notes to the Consolidated Financial Statements highlight significant changes to the notes included in the 2016 Form 10-K and present interim disclosures as required by the SEC. The accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments and estimates necessary for a fair presentation of the interim financial statements, which are of a normal, recurring nature. Revenues and expenses are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results. Note 2 – Summary of Significant Accounting Policies
We consolidate our majority-owned Subsidiaries in which we have the ability to control the operations and all variable interest entities with respect to which we are the primary beneficiary. We also consolidate entities in which we have a direct or indirect controlling or voting interest. All significant intercompany balances and transactions have been eliminated on consolidation. Effective January 1, 2016, we adopted (“ASU 2015-02”) Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 required us to evaluate whether we should consolidate certain legal entities. The adoption of this standard did not result in any changes to our accounting of interests in less than wholly-owned joint ventures; however, the Operating Partnership now meets the criteria as a VIE. We concluded that the Operating Partnership is a VIE because we are the general partner and controlling owner of approximately 93.6% of the Operating Partnership and the limited partners do not have substantive kick-out or participating rights. Our sole significant asset is our investment in the Operating Partnership, and consequently, substantially all of our assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company has the power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are significant to the VIE. Accordingly, we are the primary beneficiary and we will continue to consolidate the Operating Partnership under this new guidance. We apply the equity method of accounting to entities in which we do not have a direct or indirect controlling interest or for variable interest entities where we are not considered the primary beneficiary, but can exercise influence over the entity with respect to its operations and major decisions.
As of both March 31, 2017 and December 31, 2016, the gross carrying amount of identified intangible assets and goodwill, a component of escrow deposits, goodwill and other assets, net on our consolidated balance sheets, was approximately $12.1 million. As of both March 31, 2017 and December 31, 2016, this amount was comprised of approximately $4.3 million of identified intangible assets and approximately $7.8 million of goodwill. Accumulated amortization of identified intangible assets was approximately $2.8 million as of both March 31, 2017 and December 31, 2016, respectively. As of both March 31, 2017 and December 31, 2016, the gross carrying amount of in-place lease intangible assets, a component of buildings and other depreciable property on our consolidated balance sheets, was approximately $75.9 million. Accumulated amortization of in-place lease intangible assets was approximately $75.0 million and $74.0 million as of March 31, 2017 and December 31, 2016, respectively.
Cash as of both March 31, 2017 and December 31, 2016 included approximately $5.3 million of restricted cash for the payment of capital improvements, insurance or real estate taxes.
Our financial instruments include notes receivable, accounts receivable, accounts payable, other accrued expenses, interest rate swaps and mortgage notes payable. We disclose the estimated fair value of our financial instruments according to a fair value hierarchy (Level 1, 2 and 3). Our mortgage notes payable and term loan, excluding deferred financing costs of approximately $18.4 million and $18.9 million, respectively, had an aggregate carrying value of approximately $2,077.7 million and $2,110.2 million as of March 31, 2017 and December 31, 2016, respectively, and a fair value of approximately $2,066.7 million and $2,081.2 million as of March 31, 2017 and December 31, 2016, respectively. The fair value was measured using quoted prices and observable inputs from similar liabilities (Level 2). At March 31, 2017 and December 31, 2016, our cash flow hedge of interest rate risk included in accrued expenses and accounts payable was measured using quoted prices and observable inputs from similar assets and liabilities (Level 2). We consider our own credit risk as well as the credit risk of our counterparties when evaluating the fair value of our derivative. The fair values of our notes receivable approximate their carrying or contract values. We also utilize Level 2 and Level 3 inputs as part of our determination of the purchase price allocation for our acquisitions.
