Good day everyone and thank you for joining us to discuss Equity LifeStyle Properties' Second Quarter 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 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. Our second quarter results released yesterday showed quarter and year-to-date trends. Year-to-date we increased occupancy by 128 sites and this quarter marks our 35th consecutive quarter of occupancy growth. In the quarter, we increased New home sales volumes by 22%. Over 40% of our home sales in the quarter were in Colorado and Arizona. Year-to-date 29% of our new and used home sales were the result of in-place resident conversion. This quarter we had increased activity in New home conversions as we strengthened the sales effort geared towards converting renters who have experienced our lifestyle offering. Our New home buyer was generally all cash buyer. Over 40% of the new residents are moving from a site built home and 30% are moving from a manufactured home. We have had success filling our communities while continuing to increase rents for in-place residents. Year-to-date our MH revenue which accounts for 70% of our total revenue had a growth rate of 4.6% comprised of 4% rate and 60 basis points of occupancy. Our RV revenue growth of 7.6% year-to-date has been fuelled by growth in our annual income. The annual growth of 6.9% is comprised of 5.4% rate and 1.5% occupancy. This increase in annual growth comes from our key markets of Orlando and Phoenix. Our online transaction activity continues to escalate. In the quarter, our RV revenue through digital channels increased 15% and our sales of online camping passes increased by 42%. Our summer marketing campaigns are aimed at strengthening our commitment to our customers. Using pictures and videos our customers are providing us feedback and referrals that help to build our new customer base. We have increased the awareness of our product offerings and year-over-year we have seen an increase in social media fans of 20%. We currently have over 480,000 fans and followers. Turning to acquisition, since last earnings call we purchased one senior manufactured home community in Florida for a total purchase price is $72 million. The property is located in Fort Lauderdale with a total of 612 sites. I’d like to thank our employees for their efforts in delivering another strong quarter at ELS.

Good morning, everyone. I will discuss our second quarter results and update guidance for the remainder of 2018. For the second quarter, we reported FFO per share and normalized FFO per share of $0.90 and $0.89 respectively. Normalized FFO was higher than guidance and reflects the impact of business interruption insurance proceeds received related to our properties in the Florida Keys. Our core MH rent growth of 4.6% consists of approximately 4% rate growth and 60 basis points related to occupancy gains. Our second quarter core RV resort base rental income growth was 7.7% ahead of our guidance mainly as a result of outperformance in our seasonal and transient businesses. Growth in annual revenues within line of expectations and increased approximately 5.2% as a result of increased rate. The remainder of our annual growth was the result of increased occupancy, including annuals added as a result of our development efforts. Almost half of the seasonal growth in the quarter came from increased occupancy at our properties in California and Florida. Strong demand for transient days drove increased rate and occupancy, particularly at properties in Texas, New York and California. Core utility and other income was higher than guidance as a result of increased utility recovery offsetting higher-than-expected expense as well as insurance recovery to offset R&M expenses following a flood event in California. Membership dues revenue was higher than guidance for the quarter. During the quarter, we sold approximately 5000, 800,000 sales camping pass membership. Year-to-date we have sold approximately 8900 camping passes, a 23% increase over the first six months of 2017. The net contribution for membership upgrade sales was higher than expected during the second quarter. Of our two upgrade sales channels, our community sales effort continues to increase its share, which results in lower commission expenses compared…

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

Thanks. What was the cap rates on the [Indiscernible] quarter MH acquisition this week?

So the going in yield was five cap with an expectation of yield expansion over time as we kind of upgrade the community and institutionalize some of the management practice, practices and this property was developed by a family 40 years ago and has really stayed in the family until till this point. And it’s well located asset in Fort Lauderdale couple of miles from the beach, so we anticipate being able to get them some expansion over time, expansion in the cap rate.

How long does it typically take to get that NOI uplift?

Yes, I think that I would say in the next two to three years just to get that to increase.

Thanks. And you’ve been more active with acquisitions over the last year and a half, so just curious how the acquisition pipeline looks today?

