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, ~~2020~~2021


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

For the transition period from to

Commission file number: 1-11718

_________________________________________________________

EQUITY LIFESTYLE PROPERTIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

~~_________________________________________________________~~

Maryland

36-3857664

(State or other jurisdiction of incorporation)

(IRS Employer Identification Number)

Two North Riverside Plaza, Suite 800

Chicago,

Illinois

60606

(Address of Principal Executive Offices)

(Zip Code)

(312) 279-1400

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 Par Value

ELS

New 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~~“emerging growth ~~company"~~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: ~~182,155,196~~183,765,513 shares of Common Stock as of July ~~23, 2020.~~22, 2021.

Equity LifeStyle Properties, Inc.

Table of Contents

Page

Part I - Financial Information

Item 1.

Financial Statements (unaudited)

Index To Financial Statements

Consolidated Balance Sheets as of June 30 ~~2020~~, 2021 and December 31, ~~2019~~ 2020

Consolidated Statements of Income and Comprehensive Income for the quarters and six months ended June 30 ~~2020~~, 2021 and ~~2019~~2020

Consolidated Statements of Changes in Equity for the quarters and six months ended June 30 ~~2020 and 2019~~, 2021 and 2020

Consolidated Statements of Cash Flows for the six months ended June 30 ~~2020 and 2019~~, 2021 and 2020

Notes to Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

4140

Item 4.

Controls and Procedures

4140

Part II - Other Information

Item 1.

Item 1A.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

4341

Item 3.

Defaults Upon Senior Securities

4341

Item 4.

Mine Safety Disclosures

Item 5.

Item 6.

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 of		As of			As of		As of
		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
		(unaudited)					(unaudited)
Assets	Assets					Assets
Investment in real estate:	Investment in real estate:					Investment in real estate:
Land	Land	$	1,528,929	$	1,525,407	Land	$	1,877,023	$	1,676,636
Land improvements	Land improvements	3,396,132		3,336,070		Land improvements	3,702,696		3,543,479
Buildings and other depreciable property	Buildings and other depreciable property	903,249		881,572		Buildings and other depreciable property	1,027,716		940,311
		5,828,310		5,743,049			6,607,435		6,160,426
Accumulated depreciation	Accumulated depreciation	(1,849,799)		(1,776,224)		Accumulated depreciation	(2,014,797)		(1,924,585)
Net investment in real estate	Net investment in real estate	3,978,511		3,966,825		Net investment in real estate	4,592,638		4,235,841
Cash and restricted cash	Cash and restricted cash	119,993		28,860		Cash and restricted cash	44,753		24,060
Notes receivable, net	Notes receivable, net	35,304		37,558		Notes receivable, net	38,072		35,844
Investment in unconsolidated joint ventures	Investment in unconsolidated joint ventures	19,864		20,074		Investment in unconsolidated joint ventures	20,496		19,726
Deferred commission expense	Deferred commission expense	41,622		41,149		Deferred commission expense	45,288		42,472
Other assets, net	Other assets, net	72,880		56,809		Other assets, net	82,760		61,026
Total Assets	Total Assets	$	4,268,174	$	4,151,275	Total Assets	$	4,824,007	$	4,418,969

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Liabilities:	Liabilities:					Liabilities:
Mortgage notes payable, net	Mortgage notes payable, net	$	2,247,790	$	2,049,509	Mortgage notes payable, net	$	2,621,130	$	2,444,930
Term loan, net	Term loan, net	199,111		198,949		Term loan, net	297,261		0
Unsecured line of credit	Unsecured line of credit	50,000		160,000		Unsecured line of credit	62,000		222,000
Accounts payable and other liabilities	Accounts payable and other liabilities	142,269		124,665		Accounts payable and other liabilities	164,331		129,666
Deferred revenue – upfront payments from membership upgrade sales		132,023		126,814
Deferred revenue – annual membership subscriptions		12,655		10,599
Deferred membership revenue						Deferred membership revenue	167,631		150,692
Accrued interest payable	Accrued interest payable	8,485		8,639		Accrued interest payable	8,753		8,336
Rents and other customer payments received in advance and security deposits	Rents and other customer payments received in advance and security deposits	102,480		91,234		Rents and other customer payments received in advance and security deposits	130,903		92,587
Distributions payable	Distributions payable	65,978		58,978		Distributions payable	70,007		66,003
Total Liabilities	Total Liabilities	2,960,791		2,829,387		Total Liabilities	3,522,016		3,114,214
Equity:	Equity:					Equity:
Stockholders' Equity:	Stockholders' 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
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of June 30, 2021 and December 31, 2020; NaN issued and outstanding.						Preferred stock, $0.01 par value, 10,000,000 shares authorized as of June 30, 2021 and December 31, 2020; NaN issued and outstanding.	0		0
Common stock, $0.01 par value, 600,000,000 and shares authorized as of June 30, 2021 and December 31, 2020; 183,754,301 and 182,230,631 shares issued and outstanding as of June 30, 2021, and December 31, 2020, respectively.						Common stock, $0.01 par value, 600,000,000 and shares authorized as of June 30, 2021 and December 31, 2020; 183,754,301 and 182,230,631 shares issued and outstanding as of June 30, 2021, and December 31, 2020, respectively.	1,827		1,813
Paid-in capital	Paid-in capital	1,405,764		1,402,696		Paid-in capital	1,424,350		1,411,397
Distributions in excess of accumulated earnings	Distributions in excess of accumulated earnings	(169,903)		(154,318)		Distributions in excess of accumulated earnings	(185,930)		(179,523)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(1,161)		(380)		Accumulated other comprehensive income (loss)	239		0
Total Stockholders’ Equity	Total Stockholders’ Equity	1,236,512		1,249,810		Total Stockholders’ Equity	1,240,486		1,233,687
Non-controlling interests – Common OP Units	Non-controlling interests – Common OP Units	70,871		72,078		Non-controlling interests – Common OP Units	61,505		71,068
Total Equity	Total Equity	1,307,383		1,321,888		Total Equity	1,301,991		1,304,755
Total Liabilities and Equity	Total Liabilities and Equity	$	4,268,174	$	4,151,275	Total Liabilities and Equity	$	4,824,007	$	4,418,969

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

Equity LifeStyle Properties, Inc.

Consolidated Statements of Income and Comprehensive Income

(amounts in thousands, except per share ~~data (adjusted for stock split))~~data)

(unaudited)

Quarters Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenues:
Rental income $ 217,963 $ 212,007 $ 457,309 $ 435,573
Annual membership subscriptions 12,961 12,586 26,034 24,902
Membership upgrade sales current period, gross 5,048 5,041 9,891 8,879
Membership upgrade sales upfront payments, deferred, net (2,666) (2,912) (5,208) (4,683)
Other income 9,680 10,265 20,739 20,635
Gross revenues from home sales 8,866 7,825 20,175 14,300
Brokered resale and ancillary services revenues, net (575) 872 363 2,431
Interest income 1,791 1,803 3,598 3,554
Income from other investments, net 1,022 879 1,665 1,865
Total revenues 254,090 248,366 534,566 507,456
Expenses:
Property operating and maintenance 85,265 84,868 168,899 162,816
Real estate taxes 16,668 15,107 33,509 30,430
Sales and marketing, gross 4,276 4,214 8,254 7,623
Membership sales commissions, deferred, net (481) (389) (697) (580)
Property management 14,813 14,385 29,817 28,070
Depreciation and amortization 38,332 37,776 77,356 75,753
Cost of home sales 8,850 8,164 20,761 14,796
Home selling expenses 1,081 1,102 2,294 2,185
General and administrative 10,609 9,225 21,464 19,134
Other expenses 639 540 1,227 967
Early debt retirement — 1,491 1,054 1,491
Interest and related amortization 26,249 26,024 52,322 52,417
Total expenses 206,301 202,507 416,260 395,102
Gain on sale of real estate, net — — — 52,507
Income before equity in income of unconsolidated joint ventures 47,789 45,859 118,306 164,861
Equity in income of unconsolidated joint ventures 1,064 3,226 1,271 4,759
Consolidated net income 48,853 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 swap 552 (1,610) (781) (2,541)
Consolidated comprehensive income 49,405 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 – Basic 181,833 180,312 181,781 179,938
Weighted average Common Shares outstanding – Fully Diluted 192,542 191,860 192,538 191,546


	Quarters Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues:
Rental income	$	255,698	$	217,963	$	504,720	$	457,309
Annual membership subscriptions	14,267		12,961		27,921		26,034
Membership upgrade sales current period, gross	9,207		5,048		19,221		9,891
Membership upgrade sales upfront payments, deferred, net	(6,454)		(2,666)		(13,881)		(5,208)
Other income	14,185		9,680		24,706		20,739
Gross revenues from home sales	24,427		8,866		39,647		20,175
Brokered resale and ancillary services revenues, net	3,129		(575)		5,466		363
Interest income	1,742		1,791		3,509		3,598
Income from other investments, net	1,222		1,022		2,158		1,665
Total revenues	317,423		254,090		613,467		534,566
Expenses:
Property operating and maintenance	102,663		85,265		191,536		168,899
Real estate taxes	17,896		16,668		35,746		33,509
Sales and marketing, gross	6,298		4,276		12,474		8,254
Membership sales commissions, deferred, net	(1,438)		(481)		(2,937)		(697)
Property management	16,560		14,813		31,940		29,817
Depreciation and amortization	48,316		38,332		93,714		77,356
Cost of home sales	23,856		8,850		38,724		20,761
Home selling expenses	1,346		1,081		2,652		2,294
General and administrative	10,228		10,609		20,740		21,464
Other expenses	800		639		1,498		1,227
Early debt retirement	755		0		2,784		1,054
Interest and related amortization	27,131		26,249		53,406		52,322
Total expenses	254,411		206,301		482,277		416,260
Loss on sale of real estate, net	0		0		(59)		0
Income before equity in income of unconsolidated joint ventures	63,012		47,789		131,131		118,306
Equity in income of unconsolidated joint ventures	1,068		1,064		1,936		1,271
Consolidated net income	64,080		48,853		133,067		119,577

Income allocated to non-controlling interests – Common OP Units	(3,021)		(2,658)		(6,768)		(6,507)
Redeemable perpetual preferred stock dividends	(8)		(8)		(8)		(8)
Net income available for Common Stockholders	$	61,051	$	46,187	$	126,291	$	113,062

Consolidated net income	$	64,080	$	48,853	$	133,067	$	119,577
Other comprehensive income (loss):
Adjustment for fair market value of swap	110		552		239		(781)
Consolidated comprehensive income	64,190		49,405		133,306		118,796
Comprehensive income allocated to non-controlling interests – Common OP Units	(3,027)		(2,689)		(6,781)		(6,465)
Redeemable perpetual preferred stock dividends	(8)		(8)		(8)		(8)
Comprehensive income attributable to Common Stockholders	$	61,155	$	46,708	$	126,517	$	112,323

Earnings per Common Share – Basic	$	0.33	$	0.25	$	0.69	$	0.62

Earnings per Common Share – Fully Diluted	$	0.33	$	0.25	$	0.69	$	0.62

Weighted average Common Shares outstanding – Basic	182,337		181,833		182,142		181,781
Weighted average Common Shares outstanding – Fully Diluted	192,701		192,542		192,668		192,538

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

Equity LifeStyle Properties, Inc.

Consolidated Statements of Changes in Equity

(amounts in ~~thousands; adjusted for stock split)~~thousands)

(unaudited)


		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			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, 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, 2020		1,812		1,402,696		—		(158,193)		(380)		72,078		1,318,013
Balance as of December 31, 2020																Balance as of December 31, 2020	$	1,813	$	1,411,397	$	0	$	(179,523)	$	0	$	71,068	$	1,304,755
Exchange of Common OP Units for Common Stock	Exchange of Common OP Units for Common Stock	—		63		—		—		—		(63)		—		Exchange of Common OP Units for Common Stock	0		58		—		—		—		(58)		0

Issuance of Common Stock through employee stock purchase plan	Issuance of Common Stock through employee stock purchase plan	—		619		—		—		—		—		619		Issuance of Common Stock through employee stock purchase plan	—		732		—		—		—		—		732

Compensation expenses related to restricted stock and stock options	Compensation expenses related to restricted stock and stock options	—		2,964		—		—		—		—		2,964		Compensation expenses related to restricted stock and stock options	—		2,556		—		—		—		—		2,556
Repurchase of Common Stock or Common OP Units	Repurchase of Common Stock or Common OP Units	—		(3,962)		—		—		—		—		(3,962)		Repurchase of Common Stock or Common OP Units	—		(2,814)		—		—		—		—		(2,814)
Adjustment for Common OP Unitholders in the Operating Partnership		—		277		—		—		—		(277)		—

Adjustment for fair market value of swap	Adjustment for fair market value of swap	—		—		—		—		(1,333)		—		(1,333)		Adjustment for fair market value of swap	—		—		—		—		129		—		129
Consolidated net income	Consolidated net income	—		—		—		66,875		—		3,849		70,724		Consolidated net income	—		—		0		65,240		—		3,747		68,987
Distributions	Distributions	—		—		—		(62,385)		—		(3,590)		(65,975)		Distributions	—		—		0		(66,087)		—		(3,796)		(69,883)
Other	Other	—		(143)		—		—		—		—		(143)		Other	—		(116)		—		—		—		—		(116)
Balance as of March 31, 2020		1,812		1,402,514		—		(153,703)		(1,713)		71,997		1,320,907

Balance as of March 31, 2021																Balance as of March 31, 2021	1,813		1,411,813		0		(180,370)		129		70,961		1,304,346
Exchange of Common OP Units for Common Stock																Exchange of Common OP Units for Common Stock	14		9,310		—		—		—		(9,324)		0

Issuance of Common Stock through employee stock purchase plan	Issuance of Common Stock through employee stock purchase plan	—		531		—		—		—		—		531		Issuance of Common Stock through employee stock purchase plan	—		605		—		—		—		—		605

Compensation expenses related to restricted stock and stock options	Compensation expenses related to restricted stock and stock options	—		2,669		—		—		—		—		2,669		Compensation expenses related to restricted stock and stock options	—		2,821		—		—		—		—		2,821

Adjustment for Common OP Unitholders in the Operating Partnership	Adjustment for Common OP Unitholders in the Operating Partnership	—		193		—		—		—		(193)		—		Adjustment for Common OP Unitholders in the Operating Partnership	—		(143)		—		—		—		143		0
Adjustment for fair market value of swap	Adjustment for fair market value of swap	—		—		—		—		552		—		552		Adjustment for fair market value of swap	—		—		—		—		110		—		110
Consolidated net income	Consolidated net income	—		—		8		46,187		—		2,658		48,853		Consolidated net income	—		—		8		61,051		—		3,021		64,080
Distributions	Distributions	—		—		(8)		(62,387)		—		(3,591)		(65,986)		Distributions	—		—		(8)		(66,611)		—		(3,296)		(69,915)
Other	Other	—		(143)		—		—		—		—		(143)		Other	—		(56)		—		—		—		—		(56)
Balance as of June 30, 2020		$	1,812	$	1,405,764	$	—	$	(169,903)	$	(1,161)	$	70,871	$	1,307,383
Balance as of June 30, 2021																Balance as of June 30, 2021	$	1,827	$	1,424,350	$	0	$	(185,930)	$	239	$	61,505	$	1,301,991

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

Equity LifeStyle Properties, Inc.

Consolidated Statements of Changes in Equity

(amounts in ~~thousands; adjusted for stock split)~~thousands)

(unaudited)


		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			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 January 1, 2019		$	1,792	$	1,328,495	$	—	$	(211,034)	$	2,299	$	71,792	$	1,193,344
Balance as of December 31, 2019																Balance as of December 31, 2019	$	1,812	$	1,402,696	$	0	$	(154,318)	$	(380)	$	72,078	$	1,321,888
Cumulative effect of change in accounting principle (ASU 2016-13, Financial Instruments - Credit Losses (Topic 326))																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, 2020																Balance as of January 1, 2020	1,812		1,402,696		0		(158,193)		(380)		72,078		1,318,013
Exchange of Common OP Units for Common Stock	Exchange of Common OP Units for Common Stock	—		66		—		—		—		(66)		—		Exchange of Common OP Units for Common Stock	0		63		—		—		—		(63)		0
Issuance of Common Stock through exercise of options		—		53		—		—		—		—		53

Issuance of Common Stock through employee stock purchase plan	Issuance of Common Stock through employee stock purchase plan	—		652		—		—		—		—		652		Issuance of Common Stock through employee stock purchase plan	—		619		—		—		—		—		619

Compensation expenses related to restricted stock and stock options	Compensation expenses related to restricted stock and stock options	—		2,420		—		—		—		—		2,420		Compensation expenses related to restricted stock and stock options	—		2,964		—		—		—		—		2,964
Repurchase of Common Stock or Common OP Units	Repurchase of Common Stock or Common OP Units	—		(53)		—		—		—		—		(53)		Repurchase of Common Stock or Common OP Units	—		(3,962)		—		—		—		—		(3,962)
Adjustment for Common OP Unitholders in the Operating Partnership	Adjustment for Common OP Unitholders in the Operating Partnership	—		(56)		—		—		—		56		—		Adjustment for Common OP Unitholders in the Operating Partnership	—		277		—		—		—		(277)		0
Adjustment for fair market value of swap	Adjustment for fair market value of swap	—		—		—		—		(931)		—		(931)		Adjustment for fair market value of swap	—		—		—		—		(1,333)		—		(1,333)
Consolidated net income	Consolidated net income	—		—		—		113,309		—		7,226		120,535		Consolidated net income	—		—		0		66,875		—		3,849		70,724
Distributions	Distributions	—		—		—		(55,123)		—		(3,516)		(58,639)		Distributions	—		—		0		(62,385)		—		(3,590)		(65,975)
Other	Other	—		(63)		—		—		—		—		(63)		Other	—		(143)		—		—		—		—		(143)
Balance as of March 31, 2019		1,792		1,331,514		—		(152,848)		1,368		75,492		1,257,318
Exchange of Common OP Units for Common Stock		10		6,425		—		—		—		(6,435)		—
Balance as of March 31, 2020																Balance as of March 31, 2020	1,812		1,402,514		0		(153,703)		(1,713)		71,997		1,320,907

