UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________ 
FORM 10-Q
_________________________________________________________ 
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
2020
☐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 jurisdiction of incorporation)(IRS Employer Identification Number)
Two North Riverside Plaza, Suite 800Chicago,Illinois60606
(Address of Principal Executive Offices)(Zip Code)

(312) (312) 279-1400
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  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐
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 filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
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 ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐    No  ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 91,033,894182,155,196 shares of Common Stock as of July 24, 2019.
23, 2020.



Equity LifeStyle Properties, Inc.
Table of Contents
 
Page
Part I - Financial Information
Item 1.Financial Statements (unaudited)
Index To Financial Statements
3
4
5
7
9
Item 2.
1921
Item 3.
3441
Item 4.
3441
Part II - Other Information
Item 1.
42
Item 1.1A.
3542
Item 1A.2.
35
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
3543
Item 3.
3543
Item 4.
3543
Item 5.
3543
Item 6.
3643
2

Part I – Financial Information

Item 1. Financial Statements

Equity LifeStyle Properties, Inc.
Consolidated Balance Sheets
(amounts in thousands, except share and per share data)
As ofAs of
June 30, 2020December 31, 2019
(unaudited)
Assets
Investment in real estate:
Land$1,528,929  $1,525,407  
Land improvements3,396,132  3,336,070  
Buildings and other depreciable property903,249  881,572  
5,828,310  5,743,049  
Accumulated depreciation(1,849,799) (1,776,224) 
Net investment in real estate3,978,511  3,966,825  
Cash and restricted cash119,993  28,860  
Notes receivable, net35,304  37,558  
Investment in unconsolidated joint ventures19,864  20,074  
Deferred commission expense41,622  41,149  
Other assets, net72,880  56,809  
Total Assets$4,268,174  $4,151,275  
Liabilities and Equity
Liabilities:
Mortgage notes payable, net$2,247,790  $2,049,509  
Term loan, net199,111  198,949  
Unsecured line of credit50,000  160,000  
Accounts payable and other liabilities142,269  124,665  
Deferred revenue – upfront payments from membership upgrade sales132,023  126,814  
Deferred revenue – annual membership subscriptions12,655  10,599  
Accrued interest payable8,485  8,639  
Rents and other customer payments received in advance and security deposits102,480  91,234  
Distributions payable65,978  58,978  
Total Liabilities2,960,791  2,829,387  
Equity:
Stockholders' Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of June 30, 2020 and December 31, 2019; NaN issued and outstanding.—  —  
Common stock, $0.01 par value, 600,000,000 and 400,000,000 shares authorized as of June 30, 2020 and December 31, 2019, respectively; 182,153,754 and 182,089,595 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.1,812  1,812  
Paid-in capital1,405,764  1,402,696  
Distributions in excess of accumulated earnings(169,903) (154,318) 
Accumulated other comprehensive income (loss)(1,161) (380) 
Total Stockholders’ Equity1,236,512  1,249,810  
Non-controlling interests – Common OP Units70,871  72,078  
Total Equity1,307,383  1,321,888  
Total Liabilities and Equity$4,268,174  $4,151,275  
 As of As of
 June 30, 2019 December 31, 2018

(unaudited)  
Assets   
Investment in real estate:   
Land$1,418,353
 $1,408,832
Land improvements3,236,899
 3,143,745
Buildings and other depreciable property781,671
 720,900
 5,436,923
 5,273,477
Accumulated depreciation(1,704,091) (1,631,888)
Net investment in real estate3,732,832
 3,641,589
Cash and restricted cash90,457
 68,974
Notes receivable, net36,010
 35,041
Investment in unconsolidated joint ventures55,195
 57,755
Deferred commission expense40,710
 40,308
Other assets, net59,274
 46,227
Assets held for sale, net—
 35,914
Total Assets$4,014,478
 $3,925,808
    
Liabilities and Equity   
Liabilities:   
Mortgage notes payable, net$2,075,689
 $2,149,726
Term loan, net198,787
 198,626
Accounts payable and other liabilities127,051
 102,854
Deferred revenue – upfront payments from right-to-use contracts (membership upgrade sales)121,047
 116,363
Deferred revenue – right-to-use annual payments (membership subscriptions)13,022
 10,055
Accrued interest payable8,187
 8,759
Rents and other customer payments received in advance and security deposits104,249
 81,114
Distributions payable58,972
 52,617
Liabilities related to assets held for sale—
 12,350
Total Liabilities2,707,004
 2,732,464
Equity:   
Stockholders' Equity:   
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of June 30, 2019 and December 31, 2018; none issued and outstanding.—
 —
Common stock, $0.01 par value, 400,000,000 and 200,000,000 shares authorized as of June 30, 2019 and December 31, 2018, respectively; 91,032,007 and 89,921,018 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively.906
 896
Paid-in capital1,397,613
 1,329,391
Distributions in excess of accumulated earnings(162,204) (211,034)
Accumulated other comprehensive income (loss)(242) 2,299
Total Stockholders’ Equity1,236,073
 1,121,552
Non-controlling interests – Common OP Units71,401
 71,792
Total Equity1,307,474
 1,193,344
Total Liabilities and Equity$4,014,478
 $3,925,808









The accompanying notes are an integral part of the consolidated financial statements.
3

Equity LifeStyle Properties, Inc.
Consolidated Statements of Income and Comprehensive Income
(amounts in thousands, except per share data)data (adjusted for stock split))
(unaudited)
 Quarters Ended June 30,Six Months Ended June 30,
2020201920202019
Revenues:
Rental income$217,963  $212,007  $457,309  $435,573  
Annual membership subscriptions12,961  12,586  26,034  24,902  
Membership upgrade sales current period, gross5,048  5,041  9,891  8,879  
Membership upgrade sales upfront payments, deferred, net(2,666) (2,912) (5,208) (4,683) 
Other income9,680  10,265  20,739  20,635  
Gross revenues from home sales8,866  7,825  20,175  14,300  
Brokered resale and ancillary services revenues, net(575) 872  363  2,431  
Interest income1,791  1,803  3,598  3,554  
Income from other investments, net1,022  879  1,665  1,865  
Total revenues254,090  248,366  534,566  507,456  
Expenses:
Property operating and maintenance85,265  84,868  168,899  162,816  
Real estate taxes16,668  15,107  33,509  30,430  
Sales and marketing, gross4,276  4,214  8,254  7,623  
Membership sales commissions, deferred, net(481) (389) (697) (580) 
Property management14,813  14,385  29,817  28,070  
Depreciation and amortization38,332  37,776  77,356  75,753  
Cost of home sales8,850  8,164  20,761  14,796  
Home selling expenses1,081  1,102  2,294  2,185  
General and administrative10,609  9,225  21,464  19,134  
Other expenses639  540  1,227  967  
Early debt retirement—  1,491  1,054  1,491  
Interest and related amortization26,249  26,024  52,322  52,417  
Total expenses206,301  202,507  416,260  395,102  
Gain on sale of real estate, net—  —  —  52,507  
Income before equity in income of unconsolidated joint ventures47,789  45,859  118,306  164,861  
Equity in income of unconsolidated joint ventures1,064  3,226  1,271  4,759  
Consolidated net income48,853  49,085  119,577  169,620  
Income allocated to non-controlling interests – Common OP Units(2,658) (2,676) (6,507) (9,902) 
Redeemable perpetual preferred stock dividends(8) (8) (8) (8) 
Net income available for Common Stockholders$46,187  $46,401  $113,062  $159,710  
Consolidated net income$48,853  $49,085  $119,577  $169,620  
Other comprehensive income (loss):
Adjustment for fair market value of swap552  (1,610) (781) (2,541) 
Consolidated comprehensive income49,405  47,475  118,796  167,079  
Comprehensive income allocated to non-controlling interests – Common OP Units(2,689) (2,589) (6,465) (9,759) 
Redeemable perpetual preferred stock dividends(8) (8) (8) (8) 
Comprehensive income attributable to Common Stockholders$46,708  $44,878  $112,323  $157,312  
Earnings per Common Share – Basic$0.25  $0.26  $0.62  $0.89  
Earnings per Common Share – Fully Diluted$0.25  $0.26  $0.62  $0.89  
Weighted average Common Shares outstanding – Basic181,833  180,312  181,781  179,938  
Weighted average Common Shares outstanding – Fully Diluted192,542  191,860  192,538  191,546  
 Quarters Ended June 30,
Six Months Ended June 30,
 2019
2018
2019
2018
Revenues:       
Rental income$212,007
 $199,155
 $435,573
 $406,148
Right-to-use annual payments (membership subscriptions)12,586
 11,891
 24,902
 23,410
Right-to-use contracts current period, gross (membership upgrade sales)5,041
 3,944
 8,879
 7,106
Right-to-use contract upfront payments, deferred, net(2,912) (2,021) (4,683) (3,306)
Other income10,265
 12,536
 20,635
 25,572
Gross revenues from home sales7,825
 9,105
 14,300
 17,414
Brokered resale and ancillary services revenues, net872
 617
 2,431
 2,018
Interest income1,803
 1,862
 3,554
 3,812
Income from other investments, net879
 3,413
 1,865
 4,353
Total revenues248,366
 240,502

507,456

486,527
Expenses:       
Property operating and maintenance84,868
 81,720
 162,816
 158,052
Real estate taxes15,107
 13,440
 30,430
 27,575
Sales and marketing, gross4,214
 3,305
 7,623
 6,117
Right-to-use contract commissions, deferred, net(389) (262) (580) (286)
Property management14,385
 13,472
 28,070
 27,153
Depreciation and amortization37,776
 34,345
 75,753
 66,719
Cost of home sales8,164
 9,632
 14,796
 18,206
Home selling expenses1,102
 973
 2,185
 2,048
General and administrative9,225
 9,669
 19,134
 17,707
Other expenses540
 367
 967
 710
Early debt retirement1,491
 —
 1,491
 —
Interest and related amortization26,024
 26,285
 52,417
 51,988
Total expenses202,507
 192,946

395,102

375,989
Gain on sale of real estate, net—
 —
 52,507
 —
Income before equity in income of unconsolidated joint ventures45,859
 47,556

164,861

110,538
Equity in income of unconsolidated joint ventures3,226
 1,613
 4,759
 2,808
Consolidated net income49,085
 49,169

169,620

113,346
        
Income allocated to non-controlling interests – Common OP Units(2,676) (3,024) (9,902) (6,979)
Redeemable perpetual preferred stock dividends(8) (8) (8) (8)
Net income available for Common Stockholders$46,401
 $46,137

$159,710

$106,359
        
Consolidated net income$49,085
 $49,169
 $169,620
 $113,346
Other comprehensive income (loss):       
Adjustment for fair market value of swap(1,610) 764
 (2,541) 2,637
Consolidated comprehensive income47,475
 49,933

167,079

115,983
Comprehensive income allocated to non-controlling interests – Common OP Units(2,589) (3,071) (9,759) (7,141)
Redeemable perpetual preferred stock dividends(8) (8) (8) (8)
Comprehensive income attributable to Common Stockholders$44,878
 $46,854

$157,312

$108,834
        
Earnings per Common Share – Basic$0.51
 $0.52
 $1.78
 $1.20
        
Earnings per Common Share – Fully Diluted$0.51
 $0.52
 $1.77
 $1.20
        
Weighted average Common Shares outstanding – basic90,156
 88,549
 89,969
 88,537
Weighted average Common Shares outstanding – fully diluted95,930
 94,623
 95,773
 94,600



The accompanying notes are an integral part of the consolidated financial statements.
4

Equity LifeStyle Properties, Inc.
Consolidated Statements of Changes in Equity
(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  $—  $(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) —  
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) —  
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  —  (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) —  
Adjustment for fair market value of swap—  —  —  —  552  —  552  
Consolidated net income—  —  8  46,187  —  2,658  48,853  
Distributions—  —  (8) (62,387) —  (3,591) (65,986) 
Other—  (143) —  —  —  —  (143) 
Balance as of June 30, 2020$1,812  $1,405,764  $—  $(169,903) $(1,161) $70,871  $1,307,383  
 Common
Stock		 Paid-in
Capital		 Redeemable
Perpetual
Preferred
Stock		 Distributions
in Excess of
Accumulated
Earnings		 Accumulated
Other
Comprehensive
Income (Loss)		 Non-
controlling
Interests –
Common OP
Units		 Total
Equity
Balance as of December 31, 2018$896
 $1,329,391
 $—
 $(211,034) $2,299
 $71,792
 $1,193,344
Exchange of Common OP Units for common stock—
 66
 —
 —
 —
 (66) —
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
 —
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, 2019896
 1,332,410
 $—
 (152,848) 1,368
 75,492
 1,257,318
Exchange of Common OP Units for Common Stock5
 6,430
 —
 —
 —
 (6,435) —
Issuance of Common Stock through employee stock purchase plan—
 587
 —
 —
 —
 —
 587
Issuance of Common Stock5
 59,314
 —
 —
 —
 —
 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
 —
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) —
 (3,215) (58,980)
Other—
 (870) —
 —
 —
 —
 (870)
Balance as of June 30, 2019$906
 $1,397,613
 $—
 $(162,204) $(242) $71,401
 $1,307,474
























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

5

Equity LifeStyle Properties, Inc.
Consolidated Statements of Changes in Equity
(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 January 1, 2019$1,792  $1,328,495  $—  $(211,034) $2,299  $71,792  $1,193,344  
Exchange of Common OP Units for Common Stock—  66  —  —  —  (66) —  
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  —  
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  —  (152,848) 1,368  75,492  1,257,318  
Exchange of Common OP Units for Common Stock10  6,425  —  —  —  (6,435) —  
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  —  
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) —  (3,215) (58,980) 
Other—  (870) —  —  —  ��  (870) 
Balance as of June 30, 2019$1,812  $1,396,707  $—  $(162,204) $(242) $71,401  $1,307,474  


 Common
Stock		 Paid-in
Capital		 Redeemable
Perpetual
Preferred 
Stock		 Distributions
in Excess of
Accumulated
Earnings		 Accumulated
Other
Comprehensive
Income (Loss)		 Non-
controlling
interests –
Common OP
Units		 Total
Equity
Balance as of December 31, 2017$883
 $1,242,109
 $—
 $(211,980) $942
 $68,088
 $1,100,042
Cumulative effect of change in accounting principle (ASC 606, Revenue Recognition)—
 —
 —
 (15,186) —
 —
 (15,186)
Balance as of January 1, 2018883
 1,242,109
 —
 (227,166) 942
 68,088
 1,084,856
Exchange of Common OP Units for common stock—
 80
 —
 —
 —
 (80) —
Issuance of common stock through employee stock purchase plan—
 503
 —
 —
 —
 —
 503
Compensation expenses related to restricted stock and stock options—
 1,800
 —
 —
 —
 —
 1,800
Adjustment for Common OP Unitholders in the Operating Partnership—
 782
 —
 —
 —
 (782) —
Adjustment for fair market value of swap—
 —
 —
 —
 1,873
 —
 1,873
Consolidated net income—
 —
 —
 60,222
 —
 3,955
 64,177
Distributions—
 —
 —
 (48,805) —
 (3,205) (52,010)
Other—
 (60) —
 —
 —
 —
 (60)
Balance as of March 31, 2018883
 1,245,214
 —
 (215,749) 2,815
 67,976
 1,101,139
Exchange of Common OP Units for Common Stock1
 81
 —
 —
 —
 (82) —
Issuance of Common Stock through employee stock purchase plan—
 343
 —
 —
 —
 —
 343
Compensation expenses related to restricted stock and stock options—
 2,741
 —
 —
 —
 —
 2,741
Adjustment for Common OP Unitholders in the Operating Partnership—
 (57) —
 —
 —
 57
 —
Adjustment for fair market value of swap—
 —
 —
 —
 764
 —
 764
Consolidated net income—
 —
 8
 46,137
 —
 3,024
 49,169
Distributions—
 —
 (8) (48,841) —
 (3,201) (52,050)
Other—
 (275) —
 —
 —
 —
 (275)
Balance as of June 30, 2018$884
 $1,248,047
 $—
 $(218,453) $3,579
 $67,774
 $1,101,831

























