Equity Lifestyle Properties, Inc.

Good day, everyone, and thank you all for joining us to discuss equity lifestyle property second quarter 2021 results. Our featured speakers today are Marguerite Nader, our president and CEO, Paul Seedy, 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. For those who would like to participate in the question and answer session, management asks that you limit yourself to two questions. So everyone who would like to participate has ample opportunity. 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 results for the second quarter of 2021. Our properties experienced unprecedented demand in the quarter. Our MH revenue, RV revenue, home sales, and subscription revenue exceeded our expectations. We continued our record of strong core operations and FFO growth, with a 30% growth in normalized FFO per share in the quarter. While this growth rate is significantly impacted by the negative comps from 2020, it represents 28% growth from the second quarter, 2019. New customer growth in both MH and RV contributed to the positive results in the quarter. Year-to-date new home sales grew by 122%, contributing to the high quality of occupancy at our MH community. Homeowners grew by 179 in the quarter, driven by a record number of new home sales. Our residents recognize the high quality and value of homes in our communities and are especially motivated to buy, given trends in the broader real estate market. We continue to focus on digital marketing and our website experience as a catalyst for growing our home sales pipeline. The unique traffic to our website has grown over 35% compared to the same time prior to the pandemic. Within our RV platform, we saw increased demand during holidays and weekends, as well as strength in weekday activity. We saw an increase in customers committing to us on an annual basis. The resort lifestyle appeals to our customers as they choose an ALS property for their second home. We are attracting a larger number of new guests than in previous years, and new customers look a lot like our pre-pandemic guests, indicating stability in our growing customer base. The number of new customers added to our database during the first half of 2021 is up 25% compared to 2019. These first-time RVers are drawn to camping because of an increased desire to spend time outside and the feeling that camping is a safe activity. We see our new customers choosing to increase engagement with us. Our subscription-based Thousand Trails Camping Pass showed significant growth in the quarter. Over 8,000 new members purchased the Camp Pass, which was an increase of 40% over the second quarter of 2020. We reached a new high, with almost 50% of all Camp Passes being sold online. With increased RV sales, we saw our RV dealer pass activations increase 39%. In our customer surveys, our new customers are indicating that they intend to camp more even after returning to other vacation travel, including plane travel and hotel stays. In 2020, to help support the safety of our guests and team members, we launched a new online check-in option for our RV guests. Since launch, over 250,000 reservations were completed through the online check-in process, allowing them to get to their site more quickly and with less direct interaction. The 2021 TripAdvisor Traveler's Choice Awards have been announced, and we are pleased that 54 of our properties won this year. Twenty-six of those properties are Hall of Fame winners as they have maintained a Traveler's Choice Award for five years. Our guests reported high satisfaction levels based on the experience provided by our teams at our properties. Based on the second quarter survey results, guests responded to customer experience questions with a rating of 4.46 out of 5. In May, we released our annual sustainability report highlighting our commitments to American forest and marine life as well as our ongoing projects centered around energy efficiency at our properties. We have increased our efforts to bolster diversity through our CEO Action Pledge, expanded learning curriculum, and recruitment efforts. The report highlights all the ways that we unite people, places, and purpose within our communities. I want to thank our team members for continuing to focus on delivering excellent customer service to our residents, members, and guests. We are halfway through our primary camping season, and the feedback we have received is a testament to the hard work of our teams in the field and in the home and regional offices. I will now turn it over to Paul to walk through the numbers in detail.

