ELS (2025 - Q3)

Good day, everyone, and thank you all for joining us to discuss Equity LifeStyle Properties Third Quarter 2025 Results. Our featured speakers today are Marguerite Nader, our CEO; Patrick Waite, our President and COO; and Paul Seavey, our Executive Vice President and CFO. In advance of today's call, management released earnings. [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 security 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. Please go ahead. Margueri

Good morning, and thank you for joining us today. I am pleased to discuss our third quarter results and will provide some insight into the strengths we see in 2026. Turning to the results for the third quarter, we delivered strong normalized FFO growth in line with our expectations of 4.6%. Our full year guidance shows continued strength in property operations and FFO. I would like to highlight some of the key demand drivers for our annual business and the access points for our new customers. There are approximately 7 million manufactured homes across the country, housing over 18 million people, accounting for about 6% of all U.S. housing. Outside of metro areas, this share increases significantly to 14%. New manufactured homes in our communities are designed to meet the needs of our core demographic, offering value both in terms of cost and quality of life. Construction and safety standards for manufactured housing have been meaningfully enhanced over time, making today's homes more durable and cost 60% less than that of a comparable site built home in the surrounding area. As important as affordability, our residents benefit from amenitized communities that foster a strong sense of belonging, security and connection. We serve a large and expanding market, which includes nearly 70 million Baby Boomers and 65 million members of Gen X within our target demographic. These individuals are increasingly seeking housing options that combine desirable locations, high-quality homes at attractive price points and a welcoming community environment. Our properties deliver on all 3 fronts, offering a value proposition that resonates with this growing segment of the population. Our marketing efforts focused on leveraging technology and insights into our customers' travel patterns and lifestyles to reach the nation's 8 million RV owners. We listen closely to feedback and adapt to evolving preferences. Our seasonal guests increasingly seek flexibility to book stays and visit multiple locations while Thousand Trails members value our new subscription-based memberships with tiered benefits that they can purchase online. Manufactured home buyers increasingly research and communicate with us online and via text. Our digital tools offer detailed information, virtual tours, online applications and text messaging with local sales agents. Alongside technology, our teams focus on personal outreach. Property managers build relationships with their customers invite guests to return next season and share new home opportunities that meet their needs. Turning to 2026 expectations. Within our manufactured housing portfolio, we expect to have issued 2026 rent increase notices to 50% of our MA presence by the end of October with an average rate increase of 5.1%. In our RV portfolio, annual rates have already been set for over 95% of our annual sites with an average rate increase of 5.1%. We continue to engage with our residents to identify and prioritize capital improvements within our communities. These efforts not only enhance the resident experience, but also support the long-term value of our assets. The anticipated rent increases position us to extend our long-standing track record of REIT-leading revenue growth. Our ability to share strong current results and provide early visibility into 2026 reflects the strength and dedication of our team. Their ongoing commitment to supporting our residents and customers is fundamental to our success. Through their focus on service quality and community, we've been able to consistently deliver superior operating performance over the past 2 decades. I will now turn the call over to Patrick to provide an overview of property operations.