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

Equity LifeStyle Properties, Inc.
Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)
Six Months Ended June 30,Six Months Ended June 30,
2019 201820202019
Cash Flows From Operating Activities:   Cash Flows From Operating Activities:
Consolidated net income$169,620
 $113,346
Consolidated net income$119,577  $169,620  
Adjustments to reconcile consolidated net income to net cash provided by operating activities:   Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Gain on sale of real estate, net(52,507) —
Gain on sale of real estate, net—  (52,507) 
Early debt retirement1,491
 —
Early debt retirement1,054  1,491  
Depreciation and amortization76,648
 67,431
Depreciation and amortization78,616  76,648  
Amortization of loan costs1,768
 1,772
Amortization of loan costs1,777  1,768  
Debt premium amortization(232) (711)Debt premium amortization(211) (232) 
Equity in income of unconsolidated joint ventures(4,759) (2,808)Equity in income of unconsolidated joint ventures(1,271) (4,759) 
Distributions of income from unconsolidated joint ventures2,008
 1,732
Distributions of income from unconsolidated joint ventures81  2,008  
Proceeds from insurance claims, net4,422
 1,809
Proceeds from insurance claims, net1,288  4,422  
Compensation expense related to restricted stock and stock options5,045
 4,541
Compensation expense related to restricted stock and stock options5,633  5,045  
Revenue recognized from right-to-use contract upfront payments (membership upgrade sales)(4,195) (3,800)
Commission expense recognized related to right-to-use contracts1,867
 1,810
Revenue recognized from membership upgrade sales upfront paymentsRevenue recognized from membership upgrade sales upfront payments(4,683) (4,195) 
Commission expense recognized related to membership salesCommission expense recognized related to membership sales1,866  1,867  
Long-term incentive plan compensation(3,608) 461
Long-term incentive plan compensation765  (3,608) 
Changes in assets and liabilities:   Changes in assets and liabilities:
Notes receivable, net(1,079) 642
Notes receivable, net(484) (1,079) 
Deferred commission expense(2,269) (2,010)Deferred commission expense(2,338) (2,269) 
Other assets, net(8,275) 10,895
Other assets, net(1,857) (8,275) 
Accounts payable and other liabilities25,962
 9,274
Accounts payable and other liabilities15,918  25,962  
Deferred revenue – upfront payments from right-to-use contracts (membership upgrade sales)8,879
 7,106
Deferred revenue – right-to-use annual payments (membership subscriptions)2,967
 2,874
Deferred revenue – upfront payments from membership upgrade salesDeferred revenue – upfront payments from membership upgrade sales9,891  8,879  
Deferred revenue – annual membership subscriptionsDeferred revenue – annual membership subscriptions2,056  2,967  
Rents and other customer payments received in advance and security deposits20,932
 15,601
Rents and other customer payments received in advance and security deposits11,067  20,932  
Net cash provided by operating activities244,685
 229,965
Net cash provided by operating activities238,745  244,685  
Cash Flows From Investing Activities:   Cash Flows From Investing Activities:
Real estate acquisitions, net(38,463) (53,289)Real estate acquisitions, net(4,056) (38,463) 
Proceeds from disposition of properties, net77,746
 —
Proceeds from disposition of properties, net—  77,746  
Investment in unconsolidated joint ventures—
 (3,791)
Distributions of capital from unconsolidated joint ventures5,169
 110
Distributions of capital from unconsolidated joint ventures1,399  5,169  
Proceeds from insurance claims1,111
 2,335
Proceeds from insurance claims—  1,111  
Repayments of notes receivable—
 13,823
Capital improvements(121,444) (81,377)Capital improvements(103,147) (121,444) 
Net cash used in investing activities(75,881) (122,189)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities(105,804) (75,881) 

























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

7


Equity LifeStyle Properties, Inc.
Consolidated Statements of Cash Flows (continued)
(amounts in thousands)
(unaudited)

Six Months Ended June 30,
20202019
Cash Flows From Financing Activities:
Proceeds from stock options and employee stock purchase plan1,150  1,237  
Gross proceeds from the issuance of common stock—  59,319  
Distributions:
Common Stockholders(118,153) (104,579) 
Common OP Unitholders(6,803) (6,676) 
Preferred Stockholders(8) (8) 
Share based award tax withholding payments(3,962) —  
Principal payments and mortgage debt repayment(75,312) (93,982) 
Mortgage notes payable financing proceeds275,385  —  
Line of Credit repayment(272,500) —  
Line of Credit proceeds162,500  —  
Debt issuance and defeasance costs(3,819) (1,700) 
Other(286) (932) 
Net cash used in financing activities(41,808) (147,321) 
Net increase (decrease) in cash and restricted cash91,133  21,483  
Cash and restricted cash, beginning of period28,860  68,974  
Cash and restricted cash, end of period$119,993  $90,457  

 Six Months Ended June 30,
 2019 2018
Cash Flows From Financing Activities:   
Proceeds from stock options and employee stock purchase plan1,237
 846
Gross proceeds from the issuance of common stock59,319
 —
Distributions:   
Common Stockholders(104,579) (92,008)
Common OP Unitholders(6,676) (6,049)
Preferred Stockholders(8) (8)
Principal payments and mortgage debt repayment(93,982) (23,964)
New mortgage notes payable financing proceeds—
 64,014
Line of Credit payoff—
 (97,000)
Line of Credit proceeds—
 67,000
Debt issuance and defeasance costs(1,700) (1,688)
Other(932) (335)
Net cash used in financing activities(147,321) (89,192)
Net increase in cash and restricted cash21,483
 18,584
Cash and restricted cash, beginning of period68,974
 35,631
Cash and restricted cash, end of period$90,457
 $54,215
Six Months Ended June 30,
20202019
Supplemental Information:
Cash paid for interest$51,354  $51,744  
Net investment in real estate – reclassification of rental homes$17,336  $12,451  
Other assets, net – reclassification of rental homes$(17,336) $(12,451) 
Real estate acquisitions:
Investment in real estate$(4,235) $(58,871) 
Other assets, net—  (412) 
Debt assumed—  19,212  
Other liabilities179  1,608  
Real estate acquisitions, net$(4,056) $(38,463) 
Real estate dispositions:
Investment in real estate$—  $35,572  
Notes receivable, net—  295  
Other assets, net—  97  
Mortgage notes payable, net—  (11,175) 
Other liabilities—  450  
Gain on sale of real estate, net—  52,507  
Real estate dispositions, net$—  $77,746  


 Six Months Ended June 30,
 2019 2018
Supplemental Information:   
Cash paid for interest$51,744
 $52,658
Net investment in real estate – reclassification of rental homes$12,451
 $15,396
Other assets, net – reclassification of rental homes$(12,451) $(15,396)
    
Real estate acquisitions:   
Investment in real estate$(58,871) $(71,756)
Other assets, net(412) (9)
Debt assumed19,212
 9,200
Debt financed—
 8,786
Other liabilities1,608
 490
Real estate acquisitions, net$(38,463) $(53,289)
    
Real estate dispositions:   
Investment in real estate$35,572
 $—
Notes receivable, net295
 —
Other assets, net97
 —
Mortgage notes payable, net(11,175) —
Other liabilities450
 —
Gain on sale of real estate, net52,507
 —
Real estate dispositions, net$77,746
 $—













The accompanying notes are an integral part of 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 (the “Subsidiaries”"Subsidiaries"), are referred to herein as “we,” “us,” "the Company,"we," "us," and “our.”"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 factory-builtmanufactured homes, cottages cabins 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 wholly-owned 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 94.5%94.6% interest as of June 30, 2019.2020. 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 with 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 recognized in earnings.
The accompanying unaudited interim consolidated financial statements have been prepared pursuant to Securities and Exchange Commission (“SEC”) rules and 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 2018 Form 10-K.year ended December 31, 2019.
Intercompany balances and transactions have been eliminated. All adjustments to the interim consolidated financial statements are of a normal, recurring nature and, in the opinion of management, are necessary for a fair presentation of results for these interim periods. Revenues and expenses are subject to seasonal fluctuations and accordingly, quarterly interim results may not be indicative of full year results. Certain prior period amounts have been reclassified on
On October 15, 2019, we effected a 2-for-one stock split of our interimcommon 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 conform with current year presentation.reflect the stock split.

Note 2 – Summary of Significant Accounting Policies
(a) Recently Adopted Accounting Pronouncements
In February 2016, the FASB issued ("ASU 2016-02") Leases. This new guidance, including the related subsequently issued ASUs, provides the principles for the recognition, measurement, presentation and disclosure of leases, including the requirement that lessees recognize right-of-use ("ROU") assets and lease liabilities for leases on the Consolidated Balance Sheets.
We adopted the new lease standard effective January 1, 2019 and have elected to use January 1, 2019 as our date of initial application. Results for reporting periods beginning January 1, 2019 are presented under the new lease standard. We made an accounting policy election to not recognize ROU assets and lease liabilities for leases with a term of 12 months or less. We elected the package of practical expedients permitted under the transition guidance within the new standard and were not required to reassess the following upon adoption: (i) whether an expired or existing contract met the definition of a lease, (ii) the lease classification at January 1, 2019 for existing leases and (iii) whether leasing costs previously capitalized as initial direct costs would continue to be amortized. Upon adoption, we did not have an adjustment to the opening balance of retained earnings due to the election of these practical expedients.
As a lessor, we adopted the practical expedient that allowed us not to separate expenses reimbursed by our customers (“utility recoveries”) from the associated rental revenue if certain criteria were met. We assessed these criteria and concluded the timing and pattern of transfer for rental revenue and the associated utility recoveries are the same and as our leases qualify as operating leases, we accounted for and presented rental revenue and utility recoveries as a single component under Rental income in our Consolidated Statements of Income and Comprehensive Income for 2019 and 2018. In addition, the new standard requires our expected credit loss related to the collectability of lease receivables to be reflected as an adjustment to the line item Rental income prospectively starting from January 1, 2019. For 2018, the credit loss related to the collectability of lease receivables was recognized
Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 2 – Summary of Significant Accounting Policies (continued)

in the line item Property operating and maintenance and was not significant. The guidance regarding capitalization of leasing costs did not have any effect on our consolidated financial statements.
On January 1, 2019,2020, we recognized ROU assets of $17.5 million and lease liabilities of $18.7 million on the Consolidated Balance Sheets, principally for our ground and office space leases, in which we are the lessee.
For more disclosure on the adoption of the new lease accounting standard, see Note 3. Leases.
(b)    New Accounting Pronouncements
In August 2018, theprospectively adopted FASB issued ("ASU 2018-15")Intangibles - 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 2018-15 provides clarityguidance on the accounting for fees paid when the arrangement includes a software license and aligns the requirements for capitalizing implementation costs ofincurred in a cloud computinghosting arrangement that is a service contract. The project stage (that is, preliminary project stage, application development stage, or post implementation stage) andcontract with the nature of the implementation costs determine whichrequirements for capitalizing costs to capitalize as an asset related to the service contract and which ones to expense. This update also requires the capitalized implementation costs to be expensed over the term of the arrangement and to be presented in the same line item in the consolidated financial statements as the fees associated with the service of the arrangement. ASU 2018-15 is effective in fiscal years beginning after December 15, 2019, including interim periods within those years. Early adoption is permitted. This guidance can be applied either retrospectivelydevelop or prospectively to all implementation costs incurred after the date of adoption. We are currently in the process of evaluating the potential impact, if any, that theobtain internal-use software. The adoption of this standard mayguidance did not have a material impact on theour consolidated financial statements and related disclosures.statements.
In June 2016, theOn January 1, 2020, we adopted FASB issued (“ASU 2016-13”2016-13”) Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (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.
We are exposed to credit losses primarily 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 remaining contractual life of our receivables. The estimate is a result of our ongoing assessments and evaluations of
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 recognized a cumulative-effect adjustment of $3.9 million, which decreased opening retained earnings as of January 1, 2020.
The cumulative-effect adjustment resulting from the adoption of ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as wellof January 1, 2020 was as the credit quality and underwriting standards of an entity’s portfolio. ASU 2016-13 is 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 the consolidated financial statements and related disclosures.follows:
(c)
Balance net of allowanceBalance Sheet LocationBalance at December 31, 2019Adjustment due to ASU 2016-13 AdoptionBalance at January 1, 2020Balance at
June 30, 2020
(amounts in thousands)
Annual membership subscriptionsOther assets, net$2,394  $(1,361) $1,033  $1,412  
Membership upgradesNotes receivable, net$25,236  $(2,514) $22,722  $23,728  
(b) Revenue Recognition
We accountRental income is accounted for certain revenue streams in accordance with Accounting Standard Codification (ASC)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. Right-to-use contracts (also referred to as membership subscriptions),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 induring which access to Sites at certain Properties is provided. Membership subscription receivables are provided. Right-to-use upgrade contractspresented 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.transferred. 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.
(d)(c) Restricted Cash
As of June 30, 20192020 and December 31, 2018,2019, restricted cash consists of $27.5$25.8 million and $24.1$25.1 million, respectively, primarily related to cash reserved for customer deposits and amounts escrowedescrows 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 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. 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 communitymarina 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. In addition, customers may lease homes that are located in our Properties.communities.
The leases entered into between the customer and us for thea 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 and increases:

(amounts in thousands)As of June 30, 2020
2020$42,403  
202185,477  
202253,561  
202320,227  
202420,249  
Thereafter79,635  
Total$301,552  
(amounts in thousands) As of June 30, 2019
2019 $60,067
2020 120,012
2021 65,321
2022 34,906
2023 19,714
Thereafter 84,254
Total $384,274


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 2026.2030. For the quarters ended June 30, 20192020 and 2018,2019, total operating lease payments were $2.3$2.4 million and $2.1$2.3 million, respectively. For the six months ended June 30, 20192020 and 2018,2019, total operating lease payments were $4.6$4.8 million and $4.1$4.6 million, respectively.
The following table summarizes our minimum future minimum rental payments, excluding variable costs, which are discounted by our incremental borrowing rate to calculate the lease liabilitiesliability for our operating leases:leases as of June 30, 2020:
As of June 30, 2020
(amounts in thousands)Ground LeasesOffice and Other LeasesTotal
2020$974  $1,881  $2,855  
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 payments10,454  11,346  21,800  
Less imputed interest(2,206) (1,090) (3,296) 
Total lease liabilities$8,248  $10,256  $18,504  
(amounts in thousands) As of June 30, 2019 As of December 31, 2018
2019 $2,770
 $4,921
2020 4,801
 4,801
2021 4,179
 4,179
2022 2,103
 2,103
2023 953
 953
Thereafter 5,054
 5,054
Total undiscounted rental payments 19,860
 22,011
Less imputed interest (2,895) (3,289)
Total lease liabilities $16,965
 $18,722

Right-of-use ("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 $17.6 million and $18.5 million, respectively,
11

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 3 – Leases (continued)
as of June 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 June 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 $15.7$15.1 million and $17.0$16.2 million, respectively, as of June 30,December 31, 2019. The weighted average remaining lease term for our operating leases was 7seven years and the weighted average incremental borrowing rate was 4.4% at June 30,December 31, 2019.


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 4 – Earnings Per Common Share
The following table sets forth the computation of basic and diluted earnings per share of common sharestock, as adjusted for the stock split, for the quarters and six months ended June 30, 20192020 and 2018:2019:
Quarters Ended June 30,Six Months Ended June 30,
(amounts in thousands, except per share data)2020201920202019
Numerators:
Net income available for Common Stockholders – Basic$46,187  $46,401  $113,062  $159,710  
Amounts allocated to dilutive securities2,658  2,676  6,507  9,902  
Net income available for Common Stockholders – Fully Diluted$48,845  $49,077  $119,569  $169,612  
Denominators:
Weighted average Common Shares outstanding – Basic181,833  180,312  181,781  179,938  
Effect of dilutive securities:
Exchange of Common OP Units for Common Shares10,482  11,286  10,486  11,382  
Stock options and restricted stock227  262  271  226  
Weighted average Common Shares outstanding – Fully Diluted192,542  191,860  192,538  191,546  
Earnings per Common Share – Basic$0.25  $0.26  $0.62  $0.89  
Earnings per Common Share – Fully Diluted$0.25  $0.26  $0.62  $0.89  
  Quarters Ended June 30, Six Months Ended June 30,
(amounts in thousands, except per share data) 2019 2018 2019 2018
Numerator:        
Net income available for Common Stockholders – Basic $46,401
 $46,137
 $159,710
 $106,359
Amounts allocated to dilutive securities 2,676
 3,024
 9,902
 6,979
Net income available for Common Stockholders – Fully Diluted $49,077
 $49,161
 $169,612
 $113,338
Denominator:        
Weighted average Common Shares outstanding – Basic 90,156
 88,549
 89,969
 88,537
Effect of dilutive securities:        
Exchange of Common OP Units for Common Shares 5,643
 5,826
 5,691
 5,827
Restricted stock and stock options 131
 248
 113
 236
Weighted average Common Shares outstanding – Fully Diluted 95,930
 94,623
 95,773
 94,600
         
Earnings per Common Share – Basic $0.51
 $0.52
 $1.78
 $1.20
         
Earnings per Common Share – Fully Diluted $0.51
 $0.52
 $1.77
 $1.20
         


Note 5 – Common Stock and Other Equity Related Transactions
Two-for-One Common Stockholder Distribution ActivityStock and OP Units Split
The following quarterly distributions have been declaredOn October 15, 2019, a 2-for-one stock split of our common stock, effected by and in the form of a stock dividend, was paid to Common Stockholders andstockholders of record as of October 1, 2019. In connection with our stock split, the limited partnersOP Units of theour Operating Partnership (the "Common OP Unit holders") since January 1, 2018.
Distribution Amount Per ShareFor the Quarter EndedStockholder Record DatePayment Date
$0.5500March 31, 2018March 30, 2018April 13, 2018
$0.5500June 30, 2018June 29, 2018July 13, 2018
$0.5500September 30, 2018September 28, 2018October 12, 2018
$0.5500December 31, 2018December 28, 2018January 11, 2019
$0.6125March 31, 2019March 29, 2019April 12, 2019
$0.6125June 30, 2019June 28, 2019July 12, 2019


were also split on a 2-for-one basis.
Increase in Authorized Shares

On April 30, 2019,28, 2020, our stockholders approved an amendment to our charter to increase the number of shares of our common stock that we are authorized to issue from 200,000,000400,000,000 to 400,000,000600,000,000 shares.







