Equity LifeStyle Properties, Inc. (ELS) Q1 2026 Earnings Report, Transcript and Summary

Good day, everyone, and thank you all for joining us to discuss Equity Lifestyle Properties First Quarter 2026 results. Our featured speakers today are Marguerite Nader, our Vice Chairman and CEO; And Patrick Waite, our President and COO; and Paul Seavey, our Executive Vice President and CFO. 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. [Operator Instructions]. 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 risks 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 Vice Chairman and CEO.

Good morning, and thank you for joining us today. I am pleased to report the results for the first quarter of 2026. We continued our long-term record of strong core operations and have maintained our full year normalized FFO guidance of $3.17 per share. Our manufactured housing portfolio represents approximately 60% of our total revenue, and these properties are currently 94% occupied. Our communities distinguish themselves by their ability to sustain high occupancy levels over extended periods. This resilience is driven by the composition of our resident base as homeowners represent 97% of our MH portfolio. Homeownership promotes long-term residency and supports our strong operating performance. The high concentration of homeowners is a key driver of our predictable recurring cash flow Residents are invested in their communities, which encourages stability, long tenure and strong neighborhood engagement. Within our RV portfolio, the increase in annual revenue reflects continued strength across our customer base. Our annual customers stay in park models, resort cottages, and RVs with many families viewing our properties as an integral part of their traditions and family history. This loyal -- this loyalty supports sustained long-term revenue. Turning to demand. Our offerings across our portfolio are unique. We offer great long-term experiences in sought-after locations at a fraction of the cost of alternatives. We are engaging with our customers through traditional e-mail campaigns, social media outreach and digital advertising. For the quarter, our websites attracted a combined 1.3 million unique visitors and generated 94,000 online leads, reflecting strong engagement. The drivers of the lead generation are from our RV annual lease campaign and trip planning lead generation. Our social media strategy seeks to engage both customers and prospects in a wide variety of platforms. We have over 2.4 million fans and followers across several social media networks. Over the past 10 years, we have grown our social media fans and followers by an average of 25% annually. During periods of uncertainty, it's important to recognize the stability of our business and the fundamentals that support continued growth. I will highlight 3 of the key components of our success. First, our unique business model drives sustained long-term outperformance. Over the past 25 years, ELS has outperformed the REIT industry NOI growth by 150 basis points. The stability through economic cycles is a hallmark of our success. Second, the demand drivers are the support for continued long-term outperformance. Our core customers are baby boomers and 10,000 people per day turn 65 through 2030. Thereafter, the Gen X generation maintains the demographic tailwind for the 15-year period following the baby boomers. The runway remains long supported by favorable migration patterns. And finally, our capital structure is an advantage for us. Our balance sheet is in terrific shape with an average term to maturity of more than 7 years. Our debt is fully amortizing and not subject to refinance risk, and our debt maturity schedule through 2028 shows only 14% of our debt coming due compared to the REIT average of 35%. We have delivered an 18% compounded annual dividend growth rate over a 20-year period. ELS offers a rare combination of strong income growth, stability and demographic tailwinds backed by a well-managed balance sheet. I want to thank our team for a great start of the year. They've done an excellent job supporting our snowbird guests and will soon welcome our customers for the upcoming summer season. I will now turn it over to Patrick to provide more details about property operations.

