UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2016~~2017



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-11718

_________________________________________________________

EQUITY LIFESTYLE PROPERTIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

_________________________________________________________



Maryland	36-3857664
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

Two North Riverside Plaza, Suite 800, Chicago, Illinois	60606
(Address of Principal Executive Offices)	(Zip Code)

(312) 279-1400

(Registrant’s Telephone Number, Including Area Code)

_________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

~~85,304,824~~87,005,128 shares of Common Stock as of ~~October 25, 2016.~~July 24, 2017.

Equity LifeStyle Properties, Inc.

Table of Contents



		Page
Part I - Financial Information
Item 1.	Financial Statements
Index To Financial Statements
Consolidated Balance Sheets as of ~~September~~June 30, ~~2016~~2017 (unaudited) and December 31, ~~2015~~2016		3
Consolidated Statements of Income and Comprehensive Income for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (unaudited)		4
Consolidated ~~Statements~~Statement of Changes in Equity for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 (unaudited)		6
Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (unaudited)		7
Notes to Consolidated Financial Statements		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2518
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4133
Item 4.	Controls and Procedures	4133
Part II - Other Information
Item 1.	Legal Proceedings	4234
Item 1A.	Risk Factors	4234
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4234
Item 3.	Defaults Upon Senior Securities	4234
Item 4.	Mine Safety Disclosure	4234
Item 5.	Other Information	4234
Item 6.	Exhibits	4335

Equity LifeStyle Properties, Inc.

Consolidated Balance Sheets

As of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016

(amounts in thousands, except share and per share data)


	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
	(unaudited)						(unaudited)
Assets
Investment in real estate:
Land	$	1,155,587		$	1,101,676		$	1,167,510		$	1,163,987
Land improvements	2,863,758			2,787,882			2,922,201			2,893,759
Buildings and other depreciable property	622,045			588,041			641,931			627,590
	4,641,390			4,477,599			4,731,642			4,685,336
Accumulated depreciation	(1,368,942		)	(1,282,423		)	(1,459,931		)	(1,399,531		)
Net investment in real estate	3,272,448			3,195,176			3,271,711			3,285,805
Cash	68,812			80,258			67,740			56,340
Notes receivable, net	34,277			35,463			48,253			34,520
Investment in unconsolidated joint ventures	19,198			17,741			21,766			19,369
Deferred commission expense	31,435			30,865			31,453			31,375
Escrow deposits, goodwill, and other assets, net	44,213			40,897			44,435			51,578
Total Assets	$	3,470,383		$	3,400,400		$	3,485,358		$	3,478,987
Liabilities and Equity
Liabilities:
Mortgage notes payable, net	$	1,892,692		$	1,926,880		$	1,855,028		$	1,891,900
Term loan	199,327			199,172			199,483			199,379
Unsecured lines of credit	—			—			—			—
Accrued expenses and accounts payable	94,103			76,044			93,451			89,864
Deferred revenue – upfront payments from right-to-use contracts	80,832			78,405			83,580			81,484
Deferred revenue – right-to-use annual payments	10,578			9,878			12,559			9,817
Accrued interest payable	8,128			8,715			8,044			8,379
Rents and other customer payments received in advance and security deposits	70,794			74,300			88,543			76,906
Distributions payable	39,315			34,315			45,259			39,411
Total Liabilities	2,395,769			2,407,709			2,385,947			2,397,140
Equity:
Stockholders’ Equity:
Preferred stock, $0.01 par value, 9,945,539 shares authorized as of September 30, 2016 and December 31, 2015; none issued and outstanding.	—			—
6.75% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value, 54,461 shares authorized and 54,458 issued and outstanding as of September 30, 2016 and December 31, 2015 at liquidation value	136,144			136,144
Common stock, $0.01 par value, 200,000,000 shares authorized as of September 30, 2016 and December 31, 2015; 85,303,937 and 84,253,065 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively	852			843
Preferred stock, $0.01 par value, 9,945,539 shares authorized as of June 30, 2017 and December 31, 2016; none issued and outstanding.							—			—
6.75% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value, 54,461 shares authorized and 54,458 issued and outstanding as of June 30, 2017 and December 31, 2016 at liquidation value							136,144			136,144
Common stock, $0.01 par value, 200,000,000 shares authorized as of June 30, 2017 and December 31, 2016; 87,004,507 and 85,529,386 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively							868			854
Paid-in capital	1,096,916			1,039,140			1,121,307			1,103,048
Distributions in excess of accumulated earnings	(231,879		)	(250,506		)	(219,641		)	(231,276		)
Accumulated other comprehensive loss	(646		)	(553		)
Accumulated other comprehensive loss/(income)							30			(227		)
Total Stockholders’ Equity	1,001,387			925,068			1,038,708			1,008,543
Non-controlling interests – Common OP Units	73,227			67,623			60,703			73,304
Total Equity	1,074,614			992,691			1,099,411			1,081,847
Total Liabilities and Equity	$	3,470,383		$	3,400,400		$	3,485,358		$	3,478,987

The accompanying notes are an integral part of these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Income and Comprehensive Income

For the Quarters Ended and Six Months Ended June 30, 2017 and 2016

(amounts in thousands, except per share data)

(unaudited)



	Quarters Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Revenues:
Community base rental income	$	121,964		$	115,385		$	242,656		$	229,461
Rental home income	3,632			3,543			7,237			7,088
Resort base rental income	50,055			44,732			111,123			100,166
Right-to-use annual payments	11,350			11,187			22,602			22,241
Right-to-use contracts current period, gross	3,798			3,086			7,004			5,618
Right-to-use contract upfront payments, deferred, net	(1,321		)	(798		)	(2,096		)	(1,100		)
Utility and other income	20,650			19,523			42,776			40,316
Gross revenues from home sales	7,833			9,130			14,860			17,344
Brokered resale revenues and ancillary services revenues, net	444			398			2,105			1,816
Interest income	1,798			1,625			3,568			3,285
Income from other investments, net	1,109			2,270			1,866			3,993
Total revenues	221,312			210,081			453,701			430,228
Expenses:
Property operating and maintenance	72,901			66,647			140,955			129,601
Rental home operating and maintenance	1,657			1,581			3,208			3,106
Real estate taxes	13,943			12,869			27,980			26,067
Sales and marketing, gross	2,894			2,931			5,584			5,424
Right-to-use contract commissions, deferred, net	(112		)	(116		)	(196		)	(12		)
Property management	13,023			12,044			25,583			23,807
Depreciation on real estate assets and rental homes	30,247			29,029			60,357			57,684
Amortization of in-place leases	958			428			1,990			763
Cost of home sales	7,895			9,481			15,014			17,762
Home selling expenses	929			805			1,854			1,639
General and administrative	8,461			8,255			15,834			15,663
Property rights initiatives and other, net	271			527			490			1,181
Interest and related amortization	24,822			25,561			49,701			51,195
Total expenses	177,889			170,042			348,354			333,880
Income before equity in income of unconsolidated joint ventures	43,423			40,039			105,347			96,348
Equity in income of unconsolidated joint ventures	1,040			765			2,190			1,646
Consolidated net income	44,463			40,804			107,537			97,994

Income allocated to non-controlling interests – Common OP Units	(2,649		)	(2,998		)	(6,539		)	(7,308		)
Series C Redeemable Perpetual Preferred Stock Dividends	(2,316		)	(2,316		)	(4,613		)	(4,613		)
Net income available for Common Stockholders	$	39,498		$	35,490		$	96,385		$	86,073

Consolidated net income	$	44,463		$	40,804		$	107,537		$	97,994
Other comprehensive income (loss) (“OCI”):
Adjustment for fair market value of swap	30			(36		)	257			(644		)
Consolidated comprehensive income	44,493			40,768			107,794			97,350
Comprehensive income allocated to non-controlling interests – Common OP Units	(2,651		)	(2,995		)	(6,555		)	(7,257		)
Series C Redeemable Perpetual Preferred Stock Dividends	(2,316		)	(2,316		)	(4,613		)	(4,613		)
Comprehensive income attributable to Common Stockholders	$	39,526		$	35,457		$	96,626		$	85,480

The accompanying notes are an integral part of ~~the financial statements.~~

~~Equity LifeStyle Properties, Inc.~~

these Consolidated ~~Statements of Income and Comprehensive Income~~

~~For the Quarters Ended~~ ~~and~~ ~~Nine Months EndedSeptember 30, 2016~~ ~~and~~ ~~2015~~

~~(amounts in thousands, except per share data)~~

~~(unaudited)~~

Quarters Ended Nine Months Ended
September 30,
2016 September 30,
2015 September 30,
2016 September 30,
2015
Revenues:
Community base rental income $ 117,164
$ 110,908
$ 346,625
$ 330,251
Rental home income 3,484
3,413
10,572
10,526
Resort base rental income 54,486
49,765
154,652
142,837
Right-to-use annual payments 11,349
11,334
33,590
33,260
Right-to-use contracts current period, gross 3,672
3,889
9,290
10,264
Right-to-use contract upfront payments, deferred, net (1,327 ) (1,701 ) (2,427 ) (3,929 )
Utility and other income 21,174
20,027
61,490
58,010
Gross revenues from home sales 10,895
7,878
28,239
24,341
Brokered resale revenues and ancillary services revenues, net 920
1,051
2,736
4,045
Interest income 1,767
1,758
5,052
5,314
Income from other investments, net 2,581
1,822
6,574
5,119
Total revenues 226,165
210,144
656,393
620,038
Expenses:
Property operating and maintenance 73,410
69,227
203,011
194,522
Rental home operating and maintenance 1,768
1,874
4,874
5,232
Real estate taxes 13,467
12,923
39,534
38,169
Sales and marketing, gross 3,100
3,105
8,524
9,139
Right-to-use contract commissions, deferred, net (200 ) (464 ) (212 ) (1,471 )
Property management 11,863
11,361
35,670
33,750
Depreciation on real estate assets and rental homes 29,518
28,410
87,203
84,861
Amortization of in-place leases 1,376
616
2,139
1,950
Cost of home sales 10,745
7,868
28,507
23,685
Home selling expenses 909
861
2,548
2,386
General and administrative 7,653
7,225
23,315
22,172
Property rights initiatives and other 855
687
2,036
1,934
Early debt retirement —
—
—
16,922
Interest and related amortization 25,440
26,227
76,635
79,648
Total expenses 179,904
169,920
513,784
512,899
Income before equity in income of unconsolidated joint ventures 46,261
40,224
142,609
107,139
Equity in income of unconsolidated joint ventures 496
1,882
2,142
3,606
Consolidated net income 46,757
42,106
144,751
110,745

Income allocated to non-controlling interests – Common OP Units (3,462 ) (3,136 ) (10,770 ) (8,191 )
Series C Redeemable Perpetual Preferred Stock Dividends (2,297 ) (2,297 ) (6,910 ) (6,910 )
Net income available for Common Stockholders $ 40,998
$ 36,673
$ 127,071
$ 95,644

Consolidated net income $ 46,757
$ 42,106
$ 144,751
$ 110,745
Other comprehensive income (loss) (“OCI”):
Adjustment for fair market value of swap 551
(578 ) (93 ) (1,231 )
Consolidated comprehensive income 47,308
41,528
144,658
109,514
Comprehensive income allocated to non-controlling interests – Common OP Units (3,505 ) (3,090 ) (10,762 ) (8,093 )
Series C Redeemable Perpetual Preferred Stock Dividends (2,297 ) (2,297 ) (6,910 ) (6,910 )
Comprehensive income attributable to Common Stockholders $ 41,506
$ 36,141
$ 126,986
$ 94,511

~~The accompanying notes are an integral part of the financial statements.~~Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Income and Comprehensive Income (Continued)

For the Quarters Ended ~~and Nine Months Ended~~ ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016

(amounts in thousands, except per share data)

(unaudited)


	Quarters Ended				Nine Months Ended				Quarters Ended				Six Months Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015		June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
Earnings per Common Share – Basic:
Net income available for Common Stockholders	$	0.48	$	0.44	$	1.50	$	1.14	$	0.46	$	0.42	$	1.12	$	1.02
Earnings per Common Share – Fully Diluted:
Net income available for Common Stockholders	$	0.48	$	0.43	$	1.49	$	1.13	$	0.45	$	0.42	$	1.11	$	1.01

Distributions declared per Common Share outstanding	$	0.425	$	0.375	$	1.275	$	1.125	$	0.488	$	0.425	$	0.975	$	0.850
Weighted average Common Shares outstanding – basic	85,105		84,057		84,649		84,016		86,763		84,516		86,408		84,419
Weighted average Common Shares outstanding – fully diluted	92,910		91,940		92,405		91,877		93,063		92,264		93,041		92,163

The accompanying notes are an integral part of ~~the financial statements.~~these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated ~~Statements~~Statement of Changes in Equity

For the ~~Nine~~Six Months Ended~~September~~June 30, ~~2016~~2017

(amounts in thousands)

(unaudited)


	Common Stock		Paid-in Capital			6.75% Series C Cumulative Redeemable Perpetual Preferred Stock			Distributions in Excess of Accumulated Earnings			Non- controlling interests – Common OP Units			Accumulated Other Comprehensive Loss			Total Equity			Common Stock		Paid-in Capital			6.75% Series C Cumulative Redeemable Perpetual Preferred Stock			Distributions in Excess of Accumulated Earnings			Non- controlling interests – Common OP Units			Accumulated Other Comprehensive Loss/(Income)			Total Equity
Balance, December 31, 2015	$	843	$	1,039,140		$	136,144		$	(250,506	)	$	67,623		$	(553	)	$	992,691
Balance, December 31, 2016																					$	854	$	1,103,048		$	136,144		$	(231,276	)	$	73,304		$	(227	)	$	1,081,847
Conversion of Common OP Units to Common Stock	—		48			—			—			(48		)	—			—			14		16,423			—			—			(16,437		)	—			—
Issuance of Common Stock through exercise of options	2		5,230			—			—			—			—			5,232
Issuance of Common Stock through employee stock purchase plan	—		875			—			—			—			—			875			—		764			—			—			—			—			764
Issuance of Common Stock	7		49,993			—			—			—			—			50,000
Compensation expenses related to restricted stock	—		6,796			—			—			—			—			6,796			—		4,257			—			—			—			—			4,257
Repurchase of Common Stock or Common OP units	—		(274		)	—			—			—			—			(274		)
Adjustment for Common OP Unitholders in the Operating Partnership	—		(4,068		)	—			—			4,068			—			—			—		(3,037		)	—			—			3,037			—			—
Adjustment for fair market value of swap	—		—			—			—			—			(93		)	(93		)	—		—			—			—			—			257			257
Net income	—		—			6,910			127,071			10,770			—			144,751			—		—			4,613			96,385			6,539			—			107,537
Distributions	—		—			(6,910		)	(108,444		)	(9,186		)	—			(124,540		)	—		—			(4,613		)	(84,750		)	(5,740		)	—			(95,103		)
Other	—		(824		)	—			—			—			—			(824		)	—		(148		)	—			—			—			—			(148		)
Balance, September 30, 2016	$	852	$	1,096,916		$	136,144		$	(231,879	)	$	73,227		$	(646	)	$	1,074,614
Balance, June 30, 2017																					$	868	$	1,121,307		$	136,144		$	(219,641	)	$	60,703		$	30		$	1,099,411

The accompanying notes are an integral part of ~~the financial statements.~~these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016

(amounts in thousands)

(unaudited)


	September 30, 2016			September 30, 2015			June 30, 2017			June 30, 2016
Cash Flows From Operating Activities:
Consolidated net income	$	144,751		$	110,745		$	107,537		$	97,994
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Early debt retirement	—			16,922
Depreciation	88,043			85,674			60,960			58,242
Amortization of in-place leases	2,139			1,950			1,990			763
Amortization of loan costs	2,930			3,164			1,788			1,876
Debt premium amortization	(2,633		)	(2,983		)	(1,166		)	(1,730		)
Equity in income of unconsolidated joint ventures	(2,142		)	(3,606		)	(2,190		)	(1,646		)
Distributions of income from unconsolidated joint ventures	1,417			3,331			1,800			1,041
Amortization of stock-related compensation	6,796			6,268
Stock-based compensation							4,257			4,393
Revenue recognized from right-to-use contract upfront payments	(6,863		)	(6,335		)	(4,908		)	(4,518		)
Commission expense recognized related to right-to-use contracts	3,071			2,629			2,202			2,019
Long term incentive plan compensation	(3,390		)	955			674			(3,852		)
Recovery of uncollectible rents receivable	(548		)	(374		)
Recovery for uncollectible rents receivable							214			(679		)
Changes in assets and liabilities:
Notes receivable activity, net	349			21			(282		)	361
Deferred commission expense	(3,641		)	(4,821		)	(2,280		)	(2,238		)
Escrow deposits, goodwill and other assets	22,516			34,494			21,814			13,137
Accrued expenses and accounts payable	15,392			26,308			316			2,453
Deferred revenue – upfront payments from right-to-use contracts	9,290			10,264			7,004			5,618
Deferred revenue – right-to-use annual payments	700			1,070			2,742			3,139
Rents received in advance and security deposits	(3,595		)	1,543			11,630			10,434
Net cash provided by operating activities	274,582			287,219			214,102			186,807
Cash Flows From Investing Activities:
Real estate acquisition	(78,203		)	(23,687		)	(2,053		)	(76,203		)
Investment in unconsolidated joint ventures	(5,000		)	(4,000		)	(2,267		)	(5,000		)
Distributions of capital from unconsolidated joint ventures	4,094			80
Repayments of notes receivable	7,788			7,896			5,054			5,176
Issuance of notes receivable	(7,436		)	(7,711		)	(18,696		)	(4,356		)
Capital improvements	(87,316		)	(67,838		)	(53,464		)	(55,707		)
Net cash used in investing activities	(166,073		)	(95,260		)	(71,426		)	(136,090		)
Cash Flows From Financing Activities:
Proceeds from stock options and employee stock purchase plan	5,833			4,625			764			5,331
Share based award tax withholding							—			(98		)
Gross proceeds from sale of Common Stock	50,000			—			—			50,000
Distributions:
Common Stockholders	(103,803		)	(90,466		)	(78,699		)	(67,565		)
Common OP Unitholders	(8,828		)	(7,767		)	(5,942		)	(5,766		)
Preferred Stockholders	(6,910		)	(6,910		)	(4,613		)	(4,613		)
Principal payments and mortgage debt payoff	(109,256		)	(446,661		)	(42,637		)	(32,564		)
New mortgage notes payable financing proceeds	54,450			395,323
Debt issuance and defeasance costs	(617		)	(23,998		)	—			(5		)
Other	(824		)	(424		)	(149		)	(824		)
Net cash used in financing activities	(119,955		)	(176,278		)	(131,276		)	(56,104		)
Net (decrease) increase in cash and cash equivalents	(11,446		)	15,681
Net increase (decrease) in cash							11,400			(5,387		)
Cash, beginning of period	80,258			73,714			56,340			80,258
Cash, end of period	$	68,812		$	89,395		$	67,740		$	74,871

The accompanying notes are an integral part of ~~the financial statements.~~these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows (continued)

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016

(amounts in thousands)

(unaudited)


	September 30, 2016			September 30, 2015			June 30, 2017			June 30, 2016
Supplemental Information:
Cash paid during the period for interest	$	79,762		$	80,575		$	51,135		$	53,121
Capital improvements – used homes acquired by repossessions	485			597			192			445
Net repayments of notes receivable – used homes acquired by repossessions	(485		)	(597		)	(192		)	(445		)
Building and other depreciable property – reclassification of rental homes	26,070			21,105			15,322			15,986
Escrow deposits and other assets – reclassification of rental homes	(26,070		)	(21,105		)	(15,322		)	(15,986		)

Real estate acquisitions:
Investment in real estate, fair value	$	(100,148	)	$	(23,900	)	$	(7,985	)	$	(100,148	)
Investment in real estate, cost	(2,000		)	—
Escrow deposits and other assets	(20		)	(53		)	—			(20		)
Debt assumed	22,010			—			5,900			22,010
Accrued expenses and accounts payable	1,955			62			32			1,955
Rents and other customer payments received in advance and security deposits	—			204
Real estate acquisitions, net	$	(78,203	)	$	(23,687	)	$	(2,053	)	$	(76,203	)

The accompanying notes are an integral part of ~~the financial statements.~~these Consolidated Financial Statements.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

~~Definition~~

Note 1 – Basis of ~~Terms~~Presentation

Equity LifeStyle Properties, Inc., a Maryland corporation, together with MHC Operating Limited Partnership (the “Operating Partnership”) and other consolidated subsidiaries (“Subsidiaries”) are referred to herein as “we,” “us,” and “our.” Capitalized terms used but not defined herein are as defined in our Annual Report on Form 10-K (“~~2015~~2016 Form 10-K”) for the year ended December 31, ~~2015.~~2016. These unaudited Consolidated Financial Statements have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, they do not include all of the information and note disclosures required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements and should be read in conjunction with the financial statements and notes thereto included in the 2016 Form 10-K.

The following notes to the Consolidated Financial Statements highlight significant changes to the notes included in the 2016 Form 10-K and present interim disclosures as required by the SEC. The accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments and estimates necessary for a fair presentation of the interim financial statements, which are of a normal, recurring nature. Revenues and expenses are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results.

Note 12 – Summary of Significant Accounting Policies


(a)	~~Basis of Presentation and Principles of~~ Consolidation

We ~~follow accounting standards set by the Financial Accounting Standards Board, commonly referred to as the “FASB.” The FASB sets generally accepted accounting principles (“GAAP”),~~consolidate our majority-owned Subsidiaries in which we ~~follow~~have the ability to ~~ensure that we consistently report our financial condition, results of~~control the operations and ~~cash flows. References~~all variable interest entities with respect to ~~GAAP issued by~~which we are the ~~FASB~~primary beneficiary. We also consolidate entities in ~~these footnotes are to the FASB Accounting Standards Codification (the “Codification”).~~

~~These unaudited Consolidated Financial Statements~~which we have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the financial statements and notes thereto included in the 2015 Form 10-K. The following notes to the Consolidated Financial Statements highlight significant changes to the notes included in the 2015 Form 10-K and present interim disclosures as required by the SEC. The accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments and estimates necessary for a fair presentation of the interim financial statements, which are of a normal, recurring nature. Revenues are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results.

