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 30, 2017
2020
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)
_________________________________________________________ 

Maryland36-3857664
(State or Other Jurisdictionother jurisdiction of
Incorporation or Organization)
incorporation)
(I.R.S.IRS Employer
Identification No.)
Number)
Two North Riverside Plaza, Suite 800 Chicago, IllinoisChicago,Illinois60606
(Address of Principal Executive Offices)(Zip Code)

(312) 279-1400
(Registrant’s Telephone Number, Including Area Code)Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par ValueELSNew York Stock Exchange
_________________________________________________________ 
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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerx☒Accelerated filero☐
Non-accelerated filer
o  (Do not check if a smaller reporting company)
☐		Smaller reporting companyo☐
Emerging growth companyo☐
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:
87,836,746 182,224,703 shares of Common Stock as of October 27, 2017.
22, 2020.



Equity LifeStyle Properties, Inc.
Table of Contents
 
Page
Part I - Financial Information
Item 1.Financial Statements (unaudited)
Index To Financial Statements
3
4
65
7
9
Item 2.
2021
Item 3.
3641
Item 4.
3641
Part II - Other Information
Item 1.
42
Item 1.1A.
3742
Item 1A.2.
37
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
3743
Item 3.
3743
Item 4.
3743
Item 5.
3743
Item 6.
3844
2


Part I – Financial Information



Item 1. Financial Statements

Equity LifeStyle Properties, Inc.
Consolidated Balance Sheets
As of September 30, 2017 and December 31, 2016
(amounts in thousands, except share and per share data)

As ofAs of
September 30, 2020December 31, 2019
(unaudited)
Assets
Investment in real estate:
Land$1,531,313 $1,525,407 
Land improvements3,434,393 3,336,070 
Buildings and other depreciable property905,679 881,572 
5,871,385 5,743,049 
Accumulated depreciation(1,886,768)(1,776,224)
Net investment in real estate3,984,617 3,966,825 
Cash and restricted cash114,218 28,860 
Notes receivable, net36,230 37,558 
Investment in unconsolidated joint ventures19,933 20,074 
Deferred commission expense42,220 41,149 
Other assets, net63,195 56,809 
Total Assets$4,260,413 $4,151,275 
Liabilities and Equity
Liabilities:
Mortgage notes payable, net$2,450,783 $2,049,509 
Term loan, net0 198,949 
Unsecured line of credit50,000 160,000 
Accounts payable and other liabilities148,034 124,665 
Deferred revenue – upfront payments from membership upgrade sales136,194 126,814 
Deferred revenue – annual membership subscriptions12,035 10,599 
Accrued interest payable8,055 8,639 
Rents and other customer payments received in advance and security deposits90,219 91,234 
Distributions payable66,001 58,978 
Total Liabilities2,961,321 2,829,387 
Equity:
Stockholders' Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of September 30, 2020 and December 31, 2019; NaN issued and outstanding.0 0 
Common stock, $0.01 par value, 600,000,000 and 400,000,000 shares authorized as of September 30, 2020 and December 31, 2019, respectively; 182,222,007 and 182,089,595 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively.1,812 1,812 
Paid-in capital1,408,253 1,402,696 
Distributions in excess of accumulated earnings(181,754)(154,318)
Accumulated other comprehensive income (loss)0 (380)
Total Stockholders’ Equity1,228,311 1,249,810 
Non-controlling interests – Common OP Units70,781 72,078 
Total Equity1,299,092 1,321,888 
Total Liabilities and Equity$4,260,413 $4,151,275 

 September 30,
2017		 December 31,
2016
 (unaudited) 
Assets   
Investment in real estate:   
Land$1,167,620
 $1,163,987
Land improvements2,940,500
 2,893,759
Buildings and other depreciable property647,513
 627,590
 4,755,633
 4,685,336
Accumulated depreciation(1,488,722) (1,399,531)
Net investment in real estate3,266,911
 3,285,805
Cash77,395
 56,340
Notes receivable, net49,284
 34,520
Investment in unconsolidated joint ventures52,966
 19,369
Deferred commission expense31,608
 31,375
Escrow deposits, goodwill, and other assets, net47,683
 51,578
Total Assets$3,525,847
 $3,478,987
Liabilities and Equity   
Liabilities:   
Mortgage notes payable, net$1,981,604
 $1,891,900
Term loan199,534
 199,379
Accrued expenses and accounts payable106,688
 89,864
Deferred revenue – upfront payments from right-to-use contracts85,254
 81,484
Deferred revenue – right-to-use annual payments10,513
 9,817
Accrued interest payable7,969
 8,379
Rents and other customer payments received in advance and security deposits73,609
 76,906
Distributions payable45,501
 39,411
Total Liabilities2,510,672
 2,397,140
Equity:   
Stockholders’ Equity:   
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of September 30, 2017 and 9,945,539 shares authorized as of December 31, 2016; none issued and outstanding.—
 —
6.75% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value, no shares authorized as of September 30, 2017 and 54,461 shares authorized as of December 31, 2016; none issued and outstanding as of September 30, 2017 and 54,458 shares issued and outstanding as of December 31, 2016.—
 136,144
Common stock, $0.01 par value, 200,000,000 shares authorized as of September 30, 2017 and December 31, 2016; 87,499,669 and 85,529,386 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively872
 854
Paid-in capital1,164,658
 1,103,048
Distributions in excess of accumulated earnings(213,771) (231,276)
Accumulated other comprehensive (loss)—
 (227)
Total Stockholders’ Equity951,759
 1,008,543
Non-controlling interests – Common OP Units63,416
 73,304
Total Equity1,015,175
 1,081,847
Total Liabilities and Equity$3,525,847
 $3,478,987




















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

3

Equity LifeStyle Properties, Inc.
Consolidated Statements of Income and Comprehensive Income
For the Quarters Ended and Nine Months Ended September 30, 2017 and 2016
(amounts in thousands, except per share data)
(unaudited)
 Quarters Ended Nine Months Ended
 September 30,
2017		 September 30,
2016		 September 30,
2017		 September 30,
2016
Revenues:       
Community base rental income$123,177
 $117,164
 $365,833
 $346,625
Rental home income3,592
 3,484
 10,829
 10,572
Resort base rental income58,471
 54,486
 169,594
 154,652
Right-to-use annual payments11,531
 11,349
 34,133
 33,590
Right-to-use contracts current period, gross4,208
 3,672
 11,212
 9,290
Right-to-use contract upfront payments, deferred, net(1,670) (1,327) (3,766) (2,427)
Utility and other income26,295
 21,174
 69,071
 61,490
Gross revenues from home sales10,012
 10,895
 24,872
 28,239
Brokered resale revenues and ancillary services revenues, net1,983
 920
 4,088
 2,736
Interest income1,974
 1,767
 5,542
 5,052
Income from other investments, net2,052
 2,581
 3,918
 6,574
Total revenues241,625
 226,165

695,326

656,393
Expenses:       
Property operating and maintenance80,164
 73,410
 221,119
 203,011
Rental home operating and maintenance1,704
 1,768
 4,912
 4,874
Real estate taxes14,006
 13,467
 41,986
 39,534
Sales and marketing, gross3,277
 3,100
 8,861
 8,524
Right-to-use contract commissions, deferred, net(176) (200) (372) (212)
Property management13,160
 11,863
 38,743
 35,670
Depreciation on real estate assets and rental homes30,493
 29,518
 90,849
 87,203
Amortization of in-place leases138
 1,376
 2,128
 2,139
Cost of home sales10,377
 10,745
 25,391
 28,507
Home selling expenses1,447
 909
 3,301
 2,548
General and administrative7,505
 7,653
 23,339
 23,315
Property rights initiatives and other, net324
 855
 814
 2,036
Interest and related amortization25,027
 25,440
 74,728
 76,635
Total expenses187,446
 179,904

535,799

513,784
Income before equity in income of unconsolidated joint ventures54,179
 46,261

159,527

142,609
Equity in income of unconsolidated joint ventures686
 496
 2,876
 2,142
Consolidated net income54,865
 46,757

162,403

144,751
        
Income allocated to non-controlling interests – Common OP Units(3,286) (3,462) (9,825) (10,770)
Series C Redeemable Perpetual preferred stock dividends and original issuance costs(3,054) (2,297) (7,667) (6,910)
Net income available for Common Stockholders$48,525
 $40,998

$144,911

$127,071
        
Consolidated net income$54,865
 $46,757
 $162,403
 $144,751
Other comprehensive income/(loss):       
Adjustment for fair market value of swap(30) 551
 227
 (93)
Consolidated comprehensive income54,835
 47,308

162,630

144,658
Comprehensive income allocated to non-controlling interests – Common OP Units(3,237) (3,505) (9,792) (10,762)
Series C Redeemable Perpetual preferred stock dividends and original issuance costs(3,054) (2,297) (7,667) (6,910)
Comprehensive income attributable to Common Stockholders$48,544
 $41,506

$145,171

$126,986










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

Equity LifeStyle Properties, Inc.
Consolidated Statements of Income and Comprehensive Income (Continued)
For the Quarters Endedand Nine Months EndedSeptember 30, 2017 and 2016
(amounts in thousands, except per share data)
(unaudited)
 Quarters Ended September 30,Nine Months Ended September 30,
2020201920202019
Revenues:
Rental income$238,869 $225,116 $696,178 $660,689 
Annual membership subscriptions13,442 13,150 39,476 38,052 
Membership upgrade sales current period, gross6,631 5,730 16,522 14,609 
Membership upgrade sales upfront payments, deferred, net(4,171)(3,530)(9,379)(8,213)
Other income12,268 11,263 33,007 31,898 
Gross revenues from home sales13,070 8,438 33,245 22,738 
Brokered resale and ancillary services revenues, net1,648 2,133 2,011 4,564 
Interest income1,801 1,831 5,399 5,385 
Income from other investments, net1,428 7,029 3,093 8,894 
Total revenues284,986 271,160 819,552 778,616 
Expenses:
Property operating and maintenance99,566 90,765 268,465 253,581 
Real estate taxes15,981 15,166 49,490 45,596 
Sales and marketing, gross5,054 4,063 13,308 11,686 
Membership sales commissions, deferred, net(630)(313)(1,327)(893)
Property management14,527 14,605 44,344 42,675 
Depreciation and amortization38,581 37,032 115,937 112,785 
Cost of home sales12,866 8,434 33,627 23,230 
Home selling expenses1,241 1,033 3,535 3,218 
General and administrative9,692 8,710 31,156 27,844 
Other expenses658 1,460 1,885 2,427 
Early debt retirement9,732 0 10,786 1,491 
Interest and related amortization25,218 25,547 77,540 77,964 
Total expenses232,486 206,502 648,746 601,604 
Gain on sale of real estate, net0 0 0 52,507 
Income before equity in income of unconsolidated joint ventures52,500 64,658 170,806 229,519 
Equity in income of unconsolidated joint ventures968 3,518 2,239 8,277 
Consolidated net income53,468 68,176 173,045 237,796 
Income allocated to non-controlling interests – Common OP Units(2,908)(3,715)(9,415)(13,617)
Redeemable perpetual preferred stock dividends0 0 (8)(8)
Net income available for Common Stockholders$50,560 $64,461 $163,622 $224,171 
Consolidated net income$53,468 $68,176 $173,045 $237,796 
Other comprehensive income (loss):
Adjustment for fair market value of swap1,161 (257)380 (2,798)
Consolidated comprehensive income54,629 67,919 173,425 234,998 
Comprehensive income allocated to non-controlling interests – Common OP Units(2,971)(3,701)(9,436)(13,460)
Redeemable perpetual preferred stock dividends0 0 (8)(8)
Comprehensive income attributable to Common Stockholders$51,658 $64,218 $163,981 $221,530 
Earnings per Common Share – Basic$0.28 $0.35 $0.90 $1.24 
Earnings per Common Share – Fully Diluted$0.28 $0.35 $0.90 $1.24 
Weighted average Common Shares outstanding – Basic181,869 181,649 181,811 180,515 
Weighted average Common Shares outstanding – Fully Diluted192,537 192,400 192,548 191,840 
 Quarters Ended Nine Months Ended
 September 30,
2017		 September 30,
2016		 September 30,
2017		 September 30,
2016
Earnings per Common Share – Basic:       
Net income available for Common Stockholders$0.56
 $0.48
 $1.67
 $1.50
Earnings per Common Share – Fully Diluted:       
Net income available for Common Stockholders$0.56
 $0.48
 $1.66
 $1.49
        
Distributions declared per Common Share outstanding$0.488
 $0.425
 $1.463
 $1.275
Weighted average Common Shares outstanding – basic87,037
 85,105
 86,620
 84,649
Weighted average Common Shares outstanding – fully diluted93,324
 92,910
 93,135
 92,405

























































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

4

Equity LifeStyle Properties, Inc.
Consolidated StatementStatements of Changes in Equity
For the Nine Months Ended September 30, 2017
(amounts in thousands)thousands; adjusted for stock split)
(unaudited)
Common StockPaid-in CapitalRedeemable Perpetual Preferred StockDistributions in Excess of Accumulated EarningsAccumulated Other Comprehensive Income (Loss)Non-controlling Interests – Common OP UnitsTotal Equity
Balance as of December 31, 2019$1,812 $1,402,696 $0 $(154,318)$(380)$72,078 $1,321,888 
Cumulative effect of change in accounting principle (ASU 2016-13, Financial Instruments - Credit Losses (Topic 326))
— — — (3,875)— — (3,875)
Balance as of January 1, 20201,812 1,402,696 — (158,193)(380)72,078 1,318,013 
Exchange of Common OP Units for Common Stock— 63 — — — (63)0 
Issuance of Common Stock through employee stock purchase plan— 619 — — — — 619 
Compensation expenses related to restricted stock and stock options— 2,964 — — — — 2,964 
Repurchase of Common Stock or Common OP Units— (3,962)— — — — (3,962)
Adjustment for Common OP Unitholders in the Operating Partnership— 277 — — — (277)0 
Adjustment for fair market value of swap— — — — (1,333)— (1,333)
Consolidated net income— — — 66,875 — 3,849 70,724 
Distributions— — — (62,385)— (3,590)(65,975)
Other— (143)— — — — (143)
Balance as of March 31, 20201,812 1,402,514 0 (153,703)(1,713)71,997 1,320,907 
Issuance of Common Stock through employee stock purchase plan— 531 — — — — 531 
Compensation expenses related to restricted stock and stock options— 2,669 — — — — 2,669 
Adjustment for Common OP Unitholders in the Operating Partnership— 193 — — — (193)0 
Adjustment for fair market value of swap— — — — 552 — 552 
Consolidated net income0 — 8 46,187 0 2,658 48,853 
Distributions— — (8)(62,387)— (3,591)(65,986)
Other— (143)— — — — (143)
Balance as of June 30, 20201,812 1,405,764 0 (169,903)(1,161)70,871 1,307,383 
Issuance of Common Stock through employee stock purchase plan— 528 — — — — 528 
Compensation expenses related to restricted stock and stock options— 2,878 — — — — 2,878 
Adjustment for Common OP Unitholders in the Operating Partnership— (592)— — — 592 0 
Adjustment for fair market value of swap— — — — 1,161 — 1,161 
Consolidated net income0 — 0 50,560 0 2,908 53,468 
Distributions— — 0 (62,411)— (3,590)(66,001)
Other— (325)— — — — (325)
Balance as of September 30, 2020$1,812 $1,408,253 $0 $(181,754)$0 $70,781 $1,299,092 
 
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, 2016$854
 $1,103,048
 $136,144
 $(231,276) $73,304
 $(227) $1,081,847
Conversion of Common OP Units to Common Stock13
 16,429
 —
 —
 (16,442) —
 —
Issuance of Common Stock through employee stock purchase plan—
 1,615
 —
 —
 —
 —
 1,615
Issuance of Common Stock5
 42,032
 —
 —
 —
 —
 42,037
Compensation expenses related to restricted stock—
 6,813
 —
 —
 —
 —
 6,813
Adjustment for Common OP Unitholders in the Operating Partnership—
 (5,313) —
 —
 5,313
 —
 —
Adjustment for fair market value of swap—
 —
 —
 —
 —
 227
 227
Net income—
 —
 7,667
 144,911
 9,825
 —
 162,403
Distributions—
 —
 (6,910) (127,406) (8,584) —
 (142,900)
Series C Preferred stock redemption—
 —
 (136,144) —
 —
 —
 (136,144)
Series C Preferred stock original issuance costs—
 757
 (757) —
 —
 —
 —
Other—
 (723) —
 —
 —
 —
 (723)
Balance, September 30, 2017$872
 $1,164,658
 $—
 $(213,771) $63,416
 $—
 $1,015,175


















































The accompanying notes are an integral part of these the consolidated financial statements.
5

Equity LifeStyle Properties, Inc.
Consolidated Financial Statements.Statements of Changes in Equity

(amounts in thousands; adjusted for stock split)
(unaudited)
Common StockPaid-in CapitalRedeemable Perpetual Preferred StockDistributions in Excess of Accumulated EarningsAccumulated Other Comprehensive Income (Loss)Non-controlling interests – Common OP UnitsTotal Equity
Balance as of January 1, 2019$1,792 $1,328,495 $0 $(211,034)$2,299 $71,792 $1,193,344 
Exchange of Common OP Units for Common Stock— 66 — — — (66)0 
Issuance of Common Stock through exercise of options— 53 — — — — 53 
Issuance of Common Stock through employee stock purchase plan— 652 — — — — 652 
Compensation expenses related to restricted stock and stock options— 2,420 — — — — 2,420 
Repurchase of Common Stock or Common OP Units— (53)— — — — (53)
Adjustment for Common OP Unitholders in the Operating Partnership— (56)— — — 56 0 
Adjustment for fair market value of swap— — — — (931)— (931)
Consolidated net income— — — 113,309 — 7,226 120,535 
Distributions— — — (55,123)— (3,516)(58,639)
Other— (63)— — — — (63)
Balance as of March 31, 20191,792 1,331,514 0 (152,848)1,368 75,492 1,257,318 
Exchange of Common OP Units for Common Stock10 6,425 — — — (6,435)0 
Issuance of Common Stock through employee stock purchase plan— 587 — — — — 587 
Issuance of Common Stock through our ATM equity offering program10 59,309 — — — — 59,319 
Compensation expenses related to restricted stock and stock options— 2,625 — — — — 2,625 
Adjustment for Common OP Unitholders in the Operating Partnership— (2,883)— — — 2,883 0 
Adjustment for fair market value of swap— — — — (1,610)— (1,610)
Consolidated net income— — 8 46,401 — 2,676 49,085 
Distributions— — (8)(55,757)0 (3,215)(58,980)
Other— (870)— — — — (870)
Balance as of June 30, 20191,812 1,396,707 0 (162,204)(242)71,401 1,307,474 
Exchange of Common OP Units for Common Stock— 33 — — — (33)0 
Issuance of Common Stock through employee stock purchase plan— 698 — — — — 698 
Compensation expenses related to restricted stock and stock options— 2,734 — — — — 2,734 
Adjustment for Common OP Unitholders in the Operating Partnership— (165)— — — 165 0 
Adjustment for fair market value of swap— — — — (257)— (257)
Consolidated net income— — — 64,461 — 3,715 68,176 
Distributions— — — (55,762)— (3,214)(58,976)
Other— (56)— — — — (56)
Balance as of September 30, 2019$1,812 $1,399,951 $0 $(153,505)$(499)$72,034 $1,319,793 










The accompanying notes are an integral part of the consolidated financial statements.
6

Equity LifeStyle Properties, Inc.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2017 and 2016
(amounts in thousands)
(unaudited)
Nine Months Ended September 30,
20202019
Cash Flows From Operating Activities:
Consolidated net income$173,045 $237,796 
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Gain on sale of real estate, net0 (52,507)
Early debt retirement10,786 1,491 
Depreciation and amortization117,870 114,160 
Amortization of loan costs2,636 2,623 
Debt premium amortization(304)(359)
Equity in income of unconsolidated joint ventures(2,239)(8,277)
Distributions of income from unconsolidated joint ventures84 5,010 
Proceeds from insurance claims, net(1,453)(1,742)
Compensation expense related to restricted stock and stock options8,511 7,779 
Revenue recognized from membership upgrade sales upfront payments(7,143)(6,394)
Commission expense recognized related to membership sales2,774 2,773 
Long-term incentive plan compensation1,148 (3,226)
Changes in assets and liabilities:
Notes receivable, net(1,460)(2,441)
Deferred commission expense(3,844)(3,418)
Other assets, net21,663 1,070 
Accounts payable and other liabilities22,029 35,771 
Deferred revenue – upfront payments from membership upgrade sales16,522 14,609 
Deferred revenue – annual membership subscriptions1,436 1,340 
Rents and other customer payments received in advance and security deposits(1,193)3,290 
Net cash provided by operating activities360,868 349,348 
Cash Flows From Investing Activities:
Real estate acquisitions, net(8,871)(176,296)
Proceeds from disposition of properties, net0 77,746 
Investment in unconsolidated joint ventures0 (983)
Distributions of capital from unconsolidated joint ventures2,294 5,734 
Proceeds from insurance claims109 6,689 
Capital improvements(155,061)(189,788)
Net cash used in investing activities(161,529)(276,898)
  
 September 30,
2017		 September 30,
2016
Cash Flows From Operating Activities:   
Consolidated net income$162,403
 $144,751
Adjustments to reconcile consolidated net income to net cash provided by operating activities:   
Depreciation91,781
 88,043
Amortization of in-place leases2,128
 2,139
Amortization of loan costs2,676
 2,930
Debt premium amortization(1,664) (2,633)
Equity in income of unconsolidated joint ventures(2,876) (2,142)
Distributions of income from unconsolidated joint ventures2,711
 1,417
Stock-based compensation6,813
 6,796
Revenue recognized from right-to-use contract upfront payments(7,440) (6,863)
Commission expense recognized related to right-to-use contracts3,327
 3,071
Long term incentive plan compensation1,011
 (3,390)
Recovery for uncollectible rents receivable(52) (548)
Changes in assets and liabilities:   
Notes receivable activity, net(337) 349
Deferred commission expense(3,560) (3,641)
Escrow deposits, goodwill and other assets28,985
 22,516
Accrued expenses and accounts payable11,002
 15,392
Deferred revenue – upfront payments from right-to-use contracts11,210
 9,290
Deferred revenue – right-to-use annual payments696
 700
Rents received in advance and security deposits(3,305) (3,595)
Net cash provided by operating activities305,509
 274,582
Cash Flows From Investing Activities:   
Real estate acquisition(2,163) (78,203)
Investment in unconsolidated joint ventures(33,479) (5,000)
Distributions of capital from unconsolidated joint ventures—
 4,094
Repayments of notes receivable7,643
 7,788
Issuance of notes receivable(22,297) (7,436)
Capital improvements(87,877) (87,316)
Net cash used in investing activities(138,173) (166,073)
Cash Flows From Financing Activities:   
Proceeds from stock options and employee stock purchase plan1,615
 5,931
Share based award tax withholding—
 (98)
Gross proceeds from sale of Common Stock42,037
 50,000
Distributions:   
Common Stockholders(121,114) (103,803)
Common OP Unitholders(8,786) (8,828)
Preferred Stockholders(6,910) (6,910)
Principal payments and mortgage debt payoff(60,392) (109,256)
New mortgage notes payable financing proceeds146,000
 54,450
Redemption of preferred stock(136,144) —
Debt issuance and defeasance costs(1,864) (617)
Other(723) (824)
Net cash used in financing activities(146,281) (119,955)
Net increase (decrease) in cash21,055
 (11,446)
Cash, beginning of period56,340
 80,258
Cash, end of period$77,395
 $68,812


























