Equity LifeStyle Properties(US:ELS)2020-10-20 20:36Financial Data and Key Metrics Changes - The company reported a normalized FFO per share of $0.55 for Q3 2020, with early debt retirement costs of approximately $9.7 million added back to the FFO calculation [13] - Year-to-date core property operating revenues increased by 3.7%, while core property operating expenses rose by 5%, resulting in a 2.7% increase in core NOI before property management [16] - The weighted average rate on outstanding debt decreased by almost 35 basis points to 3.7%, and the weighted average debt maturity extended by 1.5 years to 13 years [18] Business Line Data and Key Metrics Changes - New home sales within MH communities increased by 42% year-over-year, with applications for residency up by 25% for the quarter [6] - Core MH rent growth was reported at 4.3%, driven by approximately 3.8% rate growth and occupancy gains [13] - Core RV resort base rental income increased by 5.2% for Q3 and 90 basis points year-to-date compared to the same period last year [13] Market Data and Key Metrics Changes - The company saw a 121% increase in RV revenue through digital channels, with online camping pass sales up by 56% [7] - The demand for RV parks increased during traditional weekend holidays and weekdays, with nearly 60% of transient bookings completed online compared to 43% last year [7] - The company activated 6,400 trial memberships through the Thousand Trails preferred RV dealer program, marking a 15% increase from last year [8] Company Strategy and Development Direction - The company plans to issue detailed guidance for 2021 in January, focusing on core MH and RV annual revenue streams, which historically represent over 70% of total core revenues [9][17] - The company is actively pursuing new development opportunities in the RV space, with two ground-up developments closed in the quarter [21][22] - The company emphasizes long-term value creation and balance sheet flexibility, with a focus on high-quality, well-located properties [19][37] Management's Comments on Operating Environment and Future Outlook - Management noted strong trends in MH communities, with increased occupancy and engagement from residents [5] - The company anticipates a 4% rate growth in core MH revenue and core RV annual rental rates for 2021 [9] - Management expressed caution regarding seasonal and transient revenue due to travel restrictions, particularly concerning Canadian customers [10][25] Other Important Information - The company incurred approximately $2.8 million in hurricane-related expenses during the quarter, with core utility and other income up by about 6.5% compared to Q3 2019 [15] - The company has a cash balance of over $50 million after funding its October dividend and has available capacity of $350 million from its unsecured line of credit [19] Q&A Session Summary Question: Can you provide more detail on the RV development properties acquired? - Management confirmed the acquisition of two ground-up developments, one in Virginia and another in Florida, both in high-demand markets [21][22] Question: What is the expected stabilized development yield and time to stabilization? - The stabilized yield for the Florida property is expected to be around 6% in 2 to 3 years, while the Virginia property will take longer due to additional work needed [24] Question: How will Canadian travel restrictions impact seasonal and transient RV business? - Management noted that approximately $27 million of RV revenue comes from Canadian customers, with risks associated with seasonal and transient revenue due to border regulations [25][26] Question: What was the bad debt expense for the third quarter? - The company reported that delinquency levels remained consistent, with age delinquencies around 50 basis points [33] Question: What are the return expectations for the new development projects? - Expected yields on the new parcels are in the high single digits, with strong demand anticipated for lease-up periods [51]