12

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 5 – 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

Equity Offering Program
On October 26, 2018, we entered into our currentOur at-the-market ("ATM"(“ATM”) equity offering program with certain sales agents, pursuantallows us 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 $200.0 million. As of June 30, 2019,2020, we have $140.7 million of common stock available under the ATM offering program for issuance.



Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements
Note 5 – Common Stock and Other Equity Related Transactions (continued)

The following table presents the shares that were issued under the current ATM equity offering program during the six months ended June 30, 2019. There was no activity under the ATM equity offering program during the six months ended June 30, 2018.2020. The following table presents the shares that were issued under the ATM equity offering program during the six months ended June 30, 2019.
  Six Months Ended June 30,
(amounts in thousands, except stock data) 2019
Shares of Common Stock sold 505,236
Weighted average price $117.41
Total gross proceeds 
 $59,319
Commissions paid to sales agents $771

Six Months Ended June 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 
Exchanges
Subject to certain limitations, Common OP Unit holders can request an exchange of any or all of their OP Units 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 six months ended June 30, 2020 and 2019, 495,3259,228 and 990,650 OP Units, respectively, were exchanged for an equal number of shares of Common Stock. During the six months ended June 30, 2018, 13,838 OP Units were exchanged for an equal number of shares of Common Stock.Stock

Note 6 – Investment in Real Estate
Acquisitions
On April 21, 2020, we completed the acquisition of a 4.6-acre vacant land parcel in North Ellenton, Florida, adjacent to our MH community, Colony Cove, for additional expansion. The purchase price was $2.2 million.
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 a 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,
13

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 6 – Investments in Real Estate (continued)
for a total purchase price of $25.4 million. These acquisitions were funded with available cash and a loan assumption of approximately $10.8 million, excluding mortgage premium of $0.4 million.
Dispositions
On January 23, 2019, we closed on the sale of five5 all-age MH communities located in Indiana and Michigan, collectively containing 1,463 sites, for $89.7 million. The assetsmillion and liabilities associated with the transaction were classifieds as held for sale on the Consolidated Balance Sheets as of December 31, 2018. We recognized a gain on sale of these Properties of $52.5 million, net of transaction costs, during the first quarter of 2019.


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 7 – Investment in Unconsolidated Joint Ventures
The following table summarizes our investment in unconsolidated joint ventures (investment amounts in thousands with the number of Properties shown parenthetically as of June 30, 20192020 and December 31, 20182019, respectively):
        Investment as of Income/(Loss) for
Six Months Ended
Investment Location 
 Number of Sites (a)
 
Economic
Interest (b)
 June 30,
2019		 December 31,
2018		 June 30,
2019		 June 30,
2018
Meadows Various (2,2) 1,077
 50% $346
 $346
 $800
 $819
Lakeshore Florida (3,3) 720
 (c)
 2,154
 2,263
 122
 123
Voyager Arizona (1,1) 1,801
 50%
(d) 
414
 3,135
 2,925
 883
Loggerhead Florida 2,343
 49% 35,789
 35,789
 642
 689
ECHO JV Various —
 50% 16,492
 16,222
 270
 294
    5,941
   $55,195
 $57,755
 $4,759
 $2,808
_____________________
(a)Loggerhead sites represent marina slip count.
Investment as ofIncome/(Loss) for
Six Months Ended
(b)InvestmentThe percentages shown approximate our economic interest asLocation Number of Sites
Economic 
Interest (a)
June 30, 2019. Our legal ownership interest may differ.2020December 31, 2019June 30, 2020June 30, 2019
MeadowsVarious (2,2)1,077 50 %$— $146 $854 $800 
LakeshoreFlorida (3,3)721 (b)2,344 2,467 180 122 
VoyagerArizona (1,1)1,801 50 %
(c)
416 599 (5)2,925 
LoggerheadFlorida2,343 — %
(d)
— — — 642 
ECHO JVVarious— 50 %17,104 16,862 242 270 
(c)Includes two joint ventures in which we own a 65% interest and Crosswinds joint venture in which we own a 49% interest.
(d)5,942 Voyager joint venture primarily consists of a 50% interest in Voyager RV Resort and a 33% interest in the utility plant servicing the Property.$19,864 $20,074 $1,271 $4,759 
_____________________
(a)The percentages shown approximate our economic interest as of June 30, 2020. Our legal ownership interest may differ.
(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 $7.2$1.5 million and $1.8$7.2 million in distributions from our unconsolidated joint ventures for the six months ended June 30, 20192020 and 2018,2019, respectively. Approximately $1.0 million and $2.7 million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the six months ended June 30, 2020 and 2019, respectively, and as such, were recorded as income from unconsolidated joint ventures. None of the distributions made to us exceeded our basis in joint ventures for the six months ended June 30, 2018.

Note 8 – Borrowing Arrangements
Mortgage Notes Payable
2019 Activity
During the three months ended March 31, 2019, we defeased mortgage debt of $11.2 million in conjunction with the disposition of the five MH Properties as disclosed in Note 6. Investment in Real Estate. These loans had a weighted average interest rate of 5.0% per annum.

During the three months ended June 30, 2019, we prepaid four loans secured by four properties (three MH and one RV), which were scheduled to mature in 2020. The loans had an outstanding principal balance of $66.8 million and a weighted average interest rate of 6.9% per annum. As part of the transaction, we incurred $1.4 million of prepayment penalties. We used the proceeds from the ATM and our available cash to fund the loan payments.
In connection with the acquisitions that closed during the six months ended June 30, 2019, we assumed mortgage debt of $18.6 million, excluding mortgage note premium of $0.6 million. These loans carry a weighted average interest rate of 5.4% per annum and mature between 2022 and 2024.
2018 Activity
During the three months ended March 31, 2018, we closed on one loan, secured by two RV communities, for gross proceeds of approximately $64.0 million. The loan carries an interest rate of 4.8% per annum and matures in 2038.
In connection with the Serendipity acquisition that closed during the three months ended March 31, 2018, we assumed a loan of approximately $9.2 million and obtained additional financing of $8.8 million for total mortgage debt, secured by the MH community, of $18.0 million with an interest rate of 4.8% that matures in 2039.


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements
Note 8 – Borrowing Arrangements (continued)

Our mortgage notes payable is classified as Level 2 in the fair value hierarchy. The following table presents the fair value of our mortgage notes payable:
As of June 30, 2020As of December 31, 2019
(amounts in thousands)Fair ValueCarrying ValueFair ValueCarrying Value
Mortgage notes payable, excluding deferred financing costs$2,485,462  $2,272,228  $2,227,185  $2,072,416  
  As of June 30, 2019 As of December 31, 2018
(amounts in thousands) Fair Value Carrying Value Fair Value Carrying Value
Mortgage notes payable, excluding deferred financing costs $2,203,298
 $2,099,714
 $2,164,563
 $2,174,715


The weighted average interest rate on our outstanding mortgage indebtedness, including the impact of premium/discount amortization and loan cost amortization on mortgage indebtedness, as of June 30, 2019,2020, was approximately 4.5%4.3% per annum. The debt bears interest at stated rates ranging from 3.5%2.7% to 8.9% per annum and matures on various dates ranging from 20202021 to 2041. The debt encumbered a total of 116125 and 118116 of our Properties as of June 30, 20192020 and December 31, 2018,2019, respectively, and the gross carrying value of such Properties was approximately $2,475.4$2,650.8 million and $2,489.8$2,524.7 million, as of June 30, 20192020 and December 31, 2018,2019, respectively.

14

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 8 – Borrowing Arrangements (continued)
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.
2019 Activity
During the quarter ended March 31, 2019, we defeased mortgage debt of $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 5.0% 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 3 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 six months ended June 30, 2019,2020, we did not borrow or payborrowed and paid off amounts on our unsecured Line of Credit ("LOC"). During the six months ended June 30, 2018, we paid off our unsecured line, leaving a balance of credit balance, including approximately $30.0$50.0 million outstanding as of December 31, 2017.June 30, 2020. As of June 30, 2019, the full capacity on2020, our LOC remained available.has a 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 June 30, 2019,2020, we were in compliance in all material respects with the covenants in all our borrowing arrangements.

Note 9 – Derivative Instruments and Hedging Activities
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. In connection with our $200.0 million senior unsecured term loan (the “Term Loan”), which has an interest rate of LIBOR plus 1.20% to 1.90% per annum, we entered into a three-yearthree-year LIBOR Swap Agreement (the "Swap") allowing us to trade the variable interest rate on the Term Loan for a fixed interest rate. The Swap has a notional amount of $200.0 million of outstanding principal with an underlying LIBOR of 1.85% per annum for the first three years and matures on November 1, 2020. Based on the leverage as of June 30, 2019,2020, our spread over LIBOR was 1.20% resulting in an estimated all-in interest rate of 3.05% per annum.
Our derivative financial instrument is classified as Level 2 in the fair value hierarchy. The following table presents the fair value of our derivative financial instrument:
As of June 30,As of December 31,
(amounts in thousands)Balance Sheet Location20202019
Interest Rate SwapAccounts payable and other liabilities$1,161  $380  
    As of June 30, As of December 31,
(amounts in thousands) Balance Sheet Location 2019 2018
Interest Rate Swap Other assets, net $—
 $2,299
Interest Rate Swap Accounts payable and other liabilities $242
 $—




15

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 9 – Derivative Instruments and Hedging (continued)
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 Relationship Amount of (gain)/loss recognized
in OCI on derivative
for the six months ended June 30,		 Location of (gain)/ loss reclassified from
accumulated OCI into income		 Amount of (gain)/loss reclassified from
accumulated OCI into income
for the six months ended June 30,
(amounts in thousands) 2019 2018 (amounts in thousands) 2019 2018
Interest Rate Swap $1,901
 $(2,544) Interest Expense $(640) $93

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements
Note 9 – Derivative Instruments and Hedging Activities (continued)

Derivatives in Cash Flow Hedging RelationshipAmount of (gain)/loss recognized
in OCI on derivative
for the six months ended June 30,		Location of (gain)/ loss reclassified from
accumulated OCI into income		Amount of (gain)/loss reclassified from
accumulated OCI into income
for the six months ended June 30,
(amounts in thousands)20202019(amounts in thousands)20202019
Interest Rate Swap$1,553  $1,901  Interest Expense$772  $(640) 
During the next twelvefour months through June 30,the maturity date of November 1, 2020, we estimate no material changesthat $1.2 million will be reclassified as an increase to interest expense. This estimate may be subject to change as the underlying LIBOR changes. We determined that no adjustment was necessary for non-performance risk on our derivative obligation. As of June 30, 2019,2020, we didhad not postposted any collateral related to this agreement.Swap.

Note 10 – Equity Incentive Awards
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. During the quarter ended March 31, 2019, 61,2002020, 90,933 shares of restricted stock were awarded to certain members of our management team. Of these shares, 50% are time-based awards, vesting in equal installments over a three-yearthree-year period on January 31, 2020, January 29, 2021, and January 31, 2022, and January 27, 2023, respectively, and have a grant date fair value of $3.2$3.3 million. The remaining 50% are performance-based awards vesting in equal installments on January 29, 2021, January 31, 2022, and January 27, 2023, respectively, upon meeting performance conditions as established by the Compensation Committee in the year 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 all parties. The 10,20115,154 shares of restricted stock awarded in 2019 subject to 20192020 performance goals have a grant date fair value of $1.1 million. Additionally, 11,711 shares of restricted stock awarded in 2018 subject to 2019 performance goals have a grant date fair value of $1.3 million.
During the quarter ended June 30, 2019, we awarded to certain members of our Board of Directors, 35,431 shares of restricted stock at a fair value of approximately $4.1 million. These shares are time-based awards subject to various vesting dates between October 30, 2019 and April 30, 2022.
CompensationStock based compensation expense, related to restricted stock and stock options, reported in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income, for the quarters ended June 30, 2020 and 2019, and 2018, was $2.6$2.7 million and $2.7$2.6 million, respectively, and for the six months ended June 30, 2020 and 2019, and 2018, was approximately$5.6 million and $5.0 million, and $4.5 million, respectively.

Note 11 – Commitments and Contingencies
We are involved in various legal and regulatory proceedings ("Proceedings") arising in the ordinary course of business. The 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. Management believes these 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 a declaration that the Operating Partnership, as the “owner and manager” of Westwinds, is “required by the Ground Leases, and State and local law
16

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 11 – Commitments and Contingencies (continued)
to deliver the Property free of any encumbrances or third-party claims at the expiration of the lease terms.” On February 3, 2020, the Nicholsons filed a motion in California Superior Court to compel arbitration and to stay the litigation, which motion was heard on June 25, 2020. On July 8, 2020, the California Superior Court issued a proposed statement of decision denying the Nicholson’s motion to compel. All parties have submitted to the statement of decision, and we expect the Court to issue a decision in due course. We intend to continue to vigorously defend our interests in this matter. As of June 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.
17

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 12 – 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 were from external customers and there wasis no customer who contributed 10% or more of our total revenues during the quarters and six months ended June 30, 20192020 or 2018.2019.
The following tables summarize our segment financial information for the quarters and six months ended June 30, 20192020 and 2018:2019:
Quarter Ended June 30, 2020
(amounts in thousands)Property
Operations		Home Sales
and Rentals
Operations		Consolidated
Operations revenues$238,155  $13,122  $251,277  
Operations expenses(119,296) (11,176) (130,472) 
Income from segment operations118,859  1,946  120,805  
Interest income1,061  726  1,787  
Depreciation and amortization(35,611) (2,721) (38,332) 
Income (loss) from operations$84,309  $(49) $84,260  
Reconciliation to consolidated net income:
Corporate interest income4  
Income from other investments, net1,022  
General and administrative(10,609) 
Other expenses(639) 
Interest and related amortization(26,249) 
Equity in income of unconsolidated joint ventures1,064  
Early debt retirement—  
Consolidated net income$48,853  
Total assets$3,998,462  $269,712  $4,268,174  
Capital improvements$37,552  $16,636  $54,188  

Quarter Ended June 30, 2019
(amounts in thousands)Property
Operations		Home Sales
and Rentals
Operations		Consolidated
Operations revenues$233,848  $11,836  $245,684  
Operations expenses(116,893) (10,558) (127,451) 
Income from segment operations116,955  1,278  118,233  
Interest income950  846  1,796  
Depreciation and amortization(35,197) (2,579) (37,776) 
Income (loss) from operations$82,708  $(455) $82,253  
Reconciliation to consolidated net income:
Corporate interest income7  
Income from other investments, net879  
General and administrative(9,225) 
Other expenses(540) 
Interest and related amortization(26,024) 
Equity in income of unconsolidated joint ventures3,226  
Early debt retirement(1,491) 
Consolidated net income$49,085  
Total assets$3,766,573  $247,905  $4,014,478  
Capital improvements$28,501  $40,502  $69,003  
18
(amounts in thousands)Property
Operations		 Home Sales
and Rentals
Operations		 Consolidated
Operations revenues$233,848
 $11,836
 $245,684
Operations expenses(116,893) (10,558) (127,451)
Income from segment operations116,955
 1,278
 118,233
Interest income950
 846
 1,796
Depreciation and amortization(35,197) (2,579) (37,776)
Income (loss) from operations$82,708
 $(455) $82,253
Reconciliation to consolidated net income:     
Corporate interest income    $7
Income from other investments, net    879
General and administrative    (9,225)
Other expenses    (540)
Interest and related amortization    (26,024)
Equity in income of unconsolidated joint ventures    3,226
Early debt retirement    (1,491)
Consolidated net income    $49,085
      
Total assets$3,766,573
 $247,905
 $4,014,478
Capital improvements$28,501
 $40,502
 $69,003

