ELS Reports Fourth Quarter Results

Equity LifeStyle Properties, Inc. (NYSE: ELS) (referred to herein as “we,” “us,” and “our”) today announced results for the quarter and year ended December 31, 2013. All per share results are reported on a fully diluted basis unless otherwise noted.

Financial Results for the Quarter Ended December 31, 2013

Normalized Funds from Operations (“Normalized FFO”) increased $6.1 million, or $0.06 per common share, to $56.6 million, or $0.62 per common share, compared to $50.5 million, or $0.56 per common share, for the same period in 2012. Funds from Operations (“FFO”) increased $4.6 million, or $0.05 per common share, to $54.9 million, or $0.60 per common share, compared to $50.3 million, or $0.55 per common share, for the same period in 2012. Net income available for common stockholders decreased $0.1 million to $24.2 million, or $0.29 per common share, compared to $24.3 million, or $0.29 per common share, for the same period in 2012. During the fourth quarter we expensed $1.6 million of the contingent asset related to our Colony Cove property. Consistent with our Normalized FFO definition, this amount is added back when calculating Normalized FFO.

Portfolio Performance

For the quarter ended December 31, 2013, property operating revenues, excluding deferrals, increased $10.2 million to $171.9 million compared to $161.7 million for the same period in 2012. For the year ended December 31, 2013, property operating revenues, excluding deferrals, increased $32.1 million to $696.2 million compared to $664.1 million for the same period in 2012. For the quarter ended December 31, 2013, income from property operations, excluding deferrals, increased $5.4 million to $99.3 million compared to $93.9 million for the same period in 2012. For the year ended December 31, 2013, income from property operations, excluding deferrals, increased $16.8 million to $397.7 million compared to $380.9 million for the same period in 2012.

For the quarter ended December 31, 2013, Core property operating revenues increased approximately 4.0 percent and income from Core property operations increased approximately 3.7 percent compared to the same period in 2012. For the year ended December 31, 2013, Core property operating revenues increased approximately 3.3 percent and income from Core property operations increased approximately 3.1 percent compared to the same period in 2012.

Balance Sheet

We closed on $28.4 million of financing proceeds during the quarter as part of our $430 million long-term refinancing plan. These loans bear a stated interest rate of 4.35 percent per annum and mature in 2038. We also paid off $26.1 million in mortgages with a weighted average interest rate of 5.81 percent per annum which were set to mature on March 1, 2014.

Interest coverage was approximately 3.1 times in the quarter. Our cash balance as of December 31, 2013 was approximately $58.4 million. Expanded disclosure on our balance sheet and debt statistics are included in the tables below.

Acquisitions

During the fourth quarter we closed on the acquisition of one RV resort and, in January 2014, we closed on the acquisition of two additional RV resorts for a total purchase price of approximately $31.5 million. These properties, located in Wisconsin, collectively contain 1,456 sites.

Executive Officer Promotions

Effective immediately, Mr. Paul Seavey has been promoted to Executive Vice President, Chief Financial Officer and Treasurer and will continue to have oversight of our financial, tax and information technology departments. Mr. Patrick Waite has been promoted to Executive Vice President – Property Operations and will continue to have oversight of our property operations.

General Information

As of January 27, 2014, we own or have an interest in 379 quality properties in 32 states and British Columbia consisting of 140,298 sites. We are a self-administered, self-managed real estate investment trust (“REIT”) with headquarters in Chicago.

A live webcast of our conference call discussing these results will be available via our website in the Investor Information section at www.equitylifestyle.com at 10:00 a.m. Central Time on January 28, 2014.

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and “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 recent acquisitions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to:

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

• our ability to maintain historical or increase future rental rates and occupancy with respect to properties currently owned or that we may acquire;
• our ability to retain and attract customers renewing, upgrading and entering right-to-use contracts;
• our assumptions about rental and home sales markets;
• our assumptions and guidance concerning 2014 estimated net income, FFO and Normalized FFO;
• our ability to manage counterparty risk;
• 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 transactions in their entirety and future transactions, if any, and timing and effective integration with respect thereto;
• unanticipated costs or unforeseen liabilities associated with recent acquisitions;
• ability to obtain financing or refinance existing debt on favorable terms or at all;
• the effect of interest rates;
• the dilutive effects of issuing additional securities;
• the effect of accounting for the entry of contracts with customers representing a right-to-use the Properties under the Codification Topic “Revenue Recognition;” and
• other risks indicated from time to time in our filings with the Securities and Exchange Commission.

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

Tables follow:

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1. See page 8 for details of the 2013 Core Income from Property Operations.

2. See page 9 for details of the Income from Property Operations for the properties acquired during 2012 and 2013 (the “Acquisitions”).

