Equity LifeStyle Secures Funding

Equity LifeStyle Properties, Inc. (ELS - Snapshot Report), a real estate investment trust (REIT) that owns and operates lifestyle-oriented properties, has recently obtained a debt of $100 million collateralized by 10 manufactured home communities and an RV (recreational vehicle) resort.

The debt facility, scheduled to mature in 2021, bears an annual interest rate of 5.0% and requires an interest-only payment for the first two years.

In concurrence with its corporate strategy to own high-quality resort communities in high barrier-to-entry markets, the company had earlier announced its decision to acquire a portfolio of 75 manufactured home communities and a RV resort for $1.43 billion, including loans secured by the former.

The properties were acquired from the affiliates of Hometown America L.L.C., a privately held company that owns and operates manufactured housing communities across the U.S.

As of September 15, 2011, Equity Lifestyle had completed the purchase of 58 properties. The company expects the proceeds from the loan to partially fund the acquisition of the remaining 18 properties.

The acquisition will enable Equity LifeStyle to increase its scale of operations and swell its kitty of manufactured home communities. The company leases individual developed areas or sites that have access to utilities for the construction of factory-built homes, cottages, cabins or recreational vehicles.

Customers either opt to lease individual sites or sign right-to-use agreements with the company that provide them with access to specific properties for limited stays. As of September 15, 2011, Equity LifeStyle’s portfolio includes 365 properties located in 32 states across the U.S.

We presently have a Neutral recommendation on Equity LifeStyle, which currently has a Zacks #3 Rank that translates into a short-term Hold rating. However, we have an Outperform recommendation and a Zacks #1 Rank (short-term Strong Buy) for Post Properties Inc. (PPS - Snapshot Report), one of the peers of Equity LifeStyle.

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