In January 2017, the FASB issued ("ASU 2017-01") Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective for annual reporting beginning after December 15, 2017. Early adoption is permitted. We are currently in the process of evaluating the potential impact that the adoption of this standard may have on our consolidated financial statements and related disclosures. In August 2016, the FASB issued (“ASU 2016-15”) Statement of Cash Flows (Topic 230). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 will be effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently in the process of evaluating the potential impact, if any, that adoption of this standard may have on our consolidated financial statements and related disclosures. In June 2016, the FASB issued (“ASU 2016-13”) Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. ASU 2016-13 will be effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted. We are currently in the process of evaluating the potential impact, if any, that adoption of this standard may have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ("ASU 2016-02") Leases. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We are currently in the process of evaluating the potential impact this standard may have on our consolidated financial statements and related disclosures. In May 2014, the FASB issued ("ASU 2014-09") Revenue from Contracts with Customers which along with related subsequent amendments will replace most existing revenue recognition guidance in GAAP. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The new standard will be effective for the Company beginning on January 1, 2018, however early application beginning on January 1, 2017 is permitted. The standard permits the use of either the full retrospective or modified retrospective transition method. We expect to adopt ASU 2014-09 on January 1, 2018, using the modified retrospective transition method. We are evaluating the complete impact of the adoption to our consolidated financial results. Our primary source of revenue is generated through leasing arrangements, which are excluded from ASU 2014-09. We continue to evaluate and are in the process of quantifying the impact, if any, the adoption of ASU 2014-09 will have on our non-lease revenue streams, including right-to-use annual payments, right-to-use contracts, and utility and other income. |
Earnings Per Common Share |
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Earnings Per Common Share | Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per Common Share for the quarters ended March 31, 2017 and 2016 (amounts in thousands, except per share data):
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Common Stock and Other Equity Related Transactions |
3 Months Ended |
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Mar. 31, 2017 | |
Equity [Abstract] | |
Common Stock and Other Equity Related Transactions | Common Stock and Other Equity Related Transactions Dividends On March 31, 2017 we paid a$0.421875 per share distribution on our depositary shares (each representing 1/100 of a share of our Series C Preferred Stock) to stockholders of record on March 10, 2017. On April 14, 2017 we paid a $0.4875 per share distribution to Common Stockholders of record on March 31, 2017. Conversions Subject to certain limitations, holders of Common Operating Partnership units ("OP units") can convert their units to Common Stock at any time. During the quarter ended March 31, 2017, 1,231,796 OP units were converted to an equal number of shares of Common Stock. |
Investment in Unconsolidated Joint Ventures |
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Investment in Unconsolidated Joint Ventures | Investment in Unconsolidated Joint Ventures The following table summarizes our investment in unconsolidated joint ventures for the quarters ended March 31, 2017 and December 31, 2016 (investment amounts in thousands with the number of Properties shown parenthetically as of March 31, 2017 and December 31, 2016):
We received approximately $1.1 million and $0.6 million in distributions from these joint ventures for the quarters ended March 31, 2017 and 2016, respectively. Approximately $0.2 million of the distributions made to us exceeded our basis in joint ventures for the three months ended March 31, 2017, and as such were recorded as income from unconsolidated joint ventures. None of the distributions made to us exceeded our basis in joint ventures for the quarter ended March 31, 2016. |
Borrowing Arrangements |
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Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Borrowing Arrangements | Borrowing Arrangements Mortgage Notes Payable As of March 31, 2017 and December 31, 2016, we had outstanding mortgage indebtedness of approximately $1,859.9 million and $1,891.9 million, respectively, excluding deferred financing costs. During the quarter ended March 31, 2017 we paid off one maturing mortgage loan of approximately $21.1 million, with a weighted average interest rate of 5.76%per annum, secured by one manufactured home Property. The weighted average interest rate, including the impact of premium/discount amortization and loan cost amortization on on mortgage indebtedness, for the quarters ended March 31, 2017 and December 31, 2016 was approximately 4.9% per annum. The debt bears interest at stated rates ranging from 3.5% to 8.9% per annum and matures on various dates ranging from 2017 to 2041. The debt encumbered a total of 125 and 126 of our Properties as of March 31, 2017 and December 31, 2016, respectively, and the carrying value of such Properties was approximately $2,267.0 million and $2,296.6 million, as of such dates. As of March 31, 2017, we are in compliance in all material respects with the covenants in our borrowing arrangements. |