3. See page 6 for a detailed reconciliation of Net income available for Common Shares to FFO, Normalized FFO and FAD. See definitions of FFO, Normalized FFO and FAD on page 21.

4. We acquired Colony Cove as part of the Hometown acquisition. Our ownership of this 2,200 site community consists of a fee interest as well as a leasehold interest. The lease terms include an option to purchase the underlying fee interest upon the death of the lessor as well as scheduled increases of the monthly payments and the option purchase price. We negotiated with Hometown to cap our exposure to increases in both the ground lease payments and the option purchase price. At closing, Hometown deposited shares of ELS stock into escrow and agreed to release shares to us each quarter until the option could be exercised at which time any remaining shares would be released to Hometown. We recorded this escrow as a contingent asset on our balance sheet. We have received quarterly distributions from the escrow to offset the lease and option price increases. During the fourth quarter, we learned of the death of the lessor and we intend to exercise the purchase option. The December 31, 2013 contingent asset balance of $1.9 million represents the $1.1 million fair value estimate of shares distributed to us on January 1, 2014 and the $0.8 million fair value estimate of shares we anticipate receiving before closing on the purchase option. The $1.6 million change in fair value of contingent consideration asset is net of the fourth quarter $0.3 million fair value increase.

5. Fourth quarter 2013 FFO, adjusted to include a deduction for depreciation expense on rental homes, would have been $53.2 million, or $0.58 per fully diluted share.

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1. For the quarter and year ended December 31, 2013, includes a $1.6 million and a $1.4 million decrease, respectively, and for the quarter and year ended December 31, 2012, includes a $0.1 million decrease and a $0.5 million increase, respectively, resulting from the change in the fair value of a contingent asset. See footnote 4 on page 4 for a detailed explanation.

2. Includes transaction costs, see Reconciliation of Net Income to FFO, Normalized FFO and FAD on page 6.

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1. We are required by GAAP to defer, over the estimated customer life, recognition of non-refundable upfront payments from the entry of right-to-use contracts and upgrade sales. The customer life is currently estimated to range from one to 31 years and is based upon our experience operating the membership platform since 2008. The amount shown represents the deferral of a substantial portion of current period upgrade sales, offset by amortization of prior period sales.

2. We are required by GAAP to defer recognition of commissions paid related to the entry of right-to-use contracts. The deferred commissions will be amortized using the same method as used for the related non-refundable upfront payments from the entry of right-to-use contracts and upgrade sales. The amount shown represents the deferral of a substantial portion of current period commissions on those contracts, offset by the amortization of prior period commissions.

3. See definitions of FFO, Normalized FFO and FAD on page 21.

4. FFO, adjusted to include a deduction for depreciation expense on rental homes for the quarter ended December 31, 2013 and 2012, would have been $53.2 million, or $0.58 per fully diluted share, and $48.8 million, or $0.54 per fully diluted share, respectively, and for the year ended December 31, 2013 and 2012, would have been $184.5 million, or $2.02 per fully diluted share, and $204.4 million, or $2.25 per fully diluted share, respectively.

5. Included in the line item Income from other investments, net on the Consolidated Income Statement on page 5. See footnote 4 on page 4 for a detailed explanation.

6. Included in the line item general and administrative on the Consolidated Income Statement on page 5.

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1. See page 5 for a complete Income Statement. The line items that we include in property operating revenues and property operating expenses are also individually included in our Consolidated Income Statement. Income from property operations excludes property management expenses and the GAAP deferral of right-to-use contract upfront payments and related commissions, net.

2. See the manufactured home site figures and occupancy averages below within this table.

3. See resort base rental income detail included below within this table.

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1. 2013 Core properties include properties we owned and operated during all of 2012 and 2013. Income from property operations excludes property management expenses and the GAAP deferral of right-to-use contract upfront payments and related commissions, net.

2. Calculations prepared using actual results without rounding.

3. See the Core manufactured home site figures and occupancy averages included below within this table.

4. See resort base rental income detail included below within this table.

5. During the year ended December 31, 2012, we recognized approximately $2.1 million of cable service prepayments due to the bankruptcy of a third-party cable service provider at certain properties.

6. Occupied sites as of the end of the period shown. Occupied sites have increased by 312 from 62,876 at December 31, 2012.

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1. Represents actual performance of two properties we acquired during 2012 and five properties we acquired during 2013. Excludes property management expenses.

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1. For the quarter ended December 31, 2013 and 2012, approximately $9.8 million and $9.0 million, respectively, are included in the Community base rental income line in the Consolidated Income from Property Operations table on page 7. For the year ended December 31, 2013 and 2012, approximately $38.7 million and $32.7 million, respectively, are included in the Community base rental income line in the Consolidated Income from Property Operations table on page 7. The remainder of the rental operations revenue is included in the Rental home income line in the Consolidated Income from Property Operations table on page 7.