Thanks, Margarite. We're in the middle of our seasonal shift with our snowbird customers heading back to Northern climates and our northern properties gearing up for the summer season. As we wrap up the busy season in the Sunbelt, I'd like to provide an update on our key Sunbelt MH markets and the value found in our communities. Florida is our largest market, accounting for about 50% of our core MH revenue. In our top markets of Tampa St. Pete and Fort Ladders. Pound Beach, the average single-family home price ranges from 350,000 to over $500,000. Our communities in these markets offer a compelling value with average new home prices of $100,000 and resale home prices averaging about $50,000. We continue our strategy to expand existing communities in areas of high demand and have added more than 1,100 MH sites in Florida since 2020. In our core Arizona market of Phoenix, Mesa, single-family homes averaged more than $400,000, while new homes in our communities averaged $100,000 and resale homes averaged $70,000. We are actively selling homes in our expansion projects in Arizona or new inventory is selling at prices typically ranging from 110,000 to $180,000. And we have 500 completed expansion sites to support further occupancy growth. In our Northern California markets around San Francisco and San Jose, homes averaged over $1.3 million. All the Southern California markets of Los Angeles and San Diego are about $900,000 to $1 million. Given high demand and the strong value proposition for our California properties, the portfolio is 99% occupied and home sales are typically resales of resident homes in the range of $100,000 and higher. In each of these markets, residents received an exceptional housing value along with desirable amenities, including swimming pools, clubhouses, pickleball courts and more. The active lifestyle and social engagement offered our communities as why homeowners stay with us for an average of 10 years. Leveraging feedback from our customers, our property operations team establishes comprehensive budget plans for each property. Our on-site team members prioritize occupancy and revenue growth while thoughtfully managing expenses such as seasonal staffing, overtime and discretionary spending. We're able to adjust to changes in the business to meet high customer expectations while managing expenses scaled to property operations. At the same time, we are investing in new technology across our business. customer touch points like online payments, customer surveys and follow-up and operational efficiencies like online check-in, staffing plans and expense management. This continued innovation allows us to increase operational capacity while improving the customer experience. Importantly, these efficiencies give our on-site team members more time to make connections with our customers and create memorable experiences. In our RV business, the long-term annual are the core stable occupancy -- core of our stable occupancy. Through April, we have seen improvements in attrition trends compared to last year, and we are looking forward to the summer sales season. Annual sites account for 75% of our core RV revenue, and most of our annual RV customers on a park model or our view of site improvements and sell their unit in place when they choose to leave the can grow. Annual Marina revenues experienced occupancy headwinds year-over-year from delays for permits and longer construction time lines for projects related to previous storms. We expect these construction projects to be completed late in 2016 and into 27, which will then contribute to occupancy gains as we build back that business. We're looking forward to launching the 12th annual 100 days of camping social media campaign this summer, which runs from Memorial Day weekend through Labor Day weekend. We see strong engagement with this campaign year after year, earning over 45 million views across social media last summer. Our teams will be following along as customers post photos online, helping each guest make memories and reinforcing the legacy of our brand. Now I'll turn it over to Paul.

Thanks, Patrick, and good morning, everyone. I will review our first quarter 2026 results and provide an overview of our second quarter and full year 2026 guidance. First quarter normalized FFO was $0.84 per share, in line with our guidance. Core portfolio NOI growth of 4.9% compared to prior year was slightly ahead of our expectations for the quarter. Core community-based rental income increased 5.7% for the quarter compared to the first quarter of 2025. The increase in rental income is primarily the result of noticed increases to renewing residents and market rent paid by new residents. Occupied sites increased 54% during the first quarter, resulting in occupancy of 93.9%. During the first quarter, we sold 228 new and used homes. The occupancy comparison to first quarter 2025 is impacted by expansion sites added during the past 12 months. Adjusted for expansion sites, occupancy would be 94.4%, in line with first quarter 2025. First quarter core resort and marina based rental income outperformed our budget by 10 basis points in the quarter. Rent growth from RV and Marine annuals increased 4.2% for the quarter compared to prior year. slightly below expectations for the quarter. Marina performance was impacted by delays in slip restoration efforts. Seasonal and transient ramp was 70 basis points higher than guidance as a result of higher-than-expected seasonal rent in the quarter. For the first quarter, the net contribution from our total membership business, which consists of annual subscription and upgrade revenues, offset by sales and marketing expenses was $17.6 million. an increase of 13.7% compared to the prior year. Membership dues revenue growth is primarily rate driven. Approximately 1,200 upgrade subscriptions were originated in the quarter from new and existing members. Core utility and other income increased 5.4% compared to first quarter 2025. Our utility income recovery percentage was 50.4%, about 280 basis points higher than first quarter 2025. First quarter core operating expenses increased 1.8% compared to the same period in 2025. We renewed our property and casualty insurance programs, April 1 and the premium decrease year-over-year was approximately 18%. We are pleased with the results, which reflects no change in our property insurance program coverage. Core property operating revenues increased 3.7%, while core property operating expenses increased 1.8%, resulting in growth in core NOI before property management of 4.9%. Our noncore properties contributed $3 million in the quarter, slightly higher than our expectations. Property management and corporate expenses were $28.6 million in the first quarter of 2026, and 3.4% lower than 2025. The press release and supplemental package provide an overview of 20,262nd quarter and full year earnings guidance. The following remarks are intended to provide context for our current estimate of future results. All growth rate ranges and revenue and expense projections are qualified by the risk factors included in our press release and supplemental package. Our guidance for 2026 full year normalized FFO was $3.17 per share at the midpoint of our guidance range of $3.12 to $3.22. We project core property operating income growth of 5.7% at the midpoint of our range of 5.2% to 6.2%, we project the noncore properties will generate between $5.7 million and $9.7 million of NOI during 2026. Our property management and G&A expense guidance range is $119 million to $125 million. In the core portfolio, we project the following full year growth rate ranges, 4% to 5% for core revenues, 2.2% to 3.2% for core expenses and 5.2% to 6.2% for core NOI. Full year guidance assumes core MH rent growth in the range of 5.1% to 6.1% and Full year guidance for combined RV and Marina rent growth is 2% to 3%. Annual RV and Marina rent represents approximately 75% of the full year RV and Marina rent and we expect 4.8% growth in rental income from annuals at the midpoint of our guidance range. As I mentioned, the change in expectations for full year growth in annuals compared to our prior guidance is attributed to our Marina portfolio, which is experiencing longer-than-anticipated delays in restoration of slips. Our full year expense growth assumption includes the impact of our April 1 insurance renewal for the rest of 2026. Our second quarter guidance assumes normalized FFO per share in the range of $0.69 to $0.75. Core property operating income growth is projected to be in the range of 4.8% to 5.4% for the second quarter. Second quarter growth in MH rent is 5.6% at the midpoint of our guidance range. We project second quarter annual RV and Marina rent growth to be approximately 5.1% at the midpoint of our guidance range. Our guidance assumes second quarter seasonal and transient RV revenues performed in line with our current reservation pacing. We've made no changes to prior guidance for seasonal and transient rent in the third and fourth quarters. Second quarter growth in core property operating expenses is projected to be in the range of 3.9% to 4.5% and includes the impact of our April 1 insurance renewal. I'll now provide some comments on our balance sheet and the financing market. Our balance sheet is insulated from refinance and rate risk and is well positioned to execute on capital allocation opportunities. Our floating rate exposure is limited to balances on our line of credit. Our debt-to-EBITDAre is 4.5x and interest coverage is 5.6x. We have excess to approximately $1.2 billion of capital from our combined line of credit and ATM programs. We continue to place high importance on balance sheet flexibility, and we believe we have multiple sources of capital available to us. Current secured debt terms vary depending on many factors, including lender, borrower sponsor asset type and quality. The current 10-year loans are quoted between 5.25% and 6.25% 60% to 75% loan-to-value and 1.4 to 1.6x debt service coverage. We continue to see solid interest from life companies and GSEs to lend for 10-year terms. High-quality, age-qualified MH assets continue to command best financing terms. Now we would like to open it up for questions.

