Summertime is high season for getaways, and despite -- or maybe because of -- the continuing pandemic, it proved to be a hot three months for a real estate investment trust (REIT) that specializes in cottages, cabins, recreational vehicles, and manufactured home communities.
"The third quarter represents our most active camping season, and our results show the demand for our product offerings," Marguerite Nader, president and CEO of Equity LifeStyle Properties (NYSE: ELS), said in the company's 3Q20 earnings call on Oct. 19.
The numbers bear that out. In its 3Q21 earnings announced on Oct. 18, the company said total revenues jumped 16.8% from 3Q20 and 15.5% year to date compared with the first three quarters last year. Net income year to date rose to $1.08 per share, compared with $0.90 per share at this point in 2020.
And funds from operations (FFO) rose by $28.7 million, or $0.15 per share, to $124.5 million, from this point last year. Nader pointed to that important REIT metric in the earnings call, touting normalized FFO growth of 18% compared with 3Q20 and 21% compared to pre-pandemic 3Q19.
Equity LifeStyle Properties stock closed at $86.11 on Friday, Oct. 22, close to its 52-week high of $88.47 from Sept. 2 and well off its 52-week low of $57.93 from last Nov. 10. Its current annual dividend of $1.45 per share yields 1.68% at that price, and a market cap of $15.8 billion. Nareit pegs this stock's one-year return at 28.21% at this writing.
By land and by sea, demand is rising, and this company is capitalizing
As of Oct. 18, Chicago-based Equity LifeStyle Properties owned or had controlling interest in 436 locations with 167,123 sites in manufactured home (MH) communities, RV resorts, and campgrounds in 33 states and British Columbia.
That lifestyle isn't just for landlubbers. The company's Loggerhead Marinas portfolio includes 23 properties in five states: 19 in Florida, two on the Carolinas coast, one on Lake Erie in Ohio, and one on the Kentucky side of Dale Hollow Lake.
Back on land, the company cited new customer growth in both its MH and RV businesses, with new home sales hitting a new record while jumping 75% year to date, and occupancy more than 95% in mobile home communities. "Home ownership transfers were 28% higher than last year, indicating strong demand for the homes owned by our residents," Nader added.
RV properties, meanwhile, saw a 14% year-over-year increase in revenue, while its subscription-based Thousand Trails Camping revenue also grew 12%.
Equity LifeStyle Properties plans to capitalize on that demand by raising the rent for 48% of its manufactured home tenants, yielding an anticipated 4.7% growth in core revenue there, as well as a 5% growth in core annual RV rental rates.
"These two line items have historically represented over 71% of our overall revenue," Nader said.
The company said it also plans to continue building revenue through the more than $500 million in acquisitions it's made so far this year, including an 800-site parcel within an RV park in Myrtle Beach, South Carolina and buying out a joint venture partner's interest in an 1,800-site RV park in Tucson, Arizona.
The Millionacres bottom line: Looking ahead
Manufactured home communities represent opportunity for tenants and homeowners alike, especially at their price points, which are relatively lower than many other options. Then there's the appeal of working from wherever you are. (Read more about "lomads" here.)
That's contributed to soaring RV sales, and since they need a place to park, that bodes well for outfits like Equity LifeStyle Properties, who accommodate these wayfarers with amenities-laden destinations.
"More than half of the respondents who are working remotely said that they would consider an extended stay in the Sun Belt due to their flexible work arrangements," Nader said of those survey results. "Turning to 2022, we anticipate continued demand into next year."
We can see why.