During a conference call Tuesday morning (July 21) about Equity LifeStyle Properties’ (ELS’) earnings for the second quarter, CEO Marguerite Nader went into some details about the RV resort sector’s impact on the Chicago-based real-estate investment trust (REIT).
“Our second-quarter results show strong growth, with core NOI (net operating income) up 5% and FFO (funds from operations) up 11%. The strength of our NOI is due to the high demand for our real estate locations. Our properties are located where the greatest demand exists for our customer demographic, the Baby Boomer generation,” Nader said.
“With respect to our RV portfolio,” — that includes Encore and Thousand Trails resorts — “we had strong revenue growth rate of 7.7%. This overall growth rate was bolstered by great performance from our seasonal and transient customers. There was a strong demand from our customers to get outdoors after the long winter,” she explained.
“While the transient component of our RV business only represents 5% of our overall revenue,” Nader continued, “it is an important figure for the rest of our business. Our transient business is concentrated in the summer months, with over 50% of the full-year revenue coming in from Memorial Day to Labor Day. We now have two of the important summer holidays completed, and we are pleased with the results, with a 7% increase year-over-year. This additional revenue was driven from a combination of new customers visiting our resorts, existing customers returning, and adjusting the rate where demand is high.
To keep growing their RV business, Nader said, “We continue to focus on delivering a great experience to our customers, both while they are in our communities and before they arrive, through improved reservation channels. We have completed development on our reservation app, and have improved our websites to meet the needs of our customers. Our marketing efforts extend beyond the 9 million install base of RVers to the 40 million outdoor enthusiasts who are interested in learning about our product offerings,” she said.
Nader talked about the ELS purchase during the quarter of “one property in Miami, Fla., with a total of 300 sites. The property will complement our 15 properties in the area.”
Later in the call Paul Seavey, executive vice president and CFO, said, “Our second-quarter core RV resort base rental income growth was 7.7%. Revenue from annuals performed as expected in the quarter, resulting in 5.7% growth over 2014. Revenue from seasonal and transient, performed better than expected, delivering 10.6% and 12.6% year-over-year growth, respectively.
“The annual revenue growth was driven,” Seavey continued, “by increased rates in our Encore properties and a mix of rate and occupancy increases in the Thousand Trails portfolio.
Seavey also said ELS expects its RV business to finish out the year 6% ahead of 2014.
To listen to a recording of the entire call, click here.