ELS (ELS) Q3 2026 Earnings Call Transcript

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DATE

Oct. 21, 2026

CALL PARTICIPANTS

• Vice Chairman and Chief Executive Officer - Marguerite Nader
• President and Chief Operating Officer - Patrick Waite
• Executive Vice President and Chief Financial Officer - Paul Seavey

TAKEAWAYS

• Normalized FFO -- $0.79 per share for the quarter, in line with management's previous guidance.
• Normalized FFO Guidance -- $3.15 to $3.21 per share for the full year, with the midpoint remaining unchanged at $3.18 per share.
• Core Property Operating Income Growth -- 6.7% for the quarter, reflecting continued performance in the core portfolio.
• Core Property Operating Revenues -- 4.4% increase for the quarter, driven by higher rental income across manufactured housing (MH) and recreational vehicle (RV) segments.
• Core MH Base Rental Income -- 5.7% growth for the quarter and nine months ended Sept. 30, 2026, including rate growth of 5.6%.
• MH Occupancy -- 99-site increase during the quarter and 166-site increase year-to-date.
• RV and Marina Base Rental Income -- 2.1% growth for the quarter, primarily driven by annual site occupancy gains.
• Annual RV Base Rental Income -- 5.3% growth for the quarter, representing approximately 75% of total RV and Marina base rental income.
• Preliminary 2027 MH Rent Growth -- 5.1% assumption for the upcoming year, based on rent increase notices sent to approximately 50% of MH residents.
• Preliminary 2027 Annual RV Rent Growth -- 4.7% assumption for the upcoming year, with rates already set for more than 95% of annual sites.
• Membership Dues Subscription Revenue -- 9.2% increase for the quarter and 10.8% year-to-date, contributing to a 9.5% increase in net membership contribution to $52.8 million.
• Core Property Operating Expenses -- 1.3% increase for the quarter, which management noted was roughly 135 basis points lower than average CPI over the same period.
• Full Year Core Expense Guidance -- 1.6% to 2.2% growth, narrowed from previous estimates to reflect year-to-date results.
• Debt to EBITDA -- 4.3x as of the end of the quarter, with an interest coverage ratio of 5.7x.
• Available Capital -- $1.2 billion through a combined line of credit and ATM programs, supporting balance sheet flexibility.
• Seasonal and Transient RV Rent -- 4.4% and 5.8% decreases, respectively, for the third quarter, which management stated was slightly better than previous guidance.
• Full Year RV and Marina Rent Growth Guidance -- 0.9% to 1.5% range, reflecting current seasonal and transient reservation pacing for the fourth quarter.
• New Home Sales -- 97 new homes sold during the quarter, with Florida markets serving as primary drivers of occupancy gains.
• Utility Income Recovery -- 48.5% for the quarter and 49.7% for the year-to-date period, representing a 160-basis-point increase over the prior year.
• Non-Core Portfolio NOI -- $3 million generated during the quarter, with full-year expectations between $8.3 million and $12.3 million.

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RISKS

• Seavey stated, "The expenses in the core it was about $400,000 higher than guidance in the third quarter, primarily because of utility expenses," noting that higher usage was driven by temperature trends and identified water leaks.
• Waite warned that while property teams are engaging with customers, management has seen no real improvement in seasonal and transient reservation pace for the upcoming winter season.

SUMMARY

Equity LifeStyle Properties, Inc. (NYSE:ELS) reported third-quarter results that matched management's expectations for funds from operations while demonstrating continued occupancy growth in its core manufactured housing and annual recreational vehicle portfolios. Management narrowing its full-year 2026 guidance to reflect year-to-date performance while providing early 2027 rental growth assumptions based on notices already issued to a significant portion of its resident base. The company remains focused on operational efficiency and customer acquisition, specifically targeting the emerging demand from the Gen X demographic as a complement to its traditional baby boomer audience. Management reported a strong balance sheet with $1.2 billion in available capital and no secured debt maturities until 2028.

• CEO Nader stated, "Our communities have a long track record of sustaining high occupancy levels with 50% of our communities more than 98% occupied for an extended period."
• COO Waite reported that a redesigned manufactured housing website led to a double-digit year-over-year increase in community and home tour requests.
• Management noted that the mark-to-market rent increase for new residents entering manufactured housing communities averaged 12% during the quarter.
• Nader indicated that 14% of annual site sales and 7% of new Thousand Trails memberships year-to-date were conversions from seasonal and transient customers.
• The company's 12th annual social media campaign, 100 Days of Camping, achieved more than 100 million views, doubling its 2025 engagement.
• CFO Seavey noted that current 10-year secured loans are being quoted between 6.1% and 6.6%, with high-quality, age-qualified manufactured housing assets commanding the best financing terms.
• Management highlighted the passage of the Road to Housing Act as a catalyst for future innovation in factory-built housing by removing permanent chassis requirements.