Sure, I think the pipeline is similar to what we’ve said in the past I think adds to the broader acquisition market and the industry as a whole, the investment activity this year has roughly been half MH and half RV. We have seen some new entrants into the market, but there's really no change in the process of getting deals completed mainly through long-term relationships with sellers and brokers. And right now, we have properties under contract in LOI that we really discuss once we get the deal closed.

Thanks. Just I mean with July 4 being on a Wednesday how was trend in revenue growth this year versus last?

As it looks for July 4 and we talk about this a lot that falling on a Wednesday is not a good thing for us, so it’s basically flat for year-over-year. But what we see and as you saw in the quarter we made up a lot of ground on the weekends before that. We are happy to say that July 4 is going to be a Thursday next year, so that’s a positive for us.

Thanks.

Take next.

Thank you. And our next question comes from the line of Samir Khanal with Evercore ISI. Your line is now open.

Yes, hello good morning. So, look when you look at the revenue growth it continues to be robust but one line that’s sort of hard to predict is sort of property taxes and how should we think about sort of real estate taxes in the near future, maybe any early REITS from sort of property tax assessments and how that’s trending as we think about NOI growth?

Yes, I think that for us the significant events on real estate taxes comes in the next 60 days as we receive early notifications from the state of Florida. The trim notices that they send that provides some insight into the current year taxes start to come in in August and September. Across the country, aside from Florida we haven't seen in the past say 12 months, we haven't seen significant pressure on real estate taxes. Prior to that, we had seen in both Texas and Colorado. And we’ve conducted appeals in those states and did see some relief coming from that, but I think for the rest of the year, aside from the uncertainty related to Florida we’re not seeing meaningful indication of significant pressure on real estate taxes.

Okay and I guess my second question is on kind of on the acquisition that you did, can you just generally talk about sort of the bidding process for these types of acquisition, I mean who’s showing up, which parties are showing up in the process in terms of private institution or even I mean do you have foreign capital that’s coming in, just trying to get a sense of how competitive the bidding process is for sort of MH product out there?

I think it certainly depends on it’s on a deal by deal basis. In some instances we are negotiating with a seller that didn’t know he was a seller until the last couple of years, and just the relationship that we had and that may be an opportunity where there aren’t a lot of bidders. And then in other instances, you may see a lot more people at the -- at the table at the kind of the auction table, so it really it really varies, there have been as I mentioned I think in the previous question there have been some new entrants coming into the market of people, new capital coming in, interested in investing in the space, and that’s really happened over the last four or five years. There's a lot of names that weren't around four or five years ago, and I think that has changed the progress in some of the deals where you may see more people showing up, but a lot of the deal are relationship based where you -- you you're talking to the seller for a long time before an actual transaction takes place.

Okay, thanks for the color.

Thank you.

Thank you. And our next question comes from the line of John Kim with BMO Capital Markets. Your line is now open.

Thank you. As part of your guidance do you assume that there is no change in your MH occupancy which is consistent with what you said last quarter. But I was wondering if there were any structural reasons why occupancy could not go higher like 95% to 96%?

Yes, this is Patrick. I don’t see any structural reasons why we can't eclipse the previous high water mark of 95% that were 150 Ops away from around 95% than the current portfolio. About half of our portfolio is less than 98% occupied, so we have some room to continue to grow occupancy. I'd say that structural vacancy starts to affect occupancy growth in the 98% to 99% range. So as long as the housing market holds up that our core customer tends to be an empty nest for a baby boomer who sells their single-family home up north or believes they can sell their single-family home of north continues to fell that way, consumer confidence remains and we should be able to continue the current occupancy growth we've been seeing.

And I think we're also seeing that these are sustainable levels in the MH business where the customers putting down a considerable amount of capital to limit the property, so that's why you're able to see that the high percentage of occupancy and its sticking for a long time.

And are the communities that are below 98% occupied? Are they typically all-age communities? Or there are any either characteristic either geographically or otherwise that are the commonality?

They are represented with our portfolio, if anything its overweight to our kind of our core which is age qualified in Sunbelt locations, particularly Florida about half of our current vacancies is in Florida.

Okay. And I think Paul mentioned cost of financing secured debt of 4% to 4.5% for 10-year money, which is similar to what you said last quarter. But I was wondering if you had noticed any widening of spreads in that figure?