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

7


Equity LifeStyle Properties, Inc.
Consolidated Statements of Cash Flows (continued)
For the Nine Months Ended September 30, 2017 and 2016
(amounts in thousands)
(unaudited)
Nine Months Ended September 30,
20202019
Cash Flows From Financing Activities:
Proceeds from stock options and employee stock purchase plan1,678 1,934 
Gross proceeds from the issuance of common stock0 59,319 
Distributions:
Common Stockholders(180,537)(160,336)
Common OP Unitholders(10,393)(9,891)
Preferred Stockholders(8)(8)
Share based award tax withholding payments(3,962)0 
Principal payments and mortgage debt repayment(455,252)(107,367)
Mortgage notes payable financing proceeds662,255 0 
Line of Credit repayment(367,500)(120,000)
Line of Credit proceeds257,500 240,000 
Debt issuance and defeasance costs(17,150)(1,700)
Other(612)(989)
Net cash used in financing activities(113,981)(99,038)
Net increase (decrease) in cash and restricted cash85,358 (26,588)
Cash and restricted cash, beginning of period28,860 68,974 
Cash and restricted cash, end of period$114,218 $42,386 
 September 30,
2017		 September 30,
2016
Supplemental Information:   
Cash paid during the period for interest$76,713
 $79,762
Capital improvements – used homes acquired by repossessions227
 485
Net repayments of notes receivable – used homes acquired by repossessions(227) (485)
Building and other depreciable property – reclassification of rental homes25,852
 26,070
Escrow deposits and other assets – reclassification of rental homes(25,852) (26,070)
    
Real estate acquisitions:   
Investment in real estate, fair value$(7,985) $(100,148)
Investment in real estate, cost(110) (2,000)
Escrow deposits and other assets—
 (20)
Debt assumed5,900
 22,010
Accrued expenses and accounts payable32
 1,955
Real estate acquisitions, net$(2,163) $(78,203)


Nine Months Ended September 30,
20202019
Supplemental Information:
Cash paid for interest$76,551 $76,508 
Net investment in real estate – reclassification of rental homes$28,774 $19,241 
Other assets, net – reclassification of rental homes$(28,774)$(19,241)
Real estate acquisitions:
Investment in real estate$(9,050)$(240,324)
Investment in unconsolidated joint ventures0 35,789 
Other assets, net0 (1,415)
Debt assumed0 19,212 
Other liabilities179 10,442 
Real estate acquisitions, net$(8,871)$(176,296)
Real estate dispositions:
Investment in real estate$0 $35,572 
Notes receivable, net0 295 
Other assets, net0 97 
Mortgage notes payable, net0 (11,175)
Other liabilities0 450 
Gain on sale of real estate, net0 52,507 
Real estate dispositions, net$0 $77,746 

























































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

8


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements



Note 1 – Organization and Basis of Presentation
Equity LifeStyle Properties, Inc. ("ELS"), a Maryland corporation, together with MHC Operating Limited Partnership (the “Operating Partnership”"Operating Partnership") and its other consolidated subsidiaries (“Subsidiaries”(the "Subsidiaries"), are referred to herein as “we,” “us,”"we," "us," and “our.” Capitalized terms used"our." We are a fully integrated owner and operator of lifestyle-oriented properties ("Properties") consisting primarily of manufactured home ("MH") and recreational vehicle ("RV") communities. We provide our customers the opportunity to place manufactured homes, cottages or RVs on our Properties either on a long-term or short-term basis. Our customers may lease individual developed areas ("Sites") or enter into right-to-use contracts, also known as membership subscriptions, which provide them access to specific Properties for limited stays.
Our Properties are owned primarily by the Operating Partnership and managed internally by affiliates of the Operating Partnership. ELS is the sole general partner of the Operating Partnership, has exclusive responsibility and discretion in management and control of the Operating Partnership and held a 94.6% interest as of September 30, 2020. As the general partner with control, ELS is the primary beneficiary of, and therefore consolidates, the Operating Partnership.
Equity method of accounting is applied to entities in which ELS does not have a controlling interest or for variable interest entities in which ELS is not considered the primary beneficiary, but not defined hereinwith respect to which it can exercise significant influence over operations and major decisions. Our exposure to losses associated with unconsolidated joint ventures is primarily limited to the carrying value of these investments. Accordingly, distributions from a joint venture in excess of our carrying value are as definedrecognized in our Annual Report on Form 10-K (“2016 Form 10-K”) for the year ended December 31, 2016. Theseearnings.
The accompanying unaudited Consolidated Financial Statementsinterim consolidated financial statements have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and regulations.regulations for Quarterly Reports on Form 10-Q. 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 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the 2016 Form 10-K.year ended December 31, 2019.
The following notesIntercompany balances and transactions have been eliminated. All adjustments to the Consolidated Financial Statements highlight significant changes to the notes included in the 2016 Form 10-Kinterim consolidated financial statements are of a normal, recurring nature and, present interim disclosures as required by the SEC. The accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments and estimatesare necessary for a fair presentation of theresults for these interim financial statements, which are of a normal, recurring nature.periods. Revenues and expenses are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results.
On October 15, 2019, we effected a 2-for-one stock split of our common stock. Pursuant to the anti-dilution provision in the Operating Partnership's Agreement of Limited Partnership, the stock split also effected a two-for-one split of the outstanding Operating Partnership units ("OP units"). All shares of common stock and OP units and per share data in the consolidated financial statements and accompanying notes, for all periods presented, have been adjusted to reflect the stock split.

Note 2 – Summary of Significant Accounting Policies
(a)Consolidation
We consolidate our majority-owned Subsidiaries in which we have the ability to control the operations and all variable interest entities ("VIE") with respect to which we are the primary beneficiary. We also consolidate entities in which we have a direct or indirect controlling or voting interest. All significant intercompany balances and transactions have been eliminated in consolidation.(a)    Recently Adopted Accounting Pronouncements
EffectiveOn January 1, 2016,2020, we prospectively adopted (“FASB ("ASU 2015-02”2018-15") Consolidation (Topic 810): Amendments to the Consolidation AnalysisIntangibles - Goodwill and Other - Internal-Use Software (ASC 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2015-02 required us2018-15 provides guidance on accounting for fees paid when the arrangement includes a software license and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs to evaluate whether we should consolidate certain legal entities.develop or obtain internal-use software. The adoption of this standardguidance did not result in any changes to our accounting of interests in less than wholly-owned joint ventures; however, the Operating Partnership now meets the criteria as a VIE. We concluded that the Operating Partnership is a VIE because we are the general partner and controlling owner of approximately 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.
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 its operations and major decisions.
(b)Identified Intangibles and Goodwill
As of both September 30, 2017 and December 31, 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 both September 30, 2017 and December 31, 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 $2.9 million and $2.8 million as of September 30, 2017 and December 31, 2016, respectively.
As of September 30, 2017 and December 31, 2016, the gross carrying amount of in-place lease intangible assets, a component of buildings and other depreciable property on our consolidated balance sheets, was approximately $76.7 million and $76.3 million, respectively. Accumulated amortization of in-place lease intangible assets was approximately $76.4 million and $74.3 million as of September 30, 2017 and December 31, 2016, respectively.
(c)Restricted Cash
Cash as of both September 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.

9

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements
Note 2 – Summary of Significant Accounting Policies (continued)

(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 $18.9 million as of both September 30, 2017 and December 31, 2016, had an aggregate carrying value of approximately $2,200.1 million and $2,110.2 million as of September 30, 2017 and December 31, 2016, respectively, and a fair value of approximately $2,225.4 million and $2,081.2 million as of September 30, 2017 and December 31, 2016, respectively. The fair value was measured using quoted prices and observable inputs from similar liabilities (Level 2). At December 31, 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 cash flow hedge of interest rate risk expired during the quarter ended September 30, 2017. 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.
(e)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. Early adoption is permitted. We are currently in the process of evaluating the potentialmaterial impact if any, that the adoption of this standard may have on our consolidated financial statements and related disclosures.statements.
In August 2016, theOn January 1, 2020, we adopted FASB issued (“ASU 2016-15”2016-13”) 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). using the modified retrospective approach. 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 nowshould use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures
We are exposed to help financial statement users better understand significant estimates and judgments used in estimating credit losses as well asprimarily through sales of annual membership subscriptions and membership upgrades and home sales. We have developed an allowance for credit losses, which represents an estimate of expected losses over the credit qualityremaining contractual life of our receivables. The estimate is a result of our ongoing assessments and underwriting standardsevaluations 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 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 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, if any, 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 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.

10
9


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies (continued)

collectability including historical loss experience, current market conditions and future expectations in forecasting credit losses in each of our receivable portfolios. We expect to adopt ASU 2014-09 onrecognized a cumulative-effect adjustment of $3.9 million, which decreased opening retained earnings as of January 1, 2018 using the modified retrospective transition method. We have determined that our primary source of revenue, generated through leasing arrangements, is excluded2020.
The cumulative-effect adjustment resulting from ASU 2014-09. We are in the process of finalizing our evaluation and quantifying the impact, if any, the adoption of ASU 2014-09 will2016-13 as of January 1, 2020 was as follows:
Balance net of allowanceBalance Sheet LocationBalance at December 31, 2019Adjustment due to ASU 2016-13 AdoptionBalance at January 1, 2020Balance at
September 30, 2020
(amounts in thousands)
Annual membership subscriptionsOther assets, net$2,394 $(1,361)$1,033 $1,649 
Membership upgradesNotes receivable, net$25,236 $(2,514)$22,722 $25,123 
(b)    Revenue Recognition
Rental income is accounted for in accordance with the ASC 842, Leases, and is recognized over the term of the respective lease or the length of a customer's stay. Utility recoveries are presented within Rental income on the Consolidated Statements of Income and Comprehensive Income. The allowance for credit losses related to the collectability of lease receivables is presented as a reduction to Rental Income. Lease receivables are presented within Other assets, net on the Consolidated Balance Sheets and are net of an allowance for credit losses. The estimate for credit losses is a result of our ongoing assessments and evaluations of collectibility including historical loss experience, current market conditions and future expectations in forecasting credit losses. See Note 3. Leases for additional information.
Annual membership subscriptions and membership upgrade sales are accounted for in accordance with ASC 606, Revenue from Contracts with Customers. Membership subscriptions provide our customers access to specific Properties for limited stays at a specified group of Properties. Payments are deferred and recognized on a straight-line basis over the one-year period during which access to Sites at certain Properties is provided. Membership subscription receivables are presented within Other assets, net on the Consolidated Balance Sheets and are net of an allowance for credit losses. Membership upgrades grant certain additional access rights to the customer and require non-refundable upfront payments. The non-refundable upfront payments are recognized on a straight-line basis over 20 years. Financed upgrade sales (also known as contract receivables) are presented within Notes receivable, net on the Consolidated Balance Sheets and are net of an allowance for credit losses.
Income from home sales is recognized when the earnings process is complete. The earnings process is complete when the home has been delivered, the purchaser has accepted the home and title has transferred. We have a limited program under which we purchase loans made by an unaffiliated lender to homebuyers at our Properties. Financed home sales (also known as chattel loans) are presented within Notes receivable, net on the Consolidated Balance Sheets and are net of an allowance for credit losses.
(c)    Restricted Cash
As of September 30, 2020 and December 31, 2019, restricted cash consists of $25.9 million and $25.1 million, respectively, primarily related to cash reserved for customer deposits and escrows for insurance and real estate taxes.

10

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 3 – Leases
Lessor
Rental income derived from customers renting our non-lease revenue streams,Sites is accounted for in accordance with ASC 842, Leases, and is recognized over the term of the respective operating lease or the length of a customer's stay. MH Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including right-to-usemanufactured homes. Annual RV and marina Sites are leased on an annual basis to customers who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those Northern properties that are open for the summer season. Seasonal RV and marina Sites are leased to customers generally for one to six months. Transient RV and marina Sites are leased to customers on a short-term basis. In addition, customers may lease homes that are located in our communities.
The leases entered into between the customer and us for a rental of a Site are renewable upon the consent of both parties or, in some instances, as provided by statute. Long-term leases that are non-cancelable by the tenants are in effect at certain Properties. Rental rate increases at these Properties are primarily a function of increases in the Consumer Price Index, taking into consideration certain conditions. Additionally, periodic market rate adjustments are made as deemed appropriate. In addition, certain state statutes allow entry into long-term agreements that effectively modify lease terms related to rent amounts and increases over the term of the agreements. The following table presents future minimum rents expected to be received under long-term non-cancelable tenant leases, as well as those leases that are subject to long-term agreements governing rent payments right-to-use contracts, and utilityincreases:
(amounts in thousands)As of September 30, 2020
2020$22,649 
202191,467 
202257,035 
202334,989 
202435,598 
Thereafter71,532 
Total$313,270 

Lessee
We lease land under non-cancelable operating leases at 13 Properties expiring at various dates through 2054. The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of gross revenues at those Properties. We also have other operating leases, primarily office space, expiring at various dates through 2030. For the quarters ended September 30, 2020 and 2019, total operating lease payments were $2.5 million and $2.3 million, respectively. For the nine months ended September 30, 2020 and 2019, total operating lease payments were $7.3 million and $6.9 million, respectively.
The following table summarizes our minimum future rental payments, excluding variable costs, which are discounted by our incremental borrowing rate to calculate the lease liability for our operating leases as of September 30, 2020:
As of September 30, 2020
(amounts in thousands)Ground LeasesOffice and Other LeasesTotal
2020$487 $1,015 $1,502 
20211,949 3,074 5,023 
20221,479 1,399 2,878 
2023534 1,182 1,716 
2024534 911 1,445 
Thereafter4,984 2,899 7,883 
Total undiscounted rental payments9,967 10,480 20,447 
Less imputed interest(2,116)(998)(3,114)
Total lease liabilities$7,851 $9,482 $17,333 

11

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 3 – Leases (continued)
Right-of-use ("ROU") assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other income. While we have not finalized our assessment of the impact of ASU 2014-09, basedliabilities on the analysis completed to date, we do not currently anticipate that ASU 2014-09 will have a material impactConsolidated Balance Sheets, were $16.6 million and $17.3 million, respectively, as of September 30, 2020. The weighted average remaining lease term for our operating leases was eight years and the weighted average incremental borrowing rate was 4.0% at September 30, 2020.
ROU assets and lease liabilities from our operating leases, included within Other assets, net and Accounts payable and other liabilities on the Consolidated Balance Sheets, were $15.1 million and $16.2 million, respectively, as of December 31, 2019. The weighted average remaining lease term for our consolidated financial statements.operating leases was seven years and the weighted average incremental borrowing rate was 4.4% at December 31, 2019.

Note 34 – Earnings Per Common Share
The following table sets forth the computation of basic and diluted earnings per Common Shareshare of common stock for the quarters and nine months ended September 30, 20172020 and 2016 (amounts in thousands, except per share data):2019:
Quarters Ended September 30,Nine Months Ended September 30,
(amounts in thousands, except per share data)2020201920202019
Numerators:
Net income available for Common Stockholders – Basic$50,560 $64,461 $163,622 $224,171 
Amounts allocated to dilutive securities2,908 3,715 9,415 13,617 
Net income available for Common Stockholders – Fully Diluted$53,468 $68,176 $173,037 $237,788 
Denominators:
Weighted average Common Shares outstanding – Basic181,869 181,649 181,811 180,515 
Effect of dilutive securities:
Exchange of Common OP Units for Common Shares10,482 10,496 10,485 11,084 
Stock options and restricted stock186 255 252 241 
Weighted average Common Shares outstanding – Fully Diluted192,537 192,400 192,548 191,840 
Earnings per Common Share – Basic$0.28 $0.35 $0.90 $1.24 
Earnings per Common Share – Fully Diluted$0.28 $0.35 $0.90 $1.24 

 Quarters Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Numerator:       
Net Income Available for Common Stockholders:       
Net income available for Common Stockholders – basic$48,525
 $40,998
 $144,911
 $127,071
Amounts allocated to dilutive securities3,286
 3,462
 9,825
 10,770
Net income available for Common Stockholders – fully diluted$51,811
 $44,460
 $154,736
 $137,841
Denominator:       
Weighted average Common Shares outstanding – basic87,037
 85,105
 86,620
 84,649
Effect of dilutive securities:       
Conversion of Common OP Units to Common Shares5,836
 7,203
 6,100
 7,205
Stock options and restricted shares451
 602
 415
 551
Weighted average Common Shares outstanding – fully diluted93,324
 92,910
 93,135
 92,405
        
Earnings per Common Share – Basic:       
Net income available for Common Stockholders$0.56
 $0.48
 $1.67
 $1.50
        
Earnings per Common Share – Fully Diluted:       
Net income available for Common Stockholders$0.56
 $0.48
 $1.66
 $1.49
Note 45 – Common Stock and Other Equity Related Transactions
Series C PreferredTwo-for-One Common Stock Redemption and Distribution ActivityOP Units Split
The following quarterly distributions have been declared onOn October 15, 2019, a 2-for-one stock split of our depositary shares (each representing 1/100common stock, effected by and in the form of a sharestock dividend, was paid to stockholders of record as of October 1, 2019. In connection with our stock split, the OP Units of our Series C Preferred Stock) and paidOperating Partnership also split on a 2-for-one basis.
Increase in Authorized Shares
On April 28, 2020, our stockholders approved an amendment to our preferred stockholders forcharter that increased the nine months ended September 30, 2017. On September 25, 2017, we redeemed our 6.75% Series C Preferred Stock for $138.4 million, including accrued dividends. Thenumber of shares of Series C Preferred Stockcommon stock that were redeemed now have the status ofwe are authorized but unissued preferred stock, without designation as to class or series.issue from 400,000,000 to 600,000,000 shares.






12
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
$0.421875
 September 30, 2017 September 15, 2017 September 25, 2017
Common Stockholder Distribution Activity
The following quarterly distributions have been declared and paid to common stockholders and common OP Unit non-controlling holders for the nine months ended September 30, 2017.
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
$0.4875
 September 30, 2017 September 29, 2017 October 13, 2017

11


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 45 – Common Stock and Other Equity Related Transactions (continued)


Common Stockholder Distribution Activity

The following quarterly distributions, as adjusted for the stock split, have been declared and paid to Common Stockholders and the OP Unit holders since January 1, 2019.

Distribution Amount Per ShareFor the Quarter EndedStockholder Record DatePayment Date
$0.3063March 31, 2019March 29, 2019April 12, 2019
$0.3063June 30, 2019June 28, 2019July 12, 2019
$0.3063September 30, 2019September 27, 2019October 11, 2019
$0.3063December 31, 2019December 27, 2019January 10, 2020
$0.3425March 31, 2020March 27, 2020April 10, 2020
$0.3425June 30, 2020June 26, 2020July 10, 2020
$0.3425September 30, 2020September 25, 2020October 9, 2020
Notes to Consolidated Financial Statements

Equity Offering Program
Note 5 – Investment in Joint Ventures (continued)

On May 4, 2015,July 30, 2020, we extendedentered into our current at-the-market (“ATM”) equity 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,common stock, par value $0.01 per share, having an aggregate offering price of up to $125.0$200.0 million. As of September 30, 2020, the full capacity remained available for issuance.
There was no ATM equity activity during the nine months ended September 30, 2020. The following table presents the shares that were issued under the previous ATM equity offering program during the nine months ended September 30, 2017 and nine months ended September 30, 2016 (amounts in thousands, except stock data):
2019.
  Nine Months Ended
  September 30, 2017 September 30, 2016
Shares of Common Stock sold 484,913
 683,548
Weighted average price $86.69
 $73.15
Total gross proceeds 
 $42,037
 $50,000
Commissions paid to sales agents $526
 $657
Nine Months Ended September 30,
(amounts in thousands, except share data)2019
Shares of Common Stock sold1,010,472 
Weighted average price$58.71 
Total gross proceeds$59,319 
Commissions paid to sales agents$771 
As of September 30, 2017, approximately $33.0 million of Common Stock remained available for issuance under the ATM equity offering program.
ConversionsExchanges
Subject to certain limitations, holders of Common Operating Partnership units ("OP units")Unit holders can request an exchange of any or all of their OP unitsUnits for shares of Common Stock at any time. Upon receipt of such a request, we may, in lieu of issuing shares of Common Stock, cause the Operating Partnership to pay cash. During the nine months ended September 30, 2017, 1,335,2472020 and 2019, 9,228 and 995,550 OP unitsUnits, respectively, were exchanged for an equal number of shares of Common Stock.