Equity Incentive Awards |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity Incentive Awards | Stock-based compensation expense, reported in general and administrative on the Consolidated Statements of Income and Comprehensive Income, for the quarters ended March 31, 2017 and 2016 was approximately $1.8 million and $1.9 million, respectively. Our 2014 Equity Incentive Plan (the “2014 Plan”) was adopted by our Board of Directors on March 11, 2014 and approved by our stockholders on May 13, 2014. Pursuant to the 2014 Plan, our officers, directors, employees and consultants may be awarded (i) shares of common stock (“Restricted Stock Grants”), (ii) options to acquire shares of common stock (“Options”), including non-qualified stock options and incentive stock options within the meaning of Section 422 of the Internal Revenue Code, and (iii) other forms of equity awards, subject to conditions and restrictions determined by the Compensation, Nominating, and Corporate Governance Committee of our Board of Directors (the “Compensation Committee”). The Compensation Committee will determine the vesting schedule, if any, of each Restricted Stock Grant or Option and the term of each Option, which term shall not exceed ten years from the date of grant. Shares that do not vest are forfeited. Dividends paid on restricted stock are not returnable, even if the underlying stock does not entirely vest. A maximum of 3,750,000 shares of common stock were originally available for grant under the 2014 Plan. As of March 31, 2017, 3,189,053 shares remained available for grant. Grants under the 2014 Plan are approved by the Compensation Committee, which determines the individuals eligible to receive awards, the types of awards, and the terms, conditions and restrictions applicable to any award, except grants to directors which are approved by the Board of Directors. On February 1, 2017, we awarded restricted stock grants for 75,000 shares of common stock at a fair market value of approximately $5.4 million to certain members of our senior management for their service in 2017. These restricted stock grants will vest on December 31, 2017. The fair market value of our restricted stock grants was determined by using the closing share price of our common stock on the date the shares were issued and is recorded as compensation expense and paid in capital over the vesting period. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies California Rent Control Litigation As part of our effort to realize the value of our Properties subject to rent control, we previously initiated lawsuits against certain localities in California with the goal of achieving a level of regulatory fairness in California's rent control jurisdictions, and in particular those jurisdictions that prohibit increasing rents to market upon turnover. Such regulations allow tenants to sell their homes for a price that includes a premium above the intrinsic value of the homes. The premium represents the value of the future discounted rent-controlled rents, which is fully capitalized into the prices of the homes sold. In our view, such regulations result in a transfer to the tenants of the value of our land, which would otherwise be reflected in market rents. We have discovered through the litigation process that certain municipalities considered condemning our Properties at values well below the value of the underlying land. In our view, a failure to articulate market rents for Sites governed by restrictive rent control would put us at risk for condemnation or eminent domain proceedings based on artificially reduced rents. Such a physical taking, should it occur, could represent substantial lost value to stockholders. We are cognizant of the need for affordable housing in the jurisdictions, but assert that restrictive rent regulation does not promote this purpose because tenants pay to their sellers as part of the purchase price of the home all the future rent savings that are expected to result from the rent control regulations, eliminating any supposed improvement in the affordability of housing. In a more well-balanced regulatory environment, we would receive market rents that would eliminate the price premium for homes, which would trade at or near their intrinsic value. Such efforts have included the following matters: We sued the City of San Rafael on October 13, 2000 in the U.S. District Court for the Northern District of California, challenging its rent control ordinance on constitutional grounds. While the District Court found the rent control ordinance unconstitutional, the United States Court of Appeals for the Ninth Circuit reversed the District Court and ruled that the ordinance had not unconstitutionally taken our property. On September 3, 2013, we filed a petition for review by the U.S. Supreme Court, which was denied. On January 31, 2012, we sued the City of Santee in the United States District for the Southern District of California challenging its rent control ordinance on constitutional grounds. On September 26, 2013, we entered a settlement agreement with the City pursuant to which we are able to increase Site rents at the Meadowbrook community through January 1, 2034 as follows: (a) a one-time 2.5% rent increase on all Sites in January 2014; plus (b) annual rent increases of 100% of the consumer price index (CPI) beginning in 2014; and (c) a 10% increase in the rent on a site upon turnover of that site. Absent the settlement, the rent control ordinance limited us to annual rent increases of at most 70% of CPI with no increases on turnover of a site. Colony Park On December 1, 2006, a group