No. We haven't seen much movement as rates have picked up, spreads have moved a little bit to hold the rates relatively flat throughout the year so far.

And the $23 million you raised in your ATM, is that enough equity to fund Everglades Lakes or will be opportunistically tapping the ATM market more?

I think we take a broader view of that, I mean we look at overall funding sources when you think about our year-to-date acquisition activity. We had roughly $180 million of FFO just in general. And then we have new and assumed debt of $80 million so far this year, as well as repayment of a note receivable. When you think about our dividend of 55 million, about $220 million cash left for opportunities and obligations. As I mentioned, our acquisition volume is around $145 million, CapEx of 60 and then debt repayment of around 25. So, we think about all of that activity and then we look at kind of the opportunities in front of us and we look ahead to the maturities that we have $200 million coming due in 2019. We take all of that into consideration when we determine what our capital plan is and funding sources and execute accordingly.

Okay. Thank you.

Thank you.

Thank you. And our next question comes from the line of Drew Babin with R.W. Baird. Your line is now open.

Good morning.

Good morning, Drew.

In my reading I have seen that the RV industry association, I'm just calling 2019 shipments to decelerate quite a bit from this year's pace in terms of motor homes, so from about 6.5% down to about 1% next year basically saying unemployment seems to be bottoming more inflation, higher interest rates, higher interest prices, or higher energy prices I should say. I guess within the RV segment you've made it clear, you target a very specific customer within the RV business and the incremental customer might not matter as much, but I guess as you think about thousand Trails membership, the rate of that's growing at this year, do you have any concerns of maybe it gets a bit offered to kind of get that incremental customer or do you just use produces forecast or something that might just be kind of conservative until reality might prove it is so?

Yes. I mean, I think certainly as we look to the numbers I think in 2018 they are predicting RV shipments of 539,000 which is a very high number, but what we've also concentrate, we talk about is really be installed based of RV-ers and that's who we're marketing to and that's 8 to 9 million. And so there are new ones that are obviously coming in when they buy the new RV and in some cases they are trading up. But I don't see a slowing of the demand. In fact what we're seeing is people are really have a desire to have inexperience kind of an outdoor experience, be outside with their family and we don't see that’s slowing down right now.

Okay. Then just one follow-up question on the acquisition, post the end of the second quarter. You mentioned there was a development for about 40 years ago family owned and so it seems to me like this deal is probably more of a off the market type of relationship deal. And I guess over the last couple of years what has made more owners consider selling? Is it just the pricing that's out there? Or you kind of actively pitching that to potential sellers or has kind of this recent uptick in acquisitions just coincided with more owners deciding to sell just because of life circumstances or events?

I think it’s a little bit of a mix bag, but really what you point out at the end there, there's life events that are happening, that are causing people to consider whether or not they really want to own and operate, really, it's the operating part that they're maybe getting tired of. So they're making those decisions to say, its time to kind of move and actually retire rather than just watch everybody as they're retiring. So I think that's what we're seeing a lot of and that's just a matter of timing, because we may have been talking them for the last ten years and they were fine 10 years ago, but now they are little bit tired. So that's what I think you're seeing and you're seeing that in our deal flow.

Okay, great. That's all from me. Thank you.

Thanks, Drew.

Thank you. And our next question comes from the line of Todd Stender with Wells Fargo. Your line is now open.

Hi. Thanks. Just looking at home sales, they continue to be weighted toward the new side which expanded in a quarter. Can you just show -- just share may be which your internal sales initiatives are positioned maybe how you're talking internally just maybe that dialogue versus used homes?

Sure. Well, I guess let me first take used homes and then I'll talk about the trend in new. Used is just basically settled into a range of 250 to 300 a quarter and that just based on inventory -- existing inventory in our properties kind of cycling through our inventory pipeline as well as focus on rental conversions and reducing our used inventory, you can see those trends and the year-over-year trends of -- our rental portfolio up in new and down in used. With respect to new home sales, it's a consistent focus for us. Obviously, it's a key driver of occupancy growth in MH portfolios to bring that new inventory in is the key driver of our occupancy year-over-year. I'd make the point that both the MH and the RV properties are contributing. MH is up by 14% year-over-year. We've seen strength throughout the Sunbelt but also some strength in the northern and northeast markets that's good to see them favorable for the balance of this year before we enter the winter season. And the RV properties were more than 60% year-over-year in sales, a lot of that is driven, almost all of it driven by our RV expansions in Arizona, the MH sections of our RV properties Monte Vista and ViewPoint.