~~The accompanying Consolidated Financial Statements include the consolidation of our accounts. We do not have~~direct or indirect controlling interests in any of our joint ventures (“JV”), which are therefore treated under the equity method of accounting and not consolidated in our financial statements. The holders of limited partnership interests in the Operating Partnership (“Common OP Unitholders”) receive an allocation of net income that is based on their respective ownership percentage of the Operating Partnership which is shown in our Consolidated Financial Statements as Non-controlling interests-Common OP Units.or voting interest. All significant intercompany balances and transactions have been eliminated in consolidation.

Effective January 1, 2016, we adopted (“ASU 2015-02”) Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 required us to evaluate whether we should consolidate certain legal entities. ~~Principally,~~The adoption of this standard did not result in any changes to our accounting of interests in less than wholly-owned joint ventures; however, the ~~new consolidation standard modified~~Operating Partnership now meets the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIE") or voting interest entities. Based on our review and subsequent analysis of the structure of our legal entities, wecriteria as a VIE. We concluded that the Operating Partnership is a VIE because ~~the limited partners of the Operating Partnership do not have substantive kick-out or participating rights. We~~we are the general partner and controlling owner of approximately ~~92.2%~~93.7% of the Operating Partnership and the limited partners do not have substantive kick-out or participating rights. Our sole significant asset is our investment in the Operating Partnership, and consequently, substantially all of our assets and liabilities represent those assets and liabilities of the Operating Partnership. The Company has the power to direct the VIE's activities and the obligation to absorb its losses or the right to receive its benefits, which are significant to the VIE. Accordingly, we are the primary beneficiary and we will continue to consolidate the Operating Partnership under this new guidance. ~~With~~

We apply the equity method of accounting to entities in which we do not have a direct or indirect controlling interest or for variable interest entities where we are not considered the primary beneficiary, but can exercise influence over the entity with respect to ~~our investment in unconsolidated joint ventures, the new consolidation standard did not have an impact on our previous consolidation conclusions.~~

~~Effective January 1, 2016, we adopted (“ASU 2015-03”)~~ ~~Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs~~its operations and (~~“ASU 2015-15”)~~ ~~Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements~~. ASU 2015-03 requires that debt issuance costs be deducted from the carrying value of the financial liability and not recorded as separate assets, previously classified as deferred financing costs. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. ASU 2015-15 states that presentation of costs associated with securing a revolving line of credit as an asset is permitted, regardless of whether a balance is outstanding. ASU 2015-03 and 2015-15 require retrospective adoption and as a result we reclassified deferred financing costs on our Consolidated Balance Sheets as of December 31, 2015, as presented herein (See Note 7 to the Consolidated Financial Statements for further details).major decisions.


(b)	Identified Intangibles and Goodwill

As of ~~September~~both June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the gross carrying amount of identified intangible assets and goodwill, a component of escrow deposits, goodwill and other assets, net on our consolidated balance sheets, was approximately $12.1 million. As of ~~September~~both June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, this amount was comprised of approximately $4.3 million of identified intangible assets and approximately $7.8 million of goodwill. Accumulated amortization of identified intangible assets was approximately ~~$2.8~~$2.9 million and ~~$2.6~~$2.8 million as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. ~~For~~

As of both June 30, 2017 and December 31, 2016, the ~~quarters ended September 30, 2016~~gross carrying amount of in-place lease intangible assets, a component of buildings and ~~2015,~~other depreciable property on our consolidated balance sheets, was approximately $76.7 million. Accumulated amortization ~~expense for the identified~~of in-place lease intangible assets was approximately ~~$0.1~~$75.9 million and $74.0 million as of June 30, 2017 and December 31, 2016, respectively.


(c)	Restricted Cash

Cash as of both June 30, 2017 and December 31, 2016 included approximately $5.3 million of restricted cash for the payment of capital improvements, insurance or real estate taxes.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Summary of Significant Accounting Policies (continued)

~~respectively. For the nine months ended September 30, 2016 and 2015 amortization expense for the identified intangible assets was approximately $0.2 million and $0.3 million, respectively.~~


~~(c)~~	~~Restricted Cash~~

Our cash balance as of September 30, 2016 and December 31, 2015 included approximately $5.3 million and $5.0 million respectively, of restricted cash for the payment of capital improvements, insurance or real estate taxes.


(d)	Fair Value of Financial Instruments

Our financial instruments include notes receivable, accounts receivable, accounts payable, other accrued expenses, interest rate swaps and mortgage notes payable. We disclose the estimated fair value of our financial instruments according to a fair value hierarchy (Level 1, 2 and 3).

Our mortgage notes payable and term loan, excluding deferred financing costs of approximately ~~$18.8~~$17.8 million and ~~$19.7~~$18.9 million, respectively, had an aggregate carrying value of approximately ~~$2.1 billion~~$2,072.3 million and $2,110.2 million as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, and a fair value of approximately ~~$2.1 billion~~$2,106.4 million and ~~$2.2 billion~~$2,081.2 million as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. The fair value was measured using quoted prices and observable inputs from similar liabilities (Level 2). At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, our cash flow hedge of interest rate risk included in accrued expenses and accounts payable was measured using quoted prices and observable inputs from similar assets and liabilities (Level 2). We consider our own credit risk as well as the credit risk of our counterparties when evaluating the fair value of our derivative. The fair values of our notes receivable approximate their carrying or contract values. We also utilize Level 2 and Level 3 inputs as part of our determination of the purchase price allocation for our ~~acquisitions, as discussed in Note 4 to the Consolidated Financial Statements.~~acquisitions.


(e)	~~Deferred Financing Costs, net~~

Deferred financing costs includes fees and costs incurred to obtain long-term financing and are amortized over the terms of the respective loans on a basis that approximates level yield. Unamortized deferred financing fees are written-off when debt is retired before the maturity date. Upon amendment of the line of credit or refinancing of mortgage debt, unamortized deferred financing fees are accounted for in accordance with Codification Sub-Topic ~~Modifications and Extinguishments~~ ~~(“FASB ASC 470-50-40”). Accumulated amortization for such costs was $30.7 million and $33.7 million at September 30, 2016 and December 31, 2015, respectively.~~


~~(f)~~	~~Recent~~New Accounting Pronouncements

In January 2017, the FASB issued ("ASU 2017-01") Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective for annual reporting beginning after December 15, 2017. We are currently in the process of evaluating the potential impact that the adoption of this standard may have on our consolidated financial statements and related disclosures.

In August 2016, the FASB issued (“ASU 2016-15”) Statement of Cash Flows (Topic 230). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 will be effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently in the process of evaluating the potential impact, if any, that adoption of this standard may have on our consolidated financial statements and related disclosures.

In June 2016, the FASB issued (“ASU 2016-13”) Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. ASU 2016-13 will be effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted. We are currently in the process of evaluating the potential impact, if any, that adoption of this standard may have on our consolidated financial statements and related disclosures.

In March 2016, the FASB issued ("ASU 2016-09") Compensation—Stock Compensation (Topic 718). ASU 2016-09 is intended to simplify several aspects of the accounting for share-based payments. ASU 2016-09 will be effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company is in the process of evaluating the impact, if any, that adoption of this standard may have on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ("ASU 2016-02") Leases. ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 1 – Summary of Significant Accounting Policies (continued)~~

lessor accounting. ASU 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We are currently in the process of evaluating the potential impact this standard may have on our consolidated financial statements and related disclosures.

In May 2014, the FASB issued ("ASU 2014-09") Revenue from Contracts with Customers which along with related subsequent amendments will replace most existing revenue recognition guidance in ~~U.S.~~ GAAP. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The new standard will be effective for the Company beginning on January 1, 2018. The standard permits the use of either the full retrospective or modified retrospective transition method.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies (continued)

We expect to adopt ASU 2014-09 ~~does not apply to lease contracts accounted for under ASC 840, Leases. Entities can~~on January 1, 2018, using the modified retrospective transition tomethod. We are evaluating the ~~standard either retrospectively or as a cumulative-effect adjustment as~~complete impact of the ~~date~~adoption to our consolidated financial results. Our primary source of adoption. On July 9, 2015, the FASB deferred the effective date by one year for annual reporting periods beginning after December 15, 2017. The FASB will permit early adoption of the standard, but not before the original effective date of December 15, 2016.revenue is generated through leasing arrangements, which are excluded from ASU 2014-09. We continue to evaluate and are ~~currently~~ in the process of ~~evaluating~~quantifying the impact, ~~that~~if any, the adoption of ~~the standard~~ASU 2014-09 will have on our ~~consolidated financial statements~~non-lease revenue streams, including right-to-use annual payments, right-to-use contracts, and ~~related disclosures.~~utility and other income.

Note 23 – Earnings Per Common Share

The following table sets forth the computation of ~~the~~ basic and diluted earnings per Common Share for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands, except per share data):


	Quarters Ended				Nine Months Ended				Quarters Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Numerators:
Numerator:
Net Income Available for Common Stockholders:
Net income available for Common Stockholders – basic	$	40,998	$	36,673	$	127,071	$	95,644	$	39,498	$	35,490	$	96,385	$	86,073
Amounts allocated to dilutive securities	3,462		3,136		10,770		8,191		2,649		2,998		6,539		7,308
Net income available for Common Stockholders – fully diluted	$	44,460	$	39,809	$	137,841	$	103,835	$	42,147	$	38,488	$	102,924	$	93,381
Denominator:
Weighted average Common Shares outstanding – basic	85,105		84,057		84,649		84,016		86,763		84,516		86,408		84,419
Effect of dilutive securities:
Redemption of Common OP Units for Common Shares	7,203		7,212		7,205		7,220
Conversion of Common OP Units to Common Shares									5,886		7,205		6,235		7,206
Stock options and restricted shares	602		671		551		641		414		543		398		538
Weighted average Common Shares outstanding – fully diluted	92,910		91,940		92,405		91,877		93,063		92,264		93,041		92,163

Earnings per Common Share – Basic:
Net income available for Common Stockholders	$	0.48	$	0.44	$	1.50	$	1.14	$	0.46	$	0.42	$	1.12	$	1.02

Earnings per Common Share – Fully Diluted:
Net income available for Common Stockholders	$	0.48	$	0.43	$	1.49	$	1.13	$	0.45	$	0.42	$	1.11	$	1.01

Note 34 – Common Stock and Other Equity Related Transactions

Dividends

The following ~~regular~~ quarterly distributions have been declared on our depositary shares (each representing 1/100 of a share of our Series C Preferred Stock) and paid to our preferred ~~shareholders~~stockholders for the ~~nine~~six months ended ~~September~~June 30, ~~2016:~~2017.



~~Distribution Amount Per Share~~	~~For the Quarter Ending~~	~~Stockholder Record Date~~	~~Payment Date~~
~~$0.421875~~	~~March 31, 2016~~	~~March 21, 2016~~	~~March 31, 2016~~
~~$0.421875~~	~~June 30, 2016~~	~~June 17, 2016~~	~~June 30, 2016~~
~~$0.421875~~	~~September 30, 2016~~	~~September 16, 2016~~	~~September 30, 2016~~

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 3 – Common Stock and Other Equity Related Transactions (continued)~~



Distribution Amount Per Share		For the Quarter Ended	Stockholder Record Date	Payment Date
$	0.421875	March 31, 2017	March 10, 2017	March 31, 2017
$	0.421875	June 30, 2017	June 15, 2017	June 30, 2017

The following ~~regular~~ quarterly distributions have been declared and paid to common stockholders and common OP Unit non-controlling ~~interest~~ holders for the ~~nine~~six months ended ~~September~~June 30, ~~2016:~~2017.



~~Distribution Amount Per Share~~	~~For the Quarter Ending~~	~~Stockholder Record Date~~	~~Payment Date~~
~~$0.425~~	~~March 31, 2016~~	~~March 25, 2016~~	~~April 8, 2016~~
~~$0.425~~	~~June 30, 2016~~	~~June 24, 2016~~	~~July 8, 2016~~
~~$0.425~~	~~September 30, 2016~~	~~September 30, 2016~~	~~October 14, 2016~~



Distribution Amount Per Share		For the Quarter Ended	Stockholder Record Date	Payment Date
$	0.4875	March 31, 2017	March 31, 2017	April 14, 2017
$	0.4875	June 30, 2017	June 30, 2017	July 14, 2017

~~On May 4, 2015, we extended our at-the-market (“ATM”~~Conversions

Subject to certain limitations, holders of Common Operating Partnership units ("OP units") ~~offering program by entering into new separate equity distribution agreements with certain sales agents, pursuant~~can convert their units to ~~which we may sell, from time-to-time,~~Common Stock at any time. During the six months ended June 30, 2017, 1,334,747 OP units were converted to an equal number of shares of ~~our~~ Common Stock, par value $0.01 per share, having an aggregate offering price of up to $125.0 million. The following table presents the shares that were issued under the ATM equity offering program during the nine months ended September 30, 2016 (amounts in thousands, except stock data):Stock.

Nine Months Ended September 30, 2016
Shares of Common Stock sold 683,548
Weighted average price $ 73.15
Total gross proceeds $ 50,000
Commissions paid to sales agents $ 657

As of September 30, 2016, $75.0 million of Common Stock remained available for issuance under the ATM equity offering program. We did not sell any shares under the ATM offering program for the comparable nine month period in 2015.

~~Note 4 – Investment in Real Estate~~

~~Acquisitions~~

All acquisitions have been accounted for utilizing the acquisition method of accounting in accordance with FASB ASC 805 and, accordingly, the results of operations of acquired assets are included in the Consolidated Statements of Income and Comprehensive Income from the dates of acquisition. Certain purchase price adjustments may be made within one year following the acquisition and applied prospectively in accordance with ASU 2015-16 Business Combinations (Topic 805): ~~Simplifying the Accounting for Measurement-Period Adjustments~~.

On June 15, 2016, we completed the acquisition of Forest Lake Estates, a 1,168-Site property located in Zephryhills, Florida. This property consists of 894 manufactured home community Sites and 274 RV resort Sites. The purchase price of approximately $75.2 million was funded with proceeds from the ATM offering program and the assumption of mortgage debt of approximately $22.6 million.

~~On May 26, 2016, we closed on the acquisition of Portland Fairview, a 407-Site RV resort located in Fairview, Oregon. The purchase price of approximately $17.6 million was funded with available cash.~~

On January 27, 2016, we completed the acquisition of Rose Bay, a 303-Site RV resort, located in Port Orange, Florida. The total purchase price of approximately $7.4 million was funded with available cash.

During the year ended December 31, 2015, we acquired two RV resorts, Whispering Pines and Miami Everglades, collectively containing 581 Sites, and one manufactured home community, Bogue Pines, containing 150 Sites. The combined purchase price of approximately $23.9 million was funded with available cash.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 45 – ~~Investment in~~ Real Estate ~~(continued)~~

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed in the acquisitions for the nine months ended September 30, 2016 and the year ended December 31, 2015, which we determined using Level-2, for mortgage notes payable and other liabilities, and Level-3 inputs for assets (amounts in thousands):

Nine Months Ended Year Ended
September 30,
2016 December 31,
2015
Assets acquired
Land $ 52,090
$ 8,985
Buildings and other depreciable property 43,572
13,948
Manufactured homes 39
345
In-place leases 4,447
622
Net investment in real estate 100,148
23,900
Other assets 20
53
Total Assets acquired $ 100,168
$ 23,953

Liabilities assumed
Mortgage notes payable $ 22,010
$ —
Other liabilities 1,955
266
Total Liabilities assumed $ 23,965
$ 266
Net assets acquired $ 76,203
$ 23,687
Acquisitions

On ~~October 13, 2016, subsequent to the quarter ended September 30, 2016,~~May 10, 2017, we ~~closed on~~completed the acquisition of ~~Riverside RV,~~Paradise Park Largo, a ~~499-Site RV resort~~108-site manufactured home community located in ~~Arcadia,~~Largo, Florida. The purchase price of approximately ~~$20.3~~$8.0 million was funded with available ~~cash.~~

~~Real estate acquisitions at cost~~

~~On August 15, 2016, we closed on the purchase~~cash and an assumed loan. The $5.9 million loan has an interest rate of ~~approximately 25 acres of vacant land adjacent to our Colony Cove and Ridgewood Estates manufactured home communities~~4.6% that matures in ~~Ellenton, Florida, for $2.0 million.~~

~~Dispositions and real estate held for disposition~~

~~As of September 30, 2016, we did not have any Properties designated as held for disposition pursuant to FASB ASC 360-10-35.~~2040.

Note 56 – Investment in Unconsolidated Joint Ventures

We recorded approximately $2.1 million and $3.6 million (each net of approximately $1.0 million and $0.8 million of depreciation expense, for the nine months ended September 30, 2016 and 2015, respectively) of equityOn June 15, 2017, we entered into a joint venture agreement to purchase Crosswinds Mobile Home Park, a 376-site manufactured home community located in ~~income from unconsolidated joint ventures for each~~St. Petersburg, Florida. The purchase price of the ~~nine months ended September 30, 2016 and 2015, respectively.~~Property was $18.4 million. We ~~received approximately $5.5~~contributed $2.2 million ~~and $3.4 million in distributions from these joint ventures~~ for the nine months ended September 30, 2016 and 2015, respectively. None of the distributions made to us exceeded our basis in joint ventures for the nine months ended September 30, 2016. Approximately $1.4 million of the distributions made to us, using proceeds generated by refinancing transactions, exceeded our basis in joint ventures and as such, were recorded as income from unconsolidated joint ventures for the nine months ended September 30, 2015.

~~On August 29, 2016, the Voyager joint venture obtained additional loan funding in the amount of $8.5 million, of which $4.1 million was distributed to us. This distribution decreased our investment~~a 49% equity interest in the joint venture. The joint venture ~~to approximately $3.5 million as~~is accounted for under the equity method of ~~September 30, 2016.~~

~~On January 4, 2016,~~accounting. As part of the transaction, we ~~contributed approximately $5.0~~issued a short term loan of $13.8 million to the ~~ECHO Financing, LLC~~ joint ~~venture (the "ECHO JV"). Our total investment~~venture. The loan bears interest at ~~September 30, 2016 is approximately $15.3 million.~~

~~Equity LifeStyle Properties, Inc.~~

~~Notes~~5% per annum, can be repaid with no penalty prior to ~~Consolidated Financial Statements~~

~~Note 5 – Investment in Unconsolidated Joint Ventures (continued)~~

maturity and matures on December 12, 2017.

The following table summarizes our investment in unconsolidated joint ventures (investment amounts in thousands with the number of Properties shown parenthetically as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015)~~2016):


						Investment as of				JV Income (loss) for the Nine Months Ended											Investment as of				Joint Venture Income/(Loss) for the Six Months Ended
Investment	Location	Number of Sites	Economic Interest ^(a)			September 30, 2016		December 31, 2015		September 30, 2016			September 30, 2015			Location	Number of Sites	Economic Interest ^(a)			June 30, 2017		December 31, 2016		June 30, 2017		June 30, 2016
Meadows	Various (2,2)	1,077	50	%		$	288	$	162	$	1,026		$	1,176		Various (2,2)	1,077	50	%		$	240	$	510	$	1,130	$	577
Lakeshore	Florida (2,2)	342	65	%		64		46		250			1,694			Florida (3,2)	720	(b)			2,321		56		147		160
Voyager	Arizona (1,1)	1,706	50	%	^(b)	3,515		7,166		902			764			Arizona (1,1)	1,801	50	%	^(c)	3,799		3,376		800		917
ECHO JV	Various	—	50	%		15,331		10,367		(36		)	(28		)	Various	—	50	%		15,406		15,427		113		(8		)
		3,125				$	19,198	$	17,741	$	2,142		$	3,606			3,598				$	21,766	$	19,369	$	2,190	$	1,646

_____________________


(a)	The percentages shown approximate our economic interest as of ~~September~~June 30, ~~2016.~~2017. Our legal ownership interest may differ.


(b)	Includes two joint ventures in which we own a 65% interest and Crosswinds joint venture in which we own a 49% interest.


(c)	Voyager joint venture primarily consists of a 50% interest in Voyager RV Resort and 33% interest in the utility plant servicing the Property.

~~Note 6 - Notes Receivable~~

~~In certain cases, we purchase loans made by others to finance~~We received approximately $1.8 million and $1.0 million in distributions from these joint ventures for the ~~sales of homes to our customers (“Chattel Loans”). Our Chattel Loans receivable require monthly principal~~six months ended June 30, 2017 and ~~interest payments~~2016, respectively. Approximately $0.3 million and ~~are collateralized by homes at certain~~$0.5 million of the ~~Properties. As~~distributions made to us exceeded our basis in joint ventures for the quarter and six months ended June 30, 2017, and as such were recorded as income from unconsolidated joint ventures. None of ~~September~~the distributions made to us exceeded our basis in joint ventures for the quarter and six months ended June 30, 2016 and December 31, 2015, we had approximately $16.5 million and $17.6 million, respectively, of these Chattel Loans included in notes receivable. As of September 30, 2016, the Chattel Loans receivable had a stated per annum average rate of approximately 7.8%, with a yield of 23.8%, and had an average term remaining of approximately eleven years. These Chattel Loans are recorded net of allowances of approximately $0.3 million as of September 30, 2016 and December 31, 2015, respectively.