of tenants at our Colony Park Property in Ceres, California filed a complaint in the California Superior Court for Stanislaus County alleging that we had failed to properly maintain the Property and had improperly reduced the services provided to the tenants, among other allegations. We answered the complaint by denying all material allegations and filed a counterclaim for declaratory relief and damages. The case proceeded in Superior Court because our motion to compel arbitration was denied and the denial was upheld on appeal. Trial of the case began on July 27, 2010. After just over three months of trial in which the plaintiffs asked the jury to award a total of approximately $6.8 million in damages, the jury rendered verdicts awarding a total of less than $44,000 to six out of the 72 plaintiffs, and awarding nothing to the other 66 plaintiffs. The plaintiffs who were awarded nothing filed a motion for a new trial or alternatively for judgment notwithstanding the jury's verdict, which the Superior Court denied on February 14, 2011. All but three of the 66 plaintiffs to whom the jury awarded nothing appealed. Oral argument in the appeal was held on September 19, 2013 and the matter was taken under submission by the California Court of Appeal. By orders entered on December 14, 2011, the Superior Court awarded us approximately $2.0 million in attorneys' fees and other costs jointly and severally against the plaintiffs to whom the jury awarded nothing, and awarded no attorneys' fees or costs to either side with respect to the six plaintiffs to whom the jury awarded less than $44,000. Plaintiffs filed an appeal from the approximately $2.0 million award of our attorneys' fees and other costs. Oral argument in that appeal was also held on September 19, 2013. On December 3, 2013, the Court of Appeal issued a partially published opinion that rejected all of plaintiffs' claims on appeal except one, relating to whether the park's rules prohibited the renting of spaces to recreational vehicles. The Court of Appeal reversed the judgment on the recreational vehicle issue and remanded for further proceedings regarding that issue. Because the judgment was reversed, the award of attorney's fees and other costs was also reversed. Both sides filed rehearing petitions with the Court of Appeal. On December 31, 2013, the Court of Appeal granted the defendants' rehearing petition and ordered the parties to submit supplemental briefing, which the parties did. On March 10, 2014, the Court of Appeal issued a new partially published opinion in which it again rejected all of the plaintiffs' claims on appeal except the one relating to whether the park's rules prohibited the renting of spaces to recreational vehicles, reversing the judgment on that issue and remanding it for further proceedings, and accordingly vacating the award of attorney's fees and other costs. As of result of a settlement we reached with the plaintiffs remaining in the litigation, pursuant to which among other provisions the parties agreed to mutually release all of their claims in the litigation without any payment by us, on September 28, 2015 the plaintiffs filed with the Superior Court a request for dismissal with prejudice of the entire action, to which we consented. On July 14, 2016, the Superior Court entered a dismissal of the action with prejudice. California Hawaiian On April 30, 2009, a group of tenants at our California Hawaiian Property in San Jose, California filed a complaint in the California Superior Court for Santa Clara County, Case No. 109CV140751, alleging that we have failed to properly maintain the Property and have improperly reduced the services provided to the tenants, among other allegations. We moved to compel arbitration and stay the proceedings, to dismiss the case, and to strike portions of the complaint. By order dated October 8, 2009, the Superior Court granted our motion to compel arbitration and stayed the court proceedings pending the outcome of the arbitration. The plaintiffs filed with the California Court of Appeal a petition for a writ seeking to overturn the Superior Court's arbitration and stay orders. On May 10, 2011, the Court of Appeal granted the petition and ordered the Superior Court to vacate its order compelling arbitration and to restore the matter to its litigation calendar for further proceedings. On May 24, 2011, we filed a petition for rehearing requesting the Court of Appeal to reconsider its May 10, 2011 decision. On June 8, 2011, the Court of Appeal denied the petition for rehearing. On June 16, 2011, we filed with the California Supreme Court a petition for review of the Court of Appeal's decision. On August 17, 2011, the California Supreme Court denied the petition for review. The trial commenced on January 27, 2014. On April 14-15, 2014, the jury entered verdicts against our Operating Partnership of approximately $15.3 million in compensatory damages and approximately $95.8 million in punitive damages. On October 6, 2014, we filed a motion for a new trial and a motion for partial judgment notwithstanding the jury's verdict. On December 5, 2014, after briefing and a hearing on those motions, the Superior Court entered an order granting us a new trial on the issue of damages while upholding the jury's determination of liability. As grounds for the ruling, the Superior Court cited excessive damages and insufficiency of the evidence to support the verdict as to the amount of damages awarded by the jury. The Superior Court's ruling overturned the April 2014 verdicts of $15.3 million in compensatory damages and $95.8 million in punitive damages. On January 28, 2015, we and the plaintiffs each served notices of appeal from the Superior Court's