[Operator Instructions]. And our first question comes from Jamie Feldman of Wells Fargo.

Great. I wanted to dig a little deeper into the insurance renewal and then just the impact on the expense savings and the new guidance. Can you talk about what you had in the original guidance for the insurance renewal, how that compares to the down 18%? And then just maybe some of the moving pieces around the expense savings and the guidance going forward?

Sure, Jamie. I think that we've guided to full year core expense growth. I think I mentioned this in the January call. It includes a premium to CPI. That is offset by some anticipated savings in a few line items. And just as a refresher for everybody, roughly 2/3 of our expenses are comprised of utilities, payroll and repairs and maintenance. And those three line items, we expect year-over-year growth for the remainder of 2026 to be approximately 4.7%. The CPI reported in April was almost 100 basis points higher than the prior month, and we've made some expense adjustments, including utility expenses and R&M both in anticipation of potential energy and supply cost increases. And with respect to the insurance we had an assumption in our budget, which was informed based on what we understood what's happening in the market at the time that we finalized our budget in January. And so we've made the adjustment to reflect the 18% reduction in premium and all of that is rolled into the guidance that we provided.

But are you able to say like what was in the initial number for the insurer? I'm just trying to figure out how much better it was than what you thought.

Yes. Generally, we don't go into that level of detail, Jamie.

And our next question comes from Jana Galan of Bank of America Securities.

Following up on the revised seasonal and transient top line guide, can you just talk a little bit more about like booking visibility and kind of reservation pacing. And I don't know any impacts with kind of the weather.

Sure. I mean, with respect to the seasonal business and just as we think about advanced reservation pacing, certainly, we talked a lot in the past about our transient business and not great visibility beyond the coming 90 days as our first point of kind of visibility. So as I mentioned, we've updated our guidance for transient to reflect what we're seeing in the system right now in terms of reservation pacing. But just a reminder, roughly 60% of the revenue comes from bookings that are within 7 to 10 days of arrival.

And also very much appreciate the update on the financing environment. I was just wondering if you can maybe comment on any changes in the transaction environment or any more product coming to market potentially on the RV side.

Sure. Thanks, Jana. Yes, as you know, our assets are really in demand from an investor standpoint. It's not a secret that the model that we have is compelling. But we find times in our history that we have limited amount of quality assets for sale, and we're in that time right now. As an industry, we're experiencing a low volume of activity. The ownership remains highly fragmented, but our team is very engaged with owners as they consider their next step in the future. I think that with your -- with respect to your question on whether on the RV side, I think there probably is more opportunities to buy transient RV parks than there were previously. But that's necessarily something we are interested in.