Thank you, Marguerite, and good morning, everyone. I will review our second quarter results, highlight our guidance assumptions for the third quarter and full year 2021, and discuss our balance sheet and debt market conditions. For the second quarter, we reported 61 cents normalized FFO per share, seven cents ahead of the midpoint of our guidance range. The main drivers of outperformance compared to our guidance were core RV rent revenues and membership revenues, including upgrade sales. Our core MH rent growth of 4.7% consists of approximately 4.1% rate growth and 60 basis points related to occupancy gains. We have increased occupancy 153 sites since December with an increase in owners of 283, while renters decreased by 130. While our occupied sites increased during the second quarter, our reported occupancy percentage reflects the impact of expansion sites we've added to our portfolio. Core RV resort-based rental income from annuals increased 7.5% for the second quarter and 5.6% year-to-date compared to the same periods last year. Annual RV rate increases continue to be in line with our expectations. Increased occupancy from annual RV residents in our northern properties was higher than expected during the quarter. The average annual rates in these locations are lower than our southern and western resorts, so the increased occupancy slightly reduced our core portfolio average rate. For the quarter, RV rent from seasonals increased 31% and rent from transients increased 180% compared to 2020. The comparison to prior year is impacted significantly by COVID-related property closures and shelter-in-place orders that were in effect during the second quarter of 2020. Strong demand in the quarter is evidenced by seasonal and transient growth rates of 19% and 50%, respectively, over 2019. Membership dues revenue increased 10.1% and 7.2% for the quarter and year-to-date, respectively, compared to the prior year. Year to date, we've sold approximately 13,500,000 Trails Camping Pass memberships. This represents a 50% increase over the same period in 2020 and an increase of 32% over the same period in 2019. The net contribution from membership upgrade sales year to date is $5 million higher than 2020. During the quarter, members purchased more than 1,200 upgrades at an average price of approximately $7,400. Core utility and other income was higher than expected during the quarter as a result of the receipt of insurance proceeds related to Hurricane Hannah in 2020. We recognized approximately $2.3 million of income in the quarter related to that storm event. Core property operating maintenance and real estate tax expenses were generally in line with our expectations for the quarter. Higher-than-expected utility expenses were offset by lower payroll expense as we faced challenges filling open positions across the portfolios. The comparison to second quarter 2020 shows an elevated expense growth rate as a result of the COVID-related limited operations conducted across our portfolio during the second quarter last year. In summary, second quarter core property operating revenues increased 14.9%, and core property operating expenses increased 13.9%, resulting in an increase in core NOI before property management of 15.6%. For reference, the second quarter core NOI growth CAGR from 2019 is 8%. Income from property operations generated by our non-core portfolio was $5.2 million in the quarter. This result was higher than our expectations, in part because of the NOI contributed by Pine Haven, the RV resort we acquired during the quarter. Revenues from annual customers at the marinas and other properties in the non-core portfolio generated more than 90% of total non-core revenues in the quarter and year-to-date periods. Property management and corporate G&A expenses were $26.8 million for the second quarter of 2021 and $52.7 million for the year-to-date period. Other income and expenses generated a net contribution of $5.7 million for the quarter. New home sales profits, along with a recovery in our ancillary retail and restaurant operations, contributed to an increase of $4 million in sales and ancillary NOI compared to the second quarter of 2020. Interest and related loan cost amortization expense was $27.1 million for the quarter and $53.4 million for the year-to-date period. The press release provides an overview of third quarter and full year 2021 earnings guidance. As I provide some context for the information we've provided, keep in mind my remarks are intended to provide our current estimate of future results. All growth rates and revenue and expense projections represent midpoints in our guidance range and are qualified by the risk factors included in our press release and supplemental financial information. A significant factor in our guidance assumptions for the remainder of 2021 is the level of demand for transient stays in our RV communities. We have developed guidance based on our current customer reservation trends. We provide no assurance that our actual results will be consistent with our guidance, and we assume no obligation to update guidance if conditions change. Our full year 2021 normalized FFO is $2.47 per share at the midpoint of our range of $2.42 to $2.52 per share. Normalized FFO per share at the midpoint represents an estimated 13.4% growth rate compared to 2020. Core NOI is projected to increase 7.9% at the midpoint of our range of 7.4% to 8.4%. The core NOI growth rate increase from our prior guidance is mainly the result of our second quarter outperformance. Our expectation for the third and fourth quarters has been updated to include MH occupancy gains in the second quarter current RV reservation trends, and expense adjustments based on year-to-date activity. As a reminder, we make no assumptions for storm events or other uninsured property losses we may incur. Our guidance for the full year and third quarter includes the impact of the acquisition activity we've closed in the first and second quarters, with no assumptions for additional acquisitions during the year. We've also included the impact of the financing activity we've disclosed including the recast of our unsecured credit facility. We expect third-quarter normalized FFO at the midpoint of our range of approximately $119.5 million, with a per-share range of 59 cents to 65 cents. We expect the third quarter to contribute 25% of full-year normalized FFO. We project a core NOI growth rate range of 8.7 to 9.3%. MH and RV annual rate growth assumptions for the third quarter and full year remain consistent with our prior guidance. We've built our transient RV revenue assumptions for the third and fourth quarters using factors including current reservation pace compared to both 2020 and 2019. Our guidance for the third quarter assumes a growth rate of approximately 23% compared to 2019. This represents a core transient RV revenue increase of approximately $3.5 million compared to 2020. Our fourth quarter assumptions include a reopening of the Canadian border and a return of those customers for the upcoming winter season. Now some comments on debt markets and our balance sheet. Current secured debt terms available for MH and RV assets range from 50% to 75% LTV, with rates from 2.5% to 3.5% for 10-year maturities. High-quality, age-qualified MH will command best financing terms. RV assets with a high percentage of annual occupancy have access to financing from certain life companies as well as CMBS lenders. Life companies continue to quote competitively on longer-term maturities. We continue to place high importance on balance sheet flexibility, and we believe we have multiple sources of capital available to us. Our debt to EBITDA REIT is 5.4 times, and our interest coverage is 5.4 times. The weighted average maturity of our outstanding secured debt is approximately 12.5 years. Now we would like to open it up for questions.

Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by with apology and air us there. Our first question comes from Brad Hepburn with RBC Capital Markets. He may proceed with your question.

Hey, good morning, everyone. Thanks for taking my question. Just to start on the transient guidance, you know, you have the $3.5 million increase. You have the strong 4th of July. I know the first quarter was up about $2.5 million on a number that wasn't really COVID-affected. So can you just walk through, you know, kind of what's behind that number and if there's upside to it?

Yeah, I think the The $3.5 million for the quarter, as I said, is based on our current reservation pace. It does incorporate the 4th of July. That 20% translates into about $400,000 of growth. And, you know, as we look at the current pace compared to 2020 and 2019, you know, that's the estimate that we have right now.

Okay, got it. And then maybe switching to acquisitions, can you talk about the cap rate on that Pinehaven acquisition and then just any thoughts in general across the three businesses on how the acquisition market looks?

Sure. So we closed on the property Pinehaven in Cape May. It's very well located near other ELS assets. And just to give you a sense of it, it's about 91% occupied by annuals. And so it's a highly annualized revenue base, and the cap rate for the transaction was 5%. With respect to going forward, this year we've deployed, I think, about, over $350 million of capital into 14 properties. And our acquisition team does a great job of underwriting all the deals. It's really difficult to say when properties are going to close, but as we, you know, we currently have them in various states in the acquisition process.

Okay. Thank you.

Thanks, Brad.

Thank you. Our next question comes from Keegan Call with Barenburg. You may proceed with your question.

Hey, guys. Thanks for taking the questions. I know this was touched on earlier, but can you use a little bit more color on what is driving the core RV annual rate growth guidance down? Was it exclusively just higher northern bookings, or is there something else in there?

It really is the change in the occupancy mix. Okay. As I think I explained maybe on the – it was either the January or the April call, 90% of the residents in the – the annual residents in the RV footprint were notified of their rate increase by last fall. So that increase is pretty steady throughout the year. But as we noted in the quarter, as we see kind of a change in the occupancy mix, it does have an impact on the weighted average rate.

Okay, but there's nothing we should be worried about as far as, like, downside or concerns and occupancy in other regions. It's just because of the weighting to the north. That's correct, yes.

Right, and there's an increase in overall annual occupancy, and it's just the weighting and the race is different.

Yep, okay, great. And then I think kind of going back to transient, can you give us the breakout of what was a function of volume versus price in the quarter? Is it one or the other that's kind of standing out?

I think similar to what we just discussed on the annual side, what we've seen on the transient side is a shift in the mix as well. So the demand in the transient was very strong in some of our higher-priced locations like the Florida Keys. And so the rate contribution is a pretty heady number, frankly, but it's a function of where people stayed rather than an increase in the rate implemented at, you know, individual locations.

And it was also a function of increase in cottage stays, which is a higher price point.