Issuance of Common Stock through employee stock purchase plan	Issuance of Common Stock through employee stock purchase plan	—		587		—		—		—		—		587		Issuance of Common Stock through employee stock purchase plan	—		531		—		—		—		—		531
Issuance of Common Stock through our ATM equity offering program		10		59,309		—		—		—		—		59,319

Compensation expenses related to restricted stock and stock options	Compensation expenses related to restricted stock and stock options	—		2,625		—		—		—		—		2,625		Compensation expenses related to restricted stock and stock options	—		2,669		—		—		—		—		2,669

Adjustment for Common OP Unitholders in the Operating Partnership	Adjustment for Common OP Unitholders in the Operating Partnership	—		(2,883)		—		—		—		2,883		—		Adjustment for Common OP Unitholders in the Operating Partnership	—		193		—		—		—		(193)		0
Adjustment for fair market value of swap	Adjustment for fair market value of swap	—		—		—		—		(1,610)		—		(1,610)		Adjustment for fair market value of swap	—		—		—		—		552		—		552
Consolidated net income	Consolidated net income	—		—		8		46,401		—		2,676		49,085		Consolidated net income	—		—		8		46,187		—		2,658		48,853
Distributions	Distributions	—		—		(8)		(55,757)		—		(3,215)		(58,980)		Distributions	—		—		(8)		(62,387)		—		(3,591)		(65,986)
Other	Other	—		(870)		—		—		—		��		(870)		Other	—		(143)		—		—		—		—		(143)
Balance as of June 30, 2019		$	1,812	$	1,396,707	$	—	$	(162,204)	$	(242)	$	71,401	$	1,307,474
Balance as of June 30, 2020																Balance as of June 30, 2020	$	1,812	$	1,405,764	$	0	$	(169,903)	$	(1,161)	$	70,871	$	1,307,383

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

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

Six Months Ended June 30,
2020 2019
Cash Flows From Operating Activities:
Consolidated net income $ 119,577 $ 169,620
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Gain on sale of real estate, net — (52,507)
Early debt retirement 1,054 1,491
Depreciation and amortization 78,616 76,648
Amortization of loan costs 1,777 1,768
Debt premium amortization (211) (232)
Equity in income of unconsolidated joint ventures (1,271) (4,759)
Distributions of income from unconsolidated joint ventures 81 2,008
Proceeds from insurance claims, net 1,288 4,422
Compensation expense related to restricted stock and stock options 5,633 5,045
Revenue recognized from membership upgrade sales upfront payments (4,683) (4,195)
Commission expense recognized related to membership sales 1,866 1,867
Long-term incentive plan compensation 765 (3,608)
Changes in assets and liabilities:
Notes receivable, net (484) (1,079)
Deferred commission expense (2,338) (2,269)
Other assets, net (1,857) (8,275)
Accounts payable and other liabilities 15,918 25,962
Deferred revenue – upfront payments from membership upgrade sales 9,891 8,879
Deferred revenue – annual membership subscriptions 2,056 2,967
Rents and other customer payments received in advance and security deposits 11,067 20,932
Net cash provided by operating activities 238,745 244,685
Cash Flows From Investing Activities:
Real estate acquisitions, net (4,056) (38,463)
Proceeds from disposition of properties, net — 77,746
Distributions of capital from unconsolidated joint ventures 1,399 5,169
Proceeds from insurance claims — 1,111
Capital improvements (103,147) (121,444)
Net cash provided by (used in) investing activities (105,804) (75,881)


	Six Months Ended June 30,
	2021		2020
Cash Flows From Operating Activities:
Consolidated net income	$	133,067	$	119,577
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Loss on sale of real estate, net	59		0
Early debt retirement	2,784		1,054
Depreciation and amortization	95,188		78,616
Amortization of loan costs	2,346		1,777
Debt premium amortization	(165)		(211)
Equity in income of unconsolidated joint ventures	(1,936)		(1,271)
Distributions of income from unconsolidated joint ventures	41		81
Proceeds from insurance claims, net	144		1,288
Compensation expense related to incentive plans	6,135		6,398
Revenue recognized from membership upgrade sales upfront payments	(5,339)		(4,683)
Commission expense recognized related to membership sales	1,903		1,866

Changes in assets and liabilities:
Notes receivable, net	(2,250)		(484)
Deferred commission expense	(4,719)		(2,338)
Other assets, net	18,901		(1,857)
Accounts payable and other liabilities	33,112		15,918
Deferred membership revenue	22,279		11,947
Rents and other customer payments received in advance and security deposits	27,376		11,067
Net cash provided by operating activities	328,926		238,745
Cash Flows From Investing Activities:
Real estate acquisitions, net	(356,605)		(4,056)
Proceeds from disposition of properties, net	(7)		0
Investment in unconsolidated joint ventures	(493)		0
Distributions of capital from unconsolidated joint ventures	1,617		1,399



Capital improvements	(119,723)		(103,147)
Net cash used in investing activities	(475,211)		(105,804)

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

Equity LifeStyle Properties, Inc.

Consolidated Statements of Cash Flows (continued)

(amounts in thousands)

(unaudited)


		Six Months Ended June 30,							Six Months Ended June 30,
		2020		2019			2021		2020
Cash Flows From Financing Activities:	Cash Flows From Financing Activities:					Cash Flows From Financing Activities:
Proceeds from stock options and employee stock purchase plan	Proceeds from stock options and employee stock purchase plan	1,150		1,237		Proceeds from stock options and employee stock purchase plan	1,337		1,150
Gross proceeds from the issuance of common stock		—		59,319

Distributions:	Distributions:					Distributions:
Common Stockholders	Common Stockholders	(118,153)		(104,579)		Common Stockholders	(128,501)		(118,153)
Common OP Unitholders	Common OP Unitholders	(6,803)		(6,676)		Common OP Unitholders	(7,385)		(6,803)
Preferred Stockholders	Preferred Stockholders	(8)		(8)		Preferred Stockholders	(8)		(8)

Share based award tax withholding payments	Share based award tax withholding payments	(3,962)		—		Share based award tax withholding payments	(2,814)		(3,962)
Principal payments and mortgage debt repayment	Principal payments and mortgage debt repayment	(75,312)		(93,982)		Principal payments and mortgage debt repayment	(94,271)		(75,312)
Mortgage notes payable financing proceeds	Mortgage notes payable financing proceeds	275,385		—		Mortgage notes payable financing proceeds	270,016		275,385
Term loan repayment						Term loan repayment	(300,000)		0
Term loan proceeds						Term loan proceeds	600,000		0
Line of Credit repayment	Line of Credit repayment	(272,500)		—		Line of Credit repayment	(317,500)		(272,500)
Line of Credit proceeds	Line of Credit proceeds	162,500		—		Line of Credit proceeds	157,500		162,500
Debt issuance and defeasance costs	Debt issuance and defeasance costs	(3,819)		(1,700)		Debt issuance and defeasance costs	(11,225)		(3,819)
Other	Other	(286)		(932)		Other	(171)		(286)
Net cash used in financing activities		(41,808)		(147,321)
Net increase (decrease) in cash and restricted cash		91,133		21,483
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	166,978		(41,808)
Net increase in cash and restricted cash						Net increase in cash and restricted cash	20,693		91,133
Cash and restricted cash, beginning of period	Cash and restricted cash, beginning of period	28,860		68,974		Cash and restricted cash, beginning of period	24,060		28,860
Cash and restricted cash, end of period	Cash and restricted cash, end of period	$	119,993	$	90,457	Cash and restricted cash, end of period	$	44,753	$	119,993

Six Months Ended June 30,
2020 2019
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 liabilities 179 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,
	2021		2020
Supplemental Information:
Cash paid for interest	$	51,040	$	51,354
Net investment in real estate – reclassification of rental homes	$	33,793	$	17,336
Other assets, net – reclassification of rental homes	$	(33,793)	$	(17,336)

Real estate acquisitions:
Investment in real estate	$	(366,043)	$	(4,235)

Other assets, net	(2,815)		0


Accrued expenses and accounts payable	1,313		0
Rents and other customer payments received in advance and security deposits	10,940		179
Real estate acquisitions, net	$	(356,605)	$	(4,056)

Real estate dispositions:
Investment in real estate	$	52	$	0




Loss on sale of real estate, net	(59)		0
Real estate dispositions, net	$	(7)	$	0

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

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 1 – Organization and Basis of Presentation

Equity LifeStyle Properties, Inc. ~~("ELS"~~(“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,"~~“we,” “us,” and ~~"our."~~“our”. We are a fully integrated owner ~~and operator~~ of lifestyle-oriented properties ~~("Properties"~~(“Properties”) consisting of property operations and home sales and rental operations primarily ofwithin manufactured home ~~("MH"~~(“MH”) and recreational vehicle ~~("RV"~~(“RV”) communities. We provide our customers the opportunity to place manufactured homes, cottages or RVs on our Properties either on a long-term or short-term basis. Our customers may lease individual developed areas ~~("Sites"~~(“Sites”) or enter into right-to-use contracts, also known as membership subscriptions, which provide them access to specific Properties for limited stays.

Our Properties are owned primarily by the Operating Partnership and managed internally by affiliates of the Operating Partnership. ELS is the sole general partner of the Operating Partnership, has exclusive responsibility and discretion in management and control of the Operating Partnership and held a ~~94.6%~~95.3% interest as of June 30, ~~2020.~~2021. 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"~~(“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 year ended December 31, ~~2019.~~2020.

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.

On October 15, 2019, we effected a 2-for-one stock split of our common stock. Pursuant to the anti-dilution provision in the Operating Partnership's Agreement of Limited Partnership, the stock split also effected a two-for one split of the outstanding Operating Partnership units ("OP units"). All shares of common stock and OP units and per share data in the consolidated financial statements and accompanying notes, for all periods presented, have been adjusted to reflect the stock split.

Note 2 – Summary of Significant Accounting Policies

(a) ~~Recently Adopted Accounting Pronouncements~~

~~On January 1, 2020, we prospectively adopted FASB ("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 guidance on accounting for fees paid when the arrangement includes a software license and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs to develop or obtain internal-use software. The adoption of this guidance did not have a material impact on our consolidated financial statements.

~~On January 1, 2020, we adopted FASB (“ASU 2016-13~~”) ~~Financial Instruments - Credit Losses (Topic 326)~~ ~~using the modified retrospective approach.~~ ~~ASU 2016-13~~ requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities should 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

~~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 as of January 1, 2020 was as follows:~~

Balance net of allowance Balance Sheet Location Balance at December 31, 2019 Adjustment due to ASU 2016-13 Adoption Balance at January 1, 2020 Balance at
June 30, 2020
(amounts in thousands)
Annual membership subscriptions Other assets, net $ 2,394 $ (1,361) $ 1,033 $ 1,412
Membership upgrades Notes receivable, net $ 25,236 $ (2,514) $ 22,722 $ 23,728

~~(b)~~ Revenue Recognition

~~Rental~~Our revenue streams are predominantly derived from customers renting our Sites or entering into membership subscriptions. Leases with customers renting our Sites are accounted for as operating leases. The rental income associated with these leases is accounted for in accordance with ~~the~~ ASC 842, Leases,, and is recognized over the term of the respective lease or the length of a customer's stay. ~~Utility~~MH Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. RV and marina Sites are leased to those who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those customers renting marina dry storage slips. Annual Sites are leased on an annual basis, including those Northern Properties that are open for the summer season. Seasonal Sites are leased to customers generally for one to six months. Transient Sites are leased to customers on a short-term basis. We do not separate expenses reimbursed by our customers (“utility recoveries”) from the associated rental income as we meet the practical expedient criteria to combine the lease and non-lease components. We assessed the criteria and concluded that the timing and pattern of transfer for rental income and the associated utility recoveries are ~~presented within~~the same and, as our leases qualify as operating leases, we account for and present rental income and utility recoveries as a single component under Rental income ~~on the~~in our Consolidated Statements of Income and Comprehensive Income. In addition, customers may lease homes that are located in our communities. These leases are accounted for as operating leases. Rental income derived from customers leasing homes is also accounted for in accordance with ASC 842, Leases and is recognized over the term of the respective lease. The allowance for credit losses related to the collectability of lease receivables is presented as a reduction to Rental ~~Income.~~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~~collectability including historical loss experience, current market conditions and future expectations in forecasting credit losses. ~~See~~

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note ~~3. Leases for additional information.~~2 – Summary of Significant Accounting Policies (continued)

Annual membership subscriptions and membership upgrade sales are accounted for in accordance with ASC 606, Revenue from Contracts with Customers. Membership subscriptions provide our customers access to specific Properties for limited stays at a specified group of Properties. Payments are deferred and recognized on a straight-line basis over the one-year period during which access to Sites at certain Properties is provided. Membership subscription receivables are presented within Other assets, net on the Consolidated Balance Sheets and are net of an allowance for credit losses. Membership upgrades grant certain additional access rights to the customer and require non-refundable upfront payments. The non-refundable upfront payments are recognized on a straight-line basis over 20 years. Financed upgrade sales (also known as contract receivables) are presented within Notes receivable, net on the Consolidated Balance Sheets and are net of an allowance for credit losses.

Income from home sales is recognized when the earnings process is complete. The earnings process is complete when the home has been delivered, the purchaser has accepted the home and title has transferred. We have a limited program under which we purchase loans made by an unaffiliated lender to homebuyers at our Properties. Financed home sales (also known as chattel loans) are presented within Notes receivable, net on the Consolidated Balance Sheets and are net of an allowance for credit losses.

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

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, restricted cash consists of ~~$25.8~~$31.2 million and ~~$25.1~~$24.1 million, respectively, primarily related to cash reserved for customer deposits and escrows for insurance and real estate taxes.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the existing guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The guidance in ASU 2020-04 is optional, effective immediately, and may be elected over time as reference rate reform activities occur generally through December 31, 2022. We continue to evaluate the impact of this guidance and we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

~~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. MH Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. Annual RV and marina Sites are leased on an annual basis to customers who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those Northern properties that are open for the summer season. Seasonal RV and marina Sites are leased to customers generally for ~~one~~ ~~to six months. Transient RV and marina Sites are leased to customers on a short-term basis. In addition, customers may lease homes that are located in our communities.~~

The leases entered into between the customer and us for a rental of a Site are renewable upon the consent of both parties or, in some instances, as provided by statute. Long-term leases that are non-cancelable by the tenants are in effect at certain Properties. Rental rate increases at these Properties are primarily a function of increases in the Consumer Price Index, taking into consideration certain conditions. Additionally, periodic market rate adjustments are made as deemed appropriate. In addition, certain state statutes allow entry into long-term agreements that effectively modify lease terms related to rent amounts and increases over the term of the agreements. The following table presents future minimum rents expected to be received under long-term non-cancelable tenant leases, as well as those leases that are subject to long-term agreements governing rent payments and increases:


(amounts in thousands)	(amounts in thousands)	As of June 30, 2020		(amounts in thousands)	As of June 30, 2021
2020		$	42,403
2021	2021	85,477		2021	$	77,190
2022	2022	53,561		2022	157,061
2023	2023	20,227		2023	110,501
2024	2024	20,249		2024	44,065
2025				2025	22,166
Thereafter	Thereafter	79,635		Thereafter	66,634
Total	Total	$	301,552	Total	$	477,617

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 3 – Leases (continued)

Lessee

We lease land under non-cancelable operating leases at 1314 Properties expiring at various dates through 2054. The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of gross revenues at those Properties. We also have other operating leases, primarily office space, expiring at various dates through ~~2030.~~2032. For the quarters ended June 30, ~~2020~~2021 and ~~2019,~~2020, total operating lease payments were ~~$2.4~~$2.6 million and ~~$2.3~~$2.4 million, respectively. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, total operating lease payments were ~~$4.8~~$5.1 million and ~~$4.6~~$4.8 million, respectively.

The following table summarizes our minimum future rental payments, excluding variable costs, which are discounted by our incremental borrowing rate to calculate the lease liability for our operating leases as of June 30, ~~2020:~~2021:


		As of June 30, 2020											As of June 30, 2021
(amounts in thousands)	(amounts in thousands)	Ground Leases		Office and Other Leases		Total		(amounts in thousands)	Ground Leases		Office and Other Leases		Total
2020		$	974	$	1,881	$	2,855
2021	2021	1,949		3,074		5,023		2021	$	1,153	$	2,023	$	3,176
2022	2022	1,479		1,399		2,878		2022	1,638		2,939		4,577
2023	2023	534		1,182		1,716		2023	626		2,682		3,308
2024	2024	534		911		1,445		2024	632		2,326		2,958
2025								2025	637		2,024		2,661
Thereafter	Thereafter	4,984		2,899		7,883		Thereafter	4,941		10,958		15,899
Total undiscounted rental payments	Total undiscounted rental payments	10,454		11,346		21,800		Total undiscounted rental payments	9,627		22,952		32,579
Less imputed interest	Less imputed interest	(2,206)		(1,090)		(3,296)		Less imputed interest	(2,058)		(3,511)		(5,569)
Total lease liabilities	Total lease liabilities	$	8,248	$	10,256	$	18,504	Total lease liabilities	$	7,569	$	19,441	$	27,010

Right-of-use ~~("ROU"~~(“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~~$23.7 million and ~~$18.5~~$27.0 million, respectively,

~~Equity LifeStyle Properties, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Note 3 – Leases (continued)~~

as of June 30, 2021. The weighted average remaining lease term for our operating leases was ten years and the weighted average incremental borrowing rate was 3.8% at June 30, 2021.

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 million and $16.4 million, respectively, as of December 31, 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 $15.1 million and $16.2 million, respectively, as of December 31, ~~2019. The weighted average remaining lease term for our operating leases was seven years and the weighted average incremental borrowing rate was 4.4% at December 31, 2019.~~2020.