We also provide financing for non-refundable upgrades to existing right-to-use contracts (“Contracts Receivable”). As of September 30, 2016 and December 31, 2015, we had approximately $17.8 million, respectively, of Contracts Receivable, net of allowances of approximately $0.6 million. As of September 30, 2016 and December 31, 2015 the Contracts Receivable have an average stated interest rate of 16.2% and 16.1% per annum, respectively, have a weighted average term remaining of approximately four years and require monthly payments of principal and interest.2016.

Note 7 – Borrowing Arrangements

With the adoption of ASU 2015-03 and ASU 2015-15, we reclassified deferred financing costs to mortgage notes payable in the amount of $18.9 million as of December 31, 2015. In addition, we reclassified deferred financing costs to term loan in the amount of $0.8 million as of December 31, 2015. Also, we reclassified deferred financing costs related to our unsecured line of credit to Escrow deposits, goodwill, and other assets, net in the amount of $3.7 million as of December 31, 2015.

Mortgage Notes Payable

As of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, we had outstanding mortgage indebtedness of approximately ~~$1.9 billion, excluding~~$1,855.0 million and $1,891.9 million, respectively, net of deferred financing costs. In connection with the Paradise Park Largo acquisition during the quarter ended June 30, 2017, we assumed approximately $5.9 million of mortgage debt secured by the manufactured home community with an interest rate of 4.6% that matures in 2040. During the quarter ended March 31, 2017, we paid off one maturing mortgage loan of approximately $21.1 million, with a weighted average interest rate of 5.76% per annum, secured by one manufactured home Property.

The weighted average interest rate, including the impact of premium/discount amortization and loan cost amortization on ~~this~~ mortgage indebtedness, for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 was approximately 4.9% per annum. The debt bears interest at stated rates ranging from 3.5% to 8.9% per annum and matures on various dates ranging from 2017 to 2041. The debt encumbered a total of 126 ~~and 127~~ of our Properties as of ~~September~~both June 30, ~~2016~~2017 and December 31, ~~2015, respectively,~~2016, and the carrying value of such Properties was approximately ~~$2.3 billion~~$2,282.1 million and ~~$2.2 billion, respectively,~~$2,296.6 million, as of ~~such dates.~~

In connection with the Forest Lake Estates acquisition, we assumed approximately $22.6 million of mortgage debt secured by the manufactured home community, with a stated interest rate of 4.51% per annum, which is set to mature in 2038.

~~During the nine months ended September~~June 30, ~~2016, we completed refinancing activity~~2017 and closed on loans with total gross proceeds of approximately $54.5 million in the aggregate. The loans have a weighted average maturity of 25 years, carry a weighted average interest rate of 4.05% per annum and are secured by three manufactured home properties and one RV resort. Also, during the nine months ended September 30, 2016 we paid off four maturing mortgage loans of approximately $37.0 million, with a weighted average interest rate of 5.83% per annum, secured by three manufactured home Properties and one RV resort.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 7 – Borrowing Arrangements (continued)~~

~~On October 12, 2016, we closed one mortgage loan of approximately $15.0 million, with a 20 year term and stated interest rate of 3.55% per annum, secured by one manufactured home Property.~~

~~During the year ended~~ December 31, 2015, we closed on loans with total gross proceeds of $395.3 million. The loans have a weighted average maturity of 21 years, carry a weighted average interest rate of 3.93% per annum and were secured by 26 manufactured home Properties and RV resorts. Proceeds from the financings were used to retire by defeasance and prepayment approximately $370.2 million of loans maturing at various times throughout 2015 and 2016, with a weighted average interest rate of 5.58% per annum, which were secured by 32 manufactured home Properties and RV resorts. We incurred approximately $17.0 million in early debt retirement expense related to these loans.

~~Term Loan~~respectively.

As of ~~September~~June 30, 2016 and December 31, 2015, our $200.0 million unsecured Term Loan (the “Term Loan”) matures on January 10, 2020 and has an interest rate of LIBOR plus 1.35% to 1.95% per annum and, subject to certain conditions, may be prepaid at any time without premium or penalty. The spread over LIBOR is variable quarterly based on leverage measured quarterly throughout the loan term. The Term Loan contains customary representations, warranties, and negative and affirmative covenants, and provides for acceleration of principal and payment of all other amounts payable thereunder upon the occurrence of certain events of default. In connection with the Term Loan, we also entered into a three year LIBOR Swap Agreement (the “2014 Swap”) allowing us to trade the variable interest rate for a fixed interest rate on the Term Loan (See Note 8 to the Consolidated Financial Statements for further information on the accounting for the 2014 Swap).

~~Unsecured Line of Credit~~

As of September 30, 2016 and December 31, 2015, our unsecured Line of Credit (“LOC”) had a borrowing capacity of $400.0 million, with the option to increase the borrowing capacity by $100.0 million, subject to certain conditions, with no amounts outstanding as of those dates. The LOC bears interest at a rate of LIBOR plus 1.20% to 1.65%, requires an annual facility fee of 0.20% to 0.35% and matures on July 17, 2018, with an option to extend for one additional year, subject to certain conditions. The spread over LIBOR is variable quarterly based on leverage throughout the loan term.

~~As of September 30, 2016,~~2017, we are in compliance in all material respects with the covenants in our borrowing arrangements.

~~Note 8 – Derivative Instruments and Hedging Activities~~

~~Cash Flow Hedges of Interest Rate Risk~~

In connection with our Term Loan, we entered into the 2014 Swap (see Note 7 to the Consolidated Financial Statements for information about the Term Loan related to the 2014 Swap) allowing us to trade the variable interest rate for a fixed interest rate on the Term Loan. The 2014 Swap fixes the underlying LIBOR rate on the Term Loan at 1.04% per annum for the first three years and matures on August 1, 2017. Based on the leverage as of September 30, 2016, our spread over LIBOR is 1.35% resulting in an estimated all-in interest rate of 2.39% per annum.

We have designated the 2014 Swap as a cash flow hedge. No gain or loss was recognized in the Consolidated Statements of Income and Comprehensive Income related to hedge ineffectiveness or to amounts excluded from effectiveness testing on our cash flow hedge during the quarters and nine months ended September 30, 2016 and 2015.

Amounts reported in accumulated other comprehensive loss on the Consolidated Balance Sheets related to derivatives are reclassified to interest expense as interest payments are made on our variable-rate debt. During the next ten months, until maturity, we estimate that an additional $0.6 million will be reclassified as an increase to interest expense. This estimate may be subject to change as the underlying LIBOR rate changes.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

~~Note 8 – Derivative Instruments and Hedging Activities (continued)~~

~~Derivative Instruments and Hedging Activities~~

The table below presents the fair value of our derivative financial instrument as well as our classification on our Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015 (amounts in thousands):

Derivatives in Cash Flow Hedging Relationship Balance Sheet Location September 30,
2016 December 31,
2015
Interest Rate Swap Accrued expenses and accounts payable $ 646
$ 553

~~Tabular Disclosure of the Effect of Derivative Instruments on the Income Statement~~

The tables below present the effect of our derivative financial instrument on the Consolidated Statements of Income and Comprehensive Income for the quarters ended September 30, 2016 and 2015 (amounts in thousands):

Derivatives in Cash Flow Hedging Relationship Amount of loss (gain) recognized
in OCI on derivative Location of loss
reclassified from
accumulated OCI into income Amount of loss
reclassified from
accumulated OCI into
income
September 30,
2016 September 30,
2015 September 30,
2016 September 30,
2015
Interest Rate Swap $ (272 ) $ 1,012
Interest Expense $ 279
$ 434

The tables below present the effect of our derivative financial instrument on the Consolidated Statements of Income and Comprehensive Income for the nine months ended September 30, 2016 and 2015 (amounts in thousands):

Derivatives in Cash Flow Hedging Relationship Amount of loss recognized
in OCI on derivative Location of loss
reclassified from
accumulated OCI into income Amount of loss
reclassified from
accumulated OCI into
income
September 30,
2016 September 30,
2015 September 30,
2016 September 30,
2015
Interest Rate Swap $ 986
$ 2,535
Interest Expense $ 893
$ 1,304

~~We determined that no adjustment was necessary for non-performance risk on our derivative obligation. As of September 30, 2016, we have not posted any collateral related to this agreement.~~

~~Note 9 – Deferred Revenue-entry of right-to-use contracts and Deferred Commission Expense~~

~~As of September 30, 2016 and 2015, the components of the change in deferred revenue-entry of right-to-use contracts and deferred commission expense are as follows (amounts in thousands):~~

Nine Months Ended September 30,
2016 2015
Deferred revenue–upfront payments from right-to-use contracts, as of January 1, $ 78,405
$ 74,174
Right-to-use contracts current period, gross 9,290
10,264
Revenue recognized from right-to-use contract upfront payments (6,863 ) (6,335 )
Right-to-use contract upfront payments, deferred, net 2,427
3,929
Deferred revenue–upfront payments from right-to-use contracts, as of September 30, $ 80,832
$ 78,103

Deferred commission expense, as of January 1, $ 30,865
$ 28,589
Deferred commission expense 3,641
4,821
Commission expense recognized (3,071 ) (2,629 )
Net increase in deferred commission expense 570
2,192
Deferred commission expense, as of September 30, $ 31,435
$ 30,781

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

Note 108 – Equity Incentive Awards

Stock-based compensation expense, reported in general and administrative on the Consolidated Statements of Income and Comprehensive Income, for both of the quarters ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 was approximately ~~$2.4~~$2.5 million ~~and $2.3 million, respectively,~~ and for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 was approximately ~~$6.8~~$4.3 million and ~~$6.3~~$4.4 million respectively.

Our 2014 Equity Incentive Plan (the “2014 Plan”) was adopted by our Board of Directors on March 11, 2014 and approved by our stockholders on May 13, 2014. Pursuant to the 2014 Plan, our officers, directors, employees and consultants may be awarded (i) shares of common stock (“Restricted ~~Stock Grants”~~Stock”), (ii) options to acquire shares of common stock (“Options”), including non-qualified stock options and incentive stock options within the meaning of Section 422 of the Internal Revenue Code, and (iii) other forms of equity awards, subject to conditions and restrictions determined by the Compensation, Nominating, and Corporate Governance Committee of our Board of Directors (the “Compensation Committee”). The Compensation Committee will determine the vesting schedule, if any, of each Restricted Stock Grant or Option and the term of each Option, which term shall not exceed ten years from the date of grant. Shares that do not vest are forfeited. Dividends paid on restricted stock are not returnable, even if the underlying stock does not entirely vest. A maximum of 3,750,000 shares of common stock were originally available for grant under the 2014 Plan. As of ~~September~~June 30, ~~2016, 3,264,282~~2017, 3,126,885 shares remained available for grant. ~~For the nine months ended September 30, 2016~~, ~~Options for 220,000 shares of common stock were exercised for gross proceeds of approximately $5.2 million.~~

Grants under the 2014 Plan are approved by the Compensation Committee, which determines the individuals eligible to receive awards, the types of awards, and the terms, conditions and restrictions applicable to any award, except grants to directors which are approved by the Board of Directors.

~~Grants Issued~~

On May ~~10, 2016,~~2, 2017, we awarded ~~Restricted Stock Grants for 14,705~~to certain members of our Board of Directors, 55,238 shares of ~~common stock~~Restricted Stock at a fair market value of approximately ~~$1.1~~$4.5 million and ~~awarded~~ Options to purchase ~~7,550~~6,930 shares of common stock with an exercise price of ~~$74.53~~$81.15 per ~~share to certain members of our Board of Directors.The~~share. The shares of common stock covered by these awards are subject to multiple tranches that vest ~~as soon as~~between November ~~10, 2016~~2, 2017 and ~~as late as~~ May ~~10, 2019.~~2, 2020.

On February 1, ~~2016,~~2017, we awarded ~~Restricted Stock Grants for 73,000~~75,000 shares of ~~common stock~~Restricted Stock at a fair market value of approximately ~~$4.9~~$5.4 million to certain members of our senior management for their service in ~~2016.~~2017. These ~~Restricted Stock Grants~~restricted stock grants will vest on December 31, ~~2016.~~

On February 1, 2016, we awarded Restricted Stock Grants for 45,784 shares of common stock at a fair market value of approximately $3.1 million to certain members of our Board of Directors for their services as Chairman of the Board, Chairman of the Compensation Committee and Lead Director, Chairman of the Executive Committee and Chairman of the Audit Committee in 2016. One-third of the shares of restricted common stock covered by these awards will vest on each of December 31, 2016, December 31, 2017, and December 31, 2018.2017.

The fair market value of our restricted stock grants was determined by using the closing share price of our common stock on the date the shares were issued and is recorded as compensation expense and paid in capital over the vesting period.

~~Note 11 – Long-Term Cash Incentive Plan~~

On February 12, 2016, our Compensation Committee approved a Long-Term Cash Incentive Plan Award (the "2016 LTIP") to provide a long-term cash bonus opportunity to certain members of our management. The 2016 LTIP was approved by the Compensation Committee pursuant to the authority set forth in the Long Term Cash Incentive Plan approved by our Board of Directors on May 15, 2007. The total cumulative payment for all participants (the "Eligible Payment") is based upon certain performance conditions being met over a three year period ending December 31, 2018.

The Compensation Committee has responsibility for administering the 2016 LTIP and may use its reasonable discretion to adjust the performance criteria or Eligible Payments to take into account the impact of any major or unforeseen transaction or event. Our named executive officers are not participants in the 2016 LTIP. The Eligible Payment will be paid, at the discretion of our Compensation Committee, in cash upon completion of our annual audit for the 2018 fiscal year and upon satisfaction of the vesting conditions as outlined in the 2016 LTIP and, including employer costs, is currently estimated to be approximately $5.6 million. As of September 30, 2016, we had accrued compensation expense of approximately $1.4 million for the 2016 LTIP.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 11 – Long-Term Cash Incentive Plan (continued)~~

The amount accrued for the 2016 LTIP reflects our evaluation of the 2016 LTIP based on forecasts and other available information and is subject to performance in line with forecasts and final evaluation and determination by the Compensation Committee. There can be no assurances that our estimates of the probable outcome will be representative of the actual outcome.

Note 129 – Commitments and Contingencies

California Rent Control Litigation

As part of our effort to realize the value of our Properties subject to rent control, we previously initiated lawsuits against certain localities in California with the goal of achieving a level of regulatory fairness in California's rent control jurisdictions, and in particular those jurisdictions that prohibit increasing rents to market upon turnover. Such regulations allow tenants to sell their homes for a price that includes a premium above the intrinsic value of the homes. The premium represents the value of the future discounted rent-controlled rents, which is fully capitalized into the prices of the homes sold. In our view, such regulations result in a transfer to the tenants of the value of our land, which would otherwise be reflected in market rents. We have discovered through the litigation process that certain municipalities considered condemning our Properties at values well below the value of the underlying land. In our view, a failure to articulate market rents for Sites governed by restrictive rent control would put us at risk for condemnation or eminent domain proceedings based on artificially reduced rents. Such a physical taking, should it occur, could represent substantial lost value to stockholders. We are cognizant of the need for affordable housing in the jurisdictions, but assert that restrictive rent regulation does not promote this purpose because tenants pay to their sellers as part of the purchase price of the home all the future rent savings that are expected to result from the rent control regulations, eliminating any supposed improvement in the affordability of housing. In a more well-balanced regulatory environment, we would receive market rents that would eliminate the price premium for homes, which would trade at or near their intrinsic value. Such efforts have included the following matters:

We sued the City of San Rafael on October 13, 2000 in the U.S. District Court for the Northern District of California, challenging its rent control ordinance on constitutional grounds. While the District Court found the rent control ordinance unconstitutional, the United States Court of Appeals for the Ninth Circuit reversed the District Court and ruled that the ordinance had not unconstitutionally taken our property. On September 3, 2013, we filed a petition for review by the U.S. Supreme Court, which was denied.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 9 – Commitments and Contingencies (continued)

On January 31, 2012, we sued the City of Santee in the United States District for the Southern District of California challenging its rent control ordinance on constitutional grounds. On September 26, 2013, we entered a settlement agreement with the City pursuant to which we are able to increase Site rents at the Meadowbrook community through January 1, 2034 as follows: (a) a one-time 2.5% rent increase on all Sites in January 2014; plus (b) annual rent increases of 100% of the consumer price index (CPI) beginning in 2014; and (c) a 10% increase in the rent on a site upon turnover of that site. Absent the settlement, the rent control ordinance limited us to annual rent increases of at most 70% of CPI with no increases on turnover of a site.

~~Colony Park~~

Settlement of California Lawsuits

On ~~December 1, 2006, a group~~January 18, 2017, we entered into agreements pursuant to which we agreed to settle three California lawsuits related to our California Hawaiian property in San Jose, our Monte del Lago property in Castroville and our Santiago Estates property in Sylmar. Each of ~~tenants at our Colony Park Property in Ceres, California filed a complaint in~~ the ~~California Superior Court for Stanislaus County alleging~~three plaintiff groups was represented by the same law firm and alleged that ~~we had~~the Company failed to properly maintain the ~~Property~~respective properties. The settlement agreements provided for $9.9 million to be paid to settle the California Hawaiian matter, $1.5 million to be paid to settle the Monte del Lago matter and ~~had improperly reduced~~$1.9 million to be paid to settle the ~~services provided~~Santiago Estates matter. As a result, a litigation settlement payable was recorded in Accrued expenses and accounts payable as of December 31, 2016. In addition, an insurance receivable was recorded in escrow deposits, goodwill and other assets, net as of December 31, 2016, resulting in a net settlement of approximately $2.4 million reflected as a component of property rights initiatives and other, net on the consolidated statement of income for the year ended December 31, 2016. During the quarter ended March 31, 2017, the settlements were finalized, the settlement payments were made and the insurance payments were received. These settlements resolved all pending matters brought by plaintiffs’ counsel against us or any of our affiliates. Pursuant to the ~~tenants, among other allegations. We answered the complaint by denying~~settlement agreements, all ~~material allegations and filed a counterclaim for declaratory relief and damages. The case proceeded in Superior Court because our motion~~plaintiffs provided full releases to ~~compel arbitration was denied and the denial was upheld on appeal. Trial~~each of the case began on July 27, 2010. After just over three months of trial in which the plaintiffs asked the jury to award a total of approximately $6.8 million in damages, the jury rendered verdicts awarding a total of less than $44,000 to six out of the 72 plaintiffs,defendants and awarding nothing to the other 66 plaintiffs. The plaintiffs who were awarded nothing filed a motion for a new trial or alternatively for judgment notwithstanding the jury's verdict, which the Superior Court denied on February 14, 2011. All but three of the 66 plaintiffs to whom the jury awarded nothing appealed. Oral argument in the appeal was held on September 19, 2013 and the matter was taken under submission by the California Court of Appeal.

By orders entered on December 14, 2011, the Superior Court awarded us approximately $2.0 million in attorneys' fees and other costs jointly and severally against the plaintiffs to whom the jury awarded nothing, and awarded no attorneys' fees or costs to either sidetheir affiliates including with respect to the six plaintiffs to whom the jury awarded less than $44,000. Plaintiffs filed an appeal from the approximately $2.0 million award of our attorneys' fees and other costs. Oral argument in that appeal was also held on September 19, 2013. On December 3, 2013, the Court of Appeal issued a partially published opinion that rejected all of plaintiffs' claims on appeal except one, relating to whether the park's rules prohibited the renting of spaces to recreational vehicles. The Court of Appeal

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 12 – Commitments and Contingencies (continued)~~

reversed the judgment on the recreational vehicle issue and remanded for further proceedings regarding that issue. Because the judgment was reversed, the award of attorney's fees and other costs was also reversed. Both sides filed rehearing petitions with the Court of Appeal. On December 31, 2013, the Court of Appeal granted the defendants' rehearing petition and ordered the parties to submit supplemental briefing, which the parties did. On March 10, 2014, the Court of Appeal issued a new partially published opinion in which it again rejected all of the plaintiffs' claims on appeal except the one relating to whether the park's rules prohibited the renting of spaces to recreational vehicles, reversing the judgment on that issue and remanding it for further proceedings, and accordingly vacating the award of attorney's fees and other costs.

As of result of a settlement we reached with the plaintiffs remaining in the litigation, pursuant to which among other provisions the parties agreed to mutually release all of their claims in the litigation without any payment by us, on September 28, 2015 the plaintiffs filed with the Superior Court a request for dismissal with prejudice of the entire action, to which we consented. ~~On July 14, 2016, the Superior Court entered a dismissal of the action with prejudice.~~

~~California Hawaiian~~

On April 30, 2009, a group of tenants at our California Hawaiian Property in San Jose, California filed a complaint in the California Superior Court for Santa Clara County, Case No. 109CV140751, alleging that we have failed to properly maintain the Property and have improperly reduced the services provided to the tenants, among other allegations. We moved to compel arbitration and stay the proceedings, to dismiss the case, and to strike portions of the complaint. By order dated October 8, 2009, the Superior Court granted our motion to compel arbitration and stayed the court proceedings pending the outcome of the arbitration. The plaintiffs filed with the California Court of Appeal a petition for a writ seeking to overturn the Superior Court's arbitration and stay orders. On May 10, 2011, the Court of Appeal granted the petition and ordered the Superior Court to vacate its order compelling arbitration and to restore the matter to its litigation calendar for further proceedings. On May 24, 2011, we filed a petition for rehearing requesting the Court of Appeal to reconsider its May 10, 2011 decision. On June 8, 2011, the Court of Appeal denied the petition for rehearing. On June 16, 2011, we filed with the California Supreme Court a petition for review of the Court of Appeal's decision. On August 17, 2011, the California Supreme Court denied the petition for review.