Thanks, Marguerite. As we wind down the summer season in the north, our Sunbelt properties are gearing up for their winter season. Our MH and RV properties in Florida, Arizona and South Texas are preparing for the inflow of customers and increase in activities. On-site teams have begun welcoming residents and guests to properties. Our manufactured homes and communities continue to experience consistent demand and offer desirable features and amenities at prices that provide value in their respective markets. In the quarter, we continued to experience a consistent pace of new home sales. Our Florida MH portfolio reached 94% of occupancy. Florida continues to be one of the top states for net in migration, which supports demand for our key submarkets like Tampa, St. Pete and Fort Lauderdale, West Palm Beach. To meet that demand, we developed more than 900 sites in Florida over the last 5 years. Florida is also supporting strong rent growth, reflected in mark-to-market rent increases of 13% to new homebuyers. Arizona and California are our next largest markets, which are 95% occupied. Home buyers in our Western markets are attracted to these communities due to their desirable locations, quality amenities and the substantial value they offer in their respective markets, particularly the coastal markets in California. We continue to execute on our expansion strategy, providing opportunities for more customers to enjoy our product offerings. This strategy leverages in-place utility infrastructure, operational efficiencies, zoning and the brand recognition of existing properties. We started the fourth quarter -- as we started the fourth quarter, we started a -- completed a 103 site expansion at Clover Leaf Farms and MH Community on the Gulf Coast of Florida. This was the second and final phase of development, which added a total of 170 sites plus an amenity core. The first phase of 67 sites is approaching 100% occupancy. We also continue to see growth on the RV side of our business. Our RV annual sites provide an affordable second home, whether it's lakeside retreat in the summer or warm weather destination in the winter. In the quarter, we increased annual RV occupancy by 476 sites. With respect to our Canadian customers, many of whom return year after year to their site in one of our properties for the winter season, we're engaging with them through personal outreach as well as our traditional marketing channels. The regional weather outlook for the winter season looks favorable. The NOAA Climate Prediction Center forecasts a La Nina pattern this winter. This season's forecast calls for warmer drier conditions in the south, along with cooler weather conditions in the north, making the Sunbelt particularly attractive for winter getaways. Our operations team has prioritized occupancy and revenue growth, while thoughtfully budgeting and executing on expenses. Our on-site teams are focused on providing excellent customer service, and we are leveraging technology to increase efficiency for the staff members. Tools like electronic lease agreements and SMS, text, customer service platforms have been well received by our customers and help ensure that our teams have more time to focus on delivering memorable experiences. Finally, the third quarter wrapped up our 11th annual 100 days of camping campaign, which saw record engagement among our social media fans and followers. The campaign had over 46 million impressions on social media, and we received nearly 1,100 photo entries of our viewers with our signature rally towels, which reflects a strong and active customer base that wants to engage with our properties and brands. Now I'll turn the call over to Paul.

Thanks, Patrick, and good morning, everyone. I will discuss our third quarter and September year-to-date results, review our guidance assumptions for the fourth quarter and full year 2025 and close with the discussion of our balance sheet. Third quarter normalized FFO was $0.75 per share, in line with our guidance. Continued strong performance in our core portfolio resulted in 5.3% NOI growth in the quarter, 40 basis points higher than guidance. Core community-based rental income increased 5.5% for the quarter and for the September year-to-date period compared to the same periods in 2024. In the third quarter, we generated rate growth of 6% as a result of noticed increases to renewing residents and market rent paid by new residents after resident turnover. Core RV and Marina annual base rental income, which represents approximately 70% of total RV- and Marina-based rental income increased 3.9% for the third quarter and for the year-to-date period compared to the same periods last year. Year-to-date, in the core portfolio, seasonal rent decreased 7% and transient rent decreased 8.4%. We continue to see offsetting reductions in variable expenses. The net contribution from our total membership business consists of annual subscription and upgrade revenues, offset by sales and marketing expenses. The membership business contributed $16.8 million and $48.2 million net for the third quarter and September year-to-date periods, respectively, compared to the same periods last year. Core utility and other income increased 4.2% for the September year-to-date period compared to prior year. Our utility income recovery percentage was 48.1% year-to-date in 2025, about 150 basis points higher than the same period in 2024. In addition, we recognized higher tax pass-through income, mainly in Florida. Core property operating expenses for the year-to-date period were 60 basis points higher than the same period last year. This includes the change in membership expenses associated with the membership upgrade subscription program that was implemented earlier this year. Expense growth for the third quarter was 40 basis points lower than guidance, mainly resulting from savings in real estate tax expense. Third quarter core property operating revenues increased 3.1%, while core property operating expenses increased 50 basis points, resulting in growth in core NOI before property management of 5.3%. For the year-to-date period, core NOI before property management increased 5.1%. Income from property operations generated by our noncore portfolio was $1.8 million in the quarter and $8.3 million year-to-date. I'll now discuss guidance. As I do 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. We are maintaining our full year 2025 normalized FFO guidance of $3.06 per share at the midpoint of our range of $3.01 to $3.11 per share. Full year normalized FFO per share at the midpoint represents an estimated 4.9% growth rate compared to 2024. We expect fourth quarter normalized FFO per share in the range of $0.75 to $0.81. We project full year core property operating income growth of 4.9% at the midpoint of our range of 4.4% to 5.4%. Full year guidance assumes core base rent growth in the ranges of 5% to 6% for MH and negative 20 basis points to positive 80 basis points for RV and Marina. The midpoint of our guidance assumptions for combined seasonal and transient show a decline of 13.3% in the fourth quarter and a decline of 8.8% for the full year compared to the respective periods last year. Core property operating expenses are projected to increase 40 basis points to 1.4% for the full year 2025 compared to prior year. Our full year expense growth assumption includes the benefit of savings in payroll expense year-to-date in 2025, reduced membership expenses and the impact of our April 1st insurance renewal for 2025. Consistent with our historical practice, we make no assumption for the impact of a material storm event that may occur. Our fourth quarter guidance assumes core property operating income growth is projected to be 4.4% at the midpoint of our guidance range. In our core portfolio, property operating revenues are projected to increase 3.3%, and expenses are projected to increase 1.6%, both at the midpoint of the guidance range. I'll now provide some comments on our balance sheet and the financing market. We maintain our focus on balance sheet management and believe we are well positioned to execute on capital allocation opportunities. We have no secured debt scheduled to mature before 2028, and our weighted average maturity for all debt is almost 8 years. Our debt-to-EBITDAre is 4.5x and interest coverage is 5.8x. We have access to over $1 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 and asset type and quality. Current 10-year loans are quoted between 5.25% and 5.75%, 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 the call up for questions.