INDUSTRY GLOSSARY

• EBITDAre: Earnings before interest, taxes, depreciation, and amortization for real estate, a standard performance metric for REITs.
• FFO (Funds from Operations): A measure used by REITs to define cash flow from their operations, excluding gains or losses from property sales and adding back depreciation.
• HUD Home: A factory-built home constructed according to the United States Department of Housing and Urban Development standards.
• MH (Manufactured Housing): Factory-built housing units typically located in land-lease communities.
• NOI (Net Operating Income): Total property revenues minus all operating expenses.
• Road to Housing Act: Recent legislation aimed at updating manufactured housing standards to allow for more innovation and broader adoption.
• RV (Recreational Vehicle): Vehicles or trailers used for seasonal or transient camping stays.
• Thousand Trails: A membership-based campground network owned and operated by the company.

Full Conference Call Transcript

Operator: Day, everyone, and thank you all for joining us to discuss Equity LifeStyle Properties' third quarter 2026 results. Our featured speakers today are Marguerite Nader, our Vice Chairman and CEO, Patrick Waite, our President and COO, and Paul Seavey, our Executive Vice President and CFO. In advance of today's call, management released earnings. Today's call will consist of opening remarks and a question-and-answer session with management relating to the company's earnings release. For those who would like to participate in the question-and-answer session, management asks that you limit yourself to one question so everyone who would like to participate has ample opportunity. As a reminder, this call is being recorded.

Certain matters discussed during this conference call may contain forward-looking statements and the meanings of the federal securities laws. Our forward-looking statements are subject to certain economic risk and uncertainty. The company assumes no obligation to update or supplement any statements that become untrue because of subsequent events. In addition, during today's call, we will discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release, our supplemental information, and our historical SEC filings. At this time, I would like to turn the call over to Marguerite Nader, our Vice Chairman and CEO.

Marguerite Nader: Good morning, and thank you for joining us today. I am pleased to discuss our third quarter results and share early insights into the momentum we see building into 2027. For the quarter, we delivered strong normalized FFO growth of 4.6%, in line with our expectations. Our full year guidance reflects continued strength. I will highlight the key demand drivers supporting our annual business, as well as the ways we are reaching and engaging new customers. The strength of our business is reflected in continued occupancy gains. Our teams remain focused on increasing occupancy, and we believe we have the right product and price point to continue this growth.

Our communities have a long track record of sustaining high occupancy levels with 50% of our communities more than 98% occupied for an extended period. Our customers are seeking a low-maintenance lifestyle that offers privacy and control of their home, along with opportunities for connection and an active social life. Our communities meet these needs by offering an amenity-rich environment, strong sense of community, and a compelling value compared to other options. For many years, we have discussed the impact of baby boomers choosing our locations for the lifestyle, value, and sense of community they offer. We are now seeing Gen X customers make similar decisions, with many seeking a community setting that supports a more flexible, low-maintenance lifestyle.

Over the next 20 years, approximately 10,000 people per day will turn 65, creating a steady source of demand that supports the long-term outlook for our communities. Our customer acquisition platform across both manufactured housing and RV provides a strong lead flow for our teams in the field. Our teams are well-versed at identifying prior guests and prospective customers who are interested in annual stays and using data and technology to nurture those relationships over time. For the RV customer, we have longstanding relationships with leading booking platforms that help us reach travelers as they are planning trips. Turning to our 2027 expectations, we expect continued growth across both our manufactured housing and RV portfolios.

We continue to engage closely with our residents to identify and prioritize capital improvements across our communities, including investments in amenities, infrastructure, common areas, and other enhancements that support the residents' experience. These investments improve the quality and appeal of our communities while also supporting the long-term value of our assets. Our current performance and early outlook for 2027 underscores the durability of our platform. I want to thank our employees for their hard work and commitment to our residents and customers. Their efforts enhance the customer experience and contribute to our record of superior operating performance. I will now turn the call over to Patrick to provide an overview of property operations.

Patrick Waite: Thanks, Marguerite. We wrapped up a busy summer season in the third quarter, and soon we'll turn our focus to welcoming snowbirds in the Sun Belt. In the quarter, we increased MH occupancy by nearly 100 sites. We sold 97 new homes during the quarter, and we continue to meet demand from both buyers and renters. Florida was the primary driver of the occupancy gains, in particular Fort Lauderdale and West Palm Beach markets, the Vero Beach market, and the Fort Myers/Punta Gorda markets on the Gulf Coast. Additional drivers were properties in California and throughout the Northern U.S.