December 5, 2014 order. The Court of Appeal issued an order setting the briefing sequence and ordered commencement of the briefing. On December 15, 2015, the plaintiffs filed their opening appellants’ brief; on March 25, 2016, we filed our combined respondents’ and opening brief; on July 8, 2016, the plaintiffs filed their combined reply and cross-respondents’ brief; and on September 26, 2016, we filed our reply brief, which was the final brief pursuant to the Court of Appeal's order setting forth the briefing sequence. We believe the allegations had no merit, and we vigorously defended ourselves in the lawsuit. However, as described below in “Settlement of the California Hawaiian, Monte del Lago and Santiago Estates Matters,” we settled this matter. See below for further details. Monte del Lago On February 13, 2015, a group of tenants at our Monte del Lago Property in Castroville, California filed a complaint in the California Superior Court for Monterey County, Case No. M131016, alleging that we have failed to properly maintain the Property and have improperly reduced the services provided to the tenants, among other allegations. On May 13, 2015, we filed a motion to compel arbitration with respect to certain plaintiffs and to stay the litigation pending the conclusion of the arbitration proceedings. Hearings on the motion were held on July 17, 2015 and September 18, 2015. On October 7, 2015, the Superior Court denied our motion. On December 3, 2015, we filed a notice of appeal from the denial of our motion, and on October 4, 2016, we filed our opening appellants' brief. We believe the allegations had no merit, and we vigorously defended ourselves in the lawsuit. However, as described below in “Settlement of the California Hawaiian, Monte del Lago and Santiago Estates Matters,” we settled this matter. See below for further details. Santiago Estates On September 4, 2015, a group of tenants at our Santiago Estates Property in Sylmar, California filed a complaint in the California Superior Court for Los Angeles County, Case No. BC593831, alleging that we have failed to properly maintain the Property and have improperly reduced the services provided to the tenants, among other allegations. We believe the allegations are without merit and intend to vigorously defend ourselves in the lawsuit. On November 24, 2015, we filed a motion to compel arbitration with respect to certain plaintiffs and to stay the litigation pending the conclusion of the arbitration proceedings. The hearing on that motion was held on August 19, 2016, and the Superior Court granted our motion and ordered the plaintiffs subject to arbitration agreements to resolve all claims alleged in their complaint by arbitration and stayed the remainder of the litigation while the arbitration proceeded. On September 12, 2016, we filed a demand for arbitration seeking, among other things, a declaration, with respect to the plaintiffs subject to arbitration agreements, that their claims are without merit as well as for recovery of attorneys’ fees and costs. On September 30, 2016, plaintiffs filed an ex parte motion in the Superior Court requesting that the Superior Court stay the arbitration proceedings. The Superior Court heard oral argument on the motion on September 30, 2016, we filed a written opposition brief on October 5, 2016 and the Superior Court denied the motion on October 14, 2016. On October 18, 2016, the plaintiffs filed with the California Court of Appeal a petition for a writ seeking to overturn the Superior Court’s order compelling arbitration and requested an immediate stay of the arbitration. On October 19, 2016, the Court of Appeal denied the request for stay, without prejudice to plaintiffs’ resubmitting the request in the event they make a stay request to the arbitrator and that request is denied. We believe the allegations had no merit, and we vigorously defended ourselves in the lawsuit. However, as described below in “Settlement of the California Hawaiian, Monte del Lago and Santiago Estates Matters,” we settled this matter. See below for further details. Settlement of the California Hawaiian, Monte del Lago and Santiago Estates Matters On January 18, 2017, we entered into agreements pursuant to which we agreed to settle each of the California Hawaiian matter, the Monte del Lago matter and the Santiago Estates matter. The settlement agreements provide that $9.9 million will be paid to settle the California Hawaiian matter, $1.5 million will be paid to settle the Monte del Lago matter and $1.9 million will be paid to settle the Santiago Estates matter. As a result, a litigation settlement payable was recorded in Accrued expenses and accounts payable as of December 31, 2016. In addition, an insurance receivable was recorded in escrow deposits, goodwill and other assets, net as of December 31, 2016, resulting in a net settlement of approximately $2.4 million reflected as a component of property rights initiatives and other, net on the consolidated statement of income for the year ended December 31, 2016. During the quarter ended March 31, 2017, the settlements were finalized, the settlement payments were made and the insurance payments were received. Each of the three plaintiff groups is represented by the same law firm, and these settlements resolved all pending matters brought by plaintiffs’ counsel against us or any of our affiliates. Pursuant to the settlement agreements, all plaintiffs provided full releases to each of the defendants and their affiliates including with respect to the claims alleged in the lawsuits, and each of the lawsuits and related appeals were dismissed with prejudice. The settlements do not constitute an admission of liability by us or any of our