Equity LifeStyle Properties Inc. (ELS) reported on Tuesday (April 21) net income of $13.6 million for the first quarter compared to $12.7 million for the same period last year.
Funds from Operation (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 – were $37.9 million for the quarter on a fully diluted basis, compared to $32.6 million during the same period last year.
The results for the quarter ended March 31 include approximately $1.6 million of net insurance proceeds reflected in income from other investments. Additionally, ELS recognized $1.1 million in gains from the sale of two joint ventures. The combined insurance proceeds and joint venture gains resulted in approximately $2.7 million of additional FFO or approximately $2.3 million of net income.
Due to the Aug. 14, 2008, acquisition of Privileged Access L.P. the results for the quarter also include $5.2 million of net deferrals of non-refundable upfront payments from the sale of right-to-use contracts which are amortized over the estimated customer life along with $1.5 million of net deferrals of commissions paid on the sale of right-to use contracts which are also amortized on the same method as the deferred sales revenue.
The net deferral for the quarter ended March 31, 2009, is approximately $3.7 million.
First quarter 2009 operating revenues were $124.4 million, compared to $106.4 million in the first quarter of 2008 resulting in an increase of approximately 4.5% to income from ELS’ core property operations over the quarter ended March 31, 2008.
For the quarter ended March 31, 2009, the company had 20 new home sales, including three third-party dealer sales, which represents an 83.9% decrease as compared to the same quarter last year. Gross revenues from home sales were $1.2 million for the quarter ended March 31, 2009, compared to $6.2 million for the quarter last year leading to a net loss from home sales of $600,000.
During the quarter, ELS acquired the remaining 75% interests in three joint ventures as follows: Robin Hill, a 270-site property in Lenhartsville, Pa., Sun Valley, a 265-site property in Brownsville, Pa., and Plymouth Rock, a 609-site property in Elkhart Lake, Wisconsin. The gross purchase price was approximately $19.2 million, and ELS assumed mortgage loans of approximately $12.9 million.
ELS also sold its 25% interest in two joint ventures known as Pine Haven, a 625-site property in Ocean View, N.J., and Round Top, a 319-site property in Gettysburg, Pa.
ELS has approximately $48 million of secured mortgage debt that matures in the remainder of 2009.
ELS Forecasts Growth in ’09
ELS estimated that that 2009 operating revenue will grow between 2.75% and 3.25% over 2008 and income from core property operations, excluding property management expenses, is expected to grow from approximately 3% to 4% over 2008.
In its report, ELS acknowledged the existence of volatile economic conditions, including the mix of site usage within the portfolio, yield management on its short-term resort sites, scheduled or implemented rate increases on community and resort sites, scheduled or implemented rate increases of annual payments under right-to-use contracts, occupancy changes, the ability to retain and attract customers renewing or purchasing right-to-use contracts.
Equity LifeStyle Properties Inc., a self-administered, self-managed real estate investment trust with headquarters in Chicago, owns or has an interest in 308 properties in 28 states and British Columbia consisting of 110,855 sites.