Good day, everyone and thank you all for joining us to discuss Equity LifeStyle Properties' Fourth Quarter and Year End 2018 Results. Our featured speakers today are Marguerite Nader, our President and CEO; Paul Seavey, our Executive Vice President and CFO; and Patrick Waite, our Executive Vice President and COO. In advance of today's call, management released earnings. Today's call will consist of opening remarks and a question-and-answer session with management, relating to the company's earnings release. As a reminder, this call is being recorded. Certain matters discussed during this conference call may contain forward-looking statements in the meanings of the Federal Securities Laws. Our forward-looking statements are subject to certain economic risk and uncertainty. The company assumes no obligation to update or supplement any statements that become untrue because of subsequent events. In addition, during today's call, we will discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release, our supplemental information and our historical SEC filings. At this time, I would like to turn the call over to Marguerite Nader, our President and CEO.

Good morning and thank you for joining us today. I am pleased to report the final results for 2018. We continued our record of strong core operations and FFO growth with 7.5% growth in normalized FFO. 2018 was a year marked by solid demand. Quarter-over-quarter occupancy has now increased for nine consecutive years. Our MH portfolio increased occupancy by 379 sites, while increasing homeowners by 555. We saw continued strikes at our MH properties with a full-year rate growth of 4%. Our customers are increasingly using the rental program as a trial prior to home-ownership and renter conversion trends are positive. We finished the quarter with our strongest conversion rate for new and used home sales at 32% with an average of 28% for the full year. Our RV resorts performed well this year with a 6.8% overall growth in income. The demand is strong for RV sites across the country. Our RV resorts are primarily dedicated to accommodating long-term customers with 80% of our revenue coming from annual and seasonal customers. Our guidance for 2019 reflects the strength in our business. Revenue growth is fueled by strong rate increases for in-place residents and customers. The individual market surveys provide support for our views and incorporate all housing indication options in the local area. Our online reservation and sales activity continues to escalate. In the quarter, our RV revenue through digital channels increased 41% and our online sales of camping passes increased by 56%. Our marketing team is focused on eliminating points of sale barriers for our customers. Processes have been streamlined with a focus on conversion through self-service. In 2018, we increased our social media fan base to 550,000. Turning to transactions; in the quarter, we purchased one manufactured home community for approximately $70 million and two RV parks for a total of $28 million. The properties contain 1,600 sites. Additionally, in January, we sold five Midwest all-age properties for approximately $90 million. We are pleased with the execution on these transactions. Finally, I would like to thank our employees for delivering another great year in 2018. I will now turn it over to Paul to walk through the numbers in detail.

Thanks, Marguerite and good morning, everyone. I will review our fourth quarter and full year 2018 results, update our full year 2019 guidance and discuss our detailed first quarter guidance. Before I begin, I'll mention that our core results for 2018 include the contribution from the five properties we sold last week. We have revised our core 2019 guidance to exclude the contribution from these properties. Our fourth quarter and full year core portfolio results were impacted by certain storm events that resulted in higher than expected repairs and maintenance expenses. These expenses were offset by insurance recovery from prior storm events. Our core portfolio generated 5.2% growth in NOI for the full year. Full year normalized FFO per share was $3.87, 7.6% higher than 2017. Full year core base rental income growth was 4.6%, with 4% coming from rate and 60 basis points coming from occupancy. We increased core occupancy 170 sites in the quarter. At the end of the year, rental homes represented 6.3% of our core occupancy. Fourth quarter core resort base rental income growth was 6.2% compared to prior year. The outperformance to our expectations was driven by higher seasonal and annual revenues. Our annual revenues reflect the benefit of additional site sold during the quarter, including site sold at properties with expansion sites. For the full year, net contribution from our membership business was almost $2 million higher than 2017, an increase of 4%. Dues revenues increased 4.3% due to rate increases and an increase in our paid member count of almost 2%. We continue to see strong demand for our upgrade products. During the fourth quarter, we sold 4.5% more upgrades than in the prior year and the average sales price of our upgrades was approximately 5.6% higher than the fourth quarter of 2017.…

[Operator Instructions] Thank you. And our first question will come from the line of Nick Joseph with Citi. Your line is open.

Thank you. What was the cap rate on the acquisitions in the fourth quarter both on the MH as well as the RV?