Note 56 – Investment in Real Estate
Acquisitions
On May 10, 2017,July 31, 2020, we completed the acquisition of Paradise Park Largo,an 11-acre development parcel that contained an additional 56 sites in Stella, North Carolina. On August 27, 2020, we completed the acquisition of a 108-site manufactured home51-acre vacant land parcel, also in Stella, North Carolina, for additional expansion. Both parcels are adjacent to our RV community, locatedWhite Oak Shores. The total aggregate purchase price was $4.8 million, which was funded with available cash.
On April 21, 2020, we completed the acquisition of a 4.6-acre vacant land parcel in Largo, Florida.North Ellenton, Florida, adjacent to our MH community, Colony Cove, for additional expansion. The purchase price was $2.2 million, which was funded with available cash.
On September 10, 2019, we completed the acquisition of the remaining interest in the Loggerhead joint venture that owned 11 marinas for a purchase price of approximately $8.0 million$49.0 million. As part of the acquisition, we also funded the joint
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Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 6 – Investments in Real Estate (continued)
venture's repayment of its non-transferable debt of approximately $72.0 million. The transaction was funded with proceeds from our unsecured line of credit. Following the consummation of the transaction, we own 100% of the marinas.
On May 29, 2019, we completed the acquisition of White Oak Shores Camping and RV Resort, a 455-site RV community located in Stella, North Carolina, for a purchase price of $20.5 million. The acquisition was funded with available cash.
On April 10, 2019, we completed the acquisition of Round Top RV Campground, a 391-site RV community located in Gettysburg, Pennsylvania, for a purchase price of $12.4 million. This acquisition was funded with available cash and an assumed loan. The $5.9a loan assumption of approximately $7.8 million, excluding mortgage premium of $0.2 million.
On March 25, 2019, we completed the acquisitions of Drummer Boy Camping Resort, a 465-site RV community located in Gettysburg, Pennsylvania, and Lake of the Woods Campground, a 303-site RV community located in Wautoma, Wisconsin, for a total purchase price of $25.4 million. These acquisitions were funded with available cash and a loan has an interest rateassumption of 4.6% that maturesapproximately $10.8 million, excluding mortgage premium of $0.4 million.
Dispositions
On January 23, 2019, we closed on the sale of 5 all-age MH communities located in 2040.Indiana and Michigan, collectively containing 1,463 sites, for $89.7 million and recognized a gain of $52.5 million, net of transaction costs, during the first quarter of 2019.

Note 67 – Investment in Unconsolidated Joint Ventures
On August 8, 2017, we contributed approximately $30.0 million to acquire a 49% interest in Florida Atlantic Holding, LLC ("Loggerhead"). Loggerhead owns a portfolio of 11 marinas located in Florida. The contribution was funded by net proceeds from sales of common stock under our ATM equity offering program. Our ownership interest in Loggerhead is accounted for under the equity method of accounting.
On June 15, 2017, we entered into a joint venture agreement to purchase Crosswinds Mobile Home Park, a 376-site manufactured home community located in St. Petersburg, Florida. The purchase price of the Property was $18.4 million. We contributed $2.2 million for a 49% equity interest in the joint venture. The joint venture is accounted for under the equity method of accounting. As part of the transaction, we issued a short term loan of $13.8 million to the joint venture. The loan bears interest at 5% per annum, can be repaid with no penalty prior to maturity and matures on December 12, 2017.







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Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements
Note 6 – Investment in Unconsolidated Joint Ventures (continued)



The following table summarizes our investment in unconsolidated joint ventures (investment amounts in thousands with the number of Properties shown parenthetically as of September 30, 20172020 and December 31, 2016)2019, respectively):
    Investment as ofIncome/(Loss) for
Nine Months Ended
InvestmentLocation Number of Sites
Economic
Interest (a)
September 30, 2020December 31, 2019September 30, 2020September 30, 2019
MeadowsVarious (2,2)1,077 50 %$0 $146 $1,404 $1,200 
LakeshoreFlorida (3,3)721 (b)2,328 2,467 313 183 
VoyagerArizona (1,1)1,801 50 %
(c)
373 599 153 2,938 
LoggerheadFlorida2,343 0 %
(d)
0 0 0 3,501 
ECHO JVVarious0 50 %17,232 16,862 369 455 
5,942 $19,933 $20,074 $2,239 $8,277 
         Investment as of 
Joint Venture Income/(Loss) for the
Nine Months Ended
Investment Location 
 Number of 
Sites (d)
 
Economic
Interest (a)
  September 30,
2017		 December 31,
2016		 September 30,
2017		 September 30,
2016
Meadows Various (2,2) 1,077
 50%  $170
 $510
 $1,610
 $1,026
Lakeshore Florida (3,2) 720
 (b)
  2,170
 56
 10
 250
Voyager Arizona (1,1) 1,801
 50%
(c) 
 3,455
 3,376
 795
 902
Loggerhead Florida 2,343
 49%  31,646
 —
 230
 —
ECHO JV Various —
 50%  15,525
 15,427
 231
 (36)
    5,941
    $52,966
 $19,369
 $2,876
 $2,142
_____________________
_____________________
(a)The percentages shown approximate our economic interest as of September 30, 2020. Our legal ownership interest may differ.
(a)The percentages shown approximate our economic interest as of September 30, 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.
(d)Loggerhead sites represent slip count.
(b)Includes 2 joint ventures in which we own a 65% interest and the Crosswinds joint venture in which we own a 49% interest.
(c)Primarily consists of a 50% interest in Voyager RV Resort and a 33% interest in the utility plant servicing this Property.
(d)On September 10, 2019, we completed the acquisition of the remaining interest in the Loggerhead joint venture. Loggerhead sites represent marina slip count.
We received approximately $2.7$2.4 million and $5.5$10.7 million in distributions from theseour unconsolidated joint ventures for the nine months ended September 30, 20172020 and 2016,2019, respectively. Approximately $0.1$1.8 million and $0.6$3.2 million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the quarter and nine months ended September 30, 2017,2020 and 2019, respectively, and as such, were recorded as income from unconsolidated joint ventures. None of the distributions made






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Equity LifeStyle Properties, Inc.
Notes to us exceeded our basis in joint ventures for the quarter and nine months ended September 30, 2016.Consolidated Financial Statements

Note 78 – Borrowing Arrangements
Mortgage Notes Payable
AsOur mortgage notes payable is classified as Level 2 in the fair value hierarchy. The following table presents the fair value of September 30, 2017 and December 31, 2016, we had outstandingour mortgage indebtedness of approximately $1,981.6 million and $1,891.9 million, respectively, net of deferred financing costs.notes payable:
As of September 30, 2020As of December 31, 2019
(amounts in thousands)Fair ValueCarrying ValueFair ValueCarrying Value
Mortgage notes payable, excluding deferred financing costs$2,681,820 $2,479,066 $2,227,185 $2,072,416 

The weighted average interest rate on our outstanding mortgage indebtedness, including the impact of premium/discount amortization and loan cost amortization on mortgage indebtedness, for the nine months endedas of September 30, 20172020, was approximately 4.8%4.2% per annum. The debt bears interest at stated rates ranging from 3.5%2.5% to 8.9% per annum and matures on various dates ranging from 20182022 to 2041. The debt encumbered a total of 128114 and 126116 of our Properties as of September 30, 20172020 and December 31, 2016,2019, respectively, and the gross carrying value of such Properties was approximately $2,396.2$2,551.9 million and $2,296.6$2,524.7 million, as of September 30, 20172020 and December 31, 2016,2019, respectively.
2020 Activity
During the quarter ended March 31, 2020, we entered into a $275.4 million secured credit facility with Fannie Mae, maturing in 10 years and bearing a 2.7% interest rate. The facility is secured by 8 MH and 4 RV communities. We also repaid $48.1 million of principal on 3 mortgage loans that were due to mature in 2020, incurring $1.0 million of prepayment penalties. These mortgage loans had a weighted average interest rate of 5.2% per annum and were secured by 3 MH communities.
During the quarter ended September 30, 2017,2020, we entered into three new loans, each secured by a manufactured home community, totaling $146.0Secured Credit Facility with Fannie Mae for $386.9 million. The loans have a stated interest rateloan consists of 4.07% and mature in 2037.
During the quarter ended September 30, 2017, we also paid off one maturing mortgage loan of $6.9 million,two tranches with a weighted average interest rate of 6.47%2.55% per annum secured by one manufactured home community.
In connection with the Paradise Park Largo acquisition during the quarter ended June 30, 2017, we assumed approximately $5.9and a weighted average maturity of 13.4 years. The first tranche generated proceeds of $202.0 million of mortgage debt secured by the manufactured home community with an interest rate of 4.6% that matures2.47% per annum and a maturity of 12 years. The second tranche generated proceeds of $184.9 million with an interest rate of 2.64% per annum and a maturity of 15 years. The loan is secured by 10 MH communities. The net proceeds from the transaction were primarily used to repay our $200.0 million unsecured term loan scheduled to mature in 2040.2023 and $166.8 million of secured loans scheduled to mature in 2021. The unsecured term loan had an interest rate of LIBOR plus 1.20% to 1.90% per annum and, subject to certain conditions, could be prepaid at any time without premium or penalty. In connection with the term loan, we entered into a LIBOR swap agreement allowing us to trade the variable rate of LIBOR on the term loan for a fixed interest rate of 1.85%. Our spread over LIBOR was 1.20% resulting in an all-in interest rate of 3.05% per annum. In connection with the repayment of the unsecured term loan, we terminated the associated swap agreement as disclosed in Note 9. Derivative Instruments and Hedging Activities. The secured loans had a weighted average interest rate of approximately 5.0% per annum. As part of the repayment of the loans, we incurred early debt retirement costs of $8.8 million.
2019 Activity
During the quarter ended March 31, 2017,2019, we paid off one maturingdefeased mortgage loandebt of approximately $21.1$11.2 million in conjunction with the disposition of 5 all-age MH communities as disclosed in Note 6. Investment in Real Estate. These loans had a weighted average interest rate of 5.76%5.0% per annum. We also assumed mortgage debt of $10.8 million, excluding mortgage note premium of $0.4 million, as a result of the acquisitions that were closed during the quarter. This loan carries an interest rate of 5.5% per annum and matures in 2024.
During the quarter ended June 30, 2019, we repaid $66.8 million of principal on 4 mortgage loans that were due to mature in 2020, incurring $1.4 million of prepayment penalties. These loans had a weighted average interest rate of 6.9% per annum and were secured by one manufactured home3 MH communities and 1 RV community. We also assumed mortgage debt of $7.8 million, excluding mortgage note premium of $0.2 million, as a result of the acquisitions that were closed during the quarter as disclosed in Note 6. Investment in Real Estate. This loan carries an interest rate of 5.3% per annum and matures in 2022.
Unsecured Line of Credit
During the nine months ended September 30, 2020, we borrowed and paid off amounts on our unsecured Line of Credit ("LOC"), leaving a balance of $50.0 million outstanding as of September 30, 2020. As of September 30, 2017, we are in compliance in all material respects with the covenants in2020, our borrowing arrangements.

LOC has a
13
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Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements



Note 8 – Borrowing Arrangements (continued)

remaining borrowing capacity of $350.0 million with the option to increase the borrowing capacity by $200.0 million, subject to certain conditions. The LOC had $160.0 million outstanding at December 31, 2019.
As of September 30, 2020, we were in compliance in all material respects with the covenants in all our borrowing arrangements.

Note 9 – Derivative Instruments and Hedging
Cash Flow Hedges of Interest Rate Risk
We record all derivatives at fair value. Our objective in utilizing interest rate derivatives is to add stability to our interest expense and to manage our exposure to interest rate movements. We do not enter into derivatives for speculative purposes. During the quarter ended September 30, 2020, in connection with the repayment of our $200.0 million unsecured term loan (See Note 8. Borrowing Arrangements for additional information), we terminated the interest rate swap that was scheduled to mature on November 1, 2020. As a result of the interest rate swap termination, we incurred an early termination fee of $0.9 million, which was recognized in the Consolidated Statements of Income and Comprehensive Income.
Our derivative financial instrument was classified as Level 2 in the fair value hierarchy. The following table presents the fair value of our derivative financial instrument:
As of September 30,As of December 31,
(amounts in thousands)Balance Sheet Location20202019
Interest Rate SwapAccounts payable and other liabilities$0 $380 

The following table presents the effect of our derivative financial instrument on the Consolidated Statements of Income and Comprehensive Income:
Derivatives in Cash Flow Hedging RelationshipAmount of (gain)/loss recognized
in OCI on derivative
for the nine months ended September, 30		Location of (gain)/ loss reclassified from
accumulated OCI into income		Amount of (gain)/loss reclassified from
accumulated OCI into income
for the nine months ended September 30,
(amounts in thousands)20202019(amounts in thousands)20202019
Interest Rate Swap$1,561 $1,957 Interest Expense$1,941 $(841)

Note 810 – Equity Incentive Awards
Stock-based compensation expense, reported in general and administrative on the Consolidated Statements of Income and Comprehensive Income, for the quarters ended September 30, 2017 and 2016 was approximately $2.6 million and $2.4 million, respectively, and for both the nine months ended September 30, 2017 and 2016 was approximately $6.8 million.
Our 2014 Equity Incentive Plan (the “2014 Plan”) was adopted by ourthe Board of Directors on March 11, 2014 and approved by our stockholders on May 13, 2014. Pursuant toDuring the 2014 Plan, our officers, directors, employees and consultants may be awarded (i)quarter ended March 31, 2020, 90,933 shares of commonrestricted stock (“Restricted Stock”), (ii) optionswere awarded 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 Committeecertain members of our Boardmanagement team. Of these shares, 50% are time-based awards, vesting in equal installments over a three-year period on January 29, 2021, January 31, 2022, and January 27, 2023, respectively, and have a grant date fair value of Directors (the “Compensation Committee”).$3.3 million. The Compensation Committee will determine theremaining 50% are performance-based awards vesting schedule, if any, of each Restricted Stock Grant or Optionin equal installments on January 29, 2021, January 31, 2022, 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 30, 2017, 3,126,885 shares remained available for grant.
Grants under the 2014 Plan are approvedJanuary 27, 2023, respectively, upon meeting performance conditions as established by the Compensation Committee which determinesin the individuals eligibleyear of the vesting period. They are valued using the closing price at the grant date when all the key terms and conditions are known to receive awards,all parties. The 15,154 shares of restricted stock subject to 2020 performance goals have a grant date fair value of $1.1 million.
During 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.
On May 2, 2017,quarter ended September 30, 2020, we awarded to certain members of our Board of Directors 55,23860,171 shares of Restricted Stockrestricted stock at a fair market value of approximately $4.5$4.0 million and Optionsoptions to purchase 6,93016,090 shares of common stock with an exercise price of $81.15 per share. The shares of common stock covered by these$66.81. These are time-based awards are subject to multiple tranches that vestvarious vesting dates between November 2, 2017January 28, 2021 and May 2, 2020.July 28, 2023.
On February 1, 2017, we awarded 75,000 shares of Restricted Stock at a fair market value of approximately $5.4 million to certain members of our senior management for their servicebased compensation expense, reported in 2017. These restricted stock grants will vest on December 31, 2017.
The fair market value of our restricted stock grants was determined by using the closing share price of our common stockGeneral and administrative expense on the dateConsolidated Statements of Income and Comprehensive Income, for the shares were issuedquarters ended September 30, 2020 and is recorded as compensation expense2019, was $2.9 million and paid in capital over$2.7 million, respectively, and for the vesting period.nine months ended September 30, 2020 and 2019, was $8.5 million and $7.8 million, respectively.

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Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 911 – Commitments and Contingencies
Hurricane Irma
Based on our assessment and available information as of the quarter ended September 30, 2017, we recognized expense of $3.7 million during the quarter and nine months ended September 30, 2017 related to property damage and restoration work that had been reasonably estimated and/or completed to date at our Florida properties as a result of Hurricane Irma. Based on our evaluation of these costs and our review of the potential insurance claim and our estimate of the related deductible, we recorded a revenue accrual of $3.5 million during the quarter and nine months ended September 30, 2017. As of September 30, 2017, while we expect additional amounts to be identified in the future, we cannot estimate the total expenses or recoveries related to Hurricane Irma.
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

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Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements
Note 9 – Commitments and Contingencies (continued)


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.
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.

Settlement of California Lawsuits
On 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 the three plaintiff groups was represented by the same law firm and alleged that the Company failed to properly maintain the 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 $1.9 million to be paid to settle the 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 settlement agreements, all plaintiffs provided full releases to each of the defendants and their affiliates including with respect to the claims alleged in the lawsuits, and each of the 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 costs, risks and uncertainties inherent in 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.
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, legal claims made by employees, vendors and customers, and 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.

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Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements
Note 9 – Commitments and Contingencies (continued)


Management believes these Other Proceedings taken together do not represent a material liability. In addition, to the extent any such proceedingsProceedings or audits relate to newly acquired Properties, we consider any potential indemnification obligations of sellers in our favor.
The Operating Partnership operates and manages Westwinds, a 720 site mobilehome community, and Nicholson Plaza, an adjacent shopping center, both located in San Jose, California pursuant to ground leases that expire on August 31, 2022 and do not contain extension options. The master lessor of these ground leases, The Nicholson Family Partnership (the “Nicholsons”), has expressed a desire to redevelop Westwinds, and in a written communication, they claimed that we were obligated to deliver the property free and clear of any and all subtenancies upon the expiration of the ground leases on August 31, 2022. In connection with any redevelopment, the City of San Jose’s conversion ordinance requires, among other things, that the landowner provide relocation, rental and purchase assistance to the impacted residents.
We believe the Nicholsons’ demand is unlawful, and on December 30, 2019, the Operating Partnership, together with certain interested parties, filed a complaint in California Superior Court for Santa Clara County, seeking declaratory relief pursuant to which it requested that the Court determine, among other things, that the Operating Partnership has no obligation to deliver the property free and clear of the mobilehome residents upon the expiration of the ground leases. The Operating Partnership and the interested parties filed an amended complaint on January 29, 2020. The Nicholsons filed a demand for arbitration on January 28, 2020, which they subsequently amended, pursuant to which they request (i) a declaration that the Operating Partnership, as the “owner and manager” of Westwinds, is “required by the Ground Leases, and State and local law to deliver the Property free of any encumbrances or third-party claims at the expiration of the lease terms,” (ii) that the Operating Partnership anticipatorily breached the ground leases by publicly repudiating any such obligation and (iii) that the Operating Partnership is required to indemnify the Nicholsons with respect to the claims brought by the interested parties in the Superior Court proceeding.
On February 3, 2020, the Nicholsons filed a motion in California Superior Court to compel arbitration and to stay the Superior Court litigation, which motion was heard on June 25, 2020. On July 29, 2020, the Superior Court issued a final order denying the Nicholson’s motion to compel arbitration. The Nicholsons filed a notice of appeal on August 7, 2020. The Nicholson’s claim that the Operating Partnership is required to indemnify the Nicholsons for legal fees with respect to the claims brought by the third parties in the Superior Court litigation is proceeding in the arbitration.
We intend to continue to vigorously defend our interests in this matter. As of September 30, 2020 we have not made an accrual, as we are unable to predict the outcome of this matter or reasonably estimate any possible loss.
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Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 1012 – Reportable Segments

We have identified two2 reportable segments which are:segments: (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.
All revenues arewere from external customers and there is no customer who contributed 10% or more of our total revenues during the quarters and nine months ended September 30, 20172020 or 2016.2019.
The following tables summarize our segment financial information for the quarters and nine months ended September 30, 20172020 and 2016 (amounts in thousands):2019:
Quarter EndedSeptember 30, 2017
2020
Property
Operations
 
Home Sales
and Rentals
Operations
 Consolidated
(amounts in thousands)(amounts in thousands)Property
Operations		Home Sales
and Rentals
Operations		Consolidated
Operations revenues$223,184
 $14,415
 $237,599
Operations revenues$264,284 $17,473 $281,757 
Operations expenses(110,431) (13,528) (123,959)Operations expenses(132,780)(15,825)(148,605)
Income from segment operations112,753
 887
 113,640
Income from segment operations131,504 1,648 133,152 
Interest income773
 1,042
 1,815
Interest income1,104 694 1,798 
Depreciation on real estate assets and rental homes(27,879) (2,614) (30,493)
Amortization of in-place leases(138) —
 (138)
Depreciation and amortizationDepreciation and amortization(35,878)(2,703)(38,581)
Income (loss) from operations$85,509
 $(685) $84,824
Income (loss) from operations$96,730 $(361)$96,369 
Reconciliation to Consolidated net income:     
Reconciliation to consolidated net income:Reconciliation to consolidated net income:
Corporate interest income    159
Corporate interest income3 
Income from other investments, net    2,052
Income from other investments, net1,428 
General and administrative    (7,505)General and administrative(9,692)
Property rights initiatives and other    (324)
Other expensesOther expenses(658)
Interest and related amortization    (25,027)Interest and related amortization(25,218)
Equity in income of unconsolidated joint ventures    686
Equity in income of unconsolidated joint ventures968 
Early debt retirementEarly debt retirement(9,732)
Consolidated net income    $54,865
Consolidated net income$53,468 
     
Total assets$3,298,122
 $227,725
 $3,525,847
Total assets$3,997,064 $263,349 $4,260,413 
Capital improvementsCapital improvements$40,387 $11,527 $51,914 



Quarter Ended September 30, 2019
(amounts in thousands)Property
Operations		Home Sales
and Rentals
Operations		Consolidated
Operations revenues$249,632 $12,668 $262,300 
Operations expenses(122,683)(11,070)(133,753)
Income from segment operations126,949 1,598 128,547 
Interest income985 840 1,825 
Depreciation and amortization(34,273)(2,759)(37,032)
Income (loss) from operations$93,661 $(321)$93,340 
Reconciliation to consolidated net income:
Corporate interest income6 
Income from other investments, net7,029 
General and administrative(8,710)
Other expenses(1,460)
Interest and related amortization(25,547)
Equity in income of unconsolidated joint ventures3,518 
Early debt retirement0 
Consolidated net income$68,176 
Total assets$3,871,379 $266,092 $4,137,471 
Capital improvements$26,000 $42,344 $68,344 
16
18


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 1012 – Reportable Segments (continued)



Quarter EndedSeptember 30, 2016
 
Property
Operations
 
Home Sales
and Rentals
Operations
 Consolidated
Operations revenues$207,162
 $14,655
 $221,817
Operations expenses(101,640) (13,422) (115,062)
Income from segment operations105,522
 1,233
 106,755
Interest income711
 1,056
 1,767
Depreciation on real estate assets and rental homes(26,804) (2,714) (29,518)
Amortization of in-place leases(1,376) —
 (1,376)
Income (loss) from operations$78,053
 $(425) $77,628
Reconciliation to Consolidated net income:     
Corporate interest income    —
Income from other investments, net    2,581
General and administrative    (7,653)
Property rights initiatives and other    (855)
Interest and related amortization    (25,440)
Equity in income of unconsolidated joint ventures    496
Consolidated net income    $46,757
      
