Equity LifeStyle Properties Inc (ELS) 2016 Q2 法說會逐字稿

Good day, everyone, and thank you all for joining us to discuss Equity LifeStyle Properties' second-quarter 2016 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 risks and uncertainties. The Company assumes no obligation to update or supplement any statements that become untrue because of subsequent events.

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 operations performed very well in the quarter. The key highlights for the quarter include: we continued our positive occupancy trends of both increasing occupancy and gaining homeowners. For the quarter, we have increased occupancy by 130 sites and increased homeowners by 231.

Our MH revenue grew by 4.7%. On the new home sales front, we sold 180 homes, a 26% increase from 2015. Our RV properties performed well, with a 6% growth rate, and our same-store NOI growth was 6.1%. And finally, our FFO increased 7%.

Our MH occupancy, which is comprised of annual sites leased at MH properties, is 93.5%. This occupancy has increased each of the last 27 quarters. The stability and growth in our occupancy is a testament to our quality real estate locations and amenity offerings.

We have been focused on converting existing renters to owners, and are pleased with the trend we are seeing. For the year, 10% of our new and used home sales were existing renters buying the home they were living in, and an additional 5% of our sales were from customers who were already living in the community and chose to purchase a different home in the community.

Our MH customers are continuing the migration trend that we have seen in the past. Roughly two-thirds of our new home buyers are located within 50 miles of the property, and the remaining one-third are coming from further away and generally out of state. Our customers are shoppers, and they want to appreciate the area before they make a commitment. Our data further supports our belief that driving customers to the property to experience the lifestyle is the key for continued occupancy and homes sales growth.

We are over halfway through our 100 days of marketing campaign, and are pleased with the results. While the transient component of our RV business only represents 5% of our overall revenue, it is an important feeder for the rest of our RV business. Our transient business is concentrated in the summer months, with over 50% of the full-year revenue coming in from Memorial Day to Labor Day.

We now have two of the important summer holidays completed, with a 14% revenue increase year-over-year. This additional revenue was driven from a combination of new customers visiting our resorts, existing customers returning, and adjusting the rate where demand is high.

The majority of our annual and seasonal business is repeat and referral customers. The transient business is less predictable and requires more marketing efforts. Over the last eight years, since we launched our online reservations, we have seen an increase in the desire for our customers to transact online. We now have 23% of our transient RV revenue booked online.

We've updated our websites and our reservation app to meet the demands of our customers. Our updated websites are fully responsive, providing optimal experience on any size mobile device. Using still pictures and video, we continue to refine our communication so that the customers can have an appreciation for the vacation experience before they book with us.

Turning to transaction activity, we purchased two properties in the second quarter. One property is a 1,200-site age-qualified community outside of Tampa, and we've purchased a 400-site RV property located outside of Portland, Oregon. Both properties will complement our existing properties in the area.

I want to thank our entire team for delivering great results this quarter. The summer is a busy time for us, filled with many great customer service opportunities, and I appreciate everyone's continued efforts to deliver a great experience for our customers.

I will now turn it over to Paul to walk through the numbers in detail.

Thank you, Marguerite. And good morning, everyone. I will discuss our second-quarter results and update guidance for the remainder of 2016. For the second quarter, we reported $0.75 normalized FFO per share, approximately $3 million ahead of guidance, and $0.03 ahead at the midpoint of our first share guidance range.

Overall core property NOI contributed $2.7 million more than expected as a result of strong revenue growth and lower than expected expenses. Our core MH rent growth of 4.7% consists of approximately 3.8% rate growth and 90 basis points related to occupancy gains.

Our Echo joint venture generated 63 of our new home sales during the quarter. Our second-quarter core RV resort base rental income growth was 6% -- ahead of our guidance as a result of 9.1% growth from our transient business. Revenues from annuals and seasonals generated growth over 2015 of 5% and 5.5%, respectively.

Growth in annual revenues was mainly the result of rate increases in our Florida and Arizona Encore resorts combined with occupancy increases in the Thousand Trails portfolio. Core utility and other income was higher than guidance as a result of a payment we received during the quarter related to a temporary access easement at one of our properties.

Membership dues revenue was ahead of guidance for the quarter. During the quarter, we sold approximately 4,400 Thousand Trails camping pass memberships. Year-to-date, we have sold approximately 6,600 camping passes, a 10% increase over the first six months of 2015. During the quarter, we sold 626 upgrades at an average price of approximately $4,900. The net contribution for membership upgrade sales was higher than expected as a result of decreased expenses.

Core property operating expenses were less than expected in the quarter. Savings and utility expenses -- mainly electric expense in California, Arizona and Florida -- as well as the timing of certain maintenance projects, were the main contributors to the favorable variance. We also realized lower-than-expected membership sales and marketing expenses.

In summary, second-quarter core property operating revenues increased 4.2%, and core property operating expenses increased 1.7%, resulting in an increase in core NOI before property management of 6.1%. Income from property operations generated by our acquisition properties performed better than guidance as a result of the contribution from the properties we acquired during the quarter.