We continue to fill expansion sites with properties in the Arizona markets of Phoenix and Mesa contributing to MH occupancy growth year-to-date. During the quarter, we launched a redesigned website for our MH communities. The new website modernizes the customer experience with improved navigation, search functionality, mobile accessibility, and more robust content. Together, these enhancements improve lead generation and make it easier for prospective residents to find the right home in the ideal community. Early results are encouraging, with community and home tour requests up double digits year-over-year. Demographics continue to provide a tailwind for MH demand. The baby boomers continue to turn 65 at a rate of 10,000 per day, and the oldest Gen Xers are now 61.

They are increasingly finding our communities to be an attractive option, offering compelling value and an active lifestyle. While the average age of new residents remains stable around 65, the Gen X cohort is following the baby boomers as an important core audience. The prospective residents, differing in work status, life stage, and communication habits, are prioritizing flexible tour options, clear cost information, and a balanced mix of marketing outreach. Boomer and Gen X residents at our 55+ communities typically continue to work, as the typical new resident in our communities comes to us during their working years, and they transition to full-time retirement during their residency.

100 Days of Camping is our annual summer-long social media campaign in which we highlight the peak summer camping season between Memorial Day and Labor Day. This was our 12th annual campaign and was marked by record numbers. The hashtag received more than 100 million views across social channels. We doubled our 2025 views, largely driven by highly engaged social posts. This high level of engagement reflects the strong sense of community found at our RV properties across the country, largely based on the friendships and family connections among our annual campers, which leads to stable occupancy as these customers return season after season.

Annual RV occupancy grew by 444 sites during the quarter, similarly driven by gains in our northern summer-focused RV campgrounds. Last month, MHI hosted the 2026 Homes on the Hill Showcase, of which ELS is a sponsor. The event showcased several homes on the National Mall in Washington, D.C., including a HUD home built without a chassis and a two-story HUD home built without a chassis on the second floor. The event coincided with the 50th anniversary of manufactured housing and came on the heels of the passage of the Road to Housing Act, which removes the permanent chassis requirement for manufactured housing and creates new opportunities for innovation and broader adoption of factory-built housing.

Our communities offer great value and lifestyle to our residents, and innovation in home plans and options available to them further supports the value proposition. Now I'll turn the call over to Paul.

Paul Seavey: Thanks, Patrick, and good morning, everyone. I will discuss our third quarter and September year-to-date results, review our guidance assumptions for the full year 2026 with some fourth quarter highlights, and close with a discussion of our balance sheet. Third quarter normalized FFO was $0.79 per share, in line with our guidance. Continued strong performance in our core portfolio resulted in 6.7% NOI growth in the quarter. Core community-based rental income increased 5.7% for the quarter and for the September year-to-date periods compared to the same periods in 2025. Base rental income growth for the third quarter outperformed the midpoint of our guidance and includes rate growth of 5.6%. Occupied sites increased by 99 during the quarter and 166 year-to-date.

Core RV and Marina base rental income increased 2.1% for the third quarter compared to prior year. Annual base rental income, which represents approximately 75% of total RV and Marina base rental income, increased 5.3% for the third quarter, 40 basis points higher than our guidance midpoint. Rental income growth exceeded the midpoint of our guidance estimate mainly as a result of an increase in occupied annual sites. For the third quarter, seasonal and transient rent decreased 4.4% and 5.8%, respectively, slightly better than our guidance expectations. The net contribution from our total membership business consists of annual subscription and upgrade revenues offset by sales and marketing expenses.

Membership dues subscription revenue increased 9.2% and 10.8% for the third quarter and September year-to-date periods, respectively. The growth in dues revenue is the primary contributor to the increase in net contribution from our membership business. That net contribution has grown 9.5% to $52.8 million in the September year-to-date period compared to prior year. Core utility and other income increased 2.6% for the third quarter compared to prior year. Our utility income recovery percentage was 48.5% in the third quarter and 49.7% in the year-to-date period in 2026. Year-to-date utility recovery is about 160 basis points higher than the same period in 2025. Core property operating expenses for the year-to-date period were 2% higher than the same period last year.

Roughly 135 basis points lower than average CPI over the same period. Third quarter core property operating revenues increased 4.4%, while core property operating expenses increased 1.3%, resulting in growth in core NOI before property management of 6.7%. For the year-to-date period, core NOI before property management increased 6%. Income from property operations generated by our non-core portfolio was $3 million in the quarter and $8.8 million year-to-date. Property management and corporate G&A expenses were $92 million in the September year-to-date period compared to prior year. As I discuss guidance, the following remarks are intended to provide context for our current estimated future results.

All growth rate ranges and revenue and expense projections are qualified by the risk factors included in our press release and supplemental package. We are maintaining our full year 2026 normalized FFO guidance of $3.18 per share at the midpoint of our range of $3.15-$3.21 per share. Our fourth quarter normalized FFO per share remains unchanged with a range of $0.78-$0.84. We project full year core portfolio property operating income growth of 6% at the midpoint of our guidance range. We project the non-core properties will generate between $8.3 million and $12.3 million of NOI during 2026, and our property management and G&A expense guidance range for the year is $118.9 million-$124.9 million.