affiliates and were made to avoid the costs, risks and uncertainties inherent in litigation. Civil Investigation by Certain California District Attorneys In November 2014, we received a civil investigative subpoena from the office of the District Attorney for Monterey County, California ("MCDA"), seeking information relating to, among other items, statewide compliance with asbestos and hazardous waste regulations dating back to 2005 primarily in connection with demolition and renovation projects performed by third-party contractors at our California Properties. We responded by providing the information required by the subpoena. On October 20, 2015, we attended a meeting with representatives of the MCDA and certain other District Attorneys' offices at which the MCDA reviewed the preliminary results of their investigation including, among other things, (i) alleged violations of asbestos and related regulations associated with approximately 200 historical demolition and renovation projects in California; (ii) potential exposure to civil penalties and unpaid fees; and (iii) next steps with respect to a negotiated resolution of the alleged violations. No legal proceedings have been instituted to date and we are involved in settlement discussions with the District Attorneys' offices. We continue to assess the allegations and the underlying facts, and at this time we are unable to predict the outcome of the investigation or reasonably estimate any possible loss. Alpine Lake RV Resort OSHA Citations On February 19, 2016, we received a Citation and Notice of Penalty from the Occupational Safety and Health Administration (“OSHA”) alleging two willful and seven serious safety violations relating to the design and maintenance of the electrical system at our Alpine Lake RV Resort in Corinth, New York, and assessing fines totaling $0.2 million. We retained a certified third-party electrician and addressed the items raised in the citations. On March 9, 2016, we attended an informal conference in Albany, New York with the OSHA Area Director. The matter was not resolved at the meeting, and we filed the required notice of contest on March 10, 2016 after which the matter was transferred to the Occupational Safety & Health Review Commission, which is represented by a solicitor from the Department of Labor. The solicitor filed a complaint on May 20, 2016, and the parties participated in a formal settlement conference on June 22, 2016. The parties did not reach a settlement at the formal settlement conference; however the parties continued to engage in settlement discussions. Trial had been scheduled for April 2017. On March 17, 2017, the parties entered into a settlement agreement which, among other things, reclassifies the two willful citations to serious, provides for abatement of the matters included in the citations and requires us to implement certain safety measures. Pursuant to the settlement agreement, we agreed to pay a fine totaling $0.1 million following approval of the settlement agreement by the Occupational Safety and Health Review Commission. Other In addition to legal matters discussed above, we are involved in various other legal and regulatory proceedings ("Other Proceedings") arising in the ordinary course of business. The Other Proceedings include, but are not limited to, notices, consent decrees, information requests, and additional permit requirements and other similar enforcement actions by governmental agencies relating to our utility infrastructure, including water and wastewater treatment plants and other waste treatment facilities and electrical systems. Additionally, in the ordinary course of business, our operations are subject to audit by various taxing authorities. Management believes these Other Proceedings taken together do not represent a material liability. In addition, to the extent any such proceedings or audits relate to newly acquired Properties, we consider any potential indemnification obligations of sellers in our favor. |
Reportable Segments |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | Reportable Segments We have identified two reportable segments which are: (i) Property Operations and (ii) Home Sales and Rentals Operations. The Property Operations segment owns and operates land lease Properties and the Home Sales and Rentals Operations segment purchases, sells and leases homes at the Properties. The distribution of the Properties throughout the United States reflects our belief that geographic diversification helps insulate the portfolio from regional economic influences. All revenues are from external customers and there is no customer who contributed 10% or more of our total revenues during the quarters ended March 31, 2017 or 2016. The following tables summarize our segment financial information for the quarters ended March 31, 2017 and March 31, 2016 (amounts in thousands):
The following table summarizes our financial information for the Property Operations segment for the quarters ended March 31, 2017 and March 31, 2016 (amounts in thousands):
The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters ended March 31, 2017 and 2016 (amounts in thousands):
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Summary of Significant Accounting Policies (Policies) |
3 Months Ended | ||||
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Mar. 31, 2017 | |||||
Accounting Policies [Abstract] | |||||
