Equity Lifestyle Props (NYSE:ELS) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call
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The full earnings call is available at https://edge.media-server.com/mmc/p/u366ftb4/
Summary
Equity Lifestyle Properties reported a 6.5% increase in NOI and a 7.7% growth in normalized FFO per share for the second quarter of 2026, driven by strong annual revenue streams and controlled expenses
The company raised full-year guidance for normalized FFO per share and highlighted strong demand in its MH and RV portfolios, with MH occupancy at 94% and expansion projects underway to meet demand
Recent legislation, the 21st Century Road to Housing bill, is expected to positively impact the manufactured housing segment by easing restrictions and promoting expansion
The Thousand Trails membership platform saw an 11% increase in subscription revenue, and the company completed a launch of new subscription memberships with strong demand
Guidance for 2026 includes a midpoint FFO per share of $3.18, with core property income growth projected between 5.5% and 6.5%, and the company maintains a strong balance sheet with limited floating-rate exposure
Full Transcript
Paul Seavey, Executive Vice President and Chief Financial Officer
Good day everyone and thank you all for joining us to discuss Equity Lifestyle Props second quarter 2026 results. Our featured speakers today are Marguerite Nader, our Vice Chairman and CEO; Patrick Waite, our President and COO; and I am Paul Seavey, our Executive Vice President and CFO. In advance of today’s call, management released earnings. Today’s call will consist of opening remarks and a question and answer session with management relating to the company’s earnings release
For those who would like to participate in the question and answer session, management asks that you limit yourself to one question so everyone who would like to participate has ample opportunity. As a reminder, this call is being recorded. Certain matters discussed during this conference call may contain forward-looking statements in the meaning of federal securities laws. Our forward-looking statements are subject to certain economic risks and uncertainty
The company assumes no obligation to update or supplement any statements that become untrue because of subsequent events. In addition, during today’s call we will discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release, our supplemental information, and our historical SEC filings. At this time, I’ll now turn the call over to Marguerite Nader, our Vice Chairman and CEO.
Marguerite Nader, Chief Executive Officer
Good morning and thank you for joining us today. I am pleased to discuss our operating results for the quarter. Our NOI increased 6.5% as compared to last year. We focused on translating NOI growth to normalized FFO growth driven by continued strength in our annual revenue streams and managed expenses throughout our portfolio. Our normalized per share FFO growth for the quarter is 7.7%. The strength of our portfolio allows us to raise our full year guidance for normalized FFO per share
Our MH and RV portfolio benefits from powerful long term demographic tailwinds including the aging of the population and the fact that approximately 70% of our MH communities are senior lifestyle oriented. These demand drivers help support the stability of our business and position us well for continued outperformance even in an environment of broader market uncertainty. Our MH core portfolio represents approximately 60% of our total revenue with occupancy of 94%
We have increased our MH occupancy for two consecutive quarters and have raised guidance for the rest of the year for our largest revenue line item. Our properties are in demand and the teams are executing on our strategy to increase occupancy. The manufactured housing community model benefits from stability driven by long term residency and high occupancy levels. Once communities achieve strong occupancy they tend to remain highly occupied over time
Our portfolio is further differentiated by our resident base with 97% of MH residents owning their home and choosing our communities as their retirement destination. Beyond housing, our communities foster a strong sense of connection and purpose through resident-led clubs and activities. The activities at our properties promote wellness, creativity, lifelong learning and social engagement, creating neighborhoods where residents can build relationships and remain active and involved
Annual RV and Marina revenue grew 4.8% year to date driven by strong retention across our RV sites, park models, resort cottages and other RV accommodations. We saw decreased attrition from our customer base as compared to last year and a strong level of engagement from new customers. Our annual RV customer base is split between winter and summer seasons. Approximately 70% of our annual revenue is generated from Sunbelt properties serving active adult customers
Like our MH residents, they value community, lifestyle and quality amenities. The remaining 30% of revenue is generated from seasonal properties that primarily serve families who return year after year for recreation, traditions and the unique community experience our properties offer. During the quarter, the Thousand Trails portfolio delivered strong performance with membership growth of approximately 800 members and subscription revenue increasing by 11%
The strength of our membership platform continues to resonate with customers as more guests recognize the value and flexibility it provides. I want to thank our team members for their commitment to our customers and communities. I will now turn the call over to Patrick to provide further details on our financial performance
Patrick Waite, President and Chief Operating Officer
Thanks, Marguerite. Stable annual revenue streams from MH residents, RV and Marina annual guests, and Thousand Trails members have always been the focus of our business, accounting for more than 90% of our core revenue. Over the last five years, our core MH revenue growth has averaged 5.8% while our core RV revenue growth has averaged 5.7%, led by long term annual RV revenue which makes up more than 70% of total core RV revenue. I’m pleased with the build back of annual customers in our northern markets over the last year.