Quarter EndedJune 30, 2018
(amounts in thousands)Property
Operations		 Home Sales
and Rentals
Operations		 Consolidated
Operations revenues$222,167
 $13,060
 $235,227
Operations expenses(110,046) (12,234) (122,280)
Income from segment operations112,121
 826
 112,947
Interest income823
 1,033
 1,856
Depreciation and amortization(31,954) (2,391) (34,345)
Income (loss) from operations$80,990
 $(532) $80,458
Reconciliation to consolidated net income:     
Corporate interest income    $6
Income from other investments, net    3,413
General and administrative    (9,669)
Other expenses    (367)
Interest and related amortization    (26,285)
Equity in income of unconsolidated joint ventures    1,613
Consolidated net income    $49,169
      
Total assets$3,477,455
 $222,734
 $3,700,189
Capital improvements$26,602
 $23,459
 $50,061

Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)


Six Months Ended June 30, 2020

(amounts in thousands)Property
Operations		Home Sales
and Rentals
Operations		Consolidated
Operations revenues$500,629  $28,674  $529,303  
Operations expenses(237,194) (25,643) (262,837) 
Income from segment operations263,435  3,031  266,466  
Interest income2,136  1,454  3,590  
Depreciation and amortization(71,831) (5,525) (77,356) 
Income (loss) from operations$193,740  $(1,040) $192,700  
Reconciliation to consolidated net income:
Corporate interest income8  
Income from other investments, net1,665  
General and administrative(21,464) 
Other expenses(1,227) 
Interest and related amortization(52,322) 
Equity in income of unconsolidated joint ventures1,271  
Early debt retirement(1,054) 
Consolidated net income$119,577  
Total assets$3,998,462  $269,712  $4,268,174  
Capital improvements$70,157  $32,990  $103,147  

Six Months Ended June 30, 2019

(amounts in thousands)Property
Operations		Home Sales
and Rentals
Operations		Consolidated
Operations revenues$479,864  $22,173  $502,037  
Operations expenses(225,863) (19,477) (245,340) 
Income from segment operations254,001  2,696  256,697  
Interest income1,844  1,696  3,540  
Depreciation and amortization(70,740) (5,013) (75,753) 
Gain on sale of real estate, net52,507  —  52,507  
Income (loss) from operations$237,612  $(621) $236,991  
Reconciliation to consolidated net income:
Corporate interest income14  
Income from other investments, net1,865  
General and administrative(19,134) 
Other expenses(967) 
Interest and related amortization(52,417) 
Equity in income of unconsolidated joint venture4,759  
Early debt retirement(1,491) 
Consolidated net income$169,620  
Total assets$3,766,573  $247,905  $4,014,478  
Capital Improvements$52,906  $68,538  $121,444  
19
(amounts in thousands)Property
Operations		 Home Sales
and Rentals
Operations		 Consolidated
Operations revenues$479,864
 $22,173
 $502,037
Operations expenses(225,863) (19,477) (245,340)
Income from segment operations254,001
 2,696
 256,697
Interest income1,844
 1,696
 3,540
Depreciation and amortization(70,740) (5,013) (75,753)
Gain on sale of real estate, net52,507
 —
 52,507
Income (loss) from operations$237,612
 $(621) $236,991
Reconciliation to consolidated net income:     
Corporate interest income    $14
Income from other investments, net    1,865
General and administrative    (19,134)
Other expenses    (967)
Interest and related amortization    (52,417)
Equity in income of unconsolidated joint ventures    4,759
Early debt retirement    (1,491)
Consolidated net income    $169,620
      
Total assets$3,766,573
 $247,905
 $4,014,478
Capital improvements$52,906
 $68,538
 $121,444
      

Six Months Ended June 30, 2018

(amounts in thousands)Property
Operations		 Home Sales
and Rentals
Operations		 Consolidated
Operations revenues$453,183
 $25,179
 $478,362
Operations expenses(215,558) (23,307) (238,865)
Income from segment operations237,625
 1,872
 239,497
Interest income1,631
 1,940
 3,571
Depreciation and amortization(56,029) (10,690) (66,719)
Income (loss) from operations$183,227
 $(6,878) $176,349
Reconciliation to consolidated net income:     
Corporate interest income    $241
Income from other investments, net    4,353
General and administrative    (17,707)
Other expenses    (710)
Interest and related amortization    (51,988)
Equity in income of unconsolidated joint venture    2,808
Consolidated net income    $113,346
      
Total assets$3,477,455
 $222,734
 $3,700,189
Capital Improvements$47,870
 $33,507
 $81,377
      


Equity LifeStyle Properties, Inc.
Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)


The following table summarizes our financial information for the Property Operations segment for the quarters and six months ended June 30, 20192020 and 2018:2019: 
 Quarters Ended June 30,Six Months Ended June 30,
(amounts in thousands)2020201920202019
Revenues:
Rental income$213,885  $208,375  $449,249  $428,357  
Annual membership subscriptions12,961  12,586  26,034  24,902  
Membership upgrade sales current period, gross5,048  5,041  9,891  8,879  
Membership upgrade sales upfront payments, deferred, net(2,666) (2,912) (5,208) (4,683) 
Other income9,680  10,265  20,739  20,635  
Ancillary services revenues, net(753) 493  (76) 1,774  
Total property operations revenues238,155  233,848  500,629  479,864  
Expenses:
Property operating and maintenance84,020  83,576  166,311  160,320  
Real estate taxes16,668  15,107  33,509  30,430  
Sales and marketing, gross4,276  4,214  8,254  7,623  
Membership sales commissions, deferred, net(481) (389) (697) (580) 
Property management14,813  14,385  29,817  28,070  
Total property operations expenses119,296  116,893  237,194  225,863  
Income from property operations segment$118,859  $116,955  $263,435  $254,001  
 Quarters Ended June 30, Six Months Ended June 30,
(amounts in thousands)2019
2018
2019
2018
Revenues:       
Rental income$208,375
 $195,594
 $428,357
 $399,072
Right-to-use annual payments (membership subscriptions)12,586
 11,891
 24,902
 23,410
Right-to-use contracts current period, gross (membership upgrade sales)5,041
 3,944
 8,879
 7,106
Right-to-use contract upfront payments, deferred, net(2,912) (2,021) (4,683) (3,306)
Other income10,265
 12,536
 20,635
 25,572
Ancillary services revenues, net493
 223
 1,774
 1,329
Total property operations revenues233,848
 222,167
 479,864
 453,183
Expenses:
      
Property operating and maintenance83,576
 80,091
 160,320
 154,999
Real estate taxes15,107
 13,440
 30,430
 27,575
Sales and marketing, gross4,214
 3,305
 7,623
 6,117
Right-to-use contract commissions, deferred, net(389) (262) (580) (286)
Property management14,385
 13,472
 28,070
 27,153
Total property operations expenses116,893
 110,046
 225,863
 215,558
Income from property operations segment$116,955
 $112,121
 $254,001
 $237,625

The following table summarizes our financial information for the Home Sales and Rentals Operations segment for the quarters and six months ended June 30, 20192020 and 2018:2019:
Quarters Ended June 30, Six Months Ended June 30, Quarters Ended June 30,Six Months Ended June 30,
(amounts in thousands)2019 2018 2019 2018(amounts in thousands)2020201920202019
Revenues:       Revenues:
Rental income (a)
$3,632
 $3,561
 $7,216
 $7,076
Rental income (a)
$4,078  $3,632  $8,060  $7,216  
Gross revenue from home sales7,825
 9,105
 14,300
 17,414
Gross revenue from home sales8,866  7,825  20,175  14,300  
Brokered resale revenues, net379
 369
 657
 651
Brokered resale revenues, net178  379  439  657  
Ancillary services revenues, net—
 25
 —
 38
Ancillary services revenues, net—  —  —  —  
Total revenues11,836
 13,060
 22,173
 25,179
Total revenues13,122  11,836  28,674  22,173  
Expenses:       Expenses:
Property operating and maintenance1,292
 1,629
 2,496
 3,053
Rental home operating and maintenanceRental home operating and maintenance1,245  1,292  2,588  2,496  
Cost of home sales8,164
 9,632
 14,796
 18,206
Cost of home sales8,850  8,164  20,761  14,796  
Home selling expenses1,102
 973
 2,185
 2,048
Home selling expenses1,081  1,102  2,294  2,185  
Total expenses10,558
 12,234
 19,477
 23,307
Total expenses11,176  10,558  25,643  19,477  
Income from home sales and rentals operations segment$1,278
 $826
 $2,696
 $1,872
Income from home sales and rentals operations segment$1,946  $1,278  $3,031  $2,696  
______________________
(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.
Segment information includes income related to rental homes. Income related to Site rent on rental homes is included within property operations.


20

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

The following discussion and analysis should be read in conjunction with the consolidated financial statements and relatedaccompanying notes thereto included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 20182019 ("20182019 Form 10-K"), as well as information in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 20182019 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 October 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 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") and recreational vehicle ("RV") communities. As of June 30, 2019,2020, we owned or had an ownership interest in a portfolio of 413 Properties located throughout the United States and Canada containing 155,973 Sites.156,713 individual developed areas ("Sites"). These Properties are located
Management's Discussion and Analysis (continued)


in 33 states and British Columbia, with more than 90 Properties with lake, river or ocean frontage and more than 120 Properties within 10 miles of the coastal United States.
We invest in Propertiesproperties 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 both customersincreased cash flows and stockholders.appreciation in value. We seek growth in earnings, fundsFunds from operationsOperations ("FFO") and cash flows by enhancing the profitability and operation of our Properties and investments. We seek to 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 thatthe demand from baby boomers for manufactured housingMH and RV communities will continue to outpace supply for several years. We believe thesebe 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-homesecond home sales as vacation properties, investment opportunities or retirement retreats. The entitlement process to develop new MH and RV communities is extremely restrictive. As a result, there have been few new communities developed in our target geographic markets. We believeexpect 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 Propertiescommunities 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 business model provide an opportunity for increased cash flows and appreciation in value. These may be achieved through increasing occupancy and maintaining market rents, as well as expense controls, expansion of existing Properties and opportunistic acquisitions. 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.

target geographic markets.
We generate the majority of our revenues from customers renting our individual developed areas ("Sites"),Sites or entering into right-to-use contracts, (also referred toalso known as membership subscriptions),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 communitymarina 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. We also generate revenue from customers renting 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 on the Consolidated Statements of Income and Comprehensive Income.
21
Management's Discussion and Analysis (continued)

The following table shows the breakdown of our Sites by type (amounts are approximate):

Total Sites as of June 30, 20192020
MH Community Sites72,00072,300 
RV Community Sites:
    Annual30,40029,500 
    Seasonal11,30010,200 
    Transient12,10014,200 
Marina Slips2,300 
Thousand Trails portfolioMembership (1)
24,30024,600 
Joint Ventures (2)
5,9003,600 
Total156,000156,700 
_________________________ 
(1)
(1)Primarily utilized to service the approximately 117,700 members. Includes approximately 5,700 Sites rented on an annual basis.
(2)Includes approximately 2,900 annual Sites, 500 seasonal Sites and 200 transient Sites.
Primarily utilized to service the approximately 115,400 membership customers who have entered into right-to-use contracts (membership subscriptions). Includes approximately 5,800 Sites rented on an annual basis.
(2)
Includes approximately 2,700 annual Sites, 400 seasonal Sites, and 500 transient Sites and approximately 2,300 marina slips.

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 factory-builtmanufactured 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 homes represents an attractive source of occupancy and an opportunity to convert the renter to a homebuyer in the future. We also sell and rent homes through our joint venture, ECHO Financing, LLC (the "ECHO JV"). We offerAdditionally, 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, are limited. Chattel financing options available today include community owner-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
Management's Discussion and Analysis (continued)


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.
In addition to net 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 ("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 Properties owned and operated in both periods under comparison), and (vi) Income from rental operations, net of depreciation. We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies. Definitions and reconciliations of these measures to the most comparable GAAP measures are included below in this discussion.
COVID-19 Pandemic Update
Since 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. As of July 17, 2020, all properties are 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 may have experienced as a result of COVID-19 and in response to certain regulatory guidelines, we took the following actions during the quarter ended June 30, 2020: introduced a rent deferral program for financial hardship related to COVID-19, continued to waive late fees and RV cancellation fees, continued to allow extended stays for Thousand Trails members and suspended eviction proceedings. In addition, we temporarily suspended mailing MH rent increase notices in April and May 2020. In June 2020, we resumed mailing MH rent increase notices, which are effective starting September 2020.

Employees in our corporate and regional offices continue to work remotely. 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.
22
Management's Discussion and Analysis (continued)

During the second quarter of 2020, the primary financial statement impact from the COVID-19 pandemic was a reduction of transient RV rental income. For the quarter ended June 30, 2020, we recognized approximately $7.3 million of transient RV rental income in our Core portfolio as compared to $13.9 million for the same period in 2019. For the six months ended June 30, 2020, we recognized approximately $18.4 million of transient RV rental income in our Core portfolio as compared to $25.9 million in 2019. We followed shelter-in-place orders and were closed to transient RV reservations until the beginning of June 2020.
We continue to identify cash collections as a leading indicator of disruption to our business. As of July 17, 2020, the total collection rate from our MH, RV Annual and Thousand Trails customers for the quarter ended June 30, 2020 was 99%, consistent with our collection rate for the quarter ended June 30, 2019. As of July 17, 2020, cash collections for the month of July 2020 were also consistent with the month-to-date collections for each month in the quarter ended June 30, 2020. We have also seen positive demand as another leading indicator since our properties reopened to transient RV reservations. Transient RV rental income month-to-date through July 17, 2020 was on pace and in line with prior year transient RV rental income month-to-date through July 17, 2019. Our Thousand Trail Camping ("TTC") memberships sales volume in June 2020 more than doubled from June 2019 and has continued to increase in July 2020, representing a 23% month-to-date increase through July 17, 2020 as compared to month-to-date through July 17, 2019.
Our rent deferral program assisted approximately 540 approved residents and the total amount deferred was approximately $0.5 million. Based on declining monthly deferral applications, we discontinued offering the rent deferral program in July. In July, we provided approximately $0.9 million of payment credits to annual residents at 15 Northern RV properties that experienced significantly delayed openings.
Based on our performance to date, the feedback from our customers and employees and the financial impact of programs we have implemented to date, we have continued the following programs in July: waiver of late fees and RV cancellation fees, property employee time off program, extension of stays for Thousand Trails members and suspension of eviction proceedings. While this is our current plan for these programs, there can be no assurance that these programs will be extended, and we may take additional actions.
We attribute the solid performance of our business, as shown by our cash collection activity, 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 lifestyle we offer have broad appeal to customers 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 rapidly evolving situation and we may take further actions that alter our business operations as may be required and that are in the best interests of our employees, residents, customers and shareholders.
Results Overview
For the quarter ended June 30, 2019, Net2020, net income available for Common Stockholders increased $0.3 million to $46.4decreased $0.2 million, or $0.51$0.01 per fully diluted Common Share, to $46.2 million, or $0.25 per fully diluted Common Share, compared to $46.1$46.4 million, or $0.52$0.26 per fully diluted Common Share, for the same period in 2018.2019. For the six months ended June 30, 2019, Net2020, net income available for Common Stockholders increased $53.3decreased $46.6 million, or $0.57$0.27 per fully diluted Common Share, to $159.7$113.1 million, or $1.77$0.62 per fully diluted Common Share, compared to $106.4 million, or $1.20 per fully diluted Common Share, for the same period in 2018.
For the quarter ended June 30, 2019, FFO available for Common Stock and OP Unit holders increased $4.2 million, or $0.04 per fully diluted Common Share, to $89.8 million, or $0.94 per fully diluted Common Share, compared to $85.6 million, or $0.90 per fully diluted Common Share, for the same period in 2018. For the six months ended June 30, 2019, FFO available for Common Stock and OP Unit holders increased $14.0 million, or $0.13 per fully diluted Common Share, to $197.8 million or $2.07 per fully diluted Common Share, compared to $183.8 million or $1.94 per fully diluted Common Share, for the same period in 2018.
For the quarter ended June 30, 2019, Normalized FFO available for Common Stock and OP Unit holders increased $8.1 million, or $0.07 per fully diluted Common Share, to $91.9 million, or $0.96 per fully diluted Common Share, compared to $83.8$159.7 million, or $0.89 per fully diluted Common Share, for the same period in 2018.2019. 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 June 30, 2020, FFO available for Common Stock and OP Unit holders decreased $0.3 million to $89.5 million, or $0.47 per fully diluted Common Share, compared to $89.8 million, or $0.47 per fully diluted Common Share, for the same period in 2019. For the six months ended June 30, 2019,2020, FFO available for Common Stock and OP Unit holders increased $4.0 million, or $0.02 per fully diluted Common Share, to $201.8 million, or $1.05 per fully diluted Common Share, compared to $197.8 million, or $1.03 per fully diluted Common Share, for the same period in 2019.
For the quarter ended June 30, 2020, Normalized FFO available for Common Stock and OP Unit holders decreased $1.0 million, or $0.01 per fully diluted Common Share, to $90.9 million, or $0.47 per fully diluted Common Share, compared to $91.9 million, or $0.48 per fully diluted Common Share, for the same period in 2019. For the six months ended June 30, 2020, Normalized FFO available for Common Stock and OP Unit holders increased $17.9$4.7 million, or $0.16$0.02 per fully diluted Common Share, to $199.6$204.3 million, or $2.08$1.06 per fully diluted Common Share, compared to $181.7$199.6 million, or $1.92$1.04 per fully diluted Common Share, for the same period in 2018.2019.
For the quarter ended June 30, 2019,2020, our Core Portfolio property operating revenues, excluding deferrals, increased 4.9%0.6% and property operating expenses, excluding deferrals and property management, increased 4.5%0.1%, from the same period in 2018,2019, resulting in an increase in income from property operations, excluding deferrals and property management, of 5.2%1.0% compared to the same period in 2018.2019. For the six months ended June 30, 2019,2020, our Core Portfolio property operating revenues, excluding
23
Management's Discussion and Analysis (continued)