Basis of Presentation and Principles of Consolidation | Basis of Presentation Equity LifeStyle Properties, Inc., a Maryland corporation, together with MHC Operating Limited Partnership (the “Operating Partnership”) and other consolidated subsidiaries (“Subsidiaries”) are referred to herein as “we,” “us,” and “our.” Capitalized terms used but not defined herein are as defined in our Annual Report on Form 10-K (“2016 Form 10-K”) for the year ended December 31, 2016. These unaudited Consolidated Financial Statements have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, they do not include all of the information and note disclosures required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements and should be read in conjunction with the financial statements and notes thereto included in the 2016 Form 10-K. The following notes to the Consolidated Financial Statements highlight significant changes to the notes included in the 2016 Form 10-K and present interim disclosures as required by the SEC. The accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments and estimates necessary for a fair presentation of the interim financial statements, which are of a normal, recurring nature. Revenues and expenses are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results. Note 2 – Summary of Significant Accounting Policies
We consolidate our majority-owned Subsidiaries in which we have the ability to control the operations and all variable interest entities with respect to which we are the primary beneficiary. We also consolidate entities in which we have a direct or indirect controlling or voting interest. All significant intercompany balances and transactions have been eliminated on consolidation. Effective January 1, 2016, we adopted (“ASU 2015-02”) Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 required us to evaluate whether we should consolidate certain legal entities. The adoption of this standard did not result in any changes to our accounting of interests in less than wholly-owned joint ventures; however, the Operating Partnership now meets the criteria as a VIE. We concluded that the Operating Partnership is a VIE because we are the general partner and controlling owner of approximately 93.6% of the Operating Partnership and the limited partners do not have substantive kick-out or participating rights. Our sole significant asset is our investment in the Operating Partnership, and consequently, substantially all of our assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company has the power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are significant to the VIE. Accordingly, we are the primary beneficiary and we will continue to consolidate the Operating Partnership under this new guidance. We apply the equity method of accounting to entities in which we do not have a direct or indirect controlling interest or for variable interest entities where we are not considered the primary beneficiary, but can exercise influence over the entity with respect to its operations and major decisions. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments Our financial instruments include notes receivable, accounts receivable, accounts payable, other accrued expenses, interest rate swaps and mortgage notes payable. We disclose the estimated fair value of our financial instruments according to a fair value hierarchy (Level 1, 2 and 3). Our mortgage notes payable and term loan, excluding deferred financing costs of approximately $18.4 million and $18.9 million, respectively, had an aggregate carrying value of approximately $2,077.7 million and $2,110.2 million as of March 31, 2017 and December 31, 2016, respectively, and a fair value of approximately $2,066.7 million and $2,081.2 million as of March 31, 2017 and December 31, 2016, respectively. The fair value was measured using quoted prices and observable inputs from similar liabilities (Level 2). At March 31, 2017 and December 31, 2016, our cash flow hedge of interest rate risk included in accrued expenses and accounts payable was measured using quoted prices and observable inputs from similar assets and liabilities (Level 2). We consider our own credit risk as well as the credit risk of our counterparties when evaluating the fair value of our derivative. The fair values of our notes receivable approximate their carrying or contract values. We also utilize Level 2 and Level 3 inputs as part of our determination of the purchase price allocation for our acquisitions. |
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Recent Accounting Pronouncements | New Accounting Pronouncements In January 2017, the FASB issued ("ASU 2017-01") Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective for annual reporting beginning after December 15, 2017. Early adoption is permitted. We are currently in the process of evaluating the potential impact that the adoption of this standard may have on our consolidated financial statements and related disclosures. In August 2016, the FASB issued (“ASU 2016-15”) Statement of Cash Flows (Topic 230). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 will be effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently in the process of evaluating the potential impact, if any, that adoption of this standard may have on our consolidated financial statements and related disclosures. In June 2016, the FASB issued (“ASU 2016-13”) Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. ASU 2016-13 will be effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted. We are currently in the process of evaluating the potential impact, if any, that adoption of this standard may have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued ("ASU 2016-02") Leases. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We are currently in the process of evaluating the potential impact this standard may have on our consolidated financial statements and related disclosures. In May 2014, the FASB issued ("ASU 2014-09") Revenue from Contracts with Customers which along with related subsequent amendments will replace most existing revenue recognition guidance in GAAP. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The new standard will be effective for the Company beginning on January 1, 2018, however early application beginning on January 1, 2017 is permitted. The standard permits the use of either the full retrospective or modified retrospective transition method. We expect to adopt ASU 2014-09 on January 1, 2018, using the modified retrospective transition method. We are evaluating the complete impact of the adoption to our consolidated financial results. Our primary source of revenue is generated through leasing arrangements, which are excluded from ASU 2014-09. We continue to evaluate and are in the process of quantifying the impact, if any, the adoption of ASU 2014-09 will have on our non-lease revenue streams, including right-to-use annual payments, right-to-use contracts, and utility and other income. |
Earnings Per Common Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Calculation of Numerator and Denominator in Earnings Per Share | Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per Common Share for the quarters ended March 31, 2017 and 2016 (amounts in thousands, except per share data):
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Investment in Unconsolidated Joint Ventures (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments | The following table summarizes our investment in unconsolidated joint ventures for the quarters ended March 31, 2017 and December 31, 2016 (investment amounts in thousands with the number of Properties shown parenthetically as of March 31, 2017 and December 31, 2016):
We received approximately $1.1 million and $0.6 million in distributions from these joint ventures for the quarters ended March 31, 2017 and 2016, respectively. Approximately $0.2 million of the distributions made to us exceeded our basis in joint ventures for the three months ended March 31, 2017, and as such were recorded as income from unconsolidated joint ventures. None of the distributions made to us exceeded our basis in joint ventures for the quarter ended March 31, 2016. |
Reportable Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following tables summarize our segment financial information for the quarters ended March 31, 2017 and March 31, 2016 (amounts in thousands):
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated | The following table summarizes our financial information for the Property Operations segment for the quarters ended March 31, 2017 and March 31, 2016 (amounts in thousands):
The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters ended March 31, 2017 and 2016 (amounts in thousands):
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Earnings Per Common Share - Calculation of numerator and denominator in eps table (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
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Mar. 31, 2017 |
Mar. 31, 2016 |
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Numerator: | ||
Net income available for Common Stockholders – basic | $ 56,888 | $ 50,583 |
Amounts allocated to dilutive securities | 3,890 | 4,310 |
Net income available for Common Stockholders – fully diluted | $ 60,778 | $ 54,893 |
Denominator: | ||
Weighted average Common Shares outstanding – basic (shares) | 86,048 | 84,321 |
Effect of dilutive securities: | ||
Redemption of Common OP Units for Common Shares (shares) | 6,588 | 7,208 |
Stock options and restricted shares (shares) | 375 | 512 |
Weighted average Common Shares outstanding – fully diluted (shares) | 93,011 | 92,041 |
Earnings per Common Share – Basic: | ||
Net income available for Common Shares (usd per share) | $ 0.66 | $ 0.60 |
Earnings per Common Share – Fully Diluted: | ||
Net income available for Common Shares (usd per share) | $ 0.65 | $ 0.60 |
Common Stock and Other Equity Related Transactions - Additional Information (Detail) - $ / shares |
3 Months Ended | ||
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Apr. 14, 2017 |
Mar. 31, 2017 |
Mar. 31, 2017 |
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Class of Stock [Line Items] | |||
Preferred stock dividends paid (usd per share) | $ 0.421875 | ||
OP units converted to shares (shares) | 1,231,796 | ||
Subsequent Event | |||
Class of Stock [Line Items] | |||
Common stock, dividends paid (usd per share) | $ 0.4875 |
Borrowing Arrangements - Additional Information (Detail) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2017
USD ($)
Property
loan
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Dec. 31, 2016
USD ($)
Property
Rate
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Debt Instrument [Line Items] | ||
Unsecured Debt | $ 199,431 | $ 199,379 |
Mortgage notes payable, net | $ 1,859,890 | $ 1,891,900 |
Number of maturing mortgage loans repaid | loan | 1 | |
Debt repaid | $ 21,100 | |
Weighted average interest rate (in percentage) | 5.76% | 4.90% |
Number of pledged properties | Property | 125 | 126 |
Pledged assets, not separately reported | $ 2,300,000 | $ 2,300,000 |
Loans Payable | ||
Debt Instrument [Line Items] | ||
Unsecured Debt | $ 200,000 | |
Secured Debt | Minimum | ||
Debt Instrument [Line Items] | ||
Stated interest rate (in percentage) | 3.45% | |
Secured Debt | Maximum | ||
Debt Instrument [Line Items] | ||
Stated interest rate (in percentage) | 8.87% | |
Manufactured homes | ||
Debt Instrument [Line Items] | ||
Number of pledged properties towards loans repaid | Property | 1 |
Reportable Segments - Additional Information (Detail) |
3 Months Ended |
---|---|
Mar. 31, 2017
integer
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
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