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 stock ~~as adjusted for the stock split,~~ for the quarters and six months ended June 30, ~~2020~~2021 and ~~2019:~~2020:


		Quarters Ended June 30,						Six Months Ended June 30,							Quarters Ended June 30,				Six Months Ended June 30,
(amounts in thousands, except per share data)	(amounts in thousands, except per share data)	2020		2019		2020		2019		(amounts in thousands, except per share data)	2021		2020		2021		2020
Numerators:	Numerators:									Numerators:
Net income available for Common Stockholders – Basic	Net income available for Common Stockholders – Basic	$	46,187	$	46,401	$	113,062	$	159,710	Net income available for Common Stockholders – Basic	$	61,051	$	46,187	$	126,291	$	113,062
Amounts allocated to dilutive securities	Amounts allocated to dilutive securities	2,658		2,676		6,507		9,902		Amounts allocated to dilutive securities	3,021		2,658		6,768		6,507
Net income available for Common Stockholders – Fully Diluted	Net income available for Common Stockholders – Fully Diluted	$	48,845	$	49,077	$	119,569	$	169,612	Net income available for Common Stockholders – Fully Diluted	$	64,072	$	48,845	$	133,059	$	119,569
Denominators:	Denominators:									Denominators:
Weighted average Common Shares outstanding – Basic	Weighted average Common Shares outstanding – Basic	181,833		180,312		181,781		179,938		Weighted average Common Shares outstanding – Basic	182,337		181,833		182,142		181,781
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Exchange of Common OP Units for Common Shares	Exchange of Common OP Units for Common Shares	10,482		11,286		10,486		11,382		Exchange of Common OP Units for Common Shares	10,153		10,482		10,312		10,486
Stock options and restricted stock	Stock options and restricted stock	227		262		271		226		Stock options and restricted stock	211		227		214		271
Weighted average Common Shares outstanding – Fully Diluted	Weighted average Common Shares outstanding – Fully Diluted	192,542		191,860		192,538		191,546		Weighted average Common Shares outstanding – Fully Diluted	192,701		192,542		192,668		192,538

Earnings per Common Share – Basic	Earnings per Common Share – Basic	$	0.25	$	0.26	$	0.62	$	0.89	Earnings per Common Share – Basic	$	0.33	$	0.25	$	0.69	$	0.62

Earnings per Common Share – Fully Diluted	Earnings per Common Share – Fully Diluted	$	0.25	$	0.26	$	0.62	$	0.89	Earnings per Common Share – Fully Diluted	$	0.33	$	0.25	$	0.69	$	0.62

Note5 –- Common Stock and Other Equity Related Transactions

~~Two-for-One Common Stock and OP Units Split~~

On 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 stockholders of record as of October 1, 2019. In connection with our stock split, the OP Units of our Operating Partnership were also split on a 2-for-one basis.

~~Increase in Authorized Shares~~

~~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.~~

~~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 Operating Partnership unit (“OP ~~Unit~~Unit”) holders since January 1, ~~2019.~~2020.

Distribution Amount Per Share

For the Quarter Ended

Stockholder Record Date

Payment Date

$~~0.3063~~

~~March 31, 2019~~

~~March 29, 2019~~

~~April 12, 2019~~

~~$0.3063~~

~~June 30, 2019~~

~~June 28, 2019~~

~~July 12, 2019~~

~~$0.3063~~

~~September 30, 2019~~

~~September 27, 2019~~

~~October 11, 2019~~

~~$0.3063~~

~~December 31, 2019~~

~~December 27, 2019~~

~~January 10, 2020~~

$0.3425

March 31, 2020

March 27, 2020

April 10, 2020

$0.3425

June 30, 2020

June 26, 2020

July 10, 2020

$0.3425

September 30, 2020

September 25, 2020

October 9, 2020

$0.3425

December 31, 2020

December 24, 2020

January 8, 2021

$0.3625

March 31, 2021

March 26, 2021

April 9, 2021

$0.3625

June 30, 2021

June 25, 2021

July 9, 2021

Equity Offering Program

~~Our~~On July 30, 2020, we entered into our current at-the-market (“ATM”) equity offering program ~~allows us~~with certain sales agents, pursuant to which we may sell, from time-to-time, shares of our common stock, par value $0.01 per share, having an aggregate offering price of up to $200.0 million. As of June 30, ~~2020, we have $140.7 million of common stock~~2021, the full capacity remained available ~~under the ATM offering program~~ for issuance.

There was no activity under the ATM equity offering program during the six months ended June 30, 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 share data)~~

~~2019~~

~~Shares of Common Stock sold~~

~~1,010,472~~

~~Weighted average price~~

~~58.71~~

~~Total gross proceeds~~

~~59,319~~

~~Commissions paid to sales agents~~

~~771~~

Exchanges

Subject to certain limitations, 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, 2021 and 2020, 1,386,716 and ~~2019,~~ 9,228 ~~and 990,650~~ OP Units, respectively, were exchanged for an equal number of shares of Common ~~Stock~~Stock.

Note 6 – Investment in Real Estate

Acquisitions

2021

On June 3, 2021, we completed the acquisition of Pine Haven, a 629-site RV community located in Cape May, New Jersey, for a purchase price of $62.8 million. The acquisition was funded with our unsecured line of credit.

On February 5, 2021, we completed the acquisition of a portfolio of 11 marinas, containing 3,986 slips and 181 RV sites located in Florida, North Carolina, South Carolina, Kentucky and Ohio. The purchase price of these properties was $262.0 million, which was funded with proceeds from the Loan as discussed in Note 8. Borrowing Arrangements.

On January 21, 2021, we completed the acquisition of Okeechobee KOA Resort, a 740-site RV community located in Okeechobee, Florida, for a purchase price of $42.2 million. The acquisition was funded with our unsecured line of credit.

2020

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,

~~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 5 all-age MH communities located in Indiana and Michigan, collectively containing 1,463 sites, for $89.7 million and recognized a gain of $52.5 million, net of transaction costs, during the first quarter of 2019.

Note 7 ~~– Investment~~- Investments 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, ~~2020~~2021 and December 31, ~~2019~~2020, respectively):

~~Investment as of~~

Income/(Loss) for
Six Months Ended

~~Investment~~

~~Location~~

~~Number of Sites~~

~~Economic  Interest~~ ^(a)

~~June 30, 2020~~

~~December 31, 2019~~

~~June 30, 2020~~

~~June 30, 2019~~

~~Meadows~~

~~Various (2,2)~~

~~1,077~~

—

~~146~~

~~854~~

~~800~~

~~Lakeshore~~

~~Florida (3,3)~~

~~721~~

~~(b)~~

~~2,344~~

~~2,467~~

~~180~~

~~122~~

~~Voyager~~

~~Arizona (1,1)~~

~~1,801~~

^(c)

~~416~~

~~599~~

~~(5)~~

~~2,925~~

~~Loggerhead~~

~~Florida~~

~~2,343~~

—

^(d)

—

~~642~~

~~ECHO JV~~

~~Various~~

—

~~17,104~~

~~16,862~~

~~242~~

~~270~~

~~5,942~~

~~19,864~~

~~20,074~~

~~1,271~~

~~4,759~~


						Investment as of				Income/(Loss) for Years Ended
Investment	Location	Number of Sites	Economic Interest (a)			June 30, 2021		December 31, 2020		June 30, 2021		June 30, 2020
Meadows	Various (2,2)	1,077	50	%		$	0	$	0	$	1,050	$	854
Lakeshore	Florida (3,3)	721	(b)			2,706		2,281		286		180
Voyager	Arizona (1,1)	1,801	50	%	(c)	121		83		293		(5)
ECHO JV	Various	0	50	%		17,669		17,362		307		242
		3,599				$	20,496	$	19,726	$	1,936	$	1,271

_____________________

(a)The percentages shown approximate our economic interest as of June 30, ~~2020.~~2021. 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 ~~$1.5~~$1.7 million and ~~$7.2~~$1.5 million in distributions from our unconsolidated joint ventures for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Approximately ~~$1.0~~$1.5 million and ~~$2.7~~$1.0 million of the distributions made to us exceeded our basis in our unconsolidated joint ventures for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and as such, were recorded as income from unconsolidated joint ventures.

Note 8 – Borrowing Arrangements

Mortgage Notes Payable

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, 2020						As of December 31, 2019							As of June 30, 2021				As of December 31, 2020
(amounts in thousands)	(amounts in thousands)	Fair Value		Carrying Value		Fair Value		Carrying Value		(amounts in thousands)	Fair Value		Carrying Value		Fair Value		Carrying Value
Mortgage notes payable, excluding deferred financing costs	Mortgage notes payable, excluding deferred financing costs	$	2,485,462	$	2,272,228	$	2,227,185	$	2,072,416	Mortgage notes payable, excluding deferred financing costs	$	2,848,315	$	2,648,456	$	2,537,137	$	2,472,876

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 8 - Borrowing Arrangements (continued)

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, ~~2020,~~2021, was approximately ~~4.3%~~3.8% per annum. The debt bears interest at stated rates ranging from ~~2.7%~~2.4% to 8.9% per annum and matures on various dates ranging from ~~2021~~2022 to 2041. The debt encumbered a total of ~~125~~117 and 116 of our Properties as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, and the gross carrying value of such Properties was approximately ~~$2,650.8~~$2,698.2 million and ~~$2,524.7~~$2,580.9 million, as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

2021 Activity

~~Equity LifeStyle Properties, Inc.~~

~~Notes~~During the quarter ended March 31, 2021, we entered into a $270.0 million secured financing transaction maturing in 10 years and bearing a fixed interest rate of 2.4% per annum. The loan is secured by 2 RV communities and 1 MH community. The net proceeds from the transaction were used to ~~Consolidated Financial Statements~~

~~Note 8 – Borrowing Arrangements (continued)~~

repay $67.0 million of principal on 2 mortgage loans that were due to mature in 2022, incurring $1.9 million of prepayment penalties, as well as to repay a portion of the outstanding balance on our line of credit. These mortgage loans had a weighted average interest rate of 5.1% per annum and were secured by 2 RV communities.

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 fixed interest rate of 2.7% ~~interest rate.~~per annum. 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 annumThird Amended and ~~matures in 2024.~~Restated Unsecured Credit Facility

During the quarter ended June 30, ~~2019,~~2021, we ~~repaid $66.8~~entered into a Third Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”) by and among us, MHC Operating Limited Partnership, Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other lenders named therein, pursuant to which we have access to a $500.0 million unsecured line of ~~principal on 4 mortgage loans that were due to mature in 2020, incurring $1.4~~credit (the “LOC”) and a $300.0 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.~~senior unsecured term loan (the “Term Loan”). 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, 2020, we borrowed and paid off amounts on our unsecured Line of Credit ("LOC"), leaving a balance of $50.0 million outstanding as of June 30, 2020. As of June 30, 2020, our LOC has a remaining borrowing capacity of $350.0 million withhave the option to increase the borrowing capacity by $200.0 million, subject to certain conditions. The LOC maturity date was extended to April 18, 2025, and this term can be extended 2 times for additional six month increments, subject to certain conditions. The LOC bears interest at a rate of LIBOR plus 1.25% to 1.65% and requires an annual facility fee of 0.20% to 0.35%. The Term Loan matures on April 17, 2026 and has an interest rate of LIBOR plus 1.40% to 1.95% per annum. For both the LOC and Term Loan, the spread over LIBOR is variable based on leverage throughout the respective loan terms.

Unsecured Debt

During the quarter ended March 31, 2021, in conjunction with the marina portfolio acquisition as discussed in Note 6. Investment in Real Estate, we entered into a $300.0 million senior unsecured term loan agreement (“Loan”). The maturity date was October 27, 2021 with an interest rate of LIBOR plus 1.45%. During the quarter ended June 30, 2021, in conjunction with the issuance of the Term Loan, we repaid the Loan.

The LOC had ~~$160.0~~a balance of $62.0 million and $222.0 million outstanding atas of June 30, 2021 and December 31, ~~2019.~~

2020, respectively. As of June 30, ~~2020,~~2021, our LOC had remaining borrowing capacity of $438.0 million.

As of June 30, 2021, 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~~-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, 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 Location 2020 2019
Interest Rate Swap Accounts payable and other liabilities $ 1,161 $ 380

1514

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 9 – Derivative Instruments and Hedging (continued)

During the six months ended June 30, 2021, we entered into a three-year LIBOR Swap Agreement (the “Swap”) allowing us to trade the variable interest rate associated with our variable rate debt for a fixed interest rate. The 2021 Swap has a notional amount of $300.0 million of outstanding principal with a fixed interest rate of 0.39% per annum and matures on March 25, 2024. Based on the leverage as of June 30, 2021, our spread over LIBOR was 1.40% resulting in an estimated all-in interest rate of 1.79% per annum.

Our derivative financial instrument was classified as Level 2 in the fair value hierarchy. The following table presents the fair value of our derivative financial instrument:


		As of June 30,		As of December 31,
(amounts in thousands)	Balance Sheet Location	2021		2020
Interest Rate Swap	Other assets, net	$	239	$	0

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	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,						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)	(amounts in thousands)	2020		2019		(amounts in thousands)	2020		2019		(amounts in thousands)	2021		2020		(amounts in thousands)	2021		2020
Interest Rate Swap	Interest Rate Swap	$	1,553	$	1,901	Interest Expense	$	772	$	(640)	Interest Rate Swap	$	(2)	$	1,553	Interest Expense	$	237	$	772

During the next ~~four~~twelve months, ~~through the maturity date of November 1, 2020,~~ we estimate that ~~$1.2~~$0.8 million will be reclassified as ~~an increase~~a decrease 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, ~~2020,~~2021, we had not posted any collateral related to this Swap.

Note 10 – Equity Incentive Awards

Our 2014 Equity Incentive Plan (the “2014 Plan”) was adopted by the Board of Directors on March 11, 2014 and approved by our stockholders on May 13, 2014.

During the quarter ended March 31, ~~2020, 90,933~~2021, 104,734 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-year~~three-year period on January ~~29, 2021, January~~ 31, 2022, ~~and~~ January 27, 2023 and January 26, 2024, respectively, and have a grant date fair value of $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 and January 26, 2024, 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 ~~15,154~~17,454 shares of restricted stock subject to ~~2020~~2021 performance goals have a grant date fair value of $1.1 million.

During the quarter ended June 30, 2021, we awarded to certain members of our Board of Directors 58,192 shares of restricted stock at a fair value of approximately $4.0 million and options to purchase 16,185 shares of common stock with an exercise price of $68.74. These are time-based awards subject to various vesting dates between October 27, 2021 and April 27, 2023.

Stock based compensation expense, reported in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income, for the quarters ended June 30, 2021 and 2020, ~~and 2019,~~ was ~~$2.7~~$2.8 million and ~~$2.6~~$2.7 million, respectively, and for the six months ended June 30, 2021 and 2020, ~~and 2019,~~ was ~~$5.6~~$5.4 million and ~~$5.0~~$5.6 million, respectively.

Note 11 – Commitments and Contingencies

We are involved in various legal and regulatory proceedings ~~("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, additional permit requirements and other similar enforcement actions by governmental agencies

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 11 – Commitments and Contingencies (continued)

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 Proceedings or audits relate to newly acquired Properties, we consider any potential indemnification obligations of sellers in our favor.

The Operating Partnership operates and manages Westwinds, a 720 site mobilehome community, and Nicholson Plaza, an adjacent shopping center, both located in San Jose, California pursuant to ground leases that expire on August 31, 2022 and do not contain extension options. The master lessor of these ground leases, The Nicholson Family Partnership (the “Nicholsons”), has expressed a desire to redevelop Westwinds, and in a written communication, they claimed that we were obligated to deliver the property free and clear of any and all subtenancies upon the expiration of the ground leases on August 31, 2022. In connection with any redevelopment, the City of San Jose’s conversion ordinance requires, among other things, that the landowner provide relocation, rental and purchase assistance to the impacted residents.

We believe the Nicholsons’ demand is unlawful, and on December 30, 2019, the Operating Partnership, together with certain interested parties, filed a complaint in California Superior Court for Santa Clara County, seeking declaratory relief pursuant to which it requested that the Court determine, among other things, that the Operating Partnership has no obligation to deliver the property free and clear of the mobilehome residents upon the expiration of the ground leases. The Operating Partnership and the interested parties filed an amended complaint on January 29, 2020. The Nicholsons filed a demand for arbitration on January 28, 2020, which they subsequently amended, pursuant to which they request (i) a declaration that the Operating Partnership, as the “owner and manager” of Westwinds, is “required by the Ground Leases, and State and local law

~~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.~~terms,” (ii) that the Operating Partnership anticipatorily breached the ground leases by publicly repudiating any such obligation and (iii) that the Operating Partnership is required to indemnify the Nicholsons with respect to the claims brought by the interested parties in the Superior Court proceeding.

On February 3, 2020, the Nicholsons filed a motion in California Superior Court to compel arbitration and to stay the Superior Court litigation, which motion was heard on June 25, 2020. On July 8,29, 2020, the ~~California~~ Superior Court issued a ~~proposed statement of decision~~final order denying the ~~Nicholson’s~~Nicholsons' motion to ~~compel. All parties have submitted~~compel arbitration. The Nicholsons filed a notice of appeal on August 7, 2020. The arbitration is stayed pursuant to an agreement between MHC and the ~~statement of decision, and we expect the Court to issue a decision in due course.~~ Nicholsons.

We intend to continue to vigorously defend our interests in this matter. As of June 30, ~~2020~~2021, we have not made an accrual, as we are unable to predict the outcome of this matter or reasonably estimate any possible loss.

1716

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Reportable Segments

We have identified 2 reportable 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 is no customer who contributed 10% or more of our total revenues during the quarters and six months ended June 30, ~~2020~~2021 or ~~2019.~~2020.