deferrals, increased 4.4%3.1% and property operating expenses, excluding deferrals and property management, increased 3.5%2.8%, from the same period in 2018,2019, resulting in an increase in income from property operations, excluding deferrals and property management, of 5.1%3.2% compared to the same period in 2018.2019.
WeWhile we continue to focus on the quality of occupancy growth by increasing the number of manufactured homeowners in our Core Portfolio, overwe also believe renting our vacant homes may represent an attractive source of occupancy and an opportunity to potentially convert the long term. There mayrenter 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 home owners.homeowners. Our Core Portfolio average occupancy, includesincluding both homeowners and renters, in our MH communities and was 95.4%95.2% for the quarter ended June 30, 2019,2020, compared to 95.3%95.1% for the quarter ended March 31, 20192020 and 94.9%95.1% for the same period in 2019. For the quarter ended June 30, 2018. As2020, our Core Portfolio occupancy increased by 90 sites with an increase in homeowner occupancy of 80 sites compared to occupancy as of March 31, 2020. By comparison, for the quarter ended June 30, 2019, our Core Portfolio occupancy increased 126 Sites132 sites with an increase in homeowner occupancy of 79 Sites comparedsites. In addition to higher occupancy, as of March 31, 2019. By comparison, our Core Portfolio occupancywe have increased 61 Sites with an increase in homeowner occupancy of 145 Sites from the same period in 2018. Additionally, for bothrental rates during the quarter and six months ended June 30, 2019, we have experienced rental rate increases,2020, contributing to a 4.5% growth of 4.1% and 4.3%, respectively, in community base rentMH rental income compared to the same periodperiods in 2018.2019.
We continue to grow RV rental income in our Core Portfolio as a result of our ability to increase rates and occupancy. RV rental income in our Core Portfolio for the quarter ended June 30, 20192020 was 4.1% higher8.8% lower than the same period in 2018.2019. Annual and seasonal rental income for the quarter ended June 30, 20192020 increased 6.0%4.7%, while seasonal and 4.0%, respectively. Transienttransient rental income declined 1.1% for the quarter ended June 30, 2019 compared to the same period in 2018.decreased 8.9% and 47.7%, respectively. RV rental income in our Core Portfolio for the six months ended June 30, 20192020 was 4.2% higher1.4% lower than the same period in 2018.2019. Annual and seasonal rental income for the six months ended June 30, 20192020 increased 6.1% and 3.1%3.7%, respectively. Transientrespectively, while transient rental income declined 0.8% for the six months ended June 30, 2019 compared to the same period in 2018.decreased 29.2%. The decreasedecreases in transient rental income for bothand seasonal rental income over the quartersame periods in the prior year were primarily resulting from cancellations, declines in reservations and six months ended June 30, 2019 was mainlytemporary site closures due to weather related events at a limited number of Properties.COVID-19.
Management's Discussion and Analysis (continued)


We experienced growthcontinue to experience strong performance in our membership base within our Thousand Trails portfolioportfolio. For the quarter ended June 30, 2020, annual membership subscriptions revenue increased 3.0% over the same period in 2019. We sold approximately 5,800 TTC memberships during the quarter ended June 30, 2020, representing a 11.8% decline in sales volume compared to the same period in 2019, which we attributed to the impact of COVID-19. In June 2020, there was significant recovery in sales volume that resulted in an increase of 43% over June 2019. For the quarter ended June 30, 2020, membership upgrade sales remained consistent compared to the same period in 2019. We sold approximately 6,600 Thousand Trails camping passes in the quarter and 10,200 for the six months ended June 30, 2019, an increase of 13.2% and 14.2% over the quarter and six months ended June 30, 2018, respectively. In addition, we sold 749800 membership upgrades during the quarter ended June 30, 2019, 19.8% more than2020, representing an increase of 11.6% in sales volume, which was offset by a lower average sales price due to the same period in 2018. Our customers are increasingly choosing self-service options to complete their transactions with us. Duringmix of upgrade products sold. In addition, we activated approximately 5,600 TTC memberships through our RV dealer program for the quarter ended June 30, 2019, our total Core RV rental income through digital channels increased 21.0%2020. For the six months ended June 30, 2020, we sold approximately 9,000 TTC memberships and our salesapproximately 1,600 membership upgrades, an increase in membership subscriptions and upgrade revenues of online camping passes increased 27.6% compared to4.5% and 11.4%, respectively, over the same period in 2018.2019.
Demand for our homes and communities remains strong as evidenced by factors including our high occupancy levels. We closed 133 new home sales during the quarter ended June 30, 2020 compared to 117 new home sales during the quarter ended June 30, 2019 compared to 1462019. We closed 288 new home sales during the quartersix months ended June 30, 2018 and2020 compared to 208 new home sales during the six months ended June 30, 2019 compared to 276 during the six months ended in June 30, 2018.2019. The decreaseincreases in new home sales from the same period in the prior year was mainlyprimarily due to certain areasfavorable housing trends and timing of our portfolio reaching historically high occupancy levels. Wethe availability of home inventory ready for sale. Additionally, we continue to believe renting our vacant homes represents an attractive source of occupancy and an opportunity to convert the renter to a homebuyer in the future.
As of June 30, 2019,2020, we had 4,0133,923 occupied rental homes in our Core MH communities, including 298283 homes rented through our ECHO JV. Our Core Portfolio income from rental operations, net of depreciation, was $7.6$7.9 million and $7.5 million for the quarterquarters ended June 30, 2020 and 2019, and $7.3 million for the quarter ended June 30, 2018.respectively. Approximately $7.8 million of rental operations revenue related to Site rental was included within communityin MH base rental income in our Core Portfolio for both theeach respective quarters ended June 30, 20192020 and 2018.2019. Our Core Portfolio income from rental operations, net of depreciation, was $15.2$15.5 million and $15.1 million for the six months ended June 30, 2020 and 2019, and $14.7 million for the six months ended June 30, 2018.respectively. Approximately $15.5$15.6 million and $15.6$15.5 million of rental operations revenue related to Site rental was included in communityMH base rental income in our Core Portfolio for the six months ended June 30, 20192020 and 2018,2019, respectively.
Our gross investment in real estate increased approximately $163.4$85.3 million to $5,436.9$5,828.3 million as of June 30, 20192020 from $5,273.5$5,743.0 million as of December 31, 2018,2019, primarily due to new acquisitionscapital improvements during the six months ended June 30, 2020.



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

The following chart lists the Properties acquired or sold from January 1, 20182019 through June 30, 20192020 and Sites added through expansion opportunities at our existing Properties.
Properties:
LocationType of PropertyTransaction DateSites
PropertyLocationType of PropertyTransaction DateSites
Total Sites as of January 1, 20182019 (1) (2)
151,323155,400
Acquisitions:Acquisition Properties:
KingswoodRiverview, FloridaMHMarch 8, 2018229
SerendipityClearwater, FloridaMHMarch 15, 2018425
Holiday Travel ParkHoliday, FloridaRVApril 20, 2018613
Everglades LakesFort Lauderdale, FloridaMHJuly 20, 2018612
Sunseekers RV ResortNorth Fort Myers, FloridaRVSeptember 21, 2018241
Timber Creek RV ResortWesterly, Rhode IslandRVNovember 20, 2018364
Palm LakeRiviera Beach, FloridaMHDecember 13, 2018915
King Nummy Trail CampgroundCape May Court House, New JerseyRVDecember 20, 2018313
Drummer Boy Camping ResortGettysburg, PennsylvaniaRVMarch 25, 2019465
Lake of the Woods CampgroundWautoma, WisconsinRVMarch 25, 2019303
Round Top RV CampgroundGettysburg, PennsylvaniaRVApril 10, 2019391
White Oak Shores Camping and RV ResortStella, North CarolinaRVMay 29, 2019455
Expansion Site Development:
Sites added (reconfigured) in 20182019419891
Sites added (reconfigured) in 20192020373209
Site Reconfigured, netDispositions:(5)
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 June 30, 20192020 (2)
155,973156,700

______________________
Management's Discussion and Analysis (continued)(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 flowflows 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 Incomeincome from property operations and Core Portfolio, FFO, Normalized FFO and Incomeincome 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 MH and RV communities.Properties. Income from property operations represents rental income, membership subscriptions and upgrade sales, utility and other income and right-to-use income less property and rental home operating and maintenance expenses, real estate 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 January 1, 2018.2019. 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 includes all Properties that were not owned and operated during all of 20182019 and 2019, including Fiesta Key2020.


25
Management's Discussion and Sunshine Key RV communities.Analysis (continued)

Funds from Operations ("FFO") and Normalized Funds from Operations ("Normalized FFO")
We define FFO as net income, computed in accordance with GAAP, excluding gains or losses from sales of properties, depreciation and amortization related to real estate, impairment charges and adjustments to reflect our share of FFO of unconsolidated joint ventures. Adjustments for unconsolidated 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 non-refundable upfront non-refundable 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 Normalized FFO as FFO excluding the following non-operating income and expense items: a)items, such as gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs, and b) other miscellaneous non-comparable items. Normalized FFO presented herein is not necessarily comparable to Normalized 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 gains or losses from sales of properties, depreciation and amortization related to real estate and 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 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 including prepayment penalties and defeasance costsother miscellaneous non-comparable items from Normalized FFO allows investors, analysts and our management to assess the sustainability of operating performance in future periods because these costs do not affect the future operations of the properties. In some cases, we provide information about identified non-cash components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items.
Management's Discussion and Analysis (continued)


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 more 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-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These Non-GAAP financial and operating measures do not represent cash generated from operating activities in accordance with GAAP, nor do they represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash 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 income from property operations:operations for the quarters and six months ended June 30, 2020 and 2019:
Quarters Ended June 30,Six Months Ended June 30,
(amounts in thousands)2020201920202019
Computation of Income from Property Operations:
Net income available for Common Stockholders$46,187  $46,401  $113,062  $159,710  
Redeemable preferred stock dividends8  8  8  8  
Income allocated to non-controlling interests – Common OP Units2,658  2,676  6,507  9,902  
Equity in income of unconsolidated joint ventures(1,064) (3,226) (1,271) (4,759) 
Income before equity in income of unconsolidated joint ventures47,789  45,859  118,306  164,861  
Gain on sale of real estate, net—  —  —  (52,507) 
Total other expenses, net73,016  72,374  148,160  144,343  
Loss from home sales operations and other1,640  569  2,517  250  
Income from property operations$122,445  $118,802  $268,983  $256,947  
  Quarters Ended June 30,
Six Months Ended June 30,
(amounts in thousands) 2019 2018 2019 2018
Computation of Income from Property Operations:        
Net income available for Common Stockholders $46,401
 $46,137
 $159,710
 $106,359
Redeemable preferred stock dividends 8
 8
 8
 8
Income allocated to non-controlling interests – Common OP Units 2,676
 3,024
 9,902
 6,979
Equity in income of unconsolidated joint ventures (3,226) (1,613) (4,759) (2,808)
Income before equity in income of unconsolidated joint ventures 45,859
 47,556
 164,861
 110,538
Gain on sale of real estate, net —
 —
 (52,507) —
Total other expenses, net 72,374
 65,391
 144,343
 128,959
Loss/(Income) from home sales operations and other 569
 883
 250
 822
Income from property operations $118,802
 $113,830
 $256,947
 $240,319

The following table presents a calculation of FFO available for Common Stock and OP Unitholders and Normalized FFO available for Common Stock and OP Unit holders:Unitholders for the quarters and six months ended June 30, 2020 and 2019:
 Quarters Ended June 30, Six Months Ended June 30, Quarters Ended June 30,Six Months Ended June 30,
(amounts in thousands) 2019 2018 2019 2018(amounts in thousands)2020201920202019
Computation of FFO and Normalized FFO:        Computation of FFO and Normalized FFO:
Net income available for Common Stockholders $46,401
 $46,137
 $159,710
 $106,359
Net income available for Common Stockholders$46,187  $46,401  $113,062  $159,710  
Income allocated to non-controlling interests – Common OP Units 2,676
 3,024
 9,902
 6,979
Income allocated to non-controlling interests – Common OP Units2,658  2,676  6,507  9,902  
Right-to-use contract upfront payments, deferred, net 2,912
 2,021
 4,683
 3,306
Right-to-use contract commissions, deferred, net (389) (262) (580) (286)
Membership upgrade sales upfront payments, deferred, netMembership upgrade sales upfront payments, deferred, net2,666  2,912  5,208  4,683  
Membership sales commissions, deferred, netMembership sales commissions, deferred, net(481) (389) (697) (580) 
Depreciation and amortization 37,776
 34,345
 75,753
 66,719
Depreciation and amortization38,332  37,776  77,356  75,753  
Depreciation on unconsolidated joint ventures 441
 367
 873
 739
Depreciation on unconsolidated joint ventures184  441  361  873  
Gain on sale of real estate, net —
 —
 (52,507) —
Gain on sale of real estate, net—  —  —  (52,507) 
FFO available for Common Stock and OP Unit holders 89,817
 85,632
 197,834
 183,816
FFO available for Common Stock and OP Unit holders89,546  89,817  201,797  197,834  
Early debt retirement (1)
 2,085
 —
 2,085
 —
Insurance proceeds due to catastrophic weather event (2)
 —
 (1,806) (349) (2,092)
Early debt retirementEarly debt retirement—  2,085  1,054  2,085  
Insurance proceeds due to catastrophic weather event (1)
Insurance proceeds due to catastrophic weather event (1)
—  —  —  (349) 
COVID-19 expenses (2)
COVID-19 expenses (2)
1,407  —  1,446  —  
Normalized FFO available for Common Stock and OP Unit holders $91,902
 $83,826
 $199,570
 $181,724
Normalized FFO available for Common Stock and OP Unit holders$90,953  $91,902  $204,297  $199,570  
Weighted average Common Shares outstanding – Fully Diluted(3) 95,930
 94,623
 95,773
 94,600
192,542  191,860  192,538  191,546  
______________________
(1) Includes our portion of early debt retirement costs incurred by unconsolidated joint ventures.
(2) 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.
(3)Adjusted for stock split.





27
Management's Discussion and Analysis (continued)


Results of Operations

This section discusses the comparison of our results of operations for the quarters and six months ended June 30, 2020 and June 30, 2019 and discussion of our operating activities, investing activities and financing activities for the six months ended June 30, 2020 and June 30, 2019. For the comparison of our results of operations for the quarters and six months ended June 30, 2019 and June 30, 2018 and discussion of our operating activities, investing activities and financing activities for the six months ended June 30, 2019 and June 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 June 30, 2019, filed with the SEC on July 30, 2019.
Comparison of the Quarter Endedquarter ended June 30, 20192020 to the Quarter Endedquarter ended June 30, 20182019
Income from Property Operations
The following table summarizes certain financial and statistical data for our Core Portfolio and total portfolio for the quarters ended June 30, 2020 and June 30, 2019:
 Core PortfolioTotal Portfolio
Quarters Ended June 30,Quarters Ended June 30,
(amounts in thousands)20202019Variance%
Change		20202019Variance%
Change
MH base rental income$142,535  $136,213  $6,322  4.6 %$142,557  $136,213  $6,344  4.7 %
Rental home income4,077  3,632  445  12.3 %4,078  3,632  446  12.3 %
RV and marina base rental income (1)
54,345  59,617  (5,272) (8.8)%60,107  60,997  (890) (1.5)%
Annual membership subscriptions12,960  12,586  374  3.0 %12,961  12,586  375  3.0 %
Membership upgrades sales current period, gross5,048  5,041  7  0.1 %5,048  5,041  7  0.1 %
Utility and other income21,769  22,190  (421) (1.9)%22,259  22,250  9  — %
Property operating revenues, excluding deferrals240,734  239,279  1,455  0.6 %247,010  240,719  6,291  2.6 %
Property operating and maintenance (3)
82,943  83,683  (740) (0.9)%85,378  84,396  982  1.2 %
Real estate taxes15,831  15,044  787  5.2 %16,668  15,107  1,561  10.3 %
Rental home operating and maintenance1,243  1,292  (49) (3.8)%1,245  1,292  (47) (3.6)%
Sales and marketing, gross4,276  4,214  62  1.5 %4,276  4,214  62  1.5 %
Property operating expenses, excluding deferrals and property management104,293  104,233  60  0.1 %107,567  105,009  2,558  2.4 %
Income from property operations, excluding deferrals and property management (2)(3)
136,441  135,046  1,395  1.0 %139,443  135,710  3,733  2.8 %
Property management14,813  14,385  428  3.0 %14,813  14,385  428  3.0 %
Income from property operations, excluding deferrals (2)
121,628  120,661  967  0.8 %124,630  121,325  3,305  2.7 %
Membership upgrade sales upfront payments and membership sales commission, deferred, net2,185  2,523  (338) (13.4)%2,185  2,523  (338) (13.4)%
Income from property operations (2)
$119,443  $118,138  $1,305  1.1 %$122,445  $118,802  $3,643  3.1 %
_____________________
(1)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.
(2)See Non-GAAP Financial Measures section of the Management Discussion and Analysis for definitions and reconciliations of these Non-GAAP measures to Net Income available for Common Shareholders.
(3)Includes $1.0 million 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. Excluding the impact of these expenses, Core and Consolidated income from property operations, excluding deferrals and property management, was $137.4 million and $140.4 million, respectively, for the quarter ended June 30, 2020.