Okay, great. And then, I mean, just kind of following up on Transient, can you give us kind of a feel for Booking's quarter to date, you know, outside of the 4th? Do you guys feel like it's trending well above 2019, or how should we think about that?

Yeah, I think, I mean, just, again, the 20% number that we talked about for the 4th of July, the 3.5 million represents 23% over 2019 for the quarter. And, you know, as we thought about the third quarter guidance, and looked at actual results for Q3 2019 as we took a look at the percentage of full quarter revenues. Essentially, they looked at the same time in each point in the year and think that we're tracking to those results.

Okay, that's it for me. Thanks for your time, guys.

Thanks.

Thank you.

Thank you. Our next question comes from Nick Joseph with Citi. You may proceed with your questions.

Hey, good morning. It's Michael Dorman here with Nick. So I've had a question, either Marguerite or Paul. You talked a lot about sort of the new customer activity, and you mentioned that the new customers look a lot like your existing customers. And so I'm wondering if you can maybe spend a little bit of time talking about new customers that are different. You know, are you tapping into any new segments, either on the RV or the EMH side, you know, either customer types, customer demographics, customer incomes? that is different from what you're seeing before and potentially could be stickier or not. Maybe they're not having a great experience and they're not going to continue. So just trying to really understand sort of the customer dynamics going on.

Okay, sure. Thanks, Michael. Patrick can talk a little bit about the millennial customer, but why don't I just focus a little bit on the customers, the new customers that did come to us this year that came to us during the pandemic in terms of, how they acted. The first-timers, we call them, they've returned and they have a future reservation on the books right now. I think it's one in every seven are currently a seasonal or annual or a member. This percentage is in line with what we've seen before. It's just an overall number is higher. It's generating a higher revenue. But the first-timers who return, they become, you know, either a Thousand Trails member focused on the southeast or the southwest, And then the first-timers returning as seasonals and annuals, they're concentrated in Florida, California, and the Northeast.

And so is that, and then just before we switch to millennials, are those customers acting the same as your other first-timers? Are you getting a better sort of recapture rate?

They're acting – the percentage that I quoted there was in line, although the overall number is higher. So they're acting similar to kind of the pre-pandemic. So just to kind of point out the stickiness of the new customer.

Right. So the sheer amount of customers has increased, and they're acting the same in terms of continuing with you, which is then just driving that overall stability in their rental stream. Sorry, Patrick. Go ahead.

No, that's right. I guess to reiterate, it's a shift that's having an effect on a significant base in our core customer. But just with respect to those new customers, in particular the younger generations, nearly two out of three first-time campers were under age 40. That's just high level in the industry itself. as well as millennials making up the largest generation of camping households. It's almost 40% of camping households in the United States today. That's based on an annual survey by KOA. They cover a lot of the key demographics in the asset class. So that reflects what we're seeing in our campgrounds. Based on surveys of campers, new campers in particular, we're seeing younger campers, younger families, a number of them traveling with younger children, and something that frequently comes up in the RV space, their pets. And by pets, that typically means dogs. So that's just qualitatively what we're seeing in our new customers. And I'd also touch on engagement on social media. We grew our new fans and followers in social media by almost 30%. That's to a total base of fans and followers of more than 900,000 on Facebook, Instagram, Twitter, Twitter, and Pinterest. Most of that growth for the quarter came from Instagram video content. We've also reached out, and I think our team does a very nice job in connecting with celebrities. We've had Guy Fieri stay at our properties, as well as the celebrity couple, Michael Trevino and Bray Rich Heinen. They stayed with us recently, and that helps to just kind of firm up the status of our brand.

But to be honest, we had to look up the people at the end. But they are celebrities nonetheless.

Thanks. And this is Nick. Just one other question. I just want to go back to the transaction market. Margarita, I'm wondering if you're seeing new entrants into this space at all and how that's impacting either bidding or how many people are showing up for these opportunities?

We haven't seen new major players in the last year or so, I would say. Of course, we've talked in the past about all of the new players that have shown up over the last five or six years, but nothing new in the recent past. These assets are highly sought after and highly marketed. Thanks. Thank you, Nick.