So, the acquisitions were on a 5% cap with really some upside in the form of occupancy increases. The MH community that we bought, which is located in Riviera Beach, Florida, it's really a large active adult community, I mean it's 915 sites and there is a significant amount of vacancy. This is an asset that we've been looking at for the past nine months and, we're looking forward to taking over operations and beginning to see some of that upside potential.

And was there much of a difference for that, the 5% is the blend between MH and RV, was there a difference between the MH and the two RVs?

No, it was about the same.

Okay, and then same question on the disposition of the Midwest assets in January.

Sure, the cap rate on that was about a 5.5% to 6% cap.

Great. And then just in terms of occupancy, you're up to 95%, which I think was your previous high water mark. So what's the opportunity from here to push occupancy? Would you expect MH revenue growth to be more rate driven or could occupancy still play a factor?

Hey Nick, It's Patrick. I think we're going to continue to see both rate and occupancy play a factor in our MH occupancy growth go forward. As you pointed out, we're at 95.1%. So we eclipsed the 95% that we've been talking about since the great recession and the economy stabilized, single-family market stabilized and the fundamentals of our business strengthened. And it's important to note that across the portfolio, 41% of our properties are currently 99% to 100% occupancy. You look overall the portfolio, that leaves a lot of opportunity for us to grow occupancy across the portfolio and expect to see structural vacancy start to play a role in 98%, 99% range. So that leaves some runway as well as focusing on Florida, where the fundamentals are strong. It's about half of our portfolio and it represents about half of our current occupancy opportunity, with 1,700 vacant sites of our current 3,500 site total.

And Nick, it's also really sustainable due to the investment the customer is making, when deciding to live in our property, as you know, they're basically all-cash transactions, they're making a long-term commitment for themselves and for the home in the community.

Makes sense. Thank you. And then just -- for that 95.1% that you quoted on occupancy, does that exclude the assets that you sold in January?

That includes those assets. So there's about a 30 basis point pick up as a result of the sale of those. So it would be closer to 95.4% occupancy.

Thank you. Our next question comes from the line of Joshua Dennerlein with Bank of America Merrill Lynch. Your line is open.

My question relates to the core guidance assumptions. How much did those move just by kind of updating the fundamental outlook; first, maybe just selling the Midwestern portfolio?

So the removal of those five properties that we sold from our core, really didn't have any -- it really had no impact on the change in guidance for our core revenue growth and the NOI growth was essentially -- was even as well. You do see a reduction, a modest 10 basis points reduction, when you compare what our prior guidance was and our current guidance is. That's really a function of the higher than expected Q4 revenue growth. When you ignore the five properties all together, our guidance is actually reflecting an increase in 2019 core revenues on higher MH rate and occupancy and the expectations for our TT membership business.

Okay. Thank you. And the annual resort-based rental income, looks like it fell 40 basis points from the preliminary guidance down to 5.4%. What kind of drove that downward revision?

The driver of that revision is really a couple of secondary markets like Yuma, Arizona, South Texas that reflect some seasonality and renewals in their annual bucket and we included our current expectation in our guidance update, that the total change is about $500,000 for the full year. So putting that in perspective, as we get greater visibility in coming months, we're going to update guidance accordingly.

And then for the non-core properties, looks like it's now you're forecasting $19.9 million up about like $8.5 million. You mentioned like the acquisitions were like a 5% cap. What's kind of driving the differential there between like that maybe like roughly $5 million of NOI from the acquisitions in 4Q versus like the prior guidance?

Yes, so I appreciate it. It's a bit confusing because of the activity. Essentially, we purchased the three assets for approximately $100 million. Sold the five for approximately $90 million. The guidance impact from those transactions was roughly neutral in terms of the impact on NOI. So as we presented it in Q4 and at year end, the contribution from the properties we sold is in core, but when you look at total NOI across the portfolio, it's roughly flat.

And then there was some pickup, Josh in the core -- the non-core properties that we had purchased earlier in the year.

Right.

Thank you. And our next question comes from the line of Jason Belcher with Wells Fargo. Your line is open.

We saw a report or a news story in mid-December that referenced an MH acquisition in Florida for about $49 million, and I think it was the Palm Lake Mobile Home Park, I just didn't see that mentioned in the release and was wondering if you could give us an update on that?

That is the one that was mentioned in the release. I'm not certain why that got reported as that in terms of the pricing, but that is -- it's the same one.

Okay, so the pricing was just off, I got it.

Yes, exactly.

Okay. And it's pretty rare to see you guys sell assets. Just wondering if you could talk about the drivers behind why you sold those five MH assets in the quarter?