Total portfolio income from property operations for 2020 increased $3.6 million, or 3.1%, from 2019, driven by an increase of $1.3 million, or 1.1%, from our Core Portfolio and an increase of $2.3 million from our Non-Core Portfolio. The increase in income from property operations from our Core Portfolio was primarily resulting from higher MH base rental income, partially offset by lower RV base rental income. The increase in income from property 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
MH base rental income in our Core Portfolio for 2020 increased $6.3 million, or 4.6%, from 2019, which reflects 4.1% growth from rate increases and 0.5% growth from occupancy gains. The average monthly base rental income per Site in our Core Portfolio increased to approximately $693 in 2020 from approximately $665 in 2019. The average occupancy for our Core Portfolio increased to 95.2% in 2020 from 95.1% in 2019.
RV base rental income in our Core Portfolio for 2020 decreased $5.3 million, or 8.8%, from 2019. The decreases in seasonal and transient rental income were primarily due to cancellations, declines in reservations and temporary site closures as a result of COVID-19. These decreases were partially offset by higher annual rental income, driven by growth from rate increases. RV and marina base rental income is comprised of the following:
 Core PortfolioTotal Portfolio
Quarters Ended June 30,Quarters Ended June 30,
(amounts in thousands)20202019Variance%
Change		20202019Variance%
Change
Annual$41,889  $39,996  $1,893  4.7 %$47,122  $40,790  $6,332  15.5 %
Seasonal5,166  5,669  (503) (8.9)%5,204  5,713  (509) (8.9)%
Transient7,290  13,952  (6,662) (47.7)%7,781  14,494  (6,713) (46.3)%
RV and marina base rental income (1)
$54,345  $59,617  $(5,272) (8.8)%$60,107  $60,997  $(890) (1.5)%
_____________________
(1) Marina rental income has been included in our Non-Core Portfolio following the acquisition of the remaining interest in our joint venture investment of 11 marinas in Florida on September 10, 2019.

Utility and other income in our Core Portfolio for 2020 decreased $0.4 million, or 1.9%, from 2019. The decrease is due to lower other property income of $1.7 million, partially offset by higher pass-through income of $0.8 million and higher utility income of $0.4 million. The decrease in other property income was primarily due to the suspension of late fees and RV cancellation fees as a result of COVID-19. The increase in pass-through income was driven by increases in real estate taxes in Florida.
Property Operating Expenses
Property operating expenses, excluding deferrals and property management, in our Core Portfolio for 2020 increased $0.1 million, or 0.1%, from 2019. The increase in property taxes of $0.8 million was offset by the decrease in property operating and maintenance expenses of $0.7 million. Property taxes in 2020 were higher due to real estate tax increases in Florida. Property operating and maintenance expenses were lower, primarily due to decreases of $1.2 million in administrative expense, $0.5 million in utility expenses and $0.3 million in property payroll, partially offset by increases in insurance expense of $0.7 million, bad debt expense of $0.6 million and repairs and maintenance expenses of $0.5 million. Property operating and maintenance expenses in our Core Portfolio for 2020 include $1.0 million of incremental and nonrecurring expenses 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.










29
Management's Discussion and Analysis (continued)

Home Sales and Rental Operations
Home Sales and Other
The following table summarizes certain financial and statistical data for our Home Sales and Other Operations:
Quarters Ended June 30,
(amounts in thousands, except home sales volumes)20202019Variance%
Change
Gross revenues from new home sales (1)
$7,552  $6,064  $1,488  24.5 %
Cost of new home sales (1)
7,382  5,984  1,398  23.4 %
Gross profit from new home sales170  80  90  112.5 %
Gross revenues from used home sales1,314  1,761  (447) (25.4)%
Cost of used home sales1,468  2,180  (712) (32.7)%
Loss from used home sales(154) (419) 265  63.2 %
Brokered resale and ancillary services revenues, net(575) 872  (1,447) (165.9)%
Home selling expenses1,081  1,102  (21) (1.9)%
Income (loss) from home sales and other$(1,640) $(569) $(1,071) (188.2)%
Home sales volumes
Total new home sales (2)
133  117  16  13.7 %
 New Home Sales Volume - ECHO JV11  18  (7) (38.9)%
Used home sales136  210  (74) (35.2)%
Brokered home resales111  237  (126) (53.2)%
_________________________
(1) New home sales gross revenues and costs of new home sales do not include the revenues and costs associated with our ECHO JV.
(2) Total new home sales volume includes home sales from our ECHO JV.
The loss from home sales and other operations was $1.6 million for 2020 compared to $0.6 million for 2019. The increase in loss from home sales and other operations was primarily due to a decrease in ancillary services revenues as a result of closed restaurants and amenities across the portfolio as a result of COVID-19.
30
Management's Discussion and Analysis (continued)

Rental Operations
The following table summarizes certain financial and statistical data for our MH Rental Operations:
Quarters Ended June 30,
(amounts in thousands, except rental unit volumes)20202019Variance%
Change
Rental operations revenue (1)
$11,904  $11,431  $473  4.1 %
Rental home operating and maintenance1,243  1,292  (49) (3.8)%
Income from rental operations10,661  10,139  522  5.1 %
Depreciation on rental homes (2)
2,721  2,579  142  5.5 %
Income from rental operations, net of depreciation$7,940  $7,560  $380  5.0 %
Gross investment in new manufactured home rental units (3)
$233,840  $195,816  $38,024  19.4 %
Gross investment in used manufactured home rental units$17,454  $25,113  $(7,659) (30.5)%
Net investment in new manufactured home rental units$196,200  $171,936  $24,264  14.1 %
Net investment in used manufactured home rental units$7,492  $11,751  $(4,259) (36.2)%
Number of occupied rentals – new, end of period (4)
3,291  3,011  280  9.3 %
Number of occupied rentals – used, end of period632  1,008  (376) (37.3)%
______________________
(1)Consists of Site rental income and home rental income. Approximately $7.8 million for both the quarters ended June 30, 2020 and June 30, 2019 of Site rental income is included in MH base rental 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)Included in Depreciation and amortization 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 $17.1 million and $16.5 million as of June 30, 2020 and June 30, 2019, respectively.
(4)Includes 283 and 298 homes rented through our ECHO JV as of June 30, 2020 and 2019, respectively.
Income from rental operations, net of depreciation increased $0.4 million in 2020 compared to 2019, primarily due to higher rental operations revenue from an increase in the number of new occupied rental units.
Other Income and Expenses
The following table summarizes other income and expenses, net:
Quarters Ended June 30,
(amounts in thousands, expenses shown as negative)20202019Variance%
Change
Depreciation and amortization$(38,332) $(37,776) $(556) (1.5)%
Interest income1,791  1,803  (12) (0.7)%
Income from other investments, net1,022  879  143  16.3 %
General and administrative(10,609) (9,225) (1,384) (15.0)%
Other expenses(639) (540) (99) (18.3)%
Early debt retirement—  (1,491) 1,491  100.0 %
Interest and related amortization(26,249) (26,024) (225) (0.9)%
Total other income and expenses, net$(73,016) $(72,374) $(642) (0.9)%

Total other income and expenses, net increased $0.6 million in 2020 compared to 2019, primarily due to increases in general and administrative expenses and depreciation and amortization, partially offset by early debt retirement costs paid in 2019. The early debt retirement cost in 2019 was resulted from our repayment of $66.8 million of principal on four mortgage loans that were due to mature in 2020.
Equity in income of unconsolidated joint ventures
Equity in income of unconsolidated joint ventures decreased $2.2 million in 2020 compared to 2019, primarily as a result of a distribution received from our Voyager joint venture during the second quarter of 2019 that was in excess of our investment basis.

31
Management's Discussion and Analysis (continued)

Comparison of the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019
Income from Property Operations
The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the quarterssix months ended June 30, 20192020 and 2018. Core Portfolio growth percentages exclude the impact of GAAP deferrals of upfront payments from right-to-use contracts and related commissions.2019.
 Core Portfolio Total Portfolio Core PortfolioTotal Portfolio
 Quarters Ended June 30, Quarters Ended June 30,Six Months Ended June 30,Six Months Ended June 30,
(amounts in thousands) 2019 2018 Variance 
%
Change
 2019 2018 Variance 
%
Change
(amounts in thousands)20202019Variance%
Change		20202019Variance%
Change
Community base rental income $132,406
 $125,879
 $6,527
 5.2 % $136,213
 $128,579
 $7,634
 5.9 %
MH base rental incomeMH base rental income$283,938  $271,057  $12,881  4.8 %$283,978  $271,495  $12,483  4.6 %
Rental home income 3,631
 3,274
 357
 10.9 % 3,632
 3,561
 71
 2.0 %Rental home income8,060  7,122  938  13.2 %8,060  7,216  844  11.7 %
Resort base rental income 56,181
 53,952
 2,229
 4.1 % 60,997
 55,231
 5,766
 10.4 %
Right-to-use annual payments (membership subscriptions) 12,579
 11,891
 688
 5.8 % 12,586
 11,891
 695
 5.8 %
Right-to-use contracts current period, gross (membership upgrade sales) 5,041
 3,944
 1,097
 27.8 % 5,041
 3,944
 1,097
 27.8 %
RV and marina base rental income (1)
RV and marina base rental income (1)
129,955  131,749  (1,794) (1.4)%141,167  133,165  8,002  6.0 %
Annual membership subscriptionsAnnual membership subscriptions26,033  24,902  1,131  4.5 %26,034  24,902  1,132  4.5 %
Membership upgrade sales current period, grossMembership upgrade sales current period, gross9,891  8,879  1,012  11.4 %9,891  8,879  1,012  11.4 %
Utility and other income 21,817
 21,909
 (92) (0.4)% 22,250
 24,320
 (2,070) (8.5)%Utility and other income46,629  45,847  782  1.7 %47,562  46,001  1,561  3.4 %
Property operating revenues, excluding deferrals 231,655
 220,849
 10,806
 4.9 % 240,719
 227,526
 13,193
 5.8 %Property operating revenues, excluding deferrals504,506  489,556  14,950  3.1 %516,692  491,658  25,034  5.1 %
               

Property operating and maintenance 80,277
 78,105
 2,172
 2.8 % 84,396
 80,091
 4,305
 5.4 %
Property operating and maintenance (3)
Property operating and maintenance (3)
164,384  160,971  3,413  2.1 %169,030  161,989  7,041  4.3 %
Real estate taxes 14,357
 12,920
 1,437
 11.1 % 15,107
 13,440
 1,667
 12.4 %Real estate taxes31,831  30,320  1,511  5.0 %33,509  30,430  3,079  10.1 %
Rental home operating and maintenance 1,282
 1,515
 (233) (15.4)% 1,292
 1,629
 (337) (20.7)%Rental home operating and maintenance2,583  2,474  109  4.4 %2,588  2,496  92  3.7 %
Sales and marketing, gross 4,214
 3,305
 909
 27.5 % 4,214
 3,305
 909
 27.5 %Sales and marketing, gross8,254  7,623  631  8.3 %8,254  7,623  631  8.3 %
Property operating expenses, excluding deferrals and property management 100,130
 95,845
 4,285
 4.5 % 105,009
 98,465
 6,544
 6.6 %Property operating expenses, excluding deferrals and property management207,052  201,388  5,664  2.8 %213,381  202,538  10,843  5.4 %
Income from property operations, excluding deferrals and property management 131,525
 125,004
 6,521
 5.2 % 135,710
 129,061
 6,649
 5.2 %
Income from property operations, excluding deferrals and property management (2) (3)
Income from property operations, excluding deferrals and property management (2) (3)
297,454  288,168  9,286  3.2 %303,311  289,120  14,191  4.9 %
Property management 14,383
 13,472
 911
 6.8 % 14,385
 13,472
 913
 6.8 %Property management29,817  28,070  1,747  6.2 %29,817  28,070  1,747  6.2 %
Income from property operations, excluding deferrals
 117,142
 111,532
 5,610
 5.0 % 121,325
 115,589
 5,736
 5.0 %
Income from property operations, excluding deferrals
267,637  260,098  7,539  2.9 %273,494  261,050  12,444  4.8 %
Right-to-use contracts, deferred and sales and marketing, deferred, net 2,523
 1,759
 764
 43.4 % 2,523
 1,759
 764
 43.4 %
Income from property operations (1)
 $114,619
 $109,773
 $4,846
 4.4 % $118,802
 $113,830

$4,972
 4.4 %
Membership upgrade sales upfront payments and membership sales commission, deferred, netMembership upgrade sales upfront payments and membership sales commission, deferred, net4,511  4,103  408  9.9 %4,511  4,103  408  9.9 %
Income from property operations (2)
Income from property operations (2)
$263,126  $255,995  $7,131  2.8 %$268,983  $256,947  $12,036  4.7 %
__________________________
(1)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.
(2)See Non-GAAP measure. See the Results OverviewFinancial Measures section of the Management'sManagement Discussion and Analysis for Non-GAAP Financial Measure Definitionsdefinitions and reconciliationsreconciliation of these Non-GAAP measures to Net Income available tofor Common Shareholders.
(3)Includes $1.0 million 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. Excluding the impact of these expenses, Core and Consolidated income from property operations, excluding deferrals and property management, was $208.1 million and $214.4 million, respectively, for the six months ended June 30, 2020.

Total portfolioPortfolio income from property operations for 20192020 increased $5.0$12.0 million, or 4.4%4.7%, from 2018, comprised of2019, driven by an increase of $4.8$7.1 million, or 4.4%2.8%, from our Core Portfolio and an increase of $0.2$4.9 million from our Non-Core Portfolio. The increase in income from property operations from our Core Portfolio was primarily due to higher community base rental income and resortan increase in MH base rental income, partially offset by highera decrease in RV base rental income and an increase in property operating expenses. The increase in income from property operations from our Non-CoreNone-Core Portfolio was partially offset by a decreaseattributed to income from properties acquired throughout 2019, most notably the marinas in income due to the sale of five all-age MH communities located in Indiana and Michigan during the first quarter of 2019.Florida.
Property Operating Revenues
CommunityMH base rental income in our Core Portfolio for 20192020 increased $6.5$12.9 million, or 5.2%4.8%, from 2018,2019, which reflects 4.5%4.3% growth from rate increases and 0.7%0.5% growth from occupancy gains. The average monthly base rental income per Site increased to approximately $690 in our2020 from approximately $662 in 2019. The average occupancy for the Core Portfolio increased to approximately $66595.2% in 20192020 from approximately $63695.0% in the same period in 2018. The average occupancy for our Core Portfolio increased to 95.4% in 2019 from 94.9% in the same period in 2018.2019.