Thank you. Our next question comes from Samir Canal with Evercore ISI. You may proceed with your question. Hi, everyone. Good morning. So, I guess, Marguerite, can you provide a little bit more color around what growth has been like, I guess, in the marina business year-to-date, you know, as things have started to reopen and normalize here? I think you have close to 25 marinas today with the acquisition. Just trying to figure out how that segment is tracking versus RGs or MH here.

Sure. So our Marina portfolio in the quarter, you know, performed in line with our expectations. We generally have long-term revenue streams. We've updated the technology for our customers. And what we're seeing is about a, you know, 4% growth in revenue on the Marina side.

Okay. Got it. Thank you. And then I guess my second question is around transactions. Clearly, you know, bidding is very aggressive on that front. I mean, where is the opportunity set for you today when you kind of look at maybe over the next year? Is it the marina side? Is it the RV side? I mean, how should we be thinking about that?

Yeah, I mean, I think that we certainly, as we look at our acquisition pipeline, we certainly have opportunities on the MHRV and marina sides. You know, like I mentioned earlier, difficult to know when a particular asset is going to close. I think that certainly there are a lot more people that are interested in general over the last five years, new entrance into the market. But we have long-term relationships with owners, which certainly give us an advantage here. to at least starting the conversation. In many instances, that still ends up in a bidding process. But I think there are still opportunities. There are certainly still a lot of opportunities out there, as you can see from what we've done year to date.

Got it. And I guess my final question is, have you seen any sort of inflationary pressures in the business today?

I think that, you know, overall, we have seen Inflationary pressures, we've seen pressure on wages. It's offset somewhat by the challenge in attracting recruiting employees. We're facing similar challenges to many who are trying to recruit hourly employees today. But wages are definitely increasing. And that is also translating into R&M expense with those third parties that we engage for landscaping and other activities that are properties. And, you know, then just overall energy costs are pretty volatile, especially given the severe weather patterns that we've been seeing. The demand on energy is significant across the country, and we're seeing that play out in our utility expense.

Okay, got it. Thank you.

Thank you, Samir.

Thank you. Our next question comes from Michael Goldsmith with UBS. He may proceed with your question.

Good morning. Thanks a lot for taking my question. My first question is kind of on the guidance. You beat the high end of your FFO guidance in the quarter. Your full year went up by more than that. So what are the changes in your assumptions for the back half of the year? Is there anything else there other than on the transient RV side?

The second half of the year, as I mentioned, the core occupancy, so we don't make an assumption just in our standard guidance. We don't make an assumption for future occupancy gains, but on a quarterly basis, we do update for occupancy that we have gained during the prior quarter. So we've done that. We've adjusted our RV revenue growth assumptions. And as I mentioned, that's expected to be $3.5 million higher than last year. And then we did have some adjustments to expenses, but I'd say the revenue drivers are most significant.

Thanks for that. And then clearly there's a lot of strength in the transient RV business and the membership subscriptions. As you look back historically at times with elevated RV demand, how sustainable – or captive as this group so it drives the business in future years? And, you know, looking forward, does that show up through your annual revenues? I guess said another way, like can RV revenues remain at these new elevated levels going forward?

Sure. So, well, Michael, welcome to the call, by the way. Thanks for joining us, Rafael. Sure. You know, as we look ahead, years ago, a few years ago, the install base was 9 million RVers. Now it's 11 million. And in total across the United States, there's about a million RV sites. So that ratio bodes very well for us. And we really see it's a transition going from a transient to a seasonal to an annual. And you'll see that throughout our portfolio. We've certainly seen an increase in members over the last, Thousand Trails members and subscription-based revenue over the last couple of years, and I think that just comes from the demand in RVs overall and the demand for kind of getting out and about and being outdoors with your family.

And just if I could squeeze one last one, and maybe it's similar to Brad's question in the beginning, but Is there anything to read into July 4 weekend being up 21% relative to 2019 while Memorial Day was up 30%? Are you starting to see a deceleration here?

Well, I think what you saw there is, you know, Memorial Day weekend last year was effectively closed in many areas of the country. July 4th last year we were way more open and people were moving about the country much more, you know, they were much more able to move about the country.

Thank you.

Thank you.

Thank you. Our next question comes from Wes Colliday with Baird. You may proceed with your question.

Hey, good morning, everyone. Just a quick question on how much of your business is on the books now for the quarter for the transient segment?