In the core portfolio, we project the following full year growth rate ranges: 4%-4.6% for core revenues, 1.6%-2.2% for core expenses, and 5.7%-6.3% for core NOI. Full year guidance assumes core MH rent growth in the range of 5.4%-6%. Our full year guidance for combined RV and Marina rent growth is 90 basis points to 1.5%. We expect RV and Marina annual rental growth of 5% at the midpoint of our guidance range. Our assumptions for RV and Marina rent growth reflect current seasonal and transient reservation pacing for the fourth quarter. Consistent with our historical practice, we make no assumption for the impact of a material storm event that may occur.

Our fourth quarter guidance assumes normalized FFO per share in the range of $0.78-$0.84. Core property operating income growth is projected to be in the range of 5.7%-6.3% for the fourth quarter. Fourth quarter growth in MH rent is 5.7% at the midpoint of our guidance range. We project fourth quarter RV and Marina rent growth to be approximately 2.8% at the midpoint of our guidance range. Fourth quarter growth in core property operating expenses is projected to be 1.8% at the midpoint of our guidance range. I will now provide some comments on our balance sheet and the financing market.

Our balance sheet is well positioned to execute on capital allocation opportunities with minimal exposure to refinance or rate risk. We have no secured debt scheduled to mature until 2028, and our weighted average maturity for all debt is almost seven years. Our debt to EBITDA is 4.3x, and interest coverage is 5.7x. We have access to approximately $1.2 billion of capital from our combined line of credit and ATM programs. We continue to place high importance on balance sheet flexibility. We believe we have multiple sources of capital available to us. Current secured debt terms vary depending on many factors, including lender, borrower, sponsor, and asset type and quality.

Current 10-year loans are quoted between 6.1% and 6.6%, 55%-70% loan-to-value, and 1.4x-1.65x debt service coverage. We continue to see solid interest from life companies and GSEs to lend for 10-year terms. High-quality, age-qualified MH assets continue to command best financing terms. Now we would like to open it up for questions.

Operator: To ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. In the interest of time, we ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from Jana Galan with Bank of America. Your line is open.

Jana Galan: Thank you. Good morning, and congrats on a good third quarter.

Paul Seavey: Good morning.

Jana Galan: Thanks, Marguerite. On the RV revision for full year, can you help bridge the lower outlook for 4Q, given it appears that 3Q exceeded expectations on annual, seasonal, and transient? Was there any impact from this most recent hurricane in Florida?

Paul Seavey: Yeah. With respect to the guidance update, Jana, first, there was no impact from the recent hurricane. With respect to the guidance view for fourth quarter, the thing to consider in the third quarter to fourth quarter, we're leaving the summer season and heading into our winter season. As we look to this kind of shoulder period in the beginning of the winter season, we reviewed our reservation pacing for seasonal transient, as we typically do, and we adjusted so that we're in line with those expectations.

Jana Galan: Thank you, Paul.

Operator: Thank you. Our next question comes from Jamie Feldman with Wells Fargo. Your line is open.

Jamie Feldman: Great. Good morning, and thanks for taking the question.

Paul Seavey: Good morning.

Jamie Feldman: Good morning. The realized MH rate growth has run ahead of the initial rent increase number at 5.8% in the second quarter. Can you speak to the spread you are seeing today between market rent on turnover and in-place rent? How should we think about the potential uplift to the 5.1% you provided as we build our models for next year?

Patrick Waite: Yeah, Jamie, it's Patrick. I'll speak to the mark-to-market that we've been seeing, and then maybe Paul can address your second question. What we're seeing on mark-to-markets for new residents coming in is a 12% increase. That's just a reminder, those are new residents that are coming in. They know that their rent's going to go up to that increased market rate upon the maturity of the lease that they assume. That's been the trend over the quarter.

Paul Seavey: Then I think, Jamie, as it relates to the assumptions we provided in the release, you can think about the mark-to-market and the incremental occupancy that we mentioned we didn't include. I think if you look at our prior history, you can see what our initial quarterly expectations are and how they've grown over time, and use that as a guide to the impact that we might see in 2027.

Jamie Feldman: Okay. Thank you.

Marguerite Nader: Thank you, Jamie.

Operator: Thank you. Our next question comes from Brad Heffern with RBC. Your line is open.

Brad Heffern: Yeah. Hey, everybody. Good morning.

Marguerite Nader: Good morning.

Brad Heffern: For the 2027 MH rate growth number, the 5.1%, it is the same number that you gave in Q3 last year, of course, but CPI is higher, the COLA adjustment is higher. I guess I am wondering, is there anything different in terms of how you were thinking about setting those rates, or what is the offset that is keeping rate growth from going up more?