And our next question comes from Eric Wolfe from Citi.

For the Northeast annual RV sites, can you just talk through the trends that you're seeing there? I think last year, around this time, you started to see some higher turnover like 20 properties or so. Does that seem to be normalizing? Is occupancy head behind? Maybe just talk through sort of for those Northeast properties, the annual trends you're seeing thus far?

Yes. Sure, it's Patrick. We are seeing trends that are more consistent with our historical experience as opposed to the elevated attrition that we saw at the same time last year. And as we made our way through the quarter, sequentially month after month, we were able to achieve a higher level of sales. We feel like we have consistent demand in the RV annual space. And just as a reminder, in the back half, of 2025, we added 500 annual. So we kind of rolled out of that period into a period of steady demand, and we're past that elevated attrition that you referenced from last year.

Got it. That's helpful. And then maybe just going back to the marina restoration. I guess it sounds like based on your original guidance, you expected maybe some slips to come back, I guess, this quarter, but now it's sort of getting pushed to late 2026 or even early 2027. I guess, first, I just want to confirm, that was right. And then maybe just discuss, I guess, it sounds like maybe over the last 2 months, you've seen construction delays or permitting delays. Just sort of what happened and what the magnitude of it is. I guess I calculated like $1.5 million, but maybe just let us know if that's incorrect.

Yes. So I'll -- let me speak to what's actually going on at the property. So it's 3 properties. They were impacted by the hurricane season in I think your time line is pretty close to our thinking. I would have expected that we would have been on coming into this year and starting to build occupancy as projects were completed through the current year. The reality is the delays are, call it, in the neighborhood of 9 to 12 months. And the expectation of progress being completed and building back occupancy late in 2026 and into 2027, I think is a good way to think about it.

And our next question comes from John Kim of BMO Capital Markets.

Many teasing occupancy, it continued to trend down. It did end the quarter on a high note, but I'm wondering how you see that playing out for the rest of the year, excluding the impact of expansions.

Yes. As I mentioned in the call, occupancy ended the quarter at 93.9%. That's up 10 basis points from year-end on the 54 sites that we filled during the quarter with no expansion sites added. We have a -- we essentially have an assumption in the budget for a modest uptick in occupancy for the rest of the year. not quite the volume of growth that we saw in the first quarter in the future 3 quarters, and so anticipate a slight increase during the rest of the year.

Okay. Can I ask a second question?

Sure, you can.

The 1,000 trails, you talked about a new -- I think a new rate strategy. just given that it's gone up 12% year-over-year despite fewer members. Is this something that you're going to carry on through for the near future and potentially increase rates further at the expense of memberships?

Yes. I mean I think if you look at the supplemental, as you point out, you see that increase in revenue. I think all -- if you add all the line items together, you get to about an 8% growth. And that is primarily because we changed that product. And we have a higher annual dues rate. The term is, I think, 2 to 4 years and with costs ranging from $2,000 to $4,000 a and the members want to have that extra time at the properties, take advantage of discounts on cabins, et cetera. So right now, that price is, I think, is properly priced. And as we head into '27, we would look to what increases we would think that we should do in terms of that product. But the product as a whole has been very successful for our customers, our members wanting to get that upgrade and pay the additional does.

And our next question comes from Haendel St. Juste of Mizuho Securities.

I wanted to go back to the OpEx guide for a bit. Again, I guess I understand that you don't want to get into the specific pieces of how much things like insurance or causing an adjustment for the guide. But I guess I was more curious on the oil side. Obviously, the cost of oil has picked up quite a bit this year. And I'm curious how you can hedge the future volatility in the price of oil? Or how -- what's contemplated in the guide and potentially how that can be hedged. So any color on what's being contemplated, how it can be offset and how to think about that in the broader context of the prior guidance versus the new guide

Sure. So our process to update guidance considered the impact of the roughly increase in oil price since December. We reviewed the pricing structure used by the utility providers in states where we operate. These include regulated, frankly, primarily regulated and some deregulated markets. utility providers in certain states like Florida do have pricing structures with variability clauses that allow them to recapture some portion of their costs if the regulated rates limit their ability to recapture price increases. So as we looked at all of that, we increased our utility expense assumptions for the remainder of 2026.

Okay. Fair enough. I appreciate that, I suppose. And then if I could squeeze in one just on the revised guide for the noncore portfolio income, maybe some color on what's driving that and how to be thinking about modeling that? Is that fair just to perhaps ratably grow that through the model the rest of the year?

Yes. I think it relates to just improved expectations, a couple of the properties in that portfolio. primarily RV locations. You may recall that there are a number of properties that are in the noncore portfolio that were previously impacted by storms that were not operational. And so as they're recovering, we noticed some upside in the performance and the expected contribution and that was the basis for the adjustment.