The properties we owned prior to the beginning of the quarter performed slightly better than our expectation during the quarter. Property management and corporate G&A, other income and expenses, as well as financing costs and other, were in line with our guidance for the quarter. year-to-date, core property operating revenues increased 4.3%, and core NOI increased 6%, driven by our core community base rent increase of 4.5% and our resort base rental income increase of 5.7%.

Turning to our guidance update, the press release and supplemental package provide third-quarter and full-year guidance in detail. Please note the following 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.

We have increased our full-year 2016 normalized FFO per share guidance $0.04. Our range for the year is now $3.23 to $3.33. The midpoint of our third-quarter normalized FFO guidance is approximately $76.2 million with a range of $0.79 to $0.85 per share. We expect the third-quarter to contribute approximately 25% of our full-year normalized FFO.

For the remainder of 2016, we assume no change in our core MH occupancy from the end of the second quarter, and expect community-based rent revenues of $232.3 million, a growth rate of 4.4% for the remainder of the year. In our RV business, we anticipate core RV revenues of $95.3 million for the rest of the year, a 5.1% increase over the second half of 2015. We expect revenue growth from our annual customers for the remainder of 2016 to be in line with our second-quarter growth, and project a 5.1% increase.

Our seasonal business is expected to increase 2.1% for the remainder of the year. Our transient revenue is expected to grow 6.6% for the remainder of the year. We expect between 40% and 45% of the full-year transient income will come in the third quarter. Based on our review of current reservation pace, and overall expectations for activity in August and September, we are projecting 8% growth in transient revenue for the third quarter.

Dues and membership sales revenues for the second half of the year are expected to be $29.3 million. The associated sales and marketing expenses are anticipated to be approximately $6.6 million for a net contribution of $22.7 million.

Core operating expense growth is projected to be 2.1% for the remainder of the year as well as for the full year. Our current guidance includes expenses related to certain projects that were originally scheduled for the second quarter that have been deferred to later in the year.

For the rest of the year, core property operating revenues are anticipated to be up 3.9%, with core expenses growing at 2.1%, resulting in a net increase in core property NOI of 5.2%. Our guidance update for the third and fourth quarters includes the impact of the properties we acquired during the second quarter. We expect the acquisition properties will contribute about $3.5 million in income from property operations for the remainder of the year for a total of $5 million for the full year.

Property management and corporate G&A is expected to be $38.7 million for the remainder of the year and $77.6 million for the full year. Other income and expense items are expected to be approximately $5 million for the rest of the year, and approximately $16.6 million for the full year.

Financing costs and other in the second half of the year are expected to be $55.4 million. Our guidance includes the interest expense associated with the debt we assumed with one of our acquisitions, as well as the impact of the refinancing activity we expect to close in the second half of the year, which I'll discuss in a moment.

Now some comments on our balance sheet. During the quarter, we funded approximately $93 million of acquisitions using a combination of equity, debt, and available cash. Using our ATM program, we raised approximately $50 million of equity by issuing stock at a weighted average price of $73.15. We also assumed a $22.6 million loan with a remaining term of approximately 23 years and a 4.5% coupon.

Our press release includes a description of debt refinancing we've initiated during the quarter. We have locked rate on $88 million of secured financing with three life companies at approximately 55% to 60% LTV. The loans carry a weighted average rate of 4% and a weighted average term of almost 23 years. We expect to close these loans during the third and fourth quarters of this year and we'll use the proceeds to repay maturing debt.

While we continue to see strong interest from various lending sources to finance our MH and RV assets, the combination of several factors is contributing to additional scrutiny by lenders as they evaluate opportunities. These factors include market conditions post-Brexit; the amount of capacity life companies have as they come close to meeting their annual allocations; and the appetite GSEs have for financing RV assets.

Current secured debt terms available for MH and RV assets range from 55% to 75% LTV with rates from 3.25% to 3.75% for 10-year money. High-quality, age-qualified MH will command preferred terms from all lending sources. Fannie and Freddie, CMBS lenders, and certain life companies, are currently offering debt to finance RV assets. The current lender underwriting model for MH and RV assets places high value on strong sponsorship.

Our interest coverage ratio is 4.0 times and our debt to adjusted EBITDA is 5.3 times. Our cash balance at the end of the quarter was $75 million. After adjusting for restricted cash in our July dividend, available cash is approximately $35 million. We have no outstanding balance on our $400 million line of credit, which has approximately two years remaining and carries a one-year extension option.

Now we would like to open it up for questions.

(Operator Instructions) Gaurav Mehta, Cantor Fitzgerald.

A couple of questions -- one on the transaction side. I was hoping if you could provide the cap rates on the two assets that you acquired, and what else are you seeing in the market?

Sure. The one property that we bought near Tampa -- the Thousand site property -- we purchased it for about $75 million, which was about $65,000 per site and roughly a 5-cap going in on first-year revenue.

With respect to the Portland property, Portland Fairview, again, that property is an RV property located right outside of Portland. We bought it for $17 million; about $40,000 a site. And the going in on that is about a 7-cap.