Patrick Waite: Yeah, Brad, it's Patrick. Let me just walk through a profile of the leases that we have across the portfolio. 50% of our leases are market-based leases. Another 25% is subject to rent control or a CPI-based lease, and 25% are long-term agreements in Florida. I will just walk through those briefly. In Florida, the long-term agreement is typically a two- or three-year term. Those increases typically approximate what we would see in the broader market, and those increases last year were above the 2.8% COLA. Just with respect to the rent control and CPI leases, many of those leases have floors above last year's 2.8% COLA as well.

Just setting the kind of baseline with respect to what we would see from year-over-year increases. The benefit of those floors is that was captured in the 2026 baseline. The CPI terms across the portfolio are typically regional and time-specific, so they may vary from COLA, and typically do. With respect to the market leases, we have spoken often about the process we go through evaluating the competitive set in order to establish those rent increases, so I will not go through that again. Across the market bands, across the portfolio, the band of increases is relatively narrow. It is about 30 basis points± from what the overall increases on the markets roll up to.

Brad Heffern: Okay. Thank you.

Marguerite Nader: Thank you.

Operator: Thank you. Our next question comes from Nick Joseph with Citi. Your line is open.

Eric Wolfe: Hey, it's Eric here with Nick. I just want to make sure I understood the answer to the prior question, because my assumption was that the guidance that you gave for 2027 is really base rent income growth. Not sort of like the preliminary rate increase, but sort of the overall rental income growth. I was just curious first if that's correct, and then second, if there's any sort of change in your methodology that you did for the earlier timing in the third quarter, because I'm thinking you normally give it in the fourth quarter. Just curious if the buildup to those numbers is any different from the previous methodology.

Paul Seavey: Yeah. Eric, excuse me. It's Paul. We're happy to be able to give early insight into our expectations for what 2027 MH and RV annual rent growth might look like. We haven't completed our 2027 budget process, so we're not in a position to provide our actual guidance. We do think it's helpful, though, as we have in the past, to share the current view on growth drivers for the main annual revenue streams. As you think about our process each year, in September and October, we send notices to roughly 50% of our MH customers for increases that will be effective in January.

For the annual RV customers, those rent increases are set for 95% of the customers by October, and those increases take effect at the beginning of the winter and then the future summer season. In our release last night, we provided rent growth assumptions that were developed from those notices, along with the impact of mid-year 2026 increases that will continue to generate growth into 2027. That 2027 rent growth assumption doesn't include any impact from incremental sites that we might occupy next year or the mark-to-market impact of turnover that may occur in our properties next year.

Eric Wolfe: Understood. And that—

Operator: Thank you. Our next question comes from Steve Sakwa with Evercore ISI. Your line is open.

Steve Sakwa: Yeah, thanks. Good morning. Maybe just touching on expense growth. It's obviously been a very positive sort of outcome from kind of where you started the year. And am just curious if you think about the build-up for next year. Are there some one-time benefits or one-time headwinds that we should be thinking about, or is this year sort of figure a reasonable expectation to think about for next year?

Patrick Waite: Yeah, Steve. I think that just overall, as we think about our expense structure, 2/3 are utilities, R&M, and payroll. Those are categories that we've seen over time that correlate to CPI, so we're mindful of the uptick in CPI. The remaining 1/3 of our expenses, the primary drivers are real estate taxes and insurance. We have seen in the past couple of years, and talked about quite a bit of softening in that insurance market. We've also had some success in the past few years with some real estate tax appeals and so forth.

So anticipate taking a look at that as we build our budget for next year and thinking that through and including those concepts in our assumptions.

Operator: Thank you. Our next question comes from John Kim with BMO Capital Markets. Your line is open.

John Kim: Thank you. I wanted to follow up on Jana's question on your RV/Marina guidance, because if you look at the full year guidance, it implies fourth quarter for seasonal transient will decline by approximately 7%, and that's down from what you had in the third quarter being relatively in line. So I wanted to ask what changed, because I think last quarter you mentioned that you were assuming a flat transient RV revenue quarter. In relation to that, last call you mentioned contacting winter guests who did not return last year, and I was wondering if you had achieved that and what the visibility was like on some of those customers potentially returning.

Patrick Waite: Yeah. I think when we talked last quarter, the assumption for flat covered the latter half of the year. We had some assumption for some recovery that we didn't realize in terms of the early start to the winter season.

John Kim: So was that—

Operator: Thank you. Our next question comes from Jason Wayne with Barclays. Your line is open.

Jason Wayne: Hi, thanks for the question. Just on the 4Q transient cut, how much of that is transient versus seasonal, and are there any specific markets driving the weakness? Then how have bookings from Canadian customers trended this year?