The following tables summarize our segment financial information for the quarters and six months ended June 30, ~~2020~~2021 and ~~2019:~~2020:

Quarter Ended June 30, 2021


(amounts in thousands)	Property Operations		Home Sales and Rentals Operations		Consolidated
Operations revenues	$	285,378	$	29,081	$	314,459
Operations expenses	(140,667)		(26,514)		(167,181)
Income from segment operations	144,711		2,567		147,278
Interest income	1,252		468		1,720
Depreciation and amortization	(45,631)		(2,685)		(48,316)
Loss on sale of real estate, net	0		0		0
Income (loss) from operations	$	100,332	$	350	$	100,682
Reconciliation to consolidated net income:
Corporate interest income					22
Income from other investments, net					1,222
General and administrative					(10,228)
Other expenses					(800)
Interest and related amortization					(27,131)
Equity in income of unconsolidated joint ventures					1,068
Early debt retirement					(755)
Consolidated net income					$	64,080

Total assets	$	4,566,507	$	257,500	$	4,824,007
Capital improvements	$	41,306	$	21,639	$	62,945

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)

Quarter Ended June 30, 2020


(amounts in thousands)	(amounts in thousands)	Property Operations		Home Sales and Rentals Operations		Consolidated		(amounts in thousands)	Property Operations		Home Sales and Rentals Operations		Consolidated
Operations revenues	Operations revenues	$	238,155	$	13,122	$	251,277	Operations revenues	$	238,155	$	13,122	$	251,277
Operations expenses	Operations expenses	(119,296)		(11,176)		(130,472)		Operations expenses	(119,296)		(11,176)		(130,472)
Income from segment operations	Income from segment operations	118,859		1,946		120,805		Income from segment operations	118,859		1,946		120,805
Interest income	Interest income	1,061		726		1,787		Interest income	1,061		726		1,787
Depreciation and amortization	Depreciation and amortization	(35,611)		(2,721)		(38,332)		Depreciation and amortization	(35,611)		(2,721)		(38,332)

Income (loss) from operations	Income (loss) from operations	$	84,309	$	(49)	$	84,260	Income (loss) from operations	$	84,309	$	(49)	$	84,260
Reconciliation to consolidated net income:	Reconciliation to consolidated net income:							Reconciliation to consolidated net income:
Corporate interest income	Corporate interest income					4		Corporate interest income					4
Income from other investments, net	Income from other investments, net					1,022		Income from other investments, net					1,022
General and administrative	General and administrative					(10,609)		General and administrative					(10,609)
Other expenses	Other expenses					(639)		Other expenses					(639)
Interest and related amortization	Interest and related amortization					(26,249)		Interest and related amortization					(26,249)
Equity in income of unconsolidated joint ventures	Equity in income of unconsolidated joint ventures					1,064		Equity in income of unconsolidated joint ventures					1,064
Early debt retirement	Early debt retirement					—		Early debt retirement					0
Consolidated net income	Consolidated net income					$	48,853	Consolidated net income					$	48,853

Total assets	Total assets	$	3,998,462	$	269,712	$	4,268,174	Total assets	$	3,998,462	$	269,712	$	4,268,174
Capital improvements	Capital improvements	$	37,552	$	16,636	$	54,188	Capital improvements	$	37,552	$	16,636	$	54,188

Six Months Ended June 30, 2021


(amounts in thousands)	Property Operations		Home Sales and Rentals Operations		Consolidated
Operations revenues	$	558,933	$	48,867	$	607,800
Operations expenses	(266,204)		(43,931)		(310,135)
Income from segment operations	292,729		4,936		297,665
Interest income	2,400		1,083		3,483
Depreciation and amortization	(88,409)		(5,305)		(93,714)
Gain on sale of real estate, net	(59)		0		(59)
Income (loss) from operations	$	206,661	$	714	$	207,375
Reconciliation to consolidated net income:
Corporate interest income					26
Income from other investments, net					2,158
General and administrative					(20,740)
Other expenses					(1,498)
Interest and related amortization					(53,406)
Equity in income of unconsolidated joint ventures					1,936
Early debt retirement					(2,784)
Consolidated net income					$	133,067

Total assets	$	4,566,507	$	257,500	$	4,824,007
Capital improvements	$	77,774	$	41,949	$	119,723

~~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 operations 116,955 1,278 118,233
Interest income 950 846 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

Equity LifeStyle Properties, Inc.

Notes to Consolidated Financial Statements

Note 12 – Reportable Segments (continued)

Six Months Ended June 30, 2020


(amounts in thousands)	(amounts in thousands)	Property Operations		Home Sales and Rentals Operations		Consolidated		(amounts in thousands)	Property Operations		Home Sales and Rentals Operations		Consolidated
Operations revenues	Operations revenues	$	500,629	$	28,674	$	529,303	Operations revenues	$	500,629	$	28,674	$	529,303
Operations expenses	Operations expenses	(237,194)		(25,643)		(262,837)		Operations expenses	(237,194)		(25,643)		(262,837)
Income from segment operations	Income from segment operations	263,435		3,031		266,466		Income from segment operations	263,435		3,031		266,466
Interest income	Interest income	2,136		1,454		3,590		Interest income	2,136		1,454		3,590
Depreciation and amortization	Depreciation and amortization	(71,831)		(5,525)		(77,356)		Depreciation and amortization	(71,831)		(5,525)		(77,356)

Income (loss) from operations	Income (loss) from operations	$	193,740	$	(1,040)	$	192,700	Income (loss) from operations	$	193,740	$	(1,040)	$	192,700
Reconciliation to consolidated net income:	Reconciliation to consolidated net income:							Reconciliation to consolidated net income:
Corporate interest income	Corporate interest income					8		Corporate interest income					8
Income from other investments, net	Income from other investments, net					1,665		Income from other investments, net					1,665
General and administrative	General and administrative					(21,464)		General and administrative					(21,464)
Other expenses	Other expenses					(1,227)		Other expenses					(1,227)
Interest and related amortization	Interest and related amortization					(52,322)		Interest and related amortization					(52,322)
Equity in income of unconsolidated joint ventures						1,271
Equity in income of unconsolidated joint venture								Equity in income of unconsolidated joint venture					1,271
Early debt retirement	Early debt retirement					(1,054)		Early debt retirement					(1,054)
Consolidated net income	Consolidated net income					$	119,577	Consolidated net income					$	119,577

Total assets	Total assets	$	3,998,462	$	269,712	$	4,268,174	Total assets	$	3,998,462	$	269,712	$	4,268,174
Capital improvements		$	70,157	$	32,990	$	103,147
Capital Improvements								Capital Improvements	$	70,157	$	32,990	$	103,147

~~Six Months Ended~~

The following table summarizes our financial information for the Property Operations segment for the quarters and six months ended June 30, ~~2019~~2021 and 2020:

(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 operations 254,001 2,696 256,697
Interest income 1,844 1,696 3,540
Depreciation and amortization (70,740) (5,013) (75,753)
Gain on sale of real estate, net 52,507 — 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 venture 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


	Quarters Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	2021		2020		2021		2020
Revenues:
Rental income	$	251,420	$	213,885	$	496,149	$	449,249
Annual membership subscriptions	14,267		12,961		27,921		26,034
Membership upgrade sales current period, gross	9,207		5,048		19,221		9,891
Membership upgrade sales upfront payments, deferred, net	(6,454)		(2,666)		(13,881)		(5,208)
Other income	14,185		9,680		24,706		20,739
Ancillary services revenues, net	2,753		(753)		4,817		(76)
Total property operations revenues	285,378		238,155		558,933		500,629
Expenses:
Property operating and maintenance	101,351		84,020		188,981		166,311
Real estate taxes	17,896		16,668		35,746		33,509
Sales and marketing, gross	6,298		4,276		12,474		8,254
Membership sales commissions, deferred, net	(1,438)		(481)		(2,937)		(697)
Property management	16,560		14,813		31,940		29,817
Total property operations expenses	140,667		119,296		266,204		237,194
Income from property operations segment	$	144,711	$	118,859	$	292,729	$	263,435

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, 2020 and 2019:~~

Quarters Ended June 30, Six Months Ended June 30,
(amounts in thousands) 2020 2019 2020 2019
Revenues:
Rental income $ 213,885 $ 208,375 $ 449,249 $ 428,357
Annual membership subscriptions 12,961 12,586 26,034 24,902
Membership upgrade sales current period, gross 5,048 5,041 9,891 8,879
Membership upgrade sales upfront payments, deferred, net (2,666) (2,912) (5,208) (4,683)
Other income 9,680 10,265 20,739 20,635
Ancillary services revenues, net (753) 493 (76) 1,774
Total property operations revenues 238,155 233,848 500,629 479,864
Expenses:
Property operating and maintenance 84,020 83,576 166,311 160,320
Real estate taxes 16,668 15,107 33,509 30,430
Sales and marketing, gross 4,276 4,214 8,254 7,623
Membership sales commissions, deferred, net (481) (389) (697) (580)
Property management 14,813 14,385 29,817 28,070
Total property operations expenses 119,296 116,893 237,194 225,863
Income from property operations segment $ 118,859 $ 116,955 $ 263,435 $ 254,001

~~The following table summarizes our financial information for the~~ Home Sales and Rentals Operations segment for the quarters and six months ended June 30, ~~2020~~2021 and ~~2019:~~2020:


		Quarters Ended June 30,						Six Months Ended June 30,							Quarters Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	(amounts in thousands)	2020		2019		2020		2019		(amounts in thousands)	2021		2020		2021		2020
Revenues:	Revenues:									Revenues:
Rental income ^(a)	Rental income ^(a)	$	4,078	$	3,632	$	8,060	$	7,216	Rental income (a)	$	4,278	$	4,078	$	8,571	$	8,060
Gross revenue from home sales	Gross revenue from home sales	8,866		7,825		20,175		14,300		Gross revenue from home sales	24,427		8,866		39,647		20,175
Brokered resale revenues, net	Brokered resale revenues, net	178		379		439		657		Brokered resale revenues, net	376		178		649		439
Ancillary services revenues, net	Ancillary services revenues, net	—		—		—		—		Ancillary services revenues, net	0		0		0		0
Total revenues	Total revenues	13,122		11,836		28,674		22,173		Total revenues	29,081		13,122		48,867		28,674
Expenses:	Expenses:									Expenses:
Rental home operating and maintenance	Rental home operating and maintenance	1,245		1,292		2,588		2,496		Rental home operating and maintenance	1,312		1,245		2,555		2,588
Cost of home sales	Cost of home sales	8,850		8,164		20,761		14,796		Cost of home sales	23,856		8,850		38,724		20,761
Home selling expenses	Home selling expenses	1,081		1,102		2,294		2,185		Home selling expenses	1,346		1,081		2,652		2,294
Total expenses	Total expenses	11,176		10,558		25,643		19,477		Total expenses	26,514		11,176		43,931		25,643
Income from home sales and rentals operations segment	Income from home sales and rentals operations segment	$	1,946	$	1,278	$	3,031	$	2,696	Income from home sales and rentals operations segment	$	2,567	$	1,946	$	4,936	$	3,031

______________________

(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.

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 accompanying 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, ~~2019 ("2019~~2020 (“2020 Form ~~10-K"~~10-K”), as well as information in the ~~"Management's~~“Management's Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations” in our ~~2019~~2020 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 of property operations and home sales and rental operations primarily ofwithin manufactured home ~~("MH"~~(“MH”) and recreational vehicle ~~("RV"~~(“RV”) communities. As of June 30, ~~2020,~~2021, we owned or had an ownership interest in a portfolio of ~~413~~435 Properties located throughout the United States and Canada containing ~~156,713~~166,188 individual developed areas ~~("Sites"~~(“Sites”). These Properties are located in 33 states and British Columbia, with more than 90110 Properties with lake, river or ocean frontage and more than 120 Properties within 10 miles of the coastal United States.

We invest in properties in sought-after locations near retirement and vacation destinations and urban areas across the United States with a focus on delivering value to our residents and guests as well as stockholders. Our business model is intended to provide an opportunity for increased cash flows and appreciation in value. We seek growth in earnings, Funds from Operations ~~("FFO"~~(“FFO”), Normalized Funds from Operations (“Normalized FFO”) and cash flows by enhancing the profitability and operation of our Properties and investments. We accomplish this by attracting and retaining high quality customers to our Properties, who take pride in our Properties and in their homes, and efficiently managing our Properties by increasing occupancy, maintaining competitive market rents and controlling expenses. We also actively pursue opportunities that fit our acquisition criteria and are currently engaged in various stages of negotiations relating to the possible acquisition of additional properties.

We believe the demand from baby boomers for MH and RV communities will continue to be strong over the long term. It is estimated that approximately 10,000 baby boomers are turning 65 daily through 2030. In addition, the population age 55 and older is expected to grow ~~18%~~17% from ~~2020~~2021 to ~~2035.~~2036. These individuals, seeking an active lifestyle, will continue to drive the market for second home sales as vacation properties, investment opportunities or retirement retreats. We expect it is likely that over the next decade, we will continue to see high levels of second-home sales and that manufactured homes and cottages in our Properties will continue to provide a viable second-home alternative to site-built homes. We also believe the Millennial and Generation X demographic will contribute to our future long-term customer pipeline. RV Industry Association (“RVIA”) tracking of the RV industry as of 2021 showed that those under 45 years of age is the fastest growing segment of RV owners and has been for the past few years. The RVIA also completed a survey showing that RV purchase intent is strongest among Millennials, followed closely by Generation X. Millennials and Generation X combined represent over half of RV buyers. ~~There~~RVIA statistics as of 2021 show that over 11 million U.S. households own an RV, an increase of 62% over the past 20 years. The increase is driven by strong interest from younger individuals and families who live an ~~increasing trend among these~~active, outdoor lifestyle and baby boomers who are entering retirement. These groups ~~to adopt~~exhibit interest in adopting a minimalist lifestyle due to its affordability, preference over home quality relative to its size and the overall unique experience that our communities can provide. We believe the demand from baby boomers and these younger generations will continue to outpace supply for MH and RV communities. The entitlement process to develop new MH and RV communities is extremely restrictive. As a result, there have been limited new communities developed in our target geographic markets.

We generate the majority of our revenues from customers renting our Sites or entering into right-to-use contracts, also known as membership subscriptions, which provide them access to specific Properties for limited stays. MH Sites are generally leased on an annual basis to residents who own or lease factory-built homes, including manufactured homes. ~~Annual~~ RV and marina Sites are leased ~~on an annual basis~~ to ~~customers~~those who generally have an RV, factory-built cottage, boat or other unit placed on the site, including those customers renting marina dry storage slips. Annual Sites are leased on an annual basis, including those Northern ~~properties~~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.

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, ~~2020~~2021
MH Sites						~~72,300~~73,300
RV Sites:
Annual						~~29,500~~32,200
Seasonal						~~10,200~~10,700
Transient						~~14,200~~14,700
Marina Slips						~~2,300~~6,800
Membership ⁽¹⁾						~~24,600~~24,800
Joint Ventures ⁽²⁾						3,600
Total(3)						~~156,700~~166,200

_________________________

⁽¹⁾Primarily utilized to service the approximately ~~117,700~~123,400 members. Includes approximately ~~5,700~~6,210 Sites rented on an annual basis.

⁽²⁾Includes approximately 2,900 annual Sites, ~~500~~200 seasonal Sites and ~~200~~500 transient Sites.

(3)Total does not foot due to rounding.

In our Home Sales and Rentals 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 manufactured homes and cottages that are located in Properties owned and managed by us. 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"~~“ECHO JV”). Additionally, home sale brokerage services are offered to our residents who may choose to sell their homes rather than relocate them when moving from a Property. At certain Properties, we operate ancillary facilities, such as golf courses, ~~pro shops, stores~~retail operations 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-party lender programs that provide subsidized financing to customers and often require the community owner to guarantee customer defaults. Third-party lender programs have stringent underwriting criteria, sizable down payment requirements, short loan amortization and relatively high interest rates. We have a limited program under which we purchase loans made by an unaffiliated lender to homebuyers at our Properties.

In addition to net income computed in accordance with U.S. Generally Accepted Accounting Principles ~~("GAAP"~~(“GAAP”), we assess and measure our overall financial and operating performance using certain Non-GAAP supplemental measures, which include: (i) FFO, (ii) Normalized ~~Funds from Operations ("Normalized FFO"),~~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~~Centers for Disease Control ~~("CDC"~~and Prevention (“CDC”) and local public health department guidelines and protocols for social distancing and enhanced community and office cleaning procedures. All properties continue to be open subject to seasons of operation and state and local guidelines. Our property offices ~~continue to be~~are open to residents and customers, ~~by appointment only. As~~and we are complying with CDC recommended protocols.

We continue to see strong demand in our RV business as our customers seek safe vacation and leisure activities and value the opportunity to spend time outdoors. During the second quarter of ~~July 17, 2020, all properties are open subject~~2021, Core Transient RV rental income increased $14.0 million, or 180% compared to ~~state and local guidelines. Some~~the second quarter 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~~2020. Transient RV rental income for the ~~hardship our residents and customers may have experienced~~second quarter of 2020 was negatively impacted by temporary site closures as a result of ~~COVID-19~~COVID-19. As compared to the second quarter of 2019, Transient RV rental income for the second quarter of 2021 increased $7.3 million or 50%. RV and marina rental income in ~~response to certain regulatory guidelines, we took~~our Core Portfolio for the ~~following actions during the quarter~~six months 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 during2021 was 10.7% higher than the ~~quarter~~six months ended June 30, 2020. Annual and transient rental income for the six months ended June 30, 2021 increased 5.8% and 83.0%, respectively, while seasonal rental income decreased 21.7%. The decrease in seasonal rental income was primarily due to lower seasonal RV rental income in the South and West regions during the first quarter of 2021, as seasonal customers, in particular Canadian customers, were impacted by travel restrictions resulting from COVID-19.

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, increases in home sales and occupancy, and growth in transient RV rental income, to the fundamentals of our business model. Our customers have made an investment in a housing unit that is placed on land leased from us. In addition, there is continued demand for our ~~properties.~~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, ~~2020,~~2021, net income available for Common Stockholders ~~decreased $0.2~~increased $14.9 million, or ~~$0.01~~$0.08 per fully diluted Common Share, to $61.1 million, or $0.33 per fully diluted Common Share, compared to $46.2 million, or $0.25 per fully diluted Common Share, for the same period in 2020. For the six months ended June 30, 2021, net income available for Common Stockholders increased $13.2 million, or $0.07 per fully diluted Common Share, to $126.3 million, or $0.69 per fully diluted Common Share, compared to ~~$46.4~~$113.1 million, or ~~$0.26~~$0.62 per fully diluted Common Share, for the same period in ~~2019.~~ 2020.

For the ~~six months~~quarter ended June 30, ~~2020, net income~~2021, FFO available for Common ~~Stockholders decreased $46.6~~Stock and Operating Partnership unit (“OP Unit”) holders increased $28.1 million, or ~~$0.27~~$0.14 per fully diluted Common Share, to ~~$113.1~~$117.6 million, or ~~$0.62~~$0.61 per fully diluted Common Share, compared to ~~$159.7 million, or $0.89 per fully diluted Common Share, for the same period in 2019. The financial results for 2019 included a gain of $52.5 million on the sale of five all-age MH communities.~~

~~For the quarter ended 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.~~2020. For the six months ended June 30, ~~2020,~~2021, FFO available for Common Stock and Operating Partnership unit (“OP ~~Unit~~Unit”) holders increased ~~$4.0~~$36.3 million, or ~~$0.02~~$0.19 per fully diluted Common Share, to $238.1 million, or $1.24 per fully diluted Common Share, compared 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.~~2020.

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, 2020,2021, Normalized FFO available for Common Stock and OP Unit holders increased ~~$4.7~~$27.4 million, or ~~$0.02~~$0.14 per fully diluted Common Share, to $118.3 million, or $0.61 per fully diluted Common Share, compared to $90.9 million, or $0.47 per fully diluted Common Share, for the same period in 2020. For the six months ended June 30, 2021, Normalized FFO available for Common Stock and OP Unit holders increased $36.6 million, or $0.19 per fully diluted Common Share, to $240.9 million, or $1.25 per fully diluted Common Share, compared to $204.3 million, or $1.06 per fully diluted Common Share, ~~compared to $199.6 million, or $1.04 per fully diluted Common Share,~~ for the same period in ~~2019.~~2020.

For the quarter ended June 30, ~~2020,~~2021, our Core Portfolio property operating revenues, excluding deferrals, increased ~~0.6%~~14.9% and property operating expenses, excluding deferrals and property management, increased ~~0.1%~~13.9%, from the same period in ~~2019,~~2020, resulting in an increase in income from property operations, excluding deferrals and property management, of ~~1.0%~~15.6% compared to the same period in ~~2019.~~2020. For the six months ended June 30, ~~2020,~~2021, our Core Portfolio property operating revenues, excluding

~~Management's Discussion and Analysis (continued)~~

deferrals, increased ~~3.1%~~8.5% and property operating expenses, excluding deferrals and property management, increased ~~2.8%~~9.1%, from the same period in ~~2019,~~2020, resulting in an increase in income from property operations, excluding deferrals and property management, of ~~3.2%~~8.2% compared to the same period in ~~2019.~~2020.

While we continue to focus on increasing the number of manufactured homeowners in our Core Portfolio, we also believe renting our vacant homes ~~may represent~~represents an attractive source of occupancy and an opportunity to potentially convert the renter to a new homebuyer in the future. We continue to expect there to be fluctuations in the sources of occupancy gains depending on local market conditions, availability of vacant sites and success with converting renters to homeowners. Our Core Portfolio average occupancy, including both homeowners and renters, in our MH communities was 95.2% for the quarter ended June 30, ~~2020,~~2021, compared to ~~95.1%~~95.3% for the quarter ended March 31, ~~2020~~2021 and ~~95.1%~~95.2% for the same period in ~~2019.~~2020. The decrease in average occupancy from the prior quarter is due to expansion sites completed and added to our Core Portfolio during the quarter but not yet occupied as of June 30, 2021. For the quarter ended June 30, 2021, our Core Portfolio occupancy increased by 68 sites with an increase in homeowner occupancy of 179 sites, compared to occupancy as of March 31, 2021. By comparison, for the quarter ended June 30, 2020, 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 132 sites with an increase in homeowner occupancy of 79~~ sites. In addition to higher occupancy, we have increased rental rates during the quarter and six months ended June 30, ~~2020,~~2021, contributing to a growth of 4.1% ~~and 4.3%, respectively,~~for each respective period in MH rental income, compared to the same ~~periods~~period in ~~2019.~~2020.

RV and marina rental income in our Core Portfolio for the quarter ended June 30, ~~2020~~2021 was ~~8.8% lower~~32.0% higher than the same period in ~~2019.~~2020. Annual, seasonal and transient rental income for the quarter ended June 30, ~~2020~~2021 increased ~~4.7%~~7.6%, ~~while seasonal~~31.1% and ~~transient~~180.3%, respectively. Annual rental income ~~decreased 8.9%~~increased primarily due to rate growth, including in the Core marina portfolio. Core annual marina revenue represents 99% of Core marina base rental income. Seasonal rental income increased due to increases in all regions, primarily due to cancellations in RV reservations and ~~47.7%, respectively.~~site closures during the second quarter of 2020 as a result of COVID-19. Transient rental income increased as we have continued to see positive demand as our customers seek safe vacation and leisure activities and value the opportunity to spend time outdoors. RV and marina rental income in our Core Portfolio for

Management's Discussion and Analysis (continued)

the six months ended June 30, ~~2020~~2021 was ~~1.4% lower~~10.7% higher than the same period in ~~2019.~~2020. Annual and ~~seasonal~~transient rental income for the six months ended June 30, ~~2020~~2021 increased ~~6.1%~~5.8% and ~~3.7%~~83.0%, respectively, while ~~transient~~seasonal rental income decreased ~~29.2%~~21.7%. The ~~decreases~~decrease in ~~transient rental income and~~ seasonal rental income ~~over the same periods~~was primarily due to lower seasonal RV rental income in the ~~prior year~~South and West regions during the first quarter of 2021, as seasonal customers, in particular Canadian customers, were ~~primarily~~impacted by travel restrictions resulting from ~~cancellations, declines in reservations and temporary site closures due to~~ COVID-19.

We continue to experience strong performance in our membership base within our Thousand Trails portfolio. For the quarter ended June 30, ~~2020,~~2021, annual membership subscriptions revenue increased ~~3.0%~~10.1% over the same period in ~~2019.~~2020. We sold approximately ~~5,800~~8,200 TTC memberships during the quarter ended June 30, ~~2020,~~2021, representing a ~~11.8% decline~~41% increase 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 2019.2020. We sold approximately 800 membership upgrades during the quarter ended June 30, 2020, representing an increase of 11.6% in sales volume, which was offset by a lower average sales price due to the mix of upgrade products sold. In addition, wealso activated approximately ~~5,600~~7,800 TTC memberships through our RV dealer program for the quarter ended June 30, 2021. Membership upgrade sales, gross increased $4.2 million for the quarter ended June 30, 2021 compared to the same period in 2020, driven by approximately 1,200 membership upgrade sales during the quarter. We also experienced a 22% increase in the average sales price per upgrade sold during the quarter ended June 30, 2021 compared to the same period June 30, 2020. The increase in upgrade sales and average sales price was driven by an increase in customer demand, including a new upgrade product, Adventure, introduced in the first quarter of 2021. Adventure was introduced in response to demand we were seeing from our current customers who were looking for longer stays and advanced booking windows. We periodically introduce new upgrade products. Based on our historical experience, during the first 60 to 90 days following a new product launch, we experience an increase in upgrade sales and thereafter the upgrade sales fall back in line with historical run rate performance. For the six months ended June 30, ~~2020,~~2021, we sold approximately ~~9,000~~13,500 TTC memberships and approximately ~~1,600~~2,600 membership upgrades, an increase in membership subscriptions and upgrade revenues of ~~4.5%~~7.2% and ~~11.4%~~94.3%, respectively, over the same period in ~~2019.~~2020.

Demand for our homes and communities remains strong as evidenced by factors including our high occupancy levels. We closed 295 new home sales during the quarter ended June 30, 2021, compared to 133 new home sales during the quarter ended June 30, ~~2020 compared to 117~~2020. We closed 487 new home sales during the ~~quarter~~six months ended June 30, ~~2019. We closed~~2021, compared to 288 new home sales during the six months ended June 30, ~~2020 compared to 208 new home sales during the six months ended June 30, 2019.~~2020. The ~~increases~~increase in new home sales was primarily due to favorable housing trends and timing of the 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.~~broader real estate market.

As of June 30, ~~2020,~~2021, we had ~~3,923~~3,794 occupied rental homes in our Core MH communities, including ~~283~~282 homes rented through our ECHO JV. Our Core Portfolio income from rental operations, net of depreciation, was ~~$7.9~~$8.4 million and ~~$7.5~~$8 million for the quarters ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Approximately $8.1 million and $7.8 million of rental operations revenue related to Site rental was included in MH base rental income in our Core Portfolio for ~~each respective~~the quarters ended June 30, 2021 and 2020, ~~and 2019.~~respectively. Our Core Portfolio income from rental operations, net of depreciation, was ~~$15.5~~$16.9 million and ~~$15.1~~$15.5 million for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Approximately ~~$15.6~~$16.2 million and ~~$15.5~~$15.6 million of rental operations revenue related to Site rental was included in MH base rental income in our Core Portfolio for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Our gross investment in real estate increased ~~$85.3~~$447.0 million to ~~$5,828.3~~$6,607.4 million as of June 30, ~~2020~~2021 from ~~$5,743.0~~$6,160.4 million as of December 31, ~~2019,~~2020, primarily due to acquisitions and capital improvements during the six months ended June 30, ~~2020.~~2021.

Management's Discussion and Analysis (continued)

The following chart lists the Properties acquired or sold from January 1, ~~2019~~2020 through June 30, ~~2020~~2021 and Sites added through expansion opportunities at our existing Properties:

Location

Type of Property

Transaction Date

Sites

Total Sites as of January 1, ~~2019~~2020 ^{(1) (2)}

~~155,400~~156,500

Acquisition Properties:

~~Drummer Boy Camping Resort~~Marina Dunes RV Park

~~Gettysburg, Pennsylvania~~Marina, California

~~March 25, 2019~~October 15, 2020

~~465~~96

~~Lake of the Woods~~Acorn Campground

~~Wautoma, Wisconsin~~Green Creek, New Jersey

~~March 25, 2019~~October 16, 2020

~~303~~323

~~Round Top RV Campground~~Dolce Vita at Superstition Mountain

~~Gettysburg, Pennsylvania~~Apache Junction, Arizona

December 8, 2020

484

Leisure World RV Resort

Weslaco, Texas

~~April 10, 2019~~December 9, 2020

~~391~~333

~~White Oak Shores Camping and~~Trails End RV Resort

~~Stella,~~Weslaco, Texas

December 9, 2020

362

Meridian RV Resort

Apache Junction, Arizona

December 14, 2020

264

Harbor Point RV Community

Sneads Ferry, North Carolina

~~May 29, 2019~~December 16, 2020

~~455~~203

Topsail Sound RV Park

Holly Ridge, North Carolina

December 17, 2020

230

Marker 1 Marina

Dunedin, Florida

Marina

December 30, 2020

477

Okeechobee KOA Resort

Okeechobee, Florida

January 21, 2021

740

Marina Portfolio (11 Properties)

Multiple

Marina

February 5, 2021

4,167

Pine Haven

Cape May, New Jersey

June 3, 2021

629

Expansion Site Development:

Sites added (reconfigured) in ~~2019~~

~~891~~

~~Sites added (reconfigured) in~~ 2020

~~209~~1,202

Sites added (reconfigured) in 2021

131

~~Dispositions:~~

~~Hoosier Estates~~

~~Lebanon, Indiana~~

~~January 23, 2019~~

~~(288)~~

~~Lake in the Hills~~

~~Auburn Hills, Michigan~~

~~January 23, 2019~~

~~(238)~~

~~North Glen Village~~

~~Westfield, Indiana~~

~~January 23, 2019~~

~~(282)~~

~~Oak Tree Village~~

~~Portage, Indiana~~

~~January 23, 2019~~

~~(361)~~

~~Swan Creek~~

~~Ypsilanti, Michigan~~

~~January 23, 2019~~

~~(294)~~

Total Sites as of June 30, ~~2020~~2021⁽²⁾ (1)

~~156,700~~166,200

______________________

⁽¹⁾~~Includes the marina slips from the acquisition of the remaining interest in our joint venture investment of 11 marinas in Florida.~~

⁽²⁾Sites are approximate. Total does not foot due to rounding.

Non-GAAP Financial Measures

Management's discussion and analysis of financial condition and results of operations include certain Non-GAAP financial measures that in management's view of the business are meaningful as they allow investors the ability to understand key operating details of our business both with and without regard to certain accounting conventions or items that may not always be indicative of recurring annual cash flows of the portfolio. These Non-GAAP financial measures as determined and presented by us may not be comparable to similarly titled measures reported by other companies, and include income from property operations and Core Portfolio, FFO, Normalized FFO and income from rental operations, net of depreciation.

We believe investors should review Income from property operations and Core Portfolio, FFO, Normalized FFO and Income from rental operations, net of depreciation, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REIT's operating performance. A discussion of Income from property operations and Core Portfolio, FFO, Normalized FFO and Income from rental operations, net of depreciation, and a reconciliation to net income, are included below.

Income from Property Operations and Core Portfolio

We use income from property operations, income 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 Properties. Income from property operations represents rental income, membership subscriptions and upgrade sales, utility and other 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 deferrals of membership upgrade sales upfront payments and membership sales commissions, net. ~~For comparative purposes, we~~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, 2019.~~during all of 2020 and 2021. 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 ~~2019~~2020 and ~~2020.~~

2021. This includes, but is not limited to, one MH community, seven RV communities and one marina acquired during 2020 and two RV communities and eleven marinas acquired during 2021.

Management's Discussion and Analysis (continued)

Funds from Operations ~~("FFO"~~(“FFO”) and Normalized Funds from Operations ("(“Normalized ~~FFO"~~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 payments from membership upgrade contracts. In accordance with GAAP, the non-refundable upfront payments and related commissions are deferred and amortized over the estimated membership upgrade contract term. Although the NAREIT definition of FFO does not address the treatment of non-refundable upfront 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 non-operating income and expense items, such as gains and losses from early debt extinguishment, including prepayment penalties and defeasance costs, and 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 and other miscellaneous non-comparable items from 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.

Income from Rental Operations, Net of Depreciation

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

Our definitions and calculations of these Non-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 flows from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

Management's Discussion and Analysis (continued)

The following table reconciles net income available for Common Stockholders to income from property operations for the quarters ~~and six months~~ ended June 30, ~~2020~~2021 and ~~2019:~~2020:

Quarters Ended June 30, Six Months Ended June 30,
(amounts in thousands) 2020 2019 2020 2019
Computation of Income from Property Operations:
Net income available for Common Stockholders $ 46,187 $ 46,401 $ 113,062 $ 159,710
Redeemable preferred stock dividends 8 8 8 8
Income allocated to non-controlling interests – Common OP Units 2,658 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 ventures 47,789 45,859 118,306 164,861
Gain on sale of real estate, net — — — (52,507)
Total other expenses, net 73,016 72,374 148,160 144,343
Loss from home sales operations and other 1,640 569 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)	2021		2020		2021		2020
Computation of Income from Property Operations:
Net income available for Common Stockholders	$	61,051	$	46,187	$	126,291	$	113,062
Redeemable preferred stock dividends	8		8		8		8
Income allocated to non-controlling interests – Common OP Units	3,021		2,658		6,768		6,507
Equity in income of unconsolidated joint ventures	(1,068)		(1,064)		(1,936)		(1,271)
Income before equity in income of unconsolidated joint ventures	63,012		47,789		131,131		118,306
Loss on sale of real estate, net	—		—		59		—
Total other expenses, net	84,266		73,016		166,475		148,160
Loss from home sales operations and other	(2,354)		1,640		(3,737)		2,517
Income from property operations	$	144,924	$	122,445	$	293,928	$	268,983

The following table presents a calculation of FFO available for Common Stock and OP Unitholders and Normalized FFO available for Common Stock and OP Unitholders for the quarters ~~and six months~~ ended June 30, ~~2020~~2021 and ~~2019:~~2020:


		Quarters Ended June 30,						Six Months Ended June 30,							Quarters Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	(amounts in thousands)	2020		2019		2020		2019		(amounts in thousands)	2021		2020		2021		2020
Computation of FFO and Normalized FFO:	Computation of FFO and Normalized FFO:									Computation of FFO and Normalized FFO:
Net income available for Common Stockholders	Net income available for Common Stockholders	$	46,187	$	46,401	$	113,062	$	159,710	Net income available for Common Stockholders	$	61,051	$	46,187	$	126,291	$	113,062
Income allocated to non-controlling interests – Common OP Units	Income allocated to non-controlling interests – Common OP Units	2,658		2,676		6,507		9,902		Income allocated to non-controlling interests – Common OP Units	3,021		2,658		6,768		6,507
Membership upgrade sales upfront payments, deferred, net	Membership upgrade sales upfront payments, deferred, net	2,666		2,912		5,208		4,683		Membership upgrade sales upfront payments, deferred, net	6,454		2,666		13,881		5,208
Membership sales commissions, deferred, net	Membership sales commissions, deferred, net	(481)		(389)		(697)		(580)		Membership sales commissions, deferred, net	(1,438)		(481)		(2,937)		(697)
Depreciation and amortization	Depreciation and amortization	38,332		37,776		77,356		75,753		Depreciation and amortization	48,316		38,332		93,714		77,356
Depreciation on unconsolidated joint ventures	Depreciation on unconsolidated joint ventures	184		441		361		873		Depreciation on unconsolidated joint ventures	184		184		367		361
Gain on sale of real estate, net		—		—		—		(52,507)
Loss on sale of real estate, net										Loss on sale of real estate, net	—		—		59		—
FFO available for Common Stock and OP Unit holders	FFO available for Common Stock and OP Unit holders	89,546		89,817		201,797		197,834		FFO available for Common Stock and OP Unit holders	117,588		89,546		238,143		201,797
Early debt retirement	Early debt retirement	—		2,085		1,054		2,085		Early debt retirement	755		—		2,784		1,054
Insurance proceeds due to catastrophic weather event ⁽¹⁾		—		—		—		(349)

COVID-19 expenses⁽²⁾	COVID-19 expenses⁽²⁾	1,407		—		1,446		—		COVID-19 expenses⁽²⁾	—		1,407		—		1,446
Normalized FFO available for Common Stock and OP Unit holders	Normalized FFO available for Common Stock and OP Unit holders	$	90,953	$	91,902	$	204,297	$	199,570	Normalized FFO available for Common Stock and OP Unit holders	$	118,343	$	90,953	$	240,927	$	204,297
Weighted average Common Shares outstanding – Fully Diluted ⁽³⁾	Weighted average Common Shares outstanding – Fully Diluted ⁽³⁾	192,542		191,860		192,538		191,546		Weighted average Common Shares outstanding – Fully Diluted ⁽³⁾	192,701		192,542		192,668		192,538

~~______________________~~

⁽¹⁾~~Represents insurance recovery revenue from reimbursement for capital expenditures related to Hurricane Irma.~~

⁽²⁾Includes expenses incurred related to the development and implementation of CDC and public health guidelines for social distancing and enhanced cleaning, property employee appreciation bonuses and emergency time-off pay. These COVID-19 expenses are considered incremental to our normal operations and are nonrecurring As such, they have been excluded from the calculation of Normalized FFO.

⁽³⁾~~Adjusted for stock split.~~

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, 2021 and June 30, 2020 and our operating activities, investing activities and financing activities for the six months ended June 30, 2021 and June 30, 2020. For 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,~~2020, filed with the SEC on July ~~30, 2019.~~28, 2020.

Comparison of the quarter ended June 30, ~~2020~~2021 to the quarter ended June 30, ~~2019~~2020

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~~2021 and June 30, ~~2019:~~2020:


		Core Portfolio														Total Portfolio															Core Portfolio				Total Portfolio
		Quarters Ended June 30,														Quarters Ended June 30,															Quarters Ended June 30,				Quarters Ended June 30,
(amounts in thousands)	(amounts in thousands)	2020		2019		Variance		% Change		2020		2019		Variance		% Change		(amounts in thousands)	2021		2020		Variance		% Change		2021		2020		Variance		% Change
MH base rental income(1)	MH base rental income(1)	$	142,535	$	136,213	$	6,322	4.6	%	$	142,557	$	136,213	$	6,344	4.7	%	MH base rental income(1)	$	149,214	$	142,535	$	6,679	4.7	%	$	150,145	$	142,557	$	7,588	5.3	%
Rental home income(1)	Rental home income(1)	4,077		3,632		445		12.3	%	4,078		3,632		446		12.3	%	Rental home income(1)	4,266		4,077		189		4.6	%	4,278		4,078		200		4.9	%
RV and marina base rental income ⁽¹⁾	RV and marina base rental income ⁽¹⁾	54,345		59,617		(5,272)		(8.8)	%	60,107		60,997		(890)		(1.5)	%	RV and marina base rental income (1)	79,352		60,107		19,245		32.0	%	89,008		60,107		28,901		48.1	%
Annual membership subscriptions	Annual membership subscriptions	12,960		12,586		374		3.0	%	12,961		12,586		375		3.0	%	Annual membership subscriptions	14,266		12,961		1,305		10.1	%	14,267		12,961		1,306		10.1	%
Membership upgrades sales current period, gross	Membership upgrades sales current period, gross	5,048		5,041		7		0.1	%	5,048		5,041		7		0.1	%	Membership upgrades sales current period, gross	9,207		5,048		4,159		82.4	%	9,207		5,048		4,159		82.4	%
Utility and other income(1)	Utility and other income(1)	21,769		22,190		(421)		(1.9)	%	22,259		22,250		9		—	%	Utility and other income(1)	27,364		22,259		5,105		22.9	%	28,205		22,259		5,946		26.7	%
Property operating revenues, excluding deferrals	Property operating revenues, excluding deferrals	240,734		239,279		1,455		0.6	%	247,010		240,719		6,291		2.6	%	Property operating revenues, excluding deferrals	283,669		246,987		36,682		14.9	%	295,110		247,010		48,100		19.5	%

Property operating and maintenance ⁽³⁾⁽²⁾	Property operating and maintenance ⁽³⁾⁽²⁾	82,943		83,683		(740)		(0.9)	%	85,378		84,396		982		1.2	%	Property operating and maintenance ⁽³⁾⁽²⁾	97,870		85,281		12,589		14.8	%	103,104		85,378		17,726		20.8	%
Real estate taxes	Real estate taxes	15,831		15,044		787		5.2	%	16,668		15,107		1,561		10.3	%	Real estate taxes	16,964		16,638		326		2.0	%	17,896		16,668		1,228		7.4	%
Rental home operating and maintenance	Rental home operating and maintenance	1,243		1,292		(49)		(3.8)	%	1,245		1,292		(47)		(3.6)	%	Rental home operating and maintenance	1,285		1,243		42		3.4	%	1,312		1,245		67		5.4	%
Sales and marketing, gross	Sales and marketing, gross	4,276		4,214		62		1.5	%	4,276		4,214		62		1.5	%	Sales and marketing, gross	6,296		4,276		2,020		47.2	%	6,298		4,276		2,022		47.3	%
Property operating expenses, excluding deferrals and property management	Property operating expenses, excluding deferrals and property management	104,293		104,233		60		0.1	%	107,567		105,009		2,558		2.4	%	Property operating expenses, excluding deferrals and property management	122,415		107,438		14,977		13.9	%	128,610		107,567		21,043		19.6	%
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	%
Income from property operations, excluding deferrals and property management (3)																		Income from property operations, excluding deferrals and property management (3)	161,254		139,549		21,705		15.6	%	166,500		139,443		27,057		19.4	%
Property management	Property management	14,813		14,385		428		3.0	%	14,813		14,385		428		3.0	%	Property management	16,560		14,813		1,747		11.8	%	16,560		14,813		1,747		11.8	%
Income from property operations, excluding deferrals⁽²⁾⁽³⁾	Income from property operations, excluding deferrals⁽²⁾⁽³⁾	121,628		120,661		967		0.8	%	124,630		121,325		3,305		2.7	%	Income from property operations, excluding deferrals⁽²⁾⁽³⁾	144,694		124,736		19,958		16.0	%	149,940		124,630		25,310		20.3	%
Membership upgrade sales upfront payments and membership sales commission, deferred, net	Membership upgrade sales upfront payments and membership sales commission, deferred, net	2,185		2,523		(338)		(13.4)	%	2,185		2,523		(338)		(13.4)	%	Membership upgrade sales upfront payments and membership sales commission, deferred, net	5,016		2,185		2,831		129.6	%	5,016		2,185		2,831		129.6	%
Income from property operations ⁽²⁾⁽³⁾	Income from property operations ⁽²⁾⁽³⁾	$	119,443	$	118,138	$	1,305	1.1	%	$	122,445	$	118,802	$	3,643	3.1	%	Income from property operations ⁽²⁾⁽³⁾	$	139,678	$	122,551	$	17,127	14.0	%	$	144,924	$	122,445	$	22,479	18.4	%

_____________________

⁽¹⁾~~Marina~~Rental income consists of the following total portfolio income items: 1) MH base rental income, ~~has been included~~2) Rental home income, 3) RV and marina base rental income and 4) Utility income, which is calculated by subtracting Other income on the Consolidated Statements of Income and Comprehensive Income from Utility and other income in ~~our Non-Core Portfolio since~~this table. The difference between the ~~acquisition~~sum of the ~~remaining interest~~total portfolio income items and Rental income on the Consolidated Statements of Income and Comprehensive Income is bad debt expense, which is presented in ~~a joint venture investment of 11 marinas~~Property operating and maintenance expense in ~~Florida occurred on September 10, 2019.~~this table.

⁽²⁾Includes bad debt expense for all periods presented.

(3)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~~2021 increased ~~$3.6~~$22.5 million, or ~~3.1%~~18.4%, from ~~2019,~~2020, driven by an an increase of ~~$1.3~~$17.1 million, or ~~1.1%~~14.0%, from our Core Portfolio and an increase of ~~$2.3~~$5.4 million from our Non-Core Portfolio. The increase in income from property operations from our Core Portfolio was primarily ~~resulting~~due to higher property operating revenues, excluding deferrals primarily from ~~higher~~increased RV and marina and MH base rental income, partially offset by ~~lower RV base rental income.~~an increase in property operating expenses, excluding deferrals and property management. The increase in income from property operations from our ~~None-Core~~Non-Core Portfolio was attributed to income from properties acquired ~~throughout 2019, most notably~~in the ~~marinas in Florida.~~fourth quarter of 2020 and the first and second quarters of 2021.

Management's Discussion and Analysis (continued)

Property Operating Revenues

MH base rental income in our Core Portfolio for ~~2020~~2021 increased ~~$6.3~~$6.7 million, or ~~4.6%~~4.7%, from ~~2019,~~2020, which reflects 4.1% growth from rate increases and ~~0.5%~~0.6% growth from occupancy gains. The average monthly base rental income per Site in our Core Portfolio increased to approximately $721 in 2021 from approximately $693 in ~~2020 from approximately $665 in 2019.~~2020. The average occupancy for our Core Portfolio ~~increased to~~was 95.2% ~~in 2020 from 95.1% in 2019.~~for both the quarters ended June 30, 2021 and June 30, 2020.

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 Portfolio														Total Portfolio															Core Portfolio				Total Portfolio
		Quarters Ended June 30,														Quarters Ended June 30,															Quarters Ended June 30,				Quarters Ended June 30,
(amounts in thousands)	(amounts in thousands)	2020		2019		Variance		% Change		2020		2019		Variance		% Change		(amounts in thousands)	2021		2020		Variance		% Change		2021		2020		Variance		% Change
Annual	Annual	$	41,889	$	39,996	$	1,893	4.7	%	$	47,122	$	40,790	$	6,332	15.5	%	Annual	$	50,721	$	47,122	$	3,599	7.6	%	$	58,748	$	47,122	$	11,626	24.7	%
Seasonal	Seasonal	5,166		5,669		(503)		(8.9)	%	5,204		5,713		(509)		(8.9)	%	Seasonal	6,823		5,204		1,619		31.1	%	7,447		5,204		2,243		43.1	%
Transient	Transient	7,290		13,952		(6,662)		(47.7)	%	7,781		14,494		(6,713)		(46.3)	%	Transient	21,808		7,781		14,027		180.3	%	22,813		7,781		15,032		193.2	%
RV and marina base rental income ⁽¹⁾	RV and marina base rental income ⁽¹⁾	$	54,345	$	59,617	$	(5,272)	(8.8)	%	$	60,107	$	60,997	$	(890)	(1.5)	%	RV and marina base rental income ⁽¹⁾	$	79,352	$	60,107	$	19,245	32.0	%	$	89,008	$	60,107	$	28,901	48.1	%

~~_____________________~~

⁽¹⁾~~Marina~~RV and marina base rental income ~~has been included~~ in our ~~Non-Core~~Core Portfolio ~~following~~for 2021 increased by $19.2 million, or 32.0%, from 2020 primarily due to increases in Transient RV and marina base rental income of $14.0 million or 180.3%, Annual RV and marina base rental income of $3.6 million or 7.6% and Seasonal RV and marina base rental income of $1.6 million or 31.1%. Transient and Seasonal RV and marina base rental income increased across all regions, primarily due to cancellations in RV reservations and site closures during the ~~acquisition~~second quarter of 2020 as a result of COVID-19. In addition, we continue to see positive Transient demand as our customers seek safe vacation and leisure activities and value the ~~remaining interest~~opportunity to spend time outdoors. The increase in ~~our joint venture investment~~Annual rental income is attributable to both rate and occupancy, driven by occupancy gains in the North and Northeast regions.

Membership upgrade sales, gross for 2021 increased $4.2 million, or 82.4%, from 2020. The increase in membership upgrade sales was due to approximately 1,200 upgrade sales in 2021, compared to 800 in 2020, an increase of ~~11 marinas~~49%. We also experienced a 22% increase in ~~Florida on September 10, 2019.~~

the average sales price per upgrade sold during the second quarter of 2021, compared to the second quarter of 2020. The increase in upgrade sales and average sales price was driven by an increase in customer demand, including a new upgrade product, Adventure, introduced during the first quarter of 2021.

Utility and other income in our Core Portfolio for ~~2020 decreased $0.4~~2021 increased $5.1 million, or ~~1.9%~~22.9%, from ~~2019.~~2020. The ~~decrease is~~increase was primarily due to ~~lower~~an increase in other property income of ~~$1.7 million, partially offset by higher pass-through income of $0.8~~$3.7 million and ~~higher~~an increase in utility income of ~~$0.4~~$1.2 million. The ~~decrease~~increase in other property income was primarily due to insurance recovery revenue of $2.4 million related to Hurricane Hanna recorded during the second quarter of 2021 and an increase in late fees due to the suspension of late fees ~~and RV cancellation fees~~in 2020 as a result of COVID-19. The increase in ~~pass-through~~utility income was ~~driven by increases~~primarily due to an increase in ~~real estate taxes in Florida.~~electric income.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for ~~2020~~2021 increased ~~$0.1~~$15.0 million, or ~~0.1%~~13.9%, from ~~2019. The increase in property taxes of $0.8 million was offset~~2020, driven by ~~the decrease~~increases in property operating and maintenance expenses of ~~$0.7~~$12.6 million and gross sales and marketing expenses of $2.0 million. ~~Property taxes in 2020 were higher due to real estate tax increases in Florida. Property~~Core property operating and maintenance expenses were ~~lower,~~higher in 2021 primarily due to ~~decreases of $1.2 million in administrative expense, $0.5 million~~increases in utility expenses ~~and $0.3~~of $4.5 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~~$2.7 million and property payroll of $2.2 million. ~~Property operating~~The increase in gross sales and ~~maintenance expenses~~marketing expense is primarily due to an increase in ~~our Core Portfolio for 2020 include $1.0 million~~membership upgrade sales during the second quarter of ~~incremental and nonrecurring expenses related~~2021 compared 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~~.

second quarter 2020.

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,															Quarters Ended June 30,
(amounts in thousands, except home sales volumes)	(amounts in thousands, except home sales volumes)	2020		2019		Variance		% Change		(amounts in thousands, except home sales volumes)	2021		2020		Variance		% Change
Gross revenues from new home sales ⁽¹⁾	Gross revenues from new home sales ⁽¹⁾	$	7,552	$	6,064	$	1,488	24.5	%	Gross revenues from new home sales (1)	$	23,320	$	7,552	$	15,768	208.8	%
Cost of new home sales ⁽¹⁾	Cost of new home sales ⁽¹⁾	7,382		5,984		1,398		23.4	%	Cost of new home sales (1)	22,243		7,382		14,861		201.3	%
Gross profit from new home sales	Gross profit from new home sales	170		80		90		112.5	%	Gross profit from new home sales	1,077		170		907		533.5	%

Gross revenues from used home sales	Gross revenues from used home sales	1,314		1,761		(447)		(25.4)	%	Gross revenues from used home sales	1,107		1,314		(207)		(15.8)	%
Cost of used home sales	Cost of used home sales	1,468		2,180		(712)		(32.7)	%	Cost of used home sales	1,613		1,468		145		9.9	%
Loss from used home sales	Loss from used home sales	(154)		(419)		265		63.2	%	Loss from used home sales	(506)		(154)		(352)		(228.6)	%

Brokered resale and ancillary services revenues, net	Brokered resale and ancillary services revenues, net	(575)		872		(1,447)		(165.9)	%	Brokered resale and ancillary services revenues, net	3,129		(575)		3,704		644.2	%
Home selling expenses	Home selling expenses	1,081		1,102		(21)		(1.9)	%	Home selling expenses	1,346		1,081		265		24.5	%

Income (loss) from home sales and other	Income (loss) from home sales and other	$	(1,640)	$	(569)	$	(1,071)	(188.2)	%	Income (loss) from home sales and other	$	2,354	$	(1,640)	$	3,994	243.5	%

Home sales volumes	Home sales volumes									Home sales volumes
Total new home sales ⁽²⁾	Total new home sales ⁽²⁾	133		117		16		13.7	%	Total new home sales (2)	295		133		162		121.8	%
New Home Sales Volume - ECHO JV	New Home Sales Volume - ECHO JV	11		18		(7)		(38.9)	%	New Home Sales Volume - ECHO JV	16		11		5		45.5	%
Used home sales	Used home sales	136		210		(74)		(35.2)	%	Used home sales	108		136		(28)		(20.6)	%
Brokered home resales	Brokered home resales	111		237		(126)		(53.2)	%	Brokered home resales	212		111		101		91.0	%

_________________________

⁽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~~income from home sales and other operations was $2.4 million for the second quarter of 2021, compared to a loss of $1.6 million ~~for 2020 compared to $0.6 million for 2019.~~in the second quarter of 2020. The increase in ~~loss~~income from home sales and other operations was primarily due to ~~a decrease~~an increase in ancillary services revenues, net, due to increased revenue from restaurants, stores and activities across the portfolio that were closed last year as a result of ~~closed restaurants~~COVID-19 and ~~amenities across~~an increase in non-core marina ancillary revenues, net. Income from home sales and other operations also increased due to an increase in gross profit from new home sales due to an increase of 162 new homes sales during the ~~portfolio as a result~~second quarter of ~~COVID-19.~~2021 compared to the second quarter of 2020 primarily due to favorable housing trends in the broader real estate market.