[Operator Instructions] And our first question will come from Michael Goldsmith with UBS.

First question is on the 2026 rent increases. Can you talk a little bit about the process that goes into setting those? And then I guess historically, RV has been at a higher rate than MH, and it has closed the gap here. So can you talk a little bit about what's going on there? And is there a risk that maybe you're not even conservative enough there. So just trying to get the thought process on that closing of the gap.

Yes. Sure, Michael, it's Patrick. The process for the MH rate increases and the RV annual rate increases are very similar to one another. Our property operations teams review the competitive set. And as we work our way through our budget process, we set the rates for the upcoming year. So that's been consistent and the take that we're hearing, and it's early, is that the year is behaving very similar to prior periods. There's nothing really unusual. Just with respect to the fact that the annual has moderated somewhat, so it's just general market forces. We've come off of a period where the annual rate increases did outpace as you noted. The fact that, that's coming a little bit more in line, I don't think there's a real relationship between the 2 property types, it just has more to do with the overall cadence of the market.

Got it. And my follow-up has to do with the seasonal reservation base for Canadian customers. It sounds like you've been reaching out and through traditional marketing channels and reaching out individually, I'm just trying to get a sense of the success rate there and just the ability to affect change and get that number higher as we approach the seasonal time.

Yes. I mean, Michael, one of the things that we've often talked about is that it's really the cold winter season that drives the reservations. We've had a very moderate October. So both in the United States and Canada, there hasn't been a lot of bad weather, which tends to dampen reservations a bit. So I think as we continue to head into winter, we will see increased reservations. On the Canadian front, as you know, there is a political issue there that is causing people to pause before coming to the United States.

And the next question will come from Brad Heffern with RBC.

On the reservation pace being down 40% for the Canadians, does that -- does guidance assume that the actual bookings from those customers end up being down 40%, or do you assume that they're just waiting longer to book, and there's some sort of moderation there?

Yes. So Brad, I guess I can walk through. As we said, the combined seasonal transient growth is down 13.3% at the midpoint of that range. That compares to our prior guidance update issued in July when we assumed the combined seasonal and transient will be down 1.5%. That difference, the unfavorable development of $2.7 million is primarily related to seasonal and mainly the result of the lower reservations from Canadian customers. And I'll just walk through that just to kind of be clear on what's happened. So we've previously said that Canadians represent about 10% of our total RV revenue, 50 percentage from annual customers. So the remaining 50%, which is just over $21 million is generally split evenly between seasonal and transient. In the fourth quarter, we earn approximately 25% of our seasonal revenue for the year and approximately 15% of our transient revenue for the year. So that was the basis for our prior expectation of approximately $4.3 million of Canadian seasonal and transient in the fourth quarter. Our current Canadian reservation pace, as we said, is down approximately 40% compared to prior year.