Patrick Waite: Yeah, it's largely driven by the seasonal business, which is carrying through as we're starting up the summer season. As you recall, earlier in the year, we were down with respect to reservation pace. We were watching as we approached the season, and we really haven't seen an increase in that pace. That's really the key driver. Just with respect to color from those guests, as we've referenced on previous calls, these seasonal guests typically come back year-after-year. So our property teams know them, and they've been reaching out. They continue to do that. We're hopeful that some of the people who are discussing waiting and booking at a later date will come through over time.

But what we're seeing right now is no real improvement in the pace.

Marguerite Nader: And what we're seeing is reflected in what we've put forth for our fourth quarter guidance.

Operator: Thank you. Our next question comes from Michael Goldsmith with UBS. Your line is open.

Michael Goldsmith: Good morning. Thanks a lot for taking my question.

Marguerite Nader: Morning, Michael.

Michael Goldsmith: Morning, Marguerite. We have talked a lot about the preliminary MH rent growth for 2027, but we haven't really dug into the RV side, 4.7%, which is lower than the initial or preliminary rent growth last year. Can you talk a little bit about what you're seeing on the annual RV side, customers' willingness to renew, and just what is driving that? Do you think this is a concerted effort to retain annual RV customers, or are you losing pricing power? Just trying to understand the underlying dynamics behind that number.

Patrick Waite: Yeah, sure, Patrick. I would just highlight on the RV annual front, we increased occupancy, I mentioned in my opening remarks, by about 450 in the quarter. Last year, we had a similar result that was a little bit closer to 500. We feel like the demand is there. As we go through the process of building up what our rate increase recommendations are, it's very similar to what I've described on the MH front. We review the competitive set, we meet with our property teams and our revenue management teams, and we establish those increases on a go-forward basis. We are coming off of several years of very robust rate growth.

I think some moderation is in line, and that's really the driver of our initial assumption.

Michael Goldsmith: Thank you very much.

Patrick Waite: Sure.

Marguerite Nader: Thanks, Michael.

Operator: Thank you. Our next question comes from Haendel St. Juste with Mizuho Securities. Your line is open.

Mike: Good morning. This is Mike on with Haendel at Mizuho. Our question is, where does management rank capital allocation in terms of reinvesting in site expansion projects, share buybacks, or potential acquisition opportunities? If you have cap rates as well, that would be great.

Marguerite Nader: Certainly. If you think about the acquisition market within the MH and RV universe, these assets are really highly sought after by investors. On the other side of it, owners feel very comfortable holding these assets for a really long time. I think that reflects the strength of the business model. Transaction activity has remained muted, and ownership is really highly fragmented. Our teams stay highly engaged with owners, as they continue to consider future opportunities and whether or not they are interested in selling.

I think when we think about capital allocation to the extent that there is a transaction of interest, that would be accretive, we would certainly want to pursue that, and our team is pursuing those on a regular basis. Next, I would look to expansion, and you have seen our expansion opportunities and development opportunities increase over time. I think that is a really good use of our capital. Those are the two priorities and where we are spending our time, trying to continue to grow the business.

Speaker 12: Thank you.

Marguerite Nader: Thank you.

Operator: Thank you. Our next question comes from David Segall with Green Street. Your line is open.

John Pawlowski: Thanks. It's actually John on for David. To help us think through how annual RV revenue growth could shake out relative to the initial rate increases, can you give us a sense whether you're expecting higher or lower retention in 2027 versus 2026, and whether you're expecting a higher or lower pace of transient conversions into annuals in 2027 relative to 2026?

Marguerite Nader: Yeah, John, maybe Patrick can provide more details, but I think what we're seeing is a better attrition than we saw last year. That's a real positive, and we see that continuing into 2027. We've been able to grow our annual base, and that's a function of some of those conversions that Patrick was talking about earlier. That kind of comes in a different season, so you see some of that happening in the snowbird season, and then a pickup in activity in terms of new annuals happens in April, May timeframe. We'd be able to give you a better update as we focus on that season.

But maybe Patrick could walk through a little bit of what you're seeing from a market perspective.

Patrick Waite: Yeah, the ability to grow the annuals in the quarter, which again, year-over-year has been consistent. We feel it's indicative of robust demand. I'd highlight on the conversion front that year-to-date, about 14% of our annual sales and 7% of our new Thousand Trails memberships were conversions from our seasonal and transient customers. So those are guests who enjoyed their time with us, and decided to increase their commitment. So that pipeline continues to remain strong even though we're addressing some of the recent trends with respect to headwinds on the seasonal and the transient business.

Operator: Thank you. Our next question comes from Jesse Lederman with Zelman. Your line is open.

Jesse Lederman: Hey, good morning. Thanks for taking the question.

Marguerite Nader: Good morning.