Total assets$3,238,699
 $231,684
 $3,470,383


Nine Months EndedSeptember 30, 2017
2020
Property
Operations
 
Home Sales
and Rentals
Operations
 Consolidated
(amounts in thousands)(amounts in thousands)Property
Operations		Home Sales
and Rentals
Operations		Consolidated
Operations revenues$648,766
 $37,100
 $685,866
Operations revenues$764,913 $46,147 $811,060 
Operations expenses(310,337) (33,604) (343,941)Operations expenses(369,974)(41,468)(411,442)
Income from segment operations338,429
 3,496
 341,925
Income from segment operations394,939 4,679 399,618 
Interest income2,256
 3,122
 5,378
Interest income3,240 2,148 5,388 
Depreciation on real estate assets and rental homes(82,939) (7,910) (90,849)
Amortization of in-place leases(2,128) —
 (2,128)
Depreciation and amortizationDepreciation and amortization(107,709)(8,228)(115,937)
Income (loss) from operations$255,618
 $(1,292) $254,326
Income (loss) from operations$290,470 $(1,401)$289,069 
Reconciliation to Consolidated net income:     
Reconciliation to consolidated net income:Reconciliation to consolidated net income:
Corporate interest income    164
Corporate interest income11 
Income from other investments, net    3,918
Income from other investments, net3,093 
General and administrative    (23,339)General and administrative(31,156)
Property rights initiatives and other    (814)
Other expensesOther expenses(1,885)
Interest and related amortization    (74,728)Interest and related amortization(77,540)
Equity in income of unconsolidated joint ventures    2,876
Equity in income of unconsolidated joint ventures2,239 
Early debt retirementEarly debt retirement(10,786)
Consolidated net income    $162,403
Consolidated net income$173,045 
     
Total assets$3,298,122
 $227,725
 $3,525,847
Total assets$3,997,064 $263,349 $4,260,413 
Capital improvements$52,040
 $35,837
 $87,877
Capital improvements$110,544 $44,517 $155,061 


Nine Months Ended September 30, 2019
(amounts in thousands)Property
Operations		Home Sales
and Rentals
Operations		Consolidated
Operations revenues$729,496 $34,841 $764,337 
Operations expenses(348,546)(30,547)(379,093)
Income from segment operations380,950 4,294 385,244 
Interest income2,829 2,535 5,364 
Depreciation and amortization(105,013)(7,772)(112,785)
Gain on sale of real estate, net52,507 0 52,507 
Income (loss) from operations$331,273 $(943)$330,330 
Reconciliation to consolidated net income:
Corporate interest income21 
Income from other investments, net8,894 
General and administrative(27,844)
Other expenses(2,427)
Interest and related amortization(77,964)
Equity in income of unconsolidated joint venture8,277 
Early debt retirement(1,491)
Consolidated net income$237,796 
Total assets$3,871,379 $266,092 $4,137,471 
Capital Improvements$78,907 $110,881 $189,788 
17
19


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 1012 – Reportable Segments (continued)



Nine Months Ended September 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 operations318,545
 3,766
 322,311
Interest income2,164
 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

The following table summarizes our financial information for the Property Operations segment for the quarters and nine months ended September 30, 20172020 and 2016 (amounts in thousands):    2019:
 Quarters Ended September 30,Nine Months Ended September 30,
(amounts in thousands)2020201920202019
Revenues:
Rental income$234,711 $221,306 $683,960 $649,663 
Annual membership subscriptions13,442 13,150 39,476 38,052 
Membership upgrade sales current period, gross6,631 5,730 16,522 14,609 
Membership upgrade sales upfront payments, deferred, net(4,171)(3,530)(9,379)(8,213)
Other income12,268 11,263 33,007 31,898 
Ancillary services revenues, net1,403 1,713 1,327 3,487 
Total property operations revenues264,284 249,632 764,913 729,496 
Expenses:
Property operating and maintenance97,848 89,162 264,159 249,482 
Real estate taxes15,981 15,166 49,490 45,596 
Sales and marketing, gross5,054 4,063 13,308 11,686 
Membership sales commissions, deferred, net(630)(313)(1,327)(893)
Property management14,527 14,605 44,344 42,675 
Total property operations expenses132,780 122,683 369,974 348,546 
Income from property operations segment$131,504 $126,949 $394,939 $380,950 
 Quarters Ended Nine Months Ended
 September 30,
2017		 September 30,
2016		 September 30,
2017		 September 30,
2016
Revenues:       
Community base rental income$123,177
 $117,164
 $365,833
 $346,625
Resort base rental income58,471
 54,486
 169,594
 154,652
Right-to-use annual payments11,531
 11,349
 34,133
 33,590
Right-to-use contracts current period, gross4,208
 3,672
 11,212
 9,290
Right-to-use contract upfront payments, deferred, net(1,670) (1,327) (3,766) (2,427)
Utility and other income26,295
 21,174
 69,071
 61,490
Ancillary services revenues, net1,172
 644
 2,689
 1,852
Total property operations revenues223,184
 207,162
 648,766
 605,072
Expenses:       
Property operating and maintenance80,164
 73,410
 221,119
 203,011
Real estate taxes14,006
 13,467
 41,986
 39,534
Sales and marketing, gross3,277
 3,100
 8,861
 8,524
Right-to-use contract commissions, deferred, net(176) (200) (372) (212)
Property management13,160
 11,863
 38,743
 35,670
Total property operations expenses110,431
 101,640
 310,337
 286,527
Income from property operations segment$112,753
 $105,522
 $338,429
 $318,545







18

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements
Note 10 – Reportable Segments (continued)



The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters and nine months ended September 30, 20172020 and 2016 (amounts in thousands):2019:
Quarters Ended September 30,Nine Months Ended September 30,
Quarters Ended Nine Months Ended
September 30,
2017		 September 30,
2016		 September 30,
2017		 September 30,
2016
(amounts in thousands)(amounts in thousands)2020201920202019
Revenues:       Revenues:
Rental income (a)
Rental income (a)
$4,158 $3,810 $12,218 $11,026 
Gross revenue from home sales$10,012
 $10,895
 $24,872
 $28,239
Gross revenue from home sales13,070 8,438 33,245 22,738 
Brokered resale revenues, net337
 276
 925
 884
Brokered resale revenues, net245 420 684 1,077 
Rental home income (a)
3,592
 3,484
 10,829
 10,572
Ancillary services revenues, net474
 —
 474
 —
Ancillary services revenues, net0 0 0 0 
Total revenues14,415
 14,655
 37,100
 39,695
Total revenues17,473 12,668 46,147 34,841 
Expenses:       Expenses:
Rental home operating and maintenanceRental home operating and maintenance1,718 1,603 4,306 4,099 
Cost of home sales10,377
 10,745
 25,391
 28,507
Cost of home sales12,866 8,434 33,627 23,230 
Home selling expenses1,447
 909
 3,301
 2,548
Home selling expenses1,241 1,033 3,535 3,218 
Rental home operating and maintenance1,704
 1,768
 4,912
 4,874
Total expenses13,528
 13,422
 33,604
 35,929
Total expenses15,825 11,070 41,468 30,547 
Income from home sales and rentals operations segment$887
 $1,233
 $3,496
 $3,766
Income from home sales and rentals operations segment$1,648 $1,598 $4,679 $4,294 
______________________
(a)
Segment information does not include Site rental income included in Community base rental income.

(a)Rental income within Home Sales and Rentals Operations does not include base rent related to the rental home Sites. Base rent is included within property operations.


Note 11 -13 – Subsequent Events
DuringIn October 2017,2020, we sold 336,290 shares of common stock as part ofcompleted the ATM equity offering programacquisition of:
•Marina Dunes RV Park, an 89-site RV community located in Marina, California, and Acorn Campground, a 323-site RV community in Green Creek, New Jersey. The total aggregate purchase price for these properties was $36.0 million, which was funded with available cash.
•NaN development properties, The Resort at Tranquility Lake, a weighted averageplanned 500-site RV community located in Cape Coral, Florida and Bayport, a planned 900-site RV community located in Jamaica, Virginia, for a total aggregate purchase price of $85.13, resulting in net cash proceeds$16.3 million. These acquisitions were funded with available cash.
•NaN parcels of $28.3 million. Our Board of Directors has approvedland adjacent to our properties for a new ATM equity offering program having antotal aggregate offeringpurchase price of up to $200.0 million.$1.6 million, which was funded with available cash.
On October 16, 2017, we entered into a $204 million secured facility with Fannie Mae, maturing in 2037 and bearing a 3.97% fixed interest rate. The loan is secured by five manufactured home communities. We used the proceeds to pay, in full, $194.2 million of loans that would have matured in 2018. We incurred approximately $2.2 million in prepayment penalties associated with the debt repayment.
20
On October 27, 2017, we entered into a Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”) by and among us, MHC Operating Limited Partnership, Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”) and other lenders named therein, which amends and restates the terms of the obligations owed by us under the Amended, Restated and Consolidated Credit Agreement dated as of July 17, 2014 pursuant to which we have access to a $400 million unsecured line of credit (the “LOC”) and the $200 million senior unsecured term loan facility (the “Term Loan”). The LOC maturity date was extended to October 27, 2021, and this term can be extended an additional year in two six month increments, subject to certain conditions. The LOC bears interest at a rate of LIBOR plus 1.10% to 1.55% and requires an annual facility fee of 0.15% to 0.35%. 
We also extended the term of our Term Loan. The Term Loan now matures on April 27, 2023 and has an interest rate of LIBOR plus 1.20% to 1.90% per annum. For both the LOC and Term Loan, the spread over LIBOR is variable based on leverage throughout the respective loan terms. We incurred commitment and arrangement fees of approximately $3.6 million to enter into the Second Amended and Restated Credit Agreement.





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 Statementsconsolidated financial statements and related Notesaccompanying notes thereto 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 with2019 ("2019 Form 10-K"), as well as information in the information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report2019 Form 10-K. All shares of common stock ("Common Shares") and units of common interests in our Operating Partnership ("OP Units") as well as per share results reflect the two-for-one stock split that was completed on Form 10-KOctober 15, 2019.
On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus (COVID-19) a pandemic. See the COVID-19 Pandemic Update ("COVID Update") section below for a discussion of the year ended December 31, 2016.impact on our business to date, including operational changes we have implemented, performance indicators such as rent collections and factors that we anticipate will inform our future decisions and actions. The current operating environment is changing rapidly. Our future response and the resulting impact on our business is difficult to predict. The extent of the impact that the COVID-19 pandemic will have on our business going forward, including our financial condition, results of operations and cash flows, is dependent on multiple factors, many of which are unknown. For additional details, see Item 1A. Risk Factors.
Overview and Outlook
We are a self-administered and 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.communities. As of September 30, 2017,2020, we owned or had an ownership interest in a portfolio of 404413 Properties located throughout the United States and Canada containing 149,448 Sites.157,278 individual developed areas ("Sites"). These propertiesProperties are located in 3233 states and British Columbia, with more than 90 Properties with lake, river or ocean frontage and more than 100120 Properties within 10 miles of the coastal United States.

We invest in properties in sought-after locations near retirement and vacation destinations and urban areas across the United States with a focus on delivering value to our residents and guests as well as stockholders. Our business model is intended to provide an opportunity for increased cash flows and appreciation in value. We seek growth in earnings, Funds from Operations ("FFO") and cash flows by enhancing the profitability and operation of our Properties and investments. We accomplish this by attracting and retaining high quality customers to our Properties, who take pride in our Properties and in their homes, and efficiently managing our Properties by increasing occupancy, maintaining competitive market rents and controlling expenses. We also actively pursue opportunities that fit our acquisition criteria and are currently engaged in various stages of negotiations relating to the possible acquisition of additional properties.
We believe the demand from baby boomers for MH and RV communities will continue to be strong over the long term. It is estimated that approximately 10,000 baby boomers are turning 65 daily through 2030. In addition, the population age 55 and older is expected to grow 18% from 2020 to 2035. These individuals, seeking an active lifestyle, will continue to drive the market for second home sales as vacation properties, investment opportunities or retirement retreats. We expect it is likely that over the next decade, we will continue to see high levels of second-home sales and that manufactured homes and cottages in our Properties will continue to provide a viable second-home alternative to site-built homes. We also believe the Millennial and Generation X demographic will contribute to our future long-term customer pipeline. Millennials and Generation X combined represent over half of RV buyers. There is an increasing trend among these groups to adopt a minimalist lifestyle due to its affordability, preference over home quality relative to its size and the overall unique experience that our communities can provide. We believe the demand from baby boomers and these younger generations will continue to outpace supply for MH and RV communities. The entitlement process to develop new MH and RV communities is extremely restrictive. As a result, there have been limited new communities developed in our target geographic markets.
We generate the majority of our revenues from customers renting our Sites or entering into right-to-use contracts, (also referred toalso known as membership products)subscriptions, which provide our customersthem access to specific Properties for limited stays. Our MH community Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. Annual RV and annual RV resortmarina Sites are leased on an annual basis.basis to customers who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those Northern properties that are open for the summer season. Seasonal RV and marina Sites are leased to customers generally for one to six months. Transient RV and marina 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 106,900We also generate revenue from customers who have entered into right-to-use contracts (otherwise referred to as "memberships") and who pay annual membership dues.

We alsorenting our marina dry storage. Additionally, we have interests in joint venture Properties for which revenue is classified as Equity in income from unconsolidated joint ventures inon the Consolidated Statements of Income and Comprehensive Income. During the quarter, we contributed approximately $30.0 million to acquire a 49% interest in Florida Atlantic Holding, LLC ("Loggerhead"). Loggerhead owns a portfolio of 11 marinas located in Florida.

21
Management's Discussion and Analysis (continued)

The following table shows the breakdown of our Sites by type are as follows (amounts are approximate):
Total Sites as of September 30, 20172020
CommunityMH Sites71,100
72,500 
ResortRV Sites:
Annual26,600
29,900 
Seasonal11,200
10,200 
Transient10,500
14,100 
Marina Slips2,300 
Right-to-useMembership (1)
24,100
24,600 
Joint Ventures (2)
5,900
3,600 
Total (3)
149,400
157,300 
_________________________ 
(1)
Includes approximately 5,700 Sites rented on an annual basis.
(2)
Joint ventures have approximately 2,700 annual Sites, 400 seasonal Sites, and 500 transient Sites and includes approximately 2,300 marina slips.

(1)Primarily utilized to service the approximately 117,900 members. Includes approximately 6,000 Sites rented on an annual basis.
(2)Includes approximately 2,900 annual Sites, 500 seasonal Sites and 200 transient Sites.
(3)Total does not foot due to rounding.
In our Home Sales and RentalRentals Operations business, our revenue streams include home sales, home rentals and brokerage services and ancillary activities. We generate revenue through home sales and rental operations by selling or leasing Site Setmanufactured homes and cottages that are located in Properties owned and managed by us. We continue to focus on our rental operations, as we believe renting our vacant new homes may representrepresents an attractive source of occupancy and thean opportunity to convert the renter to a new homebuyer in the future. We also sell and rent homes through our joint venture, ECHO Financing, LLC (the "ECHO JV"). We provideAdditionally, home sale brokerage services are offered to our residents of our Properties who movemay choose to sell their homes rather than relocate them when moving from a Property but do not relocate their home. In addition,Property. At certain Properties, we operate ancillary activities at certain Properties,facilities, such as golf courses, pro shops, stores and restaurants.
In the manufactured housing industry, options for home financing, also known as chattel financing, options are limited. FinancingChattel financing options available today include community owner fundedowner-funded programs or third partythird-party lender programs that provide subsidized financing to customers and often require the community owner to guarantee customer defaults. Third partyThird-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 homeshomebuyers at our Properties.

20
Management's Discussion (continued)

We 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 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 managing our Properties to increase operating margins by increasing occupancy, maintaining competitive market rents and controlling expenses.
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.
In addition to Netnet income computed in accordance with GAAP,U.S. Generally Accepted Accounting Principles ("GAAP"), we assess and measure our overall financial and operating performance using certain Non-GAAP supplemental measures, which include: (i) FFO, (ii) Normalized fundsFunds from operationsOperations ("NFFO"Normalized FFO"), (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 propertiesProperties 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 OverviewCOVID-19 Pandemic Update
NetSince the COVID-19 pandemic began, we have taken actions to prioritize the safety and security of our employees, residents and customers, while maintaining our high-quality standards in service to our residents and customers. We have implemented and may continue to implement Center for Disease Control ("CDC") and local public health department guidelines and protocols for social distancing and enhanced community and office cleaning procedures. Our property offices continue to be open to residents and customers by appointment only. All properties continue to be open subject to state and local guidelines. Some of the amenities at certain properties remain closed due to state and local guidelines. We are closely monitoring these guidelines and may limit future transient reservations as necessary and appropriate.
With consideration for the hardship our residents and customers might have experienced as a result of COVID-19 and in response to certain regulatory guidelines, during the second quarter of 2020, we offered a rent deferral program, waived late fees and RV cancellation fees, and allowed extended stays for Thousand Trails members as a result of shelter-in-place orders and suspended eviction proceedings. These measures were discontinued during the third quarter of 2020 as properties reopened and COVID-19 restrictions were lifted. While we temporarily suspended mailing MH rent increase notices in April and May 2020, we resumed mailing MH rent increase notices in June 2020. By the end of October 2020, we will have sent 2021 rent increase notices to 48% of our MH residents and we will have set RV annual rates for the 2021 season for 90% of our annual sites.
22
Management's Discussion and Analysis (continued)

In response to COVID-19, we introduced an emergency time-off program for our property employees that provides incremental pay for up to two weeks. In addition, we also provided a one-time property employee appreciation bonus during the quarter ended June 30, 2020. Employees in our corporate and regional offices are both returning to their work locations and working remotely. We are continuing to keep our focus on employee safety and our ability to adapt to changing demands and local, federal and CDC guidelines.
The primary financial statement impact from the COVID-19 pandemic has been a reduction of transient RV rental income. We have seen positive demand since our properties reopened to transient RV reservation at the beginning of June 2020 when shelter-in-place orders were lifted. During the third quarter of 2020, we recognized $24.4 million of transient RV rental income available for Common Stockholders increased $7.5in our Core Portfolio, an increase of $1.7 million, or 7.3%, compared to $48.5$22.7 million for the same period in 2019. The increase was evidenced in the North, South and Northeast as overall performance in these regions rebounded late in the third quarter after certain COVID-19 restrictions had been lifted.
Our Thousand Trail Camping ("TTC") membership sales continued to see positive demand as COVID-19 restrictions were lifted, as TTC sales volume increased 24% in the third quarter of 2020 compared to the same period in 2019, and our RV Dealer activations increased 15% compared to the prior year. We also saw an increase in upgrade sales of 20%, with over 1,000 membership upgrades sold during the quarter ended September 30, 2017,2020.
We continue to closely monitor cash collections as a leading indicator of the performance of our business. We have not experienced a significant change in the payment patterns and collection rates from our customers for the third quarter of 2020 as compared to $41.0 millionprevious quarters.
We attribute the solid performance of our business, as shown by our cash collection activity, increases in home sales and occupancy, and growth in transient RV rental income, to the fundamentals of our business model. Our customers have made an investment in a housing unit that is placed on land leased from us. In addition, there is continued demand for our properties. The property locations and the quarter ended September 30, 2016. Net income available for Common Stockholders increased $17.8 million,lifestyle we offer have broad appeal to $144.9 million forcustomers interested in enjoying an outdoor experience. We believe this is particularly relevant in a COVID-19 impacted environment. We intend to continue to monitor the nine months ended September 30, 2017, compared to $127.1 million forrapidly evolving situation and we may take further actions that alter our business operations as may be required and that are in the nine months ended September 30, 2016.best interests of our employees, residents, customers and shareholders.
Results Overview
For the quarter ended September 30, 2017, Funds from Operations (“FFO”)2020, net income available for Common Stock and OP Unit holders increased $7.4Stockholders decreased $13.9 million, or $0.07 per fully diluted Common Share, to $84.3$50.6 million, or $0.90$0.28 per fully diluted Common Share, compared to $76.9$64.5 million, or $0.83$0.35 per fully diluted Common Share, for the same period in 2016.2019. For the nine months ended September 30, 2017,2020, net income available for Common Stockholders decreased $60.6 million, or $0.34 per fully diluted Common Share, to $163.6 million, or $0.90 per fully diluted Common Share, compared to $224.2 million, or $1.24 per fully diluted Common Share, for the same period in 2019. The financial results for 2019 included a gain of $52.5 million on the sale of five all-age MH communities.
For the quarter ended September 30, 2020, FFO available for Common Stock and OP Unit holders increased $21.9decreased $12.8 million, or $0.22$0.06 per fully diluted Common Share, to $252.3$95.8 million, or $2.71$0.50 per fully diluted Common Share, compared to $230.4$108.6 million, or $2.49$0.56 per fully diluted Common Share, for the same period in 2016.
2019. For the quarternine months ended September 30, 2017, Normalized Funds from Operations (“Normalized FFO”)2020, FFO available for Common Stock and OP Unit holders increased $7.9decreased $8.8 million, or $0.08$0.05 per fully diluted Common Share, to $85.1$297.6 million, or $0.91$1.55 per fully diluted Common Share, compared to $77.2$306.4 million, or $0.83$1.60 per fully diluted Common Share, for the same period in 2016. 2019.
For the nine monthsquarter ended September 30, 2017,2020, Normalized FFO available for Common Stock and OP Unit holders increased $22.1$2.8 million, or $0.22$0.02 per fully diluted Common Share, to $253.4$105.5 million, or $2.72$0.55 per fully diluted Common Share, compared to $231.3$102.7 million, or $2.50$0.53 per fully diluted Common Share, for the same period in 2016.2019. For the nine months ended September 30, 2020, Normalized FFO available for Common Stock and OP Unit holders increased $7.5 million, or $0.03 per fully diluted Common Share, to $309.8 million, or $1.61 per fully diluted Common Share, compared to $302.3 million, or $1.58 per fully diluted Common Share, for the same period in 2019.
For the quarter ended September 30, 20172020, our Core Portfolio property operating revenues, in our Core Portfolio, excluding deferrals, were up 7.0%increased 4.9% and property operating expenses, in our Core Portfolio, excluding deferrals and property management, were up 6.8%increased 9.1%, from the quarter ended September 30, 2016,same period in 2019, resulting in an increase in our income from property operations, excluding deferrals and property management, of 7.2%, from1.8% compared to the quarter ended September 30, 2016.same period in 2019. For the nine months ended September 30, 20172020, our Core Portfolio property operating revenues, in our Core Portfolio, excluding deferrals, were up 5.6%increased 3.7% and property operating expenses, in our Core Portfolio, excluding deferrals and property management, were up 6.2%increased 5.0%, from the nine months ended September 30, 2016,same period in 2019, resulting in an increase in our income from property operations, excluding deferrals and property management, of 5.2%, from the nine months ended September 30, 2016.
During the quarter ended September 30, 2017, Hurricane Irma made landfall in the state of Florida. Our properties were affected by flooding, wind, wind-blown debris, fallen trees and tree branches. Overall, homes in our communities held up well with most of the structural damage limited to carports, screen rooms and awnings. Structural damage to common areas was also limited. Our Florida mainland properties resumed normal operations shortly after Hurricane Irma. Two RV resorts in the Florida Keys will reopen as utility services are restored. We are in the process of estimating the financial impact of the storm on our properties and we believe we have adequate insurance, subject to deductibles, including business interruption coverage. During the quarter ended September 30, 2017, we recorded expense of $3.7 million related to property damage and restoration work that had been reasonably estimated and/or completed to date. In addition we recorded revenue of $3.5 million related2.7% compared to the expected insurance recovery from this loss.