Certainly, 4th of July, as I said, is up about $400,000 just in terms of the way that we think about it. Labor Day is a big weekend for us as well. The interesting thing about it is how August and September will develop. Weather is a huge factor. And so to the extent that we have poor weather, there's going to be impact on the next couple of months. So I think that it's not quite a third, a third, a third. in terms of the three months and the quarter because September typically drops off. But I have to say last year in September was a very strong month for us because the weather was good and people were able to be out at our properties.

And, Wes, the booking window can be pretty tight. So, you know, as your weekend fills up, it may be Thursday or Friday before you know how it's shaping up.

Yeah, I guess my question, I guess, is trying to get at the, is that where the surprises come in the last two quarters, is those like near-term bookings, is that where you're seeing it?

Right, that's exactly where it is, and we're seeing an increase, as I mentioned, in weekday traffic that we hadn't seen on a pre-pandemic basis.

Got it. And then can I get, I guess, would you have a number of what the revenue uplift is, taking a transient to a seasonal and then a seasonal to an annual?

I mean, I think that it depends on a property-by-property basis because it really, you know, it depends where you are in the area of the country. We can circle back with you and kind of provide some guideposts on a, you know, kind of around-the-horn basis. We don't have that in front of us right now.

Okay, thanks. I'll follow up. And then have you started any developments year-to-date, and do you have many going on right now?

Yeah, we're tracking to mention on previous calls our 1,000 to 1,100 sites to be delivered for the full year, and that will represent roughly a dozen projects. That's tracking basically in line with our previous year, which is around 10 or 11 projects and about the same number of sites. Are those mostly expansions or are those ground up in there? Those are mostly expansion. There's an initial phase of one ground up. But predominantly, those are driven by expansions, and it's skewing a little bit towards for RV for 2021. All right.

Thanks a lot.

Sure.

Thank you.

Thank you. Our next question comes from John Kim with BMO Capital Markets. He may proceed with your question.

Thank you. On Bouncing Trails, it looks like your membership increase was the most in at least a decade. Yes. Can you remind us what the typical renewal rate is for members?

Sure. We have about a 90% renewal rate on members. So we have 10% of the members fall off in any given year.

Do you expect that rate to continue over the next 12 months or do you think there will be more volatility just given so many new members joined this year?

Yeah, I don't see that. That rate really, that attrition rate hasn't changed much. We've gone through many different cycles, and it hasn't changed. It doesn't vary very much over time. You know, we sold a lot of campuses, as I mentioned, in the quarter, and that also marks a high watermark for sales since we started this 10 years ago. And But it's been great that 50% of those deals were online. It's a really efficient method, you know, for a sales method. And it still continues to be a very sticky customer base.

And, Marguerite, can you remind us, is there seasonality when you add members? I know in past years you provided a guidance for the year. This time you're providing real up-to-date member counts. But do you typically add more members in the second, third quarter of the year?

The summer is a big season for us for adding new members, and then it trails off a little bit as you head into the winter.

Okay. Looking at your marina business, is it fair to assume that most of the leases are annual leases and not seasonal or transient? I'm just comparing your core versus your total RV and marina business leases.

Yes, more than 90% of the revenue comes from annual customers in the marina portfolio that we have.

And so what was the occupancy on the marinas?

I think we're at like 90% or 91%. Okay.

On the topic of the occupancy, can you provide the occupancy for the transient RV business in the second quarter and what you expect it to be for the remainder of the year?

We don't really quote an occupancy statistic on the transient, John, because the mix of site changes. As we use sites for seasonal, they may become transient, and we may fill a site that is a transient with annual. So that's not a metric or a statistic that we track or provide.

Which is what you saw, John, us doing in the first quarter when we had difficulty filling the seasonals. from the Canadian aspect, the Canadian customer base, and then they became transient. So that's one of the reasons it's difficult to quote that number.

What about like a total occupancy number then for Arby's?

Yes, same thing. We don't – We don't track or we don't quote a number for that purpose.

But we provide, John, in the supplemental, it shows the number of sites that are transient, and that does adjust every quarter.

Okay. I might have missed this, but have you provided or can you provide an update on your expansion site delivery expectations for this year?