Occupancy across our MH portfolio remains strong at 94% supported by demand from our 55+ customers to purchase and rent homes in our communities. Year to date, growth of our MH occupancy has come from both sales and rentals. We also typically see approximately 20% of our home sales are to existing renters who choose to become a long term homeowner and current homeowners who want to upgrade or downsize from their existing home. Our Florida markets continue to support long term occupancy growth with our major submarkets of West Palm Beach, Fort Lauderdale, Tampa, St. Pete and Ocala-Daytona all meeting demand for the value that residents find at our active lifestyle 55+ communities, particularly given the cost of alternative housing in those markets. We also continue to see steady demand across our highly occupied California and Arizona markets, while the northern U.S. submarkets in the Midwest, Northeast and Mid-Atlantic are in the middle of the summer home selling season where we see demand contributing to 40% of new home sales in the quarter.
Property expansions are key elements of our MH occupancy growth strategy. As we recognize the substantial demand for affordable 55+ communities in Florida, we will add occupancy through sales and rentals across four recent development projects with close to 500 sites. At another age-qualified expansion project in the Phoenix market, we added more than 20 units of occupancy, growing the occupancy of the property by 4% year over year. The much anticipated 21st Century Road to Housing bill became law earlier this month.
Over the last 10 years, through the work of the Manufactured Housing Institute and members of the industry, manufactured housing has been increasingly recognized at the federal and state levels as a source to address the need for more affordable housing in the U.S., and manufactured housing is specifically addressed in the Road legislation. A few key points to mention. First, manufactured housing is exempt from the institutional investor provision in the act, which preserves investment in the asset class.
Second, HUD Code homes will not be required to have a permanent chassis, which allows manufacturers greater flexibility in home design. They will expand the market for manufactured housing by offering homes that include designs similar to traditional site-built homes as well as two-story configurations. And third, zoning and land use best practices encourage state and local governments to accommodate HUD Code manufactured homes in more locations and developments
The practical implications for ELS will take some time to materialize, but they include more diversity in the homes we can place in our communities and some further support to secure entitlements as we pursue expansion projects. We completed the launch of our new Thousand Trails subscription memberships a little over a year ago. Since offering these memberships, we’ve seen strong demand with more than 9,000 Thousand Trails memberships sold, including almost 7,000 over the last 12 months
Our 12th annual 100 Days of Camping campaign is in full swing across our RV portfolio. The social media campaign celebrates the roughly 100 days between Memorial Day and Labor Day and has 33 million views across the social media channels so far this year. Campers across the country are using their hashtag and sharing photos, posing with their campaign rally towel at 100daysofcamping.com. Now I’ll turn it over to Paul
Paul Seavey, Executive Vice President and Chief Financial Officer
Thanks, Patrick, and good morning, everyone. I will highlight some takeaways from our second quarter and June year-to-date results, review our guidance assumptions for the third quarter and full year 2026, and close with a discussion of our balance sheet. Second quarter normalized FFO was $0.74 per share. Strong core portfolio performance generated 6.5% NOI growth in the quarter compared to the same quarter last year, 120 basis points higher than guidance
We continue to see solid interest from life companies and GSEs to lend for 10-year terms. High-quality age-qualified MH assets continue to command best financing terms. Now we would like to open it up for questions
Thank you. At this time we’ll conduct a question-and-answer session. As a reminder, to ask a question, you’ll need to press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from the line of Michael Goldsmith of UBS. Your line is now open
Michael Goldsmith, Analyst at UBS
Paul Seavey, Executive Vice President and Chief Financial Officer
The change from our prior guidance reflects our transient expectations for third quarter. That’s based on current reservation pace, and we reduced fourth quarter year-over-year growth in transient, and that’s flat year over year
OPERATOR
Thank you. One moment for our next question. And our next question comes from the line of Steve Sakwa of Evercore ISI. Your line is now open
Steve Sakwa, Analyst at Evercore ISI
And what do you think the right timeframe is to get that portfolio back to 95%?
Marguerite Nader, Chief Executive Officer
Sure. Thanks, Steve. I think Patrick’s going to walk you through how we’re thinking about growing occupancy. And just to point out that we did grow occupancy—I mentioned it in my opening remarks—for the last two quarters, but maybe, Patrick, you could walk through it
Patrick Waite, President and Chief Operating Officer
As you pointed out, we came through a transition here where we had some impact from storms that requires some recovery, putting inventory into those communities. And broadly across the portfolio, we feel good about demand and feel good about occupancy growth in the back half of the year
Marguerite Nader, Chief Executive Officer
So that contributes to our positive outlook on growing occupancy
OPERATOR
Thank you. One moment for our next question. And our next question comes from the line of Jamie Feldman of Wells Fargo. Your line is now open
Jamie Feldman, Analyst at Wells Fargo
Great, thanks for taking the question. I know in the third quarter you start to send out renewal rates for the following year. Can you talk through, for your annual business lines, what those are starting to look like or what you’re asking and if you have any responses yet?
Patrick Waite, President and Chief Operating Officer
So we’re going through that process right now. I’d say from the perspective of a range, we will be in a position to do that maybe in the next call
Paul Seavey, Executive Vice President and Chief Financial Officer
And Jamie, one thing to keep in mind as we think about those increases, a couple of metrics that we look to are indications of COLA, which typically comes out a bit later in the year, as well as the CPI that’s released in August as well as September
Jamie Feldman, Analyst at Wells Fargo
Okay, thank you
Marguerite Nader, Chief Executive Officer
Thanks, Jamie
OPERATOR
Thank you. One moment for our next question. Our next question comes from the line of Jeffrey Specter of Bank of America Securities. Line is now open
Jeffrey Spector, Analyst at Bank of America Securities
Great, thank you. You know, just listening to the opening comments and discussion around the 55-plus customer, given you have the expertise, you have the strong brand serving that 55-plus customer, how are you thinking about 55-plus built-to-rent communities? I’ve seen some articles in that it seems to be an emerging niche area within resi
Marguerite Nader, Chief Executive Officer
Sure. So, you know, we have within our portfolio, we obviously have rental properties, rental communities. And as we look to opportunities to grow, we’ll look at those types of assets, but really focused in on our MH portfolio and we’ll continue to look at opportunities to grow inside the MH business
OPERATOR
Thank you. One moment for our next question. Our next question comes from the line of Eric Wolf of Citi. Your line is now open
Eric Wolf, Analyst at Citi
And then could you also talk about what’s in the income from other investments and if that’s sort of one-time or more recurrent in nature?
Paul Seavey, Executive Vice President and Chief Financial Officer
Eric Wolf, Analyst at Citi
Thank you
Paul Seavey, Executive Vice President and Chief Financial Officer
You’re welcome
Marguerite Nader, Chief Executive Officer
Thanks, Eric
OPERATOR
Thank you. One moment for our next question. Our next question comes from the line of Brad Heffern of RBC. Your line is now open
Brad Heffern, Analyst at RBC Capital Markets
Yeah. Hey everybody. Thanks. On seasonal transient, you obviously mentioned the weak June, and you’ve clearly adjusted things for a slower booking pace. Can you talk through just what you think is driving that? I know sometimes it’s weather. I would think at the same time, like the Canadian customer comps are getting easier. So just any of the dynamics there would be great
Patrick Waite, President and Chief Operating Officer
And, you know, as we work our way through that, we’ll just have better visibility and can share some more insight. Thanks, Brad
OPERATOR
Thank you. One moment for our next question. Our next question comes online of John Kim of BMO Capital Markets. The line is now open
John Kim, Analyst at BMO Capital Markets
Thank you. I wanted to ask about the expansion sites in MH and if that’s having a direct impact to MH occupancy. So my question is, are these harder to lease up given they require a new, more expensive home, or are they easier to lease up because they’re in more established communities? And also wanted to know how you price expansion sites versus a comparable existing site within the community
Patrick Waite, President and Chief Operating Officer
OPERATOR
One moment for our next question. Our next question comes from the line of Handell Saint-Juste of Mizuho Securities. Line is now open
Handell Saint-Juste, Analyst at Mizuho Securities
Hey guys, thanks for taking the question. I was hoping you could share a bit more color on the cadence of RV bookings throughout 2Q and early 3Q. I think you mentioned that Memorial Day was a bit light but within your range of expectations. So I was hoping to get some more color on how the Juneteenth and July Fourth holiday weekends were versus prior year and versus your expectations. And did you see any benefit from the World Cup? Thanks
Patrick Waite, President and Chief Operating Officer
Handell Saint-Juste, Analyst at Mizuho Securities
Thank you
Marguerite Nader, Chief Executive Officer
Thanks, Handell
OPERATOR
Thank you. One moment for our next question. Our next question comes from the line of Adam Kramer of Morgan Stanley. Your line is now open
Adam Kramer, Analyst at Morgan Stanley
Hey, great. Good day, guys. Wanted to ask about the membership business. I think you’ve talked in the past about sort of prioritizing rate over sort of membership count. It looks like it’s declined now. So I just wanted to ask sort of what level is maybe sort of the right level for memberships and at what point, you know, maybe you sort of anchor back to membership count versus prioritizing rate
Marguerite Nader, Chief Executive Officer
OPERATOR
One moment for our next question. Our next question comes online of Jason Wayne of Park Racing. Line is now open
Jason Wayne, Analyst at Park Racing
Hi, thanks for the question. So you consolidated seven RV communities into the non-core portfolio during the second quarter. Could you just give some color on what was acquired in terms of geography mix, annual and transient, and occupancy?
Patrick Waite, President and Chief Operating Officer
And just with respect to the current mix of revenues, it’s about 40% longer-term streams at this point. That’s been increasing with our focus in our platform on the longer-term revenue streams, and we’re optimistic about continuing to grow the long-term revenue streams in that portfolio
OPERATOR
Thank you. One moment for our next question. Our next question comes from the line of Wesley Golladay of Baird. Your line is now open
Wesley Golladay, Analyst at Baird
Hey everyone, I just want to go back to the comment about the positive demographics for MH. Would you look to increase your MH expansions and, if so, what is the primary constraint for doing more?
Marguerite Nader, Chief Executive Officer
Wesley Golladay, Analyst at Baird
Thank you
OPERATOR
Thank you. One moment for our next question. Our next question comes from the line of Peter Amerwitz of Deutsche Bank. Your line is now open
Peter Amerwitz, Analyst at Deutsche Bank
Yes, thank you for taking the question. Just to go back to some of your comments about the expenses, I think you said some savings on utilities and real estate taxes. Any other commentary you could provide or color on other expense items? And I guess as we think about expenses in the back half and into ’27, how much of the, I guess, expense downside relative to expectations is sustainable going into the second half in 2017?
Paul Seavey, Executive Vice President and Chief Financial Officer
Some of that is dependent on what we see in insurance. That’s probably been the largest driver of variability in that third over the last few years
Peter Amerwitz, Analyst at Deutsche Bank
All right. Thanks for the time
Paul Seavey, Executive Vice President and Chief Financial Officer
Thank you
OPERATOR
Thank you. One moment for our next question. Our next question comes from the line of David Siegel of Green Street. Your line is now open
David Siegel, Analyst at Green Street
Thank you. I’m trying to better understand the slow lease-up pace for MH. I want to, you know, is it due to the lack of available home inventory in properties that have demand? Is it due to a lack of demand in the properties that have the vacant sites, or is it still primarily related to repairing storm damage or other factors?
Patrick Waite, President and Chief Operating Officer
OPERATOR
Thank you. One moment for our next question. Our next question comes online of Jesse Letterman of Zelman. Your line is now open
Jesse Letterman, Analyst at Zelman
Marguerite Nader, Chief Executive Officer
And we also look at the global basis and consider how our market rates, you know, may compare to what’s happening with CPI, as Paul pointed out earlier, and then the prices of new and resale homes in our community. So those are important pieces to consider. And as we think about our long-term levels of delinquency throughout our portfolio, they have been and remain very low
Jesse Letterman, Analyst at Zelman
I appreciate it. Thank you
Marguerite Nader, Chief Executive Officer
Thank you
OPERATOR
Thank you. One moment for our next question. And our next question comes from the line of John Kim of BMO Capital Markets. Your line is now open
John Kim, Analyst at BMO Capital Markets
Thanks for taking the follow-up. When I look at your site count on page 12, the RV transient sites are now up quarter over quarter and up 20% over the last two years despite the uneven results. And I know you use transient RV sites as a front door to annual and seasonal customers, but are you seeing like a slower conversion rate from transient to annual/seasonal and that’s why the site count keeps going up?
Marguerite Nader, Chief Executive Officer
Well, one of the reasons the site count’s increased was really as a function of putting our JV properties inside of that site count. So that’s really the driver of those differences, John
John Kim, Analyst at BMO Capital Markets
And when did that happen?
Marguerite Nader, Chief Executive Officer
That happened in the two quarters ago, I believe. So if you’re comparing it to a couple of years ago, that’s the main driver of the difference
John Kim, Analyst at BMO Capital Markets
But is there anything about that, the conversion rate or demand in annual and seasonal, a little bit slower than it has been in the past?
Patrick Waite, President and Chief Operating Officer
So it’s an introduction to our property for a good chunk of our leads, and we’ll continue to meet the longer-term demand. And we’re seeing it come through on the annuals and are optimistic about the back half of the year
John Kim, Analyst at BMO Capital Markets
Okay, thanks for clarifying
Marguerite Nader, Chief Executive Officer
Thank you, John
OPERATOR
Thank you. Since we have no more questions off the line at this time, I would like to turn it back over to Marguerite Nader for closing comments
Marguerite Nader, Chief Executive Officer
Thank you for joining us today. We appreciate you taking the time to discuss our business. Take care
OPERATOR
Thank you for your participation in today’s conference. This concludes the program. You may now disconnect