same period in 2019.
21
23
Management's Discussion and Analysis (continued)


WeWhile we continue to focus on the quality of occupancy growth by increasing the number of manufactured homeowners in our Core Portfolio.Portfolio, we also believe renting our vacant homes represents an attractive source of occupancy and an opportunity to potentially convert the renter to a new homebuyer in the future. We continue to expect there to be fluctuations in the sources of occupancy gains depending on local market conditions, availability of vacant sites and success with converting renters to homeowners. Our Core Portfolio average occupancy, consists of occupied home sitesincluding both homeowners and renters, in our MH communities (both homeowners and renters) and was 94.3%95.3% for the quarter ended September 30, 2017,2020, compared to 94.2%95.2% for the quarter ended June 30, 20172020 and 93.5%95.1% for the same period in 2019. For the quarter ended September 30, 2016. During the quarter ended September 30, 2017, we increased occupancy of manufactured homes within2020, our Core Portfolio occupancy increased by 9593 sites with an increase in homeowner occupancy of 267114 sites compared to occupancy as of June 30, 2017.2020. By comparison, as offor the quarter ended September 30, 2016,2019, our Core Portfolio occupancy increased 17656 sites with an increase in homeowner occupancy of 248 sites82 sites. In addition to higher occupancy, we have increased rental rates during the quarter and nine months ended September 30, 2020, contributing to a growth of 3.8% and 4.1%, respectively, in MH rental income compared to occupancy at June 30, 2016.the same periods in 2019.
We continue to experience growth in revenues in our Core RV Portfolio as a result of our ability to increase rental rates and occupancy. RV revenuesincome in our Core Portfolio for the quarter ended September 30, 2017 were 5.8%2020 was 5.2% higher than the quarter ended September 30, 2016.same period in 2019. Annual seasonal and transient revenuesrental income for the quarter ended September 30, 20172020 increased 6.0%, 18.7%5.2% and 2.7%7.3%, respectively, fromwhile seasonal rental income decreased 4.5%. We have continued to experience positive demand since our properties reopened to transient RV reservations at the quarter ended September 30, 2016.beginning of June 2020 as shelter-in-place orders were lifted. RV revenuesrental income in our Core Portfolio for the nine months ended September 30, 2017 were 5.4%2020 was 0.9% higher than the nine months ended September 30, 2016. Annual, seasonal and transient revenues for the nine months ended September 30, 2017 increased 5.5%, 6.2% and 4.7%, respectively, from the nine months ended September 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 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 September 30, 2017 online TTC sales increased 52% from the quarter ended September 30, 2016. During the quarter ended September 30, 2017 we sold approximately 4,400 TTCs and activated approximately 4,900 RV dealer TTCs. For the nine months ended September 30, 2017 we sold approximately 11,700 TTCs and activated approximately 14,100 RV dealer TTCs.
We continue to build on our successful multi-channel marketing campaigns, incorporating social media and advanced marketing analytics. The demand for our product offerings is high as seen by web traffic, call center traffic, reservations and sales. We have now completed our summer marketing campaign. We focused on the 100 days of camping between Memorial Day and Labor Day and ran a social media promotion, which had a social media reach of 5.1 million as we encouraged customers to post pictures of themselves enjoying our properties. For the same period in 2016, our summer social media campaign reach was 3.7 million.
We see high demand for our homes2019. Annual and communities. We closed 173 new home sales in the quarter ended September 30, 2017 compared to 207 during the quarter ended September 30, 2016 and 413 new home sales in the nine months ended September 30, 2017 compared to 508 during the nine months ended September 30, 2016. The new home sales during the quarter and nine months ended September 30, 2017 were primarily in our Florida and Colorado communities.
As of September 30, 2017, we had 4,502 occupied rental homes in our MH communities. For the quarters ended September 30, 2017 and 2016, home rental program net operating income was approximately $7.9 million, net of rental asset depreciation expense of approximately $2.6 million for the quarter ended September 30, 2017 and $2.7 million for the quarter ended September 30, 2016. Approximately $8.7 million and $8.9 million of home rental operations revenue was included in community base rental income for the quarters ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, home rental program net operating income was approximately $24.3 million and $24.6 million, respectively, net of rental asset depreciation expense of approximately $7.9 million for the nine months ended September 30, 2017 and $8.0 million for the nine months ended September 30, 2016. Approximately $26.3 million and $27.0 million of home rental operations revenue was included in community baseseasonal rental income for the nine months ended September 30, 20172020 increased 5.8% and 2.3%, respectively, while transient rental income decreased 12.2%. The decrease in transient rental income for the nine months ended September 30, 2016,2020 was largely due to cancellations, declines in reservations and temporary site closures during the second quarter of 2020 due to COVID-19.
We continue to experience strong performance in our membership base within our Thousand Trails portfolio. For the quarter ended September 30, 2020, annual membership subscriptions revenue increased 2.2% over the same period in 2019. We sold approximately 7,400 TTC memberships during the quarter ended September 30, 2020, representing a 24% increase in sales volume compared to the same period in 2019. For the quarter ended September 30, 2020, membership upgrade sales increased $0.9 million compared to the same period in 2019, driven by approximately 1,000 membership upgrade sales during the quarter ended September 30, 2020, representing an increase of 20.1% in sales volume. In addition, we activated approximately 7,400 TTC memberships through our RV dealer program for the quarter ended September 30, 2020. For the nine months ended September 30, 2020, we sold approximately 16,400 TTC memberships and approximately 2,600 membership upgrades, an increase in membership subscriptions and upgrade revenues of 3.7% and 13.1%, respectively, over the same period in 2019.
Demand for our homes and communities remains strong as evidenced by factors including our high occupancy levels. We closed 183 new home sales during the quarter ended September 30, 2020 compared to 128 new home sales during the quarter ended September 30, 2019. We closed 471 new home sales during the nine months ended September 30, 2020 compared to 336 new home sales during the nine months ended September 30, 2019. The increases in new home sales was primarily due to favorable housing trends and timing of the availability of home inventory ready for sale.
As of September 30, 2020, we had 3,902 occupied rental homes in our Core MH communities, including 286 homes rented through our ECHO JV. Our Core Portfolio income from rental operations, net of depreciation, was $7.6 million and $7.3 million for the quarters ended September 30, 2020 and 2019, respectively. Approximately $7.8 million and $7.9 million of rental operations revenue related to Site rental was included in MH base rental income in our Core Portfolio for the quarters ended September 30, 2020 and 2019, respectively. Our Core Portfolio income from rental operations, net of depreciation, was $23.2 million and $22.4 million for the nine months ended September 30, 2020 and 2019, respectively. Approximately $23.5 million and $23.4 million of rental operations revenue related to Site rental was included in MH base rental income in our Core Portfolio for the nine months ended September 30, 2020 and 2019, respectively.
Our gross investment in real estate has increased approximately $70.3$128.4 million to $4,755.6$5,871.4 million as of September 30, 20172020 from $4,685.3$5,743.0 million as of December 31, 20162019, primarily due to the acquisition of Paradise Park Largocapital improvements during the second quarter of 2017nine months ended September 30, 2020.






24
Management's Discussion and increased capital expenditures.Analysis (continued)

The following chart lists both the Properties acquired or invested insold from January 1, 20162019 through September 30, 2017, which represents our Non-Core Portfolio;2020 and Sites added through expansion opportunities at our existing Properties.

22
Management's Discussion (continued)

Properties:
PropertyLocationType of PropertyTransaction Date
Sites(a)
Total Sites as of January 1, 20162019 (1) (2)
143,938
155,400
Acquisitions:Acquisition Properties:
Rose BayDrummer Boy Camping ResortPort Orange, FloridaGettysburg, PennsylvaniaRVJanuary 27, 2016March 25, 2019303
465
Portland FairviewLake of the Woods CampgroundFairview, OregonWautoma, WisconsinRVMay 26, 2016March 25, 2019407
303
Forest Lake EstatesRound Top RV CampgroundZephryhills, FloridaGettysburg, PennsylvaniaRV MHJune 15, 2016April 10, 20191,168
391
RiversideWhite Oak Shores Camping and RV ResortArcadia, FloridaStella, North CarolinaRVOctober 13, 2016May 29, 2019499
455
Paradise Park LargoLargo, FloridaMHMay 10, 2017108
Joint Venture:Expansion Site Development:
CrosswindsSt. Petersburg, FloridaMHJune 15, 2017376
LoggerheadMultiple, FloridaMarinaAugust 8, 20172,343
Expansion Site Development and other:
Net Sites added (reconfigured) in 20162019295
891
Net Sites added (reconfigured) in 2017202011
773
Dispositions:
Hoosier EstatesLebanon, IndianaMHJanuary 23, 2019(288)
Lake in the HillsAuburn Hills, MichiganMHJanuary 23, 2019(238)
North Glen VillageWestfield, IndianaMHJanuary 23, 2019(282)
Oak Tree VillagePortage, IndianaMHJanuary 23, 2019(361)
Swan CreekYpsilanti, MichiganMHJanuary 23, 2019(294)
Total Sites as of September 30, 20172020 (2)
149,448
157,300
(a)Loggerhead sites represent slip count.

______________________

(1)    Includes the marina slips from the acquisition of the remaining interest in our joint venture investment of 11 marinas in Florida.
(2)    Sites are approximate. Total does not foot due to rounding.
Non-GAAP Financial Measures
Management's discussion and analysis of financial condition and results of operations include certain Non-GAAP financial measures that in management's view of the business are meaningful as they allow investors 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 flows 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 include income from property operations and Core Portfolio, FFO, Normalized FFO and income from rental operations, net of depreciation.
We believe investors should review Income from property operations and Core Portfolio, FFO, Normalized FFO and Income from rental operations, net of depreciation, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REIT's operating performance. A discussion of Income from property operations and Core Portfolio, FFO, Normalized FFO and Income from rental operations, net of depreciation, and a reconciliation to net income, are included below.
Income from Property Operations and Core Portfolio
We use Incomeincome from property operations, and Incomeincome from property operations, excluding deferrals and property management, and Core Portfolio income from property operations, excluding deferrals and property management, as alternative measures to evaluate the operating results of our manufactured home and RV communities.Properties. Income from property operations represents rental income, membership subscriptions and upgrade sales, utility income and right-to-useother income less property and rental home operating and maintenance expenses, real estate tax,taxes, sales and marketing expenses and property management expenses. Income from property operations, excluding deferrals and property management, represents income from property operations excluding property management expenses and the impact of the GAAP deferraldeferrals of right-to-use contractmembership upgrade sales upfront payments and relatedmembership sales commissions, net. For comparative purposes, we present bad debt expense within Property operating, maintenance and real estate taxes in the current and prior periods.
Our Core Portfolio consists of our Properties owned and operated since December 31, 2015.during all of 2019 and 2020. 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 2016all of 2019 and 2017.2020. This includes, but is not limited to, four properties and the marinas acquired and five properties sold during 2019.

25
Management's Discussion and Analysis (continued)

Funds from Operations ("FFO") and Normalized Funds from Operations ("NFFO"Normalized FFO")
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,related to real estate, impairment charges and after adjustments forto reflect our share of FFO of 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 upfront payments from the entry of right-to-usemembership upgrade contracts. In accordance with GAAP, the non-refundable upfront non-refundable payments and related commissions are deferred and amortized over the estimated customer life.membership upgrade contract term. Although the NAREIT definition of FFO does not address the treatment of non-refundable right-to-useupfront payments, we believe that it is appropriate to adjust for the impact of the deferral activity in our calculation of FFO.
We define NFFONormalized FFO as FFO excluding the following non-operating income and expense items: a) the financial impact of contingent consideration; b)items, such as gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs; c) property acquisitioncosts, and other transaction costs related to mergers and acquisitions; and d) other miscellaneous non-comparable items. NFFONormalized FFO presented herein is not necessarily comparable to NFFONormalized FFO 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 properties, depreciation and amortization related to real estate all ofand impairment charges, 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

23
Management's Discussion (continued)

a consistent basis without having to account for differences not related to our normal operations. For example, we believe that excluding the early extinguishment of debt property acquisition and other transaction costs related to mergers and acquisitionsmiscellaneous non-comparable items from NFFOFFO 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 NFFONormalized FFO because it allows investors, analysts and our management to assess the impact of those items.
Income from Rental Operations, Net of Depreciation
We use Incomeincome from rental operations, net of depreciation as an alternative measure to evaluate the operating results of our 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 calculations of these non-GAAPNon-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-GAAPNon-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 flowflows 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.







26
Management's Discussion and Analysis (continued)

The following table reconciles Netnet income available for Common Stockholders to Incomeincome from property operations for the quarters and nine months ended September 30, 20172020 and September 30, 2016 (amounts in thousands):2019:
Quarters Ended September 30,Nine Months Ended September 30,
(amounts in thousands)2020201920202019
Computation of Income from Property Operations:
Net income available for Common Stockholders$50,560 $64,461 $163,622 $224,171 
Redeemable preferred stock dividends— — 8 8 
Income allocated to non-controlling interests – Common OP Units2,908 3,715 9,415 13,617 
Equity in income of unconsolidated joint ventures(968)(3,518)(2,239)(8,277)
Income before equity in income of unconsolidated joint ventures52,500 64,658 170,806 229,519 
Gain on sale of real estate, net— — — (52,507)
Total other expenses, net80,652 63,889 228,812 208,232 
Loss from home sales operations and other(611)(1,104)1,906 (854)
Income from property operations$132,541 $127,443 $401,524 $384,390 
  Quarters ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
Computation of Income from Property Operations:        
Net income available for Common Stockholders $48,525
 $40,998
 $144,911
 $127,071
Perpetual preferred stock dividends and original issuance costs 3,054
 2,297
 7,667
 6,910
Income allocated to non-controlling interests - Common OP Units 3,286
 3,462
 9,825
 10,770
Equity in income of unconsolidated joint ventures (686) (496) (2,876) (2,142)
Income before equity in income of unconsolidated joint ventures 54,179
 46,261
 159,527
 142,609
Total other expenses, net 59,461
 60,494
 182,398
 179,702
Income/(loss) from home sales operations and other (171) (161) (268) 80
Income from property operations $113,469
 $106,594
 $341,657
 $322,391

24
Management's Discussion (continued)



The following table presents a calculation of FFO available for Common Stock and OP Unit holdersUnitholders and Normalized FFO available for Common Stock and OP Unit holdersUnitholders for the quarters and nine months ended September 30, 20172020 and September 30, 2016 (amounts in thousands):2019:
 Quarters Ended September 30,Nine Months Ended September 30,
(amounts in thousands)2020201920202019
Computation of FFO and Normalized FFO:
Net income available for Common Stockholders$50,560 $64,461 $163,622 $224,171 
Income allocated to non-controlling interests – Common OP Units2,908 3,715 9,415 13,617 
Membership upgrade sales upfront payments, deferred, net4,171 3,530 9,379 8,213 
Membership sales commissions, deferred, net(630)(313)(1,327)(893)
Depreciation and amortization38,581 37,032 115,937 112,785 
Depreciation on unconsolidated joint ventures183 174 544 1,047 
Gain on sale of real estate, net— — — (52,507)
FFO available for Common Stock and OP Unit holders95,773 108,599 297,570 306,433 
Early debt retirement9,732 — 10,786 2,085 
Insurance proceeds due to catastrophic weather event (1)
— (5,856)— (6,205)
COVID-19 expenses (2)
— — 1,446 — 
Normalized FFO available for Common Stock and OP Unit holders$105,505 $102,743 $309,802 $302,313 
Weighted average Common Shares outstanding – Fully Diluted192,537 192,400 192,548 191,840 
______________________
(1)Represents insurance recovery revenue from reimbursement for capital expenditures related to Hurricane Irma.
(2)Includes expenses incurred related to the development and implementation of CDC and public health guidelines for social distancing and enhanced cleaning, property employee appreciation bonuses and emergency time-off pay. These COVID-19 expenses are considered incremental to our normal operations and are nonrecurring. As such, they have been excluded from the calculation of Normalized FFO.






27
  Quarters ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
Computation of FFO and Normalized FFO:        
Net income available for Common Stockholders $48,525
 $40,998
 $144,911
 $127,071
Income allocated to common OP units 3,286
 3,462
 9,825
 10,770
Right-to-use contract upfront payments, deferred, net 1,670
 1,327
 3,766
 2,427
Right-to-use contract commissions, deferred, net (176) (200) (372) (212)
Depreciation on real estate assets 27,879
 26,847
 82,939
 79,218
Depreciation on rental homes 2,614
 2,671
 7,910
 7,985
Amortization of in-place leases 138
 1,376
 2,128
 2,139
Depreciation on unconsolidated joint ventures 360
 373
 1,171
 968
FFO available for Common Stock and OP Unit holders 84,296
 76,854
 252,278
 230,366
Transaction costs —
 327
 324
 925
Preferred stock original issuance costs 757
 —
 757
 —
Normalized FFO available for Common Stock and OP Unit holders $85,053
 $77,181
 $253,359
 $231,291
Weighted average Common Shares outstanding – fully diluted 93,324
 92,910
 93,135
 92,405

25
Management's Discussion and Analysis (continued)


Results of Operations

This section discusses the comparison of our results of operations for the quarters and nine months ended September 30, 2020 and September 30, 2019 and discussion of our operating activities, investing activities and financing activities for the nine months ended September 30, 2020 and September 30, 2019. For the comparison of our results of operations for the quarters and nine months ended September 30, 2019 and September 30, 2018 and discussion of our operating activities, investing activities and financing activities for the nine months ended September 30, 2019 and September 30, 2018, refer to Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2019, filed with the SEC on October 30, 2019.
Comparison of the Quarter Ended quarter ended September 30, 20172020 to the Quarter Ended quarter ended September 30, 20162019
Income from Property Operations
The following table summarizes certain financial and statistical data for theour Core Portfolio and the total portfolio for the quarters endedSeptember 30, 20172020 and 2016 (amounts in thousands). The Core PortfolioSeptember 30, 2019:
 Core PortfolioTotal Portfolio
Quarters Ended September 30,Quarters Ended September 30,
(amounts in thousands)20202019Variance%
Change		20202019Variance%
Change
MH base rental income (1)
$143,469 $137,596 $5,873 4.3 %$143,512 $137,596 $5,916 4.3 %
Rental home income (1)
4,153 3,810 343 9.0 %4,158 3,810 348 9.1 %
RV and marina base rental income (1)(2)
72,326 68,783 3,543 5.2 %78,979 71,665 7,314 10.2 %
Annual membership subscriptions13,413 13,150 263 2.0 %13,442 13,150 292 2.2 %
Membership upgrades sales current period, gross6,631 5,730 901 15.7 %6,631 5,730 901 15.7 %
Utility and other income (1)
25,475 23,931 1,544 6.5 %26,130 24,252 1,878 7.7 %
Property operating revenues, excluding deferrals265,467 253,000 12,467 4.9 %272,852 256,203 16,649 6.5 %
Property operating and maintenance (1)(3)
96,470 88,419 8,051 9.1 %99,490 90,106 9,384 10.4 %
Real estate taxes15,761 14,973 788 5.3 %15,981 15,166 815 5.4 %
Rental home operating and maintenance1,711 1,603 108 6.7 %1,718 1,603 115 7.2 %
Sales and marketing, gross5,053 4,060 993 24.5 %5,054 4,063 991 24.4 %
Property operating expenses, excluding deferrals and property management118,995 109,055 9,940 9.1 %122,243 110,938 11,305 10.2 %
Income from property operations, excluding deferrals and property management (4)
146,472 143,945 2,527 1.8 %150,609 145,265 5,344 3.7 %
Property management14,527 14,605 (78)(0.5)%14,527 14,605 (78)(0.5)%
Income from property operations, excluding deferrals (4)
131,945 129,340 2,605 2.0 %136,082 130,660 5,422 4.1 %
Membership upgrade sales upfront payments and membership sales commission, deferred, net3,541 3,217 324 10.1 %3,541 3,217 324 10.1 %
Income from property operations (4)
$128,404 $126,123 $2,281 1.8 %$132,541 $127,443 $5,098 4.0 %
_____________________
(1)Rental income consists of the following total portfolio income items: 1) MH base rental income, 2) Rental home income, 3) RV and marina base rental income and 4) Utility income, which is calculated by subtracting Other income on the Consolidated Statements of Income and Comprehensive Income from Utility and other income in this discussion includestable. The difference between the sum of the total portfolio income items and Rental income on the Consolidated Statements of Income and Comprehensive Income is bad debt expense, which is presented in Property operating maintenance expense in this table.
(2)Marina rental income has been included in our Non-Core Portfolio since the acquisition of the remaining interest in a joint venture investment of 11 marinas in Florida occurred on September 10, 2019.
(3)Includes bad debt expense for all Properties acquired on or before December 31, 2015 and which we have owned and operated continuously since January 1, 2016. Core Portfolio growth percentages exclude the impact of GAAP deferrals of upfront payments from right-to-use contracts and related commissions.periods presented.
 Core Portfolio Total Portfolio
 2017 2016 Variance 
%
Change
 2017 2016 Variance 
%
Change
Community base rental income$121,802
 $116,052
 $5,750
 5.0 % $123,177
 $117,164
 $6,013
 5.1 %
Rental home income3,592
 3,484
 108
 3.1 % 3,592
 3,484
 108
 3.1 %
Resort base rental income56,399
 53,317
 3,082
 5.8 % 58,471
 54,486
 3,985
 7.3 %
Right-to-use annual payments11,528
 11,349
 179
 1.6 % 11,531
 11,349
 182
 1.6 %
Right-to-use contracts current period, gross4,208
 3,672
 536
 14.6 % 4,208
 3,672
 536
 14.6 %
Utility and other income25,958
 20,987
 4,971
 23.7 % 26,295
 21,174
 5,121
 24.2 %
Property operating revenues, excluding deferrals223,487
 208,861
 14,626
 7.0 % 227,274
 211,329
 15,945
 7.5 %
               

Property operating and maintenance78,376
 72,687
 5,689
 7.8 % 80,164
 73,410
 6,754
 9.2 %
Rental home operating and maintenance1,704
 1,765
 (61) (3.5)% 1,704
 1,768
 (64) (3.6)%
Real estate taxes13,525
 13,161
 364
 2.8 % 14,006
 13,467
 539
 4.0 %
Sales and marketing, gross3,277
 3,100
 177
 5.7 % 3,277
 3,100
 177
 5.7 %
Property operating expenses, excluding deferrals and Property management96,882
 90,713
 6,169
 6.8 % 99,151
 91,745
 7,406
 8.1 %
Income from property operations, excluding deferrals and Property management (1)
126,605
 118,148
 8,457
 7.2 % 128,123
 119,584
 8,539
 7.1 %
Property management13,160
 11,861
 1,299
 11.0 % 13,160
 11,863
 1,297
 10.9 %
Income from property operations, excluding deferrals (1)
113,445
 106,287
 7,158
 6.7 % 114,963
 107,721
 7,242
 6.7 %
Right-to-use contracts, deferred and sales and marketing, deferred, net1,494
 1,127
 367
 32.6 % 1,494
 1,127
 367
 32.6 %
Income from property operations (1)
$111,951
 $105,160
 $6,791
 6.5 % $113,469
 $106,594

$6,875
 6.4 %
__________________________
(1)(4)See Non-GAAP measure, see the Results OverviewFinancial Measures section of the Management Discussion and Analysis for Non-GAAP Financial Measure Definitionsdefinitions and reconciliations of these non-GAAPNon-GAAP measures to Net Income available tofor Common Shareholders.