Okay. Got it. And then obviously, 4Q typically the lowest combined seasonal transient revenue quarter, first quarter typically the highest. So I'm just curious how much we should read the expectations for the fourth quarter into the first quarter as well?

Yes. I mean, we're not providing guidance right now for 2026. I can say that the reservation pace from Canadian customers for the first quarter is similar to the pace that we're seeing for the fourth quarter.

And the next question comes from Jana Galan with Bank of America.

Paul, I was just curious on the core FFO guidance range, fourth quarter, you have $0.06 of variability and full year is still $0.10. So just checking if there's any expectation of greater volatility or share count changes or anything to call out for the difference?

Nothing to call out. We simply carried forward the convention that we've used all year with the $0.10 range for the year.

Great. And then Marguerite, curious on your MH comments at the beginning of the call and kind of the opportunity there, could you potentially be developing more sites or anything on the acquisition side available in MH that could be interesting?

Sure. Patrick, maybe can walk through our development. With respect to acquisitions, as you know, we'd certainly like to buy a high-quality MH portfolios. They're just difficult to source. I think we continue to see muted volume in terms of transactions. The ownership base is very fragmented, and we work with owners as they make their way towards becoming sellers. These assets have -- they've behaved and performed incredibly well over time. And so there's not a lot of desire to sell the assets. So -- but to the extent that there are opportunities to grow inside of the MH space, we would certainly want to continue to do that. Right now, as we look to deploying capital, we think that continuing to invest in our properties is a good return. And maybe, Patrick, you can walk through that.

Yes. So for the year, we're looking to add about 400 to 500 expansion sites. That's on the lower end of what we've developed over the last 5 years on an annual basis. We had just over 1,000 sites delivered in 2020, and through the last 5 years, we've delivered about just shy of 5,000 sites. So now our goal is to be in that 500 to 1,000 site range. We think that's sustainable for the foreseeable future. But there will be some variability year-over-year when you're imposing a calendar year over a development pipeline. And as I mentioned on previous calls, we have had some headwinds just working our way through some of the administrative processes to get permits and complete developments in recent quarters.

And our next question comes from Steve Sakwa with Evercore.

I guess I wanted to circle up on the MH rent increase. It's gone to 50% of the customers. But when you sort of look back historically, at the other 50%, how does that bucket trend relative to the first half? And then could you maybe just also comment on the decline in occupancy that we're seeing in the MH portfolio?

Sure, Steve. With respect to the lease agreements with our customers, 50% of those agreements are based on market. The other 50% have some linked to CPI. Half of those are rent control or some other direct CPI link and the other are, what we call, long-term agreements. There are typically 2- to 3-year agreements, primarily in Florida, that we've entered into in negotiation with our customers. When we think about the first 50% that have been noticed for 2026, it is more heavily weighted towards Florida residents. And we do also have a higher percentage of customers going to market. So the notices in January tend to be slightly higher than what we might see throughout the year, subject to fluctuations in CPI as we issue notices throughout 2026 that are more heavily weighted to the CPI index.

And then, Stephen, just with respect to the occupancy trends. I mean, we increased occupancy in the quarter. Year-to-date through Q1, Q2, we did have some hangover from the impact of hurricanes last year. We're past that now, and the trend is back towards increasing occupancy.

Okay. And then I guess second question, just you guys have done a very good job on expense containment both in the quarter and year-to-date at sub-1%. Just any kind of broad thoughts as you kind of look into next year on some of the puts and takes that you maybe got this year that were better or maybe worse? And how should we just think about that broad trend moving forward?

Sure, sure. As we think about it, we focus quite a bit on the 2/3 of our expenses that are utilities, payroll and repairs and maintenance. And we have certainly in 2025, benefited with respect to payroll expenses as we've managed through some of the challenges we've seen in the RV transient business. So that for the year is trending close to flat. I wouldn't necessarily anticipate that as a run rate over the long term for payroll. Our insurance renewal that occurred in April of 2025 was favorable, and that was, as a reminder, for everybody, down 6% compared to prior year. And then the last thing I'll note is, in 2024, we saw some fairly significant increases in real estate taxes, particularly coming from the state of Florida. That, based on our preliminary TRIM notices, received for the 2025 tax year, that trend has reversed somewhat, and we've seen some relief from our expectations. Not to say that those taxes have declined necessarily. It's just some relief from our expectations. So we could see volatility in real estate taxes continue into 2026.