The trial commenced on January 27, 2014. On April 14-15, 2014, the jury entered verdicts against our Operating Partnership of approximately $15.3 million in compensatory damages and approximately $95.8 million in punitive damages. On October 6, 2014, we filed a motion for a new trial and a motion for partial judgment notwithstanding the jury's verdict. On December 5, 2014, after briefing and a hearing on those motions, the Superior Court entered an order granting us a new trial on the issue of damages while upholding the jury's determination of liability. As grounds for the ruling, the Superior Court cited excessive damages and insufficiency of the evidence to support the verdict as to the amount of damages awarded by the jury. The Superior Court's ruling overturned the April 2014 verdicts of $15.3 million in compensatory damages and $95.8 million in punitive damages. On January 28, 2015, we and the plaintiffs each served notices of appeal from the Superior Court's December 5, 2014 order. The Court of Appeal issued an order setting the briefing sequence and ordered commencement of the briefing. On December 15, 2015, the plaintiffs filed their opening appellants’ brief; on March 25, 2016, we filed our combined respondents’ and opening brief; on July 8, 2016, the plaintiffs filed their combined reply and cross-respondents’ brief; and on September 26, 2016, we filed our reply brief, which is the final brief pursuant to the Court of Appeal’s order setting forth the briefing sequence. We intend to continue to vigorously defend ourselves in this litigation.

At September 30, 2016, based on the information available to us, a material loss was neither probable nor estimable. We have taken into consideration the events that have occurred after the reporting period and before the financial statements were issued. We anticipate a lengthy time period to achieve resolution of this case.

~~Monte del Lago~~

On February 13, 2015, a group of tenants at our Monte del Lago Property in Castroville, California filed a complaint in the California Superior Court for Monterey County, Case No. M131016, alleging that we have failed to properly maintain the Property and have improperly reduced the services provided to the tenants, among other allegations. We believe the allegations are without merit and intend to vigorously defend ourselves in the lawsuit. On May 13, 2015, we filed a motion to compel arbitration with respect to certain plaintiffs and to stay the litigation pending the conclusion of the arbitration proceedings. Hearings on the motion were held on July 17, 2015 and September 18, 2015. On October 7, 2015, the Superior Court denied our motion. On December 3, 2015, we filed a notice of appeal from the denial of our motion, and on October 4, 2016, we filed our opening appellants’ brief.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 12 – Commitments and Contingencies (continued)~~

~~Santiago Estates~~

On September 4, 2015, a group of tenants at our Santiago Estates Property in Sylmar, California filed a complaint in the California Superior Court for Los Angeles County, Case No. BC593831, alleging that we have failed to properly maintain the Property and have improperly reduced the services provided to the tenants, among other allegations. We believe the allegations are without merit and intend to vigorously defend ourselves in the lawsuit.

On November 24, 2015, we filed a motion to compel arbitration with respect to certain plaintiffs and to stay the litigation pending the conclusion of the arbitration proceedings. The hearing on that motion was held on August 19, 2016, and the Superior Court granted our motion and ordered the plaintiffs subject to arbitration agreements to resolve all claims alleged in ~~their complaint by arbitration~~the lawsuits, and ~~stayed the remainder~~each of the ~~litigation while~~lawsuits and related appeals were dismissed with prejudice. The settlements do not constitute an admission of liability by us or any of our affiliates and were made to avoid the arbitration proceeds. On September 12, 2016, we filed a demand for arbitration seeking, among other things, a declaration, with respect to the plaintiffs subject to arbitration agreements, that their claims are without merit as well as for recovery of attorneys’ feescosts, risks and ~~costs. On September 30, 2016, plaintiffs filed an ex parte motion~~uncertainties inherent in the Superior Court requesting that the Superior Court stay the arbitration proceedings. The Superior Court heard oral argument on the motion on September 30, 2016, we filed a written opposition brief on October 5, 2016 and the Superior Court denied the motion on October 14, 2016. On October 18, 2016, the plaintiffs filed with the California Court of Appeal a petition for a writ seeking to overturn the Superior Court’s order compelling arbitration and requested an immediate stay of the arbitration. On October 19, 2016, the Court of Appeal denied the request for stay, without prejudice to plaintiffs’ resubmitting the request in the event they make a stay request to the arbitrator and that request is denied. litigation.

Civil Investigation by Certain California District Attorneys

In November 2014, we received a civil investigative subpoena from the office of the District Attorney for Monterey County, California ("MCDA"), seeking information relating to, among other items, statewide compliance with asbestos and hazardous waste regulations dating back to 2005 primarily in connection with demolition and renovation projects performed by third-party contractors at our California Properties. We responded by providing the information required by the subpoena.

On October 20, 2015, we attended a meeting with representatives of the MCDA and certain other District Attorneys' offices at which the MCDA reviewed the preliminary results of their investigation including, among other things, (i) alleged violations of asbestos and related regulations associated with approximately 200 historical demolition and renovation projects in California; (ii) potential exposure to civil penalties and unpaid fees; and (iii) next steps with respect to a negotiated resolution of the alleged violations. No legal proceedings have been instituted to date and we are involved in settlement discussions with the District Attorneys' offices. We continue to assess the allegations and the underlying facts, and at this time we are unable to predict the outcome of the investigation or reasonably estimate any possible loss.

~~Alpine Lake RV Resort OSHA Citations~~

On February 19, 2016, we received a Citation and Notice of Penalty from the Occupational Safety and Health Administration (“OSHA”) alleging two willful and seven serious safety violations relating to the design and maintenance of the electrical system at our Alpine Lake RV Resort in Corinth, New York, and assessing fines totaling $187,000. We have been working with a certified third-party electrician to address the items raised in the citations.

On March 9, 2016, we attended an informal conference in Albany, New York with the OSHA Area Director. The matter was not resolved at the meeting, and we filed the required notice of contest on March 10, 2016 after which the matter was transferred to the Occupational Safety & Health Review Commission, which is represented by a solicitor from the Department of Labor. The solicitor filed a complaint on May 20, 2016, and the parties participated in a formal settlement conference on June 22, 2016. The parties did not reach a settlement at the formal settlement conference. Absent the parties reaching a settlement, we anticipate that this matter will proceed to trial, which is currently scheduled to take place in April 2017. We intend to continue to vigorously defend ourselves, and at this time we are unable to predict the outcome of this matter.

Other

In addition to legal matters discussed above, we are involved in various other legal and regulatory proceedings ("Other Proceedings") arising in the ordinary course of business. The Other Proceedings include, but are not limited to, notices, consent decrees, information requests, and additional permit requirements and other similar enforcement actions by governmental agencies relating to our utility infrastructure, including water and wastewater treatment plants and other waste treatment facilities and electrical systems. Additionally, in the ordinary course of business, our operations are subject to audit by various taxing authorities.

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 12 – Commitments and Contingencies (continued)~~

Management believes these Other Proceedings taken together do not represent a material liability. In addition, to the extent any such proceedings or audits relate to newly acquired Properties, we consider any potential indemnification obligations of sellers in our favor.

Note 1310 – Reportable Segments

Operating segments are defined as components of an entity for which separate financial information is available that is evaluated regularly by the chief operating decision maker. The chief operating decision maker evaluates and assesses performance on a monthly basis. Segment operating performance is measured on Net Operating Income (“NOI”). NOI is defined as total operating revenues less total operating expenses. Segments are assessed before interest income, depreciation and amortization of in-place leases.

We have identified two reportable segments which are: (i) Property Operations and (ii) Home Sales and Rentals Operations. The Property Operations segment owns and operates land lease Properties and the Home Sales and Rentals Operations segment purchases, sells and leases homes at the Properties. The distribution of the Properties throughout the United States reflects our belief that geographic diversification helps insulate the portfolio from regional economic influences.

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 10 - Reportable Segments (Continued)

All revenues are from external customers and there is no customer who contributed 10% or more of our total revenues during the ~~nine~~quarters and six months ended ~~September~~June 30, ~~2016~~2017 or ~~2015~~.2016.

The following tables summarize our segment financial information for the quarters and ~~nine~~six months ended June 30, ~~September 30, 2016~~2017 and ~~2015~~2016 (amounts in thousands):

Quarter Ended June 30, 2017



	Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	206,594		$	11,811		$	218,405
Operations expenses	(102,649		)	(10,481		)	(113,130		)
Income from segment operations	103,945			1,330			105,275
Interest income	754			1,041			1,795
Depreciation on real estate assets and rental homes	(27,609		)	(2,638		)	(30,247		)
Amortization of in-place leases	(958		)	—			(958		)
Income (loss) from operations	$	76,132		$	(267	)	$	75,865
Reconciliation to Consolidated net income:
Corporate interest income							3
Income from other investments, net							1,109
General and administrative							(8,461		)
Property rights initiatives and other							(271		)
Interest and related amortization							(24,822		)
Equity in income of unconsolidated joint ventures							1,040
Consolidated net income							$	44,463

Total assets	$	3,267,947		$	217,411		$	3,485,358

~~September~~Quarter Ended June 30, 2016


	Property Operations			Home Sales and Rentals Operations			Consolidated			Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	207,162		$	14,655		$	221,817		$	193,184		$	13,002		$	206,186
Operations expenses	(101,640		)	(13,422		)	(115,062		)	(94,375		)	(11,867		)	(106,242		)
Income from segment operations	105,522			1,233			106,755			98,809			1,135			99,944
Interest income	711			1,056			1,767			736			867			1,603
Depreciation on real estate assets and rental homes	(26,804		)	(2,714		)	(29,518		)	(26,317		)	(2,712		)	(29,029		)
Amortization of in-place leases	(1,376		)	—			(1,376		)	(428		)	—			(428		)
Income (loss) from operations	$	78,053		$	(425	)	$	77,628		$	72,800		$	(710	)	$	72,090
Reconciliation to Consolidated net income:
Corporate interest income							—									22
Income from other investments, net							2,581									2,270
General and administrative							(7,653		)							(8,255		)
Property rights initiatives and other							(855		)							(527		)
Interest and related amortization							(25,440		)							(25,561		)
Equity in income of unconsolidated joint ventures							496									765
Consolidated net income							$	46,757								$	40,804

Total assets	$	3,238,699		$	231,684		$	3,470,383		$	3,249,375		$	236,200		$	3,485,575

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 1310 - ~~Segment Reporting (continued)~~Reportable Segments (Continued)

~~Quarter~~Six Months Ended ~~September~~June 30, ~~2015~~2017


	Property Operations			Home Sales and Rentals Operations			Consolidated			Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	194,983		$	11,581		$	206,564		$	425,582		$	22,685		$	448,267
Operations expenses	(96,152		)	(10,603		)	(106,755		)	(199,906		)	(20,076		)	(219,982		)
Income from segment operations	98,831			978			99,809			225,676			2,609			228,285
Interest income	692			1,037			1,729			1,484			2,079			3,563
Depreciation on real estate assets and rental homes	(25,703		)	(2,707		)	(28,410		)	(55,062		)	(5,295		)	(60,357		)
Amortization of in-place leases	(616		)	—			(616		)	(1,990		)	—			(1,990		)
Income from operations	$	73,204		$	(692	)	72,512
Income (loss) from operations										$	170,108		$	(607	)	$	169,501
Reconciliation to Consolidated net income:
Corporate interest income							29									5
Income from other investments, net							1,822									1,866
General and administrative							(7,225		)							(15,834		)
Property rights initiatives and other							(687		)							(490		)
Interest and related amortization							(26,227		)							(49,701		)
Equity in income of unconsolidated joint ventures							1,882									2,190
Consolidated net income							$	42,106								$	107,537

Total assets	$	3,193,473		$	249,917		$	3,443,390		$	3,267,947		$	217,411		$	3,485,358
Capital improvements										$	31,731		$	21,733		$	53,464

Six Months Ended June 30, 2016



	Property Operations			Home Sales and Rentals Operations			Consolidated
Operations revenues	$	397,910		$	25,040		$	422,950
Operations expenses	(184,887		)	(22,507		)	(207,394		)
Income from segment operations	213,023			2,533			215,556
Interest income	1,453			1,785			3,238
Depreciation on real estate assets and rental homes	(52,281		)	(5,403		)	(57,684		)
Amortization of in-place leases	(763		)	—			(763		)
Income (loss) from operations	$	161,432		$	(1,085	)	$	160,347
Reconciliation to Consolidated net income:
Corporate interest income							47
Income from other investments, net							3,993
General and administrative							(15,663		)
Property rights initiatives and other							(1,181		)
Interest and related amortization							(51,195		)
Equity in income of unconsolidated joint ventures							1,646
Consolidated net income							$	97,994

Total assets	$	3,249,375		$	236,200		$	3,485,575

~~Nine Months EndedSeptember 30, 2016~~

Property
Operations

Home Sales
and Rentals
Operations
Consolidated
Operations revenues $ 605,072
$ 39,695
$ 644,767
Operations expenses (286,527 ) (35,929 ) (322,456 )
Income from segment operations 318,545
3,766
322,311
Interest income 2,164
2,841
5,005
Depreciation on real estate assets and rental homes (79,086 ) (8,117 ) (87,203 )
Amortization of in-place leases (2,139 ) —
(2,139 )
Income (loss) from operations $ 239,484
$ (1,510 ) $ 237,974
Reconciliation to Consolidated net income:
Corporate interest income 47
Income from other investments, net 6,574
General and administrative (23,315 )
Property rights initiatives and other (2,036 )
Interest and related amortization (76,635 )
Equity in income of unconsolidated joint ventures 2,142
Consolidated net income $ 144,751

Total assets $ 3,238,699
$ 231,684
$ 3,470,383
Capital improvements $ 38,758
$ 48,558
$ 87,316

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 1310 - ~~Segment Reporting (continued)~~Reportable Segments (Continued)

~~Nine Months Ended September 30, 2015~~

Property
Operations

Home Sales
and Rentals
Operations
Consolidated
Operations revenues $ 573,797
$ 35,808
$ 609,605
Operations expenses (274,109 ) (31,303 ) (305,412 )
Income from segment operations 299,688
4,505
304,193
Interest income 2,114
3,126
5,240
Depreciation on real estate assets and rental homes (76,668 ) (8,193 ) (84,861 )
Amortization of in-place leases (1,950 ) —
(1,950 )
Income from operations $ 223,184
$ (562 ) 222,622
Reconciliation to Consolidated net income:
Corporate interest income 74
Income from other investments, net 5,119
General and administrative (22,172 )
Property rights initiatives and other (1,934 )
Early debt retirement (16,922 )
Interest and related amortization (79,648 )
Equity in income of unconsolidated joint ventures 3,606
Consolidated net income $ 110,745

Total assets $ 3,193,473
$ 249,917
$ 3,443,390
Capital improvements $ 37,211
$ 30,627
$ 67,838

The following table summarizes our financial information for the Property Operations segment for the quarters and ~~nine~~six months ended June 30, ~~September 30, 2016~~2017 and ~~2015~~2016 (amounts in thousands):

Quarters Ended Nine Months Ended
September 30,
2016 September 30,
2015 September 30,
2016 September 30,
2015
Revenues:
Community base rental income $ 117,164
$ 110,908
$ 346,625
$ 330,251
Resort base rental income 54,486
49,765
154,652
142,837
Right-to-use annual payments 11,349
11,334
33,590
33,260
Right-to-use contracts current period, gross 3,672
3,889
9,290
10,264
Right-to-use contract upfront payments, deferred, net (1,327 ) (1,701 ) (2,427 ) (3,929 )
Utility and other income 21,174
20,027
61,490
58,010
Ancillary services revenues, net 644
761
1,852
3,104
Total property operations revenues 207,162
194,983
605,072
573,797
Expenses:
Property operating and maintenance 73,410
69,227
203,011
194,522
Real estate taxes 13,467
12,923
39,534
38,169
Sales and marketing, gross 3,100
3,105
8,524
9,139
Right-to-use contract commissions, deferred, net (200 ) (464 ) (212 ) (1,471 )
Property management 11,863
11,361
35,670
33,750
Total property operations expenses 101,640
96,152
286,527
274,109
Income from property operations segment $ 105,522
$ 98,831
$ 318,545
$ 299,688

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 13 - Segment Reporting (continued)~~



	Quarters Ended						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Revenues:
Community base rental income	$	121,964		$	115,385		$	242,656		$	229,461
Resort base rental income	50,055			44,732			111,123			100,166
Right-to-use annual payments	11,350			11,187			22,602			22,241
Right-to-use contracts current period, gross	3,798			3,086			7,004			5,618
Right-to-use contract upfront payments, deferred, net	(1,321		)	(798		)	(2,096		)	(1,100		)
Utility and other income	20,650			19,523			42,776			40,316
Ancillary services revenues, net	98			69			1,517			1,208
Total property operations revenues	206,594			193,184			425,582			397,910
Expenses:
Property operating and maintenance	72,901			66,647			140,955			129,601
Real estate taxes	13,943			12,869			27,980			26,067
Sales and marketing, gross	2,894			2,931			5,584			5,424
Right-to-use contract commissions, deferred, net	(112		)	(116		)	(196		)	(12		)
Property management	13,023			12,044			25,583			23,807
Total property operations expenses	102,649			94,375			199,906			184,887
Income from property operations segment	$	103,945		$	98,809		$	225,676		$	213,023

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands):


	Quarters Ended				Nine Months Ended				Quarters Ended				Six Months Ended
	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015		June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
Revenues:
Gross revenue from home sales	$	10,895	$	7,878	$	28,239	$	24,341	$	7,833	$	9,130	$	14,860	$	17,344
Brokered resale revenues, net	276		290		884		941		346		329		588		608
Rental home income ^(a)	3,484		3,413		10,572		10,526		3,632		3,543		7,237		7,088
Total revenues	14,655		11,581		39,695		35,808		11,811		13,002		22,685		25,040
Expenses:
Cost of home sales	10,745		7,868		28,507		23,685		7,895		9,481		15,014		17,762
Home selling expenses	909		861		2,548		2,386		929		805		1,854		1,639
Rental home operating and maintenance	1,768		1,874		4,874		5,232		1,657		1,581		3,208		3,106
Total expenses	13,422		10,603		35,929		31,303		10,481		11,867		20,076		22,507
Income from home sales and rentals operations segment	$	1,233	$	978	$	3,766	$	4,505	$	1,330	$	1,135	$	2,609	$	2,533

______________________


(a)	Segment information does not include Site rental income included in Community base rental income.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and related Notes included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2016, and with the information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2016.

Overview ~~and Outlook~~

We are a self-administered, self-managed, real estate investment trust (“REIT”) with headquarters in Chicago, Illinois. We are a fully integrated owner and operator of lifestyle-oriented properties (“Properties”) consisting primarily of manufactured home ("MH") communities and recreational vehicle ("RV") resorts and campgrounds. We lease individual developed areas (“Sites”) with access to utilities for placement of factory built homes, cottages, cabins or RVs. Customers may lease individual Sites or enter right-to-use contracts providing the customer access to specific Properties for limited stays. As of ~~September~~June 30, ~~2016,~~2017, we owned or had an ownership interest in a portfolio of ~~390~~393 Properties located throughout the United States and Canada containing ~~145,799~~147,107 Sites. These properties are located in 32 states and British ~~Columbia.~~

~~This Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 includes certain “forward-looking statements”~~Columbia, with more than 80 Properties with lake, river or ocean frontage and more than 100 Properties within ~~the meaning~~10 miles of the Private Securities Litigation Reform Act of 1995. When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and “will be” and similar words or phrases, orcoastal United States.

We generate the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effectmajority of our ~~acquisitions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:~~

our ability to control costs, real estate market conditions, the actual rate of decline in customers, the actual use of Sites by customers and our success in acquiring new customers at our Properties (including those that we may acquire);

~~our ability to maintain historical or increase future rental rates and occupancy with respect to Properties currently owned or that we may acquire;~~

~~our ability to retain and attract customers renewing, upgrading and entering right-to-use contracts;~~

~~our assumptions about rental and home sales markets;~~

~~our ability to manage counterparty risk;~~

in the age-qualified Properties, home sales results could be impacted by the ability of potential home buyers to sell their existing residences as well as by financial, credit and capital markets volatility;

results from home sales and occupancy will continue to be impacted by local economic conditions, lack of affordable manufactured home financing and competition from alternative housing options including site-built single-family housing;

~~impact of government intervention to stabilize site-built single-family housing and not manufactured housing;~~

~~effective integration of recent acquisitions and our estimates regarding the future performance of recent acquisitions;~~

~~Management's Discussion (continued)~~

~~the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto;~~

~~unanticipated costs or unforeseen liabilities associated with recent acquisitions;~~

~~ability to obtain financing or refinance existing debt on favorable terms or at all;~~

~~the effect of interest rates;~~

~~the dilutive effects of issuing additional securities;~~

~~the effect of accounting for the entry of contracts with customers representing a right-to-use the Properties under the Codification Topic~~ ~~"Revenue Recognition";~~

the outcome of pending or future lawsuits filed against us, including those disclosed in our filings with the Securities and Exchange Commission, by tenant groups seeking to limit rent increases and/or seeking large damage awards for our alleged failure to properly maintain certain Properties or other tenant related matters, such as the case currently pending in the California Court of Appeal, Sixth Appellate District, Case No. H041913, involving our California Hawaiian manufactured home property, including any further proceedings on appeal or in the trial court; and

~~other risks indicated from time to time in our filings with the Securities and Exchange Commission.~~

These forward-looking statements are based on management's present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

~~The following chart lists the Properties acquired or invested in since January 1, 2015 through~~ ~~September 30, 2016~~.



~~Property~~	~~Transaction Date~~	~~Sites~~

~~Total Sites as of January 1, 2015~~		~~143,113~~
~~Property or Portfolio:~~
~~Acquisitions:~~
~~Bogue Pines~~	~~February 9, 2015~~	~~150~~
~~Whispering Pines~~	~~February 9, 2015~~	~~278~~
~~Miami Everglades~~	~~June 26, 2015~~	~~303~~
~~Rose Bay~~	~~January 27, 2016~~	~~303~~
~~Portland Fairview~~	~~May 26, 2016~~	~~407~~
~~Forest Lake Estates~~	~~June 15, 2016~~	~~1,168~~
~~Expansion Site Development and other:~~
~~Net Sites added (reconfigured) in 2015~~		94
~~Net Sites added (reconfigured) in 2016~~		~~(17~~	)
~~Total Sites as of September 30, 2016~~		~~145,799~~

Our gross investment in real estate has increased approximately $163.0 million to $4,641 million as of September 30, 2016 from $4,478 million as of December 31, 2015 primarily due to the acquisition of Rose Bay, Portland Fairview and Forest Lake Estates as well as increased capital expenditures.