Sure. I think you've actually asked me if there are properties we would want to sell and my answer has historically been that there's only a handful of properties we would want to sell and these happened to be the properties. We started a process in the fourth quarter with the intention to gauge what type of interest we would get out of potential disposition package. The overall interest was very high and we were pleased with the -- to be able to execute on it. These are all-age properties with low occupancy rates and a high percentage of rental homes. Generally, you're right, our assets are tight. It's tough to get our hands on. So we're reluctant sellers. But we looked at it as a great opportunity to trade out of the Midwest and into the Florida -- into Florida and the Northeast. And just as a reminder Jason, four of the five of these assets were purchased as part of the hometown portfolio a few years ago. And these were assets that we own, because they were part of our portfolio, not really assets that we would have purchased on a one-off basis.

Thank you. And our next question comes from the line of John Pawlowski with Green Street Advisors. Your line is open.

Thanks. Marguerite, do you have any additional dispositions teed up for 2019?

No, there are none. No additional dispositions teed up.

Okay. And then Paul, on the 1.5% 2019 full-year expense guidance, could you provide breakouts for a few of the big line items within that, like property taxes and what growth rates you're expecting this year?

Yes. I think the biggest challenge in that growth rate is adjusting for the impact of the storm events that I talked about last year. When you adjust for that, you get to a number overall that's , call it 3.5% to 4%-ish. When we look at utility expense, real estate taxes and insurance, our guidance or our embedded assumptions in guidance are a little bit north of that and then the R&M and so forth are closer to a CPI number, but not really in a place to provide detail on the individual line items.

Okay. And then just last one for me on the dispositions, you mentioned the growth rate, the guidance wasn't really impacted and then occupancy rates were lower. So I guess what was the 2018 revenue growth rate of those five disposition assets and how low was the occupancy of these all-age communities?

The occupancy was I think about 85% to 86%, with about 20% of -- high percentage of rentals of about 20%. As to the growth rate of those in the quarter where, I don't think -- we have to get back to you on that, John.

Thank you. [Operator Instructions] Our next question comes from the line of Samir Khanal with Evercore ISI. Your line is open.

Most of my questions were around transaction and that seems that you've provided color on that. But I guess the second for me is maybe just kind of on the industry as a whole, if you take a step back, NOI growth in the sector is still strong and it feels like the sector can do no wrong here. I mean, are there any issues or -- that we or investors sort of need to think about over the next sort of 12 months to 24 months, so they could arise as potential concerns, I don't know if it's sort of like on the expense side or maybe on -- maybe a slower home sales? Just want to get your views around that.

I mean when you look at -- when you think about just the MH industry in general, it still continues to be strong, shipments are up 6% for the year. You've probably seen some news on the RV industry, that shipments are down, down from 18% to -- from 17% to 18%, still at a high rate. So I think the demand is -- demand is still high for RVs and the industry is really benefiting from the ageing boomer population. And the renewed popularity among millennials, although they do show some excess inventories in the RV space. So we're seeing -- we're seeing strength both in the MH side and the RV and there's really nothing that's stopping us or preventing us from kind of being able to execute on our 2019 guidance.

What about from a sort of a slower home sales, kind of a scenario? If you look back kind of in the late 2000, I mean, how did that sort of play out for you guys?

I mean, we'd look at -- the home sales are down for us for the quarter and that's really a function of our properties filling up. So in 2008, when it was difficult to sell homes, we really were able to rotate toward a rental program. So we didn't see as you see in our investor presentation, we had -- continued to have strong growth in NOI. And I -- we see us doing that also in any other kind of environment where you'd see a decline in home sales, such that we weren't able to sell homes anymore. So I think we have -- and I have often said that we have a plan -- plan B in case there's a slowdown and that would be using the rental program to a larger extent.

Thank you. Thank you. And we have a follow up question from the line of Joshua Dennerlein with Bank of America Merrill Lynch. Your line is open.

Are you able to disclose who or what type of buyer purchased the Midwest assets?

I believe -- I mean, yeah, we are able to disclose it, YES! Communities was the buyer.

Communities? And they bought it as a portfolio?

They bought it as a portfolio.

Okay, great. Thank you.

They were great to work with.

Nice, excellent.

Thank you. And since we have no more questions on the line, at this time, I would like to turn it back over to Marguerite Nader for closing comments.

Thank you all very much and we look forward to updating you on our next earnings call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.