32
Management's Discussion and Analysis (continued)


ResortRV base rental income in our Core Portfolio for 2019 increased $2.22020 decreased $1.8 million, or 4.1%1.4%, from 2018,2019 due to lower transient rental income, primarily driven by higher rental rates.resulting from cancellations, declines in reservations and temporary site closures as a result of COVID-19. The decrease in transient rental income from 2018 was mainly due to weather related events at a limited number of Properties, which waspartially offset by an increaseincreases in number of membership subscriptions sold in 2019.
Resortannual and seasonal revenue, mainly driven by higher rental rates. RV and marina base rental income is comprised of the following:
 Core PortfolioTotal Portfolio
Six Months Ended June 30,Six Months Ended June 30,
(amounts in thousands)20202019Variance%
Change		20202019Variance%
Change
Annual$83,849  $79,049  $4,800  6.1 %$94,447  $79,874  $14,573  18.2 %
Seasonal27,734  26,752  982  3.7 %27,787  26,798  989  3.7 %
Transient18,372  25,948  (7,576) (29.2)%18,933  26,493  (7,560) (28.5)%
RV and marina base rental income (1)
$129,955  $131,749  $(1,794) (1.4)%$141,167  $133,165  $8,002  6.0 %
  Core Portfolio Total Portfolio
  Quarters Ended June 30, Quarters Ended June 30,
(amounts in thousands) 2019 2018 Variance 
%
Change
 2019 2018 Variance 
%
Change
Annual $38,257
 $36,077
 $2,180
 6.0 % $40,790
 $36,595
 $4,195
 11.5%
Seasonal 5,135
 4,939
 196
 4.0 % 5,713
 5,206
 507
 9.7%
Transient 12,789
 12,936
 (147) (1.1)% 14,494
 13,430
 1,064
 7.9%
Resort base rental income $56,181
 $53,952
 $2,229
 4.1 % $60,997
 $55,231
 $5,766
 10.4%
_____________________
(1) Marina rental income has been included in our Non-Core Portfolio following the acquisition of the remaining interest in our joint venture investment of 11 marinas in Florida on September 10, 2019.

Utility and other income in our Core Portfolio for 2020 increased $0.8 million, or 1.7%, from 2019. The increase was due to higher pass-through income of $1.8 million and higher utility income of $1.1 million, partially offset by a decrease in other property income of $2.2 million. The increase in pass-through income was driven by increases in real estate taxes in Florida. The decrease in other property income was primarily due to the suspension of late fees and RV cancellation fees during the second quarter of 2020 as a result of COVID-19, as well as receipt of insurance proceeds of $0.6 million related to Hurricane Irma during the first quarter of 2019.
Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for 20192020 increased $4.3$5.7 million, or 4.5%2.8%, from 2018, mainly2019, primarily due to an increase in property operating and maintenance expenses of $2.2$3.4 million and an increase in property taxes of $1.4$1.5 million. The increase in propertyProperty operating and maintenance expenses was primarilywere higher, mainly driven by an increaseincreases in insurance expense of $1.6 million, repairs and maintenance of $1.5 million, bad debt expense of $1.1 million, partially offset by a decrease in administrative expenses of $0.9 million. Property operating and maintenance expenses in our Core Portfolio for 2020 include $1.0 million of incremental and nonrecurring expenses 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. Property taxes in property payroll2020 were higher due to wagereal estate tax increases in Florida.














33
Management's Discussion and an increase of $0.9 million in insurance expense. The increase in property taxes was primarily a result of a resolution of appeals in certain states in 2018.Analysis (continued)

Home Sales and Rental Operations
Home Sales and Other
The following table summarizes certain financial and statistical data for Home Sales and Other.
  Quarters Ended June 30,
(amounts in thousands, except home sales volumes) 2019 2018 Variance 
%
Change
Gross revenues from new home sales (1)
 $6,064
 $6,859
 $(795) (11.6)%
Cost of new home sales (1)
 (5,984) (6,800) 816
 12.0 %
Gross profit from new home sales 80
 59
 21
 35.6 %
         
Gross revenues from used home sales 1,761
 2,246
 (485) (21.6)%
Cost of used home sales (2,180) (2,832) 652
 23.0 %
Loss from used home sales (419) (586) 167
 28.5 %
         
Brokered resale and ancillary services revenues, net 872
 617
 255
 41.3 %
Home selling expenses (1,102) (973) (129) (13.3)%
Income (loss) from home sales and other $(569) $(883) $314
 35.6 %
         
Home sales volumes        
Total new home sales (2)
 117
 146
 (29) (19.9)%
 New Home Sales Volume - ECHO JV 18
 25
 (7) (28.0)%
Used home sales 210
 297
 (87) (29.3)%
Brokered home resales 237
 253
 (16) (6.3)%
_________________________
Six Months Ended June 30,
(amounts in thousands, except home sales volumes)20202019Variance%
Change
Gross revenues from new home sales (1)
$16,934  $10,628  $6,306  59.3 %
Cost of new home sales (1)
16,669  10,378  6,291  60.6 %
Gross profit from new home sales265  250  15  6.0 %
Gross revenues from used home sales3,241  3,672  (431) (11.7)%
Cost of used home sales4,092  4,418  (326) (7.4)%
Loss from used home sales(851) (746) (105) (14.1)%
Brokered resale and ancillary services revenues, net363  2,431  (2,068) (85.1)%
Home selling expenses2,294  2,185  109  5.0 %
Income (loss) from home sales and other$(2,517) $(250) $(2,267) (906.8)%
Home sales volumes
Total new home sales (2)
288  208  80  38.5 %
 New Home Sales Volume - ECHO JV23  31  (8) (25.8)%
Used home sales330  429  (99) (23.1)%
Brokered home resales287  405  (118) (29.1)%
_________________________
(1) New home sales gross revenues and costs of new home sales do not include the revenues and costs associated with our ECHO JV.
(2) Total new home sales volume includes home sales from our ECHO JV.
LossThe loss from home sales and other was $0.6$2.5 million for 20192020 compared to $0.9$0.3 million for 2018.2019. The decreaseincrease in the loss from home sales and other was due to a decrease in loss from used home sales and an increase in ancillary services revenues, net.primarily related to closed restaurants and amenities across the portfolio as a result of COVID-19.
34
Management's Discussion and Analysis (continued)


Rental Operations
The following table summarizes certain financial and statistical data for MH Rental Operations.
 Quarters Ended June 30,Six Months Ended June 30,
(amounts in thousands, except rental unit volumes) 2019 2018 Variance 
%
Change
(amounts in thousands, except rental unit volumes)20202019Variance%
Change
Manufactured homes:        Manufactured homes:
Rental operations revenue (1)
 $11,422
 $11,064
 $358
 3.2 %
Rental operations revenue (1)
$23,647  $22,641  $1,006  4.4 %
Rental home operating and maintenance (1,282) (1,515) 233
 15.4 %
Rental home operating and maintenance expenseRental home operating and maintenance expense2,583  2,474  109  4.4 %
Income from rental operations 10,140
 9,549
 591
 6.2 %Income from rental operations21,064  20,167  897  4.4 %
Depreciation on rental homes (2)
 (2,544) (2,251) (293) (13.0)%
Depreciation on rental homes (2)
5,525  5,012  513  10.2 %
Income from rental operations, net of depreciation $7,596
 $7,298
 $298
 4.1 %Income from rental operations, net of depreciation$15,539  $15,155  $384  2.5 %
        
Gross investment in new manufactured home rental units (3)
 $191,975
 $135,886
 $56,089
 41.3 %
Gross investment in new manufactured home rental units (3)
$233,840  $195,816  $38,024  19.4 %
Gross investment in used manufactured home rental units $25,103
 $34,476
 $(9,373) (27.2)%Gross investment in used manufactured home rental units$17,454  $25,113  $(7,659) (30.5)%
        
Net investment in new manufactured home rental units $159,950
 $110,298
 $49,652
 45.0 %Net investment in new manufactured home rental units$196,200  $171,936  $24,264  14.1 %
Net investment in used manufactured home rental units $11,563
 $24,538
 $(12,975) (52.9)%Net investment in used manufactured home rental units$7,492  $11,751  $(4,259) (36.2)%
        
Number of occupied rentals – new, end of period (4)
 3,006
 2,547
 459
 18.0 %
Number of occupied rentals – new, end of period (4)
3,291  3,011  280  9.3 %
Number of occupied rentals – used, end of period 1,007
 1,467
 (460) (31.4)%Number of occupied rentals – used, end of period632  1,008  (376) (37.3)%
______________________
(1)
(1)Rental operations revenue consists of Site rental income and home rental income in our Core Portfolio. Approximately $15.6 million and $15.5 million of Site rental income for the six months ended June 30, 2020 and 2019, respectively, are included in community base rental 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.
(2)Included in Depreciation and amortization in the Consolidated Statements of Income and Comprehensive Income.
(3)Includes both occupied and unoccupied rental homes in our Core Portfolio. New home cost basis does not include the costs associated with our ECHO JV. Our investment in the ECHO JV was $17.1 million and $16.5 million as of June 30, 2020 and 2019, respectively.
(4)Occupied rentals as of the end of the period in our Core Portfolio and includes 283 and 298 homes rented through our ECHO JV as of June 30, 2020 and 2019, respectively.
Rental operations revenue consists of Site rental income and home rental income in our Core Portfolio. Approximately $7.8 million of Site rental income for both the quarters ended June 30, 2019 and 2018 is included in community base rental 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.
(2)
Included in Depreciation and amortization in the Consolidated Statements of Income and Comprehensive Income.
(3)
Includes both occupied and unoccupied rental homes in our Core Portfolio. New home cost basis does not include the costs associated with our ECHO JV. Our investment in the ECHO JV was $16.5 million and $15.9 million as of June 30, 2019 and 2018, respectively.
(4)
Occupied rentals as of the end of the period in our Core Portfolio and includes 298 and 264 homes rented through our ECHO JV during the quarters ended June 30, 2019 and 2018, respectively.
The increase in income from rental operations, net of depreciation, in our Core Portfolio was primarily due to higher rental operations revenue from an increase in the number of new occupied rental units, at a higher rental rate, partially offset by a decreasean increase in the number of used occupieddepreciation on rental units.homes.
Other Income and Expenses
The following table summarizes other income and expenses, net.net:
Six Months Ended June 30,
(amounts in thousands, expenses shown as negative)20202019Variance%
Change
Depreciation and amortization$(77,356) $(75,753) $(1,603) (2.1)%
Interest income3,598  3,554  44  1.2 %
Income from other investments, net1,665  1,865  (200) (10.7)%
General and administrative(21,464) (19,134) (2,330) (12.2)%
Other expenses(1,227) (967) (260) (26.9)%
Early debt retirement(1,054) (1,491) 437  29.3 %
Interest and related amortization(52,322) (52,417) 95  0.2 %
Total other income and expenses, net$(148,160) $(144,343) $(3,817) (2.6)%
  Quarters Ended June 30,
(amounts in thousands, expenses shown as negative) 2019 2018 Variance 
%
Change
Depreciation and amortization $(37,776) $(34,345) $(3,431) (10.0)%
Interest income 1,803
 1,862
 (59) (3.2)%
Income from other investments, net 879
 3,413
 (2,534) (74.2)%
General and administrative (9,225) (9,669) 444
 4.6 %
Other expenses (540) (367) (173) (47.1)%
Early debt retirement (1,491) —
 (1,491) — %
Interest and related amortization (26,024) (26,285) 261
 1.0 %
Total other income and (expenses), net $(72,374) $(65,391) $(6,983) (10.7)%

Total other income and (expenses),expenses, net increased $7.0$3.8 million during 2019in 2020 compared to 2018,2019, primarily due to an increase in general and administrative expenses and depreciation and amortization and a decrease in income from other investments, net. The decrease in income from other investments, net was mainly due to $1.8 million of insurance recovery revenue from reimbursement for capital expenditures related to Hurricane Irma in 2018. Additionally, we incurred $1.5 million of early debt retirement costs in 2019.

Management's Discussion and Analysis (continued)


Comparison of the Six Months Ended June 30, 2019 to the Six Months Ended June 30, 2018
Income from Property Operations
The following table summarizes certain financial and statistical data for the Core Portfolio and the total portfolio for the six months ended June 30, 2019 and 2018. Core Portfolio growth percentages exclude the impact of GAAP deferrals of upfront payments from right-to-use contracts and related commissions.
  Core Portfolio Total Portfolio
  Six Months Ended June 30, Six Months Ended June 30,
(amounts in thousands) 2019 2018 Variance 
%
Change
 2019 2018 Variance 
%
Change
Community base rental income $263,444
 $250,669
 $12,775
 5.1 % $271,495
 $255,318
 $16,177
 6.3 %
Rental home income 7,121
 6,506
 615
 9.5 % 7,216
 7,076
 140
 2.0 %
Resort base rental income 122,115
 117,235
 4,880
 4.2 % 133,165
 119,485
 13,680
 11.4 %
Right-to-use annual payments (membership subscriptions) 24,889
 23,409
 1,480
 6.3 % 24,902
 23,410
 1,492
 6.4 %
Right-to-use contracts current period, gross (membership upgrade sales) 8,879
 7,108
 1,771
 24.9 % 8,879
 7,106
 1,773
 25.0 %
Utility and other income 44,434
 45,970
 (1,536) (3.3)% 46,001
 49,841
 (3,840) (7.7)%
Property operating revenues, excluding deferrals 470,882
 450,897
 19,985
 4.4 % 491,658
 462,236
 29,422
 6.4 %
                 
Property operating and maintenance 154,575
 151,241
 3,334
 2.2 % 161,989
 154,999
 6,990
 4.5 %
Real estate taxes 28,931
 26,743
 2,188
 8.2 % 30,430
 27,575
 2,855
 10.4 %
Rental home operating and maintenance 2,464
 2,873
 (409) (14.2)% 2,496
 3,053
 (557) (18.2)%
Sales and marketing, gross 7,627
 6,118
 1,509
 24.7 % 7,623
 6,117
 1,506
 24.6 %
Property operating expenses, excluding deferrals and property management 193,597
 186,975
 6,622
 3.5 % 202,538
 191,744
 10,794
 5.6 %
Income from property operations, excluding deferrals and property management 277,285
 263,922
 13,363
 5.1 % 289,120
 270,492
 18,628
 6.9 %
Property management 28,067
 27,151
 916
 3.4 % 28,070
 27,153
 917
 3.4 %
Income from property operations, excluding deferrals 
 249,218
 236,771
 12,447
 5.3 % 261,050
 243,339
 17,711
 7.3 %
Right-to-use contracts, deferred and sales and marketing, deferred, net 4,103
 3,020
 1,083
 35.9 % 4,103
 3,020
 1,083
 35.9 %
Income from property operations (1)
 $245,115
 $233,751
 $11,364
 4.9 % $256,947
 $240,319
 $16,628
 6.9 %
__________________________
(1)     Non-GAAP measure. See the Results Overview section of the Management's Discussion and Analysis for Non-GAAP Financial Measure Definitions and reconciliations of these Non-GAAP measures to Net Income available to Common Shareholders.
Total Portfolio income from property operations for 2019 increased $16.6 million, or 6.9%, from 2018, primarily as a result of an increase of $11.4 million, or 4.9%, from our Core Portfolio and an increase of $5.2 million, from our Non-Core Portfolio. The increase in income from property operations from our Core Portfolio was primarily due to an increase in community base rental income and resort base rental income, partially offset by an increase in property operating expenses. The increase in income from property operations from our Non-Core Portfolio was partially offset by a decrease in income due to the sale of five all-age MH communities located in Indiana and Michigan during the first quarter of 2019.
Property Operating Revenues
Community base rental income in our Core Portfolio for 2019 increased $12.8 million, or 5.1%, from 2018, which reflects 4.5% growth from rate increases and 0.6% growth from occupancy gains. The average monthly base rental income per Site increased to approximately $662 in 2019 from approximately $633 in 2018. The average occupancy for the Core Portfolio increased to 95.3% in 2019 from 94.9% in the same period in 2018.