Jesse Lederman: One quick clarifying question, then I have one on expenses. The clarifying question is on the RV annual 2027 preliminary figure you provided. Is that just a like-for-like for the sites you have in place, or is that a revenue figure that includes the increase in the annual sites? My question on expenses is, your core expenses came in at the top of the third quarter range, of course, but the guidance implies a pretty decent step lower to slowing under 2%. Would love to know the moving pieces there and what is driving that. Thank you.

Marguerite Nader: Thank you. As to the RV number, it does not include occupancy growth in 2027, and that would be anticipated as we just talked about on the prior question. Paul, maybe you could walk through the expenses.

Paul Seavey: Sure. As you noted, excuse me. Sorry. As you noted, the expenses in the core it was about $400,000 higher than guidance in the third quarter, primarily because of utility expenses. We realized higher than expected electric and water usage. The electric usage followed the temperature trends across our Northeast and North Central properties, where they experienced higher than expected cooling degree days during the quarter. Water expense usage was higher. There were some leaks that were identified and subsequently repaired. The full year number, excuse me, that guidance is down. It is about $600,000 favorable. That is primarily the result of our expectations for Florida real estate taxes.

During the third quarter of each year, Florida counties issue their preliminary TRIM notices with a range of potential increases in real estate tax. And we took a look at those, reviewed the preliminary notices for Florida, and they did show a range of increase that was lower than our prior expectations. So based on that, we adjusted our forecast.

Jesse Lederman: Appreciate it.

Operator: Thank you. Our next question comes from Adam Kramer with Morgan Stanley. Your line is open.

Adam Kramer: Hey, thanks for the time. Can you just provide some color on the pace of trends into annual site conversions this quarter? And then, how do you sort of think about the conversion pipeline, and whether that can sort of backfill any volatility in the transient business?

Patrick Waite: Yeah. Our focus is on the longer-term streams and, obviously the 75% that is our very sticky annual revenue. I have addressed in the past that 15%-20% of our annuals previously stayed with us as a seasonal or transient, and that same stat is consistent with seasonals as well. We are always looking to migrate that first touch on transient stays to the longer-term stays. I did address this on an earlier question that the conversions year-to-date are about 14% for annuals, meaning 14% of those sales were to current customers, seasonal or transients, and that is about 7% for seasonal and transient moving into our Thousand Trails platform. That has been that general trend.

We are highly focused on, with our revenue management teams and our sales teams, on engaging seasonal and transient stays when they are on site, so that they have the opportunity to better understand what the longer-term stays offer, in an effort to get them to migrate up to the longer-term stays.

Marguerite Nader: I think it is also important in terms of the conversion, if you think about it, our average annual in the portfolio generates about, I think it is about $8,000 in revenue per year. That average transient customer is staying with us, spends about $80-$90 a night. That break-even point for that is about 90 days. So a 90-day stay equals kind of an annual stay. It really matters how many nights you are getting on that transient site in order for whether or not that conversion is a positive or a negative.

Operator: Thank you. Our next question comes from John Kim with BMO Capital Markets. Your line is open.

Marguerite Nader: John, sorry about that. Sorry about that before.

John Kim: I do like the one question rule.

Marguerite Nader: Yes.

John Kim: No, of course not. You're sticking to it. I'm glad.

Marguerite Nader: Yeah. We appreciate it. How can we help?

John Kim: Okay. I wanted to see if you could provide more color on why transient came in lower than what you projected last quarter. In relation to that, Thousand Trails, the membership volume continues to go down, your revenue goes up. I am wondering how much further can you push rates so that the revenue kind of offsets lower membership?

Marguerite Nader: Sure. Why don't I take the Thousand Trails piece, and maybe, Paul, you can touch on the guide for the quarter. John, I know you know the Thousand Trails system very well, but we have 80 properties, 24,000 sites, and 107,000+ members. As you mentioned, we have pushed the rate a little bit, and our entry-level camping pass is about $700, and we have had success. About half of those memberships are sold online, which we think is a real positive. Then we introduced the upgrade program where they had the ability to upgrade, have additional reservations, and that came with an increased dues base.

That has been really well received, and I think we will continue to see an increase in that activity, and that is the driver of that dues-based increase. It has gone from, I think, on an average dues-paying member of about 580-650. I think that what we are seeing is the customers really seeing the benefit of those enhanced benefits and being able to stay at the property longer. I think we are just going to continue to sell through that product, and do more of that in 2027. We have also launched that product, which is kind of a new thing for us, on an online capacity.

Prior to that, we were just selling camp passes online, and now we are doing the upgrade, which is a much easier way to sell, and now it is also more cost-effective.

Paul Seavey: Then John, with respect to the guidance, as we looked at, I think we were talking on the July call, the latter half of the year we assumed to be roughly flat. That did have some assumption for recovery in the fourth quarter. We call it 15%-20% of the revenue, when you look at both the seasonal and the transient, 15%-20% comes in the fourth quarter. So it is a little bit lighter quarter. We did anticipate the season would develop a bit better than it has, and we are reflecting the current reservation pace.

