EQUITY LIFESTYLE PROPERTIES INC ELS

The MH core portfolio, representing 60% of total revenue, maintained a strong 94% occupancy, increasing for two consecutive quarters. This growth is driven by demand from the 55-plus customer segment, with 97% of MH residents owning their homes. The company's strategy includes property expansions, such as 4 recent Florida projects adding close to 500 sites and a Phoenix project adding over 20 units, to meet demand for affordable 55-plus communities. The recently enacted 21st Century ROAD to Housing Bill is expected to support MH growth by exempting it from institutional investor provisions, allowing greater home design flexibility, and encouraging favorable zoning.

Annual RV and marina revenue grew 4.8% year-to-date, benefiting from strong retention and engagement from new customers. Approximately 70% of this revenue comes from Sunbelt properties serving active adults, while the remaining 30% is from seasonal properties. Core RV and marina annual base rental income increased 5.4% in Q2 and 4.8% year-to-date. However, seasonal and transient^📎 rent was 170 basis points below guidance in Q2, primarily due to lower transient^📎 rent in June, impacted by weather events and Canadian wildfire smoke during holiday weekends.

The Thousand Trails portfolio delivered strong performance, adding approximately 800 members in Q2, with subscription revenue increasing by 11%. The company launched new subscription memberships a little over a year ago, selling over 9,000 memberships since, including nearly 7,000 in the last 12 months. This initiative, which offers enhanced benefits for a higher annual due ($2,000 to $4,000 upgrade cost), has led to a deliberate trade-off prioritizing higher rate over membership volume, increasing average dues per paying member from $580 to almost $700.

Core operating expenses increased only 2.3% year-to-date, 120 basis points lower than guidance in Q2, mainly due to savings in utility and real estate tax expenses from successful appeals in Texas. The company's balance sheet remains strong with limited floating rate exposure, debt-to-EBITDAre of 4.4x, and interest coverage of 5.6x. Access to approximately $1.2 billion in capital from its line of credit and ATM programs provides flexibility, with current 10-year secured debt quoted between 5.25% and 5.75%.

MH occupancy increased by 67 occupied sites in the first six months of 2026, reaching 93.7% at the end of June. The company is focused on recovering from prior storm impacts and increasing inventory in communities. Management expressed confidence in continued occupancy growth in the back half of the year, noting that over 50% of properties are already 98% occupied, reflecting the long-term commitment of cash-paying residents.

Seven RV communities, comprising about 1,400 sites, were consolidated into the noncore portfolio during Q2. Two properties are in the West (California and Colorado), and five are in the Southeast. Five of these properties, representing 70% of the sites, were developed in the last 10 years. The current revenue mix is about 40% longer-term streams, with an optimistic outlook for growing these streams further.