2. Occupied rentals as of the end of the period shown.

3. Includes both occupied and unoccupied rental homes.

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1. Sites primarily utilized by approximately 98,300 members. Includes approximately 4,800 sites rented on an annual basis.

2. Joint venture income is included in the Equity in income from unconsolidated joint ventures line in the Consolidated Income Statement on page 5.

3. Includes 12 related party home sales for the quarter ended December 31, 2013 and 26 related party home sales and one third-party dealer sale for the year ended December 31, 2013. Includes one third-party home sale for the year ended December 31, 2012.

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1. Each line item represents the mid-point of a range of possible outcomes and reflects management’s estimate of the most likely outcome. Actual Normalized FFO, Normalized FFO per share, FFO, FFO per share, Net Income and Net Income per share could vary materially from amounts presented above if any of our assumptions is incorrect.

2. See page 14 for 2014 Core Guidance Assumptions. Amount represents 2013 income from property operations from the 2014 Core Properties of $395.4 million multiplied by an estimated growth rate of 3.4%.

3. See page 15 for the 2014 Assumptions regarding the Acquisition Properties.

4. See page 16 for 2011 Acquired Chattel Loan Assumptions.

5. See page 21 for definitions of Normalized FFO and FFO.

6. Net income per fully diluted common share is calculated before Income allocated to OP Units.

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1. Each line item represents the mid-point of a range of possible outcomes and reflects management’s best estimate of the most likely outcome. Actual Normalized FFO, Normalized FFO per share, FFO, FFO per share, Net Income and Net Income per share could vary materially from amounts presented above if any of our assumptions is incorrect.

2. See page 14 for Core Guidance Assumptions. Amount represents Core Income from property operations from the 2014 Core Properties of $104.3 million multiplied by an estimated growth rate of 3.6%.

3. See page 15 for the 2014 Assumptions regarding the Acquisition Properties.

4. See page 18 for 2011 Acquired Chattel Loan Assumptions.

5. See page 21 for definitions of Normalized FFO and FFO.

6. Net income per fully diluted common share is calculated before Income allocated to OP Units.

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1. 2014 Core properties include properties we expect to own and operate during all of 2013 and 2014. Excludes property management expenses and the GAAP deferral of right-to-use contract upfront payments and related commissions, net.

2. Management’s estimate of the growth of property operations in the 2014 Core Properties compared to actual 2013 performance. Represents our estimate of the mid-point of a range of possible outcomes. Calculations prepared using actual results without rounding. Actual growth could vary materially from amounts presented above if any of our assumptions is incorrect.

3. See Resort base rental income detail included below within this table.

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1. The acquisition properties include five properties acquired during 2013.

2. Each line item represents our estimate of the mid-point of a possible range of outcomes and reflects management’s best estimate of the most likely outcome for the Acquisition Properties. Actual income from property operations for the Acquisition Properties could vary materially from amounts presented above if any of our assumptions is incorrect.

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1. Guidance estimate. Each line item represents our estimate of the mid-point of a possible range of outcomes and reflects management’s best estimate of the most likely outcome. Actual figures could vary materially from amounts presented above if any of our assumptions is incorrect.

2. Members have entered into right-to-use contracts with us that entitle them to use certain properties on a continuous basis for up to 21 days. For the year ended December 31, 2012 and years ending December 31, 2013 and 2014, includes 1,300, 7,000 and 9,550 RV dealer ZPPs, respectively.

3. The year ended December 31, 2012 and the year ending December 31, 2013, includes $0.1 million and $2.1 million, respectively, of revenue recognized related to our right-to-use annual memberships activated through our dealer program. During the third quarter of 2013 we changed the accounting treatment of revenues and expenses associated with the RV dealer program to recognize as revenue only the cash received from members generated by the program.

4. ZPPs allow access to up to five zones of the United States.

5. Members who rent a specific site for an entire year in connection with their right-to-use contract.

6. Existing customers have upgraded agreements are eligible for longer stays, can make earlier reservations, may receive discounts on rental units, and may have access to additional Properties. Upgrades require a non-refundable upfront payment.

7. Revenues associated with contract upgrades, included in the line item Right-to-use contracts current period, gross, on our Consolidated Income Statement on page 5.

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1. Represents our mortgage notes payable excluding $17.8 million net note premiums and our $200 million term loan as of December 31, 2013. As of December 31, 2013, we had an unsecured line of credit with a borrowing capacity of $380.0 million, $0 outstanding, an interest rate of LIBOR plus 1.40% to 2.00% per annum and a 0.25% to 0.40% facility fee depending on leverage as defined in the loan agreement. The unsecured line of credit matures on September 15, 2016 and has a one-year extension option.

2. Includes loan costs amortization.