John Kim: Great. Thank you.

Marguerite Nader: Thanks, John.

Operator: Thank you. Our next question comes from Nick Joseph with Citi. Your line is open.

Nick Joseph: Thanks.

Marguerite Nader: Hello, Eric.

Nick Joseph: Sorry if I missed it.

Marguerite Nader: Sorry, we. Oh.

Nick Joseph: Hey.

Marguerite Nader: Sorry we cut you off before.

Nick Joseph: No worries. It's actually Nick here with Eric now.

Marguerite Nader: Hello, Nick.

Nick Joseph: How are you? Sorry if I missed it, but what is the preliminary MH and RV rate increase for next year? If it was just apples to apples with what you've previously provided in the third quarter in past years.

Patrick Waite: Yeah, I think maybe the best way to say it, Nick, is the current assumption that we have is based on everything that has been noticed without impact for the potential occupancy or mark-to-market. So what we're reporting is the increases that will impact 2027.

Marguerite Nader: That have already been noticed. People have it in their hands. They're either paying that or they will start to pay it in January.

Patrick Waite: Right.

Nick Joseph: Okay. Is it basically the same as what you've previously provided? I'm just trying to think about what you've normally given in the third quarter versus what you're giving now and just trying to normalize that.

Patrick Waite: Yeah. With the exception of the prior indication that we would provide was based on a subset of the in-place occupants, because it was based on 50% of the notices, 50% of the residents that received notices for January.

Marguerite Nader: Then we will be able to, as we have in the past, Nick, provide more clarity in January.

Nick Joseph: Sounds good. Thank you.

Eric Wolfe: And maybe just one.

Nick Joseph: Oh, go ahead.

Marguerite Nader: Sure.

Eric Wolfe: Sorry to keep jumping in, but.

Marguerite Nader: Oh, Eric.

Eric Wolfe: the annual RV guidance, I guess, does that include the marina sort of impact for next year? Is that not included? Because I think earlier this year, right, you had the marinas that didn't come online. Are you assuming that they come back online?

Marguerite Nader: Actually, it's only RV. It doesn't include marina. The marina rates kind of vary over the year. So we generally, at this point in time, only talk about RV. So we'll update on the marina rates in the January call. So this is just RV. Similar, it's consistent with last year.

Operator: Thank you. Our next question comes from Jamie Feldman with Wells Fargo. Your line is open.

Jamie Feldman: Great. Thanks for taking the follow-up. So maybe just a bigger picture question. Just curious to get your latest thoughts on the future of the business and where ELS fits into the housing landscape as the industry's had more time to digest the Road to Housing Act. Also, there's been some press out on investments in the 3D-printed homes business. Just kind of curious where your heads are as you think about the longer-term big picture of where manufactured housing and ELS fits in.

Marguerite Nader: Sure. We've seen, certainly in the 3D-printed homes, we've looked at those. I think they're a far different kind of animal than what we offer. We're also looking at how single-family rental build to rent and multi-family senior fits into the equation inside of our portfolio. We've seen kind of an increased activity in single-family rentals, senior multi-family around our locations. I note that. But really, those products are different from our communities. If you think about senior multi-family, it may offer some comparable amenities, but it's still a shared wall living experience. Our residents have their own homes.

As you know, they can park their cars, their golf carts at their door, and they get to enjoy those resort-style amenities and that strong sense of community that I mentioned earlier. All of that at a really attractive price point as compared to some of these other options that you highlight. When I think about it, the ability for us to incorporate a single-family rental, which we kind of already have in our portfolio, as we have 2,200 rental homes in our portfolio, I think that's something we'll continue to look into and see where we can do that for future developments.

But what really sets ELS apart from all the offerings that you mentioned and that I've mentioned is that we're not simply offering the housing. It's about that community. We're offering a lifestyle. We're offering a place for people to go and spend their retirement years. That is just a really great proposition that we don't really see out there in other areas.

Jamie Feldman: Okay. Thank you for that. In terms of Road to Housing, anything change in your perspective, thinking about the opportunities or the risk?

Patrick Waite: No, Jamie, Patrick. Road's going to provide innovation in HUD homes. As we talked about the chassis and some aesthetics and I think some potential benefit to achieving entitlements in local jurisdictions. That all has to play out over time. Right now we're in the process. The bill's passed, obviously. We're in the process of rulemaking, how the bill's going to be interpreted, and states are going through the process of interpreting the bill and tailoring their statutes accordingly. This will play out over the next couple few years.

Operator: Thank you. This concludes the question-and-answer session. At this time, I would like to turn it back over to Marguerite Nader for closing comments.

Marguerite Nader: Thank you for joining us today. We look forward to updating you on our next call. Thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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