And our next question comes from Brad Heffern of RBC.

Historically, you've talked about weather being the primary swing factor on RV transient and there hasn't really been an obvious impact from gas price movements. Obviously, with the or we're seeing a much more dramatic and quick change in prices. Is there anything in your data that suggests that it might be having a negative impact on transient demand?

Yes. We've looked certainly over many years at gas prices and the effect on RV transient. And certainly, gas prices have made headline news over the past several weeks. Year-over-year, I think we've seen a $0.90 increase in the price of gas, not unlike what we saw during the pandemic during times in the pandemic. But we kind of think of it in terms of just what is it -- what's the incremental cost to our customer. And if you consider a 3-night trip. Our average customer is going about 90 miles to our locations. That higher gas price results in an increase of about $25, $30 for the trip -- and if that's three nights, you're talking about kind of $10 per night. So if you think about other vacation alternatives, the overall cost of our vein is really significantly lower and offers the flexibility of really being able to control your spend and also be able to control your environment. So I think at the current rates, net-net, I think it can be a positive certainly, if you're talking about rates that are significantly higher or you're talking about supply issues, then you get into kind of maybe different conversations. But I think where we're at right now, our customers are excited to get out there and use their RB.

Okay. Got it. And then the Canadian tariffs kind of went into effect more than a year ago. So we should be starting to lap some of the comps on the boycotts. Are you seeing any evidence that those Canadian customers might be coming back or any other color that you can give around that?

Yes. The we're just out of the summer season and the impact of the Canadians rolled through those results. I think it's early to call what we're going to see for the summer season. And certainly, we're in some unpredictable times. But we'll provide updates as we start to get greater visibility into the next couple of quarters.

And our next question comes from Michael Goldsmith of UBS.

Maybe just a follow-up on the seasonal and transient seems like the first quarter number was in line with the initial guidance. You're kind of guiding to second quarter of down 9%, but then it kind of -- it implied that the back half is up about 3%. So I was just wondering how you're thinking about that 3% growth in seasonal and transient in the back half? And if that split is that more fourth quarter weighted than third quarter? And then are you expecting in the guidance, are you baking in kind of an acceleration in the fourth quarter as you lap some of that disruption from the Canadian customer.

Sure. Broadly, Michael, as you said, the base rental income growth rate, it does reflect a 50 basis point decline to prior guidance. half of that, as we talked about as the marina. The remainder is heavily weighted to our seasonal expectation for the second quarter. That's mainly in April. Just to provide that color. And then as we think about the remainder of the year, as I said during my opening remarks, we've left the assumptions for third and fourth quarters in place as they were budgeted as we don't have great visibility into that activity.

So as they were originally budgeted, was that does that bake in an assumption that you'd get back some of the Canadian customers that didn't come in fourth quarter.

We have an assumption in the fourth quarter of a recovery of some of that. I wouldn't qualify it to Canadian customers. I think that, as we've talked, the impact on the seasonal business, provides an opportunity for us to backfill occupancy from customers, whether they're Canadian or domestic customers.

Got it. And then just as my follow-up question, on the home sale volumes on price, it looks like new sale volumes were down and the rate and the price per home was down and then similarly on the used homes. I think they were also -- at least the price was down. So presumably that's a mix shift, but can you provide a little bit more color in what's going on in the home film.

Yes, sure. I mean we continue to see steady demand. The beginning of the quarter was -- it was impacted by weather, it was winter and that even bled down through many of the Southeast markets. And as we work our way through the quarter, we saw steady demand and feel good about the demand profile. Just with respect to the new and used sales the one, I wouldn't read too much into in any particular quarter, the home sale price because to your point, it has a lot to do with mix. I mean, directionally, the price per on the new was up and the price per on the used was down. But all of that is with the backdrop of -- we feel like we have steady demand in the MH portfolio.

And our next question comes from Wesley Golladay of Bard.

Can you unpack the seasonal and domestic transient guests for the first quarter? Was that positive growth ex Canadian?

Yes, it was primarily overall, it was growth. It did included the Canadian customer in the revenue, of course, but just to be clear, the marginal improvement was from customers that we saw booking seasonal stays during.

I guess the -- I mean, if you were -- could you unpack the domestic traveler? Was that positive? Is that customer segment bottomed? And do you have a positive outlook for that segment going forward.

The domestic seasonal customer is what [indiscernible] sorry, sorry.

Domestic seasonal and transit segment. So I'm trying to figure out how much of that was weighed down or the outlook this year is maybe Canadian negative, but U.S. domestic and transit gas positive? Just trying to unpack if that is if that segment is bottoming out at the moment.

Well, I guess. I'll say two things. One, as we -- as Patrick mentioned, we've ended our winter season and we're heading into our northern season. So that's a very different customer and different potential there. And maybe with respect to the seasonal as we just think about the future, the coming winter season next year, maybe it'd be helpful to walk through some historical context on the reservation patterns for the winter season revenue. I mean in the past, we would end our winter season with approximately 50% of the anticipated future winter season revenues booked those advanced reservations allowed customers to reserve the site that they wanted at the property and didn't carry penalties for cancellation. Then following a fair amount of booking and cancellation activity after the first quarter and into the summer months. By the end of any winter season, roughly 1/3 of the revenue that was generated during the winter season came from those advanced bookings. So start the season with 50% of the revenue booked to end with about 1/3 after all the cancellations -- and so as we think about it now, there's been a meaningful disruption to the seasonal business, we think that we've talked about as a result of the domestic and the Canadian relations, and so we look at it in terms of engagement. And as we sit here right now, 50% of the in-place guests have reserved space for next year, and that compares to 47% of the in-place guests last year.

And then one more, I guess, bigger picture question. With the rise of artificial intelligence and the way people are searching for product these days, are you noticing any change in the way you source your residents or a seasonal and transient guys?

Certainly, our marketing department is very focused on using artificial intelligence inside of our search options, understanding and appreciating customers are searching for our offerings. It is no longer kind of a simple camp grounds in Maine. It's a much more robust search and we're focused on making certain that once that search is put in place and once the person indicates what exactly they're looking for, we are able to have our communities and our resorts come up at the top of the list. And a lot of that is a function of our websites have been around for a really long time, and they have a really high number of reviews, which is very helpful for that algorithm.

Our next question comes from Jason Lane of Barclays.

Just on the RV and Marina. Looking at the RV and Marina. annual guidance cut, so that was driven primarily by transient and marinas. So can you just give any color on how rent growth and occupancy trended in RV annual specifically in the first quarter and what your assumptions are for the rest of the year, RV annual, specifically.

The RV annual, when we reported in October, we provided our guide for rate growth that was 5.1%, and that's been consistent. And we anticipate that to be consistent for 2026. We're seeing no change from that. And in terms of occupancy, we had roughly 100 sites that we were down in the first quarter, and we anticipate, as Patrick was talking recovery of those sites and addition of annual sites throughout the year.

it. And then it looks like there were some other sites added this quarter. Just curious where those new sites were added, if that was all in kind of the markets you mentioned earlier. And if there's any that are expected to come online this year in those markets and maybe outside the.

We didn't add sites in the quarter. We did have some shifting in our reporting. So a couple of things in terms of just the presentation of sites in our earnings release, if that's what you're referring to provide greater visibility and clarity on the composition of sites in our JV portfolio. We reported those a bit differently and showed those in the categories with footnote disclosure that they relate to the JVs. And then we also annually at the end of the first quarter, we true up our seasonal site count for the number of seasonal customers that we had during the winter season. So that adjustment was made. And with that adjustment, the transient site count was offset or adjusted accordingly.

And our next question comes from David SegaLoggerhead of Green Street.

Just a follow up on the site count changes. What do you think are the prospects for reclassifying those sites that were converted from or classified from seasonal transient back to seasonal later this year? Or is that more of a 2027 event?

Yes. Our practice is to update that at the end of the first quarter based on what we saw during the winter season. So we would anticipate doing that a year from now.

Great. And I appreciate the color on local home prices that you gave earlier in the call. I'm curious what your thoughts are on the impact of stagnating or lowering prices and the local for sale market would be on the MH values and the ability to increase rents and just kind of implicitly what do you expect the spread between stick built homes in your markets to MH home values to remain stable? Or do you think it would narrow

Yes. Let me -- I guess, first, I'd put in the context the value proposition that I addressed in my prepared remarks is very attractive and is a wide band to the next mark on single family. So we have a strong value proposition even if there was some moderation in single-family home pricing, and we've seen that historically that we've had consistent occupancy and consistent home sales, even in up cycles and more moderate cycles. So I think that's our reasonable expectation as we look forward to 2026. And I'd also highlight that those key markets that I highlighted have a very consistent demand profile, including in single family in the mid-tier across each one of those submarkets.

And our next question comes from Peter Abramowitz of Deutsche Bank.

Yes. Just wondering, could you give us kind of a refresher on general demographics of your transient customer base I think age average income levels would be helpful. And I know you talked about the impact of oil prices on decisions around train and travel. But just generally, kind of what are the democrats of that customer base? And then also maybe some of the broader macro factors like job growth, anything we should be watching for thinking about as it relates to results through the rest of the year?

