During an earnings call Tuesday (April 21) to discuss Equity LifeStyle Properties Inc.’s (ELS) first-quarter earnings, Marguerite Nader, president and CEO of the Chicago-based real estate investment trust (REIT) offered details on the company’s growth.
Woodall’s Campground Management reported that the biggest reason for the company’s core earnings growth of 6%, she said, is “first and foremost, we own quality real estate locations. Our properties have attractive natural amenities and are located near popular tourist attractions. We market our locations and encourage our customers to take advantage of the local culture,” she said in the conference call.
“Our Sunbelt locations appeal to the Baby Boomer who wants to get out of the cold weather. This year, the country set records that our customer base will not soon forget, including consecutive days and weeks of temperatures below freezing and triple the average snowfall,” she said.
“With respect to our RV portfolio, we had the highest revenue growth rate since we began investing in the RV business 10 years ago,” she explained. “Our overall growth rate for the quarter was almost 9%. The strong seasonal and transient growth rate of 11% and 17% was fueled by customers coming down from the north earlier and staying longer, mainly due to the weather.
“Looking ahead,” Nader continued, “we are focused on our summer season properties including the summer campaign to get our customer out to enjoy our lifestyle offerings. Our reservation pace for the second quarter is up in all three categories of revenue: Annual, seasonal and transient. Our customers are booking early so they can secure their sites,” she said.
Nader also offered details on the ELS cooperative program with RV dealers and other marketing efforts.
“We’ve increased our dealer program so that now we cover 100 different dealer locations at 65 different unique dealers and those dealers sell about 2,000 RVs each year, right now our membership base includes about 10,000 members who have come to us through this RV dealer program. We really liked the program because it exposed us to new customer base, I think around 40% of this RV sales are to first-time buyers. So that’s a great opportunity for us to get exposure into our properties from these new buyers. So, I think we are seeing new people come to us from certainly the RV dealer programs.”
During the quarter ELS bought one manufactured housing community and one RV park in North Carolina, she said. “These properties will complement our existing properties in the area. We have a great business model and we will continue to look for growth opportunities that allow us to increase shareholder value.”
Paul Seavey, executive vice president and chief financial officer, said, “Our RV business generated core resort base rental income growth of 8.8%. Our annual growth rate was 5.7% resulting from rate in Florida as well as occupancy increases in the Thousand Trails portfolio. Growth in seasonal revenues of 10.5% and growth of 16.6% in transient income was driven by rate and occupancy primarily in Florida. Demand for our Florida Keys properties contributed to the transient income growth. We also continue to see strong demand for our cabin rental program across the portfolio.”
Nader elaborated, saying, “I think the cabin rental program for us is really a way to bring a new customer in that doesn’t have an RV, maybe not understanding the lifestyle, doesn’t want to a tent, but that’s pretty interesting to be able to go in and stay in a cabin. So we are able to, our marketing department has gone in and listed our cabins on travel websites just like you would do to find a hotel. So that added new customer base, which we will be tracking as we see how we can get that person to engage with us for a longer time period rather than just a seven-day stay in a cabin.”
Of course, the company’s goal is a long-term stay, and at the membership RV resorts, “First-quarter membership dues revenue was in line with our guidance,” said Seavey. “During the quarter, we sold and activated approximately 4,200 memberships.”
Looking ahead, he said, “For the second quarter, we anticipate $38.5 million of rental revenue from our core RV properties, growth of 6.9% over last year. We expect continued strong performance from all revenue streams with annuals increasing 5.7%, seasonals increasing 8%, and transient increasing 10%. Our second-quarter reservation pace shows we are currently 84% reserved for our expected seasonal revenues and 55% reserved for our expected transient revenues, ahead of this time last year.”