And the next question comes from Jamie Feldman with Wells Fargo.

I just wanted to make sure I understand the seasonal impact of the Canadian demand down 40%. So if we assume it stays at 40% into '26 based on the fact that so much of the income is hitting in 4Q and 1Q, like is there another 3% hit next year, or since you've already taken it out of -- if we already take it out of our '25 models, it's kind of the run rate already in '26. Can you just help us think through that?

Sure. I mean, I think it's challenging to consider what we're experiencing in the fourth quarter, our run rate for '26 because clearly, the current environment is something that will likely change over the next 12 months. What I'll say about the first quarter is when you think about our expectation to earn 50% of our seasonal rent and 20% of our transient rent in the first quarter, that suggests that we -- that -- the 40% decline would be around $3 million. And what I'll say, as we think about the current environment, and how challenging it is as it relates to U.S. and Canadian relations, when we think about our long history, the only time period that we can see as any sort of reference point is during the pandemic. In late 2020 and early 2021, when there were travel restrictions in place, including the border closures, that impacted our expectations for seasonal and transient revenue. In January of '21, we anticipated a decline of $10 million in seasonal and transient revenue during that first quarter of 2021. And when we were on our call in April, the results proved better than that, and we ended up being down $6 million.

; So it is about those last-minute bookings. And as I mentioned, as the weather changes and as the reservations increase and that pace increases.

Okay. I guess in this environment, I think we've all learned not to get hopeful. Who knows it's around the corner. I mean, are there any data points or tea leaves you can point to that are actually giving you conviction that 40% is not the bottom, or 40% won't -- isn't going to stay around for a while?

I mean, what we've heard is that our customers or Canadian customers that have made reservations are excited to come back. And what we know from our long history of watching reservation pacing, it is a function of what's happening in one's local area. And as the snow starts to come down, the phone start to ring. So that's -- we don't think that's going to change.

Can I ask one more since that was more of a follow-up.

Sure. Sure, Jamie.

Okay. Just got to play by the rules here.

We'll appreciate that.

So following up to Steve's question on expenses. You've -- your model has been very successful in being able to lower expenses based on the transient revenue decreases. At some point, does that relationship break, and you just can't cut anymore? I mean I know you've commented you think 40% is about as bad as it's going to get, but just theoretically, if it gets worse or if transient continues to decline, like is there some point where you just have fixed expenses that you can no longer compensate or mitigate the revenue declines?

Yes. I mean certainly, there are fixed expenses at the property level. There's a certain amount of staff that's needed just to run the business. But we look at this and evaluate it. The operating team does a great job evaluating it on a daily basis to understand who's coming into the properties, who's checking into the properties, and how many people are working. So we'll just continue to do what I think the team has done a really good job over the last 3 or 4 years on making sure that we're operating efficiently.

And the next question comes from Eric Wolfe with Citi.

For the 5.1% price increase on annual RV, at what point over the next couple of months, will you have a good understanding of what the acceptance of those increases look like. So I'm trying to understand at what point do you know sort of the turnover for those properties, specifically for the Sunbelt locations that renew a bit earlier. And I think you've said in prior calls that the Phoenix market is by far the biggest in terms of annual customer for Canadian travelers. So do you have any early read on what that market looks like so far?

Sure. So Eric, we mentioned that a portion of the notices or the rate increases for the RV annual are essentially effective now or over the next couple of months as the winter season is starting, and so we have visibility into the annual renewals right now, that's live. And then with respect to the summer season, those renewals tend to take effect in the middle of the second quarter. So that's when we start to gain visibility into customer acceptance.

And then, Eric, in terms of Canadian annuals, and we haven't seen any decrease in appetite for people -- for our annual customers to stay with us. We haven't seen an increase in home sale activity among the Canadians that are annuals with us. So that is all trending positively.