I guess, the demographics of our transient customer really varies by region. So in the northern part of the country, the Northeast and the Midwest is really family camping. So you're talking about a couple. 40-, 50-year-old couple with a couple of children, and they come out on a weekend basis, and they're generally employed full-time workers and just have the time when they have time off from their jobs to be able to camp and then very differently in the South and Southwest in Florida, Arizona, et cetera. We have -- our transient camper tends to be a retired couple who tends to go and stay in a few different locations and has just more time on their hands to be able to work their way through our properties and through our system.

Okay. That's helpful. I appreciate that. And then just one more on the scope of the work of the Marinas I think you mentioned it was three properties specifically. Can you share where they are? And then is there any sort of kind of offsetting revenue pickup in 2017? Or is this just work to kind of get the properties back online? And kind of back on the trajectory that you previously expected?

Yes. The properties are all in Florida, three properties are in Florida. And yes, certainly, there is a revenue pickup in 2017. There's upside in 2017 for these assets. because there is a high demand for these slips to be brought online, they'll be filled and then we'll be recognizing that revenue in 2017.

And our next question comes from Adam Kramer of Morgan Stanley.

Just want to ask about capital allocation priorities here. I think, in particular, right, development seems like a really interesting opportunity. Given I think what you talked about for yields historically versus what acquisition yields would be today. So just wondering, again, general capital allocation priorities sort of stack ranking them. And then I think with development in particular, is there an ability or an interest in sort of that beyond, I think, the sort of 700 to 1,000 sites you've talked about on an annual basis?

Yes, sure. So on the development front, over the last 3 years, we've brought online a little over 2,000 sites, that's been a mix of MH and RV, highly focused on our core markets in the Sunbelt. This year, looks to be in the range of 200 to 400 sites that deceleration is not is not an indication of our desire to continue developing our expansion sites, but it's just the cadence of projects as they're working their way through an approval process and then getting a shovel in the ground. Those yields, we continue to expect to be in the high single digits. Those properties that we're focused on for the upcoming year in Florida, and then we have another 1 out on the West Coast.

Great. And then maybe switching gears a little bit more of a bigger picture question. Just on the policy side of things. I think the -- so Roto Housing Act has a number of elements related to manufactured housing in it. I think the permanent chassis requirement getting removed sort of a big one, but also some financing elements pushed for factory-built housing a number of others. So I was just wondering, again, sort of open any question here. Sort of maybe the company's thoughts just on the act and what it might mean for the industry and the potential read-throughs to DLS specifically?

I mean, overall, I would say that it would be helpful to the industry for the points that you just highlighted, specifically to ELS some variability in manufactured housing setup may provide an opportunity for us. I think there's broader opportunities for the manufacturers. We are close to tracking what is the progress on that legislation. And just given the current state of affairs in DC, that bill has stalled for all practical purposes. I think there's still a desire to move it forward, but we'll have to we'll continue to monitor. We can provide updates on future calls as we get some more insight.

And our next question comes from Steve Sakwa of Evercore ISI.

A lot of questions have been asked and answered. I just wanted to kind of circle back on the MH occupancy point. I guess whether you kind of look at the data on Page 9 or the data on Page 7, slightly different numbers, but kind of paints the same sort of broad picture, which is the site count has gone up year-over-year. but the number of occupied sites is actually down when you kind of look at the ending March 31, '26 versus March 31, '25, and I think Patrick mentioned that you guys added about 500 expansion sites maybe over the course of the past year. So maybe just talk about that lease-up process? And are you still doing expansions at the same pace, given that the occupancy has kind of been trailing down? Or how do you sort of think about that development lease-up pace and future builds?

Yes. Well, just high level on the occupancy front, just a reminder that as we made our way through '24 and '25 the hurricane impact from the '24 season was basically 300 occupied sites. So we're working through building that back. With respect to our expansions. We've completed some very solid recent expansions in particular, in Florida and Arizona. The lease-up rates there, I would expect to be anywhere in the range of 20 to 30 sites potentially as high as 40. And that's really going to depend on macro factors and then what's going on in the individual submarkets. But if you're leasing up in this space somewhere between the neighborhood of 20 and 40 sites on an annual basis. That's a good run rate. These properties are -- the expansions are part of very solid core properties and solid submarkets. So they'll continue to contribute to occupancy over the next couple of years to reach stabilization. And then as I mentioned a little earlier, we have a desire to continue those types of projects. We have others in the pipeline, and we can talk about those more as we approach 2027 and 2028.

