ELS Sees 68% Rise in Q4 FFO, Wants to Grow RV Business

Equity LifeStyle Properties, Inc. (NYSE:ELS) reported a net loss of $0.2 million, translating to $0.00 per share, available to common stockholders on a fully-diluted basis for the fourth quarter ended Dec. 31, 2011, as the company continues to encounter costs associated with an acquisition made in May 2011.

Overall net income for the year was $22.8 million, or $0.19 per share, down from the previous year’s $38.4 million and $1.26 per share.

The company’s funds from operations (FFO) increased nearly 68% to $43.5 million or $0.96 per share, up from the third quarter’s $25.9 million, or $0.73 per share.


The FFO would have been still higher, at $44.7 million and $0.99 per share on a fully-diluted basis, excluding the costs associated with ELS’ $1.43 billion acquisition of a portfolio of 75 manufactured home communities and one RV resort made on May 31, 2011. In the fourth quarter, ELS recorded transaction costs connected with the acquisition of approximately $1.2 million.

Without this $1.2 million transaction cost, the company would have posted a net gain of $0.9 million, or $0.02 per share, available to common stockholders. Throughout the year ended Dec. 31, 2011, ELS closed on 75 properties, with associated transaction costs of approximately $18.5 million. The purchase agreement for one of the Michigan properties was terminated, although the company continues to do due diligence on said property.

ELS reported property operating revenues, excluding deferrals, of $158.4 million in the fourth quarter, up 31% from the same quarter in 2010. Out of this revenue, approximately $34.5 million can be attributed to the 75-property acquisition. Total revenues for the quarter were $159.3 million.


For the year ended Dec. 31, 2011, property operating revenues were $570.2 million, compared to $506.5 million the previous year, including a total of $56.6 million of revenue from the portfolio acquired in May. Community base rental income continues to account for the majority of the quarterly revenue, rising nearly 52% from last year to more than $99 million. Property operating and maintenance expenses rose less than 20% to $52.2 million in the fourth quarter.

During the fourth quarter earnings call, ELS CEO Thomas Heneghan spoke to the success of the company’s RV sector.

“Our RV customer is resilient,” he said. “Over the last few years, we’ve seen significant fluctuations in gas prices and extremely difficult economy, yet this revenue stream continues to grow. It is clear the installed base of approximately 8 million RV owners find this lifestyle attractive.”

In response to a later question about the company’s 2012 guidance for growth assumptions around RV membership success, Heneghan said the RV sector would “trail off a little bit next year… but we still like the RV business and we’re still trying to figure out how to grow that business.”

As of Dec. 31, 2011, ELS had a cash balance of approximately $70.5 million. Looking ahead, the next quarter’s average estimate for revenue is $153 million.

View Equity LifeStyle Properties’ fourth quarter earnings report here.

Written by Alyssa Gerace