Subsequent to the end of the quarter, on October 13, 2016, we closed on the acquisition of Riverside RV, a 499-Site RV resort located in Arcadia, Florida. The purchase price of approximately $20.3 million was funded with available cash.

We actively seek to acquire and are currently engaged in various stages of negotiations relating to the possible acquisition of additional properties, which may include contracts outstanding to acquire such properties that are subject to the satisfactory completion of our due diligence review.

~~Occupancy in our Properties, as well as our ability to increase rental rates, directly affects revenues. Our revenue streams are predominantly derived~~revenues from customers renting our Sites, ~~on a long-term basis. Some revenue streams are subject~~or entering into right-to-use contracts (also referred to ~~seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full fiscal year results.~~

~~Management's Discussion (continued)~~

~~The following table shows the breakdown of~~as membership products) which provide our ~~Sites by type.~~customers access to specific Properties for limited stays. Our MH community Sites and annual RV resort Sites are leased on an annual basis. Seasonal Sites are leased to customers generally for one to six months. Transient Sites are leased to customers on a short-term basis. The revenue from seasonal and transient Sites is generally higher during the first and third quarters. We consider the transient revenue stream to be our most volatile as it is subject to weather conditions and other factors affecting the ~~marginal~~ RV customer's vacation and travel preferences. Sites designated as right-to-use Sites are primarily utilized to service the approximately ~~106,700~~106,500 customers who have entered into right-to-use ~~contracts.~~contracts (otherwise referred to as "memberships" or "membership dues"). We also have interests in joint venture Properties for which revenue is classified as Equity in income from unconsolidated joint ventures in the Consolidated Statements of Income and Comprehensive Income. The breakdown of our Sites by type are as follows (amounts are approximate):



	Total Sites as of ~~September~~June 30, ~~2016~~2017
Community Sites	~~71,000~~71,100
Resort Sites:
Annual	~~26,300~~26,600
Seasonal	~~10,800~~11,200
Transient	10,500
Right-to-use⁽¹⁾	24,100
Joint Ventures ⁽²⁾	~~3,100~~3,600
	~~145,800~~147,100

_________________________


⁽¹⁾	Includes approximately 5,700 Sites rented on an annual basis.


⁽²⁾	Joint ventures have approximately ~~2,200~~2,700 annual Sites, approximately 400 seasonal Sites and approximately 500 transient ~~Sites.~~Sites and includes Crosswinds Mobile Home Park joint venture that we entered into during the quarter ended June 30, 2017.

~~For the periods presented,~~

In our ~~Core Portfolio (“Core Portfolio”) consists of~~Home Sales and Rental Operations business our revenue streams include home sales, home rentals, brokerage services and ancillary activities. We generate revenue through home sales and rental operations by selling or leasing Site Set homes that are located in Properties owned and operated during the entire period. This measure is useful to investors for annual comparison as it removes the fluctuations associated with acquisitions, dispositions and significant transactions or unique situations, which are included in income from property operations, excluding deferrals and property management. For the quarter ended September 30, 2016, property operating revenues in our Core Portfolio, excluding deferrals, were up 4.7% and property operating expenses in our Core Portfolio, excluding deferrals and property management, were up 4.1%, resulting in an increase in Core net operating income before deferrals and property management of 5.3%.

Approximately one third of our rental agreements on community Sites have rent increases that are directly or indirectly connected to published CPI statistics that are issued from June through September of the year prior to the increase effective date. Approximately one half of those rental agreements have a CPI floor of approximately 3.0%.

State and local rent control regulations affect 27 Properties, including 19 of our 49 California Properties, all of our seven Delaware Properties and one of our five Massachusetts Properties. The impact of the rent control regulations is to limit our ability to implement rent increases based on prevailing market conditions. The regulations generally permit us to increase ratesmanaged by a percentage of the increase in the CPI, which may be national, regional or local, depending on the rent control ordinance. The limit on rent increases may range from 60% to 100% of CPI with certain maximum limits depending on the jurisdiction.

In the years following the disruption in the site-built housing market, our home sales business was negatively affected by our customers' inability to sell their existing site-built homes and relocate to their retirement destination. As a result, we focused on home rentals rather than sales as our primary source of occupancy upon turnover. As we managed and expanded our portfolio of rental homes, we placed homes in communities where we believed we could successfully sell homes as the market improved. At these Properties, we have been successful at selling homes and driving occupancy gains through increased home ownership. We continue to allocate capital to home purchases based on our assessment of market conditions and emphasize home sales. We continue to see population growth in our key markets, increased access to distribution channels for our products and a renewed willingness by our customers to commit to us for longer periods of time. We have also seen a decrease in homes coming back to us, which generally means that our residents have the opportunity to resell their homes to new residents. While we continue to focus on selling homes, we continue to evaluate rental units, and based on market conditions, we expect to invest in additional new homes for customer rentals.

us. We continue to focus on ~~the quality~~our rental operations, as we believe renting our vacant new homes may represent an attractive source of occupancy ~~growth by increasing~~and the ~~number of homeowners in our Core portfolio. As of September 30, 2016, we increased occupancy in our Core Portfolio by 450 Sites, which included~~opportunity to convert to a ~~gain of 628 homeowners. This compares to the first nine months of 2015, during which occupancy increased by 380 Sites resulting from a gain of 791 homeowners.~~

~~Since 2013, we have experienced an increase~~new homebuyer in the ~~sales volume of new~~future. We also sell and used homes in our communities. We attribute this increase to various factors including management's focus on increasing the number of homeowners within our communities, changes to incentive structures for our on-site personnel to emphasize home sales rather than rentals and willingness of an increasing number of customers to commit their capital to purchase a home in one of our communities. New home sales in the manufactured

~~Management's Discussion (continued)~~

home communities in our Core Portfolio during the nine months ended September 30, 2016 increased by 156 new homes over the same period in the prior year. The recent new home sales have been primarily in our Colorado and Florida communities. (See the Home Sales Operations tables in the sections below for additional detail regarding our home sales activity.)

In the ordinary course of business, we acquire used homes from customers through purchase, foreclosure of a lien, or abandonment. In a vibrant home sales market in which residents are able to resell their homes, we generally acquire fewerrent homes through ~~foreclosure or abandonment. Used homes may require rehabilitation before selling or renting them to new customers.~~

~~During 2013 we formed a~~our joint venture, ECHO Financing, LLC (the "ECHO JV")~~, with~~. We provide brokerage services to residents of our Properties who move from a ~~home manufacturer to buy~~Property but do not relocate their home. In addition, we operate ancillary activities at certain Properties, such as golf courses, pro shops, stores and sell homes, as well as to purchase loans made by an unaffiliated lender to purchasers of such homes at our Properties. The ECHO JV may also rent homes to customers in our communities. We also have a limited program under which we purchase loans made by an unaffiliated lender to purchasers of homes at our Properties.restaurants.

In the manufactured housing industry chattel financing options are limited. Financing options available today include community owner funded programs or third party lender programs that provide subsidized financing to customers and require the community owner to guarantee customer defaults. Third party lender programs have stringent underwriting criteria, sizable down payment requirements, short loan amortization and high interest rates. We have a limited program under which we purchase loans made by an unaffiliated lender to purchasers of homes at our Properties.

AsWe invest in Properties in sought-after locations near retirement and vacation destinations and urban areas across the United States with a focus on increasing operating cash flows. We seek growth in earnings, funds from operations ("FFO") and cash flows by enhancing the profitability and operation of ~~September~~our Properties and investments. We seek to accomplish this by attracting high quality customers to our Properties and retaining these customers who take pride in the Property and in their homes and efficiently

Management's Discussion (continued)

managing our Properties to increase operating margins by increasing occupancy, maintaining competitive market rents and controlling expenses.

In addition to Net income computed in accordance with GAAP, we assess and measure our overall financial and operating performance using certain Non-GAAP supplemental measures, which include: (i) FFO, (ii) Normalized funds from operations ("NFFO"), (iii) Income from property operations, (iv) Income from property operations, excluding deferrals and property management, (v) Core Portfolio income from property operations, excluding deferrals and property management, (operating results for properties owned and operated in both periods under comparison) and (vi) Income from rental operations, net of depreciation. We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies. Definitions and reconciliations of these measures to the most comparable GAAP measures are included below in this discussion.

Results Overview

Net income available for Common Stockholders increased $4.0 million, to $39.5 million for the quarter ended June 30, 2017, compared to $35.5 million for the quarter ended June 30, 2016. Net income available for Common Stockholders increased $10.3 million, to $96.4 million for the six months ended June 30, 2017, compared to $86.1 million for the six months ended June 30, 2016. Both FFO per diluted share and NFFO per diluted share for the quarter ended June 30, 2017 were $0.81 compared to $0.75 for the quarter ended June 30, 2016 ~~we had 4,789~~driven by improved Core and Non-Core income from property operations. Both FFO per diluted share and NFFO per diluted share for the six months ended June 30, 2017 were $1.81 compared to $1.67 for the six months ended June 30, 2016.

For the quarter ended June 30, 2017 property operating revenues in our Core Portfolio, excluding deferrals, were up 5.5% and property operating expenses in our Core Portfolio, excluding deferrals and property management, were up 6.5% from the quarter ended June 30, 2016, resulting in an increase in our income from property operations before deferrals and property management of 4.8%, from the quarter ended June 30, 2016. For the six months ended June 30, 2017 property operating revenues in our Core Portfolio, excluding deferrals, were up 4.9% and property operating expenses in our Core Portfolio, excluding deferrals and property management, were up 5.9% from the six months ended June 30, 2016, resulting in an increase in our income from property operations before deferrals and property management of 4.3%, from the six months ended June 30, 2016.

We continue to focus on the quality of occupancy growth by increasing the number of manufactured homeowners in our Core Portfolio. Our Core Portfolio average occupancy consists of occupied ~~rental homes~~home sites in our MH ~~communities. For~~communities (both homeowners and renters) and was 94.2% for the ~~quarters~~quarter ended ~~September~~June 30, 2017, compared to 94.0% for the quarter ended March 31, 2017 and 93.3% for the quarter ended June 30, 2016. During the quarter ended June 30, 2017, we increased occupancy of manufactured homes within our Core Portfolio by 114 sites with an increase in homeowner occupancy of 204 sites compared to occupancy as of March 31, 2017. By comparison, as of June 30, 2016, ~~and 2015, home rental program net operating income was approximately $7.9 million and $8.0 million, respectively, net~~our Core Portfolio occupancy increased 128 sites with an increase in homeowner occupancy of rental asset depreciation expense of approximately $2.7 million for both periods. Approximately $8.9 million and $9.0 million of home rental operations revenue was included in community base rental income for the quarters ended September 30, 2016 and 2015, respectively (see the Rental Operations tables in the sections below for additional detail regarding our rental activity). We believe229 sites compared to occupancy at ~~this time we compete effectively with other types of rentals (i.e., apartments).~~March 31, 2016.

For the nine months ended September 30, 2016 and 2015, home rental program net operating income was approximately $24.6 million and $24.9 million, respectively, net of rental asset depreciation expense of approximately $8.0 million and $8.1 million, respectively. Approximately $27.0 million and $27.7 million of home rental operations revenue was included in community base rental income for the nine months ended September 30, 2016 and 2015, respectively (see the Rental Operations tables in the sections below for additional detail regarding our rental activity).

~~In our RV resorts, we are focused on engaging with our existing customers and providing them the lifestyle they seek as well as attracting additional customers interested in our Properties.~~ We continue to experience growth in revenues in our ~~annual revenues~~Core RV Portfolio as a result of our ability to increase rental rates and occupancy. ~~Our third quarter~~RV revenues in our Core Portfolio ~~annual revenues~~for the quarter ended June 30, 2017 were ~~5.8%~~8.1% higher than the ~~third~~ quarter ended June 30, 2016. Annual, seasonal and transient revenues for the quarter ended June 30, 2017 increased 6.0%, 13.7% and 12.3%, respectively, from the quarter ended June 30, 2016. RV revenues in our Core Portfolio for the six months ended June 30, 2017 were 5.3% higher than the six months ended June 30, 2016. Annual, seasonal and transient revenues for the six months ended June 30, 2017 increased 5.3%, 3.8% and 6.7%, respectively, from the six months ended June 30, 2016.

We continue to offer the Thousand Trails Camping Pass (“TTC”) and as a customer acquisition tool we have relationships with a network of ~~last year. We believe our customer base is loyal~~RV dealers to provide them with a free one-year TTC membership to give to their customers in connection with the purchase of an RV. During the quarter ended June 30, 2017 online TTC sales increased 45% from the quarter ended June 30, 2016. During the quarter ended June 30, 2017 we sold approximately 4,700 TTCs and ~~engaged in~~activated approximately 5,700 RV dealer TTCs. For the ~~lifestyle~~six months ended June 30, 2017 we ~~offer at our Properties. We have annual customers who have stayed with us for more than ten years~~sold approximately 7,300 TTCs and ~~our member base includes members who have camped with us for more than twenty years.~~ activated approximately 9,200 RV dealer TTCs.

Our social media presence ~~has increased~~continues to increase within ~~this member~~our RV customer base and we ~~have also been~~continue to be successful at providing a venue for our customers to promote our Properties by encouraging them to share their memories of their ~~adventures~~experiences at our resorts. We believe this is an important factor in a customer's decision to relocate. Our customers continue to increase the amount of time spent shopping online for their home and vacation decisions. We have also expanded our marketing efforts to reach approximately 40 million outdoor enthusiasts (according to the 2014 American Camper Report) to inform them about our product offerings.

For our membership based RV resorts, we offer low-cost membership products that focus on the installed base of approximately nine million RV owners. Such products include right-to-use contracts that entitle the customer to use certain Properties. We are offering a Thousand Trails Camping Pass (“TTC”) (formerly Zone Park Pass), which can be purchased for one to five geographic areas of the United States and requires an annual payment of $545. A single zone TTC requires no additional upfront payment while additional zones may be purchased for modest additional upfront payments. Since the introduction of low-cost membership products,Year-over-year we have ~~entered into approximately 100,900 TTCs. Our renewal rate for these memberships is approximately 43.2%~~seen an increase in social media fans of 30%.

~~We have arranged with RV dealers to feature~~ Through our ~~TTC as part of the dealers’ sales and~~summer marketing efforts. We provide the dealer with a TTC membership to give to their customers in connection with the purchase of an RV. No cash is received from the member during the first year of membership for memberships activated through the RV dealer program. Since inception,campaigns, we have ~~activated 42,686 TTCs through the RV dealer program. Our renewal rate for these RV dealer memberships is approximately 16.8%.~~

Management's Discussion (continued)

increased the awareness of our product offering and our customers are increasingly choosing the web as a vehicle to transact with us.

We continue to see high demand for our homes and communities. We closed 120 new home sales in the quarter ended June 30, 2017 compared to 180 during the quarter ended June 30, 2016 and 240 new home sales in the six months ended June 30, 2017 compared to 301 during the six months ended June 30, 2016. The ~~table below provides additional details regarding~~new home sales during the quarter and six months ended June 30, 2017 were primarily in our ~~TTCs:~~Florida and Colorado communities.

As of June 30, 2017, we had 4,674 occupied rental homes in our MH communities. For the quarters ended June 30, 2017 and 2016, home rental program net operating income was approximately $8.2 million and $8.3 million, respectively, net of rental asset depreciation expense of approximately $2.6 million for the quarter ended June 30, 2017 and $2.7 million for the quarter ended June 30, 2016. Approximately $8.8 million and $9.0 million of home rental operations revenue was included in community base rental income for the quarters ended June 30, 2017 and June 30, 2016, respectively. For the six months ended June 30, 2017 and 2016, home rental program net operating income was approximately $16.4 million and $16.8 million, respectively, net of rental asset depreciation expense of approximately $5.3 million for both the six months ended June 30, 2017 and six months ended June 30, 2016. Approximately $17.7 million and $18.1 million of home rental operations revenue was included in community base rental income for the six months ended June 30, 2017 and six months ended June 30, 2016, respectively.

On May 10, 2017, we completed the acquisition of Paradise Park Largo, a 108-site manufactured home community located in Largo, Florida for a purchase price of approximately $8.0 million. Our gross investment in real estate has increased approximately $46.3 million to $4,731.6 million as of June 30, 2017 from $4,685.3 million as of December 31, 2016 primarily due to the acquisition of Paradise Park Largo and increased capital expenditures.

The following chart lists both the Properties acquired or invested in from January 1, 2016 through June 30, 2017, which represents our Non-Core Portfolio; and Sites added through expansion opportunities at our existing Properties.

Years Ended December 31, Nine Months Ended September 30,
2012 2013 2014 2015 2016
TTC Origination 10,198
15,607
18,187
25,544
23,983
TTC Sales 8,909
9,289
10,014
11,877
10,744
RV Dealer TTC Activations 1,289
6,318
8,173
13,667
13,239



Property	Location	Type of Property	Transaction Date	Sites

Total Sites as of January 1, 2016				143,938
Acquisitions:
Rose Bay	Port Orange, Florida	RV	January 27, 2016	303
Portland Fairview	Fairview, Oregon	RV	May 26, 2016	407
Forest Lake Estates	Zephryhills, Florida	RV, MH	June 15, 2016	1,168
Riverside RV	Arcadia, Florida	RV	October 13, 2016	499
Paradise Park Largo	Largo, Florida	MH	May 10, 2017	108
Joint Venture:
Crosswinds	St. Petersburg, Florida	MH	June 15, 2017	376
Expansion Site Development and other:
Net Sites added (reconfigured) in 2016				295
Net Sites added (reconfigured) in 2017				13
Total Sites as of June 30, 2017				147,107

Existing customers are eligible to upgrade their right-to-use contract from time-to-time. An upgrade is distinguishable from a new right-to-use contract that a customer would enter by, depending on the type of upgrade, offering (1) increased length of consecutive stay by 50% (i.e., up to 21 days); (2) ability to make earlier advance reservations; (3) discounts on rental units; (4) access to additional Properties, which may include use of Sites at non-membership RV resorts and (5) membership in discount travel programs. Each upgrade contract requires a nonrefundable upfront payment. For certain customers, we finance the nonrefundable upfront payment for these upgrades.

~~Critical Accounting Policies and Estimates~~

Refer to the 2015 Form 10-K for a discussion of our critical accounting policies, which includes impairment of real estate assets and investments, revenue recognition and business combinations. There have been no changes to these policies during the nine months ended September 30, 2016.

~~Supplemental~~Non-GAAP Financial Measures

~~Management's discussion~~Income from Property Operations and analysis of financial condition and results of operations include certain non-GAAP financial measures that in management's view of the business we believe are meaningful as they allow the investor the ability to understand key operating details of our business both with and without regard to certain accounting conventions or items that may not always be indicative of recurring annual cash flow of the portfolio. These non-GAAP financial measures as determined and presented by us may not be comparable to similarly titled measures reported by other companies, and includeCore Portfolio

We use Income from property operations ~~Funds from Operations ("FFO") and Normalized Funds from Operations ("Normalized FFO"). We believe investors should review FFO, Normalized FFO~~ and Income from property operations, ~~along with GAAP net~~excluding deferrals and property management and Core Portfolio income from property operations, excluding deferrals and ~~cash flow from~~property management, as alternative measures to evaluate the operating ~~activities, investing activities~~results of our manufactured home and financing activities, when evaluating an equity REIT’s operating performance. A discussion of FFO, Normalized FFO and a reconciliation to net income is included in the presentation of FFO following our "Results of Operations."

RV communities. Income from property operations, represents rental income, utility income and right-to-use income less property operating and maintenance expenses, real estate ~~taxes,~~tax, sales and marketing expenses and property management expenses. ~~We believe that~~ Income from property operations, excluding deferrals and property management represents income from property operations excluding property management expenses and the impact of the GAAP deferral of right-to-use contract upfront payments and related commissions, net. Our Core Portfolio consists of our Properties owned and operated since December 31, 2015. Core Portfolio income from property operations, excluding deferrals and property management is useful to investors for annual comparison as it removes the fluctuations associated with acquisitions, dispositions and significant transactions or unique situations. Our Non-Core Portfolio (or Acquisitions) includes all Properties that were not owned and operated during 2016 and 2017.

Management's Discussion (continued)

Funds from Operations ("FFO") and Normalized Funds from Operations ("NFFO")

We define FFO as net income, computed in accordance with GAAP, excluding gains and actual or estimated losses from sales of properties, plus real estate related depreciation and amortization, impairments, if any, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. We receive up-front non-refundable payments from the entry of right-to-use contracts. In accordance with GAAP, the upfront non-refundable payments and related commissions are deferred and amortized over the estimated customer life. Although the NAREIT definition of FFO does not address the treatment of non-refundable right-to-use payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO.

We define NFFO as FFO excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b) gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; c) property acquisition and other transaction costs related to mergers and acquisitions; and d) other miscellaneous non-comparable items. NFFO presented herein is not necessarily comparable to NFFO presented by other real estate companies due to the fact that not all real estate companies use the same methodology for computing this amount.

We believe that FFO and Normalized FFO are helpful to investors as supplemental measures of the performance of an equity REIT. We believe that by excluding the effect of depreciation, amortization, impairments, if any, and actual or estimated gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and among other equity REITs. We further believe that Normalized FFO provides useful information to investors, analysts and our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our operations. For example, we believe that excluding the early extinguishment of debt, property acquisition and other transaction costs related to mergers and acquisitions from NFFO allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. In some cases, we provide information about identified non-cash components of FFO and NFFO because it allows investors, analysts and our management to assess the impact of those items.