So just as a quick follow-up, Patrick. Is it your expectation that occupancy, given the hurricanes and the expansions, would you expect occupancy, whether it's an average or a spot to be bottoming in '26 and then moving higher in '27 or '28? Or could you envision where occupancy is even down next year as you're kind of working through the pace of that and then it kind of starts to take off in '28?

I would expect that we're going to increase occupancy in the MH portfolio on a consistent basis over time. That doesn't mean that we're not going to have an external catalyst that's a disruption to the business model temporarily, but we have a long history of continuing to increase the occupancy. And even backfilling the impacts of the hurricanes that I referenced show a very steady demand profile.

And we have a follow-up from Eric Wolfe from Citi.

Another questions. If I look at your guidance changes, in the supplemental, it adds up to almost $0.02 positive benefit. I was just wondering what's offsetting that?

Sure. Eric, we have maintained full year normalized FFO per share guidance though there are a lot of changes, as you mentioned. You can see the items that increased. The main offset in the updated guidance relates to assumptions for our income from home sales and ancillary operations.

Got it. That's helpful. And then you mentioned some adjustments to April seasonal. Was that just, I guess, the number of customers that typically extend their stays. So you just saw a little bit less extending their stays this year. And do you think that was perhaps due to sort of the greater shift towards domestic customers versus Canadian? Or is there some other factor around that?

A lot of what we see, Eric, in April, is really weather-related where people are saying, okay, it's nice enough up north, we can head up north. And No longer need to seek refuge in the cold or in Florida from the cold. So that's kind of what we saw. And you see that same effect in October, where -- some people stay longer, if you have a longer summer in September and October. And if you just saw people returning back north quicker than anticipated.

And we have a follow-up from Brad Heffern of RBC.

Yes. On the RV site count, what is the financial impact of a seasonal site moving to transient? I'm sure, obviously, it could just get booked again is the seasonal next winter. But if it stays a transient sight, is there a meaningful negative financial impact from that?

I mean it really depends on what -- how that site was performing. I guess just think -- if you just think about the annual conversions to transient our average annual is about $7,000 or $8,000 and your average transient customer is about $81 per night. So it depends how many nights and both the same with the seasonal, how many nights are occupied as to whether or not you have a financial impact to that conversion.

Okay. But the like shift of those, whatever it was 12 1,400 sites, is that meaningful in some way? Or is it really just moving change from one back to the other?

Well, it's -- I mean it's already embedded in our guidance because it's simply a reflection of what we experienced during the winter season in terms of the occupancy of those sites.

And we have a follow-up from Jamie Feldman of Wells Fargo.

I had a very strict instructions from Adam to ask one question. It's still hard. So I've had a couple of people ask me to clarify. So I apologize if you guys already answered this or provided it. But the 50 basis point cut to RV and Marina based rental income, was that all from the slips. And if it wasn't all the slips, how do you break it out between RV and Marina?

Well, the -- it's interesting because there's a 50 basis point decline in RV and Marine in total. And there's a 50 basis point decline in RV and Marine annual. So to be clear, the RV and Marina annual 50 basis point decline is attributed to the Marina portfolio. It's not the RV portfolio. It's the Marina portfolio. And I think somebody earlier in the call said they calculated roughly $1.5 million, and that's correct.

Okay. All right. And then last, the 300 sites lost in the hurricane, how many of those are back online. Because it seems like it comes up every quarter the occupancy change or fewer lease sites, fewer I should say.

Yes, we're in the process of putting homes on those sites in I put it in the context of this. It's an additional 300 vacant sites in a portfolio of 70,000 sites where we have a run rate practice of purchasing new homes and these occupancy it's not like the 300 go down, then we fill them 1 through 300 and the move on. They're part of the ongoing investment in inventory in those -- in the broader market. Obviously, they were hurricane impacted, so they're in Florida. I don't have the exact number, but we've filled a substantial number with new homes, and we'll continue through that process to reach full occupancy. The properties that were impacted by those hurricanes are Pinnacle assets where the demand profile is very solid and I would expect the occupancy to rebuild consistently.

Okay. And then finally, I think I know the answer, but you do have some portfolios out there for sale internationally. What are your latest thoughts on sticking to your knitting and keeping the type of assets you have? Or is there any yield IRR that would be compelling enough to go international at this point or into new property types or something outside of your core business?

I think you were right with how you started, which is you know what the answer is going to be. We are focused on growing our business inside the United States, and we will continue to do that.

And in terms of new property types?

Well, certainly, more MH, more RBS to new property types, nothing that we're looking at right now.

Since we have no further questions on the line, I'd like to turn it back over to Marguerite Nader for closing remarks.

Thanks for taking the time today to listen to our call. We look forward to updating you on our second quarter earnings.

This concludes today's conference call. Thank you for participating, and you may now disconnect.