Management's Discussion and Analysis (continued)


Resort base rental income in our Core Portfolio for 2019 increased $4.9 million, or 4.2%, from 2018, primarily driven by higher rental rates. The decrease in transient rental income from 2018 was mainly due to weather related events at a limited number of Properties, which was offset by an increase in number of membership subscriptions sold in 2019.
Resort base rental income is comprised of the following:
  Core Portfolio Total Portfolio
  Six Months Ended June 30, Six Months Ended June 30,
(amounts in thousands) 2019 2018 Variance 
%
Change
 2019 2018 Variance 
%
Change
Annual $75,606
 $71,274
 $4,332
 6.1 % $79,874
 $71,751
 $8,123
 11.3%
Seasonal 24,319
 23,597
 722
 3.1 % 26,798
 24,229
 2,569
 10.6%
Transient 22,190
 22,364
 (174) (0.8)% 26,493
 23,505
 2,988
 12.7%
Resort base rental income $122,115
 $117,235
 $4,880
 4.2 % $133,165
 $119,485
 $13,680
 11.4%
Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for 2019 increased $6.6 million, or 3.5%, from 2018, mainly due to an increase in property operating and maintenance expenses of $3.3 million and an increase in property taxes of $2.2 million. The increase in property operating and maintenance expenses was primarily driven by an increase in property payroll as a result of salary increases and higher electric and trash expenses in California and the South. The increase in property taxes was primarily a result of a resolution of appeals in certain states in 2018.
Home Sales and Rental Operations
Home Sales and Other
The following table summarizes certain financial and statistical data for Home Sales and Other.
  Six Months Ended June 30,
(amounts in thousands, except home sales volumes) 2019 2018 Variance 
%
Change
Gross revenues from new home sales (1)
 $10,628
 $13,595
 $(2,967) (21.8)%
Cost of new home sales (1)
 (10,378) (13,310) 2,932
 22.0 %
Gross profit from new home sales 250
 285
 (35) (12.3)%
         
Gross revenues from used home sales 3,672
 3,819
 (147) (3.8)%
Cost of used home sales (4,418) (4,896) 478
 9.8 %
Loss from used home sales (746) (1,077) 331
 30.7 %
         
Brokered resale and ancillary services revenues, net 2,431
 2,018
 413
 20.5 %
Home selling expenses (2,185) (2,048) (137) (6.7)%
Income (loss) from home sales and other $(250) $(822) $572
 69.6 %
         
Home sales volumes        
Total new home sales (2)
 208
 276
 (68) (24.6)%
 New Home Sales Volume - ECHO JV 31
 43
 (12) (27.9)%
Used home sales 429
 538
 (109) (20.3)%
Brokered home resales 405
 446
 (41) (9.2)%
_________________________
(1) New home sales gross revenues and costs of new home sales do not include the revenues and costs associated with our ECHO JV.
(2) Total new home sales volume includes home sales from our ECHO JV.
Loss from home sales and other was $0.3 million for 2019 compared to $0.8 million for 2018. The decrease in loss from home sales and other was primarily due to a decrease in the loss from used home sales and an increase in ancillary services revenues, net.
Management's Discussion and Analysis (continued)


Rental Operations
The following table summarizes certain financial and statistical data for MH Rental Operations.
  Six Months Ended June 30,
(amounts in thousands, except rental unit volumes) 2019 2018 Variance 
%
Change
Manufactured homes:        
Rental operations revenue (1)
 $22,633
 $22,152
 $481
 2.2 %
Rental home operating and maintenance (2,464) (2,873) 409
 14.2 %
Income from rental operations 20,169
 19,279
 890
 4.6 %
Depreciation on rental homes (2)
 (4,957) (4,605) (352) (7.6)%
Income from rental operations, net of depreciation $15,212
 $14,674
 $538
 3.7 %
         
Gross investment in new manufactured home rental units (3)
 $191,975
 $135,886
 $56,089
 41.3 %
Gross investment in used manufactured home rental units $25,103
 $34,476
 $(9,373) (27.2)%
         
Net investment in new manufactured home rental units $159,950
 $110,298
 $49,652
 45.0 %
Net investment in used manufactured home rental units $11,563
 $24,538
 $(12,975) (52.9)%
         
Number of occupied rentals – new, end of period (4)
 3,006
 2,547
 459
 18.0 %
Number of occupied rentals – used, end of period 1,007
 1,467
 (460) (31.4)%
______________________
(1)
Rental operations revenue consists of Site rental income and home rental income in our Core Portfolio. Approximately $15.5 million and $15.6 million of Site rental income for the six months ended June 30, 2019 and 2018, respectively, are included in community base rental 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.
(2)
Included in Depreciation and amortization in the Consolidated Statements of Income and Comprehensive Income.
(3)
Includes both occupied and unoccupied rental homes in our Core Portfolio. New home cost basis does not include the costs associated with our ECHO JV. Our investment in the ECHO JV was $16.5 million and $15.9 million as of June 30, 2019 and 2018, respectively.
(4)
Occupied rentals as of the end of the period in our Core Portfolio and includes 298 and 264 homes rented through our ECHO JV during the six months ended June 30, 2019 and 2018, respectively.
The increase in income from rental operations, net of depreciation, was primarily due to an increase in the number of new occupied rental units at a higher rental rate, partially offset by a decrease in the number of used occupied rental units.
Other Income and Expenses
The following table summarizes other income and expenses, net.
  Six Months Ended June 30,
(amounts in thousands, expenses shown as negative) 2019 2018 Variance 
%
Change
Depreciation and amortization $(75,753) $(66,719) $(9,034) (13.5)%
Interest income 3,554
 3,812
 (258) (6.8)%
Income from other investments, net 1,865
 4,353
 (2,488) (57.2)%
General and administrative (19,134) (17,707) (1,427) (8.1)%
Other expenses (967) (710) (257) (36.2)%
Early debt retirement (1,491) —
 (1,491) — %
Interest and related amortization (52,417) (51,988) (429) (0.8)%
Total other income and (expenses), net $(144,343) $(128,959) $(15,384) (11.9)%

Total other income and (expenses), net increased $15.4 million for 2019, compared to 2018. The increase was primarily due to an increase in depreciation and amortization and a decrease in income from other investments, net. The decrease in income from other investments, net was mainly due to $2.1 million of insurance recovery revenue from reimbursement for capital expenditures related to Hurricane Irma in 2018. Additionally, we incurred $1.5 million of early debt retirement costs in 2019.

amortization.
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 the 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 $3.5 million in 2020 compared to 2019, primarily as a result of 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, home purchases and 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.
Our at-the-market (“ATM”) equity offering program allows usThe impact the COVID-19 pandemic will continue to sell,have on our financial condition and cashflows is uncertain and is dependent upon various factors including the timing and manner in which operations resume at our Properties, customer payment patterns and operational decisions we have made and may make in the future in response to 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 priceemployees, residents and guests. We believe, based on information currently available and informed in part by our cash collection experience in July as detailed in our COVID Update, that our current cash reserves provide us sufficient cash to meet our needs for the next twelve months, including our expected dividend payments. Each quarter our Board of upDirectors considers several factors as it deliberates and decides whether to $200.0 million. As of June 30, 2019, we have $140.7 million of common stock available for issuance.
On April 30, 2019,declare a quarterly dividend. The process includes revisiting our stockholders approved an amendmentannual budget and considering factors including our planned operating performance and related cash flow, our debt service obligations, capital investments to our chartermaintain and expand the business, working capital requirements including home purchases and potential investments to increase the number of shares of our common stock that we are authorized to issue from 200,000,000 to 400,000,000 shares. As of June 30, 2019, we have available liquidity in the form of approximately 309.0 million shares of authorized and unissued common stock and 10.0 million shares of authorized and unissued preferred stock registered for sale under the Securities Act of 1933, as amended.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, managing future debt maturities and borrowing at competitive rates, enables us to meet this objective. Our financing objectives continue to focus on accessingAccessing long-term low-cost secured debt.debt continues to be our focus.
We expect to meet certain long-term liquidity requirements, such as scheduled debt maturities, property acquisitions and capital improvements, using long-term collateralized and uncollateralized borrowings including the existing LOC and the issuance of debt securities or the issuance of equity including under our ATM equity offering program.
For information regarding our debt activities and related borrowing arrangements, see Item 1. Financial Statements—Note 8. Borrowing Arrangements. Total secured debt encumbered a total of 125 and 116 of our Properties as of June 30, 2020 and December 31, 2019, respectively, and the gross carrying value of such Properties was approximately $2,650.8 million and $2,524.7 million, as of June 30, 2020 and December 31, 2019, respectively.
On April 28, 2020, our stockholders approved an amendment to our charter to increase the number of shares of common stock that we are authorized to issue from 400,000,000 to 600,000,000 shares. As of June 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 share of stock, and 10.0 million shares of authorized and unissued preferred stock registered for sale under the Securities Act of 1933, as amended.
Our at-the-market (“ATM”) equity offering program allows us to sell, from time-to-time, shares of our common stock, having an aggregate offering price of up to $200.0 million. As of June 30, 2020, we have $140.7 million of common stock available for issuance under our ATM equity program.
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 June 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%, requires an annual facility fee of 0.15% to 0.35% and matures on October 27, 2021.
36
Management's Discussion and Analysis (continued)

We also utilize interest rate swaps to add stability to our interest expense and to manage our exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The changes in the fair value of the designated derivative are recorded in Accumulatedaccumulated other comprehensive income (loss) on the Consolidated Balance Sheets and subsequently reclassified into earnings on the Consolidated Statements of Income and Comprehensive Income in the period that the hedged forecasted transaction affects earnings. For additional information regarding our interest rate swap, see Item 1. Financial Statements—Note 9. Derivative Instruments and Hedging Activities.
We expect to meet our short-term liquidity requirements, including principal payments, capital improvements and dividend distributions for the next twelve months, mainly through available cash as well as net cash provided by operating activities. Our LOC has a borrowing capacity of $400.0 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%, requires an annual facility fee of 0.15% to 0.35% and matures on October 27, 2021.
As part of our Unsecured Credit Facility,unsecured credit facility, our LOC arrangement will mature prior to the expected discontinuation of LIBOR subsequent to 2021 and our $200.0 million term loan is scheduled to mature in April 2023. 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 in the future. Given overapproximately 90% of our current debt is secured and not subject to LIBOR, we do not believe the discontinuation of LIBOR will have a significant impact on our consolidated financial statements.
We expect to meet certain long-term liquidity requirements, including scheduled debt maturities, property acquisitions and capital improvements by use of our long-term collateralized and uncollateralized borrowings including the existing LOC and the issuance of debt securities or additional equity securities. We have no debt maturing in 2019 and approximately $48.9 million of scheduled debt matures in 2020 (excluding scheduled principal payments on debt maturing in 2020 and beyond).
For information regarding our debt activities and related borrowing arrangements, see Item 1. Financial Statements—Note 8. Borrowing Arrangements.

The following table below summarizes our cash flowflows activity:
 Six Months Ended June 30,
(amounts in thousands)2019 2018
Net cash provided by operating activities$244,685
 $229,965
Net cash used in investing activities(75,881) (122,189)
Net cash used in financing activities(147,321) (89,192)
Net increase in cash and restricted cash$21,483
 $18,584

Management's Discussion and Analysis (continued)


Six Months Ended June 30,
(amounts in thousands)20202019
Net cash provided by operating activities$238,745  $244,685  
Net cash provided by (used in) investing activities(105,804) (75,881) 
Net cash used in financing activities(41,808) (147,321) 
Net increase (decrease) in cash and restricted cash$91,133  $21,483  
Operating Activities
Net cash provided by operating activities increased $14.7decreased $6.0 million to $238.7 million for the six months ended June 30, 2020 from $244.7 million for the six months ended June 30, 2019, from $230.0 million for the six months ended June 30, 2018.2019. The increasedecrease in net cash provided by operating activities was primarily due to higher income from property operationsdecreases in accounts payable and other liabilities of $16.6$10.0 million, and an increase in rents and other customer payments received in advance and security deposits of approximately $5.3$9.9 million and proceeds from insurance claims of $3.1 million, partially offset by long termhigher income from property operations of $12.0 million. In addition, long-term incentive plan compensation payments of approximately $4.2$4.4 million paidwere made during the first quarter of 2019 and a net decrease in other assets and accounts payable and other liabilities of approximately of $2.5 million.2019.
Investing Activities
Net cash used in investing activities wasincreased $29.9 million to $105.8 million for the six months ended June 30, 2020 from $75.9 million for the six months ended June 30, 2019 compared to $122.2 million for the six months ended June 30, 2018.2019. The decreaseincrease in net cash used in investing activities was primarily due to proceeds received of $77.7 million as a result ofreceived in 2019 from the sale of five MH properties during the first quarter of 2019real estate and a decrease in distributions of capital from unconsolidated joint ventures of $5.2 million. This was$3.8 million in 2020 compared to 2019, partially offset by an increasereduced spending on acquisitions of $40.1$34.4 million inand reduced capital improvements.improvement spending of $18.3 million.
Capital Improvements
The following table below summarizes capital improvements:
Six Months Ended June 30,
(amounts in thousands)20202019
Recurring capital expenditures (1)
$26,796  $22,913  
Property upgrades and development (2)
41,374  28,915  
New home investments (3) (4)
32,505  67,086  
Used home investments (4)
485  1,452  
Total property improvements101,160  120,366  
Corporate1,987  1,078  
Total capital improvements$103,147  $121,444  
______________________
(1)Primarily comprised of common area, utility infrastructure and mechanical improvements.
(2)Includes $2.5 million of restoration and improvement activities:
 Six Months Ended June 30,
(amounts in thousands)2019 2018
Recurring capital expenditures (1)
$22,913
 $21,175
Property upgrades and development(2)
28,915
 25,580
New home investments (3)(4)
67,086
 31,701
Used home investments (4)
1,452
 1,807
Total property120,366
 80,263
Corporate1,078
 1,114
Total capital improvements$121,444
 $81,377
______________________capital expenditures related to Hurricane Irma for the six months ended June 30, 2019.
(1)
(3)Excludes new home investments associated with our ECHO JV.
(4)Net proceeds from new and used home sale activities are reflected within Operating Activities.

37
Management's Discussion and Analysis (continued)

Recurring capital expenditures are primarily comprised of common area improvements, furniture and mechanical improvements.
(2)
Includes $2.5 million and $9.5 million of restoration and improvement capital expenditures related to Hurricane Irma for the six months ended June 30, 2019 and 2018, respectively.
(3)
Excludes new home investment associated with our ECHO JV.
(4)
Net proceeds from new and used home sale activities are reflected within Operating Activities.
Financing Activities
Net cash used in financing activities increased $58.1decreased $105.5 million to $41.8 million for the six months ended June 30, 2020 from $147.3 million for the six months ended June 30, 2019 from $89.2 million for the six months ended June 30, 2018.2019. The increasedecrease in net cash used in financing activities was primarily due to an increase in debt repayments and distributions paidfinancing proceeds of $70.0$275.4 million, partially offset by net repayment on the LOC of $110.0 million and $13.2 million, respectively, during the six months ended June 30,proceeds received in 2019 as compared to the same period in the prior year. Proceeds of $59.3 million received from the sale of our common stock under our ATM equity offering program for the six months ended June 30, 2019 was offset by debt proceeds received during the six months ended June 30, 2018. These increases in cash used in financing activities during the six months ended June 30, 2019 were partially offset by a $30.0 million net payment related to the LOC during the six months ended June 30, 2018.of $59.3 million.
Contractual Obligations
Significant ongoing contractual obligations consist primarily of long-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 20182019 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 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 are unlawfully attempting to impose those obligations upon the Operating Partnership.
Westwinds opened in the 1970s and was developed by the original ground lessee with assistance from the Nicholsons. In 1997, the Operating Partnership acquired the leasehold interest in 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.
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 the 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 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 litigation, which motion was heard on June 25, 2020. On July 8, 2020, the California Superior Court issued a proposed statement of decision denying the Nicholson’s motion to compel. All parties have submitted to the statement of decision, and we expect the Court to issue a decision in due course.
38
Management's Discussion and Analysis (continued)

Following the filing of our lawsuit, the City of San Jose took steps to accelerate the passage of a general plan amendment previously under review by the City to change the designation for Westwinds from its current general plan designation of Urban Residential (which would allow for higher 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 change in designation requires, among other things, a further amendment to the general plan to a different land use designation by the City Council prior to any change in use.
Off-Balance Sheet Arrangements
As of June 30, 2019,2020, we have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Refer to the "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 20182019 Form 10-K for a discussion of our critical accounting policies. There have been no significant changes to our critical accounting policies and estimates during the six months ended June 30, 2019.2020.
Management's Discussion and Analysis (continued)


Forward-Looking Statements
This Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 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, our 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 properties 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;
•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 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.
40

Item 3.Quantitative and Qualitative Disclosures About 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 in our 20182019 Form 10-K. There have been no material changes in the assumptions used or results obtained regarding market risk since December 31, 2018.2019.

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 officer), has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2019.2020. 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 June 30, 2019.2020. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Changes in Internal Control Over Financial Reporting
During the quarter ended June 30, 2019,2020, 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 11. Commitments and Contingencies accompanying the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Item 1A.Risk Factors
Item 1A.Risk Factors
There have been no material changes to
A description of the risk factors associated with our business are discussed in “Item 1A. Risk Factors” in our 20182019 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 failure to pay rent, which could lead to an increase in our recognition 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
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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.

•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-K, each of which could be exacerbated by the 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 Disclosures
Item 4.Mine Safety Disclosures
None.

Item 5.Other Information
Item 5.Other Information
None.


Item 6.Exhibits
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Item 6.Exhibits
3.131.1
31.1
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
32.1
32.2
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL 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)

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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: July 30, 201928, 2020By:/s/ Marguerite Nader
Marguerite Nader
President and Chief Executive Officer
(Principal Executive Officer)
Date: July 30, 201928, 2020By:/s/ Paul Seavey
Paul Seavey
Executive Vice President and Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: July 30, 201928, 2020By:/s/ Valerie Henry
Valerie Henry
Vice President and Chief Accounting Officer
(Principal Accounting Officer)


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