Yeah, it should be around 1,000 to 1,100 sites for the full year.

Okay.

Great. Thank you.

Thanks, Jeff.

Thank you. Our next question comes from Joshua Dennerle with Bank of America. You may proceed with your question.

Yeah. Hey, Marguerite. Hey, Paul.

Hope you guys are doing well.

I saw the new home sales, the volume looks like it was up a lot, and then the gross revenues were up as well.

I'm curious if there's any underlying theme that you're seeing driving that, and if you expect it to kind of continue to tick higher across the rest of the year.

Yeah, I mean, let me, I'll take the volume first. The volume obviously was up significantly, you know, more than double over the, same time last year. So what we're really seeing is strong demand from home buyers. So a big driver of that increase was us selling homes to meet increased buyer demand. And some of that is just a mix of sales and rentals. If you look at Q1, our rentals were, for the most part, in total flat year over year. For Q2, they were down more than 100, and a piece of that is really just more buyers coming through the door interested in purchasing a home as opposed to renting. So that's kind of a high level on the unit count. And then just with respect to sale price, sale price was up almost 30% year over year. Some of that is really driven by mix of some higher-priced units, and that will happen just depending on where transactions are happening in any particular quarter. If we look at similar models year over year, they're up roughly 10% from a sales price perspective.

Thanks, Patrick, and I apologize for not saying hi to you at the beginning.

You're so polite, Josh.

I'm curious, like, that 10% kind of same kind of unit number you quoted, like, do those unit prices kind of track the overall rate? home price market from that basis. I know we've seen significant gains. So I guess from my perspective, I'm trying to think if like, you know, if you keep seeing built homes, prices go up and it becomes super competitive, maybe you end up with more customers.

Yeah, I mean, I would say that in any particular sub-market, at a minimum, it'll be directional. Just high level, you know, Kay Schuller, It was up 16% for the quarter. It was up 12% for the quarter in Q1. So we're seeing kind of a similar trend. You know, when I said 10%, we're actually up 11% for the second quarter. And in Q1, we were up 6%. So you're seeing an acceleration in that pricing just based on that high level of demand.

Okay, awesome. And then I noticed if I look at your annual RBA, same store versus 2019 levels. It looks like it's up a fair bit. I'm assuming some of that might be just the same store pool change. But is there something else driving that, like conversions, the big increase in conversions from 2019, or maybe just, like, did they grow? Is there anything to that, or maybe I'm getting that wrong?

Well, there's certainly an uptick in occupancy, Josh. And part of that is the contribution from the expansion sites that we've added. So that's driving that.

Okay. Awesome. Thank you, guys. Appreciate the time.

Thanks, Josh.

Thank you. And as a reminder, if you have a question, you'll need to press star 1 on your telephones. Our next question comes from John Palowski with Green Street. You may proceed with your question.

Hey, thank you for the time. Patrick or Marguerite, could you give me a sense for how meaningful the shift in weekday bookings have been and if it's enough of a needle mover to change how you think through the risks of the transient business? Because ostensibly that would put a little bit less pressure on weaving the needle on weather.

Yeah, I mean, we've seen an increase. It's probably been a 4% or 5% increase overall in the nights and occupancy. So I don't think that changes the metric of how we think about transient overalls. And we also think that, you know, that there's some amount of, you know, work flexibility that's factoring into that. And that, you know, seems to be changing over time here as people return to office.

Yeah. So in the past, you've kind of made the claim that or the statement that transient RV parks are kind of mispriced relative to annual or relative to MH. In a post-COVID world with more work-from-home flexibility requirements, Do you still stand by that, or is the transient RV becoming more interesting at current pricing?

Well, I think that we will always, you know, tend to want to invest in assets where you have a long-term customer base that you don't have to kind of go out and market every weekend for. So I would still stand by the annual seasonal business, the stickier business, a more high-quality cash flow than what you see on the transient side. On the transient side, in certain locations where, you know, it's extremely well located and there may be an opportunity there, but for the most part, we're, you know, we will be sticking with the annual seasonal business that's served us very well.

Okay. Thanks very much.

Thanks, Jonathan. Thank you all for joining us today. We're available for any additional questions. Have a great rest of the summer.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating.