Equity Lifestyle Earnings: Results Are in Line but 2nd Quarter May See Decline in Seasonal RV Biz

Equity Lifestyle reported first-quarter results that were in line with our expectations, leading us to reaffirm our $77 fair value estimate for the no-moat company. Occupancy for the same-store manufactured homes portfolio held steady at 94.9% in the first quarter and monthly rental rates increased 6.3% year over year. After reporting declines for much of 2023, the seasonal and transient portions of the recreational vehicle and marina segment saw 2.2% and 1.4% respective growth. This, combined with the 8.1% growth from the annual membership business, led to revenue growth of 5.8% for the RV and marina segment. Equity Lifestyle reported same-store revenue growth for the total company of 5.8%, which matched our estimate for the first quarter. Same-store operating expenses only grew 4.0% in the quarter, leading to same-store net operating income growth of 7.1% that was slightly ahead of our 6.4% estimate. The company reported normalized funds from operations year-over-year growth of 8.6% to $0.78 per share in the first quarter, which matched our estimate.