Got it. So I guess just to make sure I understand. I mean because I think if you look back to the fourth quarter call earlier this year, I think you said that you noticed a bit higher turnover in some of those Sunbelt locations. But it sounds like you're saying right now, you have very good insight, at least for the next 3 months because those rate increases are effective. I guess what I'm trying to understand is, at what point do you sort of have that locked in -- that 5.1% locked in? Is that by kind of like December, January, or is it already set for those 95% they've already effectively accepted those? Just trying to understand how turnover might change from the next 3 months to like the next 6 months and the potential for any kind of surprise come sort of the fourth quarter call.

Yes. I guess, adding to what Paul said that the cadence of the Sunbelt, we're at the early stages of that process right now. And the notice is going out for the next summer season are being sent currently. So we're getting very early visibility there. I guess I'd say at this point, we don't see anything, as I mentioned earlier with -- just with respect to the MH and the RV notices. They seem very much like a run rate year for us. We're not seeing any indication that there's an unusual pattern. I would phrase that or characterize that as a normal rate of acceptance. And as we move into the summer season when those increases are effective in the second quarter, we'll have better visibility. But the early read is that it's behaving very much like a run rate year for us.

And Eric, I think it's also just an important data point that we covered in, I think Patrick covered it in his comments, but also in our release that we filled 475 annual RV sites in the quarter, which is a very high watermark for us. So I wanted to make sure you saw that.

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

I work at a Canadian bank, so I have to stick to Canada. In your discussions with your Canadian customers, how much of the reason that they're not returning due to weather versus the political environment? And if it's the latter, why would that not impact the annual RV customers?

Yes, I think there's a couple of things happening. So what we're hearing is the customers that have not booked -- that had previously booked, they are not interested due to political issues. So that's just what we're hearing. Now the reason it doesn't impact the annual customers, that annual customer has a home on site at one of our properties. They've already made that decision. They put capital on our properties. They own a home, they own an RV, maybe on the site, but that is -- they've made that commitment. So that's why -- I think that's why we're not seeing it because the -- on the seasonal base, they haven't made their way down yet. They haven't gotten the RV and started driving yet. So that's the difference that we're seeing. It's really a function of the political overtones right now.

Okay. And then on your guidance for the fourth quarter, seasonal transient down 13% at the midpoint. What do you assume as far as backfilling some of that Canadian demand with non-Canadians. And also, you mentioned the shorter booking window, like how much of that do you think -- like how much of the demand do you think just books kind of like last minute?

Yes. I would point -- I think Paul mentioned that what we -- how we dealt with things during COVID. We thought it was going to be one number ended up being much better, and that was because we were filling the properties with U.S. demand. The impact on the Canadian properties is a handful of properties has primarily the bulk of the discrepancy. And so those are -- that is something that we continue to market to United States customers, which we, in the past, have not. So we're continuing to try to provide them access to those properties that they previously didn't have access to because they were filled and reserved with our Canadian customers.

And the next question comes from Jason Wayne with Barclays.

Just on the RV and Marina annual, that came in a bit weaker than expected, a little lower guidance. You previously mentioned there was an impact from some storm damaged properties. So just wondering that's driving impact, and are the storm properties back online there?

Yes. So what you're referring to is the impact on our Marina portfolio, the Marina annuals. We're working our way through that 3 specific properties that were previously damaged by storms. It's just taking us a little bit more time to work through the permitting process and completing construction. We expect those properties to come online fully in 2026. So we'll see a rebound. We're not seeing an impact from an overall demand perspective. Rather, it's driven by the impact of those properties that have some reduced capacity.

Our next question will come from Wesley Golladay with Baird.

Can you talk about the seasonal and transient RV trends ex Canada?

Sure. What I'd say just kind of walking through the math or the analysis that I discussed earlier. If you think about the remainder, what we're seeing is reservation level or pacing that is similar to what we've seen year-to-date in 2025.

Okay. And then when we look at the building blocks for '26 RV revenue growth, it looks like this year, overall revenue growth lagged the rate growth that was set last year. Do you expect similar headwinds this year on occupancy and other items?