Okay. That's helpful. Thank you. And then kind of just dovetail of Drew's question about the seller profile. With the Fort Lauderdale community was there any assumed debt that you took on from that property? And then can you kind of just expand on your ability and willingness to issue OP units, because when I look at the competitive landscape perhaps from private equity entering the space they may not have that tax efficient currency like you guys do?

Right, right. We didn't have any debt assumed as part of that deal and certainly OP unit discussions happened frequently in this type of transaction. Often the interest on the seller is expressed and it just depend on their personal circumstances whether they choose to execute with OP unit or not. We have identified the ATM as an attractive opportunity for us, obviously to issue equity in the event that the seller chooses not to take advantage of OP unit.

And Todd, what we've seen is that its really just having the OPP unit as a tool in the toolbox is a reason in the door in some instances that maybe others don't have. Now in the end maybe they choose not to take OPP units, but it’s a way to starts the conversation.

Okay. Thank you. And just finally what -- if I missed this, sorry, any expansion opportunities at the Fort Lauderdale, MH community, and then also at the RV community in holiday?

No. There are no expansion opportunities at either of those assets.

Okay. Thank you.

Thank you.

Thank you, Todd.

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

Thanks. First question relates to affordable housing. I know that the social and political outcry seems to be rising, particularly on the coast. So curious in any municipalities you operate in, it's the tone from elected or unelected officials with power changing at all in terms of barriers to supply and willingness to increase zoning for manufactured housing change at all across your markets?

We haven't seen a change. Now, as we look to all the markets that we operate in where we are doing developments and this is add-ons to our existing. We've been able to work with municipalities and able to get the necessary permits. But we haven't seen a change writ large to starting the ground-up development in the middle of a city that would be attractive to us. Not say that that wouldn't change in the future but that's not something we're seeing right now.

But the, for lack of a better word, barriers to expansion are easing little bit?

No. I think it's consistent with what it's been in the past. In the past the demand really wasn't always there, so we had land and we chose not to develop it, but it was entitled, it was permitted, it was just a matter of kind of going down to the city and making certain that we were – the site plan was approved. So I think that that supply characteristic was been in place for a long time, but there isn't a change to the supply characteristic of all the assets or all the possibilities.

Okay. Thanks. And then last one, just hoping for more color on the transaction market, and we're seeing across the residential sectors pretty good quality compression in terms people getting more aggressive whether its secondary market or some market quality, age of asset seems to be compression versus B – B assets versus As. Wondering if you're see – what type of compression you're seeing RV versus MH, secondary market versus primary market. Any color you could provide on the competitiveness of the bid across the quality spectrum would be great?

Sure. So when you consider RV and MH we're seeing in areas that we would want to be focused in. We're seeing they're really trading right in top of each other in terms of a cap rate, obviously changes on a per site basis, but from a cap rate basis they're very similar. And that's not a new story, that's consistent with what we've seen over the last 10 years. And so I think that that's generally what we're seeing. We're certainly as we've seen I mentioned earlier there is new entrance coming into the market that's generating some amount of activity and some desire for the sellers are looking and they're seeing maybe there's another guy showing up to the door, but there's been no real change I would say in cap rate compression.

So, today you don't have any more issue competing with the private equity or the deep private equity pockets that are entering the space?

No. I mean certainly, certainly there is been instances where there's a particular market that somebody may not have a toehold in at all and they're going to pay a lot for that and that's a place where we just step away and we have the confidence to be able to step away and if it doesn't make sense it doesn't make sense for us. So – but that's not new, I would say that's something we've experienced in the last five or six years.

Okay. Thanks, Marguerite.

Thank you.

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.

Thanks for joining us today. We look forward to updating you on our next quarter's 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.