Income from Rental Operations, Net of Depreciation

We use Income from rental operations, net of depreciation as aan alternative measure ofto evaluate the operating results of our ~~manufactured~~ home rental program. Income from rental operations, net of depreciation, represents income from rental operations less depreciation expense on rental homes. We believe this measure is meaningful for investors as it provides a complete picture of the home rental program operating results including the impact of depreciation which affects our home rental program investment decisions.

Our definitions and ~~RV communities.~~calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flow from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

Management's Discussion (continued)

The following table reconciles Net income available for Common Stockholders to Income from property operations ~~to Income before equity in income of unconsolidated joint ventures~~ for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~June 30, 2016 (amounts in thousands):


	Total Portfolio												Quarters ended June 30,						Six Months Ended June 30,
	Quarters Ended						Nine Months Ended						2017			2016			2017			2016
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Computation of Income from Property Operations:
Net income available for Common Stockholders													$	39,498		$	35,490		$	96,385		$	86,073
Series C Redeemable Perpetual Preferred Stock Dividends													2,316			2,316			4,613			4,613
Income allocated to non-controlling interests - Common OP Units													2,649			2,998			6,539			7,308
Equity in income of unconsolidated joint ventures													(1,040		)	(765		)	(2,190		)	(1,646		)
Income before equity in income of unconsolidated joint ventures													43,423			40,039			105,347			96,348
Total other expenses, net													61,852			59,905			122,938			119,208
Income from home sales operations and other													547			758			(97		)	241
Income from property operations	$	106,594		$	99,609		$	322,391		$	301,878		$	105,822		$	100,702		$	228,188		$	215,797
(Loss) income from home sales operations and other	161			200			(80		)	2,315
Total other income and expenses, net	(60,494		)	(59,585		)	(179,702		)	(197,054		)
Income before equity in income of unconsolidated joint ventures	$	46,261		$	40,224		$	142,609		$	107,139

The following table presents a calculation of FFO available for Common Stock and OP Unit holders and Normalized FFO available for Common Stock and OP Unit holders for the quarters and six months ended June 30, 2017 and June 30, 2016 (amounts in thousands):



	Quarters ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Computation of FFO and Normalized FFO:
Net income available for Common Stockholders	$	39,498		$	35,490		$	96,385		$	86,073
Income allocated to common OP units	2,649			2,998			6,539			7,308
Right-to-use contract upfront payments, deferred, net	1,321			798			2,096			1,100
Right-to-use contract commissions, deferred, net	(112		)	(116		)	(196		)	(12		)
Depreciation on real estate assets	27,608			26,362			55,061			52,370
Depreciation on rental homes	2,639			2,667			5,296			5,314
Amortization of in-place leases	958			428			1,990			763
Depreciation on unconsolidated joint ventures	364			305			811			595
FFO available for Common Stock and OP Unit holders	74,925			68,932			167,982			153,511
Transaction costs	220			398			324			598
Normalized FFO available for Common Stock and OP Unit holders	$	75,145		$	69,330		$	168,306		$	154,109
Weighted average Common Shares outstanding – fully diluted	93,063			92,264			93,041			92,163

Management's Discussion (continued)

Results of Operations

Comparison of the Quarter Ended ~~September~~June 30, ~~2016~~2017 to the Quarter Ended ~~September~~June 30, ~~2015~~2016

Income from Property Operations

The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the quarters ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands). The Core Portfolio ~~may change from time-to-time depending on acquisitions, dispositions and significant transactions or unique situations. The Core Portfolio~~ in this ~~Form 10-Q~~discussion includes all Properties acquired ~~prior to~~on or before December 31, ~~2014~~2015 and which we have owned and operated continuously since January 1, ~~2015~~2016. Core Portfolio growth percentages exclude the impact of GAAP deferrals of upfront payments from right-to-use contracts and related commissions.


	Core Portfolio									Total Portfolio									Core Portfolio									Total Portfolio
	2016		2015		Variance			% Change		2016		2015		Variance			% Change		2017		2016		Variance			% Change		2017		2016		Variance			% Change
Community base rental income	$	115,944	$	110,792	$	5,152		4.7	%	$	117,164	$	110,908	$	6,256		5.6	%	$	120,699	$	115,188	$	5,511		4.8	%	$	121,964	$	115,385	$	6,579		5.7	%
Rental home income	3,484		3,408		76			2.2	%	3,484		3,413		71			2.1	%	3,632		3,543		89			2.5	%	3,632		3,543		89			2.5	%
Resort base rental income	52,809		49,338		3,471			7.0	%	54,486		49,765		4,721			9.5	%	47,753		44,173		3,580			8.1	%	50,055		44,732		5,323			11.9	%
Right-to-use annual payments	11,349		11,334		15			0.1	%	11,349		11,334		15			0.1	%	11,350		11,187		163			1.5	%	11,350		11,187		163			1.5	%
Right-to-use contracts current period, gross	3,672		3,889		(217		)	(5.6	)%	3,672		3,889		(217		)	(5.6	)%	3,798		3,086		712			23.1	%	3,798		3,086		712			23.1	%
Utility and other income	20,887		19,956		931			4.7	%	21,174		20,027		1,147			5.7	%	20,319		19,468		851			4.4	%	20,650		19,523		1,127			5.8	%
Property operating revenues, excluding deferrals	208,145		198,717		9,428			4.7	%	211,329		199,336		11,993			6.0	%	207,551		196,645		10,906			5.5	%	211,449		197,456		13,993			7.1	%

Property operating and maintenance	72,295		68,875		3,420			5.0	%	73,410		69,227		4,183			6.0	%	71,096		66,363		4,733			7.1	%	72,901		66,647		6,254			9.4	%
Rental home operating and maintenance	1,765		1,874		(109		)	(5.8	)%	1,768		1,874		(106		)	(5.7	)%	1,657		1,581		76			4.8	%	1,657		1,581		76			4.8	%
Real estate taxes	13,125		12,890		235			1.8	%	13,467		12,923		544			4.2	%	13,462		12,781		681			5.3	%	13,943		12,869		1,074			8.3	%
Sales and marketing, gross	3,100		3,105		(5		)	(0.2	)%	3,100		3,105		(5		)	(0.2	)%	2,894		2,931		(37		)	(1.3	)%	2,894		2,931		(37		)	(1.3	)%
Property operating expenses, excluding deferrals and Property management	90,285		86,744		3,541			4.1	%	91,745		87,129		4,616			5.3	%	89,109		83,656		5,453			6.5	%	91,395		84,028		7,367			8.8	%
Income from property operations, excluding deferrals and Property management ⁽¹⁾	117,860		111,973		5,887			5.3	%	119,584		112,207		7,377			6.6	%	118,442		112,989		5,453			4.8	%	120,054		113,428		6,626			5.8	%
Property management	11,861		11,361		500			4.4	%	11,863		11,361		502			4.4	%	13,023		12,044		979			8.1	%	13,023		12,044		979			8.1	%
Income from property operations, excluding deferrals⁽¹⁾	105,999		100,612		5,387			5.4	%	107,721		100,846		6,875			6.8	%	105,419		100,945		4,474			4.4	%	107,031		101,384		5,647			5.6	%
Right-to-use contracts, deferred and sales and marketing, deferred, net	1,127		1,237		(110		)	(8.9	)%	1,127		1,237		(110		)	(8.9	)%	1,209		682		527			77.3	%	1,209		682		527			77.3	%
Income from property operations ⁽¹⁾	$	104,872	$	99,375	$	5,497		5.5	%	$	106,594	$	99,609	$	6,985		7.0	%	$	104,210	$	100,263	$	3,947		3.9	%	$	105,822	$	100,702	$	5,120		5.1	%

__________________________

⁽¹⁾ Non-GAAP measure.

~~The increase in total portfolio~~Total Portfolio income from property operations, which includes recently acquired properties, ~~is primarily due to increases~~for the quarter ended June 30, 2017 increased $5.1 million, or 5.1%, from the quarter ended June 30, 2016, driven by an increase of $3.9 million, or 3.9%, in our Core ~~community~~Portfolio income from property operations and a $1.2 million increase in our Non-Core income from property operations.

Property Operating Revenues

Community base rental income in our Core ~~resort base rental income,~~Portfolio for the quarter ended June 30, 2017 increased utility and other property income, partially offset by an overall increase in expenses, with the most significant increases relating to utility expense, property payroll and repairs and maintenance expense.

~~The $5.2~~$5.5 million, or ~~4.7%, increase in Core Portfolio community base rental income primarily~~4.8% from the quarter ended June 30, 2016, which reflects ~~a 3.8%~~3.9% growth from rate increases and approximately 0.9% growth from occupancy gains. The average monthly base ~~rent~~rental income per Site increased to approximately ~~$592~~$611 for the quarter ended ~~September~~June 30, ~~2016~~2017 from approximately ~~$570 for the corresponding quarter in 2015. The average occupancy increased to 93.6%~~$588 for the quarter ended ~~September~~June 30, ~~2016 from 92.8%~~2016. The average occupancy for the ~~corresponding~~Core Portfolio increased to 94.2% for the quarter ~~in 2015.~~ended June 30, 2017 from 93.3% for the quarter ended June 30, 2016.

Management's Discussion (continued)

Resort base rental income in our Core Portfolio for the quarter ended June 30, 2017 increased $3.6 million, or 8.1%, from the quarter ended June 30, 2016 primarily due to increased rates. Resort base rental income is comprised of the following (amounts in thousands):


	Core Portfolio									Total Portfolio								Core Portfolio								Total Portfolio
	2016		2015		Variance			% Change		2016		2015		Variance		% Change		2017		2016		Variance		% Change		2017		2016		Variance		% Change
Annual	$	30,549	$	28,881	$	1,668		5.8	%	$	31,278	$	29,075	$	2,203	7.6	%	$	31,884	$	30,089	$	1,795	6.0	%	$	32,869	$	30,360	$	2,509	8.3	%
Seasonal	3,747		3,820		(73		)	(1.9	)%	4,244		3,933		311		7.9	%	4,481		3,942		539		13.7	%	4,902		4,114		788		19.2	%
Transient	18,513		16,637		1,876			11.3	%	18,964		16,757		2,207		13.2	%	11,388		10,142		1,246		12.3	%	12,284		10,258		2,026		19.8	%
Resort base rental income	$	52,809	$	49,338	$	3,471		7.0	%	$	54,486	$	49,765	$	4,721	9.5	%	$	47,753	$	44,173	$	3,580	8.1	%	$	50,055	$	44,732	$	5,323	11.9	%

Right-to-use contracts current period, gross, net of sales and marketing, gross, ~~decreased~~increased by $0.7 million, primarily as a result of ~~lower~~an increase in the average price per upgrade sale and a higher number of upgrade sales ~~by our third party sales agent.~~during the quarter ended June 30, 2017 compared to the quarter ended June 30, 2016. During the ~~third~~ quarter ended June 30, 2017 there were ~~740~~635 upgrade sales with an average price per upgrade sale of ~~$4,962.~~$5,980. This compares to ~~798~~626 upgrade sales with an average price per upgrade sale of ~~$4,873 for~~$4,930 during the quarter ended ~~September~~June 30, ~~2015.~~2016.

The increase in utility and other income is primarily due to ~~increased utility~~insurance recovery ~~of electric and water income, as well as insurance proceeds received of approximately $0.2 million~~revenue related to ~~two prior events.~~California storm events and increased electric, water, gas, and sewer income recovery.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the quarter ended June 30, 2017 increased $5.5 million, or 6.5%, from the quarter ended June 30, 2016 primarily driven by an increase in utility expenses, property payroll and repairs and maintenance. The increase in ~~property operating and maintenance expenses~~utility expense was ~~primarily~~ driven by ~~increased property payroll, repair~~increases in electric, sewer, and ~~maintenance and~~gas expenses, which is partially offset by an increase in utility ~~expense.~~income recovery. The increase in property payroll expense primarily resulted from ~~2016~~2017 salary increases. The increase in repair and maintenance was largely due to extraordinary expenses, including expenses related to insurance losses, such as a fire at one of our locations, and modest clean-up expenses following Hurricane Hermine. In addition, we incurred higher than expected repairs and maintenance ~~expenses at certain locations related~~expense was primarily due to ~~the temporary interruption~~clean-up costs as a result of ~~water and sewer service. The increase in utility expense is driven by increases in sewer, water, trash and electric expenses.~~California storm events.

Home Sales and Rental Operations

Home Sales and Other

The following table summarizes certain financial and statistical data for ~~the~~ Home Sales ~~Operations~~ for the quarters ended~~September~~ June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands, except home sales volumes).


	2016			2015			Variance			% Change		2017			2016			Variance			% Change
Gross revenues from new home sales⁽¹⁾	$	8,057		$	3,901		$	4,156		106.5	%	$	4,548		$	6,044		$	(1,496	)	(24.8	)%
Cost of new home sales ⁽¹⁾	7,900			3,738			4,162			111.3	%	(4,419		)	(6,246		)	1,827			29.3	%
Gross profit from new home sales	157			163			(6		)	(3.7	)%
Gross profit (loss) from new home sales												129			(202		)	331			163.9	%

Gross revenues from used home sales	2,838			3,977			(1,139		)	(28.6	)%	3,285			3,086			199			6.4	%
Cost of used home sales	2,845			4,130			(1,285		)	(31.1	)%	(3,476		)	(3,235		)	(241		)	(7.4	)%
Gross (loss) from used home sales	(7		)	(153		)	146			95.4	%
Loss from used home sales												(191		)	(149		)	(42		)	(28.2	)%

Brokered resale revenues and ancillary services revenues, net	920			1,051			(131		)	(12.5	)%	444			398			46			11.6	%
Home selling expenses	909			861			48			5.6	%	(929		)	(805		)	(124		)	(15.4	)%
Income from home sales operations and other	$	161		$	200		$	(39	)	(19.5	)%
Loss from home sales and other												$	(547	)	$	(758	)	$	211		27.8	%

Home sales volumes
Total new home sales⁽²⁾	207			123			84			68.3	%	120			180			(60		)	(33.3	)%
New Home Sales Volume - ECHO JV	65			52			13			25.0	%	41			63			(22		)	(34.9	)%
Used home sales	335			357			(22		)	(6.2	)%	338			342			(4		)	(1.2	)%
Brokered home resales	182			202			(20		)	(9.9	)%	252			217			35			16.1	%

_________________________

⁽¹⁾ New home sales gross revenues and costs of new home sales does not include the revenues and costs associated with our ECHO JV.

⁽²⁾ Total new home sales volume includes home sales from our ECHO ~~JV for the quarters ended~~ ~~September 30, 2016~~ ~~and 2015, respectively.~~JV.

The decrease in income from home sales operations and other is primarily due to lower revenue from ancillary services, which includes retail sales at various Properties, as well as higher home selling expenses, offset by lower gross losses on used home sales.

Management's Discussion (continued)

Loss from home sales and other was $0.5 million and $0.8 million for the quarters ended June 30, 2017 and 2016, respectively. The decrease in loss from home sales and other from the quarter ended June 30, 2016 was primarily due to an increase in the gross profit from new home sales, partially offset by an increase in home selling expenses.

Rental Operations

The following table summarizes certain financial and statistical data for manufactured home Rental Operations for the quarters ended~~September~~ June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands, except rental unit volumes).


	2016		2015		Variance			% Change		2017			2016			Variance			% Change
Manufactured homes:
New Home	$	6,329	$	5,836	$	493		8.4	%	$	6,985		$	6,332		$	653		10.3	%
Used Home	6,013		6,758		(745		)	(11.0	)%	5,483			6,250			(767		)	(12.3	)%
Rental operations revenue ⁽¹⁾	12,342		12,594		(252		)	(2.0	)%	12,468			12,582			(114		)	(0.9	)%
Rental home operating and maintenance	1,768		1,874		(106		)	(5.7	)%	(1,657		)	(1,581		)	(76		)	(4.8	)%
Income from rental operations	10,574		10,720		(146		)	(1.4	)%	10,811			11,001			(190		)	(1.7	)%
Depreciation on rental homes ⁽²⁾	2,671		2,673		(2		)	(0.1	)%	(2,639		)	(2,667		)	28			1.0	%
Income from rental operations, net of depreciation	$	7,903	$	8,047	$	(144	)	(1.8	)%	$	8,172		$	8,334		$	(162	)	(1.9	)%

Gross investment in new manufactured home rental units ⁽³⁾	$	123,866	$	110,227	$	13,639		12.4	%	$	129,868		$	120,708		$	9,160		7.6	%
Gross investment in used manufactured home rental units	$	52,628	$	58,847	$	(6,219	)	(10.6	)%	$	48,182		$	54,675		$	(6,493	)	(11.9	)%

Net investment in new manufactured home rental units	$	98,050	$	89,242	$	8,808		9.9	%	$	104,710		$	99,428		$	5,282		5.3	%
Net investment in used manufactured home rental units	$	26,951	$	38,951	$	(12,000	)	(30.8	)%	$	28,182		$	36,690		$	(8,508	)	(23.2	)%

Number of occupied rentals – new, end of period ⁽⁴⁾	2,316		2,076		240			11.6	%	2,517			2,267			250			11.0	%
Number of occupied rentals – used, end of period	2,473		2,876		(403		)	(14.0	)%	2,157			2,595			(438		)	(16.9	)%

______________________

⁽¹⁾

Rental operations revenue consists of Site rental income and home rental income. Approximately ~~$8.9~~$8.8 million and $9.0 million for the quarters ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, of Site rental income are included in Community base rental income in the Income from Property Operations table. The remainder of home rental income is included in Rental home income in the Income from Property Operations table.


⁽²⁾	Included in depreciation on real estate and other costs in the Consolidated Statements of Income and Comprehensive Income.


⁽³⁾	New home cost basis does not include the costs associated with our ECHO JV. Our investment in the ECHO JV was ~~$15.3 million and $10.3~~$15.4 million at ~~September~~both June 30, ~~2016~~2017 and ~~2015, respectively.~~December 31, 2016.


⁽⁴⁾	~~Includes 158~~Occupied rentals as of the end of the period in our Core Portfolio and 72includes 257 and 143 homes rented through our ECHO JV during the quarters ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

The decrease in income from rental operations, isnet of depreciation, was primarily due to a decrease in the number of used occupied rental ~~units. The occupancy decrease is~~units, partially offset by the change in the mix of occupied rentals, driven by an ~~increased~~increase in the number of occupied new rental homes at a higher rental rate.

Other Income and Expenses

The following table summarizes other income and expenses, net for the quarters ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands, expenses shown as negative).


	2016			2015			Variance			% Change		2017			2016			Variance			% Change
Depreciation on real estate and rental homes	$	(29,518	)	$	(28,410	)	$	(1,108	)	(3.9	)%	$	(30,247	)	$	(29,029	)	$	(1,218	)	(4.2	)%
Amortization of in-place leases	(1,376		)	(616		)	(760		)	(123.4	)%	(958		)	(428		)	(530		)	(123.8	)%
Interest income	1,767			1,758			9			0.5	%	1,798			1,625			173			10.6	%
Income from other investments, net	2,581			1,822			759			41.7	%	1,109			2,270			(1,161		)	(51.1	)%
General and administrative (excluding transaction costs)	(7,326		)	(7,104		)	(222		)	(3.1	)%	(8,241		)	(7,857		)	(384		)	(4.9	)%
Transaction costs	(327		)	(121		)	(206		)	(170.2	)%	(220		)	(398		)	178			44.7	%
Property rights initiatives and other	(855		)	(687		)	(168		)	(24.5	)%	(271		)	(527		)	256			48.6	%
Interest and related amortization	(25,440		)	(26,227		)	787			3.0	%	(24,822		)	(25,561		)	739			2.9	%
Total other income and expenses, net	$	(60,494	)	$	(59,585	)	$	(909	)	(1.5	)%	$	(61,852	)	$	(59,905	)	$	(1,947	)	(3.3	)%

~~Depreciation~~

Other expenses, net increased $1.9 million for the quarter ended June 30, 2017, compared to the quarter ended June 30, 2016. The increase from the quarter ended June 30, 2016 was primarily due to an increase in depreciation on real estate and rental

Management's Discussion (continued)

homes ~~increased primarily~~and amortization of in-place leases due to ~~increased capital expenditures~~2016 acquisition activity and a decrease in income from other investments, net, due to the ~~acquisitions that occurred~~termination of the Tropical Palms RV ground lease in 2016.

This was partially offset by a decrease in interest and related amortization as a result of the refinancing activities completed during ~~the first half of~~ 2016 (see Note 47 to the Consolidated Financial Statements for additional detail regarding ~~our recent acquisition activity)~~borrowing arrangements).

~~A decrease in secured debt, resulting from the 2015 refinancing and prepayment activity, and lower weighted average interest rates contributed to the decrease in interest and related amortization.~~

~~Management's Discussion (continued)~~

Comparison of the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 to the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2015~~2016

Income from Property Operations

The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands). The Core Portfolio ~~may change from time-to-time depending on acquisitions, dispositions and significant transactions or unique situations. The Core Portfolio~~ in this ~~Form 10-Q~~discussion includes all Properties acquired ~~prior to~~on or before December 31, ~~2014~~2015 and which we have owned and operated continuously since January 1, ~~2015.~~2016. Core Portfolio growth percentages exclude the impact of GAAP deferrals of upfront payments from right-to-use contracts and related commissions.