As we look forward, I'll go back to just what I highlighted with respect to the rate increases, and what we're seeing is early acceptance. I would expect that we're going to go to something that's a more normal trend for us, which would include occupancy that would improve over what we've seen over the prior year.

And the most recent data point we have on that is the sites that I mentioned just the annual growth -- annual RV sites growth in the quarter.

And the next question comes from David Segall with Green Street.

I was hoping you can kind of provide a little more color on how you can backfill the missing demand from Canadian customers of domestic and domestic customers and whether that might involve discounted rates in order to spur demand?

Sure. It's really about exposing those customers to the property. So our marketing strategy really -- we engaged with previous guests and try to give them exposure to the new properties, making social media post. It's really important and making them very relevant and topical. We have over 2.2 million fans and followers between Facebook, Instagram and Twitter. We use pictures and videos of the locations to really help the customer make the decision to book. And then we're very focused on leveraging the current news cycle for topical material that we can really incorporate into our marketing, including sporting events, local festivals and that type of thing to draw people into and experience the properties. In many ways, we try to view it as a sample to property, you'll try it, you like it kind of thing. And I think we've been successful with that in the past. And then we successfully work with online travel agents, Expedia and Booking.com to post our properties on their websites.

Okay. So you're not necessarily trying to cut rates to fill demand, it's more of a marketing play.

Yes. That decision whether or not to offer concessions is done on a market-by-market or property-by-property basis and in some instances, where we see it makes sense to reduce rates and bring in volume, we will do that.

Great. And then for my second question, just with regard to the several hundred annual RV sites that you released in the quarter, looks like it effectively reversed the sites that went last quarter that went from manual to transient. Are you reletting the same sites that had been vacated last quarter or these different sites? And why the addition of these additional annual paying sites not seem to impact the outlook for the remainder of the year? Is it just too late in the year to make a difference?

Yes. I think the latter part of your question is the answer to the impact. There is impact, of course, from filling those, but it's modest, just given the time left in the year. When you think about the chart that we provide that shows the site count, the annuals increased as you saw in the transient decrease. Essentially, the way that chart works, all sites are available for transient to the extent that we fill annuals, we're going to show that, and it just naturally offsets the transient. And finally, like I said, so we didn't release the same sites. It was the mix of sites that we filled in the quarter that changed.

And the next question will come from Omotayo Okusanya with Deutsche Bank.

I just wanted to wanted to go back to Jana's question just about guidance. Again, just kind of given so late in the year already, but there's still that $0.10 gap from that perspective. Just wondering, again, at this point, what's driving the higher end or the lower end of guidance kind of at this late stage in the year?

Well, I guess I'll just say when you look at the math, yes, there's a difference. I'll also comment. We've done this the other way in the fourth quarter, where we've reduced the range to $0.06, and we've had confusion on that. So I'm not sure which way is the right way to handle it on a go-forward basis. But with respect to the upper and the lower end of guidance, I think I would point to, as I mentioned, we don't have an assumption for a storm event. So that's not factored in at all to the extent that we see meaningful acceleration in something like MH occupancy, that could potentially drive revenues. We could see expense changes potentially if we have not yet seen meaningful impact from tariffs or other influencers on expenses. But I suppose it's possible that, that could come up in the quarter. And generally speaking, there could be just other points of volatility in the business, but there's not a signal as it relates to the difference between the guidance for the quarter and the guidance for the full year.

That's helpful. And then one follow-up question. In regards to kind of initiatives to kind of move some of the transient business over to annual, again to kind of just lower volatility in general. Could you talk a little bit about kind of what's happening along those lines, how successful you are at kind of making some of those conversions, or whether it's kind of been a little bit more difficult than you were anticipating?

I'll just speak to the typical trends that we see. And of our annual customers, about 15% to 20% of them has previously stayed with us as a transient or a seasonal. That also adds to our seasonal customers, 15% to 20% of them has previously stayed with us as a transient customer. So that pipeline of an original transient stay that ends up migrating to longer-term stays for us is, call it, in that 20% range. And that's been relatively consistent. We are focused on -- we have guests on sites that they experience a high level of customer service and that they're presented with the ask of a take on a longer-term stay.

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 remarks.

Thank you. We appreciate you joining our call today. We look forward to updating you on our next call.

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