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,															Quarters Ended June 30,
(amounts in thousands, except rental unit volumes)	(amounts in thousands, except rental unit volumes)	2020		2019		Variance		% Change		(amounts in thousands, except rental unit volumes)	2021		2020		Variance		% Change
Rental operations revenue ⁽¹⁾	Rental operations revenue ⁽¹⁾	$	11,904	$	11,431	$	473	4.1	%	Rental operations revenue (1)	$	12,344	$	11,904	$	440	3.7	%
Rental home operating and maintenance		1,243		1,292		(49)		(3.8)	%
Rental home operating and maintenance expenses										Rental home operating and maintenance expenses	1,285		1,243		42		3.4	%
Income from rental operations	Income from rental operations	10,661		10,139		522		5.1	%	Income from rental operations	11,059		10,661		398		3.7	%
Depreciation on rental homes ⁽²⁾	Depreciation on rental homes ⁽²⁾	2,721		2,579		142		5.5	%	Depreciation on rental homes (2)	2,685		2,721		(36)		(1.3)	%
Income from rental operations, net of depreciation	Income from rental operations, net of depreciation	$	7,940	$	7,560	$	380	5.0	%	Income from rental operations, net of depreciation	$	8,374	$	7,940	$	434	5.5	%

Gross investment in new manufactured home rental units ⁽³⁾	Gross investment in new manufactured home rental units ⁽³⁾	$	233,840	$	195,816	$	38,024	19.4	%	Gross investment in new manufactured home rental units (3)	$	230,394	$	235,516	$	(5,122)	(2.2)	%
Gross investment in used manufactured home rental units	Gross investment in used manufactured home rental units	$	17,454	$	25,113	$	(7,659)	(30.5)	%	Gross investment in used manufactured home rental units	$	17,732	$	17,722	$	10	0.1	%

Net investment in new manufactured home rental units	Net investment in new manufactured home rental units	$	196,200	$	171,936	$	24,264	14.1	%	Net investment in new manufactured home rental units	$	188,343	$	202,115	$	(13,772)	(6.8)	%
Net investment in used manufactured home rental units	Net investment in used manufactured home rental units	$	7,492	$	11,751	$	(4,259)	(36.2)	%	Net investment in used manufactured home rental units	$	9,288	$	10,430	$	(1,142)	(10.9)	%

Number of occupied rentals – new, end of period ⁽⁴⁾	Number of occupied rentals – new, end of period ⁽⁴⁾	3,291		3,011		280		9.3	%	Number of occupied rentals – new, end of period (4)	3,303		3,291		12		0.4	%
Number of occupied rentals – used, end of period	Number of occupied rentals – used, end of period	632		1,008		(376)		(37.3)	%	Number of occupied rentals – used, end of period	491		632		(141)		(22.3)	%

______________________

⁽¹⁾Consists of Site rental income and home rental income. Approximately $8.1 million and $7.8 million for ~~both~~ the quarters ended June 30, ~~2020~~2021 and June 30, ~~2019~~2020, respectively, 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~~Presented 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~~$17.7 million and ~~$16.5~~$17.1 million as of June 30, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively.

⁽⁴⁾Includes ~~283~~282 and ~~298~~283 homes rented through our ECHO JV as of June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Income from rental operations, net of depreciation, ~~increased~~was $0.4 million ~~in 2020~~higher during the second quarter of 2021, compared to ~~2019,~~the second quarter of 2020, primarily due to ~~higher rental operations revenue from~~ an increase in the number of occupied new rental homes which command a higher rental rate than occupied ~~rental units.~~used homes.

Other Income and Expenses

The following table summarizes other income and expenses, net:


		Quarters Ended June 30,															Quarters Ended June 30,
(amounts in thousands, expenses shown as negative)	(amounts in thousands, expenses shown as negative)	2020		2019		Variance		% Change		(amounts in thousands, expenses shown as negative)	2021		2020		Variance		% Change
Depreciation and amortization	Depreciation and amortization	$	(38,332)	$	(37,776)	$	(556)	(1.5)	%	Depreciation and amortization	$	(48,316)	$	(38,332)	$	(9,984)	(26.0)	%
Interest income	Interest income	1,791		1,803		(12)		(0.7)	%	Interest income	1,742		1,791		(49)		(2.7)	%
Income from other investments, net	Income from other investments, net	1,022		879		143		16.3	%	Income from other investments, net	1,222		1,022		200		19.6	%
General and administrative	General and administrative	(10,609)		(9,225)		(1,384)		(15.0)	%	General and administrative	(10,228)		(10,609)		381		3.6	%
Other expenses	Other expenses	(639)		(540)		(99)		(18.3)	%	Other expenses	(800)		(639)		(161)		(25.2)	%
Early debt retirement	Early debt retirement	—		(1,491)		1,491		100.0	%	Early debt retirement	(755)		—		(755)		—	%
Interest and related amortization	Interest and related amortization	(26,249)		(26,024)		(225)		(0.9)	%	Interest and related amortization	(27,131)		(26,249)		(882)		(3.4)	%
Total other income and expenses, net	Total other income and expenses, net	$	(73,016)	$	(72,374)	$	(642)	(0.9)	%	Total other income and expenses, net	$	(84,266)	$	(73,016)	$	(11,250)	(15.4)	%

Total other income and expenses, net increased ~~$0.6~~$11.3 million in ~~2020~~2021 compared to ~~2019,~~2020, primarily due to ~~increases in general and administrative expenses and~~higher depreciation and amortization, ~~partially offset by~~higher interest and related amortization, and 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~~incurred during the second quarter of ~~2019 that was~~2021. The increase in ~~excess~~depreciation and amortization is due to depreciation on Non-core properties acquired in the fourth quarter of ~~our investment basis.~~2020, and the first and second quarters of 2021. The increase in interest and related amortization is due to higher debt levels than the same period in 2021.

Management's Discussion and Analysis (continued)

Comparison of the Six Months Ended June 30, ~~2020~~2021 to the Six Months Ended June 30, ~~2019~~2020

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, ~~2020~~2021 and ~~2019.~~2020.


		Core Portfolio														Total Portfolio															Core Portfolio				Total Portfolio
		Six Months Ended June 30,														Six Months Ended June 30,															Six Months Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	(amounts in thousands)	2020		2019		Variance		% Change		2020		2019		Variance		% Change		(amounts in thousands)	2021		2020		Variance		% Change		2021		2020		Variance		% Change
MH base rental income(1)	MH base rental income(1)	$	283,938	$	271,057	$	12,881	4.8	%	$	283,978	$	271,495	$	12,483	4.6	%	MH base rental income(1)	$	297,278	$	283,938	$	13,340	4.7	%	$	299,119	$	283,978	$	15,141	5.3	%
Rental home income(1)	Rental home income(1)	8,060		7,122		938		13.2	%	8,060		7,216		844		11.7	%	Rental home income(1)	8,554		8,060		494		6.1	%	8,571		8,060		511		6.3	%
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	%	RV and marina base rental income (1)	156,318		141,167		15,151		10.7	%	172,596		141,167		31,429		22.3	%
Annual membership subscriptions	Annual membership subscriptions	26,033		24,902		1,131		4.5	%	26,034		24,902		1,132		4.5	%	Annual membership subscriptions	27,917		26,033		1,884		7.2	%	27,921		26,034		1,887		7.2	%
Membership upgrade sales current period, gross	Membership upgrade sales current period, gross	9,891		8,879		1,012		11.4	%	9,891		8,879		1,012		11.4	%	Membership upgrade sales current period, gross	19,221		9,891		9,330		94.3	%	19,221		9,891		9,330		94.3	%
Utility and other income(1)	Utility and other income(1)	46,629		45,847		782		1.7	%	47,562		46,001		1,561		3.4	%	Utility and other income(1)	51,488		47,564		3,924		8.2	%	52,923		47,562		5,361		11.3	%
Property operating revenues, excluding deferrals	Property operating revenues, excluding deferrals	504,506		489,556		14,950		3.1	%	516,692		491,658		25,034		5.1	%	Property operating revenues, excluding deferrals	560,776		516,653		44,123		8.5	%	580,351		516,692		63,659		12.3	%

Property operating and maintenance⁽³⁾⁽²⁾	Property operating and maintenance⁽³⁾⁽²⁾	164,384		160,971		3,413		2.1	%	169,030		161,989		7,041		4.3	%	Property operating and maintenance⁽³⁾⁽²⁾	183,477		168,832		14,645		8.7	%	192,764		169,030		23,734		14.0	%
Real estate taxes	Real estate taxes	31,831		30,320		1,511		5.0	%	33,509		30,430		3,079		10.1	%	Real estate taxes	34,028		33,450		578		1.7	%	35,746		33,509		2,237		6.7	%
Rental home operating and maintenance	Rental home operating and maintenance	2,583		2,474		109		4.4	%	2,588		2,496		92		3.7	%	Rental home operating and maintenance	2,509		2,582		(73)		(2.8)	%	2,555		2,588		(33)		(1.3)	%
Sales and marketing, gross	Sales and marketing, gross	8,254		7,623		631		8.3	%	8,254		7,623		631		8.3	%	Sales and marketing, gross	12,471		8,255		4,216		51.1	%	12,474		8,254		4,220		51.1	%
Property operating expenses, excluding deferrals and property management	Property operating expenses, excluding deferrals and property management	207,052		201,388		5,664		2.8	%	213,381		202,538		10,843		5.4	%	Property operating expenses, excluding deferrals and property management	232,485		213,119		19,366		9.1	%	243,539		213,381		30,158		14.1	%
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	%
Income from property operations, excluding deferrals and property management (3)																		Income from property operations, excluding deferrals and property management (3)	328,291		303,534		24,757		8.2	%	336,812		303,311		33,501		11.0	%
Property management	Property management	29,817		28,070		1,747		6.2	%	29,817		28,070		1,747		6.2	%	Property management	31,930		29,817		2,113		7.1	%	31,940		29,817		2,123		7.1	%
Income from property operations, excluding deferrals⁽³⁾	Income from property operations, excluding deferrals⁽³⁾	267,637		260,098		7,539		2.9	%	273,494		261,050		12,444		4.8	%	Income from property operations, excluding deferrals⁽³⁾	296,361		273,717		22,644		8.3	%	304,872		273,494		31,378		11.5	%
Membership upgrade sales upfront payments and membership sales commission, deferred, net	Membership upgrade sales upfront payments and membership sales commission, deferred, net	4,511		4,103		408		9.9	%	4,511		4,103		408		9.9	%	Membership upgrade sales upfront payments and membership sales commission, deferred, net	10,944		4,511		6,433		142.6	%	10,944		4,511		6,433		142.6	%
Income from property operations ⁽²⁾⁽³⁾	Income from property operations ⁽²⁾⁽³⁾	$	263,126	$	255,995	$	7,131	2.8	%	$	268,983	$	256,947	$	12,036	4.7	%	Income from property operations ⁽²⁾⁽³⁾	$	285,417	$	269,206	$	16,211	6.0	%	$	293,928	$	268,983	$	24,945	9.3	%

__________________________

⁽¹⁾~~Marina~~Rental income consists of the following total portfolio income items: 1) MH base rental income, ~~has been included~~2) Rental home income, 3) RV and marina base rental income and 4) Utility income, which is calculated by subtracting Other income on the Consolidated Statements of Income and Comprehensive Income from Utility and other income in ~~our Non-Core Portfolio since~~this table. The difference between the ~~acquisition~~sum of the ~~remaining interest~~total portfolio income items and Rental income on the Consolidated Statements of Income and Comprehensive Income is bad debt expense, which is presented in ~~a joint venture investment of 11 marinas~~Property operating maintenance expense in ~~Florida occurred on September 10, 2019.~~this table.

⁽²⁾Includes bad debt expense for all periods presented.

(3)See Non-GAAP Financial Measures section of the Management Discussion and Analysis for definitions and reconciliation 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 $208.1 million and $214.4 million, respectively, for the six months ended June 30, 2020.

Total Portfolio income from property operations for ~~2020~~2021 increased ~~$12.0~~$24.9 million, or ~~4.7%~~9.3%, from ~~2019,~~2020, driven by an increase of ~~$7.1~~$16.2 million, or ~~2.8%~~6.0%, from our Core Portfolio and by an increase of ~~$4.9~~$8.7 million from our Non-Core Portfolio. The increase in income from property operations from our Core Portfolio was primarily due to ~~an increase~~increases in RV and marina base rental income, MH base rental income ~~partially offset by a decrease in RV base rental income~~ and ~~an increase in property operating expenses.~~Membership upgrade sales, gross. The increase in income from property operations from our ~~None-Core~~Non-Core Portfolio was attributed to income from properties acquired ~~throughout 2019, most notably~~in the ~~marinas in Florida.~~fourth quarter of 2020 and during the six months ended June 30, 2021.

Property Operating Revenues

MH base rental income in our Core Portfolio for ~~2020~~2021 increased ~~$12.9~~$13.3 million, or ~~4.8%~~4.7%, from ~~2019,~~2020, which reflects ~~4.3%~~4.1% growth from rate increases and ~~0.5%~~0.6% growth from occupancy gains. The average monthly base rental income per Site increased to approximately $719 in 2021 from approximately $690 in ~~2020 from approximately $662 in 2019.~~2020. The average occupancy for the Core Portfolio ~~increased~~was 95.3% for the six months ended June 30, 2021 compared to 95.2% ~~in 2020 from 95.0% in 2019.~~for the six months ended June 30, 2020.

Management's Discussion and Analysis (continued)

RV base rental income in our Core Portfolio for 2020 decreased $1.8 million, or 1.4%, from 2019 due to lower transient rental income, primarily resulting from cancellations, declines in reservations and temporary site closures as a result of COVID-19. The decrease in transient rental income was partially offset by increases in annual and seasonal revenue, mainly driven by higher rental rates. RV and marina base rental income is comprised of the following:


		Core Portfolio														Total Portfolio															Core Portfolio				Total Portfolio
		Six Months Ended June 30,														Six Months Ended June 30,															Six Months Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	(amounts in thousands)	2020		2019		Variance		% Change		2020		2019		Variance		% Change		(amounts in thousands)	2021		2020		Variance		% Change		2021		2020		Variance		% Change
Annual	Annual	$	83,849	$	79,049	$	4,800	6.1	%	$	94,447	$	79,874	$	14,573	18.2	%	Annual	$	99,910	$	94,447	$	5,463	5.8	%	$	113,267	$	94,447	$	18,820	19.9	%
Seasonal	Seasonal	27,734		26,752		982		3.7	%	27,787		26,798		989		3.7	%	Seasonal	21,767		27,787		(6,020)		(21.7)	%	22,809		27,787		(4,978)		(17.9)	%
Transient	Transient	18,372		25,948		(7,576)		(29.2)	%	18,933		26,493		(7,560)		(28.5)	%	Transient	34,641		18,933		15,708		83.0	%	36,520		18,933		17,587		92.9	%
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	%	RV and marina base rental income⁽¹⁾	$	156,318	$	141,167	$	15,151	10.7	%	$	172,596	$	141,167	$	31,429	22.3	%

~~_____________________~~

⁽¹⁾~~Marina~~RV and marina base rental income ~~has been included~~ in our ~~Non-Core~~Core Portfolio ~~following~~for 2021 increased $15.2 million, or 10.7%, from 2020 primarily due to increases in Transient RV and marina base rental income of $15.7 million, or 83.0% and Annual RV and marina base rental income of $5.5 million, or 5.8%, partially offset by a decrease in Seasonal RV and marina base rental income of $6.0 million, or 21.7%. Transient RV and marina base rental income increased across all regions, primarily due to cancellations in RV reservations and site closures during the ~~acquisition~~six months ended June 30, 2020 as a result of COVID-19. In addition, we continue to see positive Transient demand as our customers seek safe vacation and leisure activities and value the ~~remaining interest~~opportunity to spend time outdoors. The increase in ~~our joint venture investment~~Annual RV and marina base rental income was primarily due to growth from rate increases. The decrease in Seasonal RV and marina base rental income was primarily due to a decrease in seasonal RV rental income in the South and West regions during the first quarter of ~~11 marinas~~2021, as seasonal customers, in ~~Florida on September 10, 2019.~~particular Canadian customers, were impacted by travel restrictions resulting from COVID-19.

Membership upgrade sales, gross for 2021 increased $9.3 million, or 94.3%, from 2020. The increase in membership upgrade sales was due to approximately 2,600 upgrade sales during the six months ended June 30, 2021, compared to 1,600 during the six months ended June 30, 2020, an increase of 67%. We also experienced a 16% increase in the average sales price per upgrade sold during the six months ended June 30, 2021, compared to the same period ended June 30, 2020. The increase in upgrade sales and average sales price was driven by an increase in customer demand, including a new upgrade product, Adventure, introduced during the first quarter of 2021.

Utility and other income in our Core Portfolio for ~~2020~~2021 increased ~~$0.8~~$3.9 million, or ~~1.7%~~8.2%, from ~~2019.~~2020. The increase was primarily due to ~~higher pass-through income of $1.8 million and higher utility income of $1.1 million, partially offset by a decrease~~an increase in other property income of ~~$2.2~~$2.8 million and an increase in utility income of $0.9 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~~driven by insurance recovery revenue of $2.4 million related to Hurricane Hanna recorded during the second quarter of 2021 and increased late fees due to the suspension of late fees ~~and RV cancellation fees during the second quarter of~~in 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.~~COVID-19.

Property Operating Expenses

Property operating expenses, excluding deferrals and property management, in our Core Portfolio for ~~2020~~2021 increased ~~$5.7~~$19.4 million, or ~~2.8%~~9.1%, from ~~2019, primarily due to an increase~~2020, driven by increases in property operating and maintenance expenses of ~~$3.4~~$14.6 million and ~~an increase in~~gross sales and marketing expenses of $4.2 million. Core property ~~taxes of $1.5 million. Property~~ operating and maintenance expenses were higher ~~mainly driven by~~during the six months ended June 30, 2021 compared to the six months ended June 30, 2020 primarily due to increases in ~~insurance expense~~utility expenses of ~~$1.6~~$5.1 million, repairs and maintenance expenses of ~~$1.5~~$3.3 million, ~~bad debt~~property payroll expenses of $2.6 million and insurance expense of ~~$1.1 million, partially offset by a decrease~~$2.0 million. The increase in ~~administrative~~gross sales and marketing 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 2020 were higher~~was primarily due to ~~real estate tax increases~~an increase in ~~Florida.~~

membership upgrade sales.