Total Portfolioportfolio income from property operations which includes Core and non-Core portfolios, for the quarter ended September 30, 20172020 increased $6.9$5.1 million, or 6.4%4.0%, from the quarter ended September 30, 2016,2019, driven by an increase of $6.8$2.3 million, or 6.5%1.8%, infrom our Core Portfolio and an increase of $2.8 million from our Non-Core Portfolio. The increase in income from property operations from our Core Portfolio was primarily resulting from higher MH and a $0.1 millionRV base rental income. The increase in our Non-Core income from property operations.operations from our None-Core Portfolio was attributed to income from properties acquired throughout 2019, most notably the marinas in Florida.


28
Management's Discussion and Analysis (continued)

Property Operating Revenues
CommunityMH base rental income in our Core Portfolio for the quarter ended September 30, 20172020 increased $5.8$5.9 million, or 5.0%4.3%, from the quarter ended September 30, 2016,2019, which reflects 4.0%3.8% growth from rate increases and approximately 1.0%0.5% growth from occupancy gains. The average monthly base rental income per Site in our Core Portfolio increased to approximately $615 for the quarter ended September 30, 2017$696 in 2020 from approximately $591 for the quarter ended September 30, 2016.$671 in 2019. The average occupancy for theour Core Portfolio increased to 94.3% for the quarter ended September 30, 201795.3% in 2020 from 93.5% for the quarter ended September 30, 2016.95.1% in 2019.



26
Management's Discussion (continued)

ResortRV base rental income in our Core Portfolio for the quarter ended September 30, 20172020 increased $3.1$3.5 million, or 5.8%5.2%, from the quarter ended September 30, 20162019. The increase was primarily due to higher annual rental income, driven by growth from rate increases, and higher transient income. Transient income increased rates. Resort7.3% from 2019, most notably in the North, South and Northeast. We have seen positive demand since our properties reopened to transient RV reservations at the beginning of June 2020 as shelter-in-place orders were lifted. RV and marina base rental income is comprised of the following:
 Core PortfolioTotal Portfolio
Quarters Ended September 30,Quarters Ended September 30,
(amounts in thousands)20202019Variance%
Change		20202019Variance%
Change
Annual$42,866 $40,744 $2,122 5.2 %$48,194 $42,581 $5,613 13.2 %
Seasonal5,093 5,334 (241)(4.5)%5,159 5,424 (265)(4.9)%
Transient24,367 22,705 1,662 7.3 %25,626 23,660 1,966 8.3 %
RV and marina base rental income (1)
$72,326 $68,783 $3,543 5.2 %$78,979 $71,665 $7,314 10.2 %
_____________________
(1)    Marina rental income has been included in our Non-Core Portfolio following (amountsthe acquisition of the remaining interest in thousands):our joint venture investment of 11 marinas in Florida on September 10, 2019.
 Core Portfolio Total Portfolio
 2017 2016 Variance 
%
Change
 2017 2016 Variance 
%
Change
Annual$32,737
 $30,874
 $1,863
 6.0% $33,647
 $31,278
 $2,369
 7.6%
Seasonal4,510
 3,799
 711
 18.7% 4,952
 4,244
 708
 16.7%
Transient19,152
 18,644
 508
 2.7% 19,872
 18,964
 908
 4.8%
Resort base rental income$56,399
 $53,317
 $3,082
 5.8% $58,471
 $54,486
 $3,985
 7.3%
Right-to-use contracts current period, gross, net of sales and marketing, gross, increased by $0.4 million, primarily as a result of an increase in the average price per upgrade sale and a higher number of upgrade sales during the quarter ended September 30, 2017 compared to the quarter ended September 30, 2016. During the quarter ended September 30, 2017 there were 757 upgrade sales with an average price per upgrade sale of $5,558. This compares to 740 upgrade sales with an average price per upgrade sale of $4,962 during the quarter ended September 30, 2016.
Utility and other income in our Core Portfolio for 2020 increased by $5.0$1.5 million, or 6.5%, from 2019. The increase was primarily due to the Hurricane Irmahigher insurance recovery revenue accrual of $3.1$1.9 million, driven by insurance recovery revenue of $2.3 million for Hurricanes Hanna and Isaias during the third quarter of 2020. Increases in utility income of $0.7 million and insurance proceedspass-through income of $1.5$0.5 million related to prior storm events.were offset by decreases in other property income.
Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the quarter ended September 30, 20172020 increased $6.2$9.9 million, or 6.8%9.1%, from the quarter ended September 30, 20162019, driven primarily driven by an increaseincreases in property operating and maintenance expenses of $5.7$8.1 million and real estate taxes of $0.8 million. Property operating and maintenance expenses were higher in 2020 primarily due to increases in utility expenses, repairs and maintenance expenses, and insurance expense. The increase in property operating and maintenanceutility expenses was primarily due to costs, including labor, associated with distribution system repairs and maintenance expense of $3.3approximately $2.9 million recognized during the quarter ended September 30, 2017 for restoration work that had been reasonably estimated and/or completed to date at our Florida properties impacted by Hurricane Irma.incurred in 2020. The increase in property operatingrepairs and maintenance expenses was alsodriven by debris removal and cleanup costs of approximately $2.8 million related to Hurricane Hanna and Hurricane Isaias incurred during the third quarter of 2020. Property taxes in 2020 were higher due to an increase in property payroll, primarily as a result of 2017 salary increases and an increase in utility expense, primarily due toreal estate tax increases in waterFlorida.











29
Management's Discussion and sewer expenses, which was partially offset by an increase in utility income recovery.Analysis (continued)

Home Sales and Rental Operations
Home Sales and Other
The following table summarizes certain financial and statistical data for our Home Sales for the quarters ended September 30, 2017 and 2016 (amounts in thousands, except home sales volumes).Other Operations:
  2017 2016 Variance 
%
Change
Gross revenues from new home sales (1)
 $7,233
 $8,057
 $(824) (10.2)%
Cost of new home sales (1)
 (7,276) (7,900) 624
 7.9 %
Gross profit (loss) from new home sales (43) 157
 (200) (127.4)%
         
Gross revenues from used home sales 2,779
 2,838
 (59) (2.1)%
Cost of used home sales (3,101) (2,845) (256) (9.0)%
Loss from used home sales (322) (7) (315) (4,500.0)%
         
Brokered resale revenues and ancillary services revenues, net 1,983
 920
 1,063
 115.5 %
Home selling expenses (1,447) (909) (538) (59.2)%
Income from home sales and other $171
 $161
 $10
 6.2 %
         
Home sales volumes        
Total new home sales (2)
 173
 207
 (34) (16.4)%
 New Home Sales Volume - ECHO JV 48
 65
 (17) (26.2)%
Used home sales 331
 335
 (4) (1.2)%
Brokered home resales 239
 182
 57
 31.3 %
_________________________
Quarters Ended September 30,
(amounts in thousands, except home sales volumes)20202019Variance%
Change
Gross revenues from new home sales (1)
$11,929 $6,864 $5,065 73.8 %
Cost of new home sales (1)
11,398 6,499 4,899 75.4 %
Gross profit from new home sales531 365 166 45.5 %
Gross revenues from used home sales1,141 1,574 (433)(27.5)%
Cost of used home sales1,468 1,935 (467)(24.1)%
Loss from used home sales(327)(361)34 9.4 %
Brokered resale and ancillary services revenues, net1,648 2,133 (485)(22.7)%
Home selling expenses1,241 1,033 208 20.1 %
Income (loss) from home sales and other$611 $1,104 $(493)(44.7)%
Home sales volumes
Total new home sales (2)
183 128 55 43.0 %
 New Home Sales Volume - ECHO JV15 19 (4)(21.1)%
Used home sales120 198 (78)(39.4)%
Brokered home resales167 270 (103)(38.1)%
_________________________
(1) New home sales gross revenues and costs of new home sales doesdo not include the revenues and costs associated with our ECHO JV.
(2) Total new home sales volume includes home sales from our ECHO JV.

27
Management's Discussion (continued)

IncomeThe income from home sales and other operations was $0.2$0.6 million for both the quarters ended September 30, 20172020, compared to $1.1 million for 2019. The decrease in income from home sales and 2016. The increase in home selling expensesother operations was due to lower brokered resale and ancillary services revenues, net primarily due to expense of $0.4 million recorded duringreduced capacity at restaurants, stores and activities across the quarter ended September 30, 2017 related to property damageportfolio as a result of Hurricane Irma. The expense recorded during the quarter was offset by revenue recorded of $0.4 million related to the expected insurance recovery from this loss.COVID-19.
30
Management's Discussion and Analysis (continued)

Rental Operations
The following table summarizes certain financial and statistical data for manufacturedour MH Rental Operations:
Quarters Ended September 30,
(amounts in thousands, except rental unit volumes)20202019Variance%
Change
Rental operations revenue (1)
$12,032 $11,670 $362 3.1 %
Rental home operating and maintenance1,711 1,603 108 6.7 %
Income from rental operations10,321 10,067 254 2.5 %
Depreciation on rental homes (2)
2,703 2,758 (55)(2.0)%
Income from rental operations, net of depreciation$7,618 $7,309 $309 4.2 %
Gross investment in new manufactured home rental units (3)
$231,192 $220,669 $10,523 4.8 %
Gross investment in used manufactured home rental units$16,299 $23,454 $(7,155)(30.5)%
Net investment in new manufactured home rental units$192,247 $195,626 $(3,379)(1.7)%
Net investment in used manufactured home rental units$6,798 $10,418 $(3,620)(34.7)%
Number of occupied rentals – new, end of period (4)
3,314 3,079 235 7.6 %
Number of occupied rentals – used, end of period588 914 (326)(35.7)%
______________________
(1)Consists of Site rental income and home Rental Operationsrental income. Approximately $7.8 million and $7.9 million for the quarters ended September 30, 20172020 and 2016 (amountsSeptember 30, 2019, respectively, of Site rental income is included in thousands, exceptMH base rental unit volumes).income in the Core Portfolio Income from Property Operations table. The remainder of home rental income is included in rental home income in our Core Portfolio Income from Property Operations table.
(2)Presented in Depreciation and amortization in the Consolidated Statements of Income and Comprehensive Income.
  2017 2016 Variance 
%
Change
Manufactured homes:        
New Home $7,100
 $6,329
 $771
 12.2 %
Used Home 5,157
 6,013
 (856) (14.2)%
Rental operations revenue (1)
 12,257
 12,342
 (85) (0.7)%
Rental home operating and maintenance (1,704) (1,768) 64
 3.6 %
Income from rental operations 10,553
 10,574
 (21) (0.2)%
Depreciation on rental homes (2)
 (2,614) (2,671) 57
 2.1 %
Income from rental operations, net of depreciation $7,939
 $7,903
 $36
 0.5 %
         
Gross investment in new manufactured home rental units (3)
 $131,389
 $123,866
 $7,523
 6.1 %
Gross investment in used manufactured home rental units $44,624
 $52,628
 $(8,004) (15.2)%
         
Net investment in new manufactured home rental units $105,424
 $101,768
 $3,656
 3.6 %
Net investment in used manufactured home rental units $24,833
 $34,169
 $(9,336) (27.3)%
         
Number of occupied rentals – new, end of period (4)
 2,492
 2,316
 176
 7.6 %
Number of occupied rentals – used, end of period 2,010
 2,473
 (463) (18.7)%
(3)New home cost basis does not include the costs associated with our ECHO JV. Our investment in the ECHO JV was $17.2 million and $16.7 million as of September 30, 2020 and September 30, 2019, respectively.
______________________(4)Includes 286 and 294 homes rented through our ECHO JV as of September 30, 2020 and 2019, respectively.
(1)

Rental operations revenue consists of Site rental income and home rental income. Approximately $8.7 million and $8.9 million for the quarters ended September 30, 2017 and 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 $15.5 million and $15.3 million as of September 30, 2017 and 2016, respectively.
(4)
Occupied rentals as of the end of the period in our Core Portfolio and includes 254 and 158 homes rented through our ECHO JV during the quarters ended September 30, 2017 and 2016, respectively.
Other Income and Expenses
The following table summarizes other income and expenses, net for the quarters endedSeptember 30, 2017net:
Quarters Ended September 30,
(amounts in thousands, expenses shown as negative)20202019Variance%
Change
Depreciation and amortization$(38,581)$(37,032)$(1,549)(4.2)%
Interest income1,801 1,831 (30)(1.6)%
Income from other investments, net1,428 7,029 (5,601)(79.7)%
General and administrative(9,692)(8,710)(982)(11.3)%
Other expenses(658)(1,460)802 54.9 %
Early debt retirement(9,732)— (9,732)— %
Interest and related amortization(25,218)(25,547)329 1.3 %
Total other income and expenses, net$(80,652)$(63,889)$(16,763)(26.2)%

Total other income and2016 (amounts in thousands, expenses shown as negative).
  2017 2016 Variance 
%
Change
Depreciation on real estate and rental homes $(30,493) $(29,518) $(975) (3.3)%
Amortization of in-place leases (138) (1,376) 1,238
 90.0 %
Interest income 1,974
 1,767
 207
 11.7 %
Income from other investments, net 2,052
 2,581
 (529) (20.5)%
General and administrative (excluding transaction costs) (7,505) (7,326) (179) (2.4)%
Transaction costs —
 (327) 327
 100.0 %
Property rights initiatives and other, net (324) (855) 531
 62.1 %
Interest and related amortization (25,027) (25,440) 413
 1.6 %
Total other income and expenses, net $(59,461) $(60,494) $1,033
 1.7 %

Other expenses, net decreased $1.0increased $16.8 million for the quarter ended September 30, 2017,in 2020 compared to the quarter ended September 30, 2016. The decrease from the quarter ended September 30, 2016 was2019, primarily due to early debt retirement costs, lower income from other investments, net, and higher depreciation and amortization expenses. The early debt retirement costs was a decreaseresult of the repayment of our secured term loans that was scheduled to mature in amortization2021 and the termination of in-place leases,our interest rate swap agreement. The decrease in income from other investments, net was primarily due to the terminationreimbursement of the Tropical Palms RV ground leasecapital expenditures related to Hurricane Irma received in 2016 and2019.
Equity in income of unconsolidated joint ventures
Equity in income of unconsolidated joint ventures decreased $2.6 million in 2020 compared to 2019, primarily due to a decrease in income recognized from distributions from our unconsolidated joint ventures as we acquired the remaining interest and related amortization as a resultin the Loggerhead joint venture in the third quarter of the refinancing activities completed during 2016 (see Note 7 to the Consolidated Financial Statements for additional detail regarding borrowing arrangements). These decreases were partially offset by an increase in depreciation on real estate and rental homes due to an increase in capital expenditures.2019.


28
31
Management's Discussion and Analysis (continued)


Comparison of the Nine Months Ended September 30, 20172020 to the Nine Months Ended September 30, 20162019
Income from Property Operations
The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the nine months ended September 30, 20172020 and 2016 (amounts in thousands). The Core Portfolio2019.
 Core PortfolioTotal Portfolio
Nine Months Ended September 30,Nine Months Ended September 30,
(amounts in thousands)20202019Variance%
Change		20202019Variance%
Change
MH base rental income (1)
$427,407 $408,653 $18,754 4.6 %$427,490 $409,091 $18,399 4.5 %
Rental home income (1)
12,213 10,932 1,281 11.7 %12,218 11,026 1,192 10.8 %
RV and marina base rental income (1)(2)
202,281 200,532 1,749 0.9 %220,146 204,830 15,316 7.5 %
Annual membership subscriptions39,446 38,052 1,394 3.7 %39,476 38,052 1,424 3.7 %
Membership upgrade sales current period, gross16,522 14,609 1,913 13.1 %16,522 14,609 1,913 13.1 %
Utility and other income (1)
72,104 69,778 2,326 3.3 %73,692 70,253 3,439 4.9 %
Property operating revenues, excluding deferrals769,973 742,556 27,417 3.7 %789,544 747,861 41,683 5.6 %
Property operating and maintenance (1)(3)(4)
260,854 249,390 11,464 4.6 %268,520 252,095 16,425 6.5 %
Real estate taxes47,592 45,293 2,299 5.1 %49,490 45,596 3,894 8.5 %
Rental home operating and maintenance4,294 4,077 217 5.3 %4,306 4,099 207 5.1 %
Sales and marketing, gross13,307 11,683 1,624 13.9 %13,308 11,686 1,622 13.9 %
Property operating expenses, excluding deferrals and property management326,047 310,443 15,604 5.0 %335,624 313,476 22,148 7.1 %
Income from property operations, excluding deferrals and property management (4)(5)
443,926 432,113 11,813 2.7 %453,920 434,385 19,535 4.5 %
Property management44,344 42,675 1,669 3.9 %44,344 42,675 1,669 3.9 %
Income from property operations, excluding deferrals (5)
399,582 389,438 10,144 2.6 %409,576 391,710 17,866 4.6 %
Membership upgrade sales upfront payments and membership sales commission, deferred, net8,052 7,320 732 10.0 %8,052 7,320 732 10.0 %
Income from property operations (5)
$391,530 $382,118 $9,412 2.5 %$401,524 $384,390 $17,134 4.5 %
__________________________
(1)Rental income consists of the following total portfolio income items: 1) MH base rental income, 2) Rental home income, 3) RV and marina base rental income and 4) Utility income, which is calculated by subtracting Other income on the Consolidated Statements of Income and Comprehensive Income from Utility and other income in this discussion includestable. The difference between the sum of the total portfolio income items and Rental income on the Consolidated Statements of Income and Comprehensive Income is bad debt expense, which is presented in Property operating maintenance expense in this table.
(2)Marina rental income has been included in our Non-Core Portfolio since the acquisition of the remaining interest in a joint venture investment of 11 marinas in Florida occurred on September 10, 2019.
(3)Includes bad debt expense for all Properties acquired on or before December 31, 2015periods presented.
(4)Includes $1.0 million related to expenses incurred related to the development and which we have ownedimplementation of CDC and operated continuously since January 1, 2016. Core Portfolio growth percentages excludepublic health guidelines for social distancing and enhanced cleaning, property employee appreciation bonuses and emergency time-off pay for the impactnine months ended September 30, 2020, respectively. These COVID-19 expenses are considered incremental to our normal operations and are nonrecurring. As such, they were excluded from the calculation of GAAP deferrals of upfront payments from right-to-use contracts and related commissions.Normalized FFO.
 Core Portfolio Total Portfolio
 2017 2016 Variance 
%
Change
 2017 2016 Variance 
%
Change
Community base rental income$362,080
 $345,316
 $16,764
 4.9% $365,833
 $346,625
 $19,208
 5.5%
Rental home income10,829
 10,573
 256
 2.4% 10,829
 10,572
 257
 2.4%
Resort base rental income161,002
 152,697
 8,305
 5.4% 169,594
 154,652
 14,942
 9.7%
Right-to-use annual payments34,130
 33,590
 540
 1.6% 34,133
 33,590
 543
 1.6%
Right-to-use contracts current period, gross11,212
 9,290
 1,922
 20.7% 11,212
 9,290
 1,922
 20.7%
Utility and other income67,961
 61,235
 6,726
 11.0% 69,071
 61,490
 7,581
 12.3%
Property operating revenues, excluding deferrals647,214
 612,701
 34,513
 5.6% 660,672
 616,219
 44,453
 7.2%
       

        
Property operating and maintenance215,802
 201,871
 13,931
 6.9% 221,119
 203,011
 18,108
 8.9%
Rental home operating and maintenance4,912
 4,871
 41
 0.8% 4,912
 4,874
 38
 0.8%
Real estate taxes40,557
 39,118
 1,439
 3.7% 41,986
 39,534
 2,452
 6.2%
Sales and marketing, gross8,860
 8,526
 334
 3.9% 8,861
 8,524
 337
 4.0%
Property operating expenses, excluding deferrals and Property management270,131
 254,386
 15,745
 6.2% 276,878
 255,943
 20,935
 8.2%
Income from property operations, excluding deferrals and Property management (1)
377,083
 358,315
 18,768
 5.2% 383,794
 360,276
 23,518
 6.5%
Property management38,743
 35,668
 3,075
 8.6% 38,743
 35,670
 3,073
 8.6%
Income from property operations, excluding deferrals (1)
338,340
 322,647
 15,693
 4.9% 345,051
 324,606
 20,445
 6.3%
Right-to-use contracts, deferred and sales and marketing, deferred, net3,394
 2,215
 1,179
 53.2% 3,394
 2,215
 1,179
 53.2%
Income from property operations (1)
$334,946
 $320,432
 $14,514
 4.5% $341,657
 $322,391
 $19,266
 6.0%
__________________________
(1)(5)See Non-GAAP measure, see the Results OverviewFinancial Measures section of the Management Discussion and Analysis for Non-GAAP Financial Measure Definitionsdefinitions and reconciliationsreconciliation of these non-GAAPNon-GAAP measures to Net Income available tofor Common Shareholders.

