Equity LifeStyle Properties Inc. (ELS) today (Oct. 21) reported higher funds from operations (FFO) for the third quarter and nine months ending Sept. 30.
The Chicago-based real estate investment trust said that FFO for the quarter was $22.7 million compared to $21.4 million for the same period in 2007 and for the nine months FFO increased to $77.1 million from $70.9 million.
FFO, a widely used gauge of real estate operating performance, adds depreciation and amortization expenses, as well as other non-operating items, back to net income.
For the third quarter, net income available to common shareholders totaled $1.5 million compared to $9.7 million the year prior. For the nine months, net income totaled $18.3 million versus $27.4 million for the same period a year ago.
Earnings for the quarter and nine months include results from Privileged Access LP. ELS acquired substantially all of the assets of Privileged Access on Aug. 14 for $2 million. As a result of this transaction, Privileged Access contributed approximately $6.4 million to FFO for the quarter.
Privileged Access is parent to RV and vacation membership business Thousand Trails, which leased approximately 24,300 sites at 82 of ELS’s properties.
In another measure of its performance, ELS reported that third quarter property operating revenues were $108.3 million compared to $94.2 million last year. For the nine months, property operating revenues rose to $309.0 million from $285.1 million the year prior.
During an investor conference call after release of the report, CEO Thomas P. Heneghan said he is pleased with the company’s performance in what he called “a very difficult macro environment.” He said he believes ELS’s manufactured home communities and RV resorts will become more desirable in the coming years as Americans seek more simplicity in their business and social lives.
However, increased uncertainty of the future has made people more cautious in their decision-making, he said, and as a result ELS is discontinuing its new home sales program until further notice. The current inventory of some 250 homes will be placed in the rental pool, explained Joe McAdams, ELS president.
“Carrying a new home sales operation at continued losses could not be justified,” McAdams explained.
On the RV side of the business, McAdams said revenues from the Thousand Trails RV resort segment are up 6.7% this year. He said ELS has formed strategic alliances with the Good Sam Club and ReserveAmerica to acquire new customers.
Thousand Trails loses approximately 8,000 members annually, with the reasons for their leaving equally divided due to illness or death, sale of their RV or the belief that membership dues are too high, McAdams explained.
ELS will seek to mitigate people exiting after sale of their RV by offering former owners either a cottage or rental and offering the others a flexible dues program at front-end sales, he said.