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 Home Sales and ~~Other.~~Other Operations:


		Six Months Ended June 30,															Six Months Ended June 30,
(amounts in thousands, except home sales volumes)	(amounts in thousands, except home sales volumes)	2020		2019		Variance		% Change		(amounts in thousands, except home sales volumes)	2021		2020		Variance		% Change
Gross revenues from new home sales ⁽¹⁾	Gross revenues from new home sales ⁽¹⁾	$	16,934	$	10,628	$	6,306	59.3	%	Gross revenues from new home sales (1)	$	37,658	$	16,934	$	20,724	122.4	%
Cost of new home sales ⁽¹⁾	Cost of new home sales ⁽¹⁾	16,669		10,378		6,291		60.6	%	Cost of new home sales (1)	35,958		16,669		19,289		115.7	%
Gross profit from new home sales	Gross profit from new home sales	265		250		15		6.0	%	Gross profit from new home sales	1,700		265		1,435		541.5	%

Gross revenues from used home sales	Gross revenues from used home sales	3,241		3,672		(431)		(11.7)	%	Gross revenues from used home sales	1,989		3,241		(1,252)		(38.6)	%
Cost of used home sales	Cost of used home sales	4,092		4,418		(326)		(7.4)	%	Cost of used home sales	2,766		4,092		(1,326)		(32.4)	%
Loss from used home sales	Loss from used home sales	(851)		(746)		(105)		(14.1)	%	Loss from used home sales	(777)		(851)		74		8.7	%

Brokered resale and ancillary services revenues, net	Brokered resale and ancillary services revenues, net	363		2,431		(2,068)		(85.1)	%	Brokered resale and ancillary services revenues, net	5,466		363		5,103		1,405.8	%
Home selling expenses	Home selling expenses	2,294		2,185		109		5.0	%	Home selling expenses	2,652		2,294		358		15.6	%

Income (loss) from home sales and other	Income (loss) from home sales and other	$	(2,517)	$	(250)	$	(2,267)	(906.8)	%	Income (loss) from home sales and other	$	3,737	$	(2,517)	$	6,254	248.5	%

Home sales volumes	Home sales volumes									Home sales volumes
Total new home sales ⁽²⁾	Total new home sales ⁽²⁾	288		208		80		38.5	%	Total new home sales (2)	487		288		199		69.1	%
New Home Sales Volume - ECHO JV	New Home Sales Volume - ECHO JV	23		31		(8)		(25.8)	%	New Home Sales Volume - ECHO JV	24		23		1		4.3	%
Used home sales	Used home sales	330		429		(99)		(23.1)	%	Used home sales	210		330		(120)		(36.4)	%
Brokered home resales	Brokered home resales	287		405		(118)		(29.1)	%	Brokered home resales	372		287		85		29.6	%

_________________________

⁽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~~income from home sales and other was $3.7 million for the six months ended June 30, 2021 compared to a loss of $2.5 million for ~~2020 compared to $0.3 million for 2019.~~the six months ended June 30, 2020. The increase in ~~the loss~~income from home sales and other was due to ~~a decrease~~an increase in ancillary services revenues, ~~primarily related to closed~~net, driven by increased revenue from restaurants, stores and ~~amenities~~activities across the portfolio primarily as a result of ~~COVID-19.~~closures in 2020 as a result of COVID-19, an increase in non-core marina ancillary revenues, net and an increase in gross profit from new home sales as a result of an increase in the number of new homes sold.

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,															Six Months Ended June 30,
(amounts in thousands, except rental unit volumes)	(amounts in thousands, except rental unit volumes)	2020		2019		Variance		% Change		(amounts in thousands, except rental unit volumes)	2021		2020		Variance		% Change
Manufactured homes:
Rental operations revenue ⁽¹⁾	Rental operations revenue ⁽¹⁾	$	23,647	$	22,641	$	1,006	4.4	%	Rental operations revenue (1)	$	24,733	$	23,647	$	1,086	4.6	%
Rental home operating and maintenance expense		2,583		2,474		109		4.4	%
Rental home operating and maintenance expenses										Rental home operating and maintenance expenses	2,509		2,582		(73)		(2.8)	%
Income from rental operations	Income from rental operations	21,064		20,167		897		4.4	%	Income from rental operations	22,224		21,065		1,159		5.5	%
Depreciation on rental homes ⁽²⁾	Depreciation on rental homes ⁽²⁾	5,525		5,012		513		10.2	%	Depreciation on rental homes (2)	5,305		5,525		(220)		(4.0)	%
Income from rental operations, net of depreciation	Income from rental operations, net of depreciation	$	15,539	$	15,155	$	384	2.5	%	Income from rental operations, net of depreciation	$	16,919	$	15,540	$	1,379	8.9	%

Gross investment in new manufactured home rental units ⁽³⁾	Gross investment in new manufactured home rental units ⁽³⁾	$	233,840	$	195,816	$	38,024	19.4	%	Gross investment in new manufactured home rental units (3)	$	230,394	$	235,516	$	(5,122)	(2.2)	%
Gross investment in used manufactured home rental units	Gross investment in used manufactured home rental units	$	17,454	$	25,113	$	(7,659)	(30.5)	%	Gross investment in used manufactured home rental units	$	17,732	$	17,722	$	10	0.1	%

Net investment in new manufactured home rental units	Net investment in new manufactured home rental units	$	196,200	$	171,936	$	24,264	14.1	%	Net investment in new manufactured home rental units	$	188,343	$	202,115	$	(13,772)	(6.8)	%
Net investment in used manufactured home rental units	Net investment in used manufactured home rental units	$	7,492	$	11,751	$	(4,259)	(36.2)	%	Net investment in used manufactured home rental units	$	9,288	$	10,430	$	(1,142)	(10.9)	%

Number of occupied rentals – new, end of period ⁽⁴⁾	Number of occupied rentals – new, end of period ⁽⁴⁾	3,291		3,011		280		9.3	%	Number of occupied rentals – new, end of period (4)	3,303		3,291		12		0.4	%
Number of occupied rentals – used, end of period	Number of occupied rentals – used, end of period	632		1,008		(376)		(37.3)	%	Number of occupied rentals – used, end of period	491		632		(141)		(22.3)	%

______________________

⁽¹⁾Rental operations revenue consists of Site rental income and home rental income in our Core Portfolio. Approximately ~~$15.6~~$16.2 million and ~~$15.5~~$15.6 million of Site rental income for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, 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~~Presented 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~~$17.7 million and ~~$16.5~~$17.1 million as of June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

⁽⁴⁾Occupied rentals as of the end of the period in our Core Portfolio and includes ~~283~~282 and ~~298~~283 homes rented through our ECHO JV as of June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

~~The increase in income~~

Income from rental operations, net of depreciation, ~~in our Core Portfolio~~ was $1.4 million higher during the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to ~~higher rental operations revenue from~~ an increase in the number of occupied new rental homes which command a higher rental rate than occupied ~~rental units, partially offset by an increase in depreciation on rental~~used homes.

Other Income and Expenses

The following table summarizes other income and expenses, net:


		Six Months Ended June 30,															Six Months Ended June 30,
(amounts in thousands, expenses shown as negative)	(amounts in thousands, expenses shown as negative)	2020		2019		Variance		% Change		(amounts in thousands, expenses shown as negative)	2021		2020		Variance		% Change
Depreciation and amortization	Depreciation and amortization	$	(77,356)	$	(75,753)	$	(1,603)	(2.1)	%	Depreciation and amortization	$	(93,714)	$	(77,356)	$	(16,358)	(21.1)	%
Interest income	Interest income	3,598		3,554		44		1.2	%	Interest income	3,509		3,598		(89)		(2.5)	%
Income from other investments, net	Income from other investments, net	1,665		1,865		(200)		(10.7)	%	Income from other investments, net	2,158		1,665		493		29.6	%
General and administrative	General and administrative	(21,464)		(19,134)		(2,330)		(12.2)	%	General and administrative	(20,740)		(21,464)		724		3.4	%
Other expenses	Other expenses	(1,227)		(967)		(260)		(26.9)	%	Other expenses	(1,498)		(1,227)		(271)		(22.1)	%
Early debt retirement	Early debt retirement	(1,054)		(1,491)		437		29.3	%	Early debt retirement	(2,784)		(1,054)		(1,730)		(164.1)	%
Interest and related amortization	Interest and related amortization	(52,322)		(52,417)		95		0.2	%	Interest and related amortization	(53,406)		(52,322)		(1,084)		(2.1)	%
Total other income and expenses, net	Total other income and expenses, net	$	(148,160)	$	(144,343)	$	(3,817)	(2.6)	%	Total other income and expenses, net	$	(166,475)	$	(148,160)	$	(18,315)	(12.4)	%

Total other income and expenses, net increased ~~$3.8~~$18.3 million ~~in 2020~~during the six months ended June 30, 2021 compared to ~~2019,~~the six months ended June 30, 2020, primarily due to higher depreciation and amortization and higher early debt retirement costs. The increase in depreciation and amortization was due to depreciation on Non-Core properties acquired in the fourth quarter of 2020 and the six months ended June 30, 2021. The increase in early debt retirement costs was due to higher debt repayment costs in 2021 compared to 2020.

Equity in income of unconsolidated joint ventures

Equity in income of unconsolidated joint ventures increased $0.7 million during the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to an increase in ~~general and administrative expenses and depreciation and amortization.~~

~~Gain on Sale of Real Estate, Net~~

~~On January 23, 2019, we closed on the sale of five all-age MH communities located~~distributions received 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.~~

2021 compared to 2020.

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"~~(“LOC”) and proceeds from issuance of equity and debt securities.

The impact the COVID-19 pandemic will continue to 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 public authorities and/or for the health and safety of our employees, 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 Directors considers several factors as it deliberates and decides whether to declare a quarterly dividend. The process includes revisiting our annual budget and considering factors including our planned operating performance and related cash flow, our debt service obligations, capital investments to maintain and expand the business, working capital requirements including home purchases and potential investments to 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. Accessing long-term low-cost secured 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 ATMOur at-the-market (“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 116program allows us, from time-to-time, to sell shares 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~~par value $0.01 per share, having an aggregate offering price up to ~~issue from 400,000,000 to 600,000,000 shares.~~$200.0 million. As of June 30, ~~2020,~~2021, the full capacity remained available for issuance.

As of June 30, 2021, we ~~have~~had available liquidity in the form of approximately ~~417.8~~416.2 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~~During the six months ended June 30, ~~2020,~~2021, we ~~have $140.7 million~~closed on an amended revolving line 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 acredit with borrowing capacity of ~~$350.0~~$500.0 million ~~with~~and a $300.0 million term loan (“Term Loan”). The variable interest rate on the ~~option to increase the borrowing capacity by $200.0 million, subject to certain conditions. The LOC bears interest at a rate of~~Term Loan is LIBOR plus ~~1.10%~~1.40%. Pursuant to ~~1.55%~~the Swap (as defined below), ~~requires an annual facility fee of 0.15% to 0.35% and matures on October 27, 2021.~~

~~Management's Discussion and Analysis (continued)~~

we have fixed the interest rate at 1.8% per annum. See
Item 1. Financial Statements—Note 8. Borrowing Arrangements

for further details.

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 accumulated 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.

During the six months ended June 30, 2021, we entered into a three-year LIBOR Swap Agreement (the ”Swap”) allowing us to trade the variable interest rate associated with our variable rate debt for a fixed interest rate. The Swap has a notional amount of $300.0 million of outstanding principal and fixes the underlying LIBOR rate at 0.39% per annum and matures on March 25, 2024. 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, generally through available cash, net cash provided by operating activities and our LOC. As ~~part~~ of ~~our unsecured credit facility,~~June 30, 2021, our LOC ~~arrangement will mature prior to~~had a borrowing capacity of $438.0 million. As of June 30, 2021, the ~~expected discontinuation~~LOC bears interest at a rate of LIBOR ~~subsequent~~plus 1.25% to ~~2021~~1.65%, carries an annual facility fee of 0.20% to 0.35% and matures on April 18, 2025.

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 ~~$200.0 million term loan is scheduled to mature in April 2023.~~ ATM equity offering program.

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~~transition. Given the ~~future. Given approximately 90%~~majority 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.

The impact the COVID-19 pandemic will continue to have on our financial condition and cashflows is uncertain and is dependent upon various factors including the manner in which operations will continue at our Properties, customer payment

Management's Discussion and Analysis (continued)

patterns and operational decisions we have made and may make in the future in response to guidance from public authorities and/or for the health and safety of our employees, residents and guests.

The following table summarizes our cash flows activity:

Six Months Ended June 30,
(amounts in thousands) 2020 2019
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


	For the six months ended June 30,
(amounts in thousands)	2021		2020
Net cash provided by operating activities	$	328,926	$	238,745
Net cash used in investing activities	(475,211)		(105,804)
Net cash provided by (used in) financing activities	166,978		(41,808)
Net increase in cash and restricted cash	$	20,693	$	91,133

Operating Activities

Net cash provided by operating activities ~~decreased $6.0~~increased $90.2 million to $328.9 million for the quarter ended June 30, 2021 from $238.7 million for the ~~six months~~quarter ended June 30, ~~2020 from $244.7 million for the six months ended June 30, 2019.~~2020. The ~~decrease~~increase in net cash provided by operating activities was primarily due to ~~decreases~~an increase in other assets, net and accounts payable and other liabilities of ~~$10.0~~$38.0 million, higher income from property operations of $24.9 million, an increase in rents and other customer payments received in advance and security deposits of ~~$9.9~~$16.3 million and ~~proceeds from insurance claims~~higher deferred membership revenue of ~~$3.1 million, partially offset by higher income from property operations of $12.0~~$10.3 million. ~~In addition, long-term incentive plan compensation payments of $4.4 million were made during the first quarter of 2019.~~

Investing Activities

Net cash used in investing activities increased ~~$29.9~~$369.4 million to $475.2 million for the quarter ended June 30, 2021 from $105.8 million for the ~~six months~~quarter ended June 30, ~~2020 from $75.9 million for the six months ended June 30, 2019.~~2020. The increase ~~in cash used~~ was ~~primarily~~ due to proceeds of $77.7 million received in 2019 from the sale of real estate and a decrease in distributions of capital from unconsolidated joint ventures of $3.8 million in 2020 compared to 2019, partially offset by reducedincreased spending on acquisitions of ~~$34.4~~$352.5 million ~~and reduced~~along with an increase in capital improvement spending of ~~$18.3~~$16.6 million.

Capital Improvements

The following table summarizes capital improvements:


		Six Months Ended June 30,							For the six months ended June 30,
(amounts in thousands)	(amounts in thousands)	2020		2019		(amounts in thousands)	2021		2020
Recurring capital expenditures ⁽¹⁾	Recurring capital expenditures ⁽¹⁾	$	26,796	$	22,913	Recurring capital expenditures (1)	$	30,892	$	26,796
Property upgrades and development ⁽²⁾	Property upgrades and development ⁽²⁾	41,374		28,915		Property upgrades and development ⁽²⁾	45,008		41,374
New home investments^{(3) (4)}		32,505		67,086
Used home investments ⁽⁴⁾		485		1,452
New and used home investments (2) (3)						New and used home investments (2) (3)	41,949		32,990

Total property improvements	Total property improvements	101,160		120,366		Total property improvements	117,849		101,160
Corporate	Corporate	1,987		1,078		Corporate	1,874		1,987
Total capital improvements	Total capital improvements	$	103,147	$	121,444	Total capital improvements	$	119,723	$	103,147

______________________

⁽¹⁾Primarily comprised of common area, utility infrastructure and mechanical improvements.

⁽²⁾~~Includes $2.5 million of restoration and improvement capital expenditures related to Hurricane Irma for the six months ended June 30, 2019.~~

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

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

~~Management's Discussion and Analysis (continued)~~

Financing Activities

Net cash provided by financing activities was $167.0 million for the quarter ended June 30, 2021. Net cash used in financing activities ~~decreased $105.5 million to~~was $41.8 million for the ~~six months~~quarter ended June 30, ~~2020 from $147.3 million for the six months ended June 30, 2019.~~2020. The ~~decrease~~increase in net cash ~~used in~~provided by financing activities was primarily due to ~~financing~~an increase net term loan proceeds of ~~$275.4~~$300.0 million, partially offset by an increase in net ~~repayment~~repayments on the LOC of ~~$110.0~~$50.0 million and ~~proceeds received~~an increase in ~~2019 from the sale~~mortgage debt repayments of ~~common stock under our ATM equity program of $59.3~~$19.0 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~~“Management's Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations” in our ~~2019~~2020 Form 10-K.

Westwinds

Management's Discussion and Analysis (continued)

families with children and residents over 65 years of age. For the year ended December 31, ~~2019,~~2020, 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’~~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.

~~Management's Discussion and Analysis (continued)~~

Nicholsons.

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, ~~2020,~~2021, we have no off-balance sheet arrangements.

Management's Discussion and Analysis (continued)

Critical Accounting Policies and Estimates

Refer to the ~~"Management’s~~“Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations” in our ~~2019~~2020 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~~quarter ended June 30, ~~2020.~~2021.

Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 upgrading membership subscriptions;

•our assumptions about rental and home sales markets;

•our ability to manage ~~counter-party~~counterparty 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 homebuyers to sell their existing residences as well as by financial, credit and capital markets volatility;

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

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

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

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

•unanticipated costs or unforeseen liabilities associated with recent acquisitions;

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

•the effect of interest rates;

•the effect from any breach of our, or any of our ~~vendor's,~~vendors', 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.

~~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.

4039

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 ~~2019~~2020 Form 10-K. There have been no material changes in the assumptions used or results obtained regarding market risk since December 31, ~~2019.~~2020.

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, ~~2020.~~2021. 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, ~~2020.~~2021. 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, ~~2020,~~2021, 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.

4140

Part II – Other Information

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

A description of the risk factors associated with our business are discussed in “Item 1A. Risk Factors” in our ~~2019~~2020 Form ~~10-K. In light of the COVID-19 pandemic, the Company has supplemented the risk factors disclosed in "Item 1A. Risk Factors"~~10-K and updated in our ~~2019~~2021 First Quarter 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

~~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.

10-Q.

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

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

None.

Item 5.Other Information

None.

Item 6.Exhibits


10.1.1			Form of Amendment no. 1 to each of the Equity Distribution Agreements, dated July 30, 2020, by and among the Company, the Operating Partnership and each of the Sales Agents
31.1			Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1			Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
32.2			Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
101.INS			XBRL 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.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
104			Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document)

4441

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


	EQUITY LIFESTYLE PROPERTIES, INC.

Date: July ~~28, 2020~~27, 2021	By:	/s/ Marguerite Nader
		Marguerite Nader
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: July ~~28, 2020~~27, 2021	By:	/s/ Paul Seavey
		Paul Seavey
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Date: July ~~28, 2020~~27, 2021	By:	/s/ Valerie Henry
		Valerie Henry
		Vice President and Chief Accounting Officer
		(Principal Accounting Officer)

4542


Balance net of allowance	Balance Sheet Location	Balance at December 31, 2019		Adjustment due to ASU 2016-13 Adoption		Balance at January 1, 2020		Balance at June 30, 2020
(amounts in thousands)
Annual membership subscriptions	Other assets, net	$	2,394	$	(1,361)	$	1,033	$	1,412
Membership upgrades	Notes receivable, net	$	25,236	$	(2,514)	$	22,722	$	23,728