	Core Portfolio									Total Portfolio									Core Portfolio								Total Portfolio
	2016		2015		Variance			% Change		2016		2015		Variance			% Change		2017		2016		Variance		% Change		2017		2016		��	Variance		% Change
Community base rental income	$	344,991	$	329,958	$	15,033		4.6	%	$	346,625	$	330,251	$	16,374		5.0	%	$	240,278	$	229,264	$	11,014	4.8	%	$	242,656	$	229,461		$	13,195	5.8	%
Rental home income	10,572		10,521		51			0.5	%	10,572		10,526		46			0.4	%	7,237		7,089		148		2.1	%	7,237		7,088			149		2.1	%
Resort base rental income	150,750		142,076		8,674			6.1	%	154,652		142,837		11,815			8.3	%	104,603		99,380		5,223		5.3	%	111,123		100,166			10,957		10.9	%
Right-to-use annual payments	33,590		33,260		330			1.0	%	33,590		33,260		330			1.0	%	22,602		22,241		361		1.6	%	22,602		22,241			361		1.6	%
Right-to-use contracts current period, gross	9,290		10,264		(974		)	(9.5	)%	9,290		10,264		(974		)	(9.5	)%	7,004		5,618		1,386		24.7	%	7,004		5,618			1,386		24.7	%
Utility and other income	60,951		57,903		3,048			5.3	%	61,490		58,010		3,480			6.0	%	42,003		40,249		1,754		4.4	%	42,776		40,316			2,460		6.1	%
Property operating revenues, excluding deferrals	610,144		583,982		26,162			4.5	%	616,219		585,148		31,071			5.3	%	423,727		403,841		19,886		4.9	%	433,398		404,890			28,508		7.0	%

Property operating and maintenance	200,700		193,899		6,801			3.5	%	203,011		194,522		8,489			4.4	%	137,429		129,186		8,243		6.4	%	140,955		129,601			11,354		8.8	%
Rental home operating and maintenance	4,871		5,232		(361		)	(6.9	)%	4,874		5,232		(358		)	(6.8	)%	3,208		3,105		103		3.3	%	3,208		3,106			102		3.3	%
Real estate taxes	39,011		38,115		896			2.4	%	39,534		38,169		1,365			3.6	%	27,032		25,957		1,075		4.1	%	27,980		26,067			1,913		7.3	%
Sales and marketing, gross	8,524		9,139		(615		)	(6.7	)%	8,524		9,139		(615		)	(6.7	)%	5,583		5,426		157		2.9	%	5,584		5,424			160		2.9	%
Property operating expenses, excluding deferrals and Property management	253,106		246,385		6,721			2.7	%	255,943		247,062		8,881			3.6	%	173,252		163,674		9,578		5.9	%	177,727		164,198			13,529		8.2	%
Income from property operations, excluding deferrals and Property management ⁽¹⁾	357,038		337,597		19,441			5.8	%	360,276		338,086		22,190			6.6	%	250,475		240,167		10,308		4.3	%	255,671		240,692			14,979		6.2	%
Property management	35,668		33,750		1,918			5.7	%	35,670		33,750		1,920			5.7	%	25,583		23,807		1,776		7.5	%	25,583		23,807			1,776		7.5	%
Income from property operations, excluding deferrals⁽¹⁾	321,370		303,847		17,523			5.8	%	324,606		304,336		20,270			6.7	%	224,892		216,360		8,532		3.9	%	230,088		216,885			13,203		6.1	%
Right-to-use contracts, deferred and sales and marketing, deferred, net	2,215		2,458		(243		)	(9.9	)%	2,215		2,458		(243		)	(9.9	)%	1,900		1,088		812		74.6	%	1,900		1,088			812		74.6	%
Income from property operations⁽¹⁾	$	319,155	$	301,389	$	17,766		5.9	%	$	322,391	$	301,878	$	20,513		6.8	%	$	222,992	$	215,272	$	7,720	3.6	%	$	228,188	$	215,797		$	12,391	5.7	%

__________________________

⁽¹⁾ Non-GAAP measure.

~~The increase in total portfolio~~Total Portfolio income from property operations, which includes recently acquired properties, ~~is primarily due to increases~~for the six months ended June 30, 2017 increased $12.4 million, or 5.7%, from the six months ended June 30, 2016, driven by an increase of $7.7 million, or 3.6%, in our Core ~~community~~Portfolio income from property operations and a $4.7 million increase in our Non-Core income from property operations.

Property Operating Revenues

Community base rental income in our Core ~~resort base rental income as well as~~Portfolio for the six months ended June 30, 2017 increased utility and other property income. The increase is partially offset by an overall increase in expenses, with the most significant increases relating to repairs and maintenance, payroll and property taxes.

~~The $15.0~~$11.0 million, or ~~4.6%, increase in Core Portfolio community base rental income primarily~~4.8% from the six months ended June 30, 2016, which reflects ~~a 3.8%~~3.9% growth from rate increases and ~~a 0.8%~~approximately 0.9% growth from occupancy gains. The average monthly base ~~rent~~rental income per Site increased to approximately ~~$588~~$608 for the ~~year-to-date 2016~~six months ended June 30, 2017 from approximately ~~$567~~$586 for the ~~corresponding year-to-date 2015.~~six months ended June 30, 2016. The average occupancy for the Core Portfolio increased to ~~93.3% in 2016~~94.1% for the six months ended June 30, 2017 from ~~92.5% in 2015.~~93.2% for the six months ended June 30, 2016.

Management's Discussion (continued)

Resort base rental income in our Core Portfolio for the six months ended June 30, 2017 increased $5.2 million, or 5.3%, from the quarter ended June 30, 2016 primarily due to an increase in annual and transient revenues as a result of increased rates. Resort base rental income is comprised of the following (amounts in thousands):


	Core Portfolio								Total Portfolio								Core Portfolio								Total Portfolio
	2016		2015		Variance		% Change		2016		2015		Variance		% Change		2017		2016		Variance		% Change		2017		2016		Variance		% Change
Annual	$	89,946	$	85,089	$	4,857	5.7	%	$	91,648	$	85,550	$	6,098	7.1	%	$	63,123	$	59,953	$	3,170	5.3	%	$	64,965	$	60,370	$	4,595	7.6	%
Seasonal	23,423		22,440		983		4.4	%	24,573		22,584		1,989		8.8	%	20,864		20,100		764		3.8	%	23,401		20,329		3,072		15.1	%
Transient	37,381		34,547		2,834		8.2	%	38,431		34,703		3,728		10.7	%	20,616		19,327		1,289		6.7	%	22,757		19,467		3,290		16.9	%
Resort base rental income	$	150,750	$	142,076	$	8,674	6.1	%	$	154,652	$	142,837	$	11,815	8.3	%	$	104,603	$	99,380	$	5,223	5.3	%	$	111,123	$	100,166	$	10,957	10.9	%

Right-to-use contracts current period, gross, net of sales and marketing, gross, ~~decreased~~increased by $1.4 million, primarily as a result of ~~lower~~a higher average price per upgrade sale and higher upgrade sales ~~by our third party sales agent.~~during the six months ended June 30, 2017 compared to the six months ended June 30, 2016. During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017 there were ~~1,892~~1,260 upgrade sales with an average price per upgrade sale of ~~$4,910.~~$5,557. This compares to ~~2,152~~1,152 upgrade sales with an average price per upgrade sale of ~~$4,770~~$4,877 for the ~~nine~~six months ended ended September 30, 2015. This decrease in sales by our third party sales agent was partially offset by an increase in upgrade sales by our in-park staff as we continue to experience increased demand for our upgraded product from our newest TTC members. The overall decline is offset by lower commission expense to sales agents during the nine months ended SeptemberJune 30, 2016.

The increase in utility and other income is primarily due to ~~increased utility~~insurance recovery revenue related to ~~higher~~California storm events and increased electric, water, gas, and ~~water usage, insurance proceeds of approximately $1.0~~sewer income recovery.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the six months ended June 30, 2017 increased $9.6 million, ~~related~~or 5.9%, from the six months ended June 30, 2016. The increase was primarily due to ~~four prior events that impacted certain Properties,~~an increase in utility expenses, property payroll and ~~proceeds of approximately $0.4 million as a result of granting an easement at a certain Property in Pennsylvania.~~

repairs and maintenance. The increase in ~~property operating and maintenance expenses~~utility expense was ~~primarily~~ driven by increases in electric, sewer, trash and gas expenses, which was partially offset by increased ~~property payroll, repair and maintenance, and~~ utility ~~expense.~~income recovery. The increase in property payroll expense resulted from ~~2016~~2017 salary ~~increases, while the~~increases. The increase in ~~repair~~repairs and maintenance expense was ~~largely~~primarily due to ~~excess water hauling expense~~clean-up costs as a result of ~~significant rainfall~~California storm events and the hurricanes in ~~the South region, increased landscaping expenses, snow removal costs~~Florida in ~~the Northeast region~~2016, and ~~other extraordinary expenses including a fire at one of our Properties and modest clean up expenses following Hurricane Hermine. The~~an increase in utility expense is primarily driven by increases in sewer, water, electric and trash expenses at certain Properties, and is offset by the increase in utility recoveries reflected in utility and other income.landscaping costs.

Home Sales and Rental Operations

Home Sales and Other

The following table summarizes certain financial and statistical data for ~~the~~ Home Sales ~~Operations~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~June 30, 2016 (amounts in thousands, except home sales volumes).


	2016			2015			Variance			% Change		2017			2016			Variance			% Change
Gross revenues from new home sales⁽¹⁾	$	19,500		$	12,186		$	7,314		60.0	%	$	9,491		$	11,443		$	(1,952	)	(17.1	)%
Cost of new home sales ⁽¹⁾	19,598			11,408			8,190			71.8	%	(9,191		)	(11,698		)	2,507			21.4	%
Gross (loss) profit from new home sales	(98		)	778			(876		)	(112.6	)%
Gross profit (loss) from new home sales												300			(255		)	555			217.6	%

Gross revenues from used home sales	8,739			12,155			(3,416		)	(28.1	)%	5,369			5,901			(532		)	(9.0	)%
Cost of used home sales	8,909			12,277			(3,368		)	(27.4	)%	(5,823		)	(6,064		)	241			4.0	%
Gross (loss) from used home sales	(170		)	(122		)	(48		)	(39.3	)%
Loss from used home sales												(454		)	(163		)	(291		)	(178.5	)%

Brokered resale revenues and ancillary services revenues, net	2,736			4,045			(1,309		)	(32.4	)%	2,105			1,816			289			15.9	%
Home selling expenses	2,548			2,386			162			6.8	%	(1,854		)	(1,639		)	(215		)	(13.1	)%
(Loss) income from home sales operations and other	$	(80	)	$	2,315		$	(2,395	)	(103.5	)%
Income (loss) from home sales and other												$	97		$	(241	)	$	338		140.2	%

Home sales volumes
Total new home sales⁽²⁾	508			352			156			44.3	%	240			301			(61		)	(20.3	)%
New Home Sales Volume - ECHO JV	162			140			22			15.7	%	78			97			(19		)	(19.6	)%
Used home sales	988			1,174			(186		)	(15.8	)%	623			653			(30		)	(4.6	)%
Brokered home resales	585			668			(83		)	(12.4	)%	420			403			17			4.2	%

_________________________

⁽¹⁾ New home sales gross revenues and costs of new home sales does not include the revenues and costs associated with our ECHO JV.

⁽²⁾ Total new home sales volume includes home sales from our ECHO JV for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~June 30, 2016, respectively.

Management's Discussion (continued)

The ~~decrease~~increase in income from home sales ~~operations~~ and other iswas primarily due to ~~lower revenue from ancillary services, which includes retail sales at various Properties, as well as a small~~an increase in the gross ~~loss~~profit from new home sales, partially offset by an increase in the loss from used home sales.

~~Management's Discussion (continued)~~

Rental Operations

The following table summarizes certain financial and statistical data for manufactured home Rental Operations for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~June 30, 2016 (amounts in thousands, except rental unit volumes).


	2016		2015		Variance			% Change		2017			2016			Variance			% Change
Manufactured homes:
New Home	$	18,802	$	17,163	$	1,639		9.5	%	$	13,618		$	12,473		$	1,145		9.2	%
Used Home	18,728		20,984		(2,256		)	(10.8	)%	11,267			12,715			(1,448		)	(11.4	)%
Rental operations revenue ⁽¹⁾	37,530		38,147		(617		)	(1.6	)%	24,885			25,188			(303		)	(1.2	)%
Rental home operating and maintenance	4,874		5,232		(358		)	(6.8	)%	(3,208		)	(3,106		)	(102		)	(3.3	)%
Income from rental operations	32,656		32,915		(259		)	(0.8	)%	21,677			22,082			(405		)	(1.8	)%
Depreciation on rental homes ⁽²⁾	8,007		8,050		(43		)	(0.5	)%	(5,296		)	(5,314		)	18			0.3	%
Income from rental operations, net of depreciation	$	24,649	$	24,865	$	(216	)	(0.9	)%	$	16,381		$	16,768		$	(387	)	(2.3	)%

Gross investment in new manufactured home rental units ⁽³⁾	$	123,866	$	110,227	$	13,639		12.4	%	$	129,868		$	120,708		$	9,160		7.6	%
Gross investment in used manufactured home rental units	$	52,628	$	58,847	$	(6,219	)	(10.6	)%	$	48,182		$	54,675		$	(6,493	)	(11.9	)%

Net investment in new manufactured home rental units	$	98,050	$	89,242	$	8,808		9.9	%	$	104,710		$	99,428		$	5,282		5.3	%
Net investment in used manufactured home rental units	$	26,951	$	38,951	$	(12,000	)	(30.8	)%	$	28,182		$	36,690		$	(8,508	)	(23.2	)%

Number of occupied rentals – new, end of period ⁽⁴⁾	2,316		2,076		240			11.6	%	2,517			2,267			250			11.0	%
Number of occupied rentals – used, end of period	2,473		2,876		(403		)	(14.0	)%	2,157			2,595			(438		)	(16.9	)%

______________________

⁽¹⁾

Rental operations revenue consists of Site rental income and home rental income. Approximately ~~$27.0~~17.7 million and ~~27.7~~$18.1 million for the ~~nine~~six months ended~~September~~ June 30, ~~2016~~2017 and ~~2015,~~June 30, 2016, respectively, of Site rental income are included in Community base rental income in the Income from Property Operations table. The remainder of home rental income is included in Rental home income in the Income from Property Operations table.


⁽²⁾	Included in depreciation on real estate and other costs in the Consolidated Statements of Income and Comprehensive Income.


⁽³⁾	New home cost basis does not include the costs associated with our ECHO JV. Our investment in the ECHO JV was ~~$15.3 million and $10.3~~$15.4 million at ~~September~~both June 30, ~~2016~~2017 and ~~2015, respectively.~~December 31, 2016.


⁽⁴⁾	~~Includes 158~~Occupied rentals as of the end of the period in our Core Portfolio and 72includes 257 and 143 homes rented through our ECHO JV induring the six months ended June 30, 2017 and June 30, 2016, ~~and 2015,~~ respectively.

The decrease in income from rental operations, isnet of depreciation, was primarily due to a decrease in the number of occupied rental ~~units. The occupancy decrease is~~units, which was partially offset by the change in the mix of occupied rentals, driven by an increased number of occupied new homes at a higher rental rate.

Other Income and Expenses

The following table summarizes other income and expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~June 30, 2016 (amounts in thousands, expenses shown as negative).


	2016			2015			Variance			% Change		2017			2016			Variance			% Change
Depreciation on real estate and rental homes	$	(87,203	)	$	(84,861	)	$	(2,342	)	(2.8	)%	$	(60,357	)	$	(57,684	)	$	(2,673	)	(4.6	)%
Amortization of in-place leases	(2,139		)	(1,950		)	(189		)	(9.7	)%	(1,990		)	(763		)	(1,227		)	(160.8	)%
Interest income	5,052			5,314			(262		)	(4.9	)%	3,568			3,285			283			8.6	%
Income from other investments, net	6,574			5,119			1,455			28.4	%	1,866			3,993			(2,127		)	(53.3	)%
General and administrative (excluding transaction costs)	(22,390		)	(21,569		)	(821		)	(3.8	)%	(15,510		)	(15,065		)	(445		)	(3.0	)%
Transaction costs	(925		)	(603		)	(322		)	(53.4	)%	(324		)	(598		)	274			45.8	%
Property rights initiatives and other	(2,036		)	(1,934		)	(102		)	(5.3	)%	(490		)	(1,181		)	691			58.5	%
Early debt retirement	—			(16,922		)	16,922			100.0	%
Interest and related amortization	(76,635		)	(79,648		)	3,013			3.8	%	(49,701		)	(51,195		)	1,494			2.9	%
Total other income and expenses, net	$	(179,702	)	$	(197,054	)	$	17,352		8.8	%	$	(122,938	)	$	(119,208	)	$	(3,730	)	(3.1	)%

~~Depreciation~~

Other expenses, net increased $3.7 million for the six months ended June 30, 2017, compared to the six months ended June 30, 2016. The increase in other expenses, net from the six months ended June 30, 2016 was primarily due to an increase in depreciation on real estate and rental homes ~~increased primarily~~and amortization of in-place leases due to ~~increased capital expenditures~~2016 acquisition activity and a a decrease in income from other investments, net, due to the ~~acquisitions that occurred~~termination of the Tropical Palms RV ground lease in 2016.

Management's Discussion (continued)

~~Early debt retirement expense was higher in 2015 as a result of the defeasance and prepayment activity that occurred during the first quarter of 2015.~~

A decrease in secured debt, resulting from the aforementioned refinancing and prepayment activity, and lower weighted average interest rates contributed to the decrease in interest and related amortization.

~~Management's Discussion (continued)~~

Liquidity and Capital Resources

Liquidity

Our primary demands for liquidity include payment of operating expenses, debt service, including principal and interest, capital improvements on properties, purchasing both new and pre-owned homes, acquisitions of new Properties, and distributions. We expect similar ~~demands~~demand for liquidity will continue for the short-term and long-term. Our primary sources of cash include operating cash flows, proceeds from financings, borrowings under our unsecured Line of Credit ("LOC") and proceeds from issuance of equity and debt securities.

~~On May 4, 2015, we extended our~~We have entered into an at-the-market (“ATM”) offering program, ~~by entering into new separate equity distribution agreements with certain sales agents,~~ pursuant to which we may sell, from time-to-time, shares of our common stock, par value $0.01 per share, having an aggregate offering price of up to $125.0 million. For the nine months ended September 30, 2016, we sold 683,548 shares of our common stock under the ATM offering Program for gross cash proceeds of approximately $50.0 million before expenses of approximately $0.7 million. As of ~~September~~June 30, ~~2016,~~2017, $75.0 million of common stock remained available for issuance under the ATM equity offering program. In addition, we have available liquidity in the form of authorized and unissued preferred stock of approximately 9.9 million shares and approximately ~~114.7~~113.0 million shares of authorized but unissued common stock registered for sale under the Securities Act of 1933, as amended, by a shelf registration statement which was automatically effective when filed with the SEC. Our charter allows us to issue up to 200.0 million shares of common stock, par value $0.01 per share, and up to 10.0 million shares of preferred stock, par value $0.01 per share.

One of our stated objectives is to maintain financial flexibility. Achieving this objective allows us to take advantage of strategic opportunities that may arise. We believe effective management of our balance sheet, including maintaining various access points to raise capital, manage future debt maturities and borrow at competitive rates enables us to meet this objective. We believe that as of ~~September~~June 30, ~~2016,~~2017, we have sufficient liquidity, in the form of ~~$63.6~~$62.5 million in available cash, net of restricted cash, and $400.0 million available on our LOC, to satisfy our near term obligations. Our LOC has a borrowing capacity of $400.0 million with the option to increase the borrowing capacity by $100.0 million, subject to certain ~~conditions (See Note 7~~conditions. The LOC bears interest at a rate of LIBOR plus 1.20% to ~~the Consolidated Financial Statements).~~1.65%, requires an annual facility fee of 0.20% to 0.35% and matures on July 17, 2018, with an option to extend for one additional year, subject to certain conditions.

We expect to meet our short-term liquidity requirements, including distributions for the ~~third quarter distribution of approximately $39.3 million paid on October 14, 2016, as well as all the remaining distributions,~~next twelve months, generally through available cash as well as net cash provided by operating activities and availability under our existing LOC. We consider these resources to be adequate to meet our operating requirements for capital improvements, amortizing debt and payment of dividends and distributions.

We expect to meet certain long-term liquidity requirements such as scheduled debt maturities, property acquisitions and capital improvements by use of our current cash balance, long-term collateralized and uncollateralized borrowings including borrowings under the existing LOC and the issuance of debt securities or additional equity securities, in addition to net cash provided by operating activities. As of ~~September~~June 30, ~~2016,~~2017, we have ~~no remaining~~approximately $6.9 million of scheduled debt maturities in ~~2016~~2017 (excluding scheduled principal payments on debt maturing in ~~2016~~2017 and beyond). We expect to satisfy our 2017 maturities with existing cash and anticipated operating cash flow.

In connection with the acquisition completed in June 2016, we assumed approximately $22.6 million of mortgage debt secured by the Forest Lake Estates manufactured home community with a stated interest rate of 4.51% per annum, which is set to mature in 2038.

During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017 we ~~completed refinancing activity~~paid off one maturing mortgage loan and ~~closed on loans with total gross proceeds of approximately $54.5 million~~assumed debt in the ~~aggregate.~~purchase of Paradise Park Largo. The ~~loans have a weighted average maturity of 25 years, carry a weighted average interest rate of 4.05% per annum and are secured by three manufactured home properties and one RV resort. We also~~mortgage loan we paid off ~~four maturing mortgage loans of~~was approximately ~~$37.0~~$21.1 million, with a weighted average interest rate of ~~5.83%~~5.76% per annum, ~~secured by three manufactured home Properties and one RV resort.~~

~~On October 12, 2016, we closed on one loan of approximately $15.0 million. The loan had a stated interest rate of 3.55% per annum, a 20 year term and is~~ secured by one manufactured home ~~property.~~

~~Management's Discussion (continued)~~

Property. In connection with the Paradise Park Largo acquisition during the quarter ended June 30, 2017, we assumed approximately $5.9 million of mortgage debt secured by the manufactured home community with an interest rate of 4.6% that matures in 2040.

The table below summarizes cash flow activity for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (amounts in thousands):


	Nine Months Ended September 30,						Six Months Ended June 30,
	2016			2015			2017			2016
Net cash provided by operating activities	$	274,582		$	287,219		$	214,102		$	186,807
Net cash used in investing activities	(166,073		)	(95,260		)	(71,426		)	(136,090		)
Net cash used in financing activities	(119,955		)	(176,278		)	(131,276		)	(56,104		)
Net (decrease)/increase in cash	$	(11,446	)	$	15,681
Net increase (decrease) in cash							$	11,400		$	(5,387	)

Management's Discussion (continued)

Operating Activities

Net cash provided by operating activities ~~decreased $12.6~~increased $27.3 million to ~~$274.6~~$214.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, from ~~$287.2~~$186.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016. The ~~overall decrease~~increase in net cash provided by operating activities iswas primarily due to ~~a decrease~~higher income from property operations of ~~$10.9~~$12.4 million, receipt of insurance proceeds of $10.8 million related to the California failure to maintain lawsuits, long term incentive plan payments of $4.3 million during the first quarter of 2016, increase of $1.2 million in ~~Accrued expenses and accounts payable, a decrease in Escrow deposits, goodwill and other assets of $12.0 million, as well as a decrease of $5.1 million in Rents~~rents received in advance and ~~security deposits,~~an increase of $0.8 million in distributions from unconsolidated joint ventures. These increases were partially offset by ~~an increase in Income from property operations~~the litigation settlement payment of ~~$20.5 million.~~$13.3 million related to the California failure to maintain lawsuits.

Investing Activities

Net cash used in investing activities was ~~$166.1~~$71.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to ~~$95.3~~$136.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2015. Significant components of~~2016. The decrease in net cash used in investing activities ~~include:~~

~~We paid approximately $78.2 million (net~~was primarily due to the acquisitions of ~~mortgage debt assumed of $22.6 million) in 2016 to acquire~~Forest Lake Estates, Portland Fairview and Rose Bay ~~RV Resort, Forest Lakes Estates~~during the six months ended June 30, 2016, partially offset by the short-term loan of $13.8 million issued to the Crosswinds joint venture during the second quarter of 2017.

Capital Improvements

The table below summarizes capital improvement activity for the six months ended June 30, 2017 and ~~Portland Fairview which resulted~~2016 (amounts in ~~an additional 984 RV Sites~~thousands):



	Six Months Ended June 30, ⁽¹⁾
	2017		2016
Recurring Capital Expenditures ⁽²⁾	$	18,808	$	18,317
Property upgrades and site development	11,870		5,961
New home investments⁽³⁾⁽⁴⁾	19,542		27,774
Used home investments ⁽⁴⁾	2,191		3,210
Total Property	52,411		55,262
Corporate	1,053		445
Total Capital improvements	$	53,464	$	55,707

______________________

⁽¹⁾ Excludes non-cash activity of approximately $0.2 million and ~~894 manufactured~~$0.4 million of used homes acquired through foreclosure of Chattel Loans for the six months ended June 30, 2017 and 2016, respectively.

⁽²⁾Recurring capital expenditures are primarily comprised of common area improvements, furniture, and mechanical improvements.

⁽³⁾ Excludes new home Sites, as well as vacant land in Florida for $2.0 million. We paid approximately $23.7 million in 2015 to acquire the Bogue Pines MH Property, Whispering Pines RV Resort and Miami Everglades RV Resort. These acquisitions contributed an additional 731 Sites.

~~We contributed $5.0 million to~~investment associated with our ECHO JVJV.

⁽⁴⁾Net proceeds from new and used home sale activities are reflected within Operating Activities.

Financing Activities

Net cash used in ~~2016~~financing activities was $131.3 million for the six months ended June 30, 2017 compared to net cash used in financing activities of $56.1 million for the ~~$4.0 million we invested~~six months ended June 30, 2016. The increase in ~~2015. During 2016 we received capital distributions of $4.1 million from our Voyager JV (see Note 5~~net cash used in financing activities was primarily due to the ~~Consolidated Financial Statements for a description~~$50.0 million of ~~our joint ventures).~~

~~We paid approximately $87.3 million and $67.8 million for capital improvements~~cash proceeds received during the ~~nine~~six months ended ~~September~~June 30, 2016 ~~and 2015, respectively (see Capital Improvements table below).~~

as a result of the sale of stock under the ATM equity offering program.

~~Management's Discussion (continued)~~30

~~Capital Improvements~~

~~The table below summarizes capital improvement activity for the nine months ended September 30, 2016 and 2015 (amounts in thousands):~~

Nine Months ended
September 30,⁽¹⁾
2016 2015
Recurring Capital Expenditures ⁽²⁾
$ 28,321
$ 26,196
Property upgrades and site development 9,833
10,172
New home investments⁽³⁾
44,293
25,081
Used home investments 4,265
5,546
Total Property 86,712
66,995
Corporate 604
843
Total Capital improvements $ 87,316
$ 67,838

~~______________________~~


⁽¹⁾	Excludes non-cash activity of approximately $0.5 million and $0.6 million of used homes acquired through foreclosure of Chattel Loans for the nine months ended September 30, 2016 and 2015, respectively.


⁽²⁾	~~Recurring capital expenditures are primarily comprised of common area improvements, furniture, and mechanical improvements.~~


⁽³⁾	~~Excludes new home investment associated with our ECHO JV.~~

~~Financing Activities~~

Net cash used in financing activities was $120.0 million for the nine months ended September 30, 2016 compared to net cash used in financing activities of $176.3 million for the nine months ended September 30, 2015. Significant components of net cash used in financing activities include:

We paid approximately $29.2 million of amortizing principal debt, approximately $37.0 million to repay four maturing mortgages, and $43.0 million to refinance two mortgage loans in 2016. This compares to 2015 where we had approximately $27.8 million of amortizing principal debt, approximately $48.7 million of maturing mortgage, defeased approximately $370.2 million of debt and paid a total of approximately $24.0 million in debt issuance and defeasance costs as well as early debt retirement costs. (See Note 7 to the Consolidated Financial Statements for a description of our borrowing arrangements).

We sold 683,548 shares of our common stock under the ATM offering program for gross cash proceeds of approximately $50.0 million before expenses during the nine months ended September 30, 2016 (see Note 3 to the Consolidated Financial Statements for a description of our equity transactions).

We received $54.5 million in financing proceeds in 2016 compared to $395.3 million in financing proceeds in 2015. (see Note 7 to the Consolidated Financial Statements for a description of our borrowing arrangements).

We made distributions of approximately $119.5 million in the first nine months of 2016 to Common Stockholders, Common OP unitholders and preferred stockholders which were partially offset by proceeds received of approximately $5.8 million from the exercise of stock options and the sale of shares through the employee stock purchase plan (see Note 3 to the Consolidated Financial Statements for a description of our equity transactions).

We made distributions of approximately $105.1 million in the first nine quarter of 2015 to Common Stockholders, Common OP unitholders and preferred stockholders and paid approximately $0.4 million for offering costs, offset by proceeds received of approximately $4.6 million from the exercise of stock options and the sale of shares through the employee stock purchase plan (see Note 3 to the Consolidated Financial Statements for a description of our equity transactions).

Management's Discussion (continued)

Contractual Obligations

As of ~~September~~June 30, ~~2016~~2017, we were subject to certain contractual payment obligations as described in the table below (amounts in thousands):



	Total ⁽⁵⁾			2017			2018			2019			2020			2021			Thereafter
Long Term Borrowings ⁽¹⁾	$	2,068,016		$	28,900		$	239,608		$	234,920		$	352,089		$	211,650		$	1,000,849
Interest Expense ⁽²⁾	605,441			48,266			87,925			73,013			57,639			49,742			288,856
Operating Lease	9,444			1,090			2,221			2,062			2,011			1,711			349
LOC Maintenance Fee ⁽³⁾	849			409			440			—			—			—			—
Ground Lease ⁽⁴⁾	16,035			993			1,980			1,983			1,984			1,987			7,108
Total Contractual Obligations	$	2,699,785		$	79,658		$	332,174		$	311,978		$	413,723		$	265,090		$	1,297,162
Weighted average interest rates - Long Term Borrowings	4.41		%	4.69		%	4.61		%	4.40		%	4.49		%	4.39		%	4.25		%

Total ⁽⁵⁾
2016 2017 2018 2019 2020 Thereafter
Long Term Borrowings ⁽¹⁾
$ 2,104,628
$ 10,459
$ 99,562
$ 232,164
$ 233,601
$ 350,716
$ 1,178,126
Interest Expense ⁽²⁾
659,509
24,900
95,644
86,317
71,542
56,222
324,884
Operating Lease 11,059
534
2,171
2,221
2,062
2,011
2,060
LOC Maintenance Fee ⁽³⁾
1,455
204
811
440
—
—
—
Ground Lease ⁽⁴⁾
16,928
491
1,965
1,960
1,963
1,964
8,585
Total Contractual Obligations $ 2,793,579
$ 36,588
$ 200,153
$ 323,102
$ 309,168
$ 410,913
$ 1,513,655
Weighted average interest rates - Long Term Borrowings 4.47 % 4.78 % 4.70 % 4.62 % 4.41 % 4.50 % 4.28 %

~~______________________________~~


⁽¹⁾	Balance excludes note premiums of ~~$6.2~~$4.3 million and deferred financing costs of approximately ~~$18.8~~$17.8 million. Balances include debt maturing, ~~and~~ scheduled periodic principal ~~payments.~~payments, and Paradise Park Largo mortgage debt of $5.9 million.


⁽²⁾	Amounts include interest expected to be incurred on our secured debt and Term Loan based on obligations outstanding as of ~~September~~June 30, ~~2016.~~2017.


⁽³⁾	As of ~~September~~June 30, ~~2016,~~2017, assumes we will not exercise our one year extension option on July 17, 2018 and assumes we will maintain our current leverage ratios as defined by the LOC.


⁽⁴⁾	We also lease land under non-cancelable operating leases at certain of the Properties expiring in various years from 2017 to 2054. The majority of the lease terms require twelve equal payments per year plus additional rents calculated as a percentage of gross revenues.


⁽⁵⁾	We do not include insurance, property taxes and cancelable contracts in the contractual obligations table.

We believe that we will be able to refinance our maturing debt obligations on a secured or unsecured basis; however, to the extent we are unable to refinance our debt as it matures, we believe that we will be able to repay such maturing debt through available cash as well as operating cash flow, asset sales and/or the proceeds from equity issuances. With respect to any refinancing of maturing debt, our future cash flow requirements could be impacted by significant changes in interest rates or other debt terms, including required amortization payments.

Inflation

Substantially all of the leases at the Properties allow for monthly or annual rent increases which provide us with the opportunity to achieve increases, where justified by the market, as each lease matures. Such types of leases generally minimize our risks of inflation. In addition, our resort Properties are not generally subject to leases and rents are established for these Sites on an annual basis. Our right-to-use contracts generally provide for an annual dues increase, but dues may be frozen under the terms of certain contracts if the customer is over 61 years of age.

Off Balance Sheet Arrangements

As of ~~September~~June 30, ~~2016,~~2017, we have no off balance sheet arrangements.

~~Funds From Operations~~Critical Accounting Policies and Estimates

~~Funds from Operations ("FFO") is~~Refer to the 2016 Form 10-K for a ~~non-GAAP financial measure. We define FFO as net income, computed in accordance with GAAP, excluding gains and actual or estimated losses from sales~~discussion of ~~properties, plus~~our critical accounting policies, which includes impairment of real estate ~~related depreciation~~assets and ~~amortization, impairments, if any,~~investments, revenue recognition and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We compute FFO in accordance with our interpretation of standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. We receive up-front non-refundable payments from the entry of right-to-use contracts. In accordance with GAAP, the upfront non-refundable payments and related commissions are deferred and amortized over the estimated customer life. Although the NAREIT definition of FFO does not address the treatment of non-refundable right-to-use payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO.

We believe FFO, as defined by the Board of Governors of NAREIT, is generally a measure of performance for an equity REIT. While FFO is a relevant and widely used measure of operating performance for equity REITs, it does not represent cash flow from operations or net income as defined by GAAP, and it should not be considered as an alternativebusiness combinations. There have been no changes to these ~~indicators in evaluating liquidity or operating performance.~~policies during the quarter ended June 30, 2017.

Normalized Funds from Operations ("Normalized FFO") is a non-GAAP measure. We define Normalized FFO as FFO excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b) gains

Management's Discussion (continued)

Forward Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and ~~losses from early debt extinguishment,~~“will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements and may include without limitation, information regarding our expectations, goals or intentions regarding the future, and the expected effect of our acquisitions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, ~~prepayment penalties and defeasance costs; c) property acquisition and other transaction~~but not limited to:

our ability to control costs, ~~related to mergers and acquisitions; and d) other miscellaneous non-comparable items. Normalized FFO presented herein is not necessarily comparable to Normalized FFO presented by other~~ real estate ~~companies due~~market conditions, the actual rate of decline in customers, the actual use of Sites by customers and our success in acquiring new customers at our Properties (including those that we may acquire);

our ability to maintain historical or increase future rental rates and occupancy with respect to Properties currently owned or that we may acquire;

our ability to retain and attract customers renewing, upgrading and entering right-to-use contracts;

our assumptions about rental and home sales markets;

our ability to manage counterparty risk;

in the ~~fact that~~age-qualified Properties, home sales results could be impacted by the ability of potential home buyers to sell their existing residences as well as by financial, credit and capital markets volatility;

impact of government intervention to stabilize site-built single-family housing and not ~~all real estate companies use~~manufactured housing;

effective integration of recent acquisitions and our estimates regarding the ~~same methodology for computing this amount.~~

~~We believe that FFO and Normalized FFO are helpful to investors as supplemental measures of the~~future performance of ~~an equity REIT. We believe that by excluding~~ recent acquisitions;

the completion of future transactions in their entirety, if any, and timing and effective integration with respect thereto;

unanticipated costs or unforeseen liabilities associated with recent acquisitions;

ability to obtain financing or refinance existing debt on favorable terms or at all;

the effect of ~~depreciation, amortization, impairments, if any,~~interest rates;

the dilutive effects of issuing additional securities;

the effect of accounting for the entry of contracts with customers representing a right-to-use the Properties under the Codification Topic "Revenue Recognition";

the outcome of pending or future lawsuits or actions brought against us, including those disclosed in our filings with the Securities and ~~actual or estimated gains or losses~~Exchange Commission; and

other risks indicated from ~~sales of real estate, all of which~~time to time in our filings with the Securities and Exchange Commission.

These forward-looking statements are based on ~~historical costs~~management's present expectations and ~~which may be of limited relevance~~beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in ~~evaluating current performance, FFO can facilitate comparisons of operating performance between periods~~circumstances. We are under no obligation to, and ~~among other equity REITs. We further believe that Normalized FFO provides useful information~~expressly disclaim any obligation to, ~~investors, analysts and~~update or alter our management because it allows them to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences not related to our operations. For example, we believe that excluding the early extinguishment of debt, property acquisition and other transaction costs related to mergers and acquisitions from Normalized FFO allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. In some cases, we provide information about identified non-cash components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items.

Our definitions and calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flow from operating activities, determined in accordance with GAAP,forward-looking statements whether as a ~~measure~~result of ~~our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.~~

The following table presents a calculation of FFO available for Common Stock and OP Unit holders and Normalized FFO available for Common Stock and OP Unit holders for the quarters and nine months ended September 30, 2016 and 2015 (amounts in thousands):

Quarters Ended
September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Computation of FFO and Normalized FFO:
Net income available for Common Stockholders $ 40,998
$ 36,673
$ 127,071
$ 95,644
Income allocated to common OP units 3,462
3,136
10,770
8,191
Right-to-use contract upfront payments, deferred, net 1,327
1,701
2,427
3,929
Right-to-use contract commissions, deferred, net (200 ) (464 ) (212 ) (1,471 )
Depreciation on real estate assets 26,847
25,747
79,218
76,811
Depreciation on rental homes 2,671
2,663
7,985
8,050
Amortization of in-place leases 1,376
616
2,139
1,950
Depreciation on unconsolidated joint ventures 373
274
968
799
FFO available for Common Stock and OP Unit holders 76,854
70,346
230,366
193,903
Transaction costs 327
121
925
603
Early debt retirement —
—
—
16,922
Normalized FFO available for Common Stock and OP Unit holders $ 77,181
$ 70,467
$ 231,291
$ 211,428
Weighted average Common Shares outstanding – fully diluted 92,910
91,940
92,405
91,876
such changes, new information, subsequent events or otherwise.


Item 3.	Quantitative and Qualitative Disclosure of Market Risk

We disclosed a quantitative and qualitative analysis regarding market risk in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk on Form 10-K for the year ended December 31, ~~2015.~~2016. There have been no material changes in the assumptions used or results obtained regarding market risk since December 31, ~~2015.~~2016.


Item 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting officer), has evaluated the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2016~~2017. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to give reasonable assurances to the timely collection, evaluation and disclosure of information relating to us that would potentially be subject to disclosure under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder as of ~~September~~June 30, ~~2016~~2017.

Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within us to disclose material information otherwise required to be set forth in our periodic reports.

Changes in Internal Control Over Financial Reporting

During the ~~third~~quarter of ~~2016~~,ended June 30, 2017, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II – Other Information


Item 1.	Legal Proceedings

See Note 129 of the Consolidated Financial Statements contained herein.


Item 1A.	Risk Factors

There have been no material changes to the risk factors discussed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2015 other than those disclosed~~2016 and in our Quarterly Report on Form 10-Q for the quarter ended March ~~2016.~~31, 2017.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

None.


Item 3.	Defaults Upon Senior Securities

None.


Item 4.	Mine Safety Disclosure

None.


Item 5.	Other Information

None.


Item 6.	Exhibit Index



31.1	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
32.2	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
101	The following materials from Equity LifeStyle Properties, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2016~~2017 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Cash Flow, and (v) Notes to Consolidated Financial Statements, filed herewith.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.



	EQUITY LIFESTYLE PROPERTIES, INC.

Date: ~~October 27, 2016~~July 26, 2017	By:	/s/ Marguerite Nader
		Marguerite Nader
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~October 27, 2016~~July 26, 2017	By:	/s/ Paul Seavey
		Paul Seavey
		Executive Vice President, Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

4436



	Nine Months Ended September 30, 2016
Shares of Common Stock sold	683,548
Weighted average price	$	73.15
Total gross proceeds	$	50,000
Commissions paid to sales agents	$	657



	Nine Months Ended		Year Ended
	September 30, 2016		December 31, 2015
Assets acquired
Land	$	52,090	$	8,985
Buildings and other depreciable property	43,572		13,948
Manufactured homes	39		345
In-place leases	4,447		622
Net investment in real estate	100,148		23,900
Other assets	20		53
Total Assets acquired	$	100,168	$	23,953

Liabilities assumed
Mortgage notes payable	$	22,010	$	—
Other liabilities	1,955		266
Total Liabilities assumed	$	23,965	$	266
Net assets acquired	$	76,203	$	23,687



Derivatives in Cash Flow Hedging Relationship	Balance Sheet Location	September 30, 2016		December 31, 2015
Interest Rate Swap	Accrued expenses and accounts payable	$	646	$	553



Derivatives in Cash Flow Hedging Relationship	Amount of loss (gain) recognized in OCI on derivative					Location of loss reclassified from accumulated OCI into income	Amount of loss reclassified from accumulated OCI into income
Derivatives in Cash Flow Hedging Relationship	September 30, 2016			September 30, 2015			September 30, 2016		September 30, 2015
Interest Rate Swap	$	(272	)	$	1,012	Interest Expense	$	279	$	434



Derivatives in Cash Flow Hedging Relationship	Amount of loss recognized in OCI on derivative				Location of loss reclassified from accumulated OCI into income	Amount of loss reclassified from accumulated OCI into income
Derivatives in Cash Flow Hedging Relationship	September 30, 2016		September 30, 2015			September 30, 2016		September 30, 2015
Interest Rate Swap	$	986	$	2,535	Interest Expense	$	893	$	1,304



	Years Ended December 31,				Nine Months Ended September 30,
	2012	2013	2014	2015	2016
TTC Origination	10,198	15,607	18,187	25,544	23,983
TTC Sales	8,909	9,289	10,014	11,877	10,744
RV Dealer TTC Activations	1,289	6,318	8,173	13,667	13,239



	Nine Months ended September 30,⁽¹⁾
	2016		2015
Recurring Capital Expenditures ⁽²⁾	$	28,321	$	26,196
Property upgrades and site development	9,833		10,172
New home investments⁽³⁾	44,293		25,081
Used home investments	4,265		5,546
Total Property	86,712		66,995
Corporate	604		843
Total Capital improvements	$	87,316	$	67,838



	Quarters Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Computation of FFO and Normalized FFO:
Net income available for Common Stockholders	$	40,998		$	36,673		$	127,071		$	95,644
Income allocated to common OP units	3,462			3,136			10,770			8,191
Right-to-use contract upfront payments, deferred, net	1,327			1,701			2,427			3,929
Right-to-use contract commissions, deferred, net	(200		)	(464		)	(212		)	(1,471		)
Depreciation on real estate assets	26,847			25,747			79,218			76,811
Depreciation on rental homes	2,671			2,663			7,985			8,050
Amortization of in-place leases	1,376			616			2,139			1,950
Depreciation on unconsolidated joint ventures	373			274			968			799
FFO available for Common Stock and OP Unit holders	76,854			70,346			230,366			193,903
Transaction costs	327			121			925			603
Early debt retirement	—			—			—			16,922
Normalized FFO available for Common Stock and OP Unit holders	$	77,181		$	70,467		$	231,291		$	211,428
Weighted average Common Shares outstanding – fully diluted	92,910			91,940			92,405			91,876