Equity Lifestyle ELS reported third-quarter results that were slightly below our estimates, though we don’t see anything in the quarter that would materially change our $77 fair value estimate for the no-moat company. Occupancy for the manufactured housing portfolio sequentially remained flat at 94.6%, relatively in line with our estimate of 94.7%. Core manufactured home rates per rental site were up 7.1% year over year, slightly below our estimate of 8.0% for the segment. Meanwhile, recreational vehicle and marina rental rates were only up 2.0% year over year as seasonal and transient business fell 9.1% and 7.6%, respectively. As a result, core revenue increased 4.7%, below our estimate of 6.9% growth. However, operating expense growth was also below our estimate, coming in at 4.8% growth compared with our estimate of 7.7% growth in the third quarter. Therefore, net operating income was up 4.4% in the quarter, slightly below our estimate of 6.3%. Lower NOI growth led to Equity Lifestyle reporting funds from operations of $0.71 per share in the quarter, which was below our $0.73 estimate but matched the midpoint of management’s prior guidance of $0.68 to $0.74 for the third quarter.

Despite results coming in slightly below our expectations, we are comfortable with our short-, medium-, and long-term outlooks for the company. Management narrowed the 2023 FFO guidance by 2 cents on both the high end and low end to a new range of $2.82 to $2.88, keeping our $2.84 estimate for the year just below the midpoint. Management said it sent 2024 rent increases to approximately half of residents with rental rates increasing 5.4% on average, which just about matches our 5.5% estimate for 2024. Additionally, the company has set 2024 rates for approximately 95% of the annual sites with rates going up 7.0% on average, which is higher than our estimate of 5.3% growth. Therefore, we don’t anticipate any material changes to our forward estimates for the company.