Total Portfolio income from property operations which includes Core and non-Core portfolios, for the nine months ended September 30, 20172020 increased $19.3$17.1 million, or 6.0%4.5%, from the nine months ended September 30, 2016,2019, driven by an increase of $14.5$9.4 million, or 4.5%2.5%, infrom our Core Portfolio and an increase of $7.7 million from our Non-Core Portfolio. The increase in income from property operations and a $4.8 millionfrom our Core Portfolio was primarily due to an increase in our Non-CoreMH base rental income, partially offset by an increase in property operating expenses. The increase in income from property operations.operations from our None-Core Portfolio was attributed to income from properties acquired throughout 2019, most notably the marinas in Florida.
Property Operating Revenues
CommunityMH base rental income in our Core Portfolio for the nine months ended September 30, 20172020 increased $16.8$18.8 million, or 4.9%4.6%, from the nine months ended September 30, 2016,2019, which reflects 4.0%4.1% growth from rate increases and approximately 0.9%0.5% growth from occupancy gains. The average monthly base rental income per Site increased to approximately $611 for the nine months ended September 30, 2017$692 in 2020 from approximately $588 for the nine months ended September 30, 2016.$665 in 2019. The average occupancy for the Core Portfolio increased to 94.2% for the nine months ended September 30, 201795.2% in 2020 from 93.3% for the nine months ended September 30, 2016.



95.1% in 2019.
29
32
Management's Discussion and Analysis (continued)


ResortRV base rental income in our Core Portfolio for the nine months ended September 30, 20172020 increased $8.3$1.7 million, or 5.4%0.9%, from the nine months ended September 30, 2016 primarily2019 due to an increaseincreased annual and seasonal revenue, mainly driven by higher rental rates. These increases were partially offset by lower transient rental income, primarily resulting from cancellations, declines in annual, seasonalreservations and transient revenuestemporary site closures during the second quarter of 2020 as a result of increased rates. ResortCOVID-19. RV and marina base rental income is comprised of the following:
 Core PortfolioTotal Portfolio
Nine Months Ended September 30,Nine Months Ended September 30,
(amounts in thousands)20202019Variance%
Change		20202019Variance%
Change
Annual$126,715 $119,793 $6,922 5.8 %$142,641 $122,455 $20,186 16.5 %
Seasonal32,827 32,086 741 2.3 %32,946 32,222 724 2.2 %
Transient42,739 48,653 (5,914)(12.2)%44,559 50,153 (5,594)(11.2)%
RV and marina base rental income (1)
$202,281 $200,532 $1,749 0.9 %$220,146 $204,830 $15,316 7.5 %
_____________________
(1)    Marina rental income has been included in our Non-Core Portfolio following (amountsthe acquisition of the remaining interest in thousands):our joint venture investment of 11 marinas in Florida on September 10, 2019.
 Core Portfolio Total Portfolio
 2017 2016 Variance 
%
Change
 2017 2016 Variance 
%
Change
Annual$95,860
 $90,828
 $5,032
 5.5% $98,612
 $91,648
 $6,964
 7.6%
Seasonal25,374
 23,899
 1,475
 6.2% 28,353
 24,573
 3,780
 15.4%
Transient39,768
 37,970
 1,798
 4.7% 42,629
 38,431
 4,198
 10.9%
Resort base rental income$161,002
 $152,697
 $8,305
 5.4% $169,594
 $154,652
 $14,942
 9.7%
Right-to-use contracts current period, gross, net of sales and marketing, gross, increased by $1.6 million, primarily as a result of a higher average price per upgrade sale during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. During the nine months ended September 30, 2017 there were 2,017 upgrade sales with an average price per upgrade sale of $5,558. This compares to 1,892 upgrade sales with an average price per upgrade sale of $4,910 for the nine months ended September 30, 2016.
Utility and other income in our Core Portfolio for 2020 increased $2.3 million, or 3.3%, from 2019. The increase was due to higher pass-through income of $2.3 million and higher utility income of $1.9 million, partially offset by $6.7 million,a decrease in other property income of $1.9 million. The increase in pass-through income was primarily driven by increases in real estate taxes in Florida. The increase in utility income was mainly resulting from higher electric and sewer income. The decrease in other property income was primarily due to the Hurricane Irmasuspension of late fees and RV cancellation fees during the second quarter of 2020 as a result of COVID-19, partially offset by an increase in insurance recovery revenue. During the third quarter of 2020, we recognized insurance recovery revenue accrual of $3.1 million and insurance proceeds of $1.5$2.3 million related to prior storm events. In addition, the increase in utilityHurricanes Hanna and other income was due to an increase in utility income recovery across all utilities.Isaias.
Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for the nine months ended September 30, 20172020 increased $15.7$15.6 million, or 6.2%5.0%, from the nine months ended September 30, 2016. The increase was2019, primarily due to an increase in property operating and maintenance expenses of $13.9$11.5 million driven byand an increase in repairs and maintenance expense, utility expense and property payroll.real estate taxes of $2.3 million. The increase in repairsproperty operating and maintenance expense of $5.7 millionexpenses was primarily due to an expense of $3.3 million recognized during the quarter ended September 30, 2017 for restoration work that had been reasonably estimated and/or completed to date at our Florida properties impacted by Hurricane Irma and $1.2 million of clean-upincrease in utility expenses, including labor costs associated with prior storm events.sewer, water and electric distribution system, of approximately $3.6 million, an increase in insurance expense of $2.5 million and an increase in bad debt expense of $1.8 million, partially offset by a decrease in administrative expense of $1.6 million. Property operating and maintenance expenses in our Core Portfolio for 2020 also includes debris removal and cleanup costs of approximately $2.8 million related to Hurricane Hanna and Hurricane Isaias and $1.0 million in incremental and nonrecurring expenses related to the development of CDC and public health guidelines for social distancing and enhanced cleaning, property employee appreciation bonuses and emergency time-off pay. The increase in utility expensereal estate taxes was driven byprimarily due to real estate tax increases in electric, sewer, trashFlorida.













33
Management's Discussion and gas expenses, which was partially offset by increased utility income recovery. The increase in property payroll expense resulted from 2017 salary increases.Analysis (continued)


Home Sales and Rental Operations
Home Sales and Other
The following table summarizes certain financial and statistical data for Home Sales for the nine months ended September 30, 2017 and 2016 (amounts in thousands, except home sales volumes).Other.
  2017 2016 Variance 
%
Change
Gross revenues from new home sales (1)
 $16,724
 $19,500
 $(2,776) (14.2)%
Cost of new home sales (1)
 (16,467) (19,598) 3,131
 16.0 %
Gross profit (loss) from new home sales 257
 (98) 355
 362.2 %
         
Gross revenues from used home sales 8,148
 8,739
 (591) (6.8)%
Cost of used home sales (8,924) (8,909) (15) (0.2)%
Loss from used home sales (776) (170) (606) (356.5)%
         
Brokered resale revenues and ancillary services revenues, net 4,088
 2,736
 1,352
 49.4 %
Home selling expenses (3,301) (2,548) (753) (29.6)%
Income (loss) from home sales and other $268
 $(80) $348
 435.0 %
         
Home sales volumes        
Total new home sales (2)
 413
 508
 (95) (18.7)%
 New Home Sales Volume - ECHO JV 126
 162
 (36) (22.2)%
Used home sales 954
 988
 (34) (3.4)%
Brokered home resales 659
 585
 74
 12.6 %
_________________________
Nine Months Ended September 30,
(amounts in thousands, except home sales volumes)20202019Variance%
Change
Gross revenues from new home sales (1)
$28,863 $17,492 $11,371 65.0 %
Cost of new home sales (1)
28,067 16,877 11,190 66.3 %
Gross profit from new home sales796 615 181 29.4 %
Gross revenues from used home sales4,382 5,246 (864)(16.5)%
Cost of used home sales5,560 6,353 (793)(12.5)%
Loss from used home sales(1,178)(1,107)(71)(6.4)%
Brokered resale and ancillary services revenues, net2,011 4,564 (2,553)(55.9)%
Home selling expenses3,535 3,218 317 9.9 %
Income (loss) from home sales and other$(1,906)$854 $(2,760)(323.2)%
Home sales volumes
Total new home sales (2)
471 336 135 40.2 %
 New Home Sales Volume - ECHO JV38 50 (12)(24.0)%
Used home sales450 627 (177)(28.2)%
Brokered home resales454 675 (221)(32.7)%
_________________________
(1) New home sales gross revenues and costs of new home sales doesdo 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 months ended September 30, 2017 and September 30, 2016, respectively.

30
Management's Discussion (continued)

JV.
The increase in incomeloss from home sales and other was primarily due$1.9 million for 2020 compared to an increase in ancillary activities and an increase in the gross profit from new homes sales, partially offset by an increase in home selling expenses and anincome of $0.9 million for 2019. The increase in the loss from used home sales. The increase in home selling expensessales and other was driven by lower brokered resale and ancillary services revenues, net primarily due to expenseclosures or limitations of $0.4 million recorded duringcapacity at restaurants and amenities across the quarter ended September 30, 2017 related to property damageportfolio as a result of Hurricane Irma. The expense recorded during the quarter was offset by revenue recorded of $0.4 million related to the expected insurance recovery from this loss.COVID-19.
34
Management's Discussion and Analysis (continued)

Rental Operations
The following table summarizes certain financial and statistical data for manufacturedMH Rental Operations.
Nine Months Ended September 30,
(amounts in thousands, except rental unit volumes)20202019Variance%
Change
Manufactured homes:
Rental operations revenue (1)
$35,679 $34,312 $1,367 4.0 %
Rental home operating and maintenance expense4,294 4,077 217 5.3 %
Income from rental operations31,385 30,235 1,150 3.8 %
Depreciation on rental homes (2)
8,228 7,770 458 5.9 %
Income from rental operations, net of depreciation$23,157 $22,465 $692 3.1 %
Gross investment in new manufactured home rental units (3)
$231,192 $220,669 $10,523 4.8 %
Gross investment in used manufactured home rental units$16,299 $23,454 $(7,155)(30.5)%
Net investment in new manufactured home rental units$192,247 $195,626 $(3,379)(1.7)%
Net investment in used manufactured home rental units$6,798 $10,418 $(3,620)(34.7)%
Number of occupied rentals – new, end of period (4)
3,314 3,079 235 7.6 %
Number of occupied rentals – used, end of period588 914 (326)(35.7)%
______________________
(1)Rental operations revenue consists of Site rental income and home Rental Operationsrental income in our Core Portfolio. Approximately $23.5 million and $23.4 million of Site rental income for the nine months ended September 30, 20172020 and 2016 (amounts2019, respectively, are included in thousands, exceptcommunity base rental unit volumes).income within the Core Portfolio Income from Property Operations table. The remainder of home rental income is included in rental home income within the Core Portfolio Income from Property Operations table.
  2017 2016 Variance 
%
Change
Manufactured homes:        
New Home $20,718
 $18,802
 $1,916
 10.2 %
Used Home 16,425
 18,728
 (2,303) (12.3)%
Rental operations revenue (1)
 37,143
 37,530
 (387) (1.0)%
Rental home operating and maintenance (4,912) (4,874) (38) (0.8)%
Income from rental operations 32,231
 32,656
 (425) (1.3)%
Depreciation on rental homes (2)
 (7,910) (8,007) 97
 1.2 %
Income from rental operations, net of depreciation $24,321
 $24,649
 $(328) (1.3)%
         
Gross investment in new manufactured home rental units (3)
 $131,389
 $123,866
 $7,523
 6.1 %
Gross investment in used manufactured home rental units $44,624
 $52,628
 $(8,004) (15.2)%
         
Net investment in new manufactured home rental units $105,424
 $101,768
 $3,656
 3.6 %
Net investment in used manufactured home rental units $24,833
 $34,169
 $(9,336) (27.3)%
         
Number of occupied rentals – new, end of period (4)
 2,492
 2,316
 176
 7.6 %
Number of occupied rentals – used, end of period 2,010
 2,473
 (463) (18.7)%
______________________
(1)
Rental operations revenue consists of Site rental income and home rental income. Approximately $26.3 million and $27.0 million for the nine months ended September 30, 2017 and 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 $15.5 million and $15.3 million as of September 30, 2017 and 2016, respectively.
(4)
Occupied rentals as of the end of the period in our Core Portfolio and includes 254 and 158 homes rented through our ECHO JV during the nine months ended September 30, 2017 and 2016, respectively.
The decrease(2)Presented in income from rental operations, net of depreciation, was primarily due to a decreaseDepreciation and amortization in the numberConsolidated Statements of usedIncome and Comprehensive Income.
(3)Includes both occupied and unoccupied rental units, partially offset byhomes in our Core Portfolio. New home cost basis does not include the changecosts associated with our ECHO JV. Our investment in the mixECHO JV was $17.2 million and $16.7 million as of occupiedSeptember 30, 2020 and 2019, respectively.
(4)Occupied rentals driven by an increased numberas of occupied newthe end of the period in our Core Portfolio and includes 286 and 294 homes at a higher rental rate.rented through our ECHO JV as of September 30, 2020 and 2019, respectively.


Other Income and Expenses
The following table summarizes other income and expenses, for the nine months ended September 30, 2017net:
Nine Months Ended September 30,
(amounts in thousands, expenses shown as negative)20202019Variance%
Change
Depreciation and amortization$(115,937)$(112,785)$(3,152)(2.8)%
Interest income5,399 5,385 14 0.3 %
Income from other investments, net3,093 8,894 (5,801)(65.2)%
General and administrative(31,156)(27,844)(3,312)(11.9)%
Other expenses(1,885)(2,427)542 22.3 %
Early debt retirement(10,786)(1,491)(9,295)(623.4)%
Interest and related amortization(77,540)(77,964)424 0.5 %
Total other income and expenses, net$(228,812)$(208,232)$(20,580)(9.9)%

Total other income and September 30, 2016 (amounts in thousands, expenses shown as negative).
  2017 2016 Variance 
%
Change
Depreciation on real estate and rental homes $(90,849) $(87,203) $(3,646) (4.2)%
Amortization of in-place leases (2,128) (2,139) 11
 0.5 %
Interest income 5,542
 5,052
 490
 9.7 %
Income from other investments, net 3,918
 6,574
 (2,656) (40.4)%
General and administrative (excluding transaction costs) (23,015) (22,390) (625) (2.8)%
Transaction costs (324) (925) 601
 65.0 %
Property rights initiatives and other (814) (2,036) 1,222
 60.0 %
Interest and related amortization (74,728) (76,635) 1,907
 2.5 %
Total other income and expenses, net $(182,398) $(179,702) $(2,696) (1.5)%

Other expenses, net increased $2.7$20.6 million for the nine months ended September 30, 2017,in 2020 compared to the nine months ended September 30, 2016. The increase in other expenses, net from the nine months ended September 30, 2016 was2019, primarily

31
Management's Discussion (continued)

due to an increaseincreases in early debt retirement costs, general and administrative expenses and depreciation on real estate and rental homes, partially offset byamortization, as well as a decrease in income from other investments, net, due to the termination of the Tropical Palms RV ground leasenet. The higher early debt retirement costs in 2016 and a decrease in interest and related amortization as2020 was a result of the refinancing activities completedrepayment of our secured term loans that was scheduled to mature in 2021 and the termination of our swap agreement. The increase in general and administrative expenses was primarily due to higher payroll and professional fees. The decrease in income from other investments, net was primarily due to reimbursement of capital expenditures related to Hurricane Irma received in 2019.
Gain on Sale of Real Estate, Net
On January 23, 2019, we closed on the sale of five all-age MH communities located in Indiana and Michigan, collectively containing 1,463 sites, for $89.7 million. We recognized a gain on sale of these Properties of $52.5 million during 2016 (see Note 7the first quarter of 2019.
35
Management's Discussion and Analysis (continued)

Equity in income of unconsolidated joint ventures
Equity in income of unconsolidated joint ventures decreased $6.0 million in 2020 compared to 2019, primarily due to a decrease in income recognized from distributions from our unconsolidated joint ventures as we acquired the Consolidated Financial Statements for additional detail regarding borrowing arrangements).remaining interest in the Loggerhead joint venture in the third quarter of 2019 and a distribution received from our Voyager joint venture during the second quarter of 2019 that was in excess of our investment basis.


Liquidity and Capital Resources
Liquidity
Our primary demands for liquidity include payment of operating expenses, dividend distributions, debt service, including principal and interest, capital improvements on properties, purchasing both newProperties, home purchases and pre-owned homes, acquisitions of new Properties, and distributions.property acquisitions. We expect similar 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.
WeThe impact the COVID-19 pandemic will continue to have entered into an at-the-market (“ATM”) offering program, pursuanton our financial condition and cashflows is uncertain and is dependent upon various factors including the manner in which operations will continue at our Properties, customer payment patterns and operational decisions we have made and may make in the future in response to which we may sell,guidance from time-to-time, sharespublic authorities and/or for the health and safety of our common stock, par value $0.01 per share, having an aggregate offering price of upemployees, residents and guests. We believe, based on information currently available and our cash collection experience, that our current cash reserves provide us sufficient cash to $125.0 million. Duringmeet our needs for the next twelve months, including our expected dividend payments. Each quarter we sold 484,913 shares of common stock as part of the ATM equity offering program, at a weighted average price of $86.69, resulting in net cash proceeds of approximately $41.5 million. As of September 30, 2017, $33.0 million of common stock remained available for issuance under the ATM equity offering program. During October 2017, we sold 336,290 shares of common stock as part of the ATM equity offering program at a weighted average price of $85.13, resulting in net cash proceeds of approximately $28.3 million. Ourour Board of Directors has approvedconsiders several factors as it deliberates and decides whether to declare a new ATM equity offering program having an aggregate offering price of upquarterly dividend. The process includes revisiting our annual budget and considering factors including our planned operating performance and related cash flow, our debt service obligations, capital investments to $200.0 million.
In addition, we have available liquidity inmaintain and expand the form of authorizedbusiness, working capital requirements including home purchases and unissued preferred stock of approximately 10.0 million shares and approximately 112.5 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 uspotential investments 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.generate external growth.
One of our stated objectives is to maintain financial flexibility. Achieving this objective allows us to take advantage of strategic opportunities that may arise. When investing capital, we consider all potential uses, including returning capital to our stockholders or the conditions under which we may repurchase our stock. These conditions include, but are not limited to, market price, balance sheet flexibility, alternative opportunistic capital uses and capital requirements. We believe effective management of our balance sheet, including maintaining various access points to raise capital, managemanaging future debt maturities and borrowborrowing at competitive rates, enables us to meet this objective. We believe that as of September 30, 2017, we have sufficient liquidity, in the form of $72.1 million in available cash, net of restricted cash, and $400.0 million available on our LOC, to satisfy our near term obligations.
On October 27, 2017, we entered into a Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”) by and among us, MHC Operating Limited Partnership, Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”) and other lenders named therein, which amends and restates the terms of the obligations owing by us under the Amended, Restated and Consolidated Agreement dated as of July 17, 2014 pursuant to which we have access to a $400 million unsecured line of credit and the $200 million senior unsecured term loan facility. The LOC maturity date was extended to October 27, 2021, and this term can be extended an additional year in two six month increments, subject to certain conditions. The LOC bears interest at a rate of LIBOR plus 1.10% to 1.55% and requires an annual facility fee of 0.15% to 0.35%. We also extended the term of our Term Loan, which now matures on April 27, 2023 and has an interest rate of LIBOR plus 1.20% to 1.90% per annum.
We expect to meet our short-term liquidity requirements, including distributions for the 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 resourcesAccessing long-term low-cost secured debt continues to be adequate to meet our operating requirements for capital improvements, amortizing debt and payment of dividends and distributions.focus.
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,using long-term collateralized and uncollateralized borrowings including borrowings under the existing LOC and the issuance of debt securities or additionalthe issuance of equity securities, in addition to net cash provided by operating activities. As of September 30, 2017, we have no remaining scheduled debt maturities in 2017.including under our ATM equity offering program.
During the quarter ended September 30, 2017,2020, we entered into three new loans, each secured by a manufactured home Property, totaling $146.0Secured Facility with Fannie Mae for $386.9 million. The loans have a statednet proceeds from this transaction were primarily used to repay our $200.0 million unsecured term loan, including termination of the associated interest rate swap, and $166.8 million of 4.07%secured loans. For information regarding our debt activities and related borrowing arrangements, see Item 1. Financial Statements—Note 8. Borrowing Arrangements. For information regarding our interest rate swap, see Item 1. Financial Statements—Note 9. Derivative Instruments and Hedging.
Total secured debt encumbered a total of 114 and 116 of our Properties as of September 30, 2020 and December 31, 2019, respectively, and the gross carrying value of such Properties was approximately $2,551.9 million and $2,524.7 million, as of September 30, 2020 and December 31, 2019, respectively.
On April 28, 2020, our stockholders approved an amendment to our charter that increased the number of shares of common stock we are authorized to issue from 400,000,000 to 600,000,000 shares. As of September 30, 2020, we have available liquidity in the form of approximately 417.8 million shares of authorized and unissued common stock, par value $0.01 per year with 20 year maturitiesshare, and 10.0 million shares of authorized and unissued preferred stock registered for sale under the Securities Act of 1933, as amended.
On July 30, year principal amortization. We utilized the proceeds2020, we entered into our current at-the-market (“ATM”) equity offering program, which allows us to sell, from these loanstime-to-time, shares of our common stock, having an aggregate offering price of up to redeem$200.0 million. As of September 30, 2020, we have $200.0 million of common stock available for issuance under our Series C Preferred Stock for $136.1 million.

ATM equity program.
32
36
Management's Discussion and Analysis (continued)


We expect to meet our short-term liquidity requirements, including principal payments, capital improvements and dividend distributions for the next twelve months, generally through available cash, net cash provided by operating activities and our LOC. As of September 30, 2020, our LOC had a borrowing capacity of $350.0 million with the option to increase the borrowing capacity by $200.0 million, subject to certain conditions. The LOC bears interest at a rate of LIBOR plus 1.10% to 1.55%, carries an annual facility fee of 0.15% to 0.35% and matures on October 27, 2021. We also utilize interest rate swaps, as needed, to add stability to our interest expense and to manage our exposure to interest rate movements.
On October 16, 2017, weOur LOC arrangement will mature prior to the expected discontinuation of LIBOR subsequent to 2021. We continue to monitor the development and adoption of an alternative index to LIBOR to manage the transition and as it pertains to new arrangements to be entered into a $204 million secured facility with Fannie Mae, maturing in 2037 and bearing a 3.97% fixed interest rate. The loanthe future. Given the majority of our current debt is secured by five manufactured home communities. We usedand not subject to LIBOR, we do not believe the proceeds to pay, in full, $194.2 milliondiscontinuation of loans that wouldLIBOR will have matured in 2018. We incurred approximately $2.2 million in prepayment penalties associated with the debt repayment.
During the nine months ended September 30, 2017 we paid off two maturing mortgage loans and assumed debt in the purchase of Paradise Park Largo. The two mortgage loans we paid off were approximately $21.1 million, with a weighted average interest rate of 5.76% per annum, and $6.9 million, with a weighted average interest rate of 6.47%. Each loan was secured by a manufactured home 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.

significant impact on our consolidated financial statements.
The following table below summarizes our cash flow activity for the nine months ended September 30, 2017 and 2016 (amounts in thousands):flows activity:
Nine Months Ended September 30,
Nine Months Ended
September 30,
2017 2016
(amounts in thousands)(amounts in thousands)20202019
Net cash provided by operating activities$305,509
 $274,582
Net cash provided by operating activities$360,868 $349,348 
Net cash used in investing activities(138,173) (166,073)Net cash used in investing activities(161,529)(276,898)
Net cash used in financing activities(146,281) (119,955)Net cash used in financing activities(113,981)(99,038)
Net increase (decrease) in cash$21,055
 $(11,446)
Net increase (decrease) in cash and restricted cashNet increase (decrease) in cash and restricted cash$85,358 $(26,588)
Operating Activities
Net cash provided by operating activities increased $30.9$11.5 million to $305.5$360.9 million for the nine months ended September 30, 2017,2020 from $274.6$349.3 million for the nine months ended September 30, 2016.2019. The increase in net cash provided by operating activities was primarily due to higher income from property operations of $19.3$17.1 million, receipt of insurance proceeds of $10.8 million related to the California failure to maintain lawsuits and insurance proceeds of $1.5 million related to prior storm events, and long term incentive plan payments of $4.3 million during the first quarter of 2016. These increases were partially offset by the litigation settlement paymenta decrease in rents and other customer payments received in advance and security deposits of $13.3 million related to the California failure to maintain lawsuits.$4.5 million.
Investing Activities
Net cash used in investing activities was $138.2decreased $115.4 million to $161.5 million for the nine months ended September 30, 2017 compared to $166.12020 from $276.9 million for the nine months ended September 30, 2016. The decrease in net cash used in investing activities was primarily due to (1) the acquisitions of Forest Lake Estates, Portland Fairview and Rose Bay for $78.2 million, (2) an acquisition of vacant land in Florida for $2.0 million and (3) receipt of capital distribution of $4.1 million from our Voyager JV during the nine months ended September 30, 2016.2019. The decrease was due to reduced spending on acquisitions of $167.4 million and reduced capital improvement spending of $34.7 million partially offset by investments, inclusiveproceeds of costs,$77.7 million received in 2019 from the Crosswinds and Loggerhead joint venturessale of $2.3 million and $31.4 million, respectively,real estate and a short-term loandecrease in insurance proceeds of $13.8$6.6 million issuedin 2020 compared to the Crosswinds joint venture during the nine months ended September 30, 2017.2019.
Capital Improvements
The following table below summarizes capital improvement activity for the nine months ended September 30, 2017 and 2016 (amounts in thousands):
 
Nine Months Ended
September 30, (1)
 2017 2016
Recurring Capital Expenditures (2)
$29,823
 $28,321
Property upgrades and site development20,931
 9,833
New home investments (3)(4)
32,724
 44,293
Used home investments (4)
3,113
 4,265
Total Property86,591
 86,712
Corporate1,286
 604
Total Capital improvements$87,877
 $87,316
______________________improvements:
Nine Months Ended September 30,
(amounts in thousands)20202019
Recurring capital expenditures (1)
$42,277 $37,271 
Property upgrades and development (2)
64,651 40,429 
New home investments (3) (4)
42,934 108,845 
Used home investments (4)
1,583 2,036 
Total property improvements151,445 188,581 
Corporate3,616 1,207 
Total capital improvements$155,061 $189,788 
______________________
(1) Excludes non-cash activityPrimarily comprised of approximately $0.2common area, utility infrastructure and mechanical improvements.
(2)Includes restoration and improvement capital expenditures of $2.5 million and $0.5 million of used homes acquired through foreclosure of Chattel Loansrelated to Hurricane Irma for the nine months ended September 30, 2017 and 2016, respectively.2019.
(2) Recurring capital expenditures are primarily comprised of common area improvements, furniture, and mechanical improvements.
(3)Excludes new home investmentinvestments associated with our ECHO JV.
(4)Net proceeds from new and used home sale activities are reflected within Operating Activities.

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Management's Discussion (continued)

Financing Activities
Net cash used in financing activities was $146.3increased $14.9 million to $114.0 million for the nine months ended September 30, 2017 compared to net cash used in financing activities of $120.02020 from $99.0 million for the nine months ended September 30, 2016.2019. The increase in net cash used in financing activities for the nine months ended September 30, 2017 was primarily due to (1) a decrease in new mortgage debt proceeds, net, compared to the nine months ended September 30, 2016, (2) an increase in net repayments on the line of credit of $230.0 million, increased dividend distributions to our common stockholders for the nine months ended September 30, 2017 due to an increase approved by our Board of Directors, (3) reduced gross$20.7 million, increased debt issuance and defeasance costs of $15.5 million and proceeds received in 2019 from the sale of
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Management's Discussion and Analysis (continued)

common stock under our ATM equity offering program compared to the nine months ended September 30, 2016, and (4) reducedof $59.3 million, partially offset by an increase in net financing proceeds from stock options and our employee stock purchase plan.of $314.4 million .
Contractual Obligations
AsSignificant ongoing contractual obligations consist primarily of September 30, 2017long-term borrowings, interest expense, operating leases, LOC maintenance fees and ground leases. For a summary and complete presentation and description of our ongoing commitments and contractual obligations, see the Contractual Obligations section of the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2019 Form 10-K.
Westwinds
The Operating Partnership operates and manages Westwinds, a 720 site mobilehome community, and Nicholson Plaza, an adjacent shopping center, both located in San Jose, California pursuant to ground leases that expire on August 31, 2022 and do not contain extension options. Westwinds provides affordable, rent-controlled homes to numerous residents, including families with children and residents over 65 years of age. For the year ended December 31, 2019, Westwinds and Nicholson Plaza generated approximately $5.8 million of net operating income.
The master lessor of these ground leases, The Nicholson Family Partnership (together with its predecessor in interest, the “Nicholsons”), has expressed a desire to redevelop Westwinds, and in a written communication, they claimed that we were subjectobligated to certain contractual paymentdeliver the property free and clear of any and all subtenancies upon the expiration of the ground leases on August 31, 2022. In connection with any redevelopment, the City of San Jose’s conversion ordinance requires, among other things, that the landowner provide relocation, rental and purchase assistance to the impacted residents. We believe the Nicholsons are unlawfully attempting to impose those obligations as describedupon the Operating Partnership.
Westwinds opened in the table below (amounts1970s and was developed by the original ground lessee with assistance from the Nicholsons. In 1997, the Operating Partnership acquired the leasehold interest in thousands):the ground leases. In addition to rent based on the operations of Westwinds, the Nicholsons receive a percentage of gross revenues from the sale of new or used mobile homes in Westwinds.
 
Total (5)
 2017 2018 2019 2020 2021 Thereafter
Long Term Borrowings (1)
$2,196,259
 $11,544
 $242,082
 $237,497
 $354,758
 $214,448
 $1,135,930
Interest Expense (2)
675,257
 25,525
 93,878
 78,862
 63,396
 55,369
 358,227
Operating Lease8,901
 547
 2,221
 2,062
 2,011
 1,711
 349
LOC Maintenance Fee (3)
644
 204
 440
 

 

 

 —
Ground Lease (4)
15,534
 496
 1,980
 1,983
 1,984
 1,987
 7,104
Total Contractual Obligations$2,896,595
 $38,316
 $340,601
 $320,404
 $422,149
 $273,515
 $1,501,610
Weighted average interest rates - Long Term Borrowings4.35% 4.66% 4.57% 4.38% 4.45% 4.36% 4.23%

(1)
Balance excludes note premiums of $3.8 million and deferred financing costs of approximately $18.9 million. Balances include debt maturing and scheduled periodic principal payments.
(2)
Amounts include interest expected to be incurred on our secured debt and Term Loan based on obligations outstanding as of September 30, 2017.
(3)
As of September 30, 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.
The Operating Partnership has entered into subtenancy agreements with the mobilehome residents of Westwinds. Because the ground leases with the Nicholsons have an expiration date of August 31, 2022, and no further right of extension, the Operating Partnership has not entered into any subtenancy agreements that extend beyond August 31, 2022. However, the mobilehome residents’ occupancy rights continue by operation of California state and San Jose municipal law beyond the expiration date of the ground leases. Notwithstanding this, the Nicholsons’ have made what we believe to be an unlawful demand that the Operating Partnership deliver the property free and clear of any subtenancies upon the expiration of the ground leases by August 31, 2022. We believe the Nicholsons’ demand (i) violates California state and San Jose municipal law because the Nicholsons are demanding that we will be ablethe Operating Partnership remove all residents without just cause and (ii) conflicts with the terms and conditions of the ground leases, which contain no express or implied requirement that the Operating Partnership deliver the property free and clear of all subtenancies at the mobile home park and require, instead, that the Operating Partnership continuously operate the mobilehome park during the lease term.
On December 30, 2019, the Operating Partnership, together with certain interested parties, filed a complaint in California Superior Court for Santa Clara County, seeking declaratory relief pursuant to refinance our maturing debt obligationswhich it requested that the Court determine, among other things, that the Operating Partnership has no obligation to deliver the property free and clear of the mobilehome residents upon the expiration of the ground leases. The Operating Partnership and the interested parties filed an amended complaint on January 29, 2020.
The Nicholsons filed a secureddemand for arbitration on January 28, 2020, which they subsequently amended, pursuant to which they request (i) a declaration that the Operating Partnership, as the “owner and manager” of Westwinds, is “required by the Ground Leases, and State and local law to deliver the Property free of any encumbrances or unsecured basis; however,third-party claims at the expiration of the lease terms,” (ii) that the Operating Partnership anticipatorily breached the ground leases by publicly repudiating any such obligation and (iii) that the Operating Partnership is required to indemnify the Nicholsons with respect to the extent we are unableclaims brought by the interested parties in the Superior Court proceeding.
On February 3, 2020, the Nicholsons filed a motion in California Superior Court to refinance our debt as it matures, we believecompel arbitration and to stay the Superior Court litigation, which motion was heard on June 25, 2020. On July 29, 2020, the Superior Court issued a final order denying the Nicholson’s motion to compel arbitration. The Nicholsons filed a notice of appeal on August 7, 2020. The Nicholson’s claim that we will be ablethe Operating Partnership is required to repay such maturing debt through available cash as well as operating cash flow, asset sales and/orindemnify the proceeds from equity issuances. WithNicholsons for legal fees with respect to any refinancingthe claims brought by third parties in the Superior Court litigation is proceeding in the arbitration.
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Management's Discussion and Analysis (continued)

Following the filing of maturing debt, our future cash flow requirements could be impactedlawsuit, the City of San Jose took steps to accelerate the passage of a general plan amendment previously under review by significant changes in interest rates or other debt terms, including required amortization payments.
Inflation
Substantially allthe City to change the designation for Westwinds from its current general plan designation of the leases at the PropertiesUrban Residential (which would allow for monthly or annual rent increases which provide ushigher density redevelopment), to a newly created designation of Mobile Home Park. The Nicholsons expressed opposition to this change in designation. However, on March 10, 2020, following significant pressure from residents and advocacy groups, the City Council approved this new designation for all 58 mobilehome communities in with City of San Jose, including Westwinds. In addition to requirements imposed by California state and San Jose municipal law, the opportunitychange in designation requires, among other things, a further amendment to achieve increases, where justifiedthe general plan to a different land use designation 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 subjectCity Council prior 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.any change in use.
Off BalanceOff-Balance Sheet Arrangements
As of September 30, 2017,2020, we have no off balanceoff-balance sheet arrangements.
Critical Accounting Policies and Estimates
Refer to the 2016"Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2019 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.policies. There have been no significant changes to theseour critical accounting policies and estimates during the quarternine months ended September 30, 2017.2020.


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Management's Discussion (continued)

Forward LookingForward-Looking Statements
This Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 includes certain “forward-looking statements”"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”"anticipate," "expect," "believe," "project," "intend," "may be" and “will be”"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, but not limited to:
•our ability to control costs and real estate market conditions, the actual rate of decline inour ability to retain 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 Propertiesproperties currently owned or that we may acquire;
•our ability to attract and retain customers entering, renewing and attract customers renewing, upgrading and entering right-to-use contracts;membership subscriptions;
•our assumptions about rental and home sales markets;
•our ability to manage counterpartycounter-party risk;
•our ability to renew our insurance policies at existing rates and on consistent terms;
•in the age-qualified Properties, home sales results could be impacted by the ability of potential home buyershomebuyers 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;
•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;
•our ability to obtain financing or refinance existing debt on favorable terms or at all;
•the effect of interest rates;
•the effect from any breach of our, or any of our vendor's, data management systems;
•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 Exchange Commission; and
•other risks indicated from time to time in our filings with the Securities and Exchange Commission.

In addition, these forward-looking statements are subject to risks related to the COVID-19 pandemic, many of which are unknown, including the duration of the pandemic, the extent of the adverse health impact on the general population and on our residents, customers, and employees in particular, its impact on the employment rate and the economy, the extent and impact of governmental responses, and the impact of operational changes we have implemented and may implement in response to the pandemic.
39
Management's Discussion and Analysis (continued)

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.

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Item 3.Quantitative and Qualitative Disclosure of Market Risk
Item 3.Quantitative and Qualitative Disclosures About Market Risk
We disclosed a quantitative and qualitative analysis regarding market risk in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk onin our 2019 Form 10-K for the year ended December 31, 2016.10-K. There have been no material changes in the assumptions used or results obtained regarding market risk since December 31, 2016.2019.


Item 4.Controls and Procedures
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 30, 2017.2020. 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 30, 2017.
Notwithstanding the foregoing, a control system,2020. Any controls and procedures, 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.of achieving the desired control objectives.
Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2017,2020, 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.





41

Part II – Other Information


Item 1.Legal Proceedings
Item 1.Legal Proceedings
See Item 1. Financial Statements—Note 9 of11. Commitments and Contingencies accompanying the Consolidated Financial Statements contained herein.in this Quarterly Report on Form 10-Q.


Item 1A.Risk Factors
Item 1A.Risk Factors
There have been no material changes toA description of the risk factors associated with our business are discussed in “Item 1A. Risk Factors” in our Annual Report on2019 Form 10-K. In light of the COVID-19 pandemic, the Company has supplemented the risk factors disclosed in "Item 1A. Risk Factors" in our 2019 Form 10-K with the additional risk factor described below.
The current pandemic of the novel coronavirus, or COVID-19, has adversely impacted us, and COVID-19, or the future outbreak of other highly infectious or contagious diseases, could materially and adversely impact or disrupt our business, including our financial condition, results of operations and cash flows.
In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China. COVID-19 has since spread globally, including throughout the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.
COVID-19 has had, and another pandemic could have, significant repercussions across regional, national and global economies and financial markets, and could trigger a period of regional, national and global economic slowdown or regional, national or global recessions. The outbreak of COVID-19 in many countries continues to adversely impact regional, national and global economic activity and has contributed to significant volatility and negative pressure in financial markets.
Many U.S. cities and states, including cities and states where our offices and properties are located, have implemented measures to combat COVID-19, including quarantines, “shelter in place” rules, social distancing requirements, and restrictions on travel and the types of business that may continue to operate. We have taken actions in response to or in furtherance of these measures, including, but not limited to, temporarily halting RV reservations by incoming transient customers, delaying opening certain of our northern RV communities, closing all indoor amenity areas, pools and playgrounds, introducing a rent deferral program and waiving certain late fees and cancellation fees, which actions we may continue to implement. See "Management Discussion and Analysis of Financial Condition and Results of Operations-COVID-19 Pandemic Update."
The effects of COVID-19 have had, and could continue to have, or another pandemic, could have an adverse effect on our financial condition, results of operations and cash flows, which impact could be material, due to, among other factors:
•Weaknesses in national, regional or local economies may prevent our residents and customers from paying rent in full or on a timely basis. Federal, state, local, and industry-initiated efforts, including eviction moratoriums, and certain actions we have taken, such as the introduction of a rent deferral program, may affect our ability to collect rent, including on a deferred basis, or enforce remedies for the year ended December 31, 2016 andfailure to pay rent, which could lead to an increase in our Quarterly Reportrecognition of credit losses related to our rent receivables. In addition, a reduction in the ability or willingness of prospective customers to visit our properties could impact our ability to lease Sites and sell manufactured homes and may result in lower rental revenue and ancillary operating revenue produced by our Properties.
•The seasonal and transient customers that vacation and camp at our Properties, including our RV communities, may be less likely to visit if they have less disposable income for leisure-time activities or are unable to visit if subject to shelter-in-place or stay-at-home orders, which has caused, and could continue to cause, cancellation of existing reservations and reduced transient RV revenue.
•A general decline in business activity and discretionary spending could result in few customers purchasing membership subscriptions, or existing customers purchasing fewer membership upgrades or failing to pay annual subscription fees or installments on financed upgrade sales.
•A reduction in the demand for our Properties due to a general decline in business activity and discretionary spending could adversely affect the value of our Properties. This could lead to an impairment of our real estate investments. In addition, we may be unable to complete planned development of land for expansion or other capital improvement projects on a timely basis or at all due to government-mandated shutdowns or an inability by our third-party contractors to continue to work on construction projects.
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•A general decline in business activity or demand for real estate transactions could adversely affect our ability or desire to acquire additional properties, including through our joint ventures.
•The financial impact of COVID-19 could negatively impact our ability to comply with financial covenants in our credit arrangements and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our credit facilities.
•A severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our ability to access capital necessary to fund business operations, including the acquisition or expansion of properties, or replace or renew maturing liabilities on a timely basis, on attractive terms, or at all and may adversely affect the valuation of financial assets and liabilities.
•The outbreak of COVID-19 could negatively affect the health, availability and productivity of our current personnel. It could also affect our ability to recruit and attract new employees and retain current employees whose hours have been reduced. An outbreak that directly affects, or threatens to directly affect, any of our properties could also deter or prevent our on-site personnel from reporting to work. In response to shelter-in-place orders, the employees in our corporate and regional offices are currently working remotely. The effects of these shelter-in-place orders, including remote work arrangements for an extended period of time, could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. Further, we have and may continue to implement mitigation and other measures to support and protect our employees, which could result in increased labor costs.
We have also described risks related to changes to federal and state laws and regulations, economic downturn in markets with a large concentration of our properties, and our ability to obtain mortgage financing or refinance maturing mortgages and the effects of these risks on our financial condition, results of operations, cash flows, ability to make distributions, operations and market price of our stock in our 2019 Form 10-Q for10-K, each of which could be exacerbated by the quarter ended March 31, 2017.effects of COVID-19.

The rapid development and fluidity of the circumstances resulting from COVID-19 precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 and the current financial, economic and capital markets environment, and future developments in these and other areas present material uncertainty and risk with respect to our performance, financial condition, volume of business, results of operations and cash flows, which could adversely affect our ability to make distributions.


Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
None.


Item 3.Defaults Upon Senior Securities
Item 3.Defaults Upon Senior Securities
None.


Item 4.Mine Safety Disclosure
Item 4.Mine Safety Disclosures
None.


Item 5.Other Information
None.







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Item 6.Exhibits
Item 5.Other Information

On October 27, 2017, we entered into a Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”) by and among us, MHC Operating Limited Partnership, Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”) and other lenders named therein, which amends and restates the terms of the obligations owing by us under the Amended, Restated and Consolidated Credit Agreement dated as of July 17, 2014 pursuant to which we have access to a $400 million unsecured line of credit (the “LOC”) and the $200 million senior unsecured term loan facility (the “Term Loan”). We have the option to increase the borrowing capacity by $200 million, subject to certain conditions. The LOC maturity date was extended to October 27, 2021, and this term can be extended an additional year in two six month increments, subject to certain conditions. The LOC bears interest at a rate of LIBOR plus 1.10% to 1.55% and requires an annual facility fee of 0.15% to 0.35%. 

We also extended the term of our Term Loan, which now matures on April 27, 2023 and has an interest rate of LIBOR plus 1.20% to 1.90% per annum. For both the LOC and Term Loan, the spread over LIBOR is variable based on leverage throughout the respective loan terms. We incurred commitment and arrangement fees of approximately $3.6 million to enter into the Second Amended and Restated Credit Agreement.

Pursuant to a Second Amended and Restated Guaranty dated as of October 27, 2017, among us and certain of our subsidiaries and the Administrative Agent, we have guaranteed all of the obligations of our operating partnership under the Second Amended and Restated Credit Agreement when due, whether at stated maturity, by acceleration or otherwise.

The foregoing summaries of the Second Amended and Restated Credit Agreement, the Second Amended and Restated Guaranty and the amendments to the LOC and Term Loan are qualified in their entirety by reference to the text of the Second Amended and Restated Credit Agreement and the Second Amended and Restated Guaranty, each of which is attached as Exhibit 10.1 and 10.2, respectively.


Item 6.Exhibit Index
10.131.1

10.2
Second Amended and Restated Guaranty dated as of October 27, 2017, by Equity Lifestyle Properties, Inc. in favor of Wells Fargo Bank, National Association.

31.1
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
32.1
32.2
101101.INSThe following materials from Equity LifeStyle Properties, Inc.’s Quarterly Report on Form 10-Q forXBRL Instance Document - the quarter ended September 30, 2017 formattedinstance document does not appear in the Interactive Data File because its 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.tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
104Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document)



44

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.
EQUITY LIFESTYLE PROPERTIES, INC.
Date: October 31, 201727, 2020By:/s/ Marguerite Nader
Marguerite Nader
President and Chief Executive Officer
(Principal Executive Officer)
Date: October 31, 201727, 2020By:/s/ Paul Seavey
Paul Seavey
Executive Vice President and Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: October 27, 2020By:/s/ Valerie Henry
Valerie Henry
Vice President and Chief Accounting Officer
(Principal Accounting Officer)



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