And then, Gaurav, with respect to just the broader market, there continues to be strong demand for our product type. Most of the time, it's a question of when the seller is willing to part with their asset. And we are continuing to work with interested sellers on transactions, but never quite sure when deals are going to close, which, as you can see, is evidenced by the closes that we did this quarter, we've been working on them for a while. I'm not sure when they were going to close, though.

Okay, great. And second question on the operations side, if you think about the occupancy for your portfolio, how much more upside would you say before you reach fully occupied status for your portfolio?

Yes, Gaurav, this is Patrick. The historical high watermark is about 95%. We're a little over 93% at this point, and we're adding occupancy at around 90 basis points year-over-year. As long as the market holds up, I don't see any reason why that trend wouldn't continue up to the 95%. And then we'll see what we can achieve after that.

Okay. Thank you.

Thanks, Gaurav.

Juan Sanabria, Bank of America.

I'm here with Jeff Spector. I just wanted to ask a question on the sales and marketing. It looks like it was below what you had expected for the second quarter, and I think it's come down a little bit for the full year again. Could you just speak to, well, maybe what's changed there and how your marketing initiatives may be altering as the year goes on?

Yes. The membership sales and marketing that you're referring to, we had a couple of drivers. There was a change in -- in the quarter, there was a change in the commissions that were paid out, and then we also had some initiatives that we anticipated implementing in the second quarter that didn't happen. One thing I want to note is that line item is specific to marketing costs associated with the membership business.

And how did the commissions change?

It was just a function of the volume of sales as well as the mix of sales between our in-house sales and our third-party provider of membership sales.

And I think we've talked in the past about the third-party sales just have a higher commission rate. So to the extent the mix skews towards the in-house, you are going to see lower commissions.

Great. Thank you. And then just on the annual RV rent growth expectations, they are down a little bit from where you were forecasting for 2016 from the first quarter. Anything that drove that change from a fundamental perspective?

You know, I mean, as we look at it, I think we started the year, we were somewhat at 5.7% in terms of annuals. And now, when we look out to the rest of the year, we're coming in at a 5.4% number; I think it's roughly a $500,000 swing. So, overall, we're pretty specific when we do our reforecast. So, overall, there's no big adjustment; it's a $500,000 swing.

And as we look to the seasonal and transient piece, you can see the pickups -- specifically seasonal, I think it's been pretty -- it's gone from 4% to something like 4.5%. And on the transient side is really where we get more clarity as we go through the year. I think we started out the year at somewhere in the 4% range; brought it down a little bit and now it's back up to 6%, based on what we're seeing for the second quarter and the reservations in the third quarter.

Great. And just lastly, any big portfolios that are out there in the market that maybe you would be looking to acquire anything that kind of fits your parameters?

No, there's a couple -- some of the portfolios I've been talking about for a while, just assets that we're not necessarily interested, in terms of larger portfolio, that are out there. But nothing that's on the horizon right now.

Great. Thank you very much.

Thank you.

David Toti, BB&T.

Just a couple quick questions. Did you guys look at any of the Northstar assets during any of the recent activity there?

No, I mean, we know those assets very well. They are basically the ARC assets, which Patrick was Head of Operations at ARC. So, we were very aware of them. There were maybe a couple that we'd be interested in, but overall, not -- it didn't really meet the quality end of our asset type.

Okay. And then I guess, given where pricing is kind of [ahead] on your assets specifically, are you seeing any change in seller attitude? Or I guess are sellers a little bit more willing to transact today? That's always been a tough aspect of your business, is that people just won't let go of the assets. Are you seeing that loosen up at all?

Right. No. It continues to be difficult. And I think it's what's the right time for them? It's a very personal decision. It's a decision about what's happening with their family situation. Oftentimes they think they're going to hand it off to their kids, and their kids aren't interested.

So it's those types of individual situations. We certainly are continuing to engage with potential sellers, but I call them potential sellers because you never quite know when they're actually willing to part with it.

Okay. And then just one last question relative to the home sales. Maybe I missed this, but have you seen any change in price point on the new home sales? Are customers moving back up the spectrum to more expensive homes at this point in the cycle? Or is that remaining relatively flat still?

Let me speak. They're mostly based on mix. I mean, you've seen an increase in our new home sales over the last several quarters. We're up 26% in the quarter. And over the year-to-date period, we are up more than 30% in new home sales. Typical price point on those homes, depending on market, ranges anywhere from $50,000 to $75,000. That's a substantial uptick from where we were in, call it, 2012, 2013, and 2014.

With respect to used homes, our used home inventory has actually decreased. So as we came out of the Recession, and the single-family housing markets firmed, and the economy improved, people were more willing to make that investment in both new and used homes. So we've been selling down our used home inventory.

And I would say that's indicative of people willing to make that investment. I haven't seen a lot of what I would call price increases on the used home inventory; it's relatively consistent. But that shift to more new home sales points to a willingness of that customer to just invest in a newer, more expensive property.

Okay. But you are not at the $200,000 unit price point yet?

(laughter) Not quite.

Okay. (multiple speakers) Thanks for the detail.

Thanks, David.

Drew Babin, Robert W. Baird.

A quick question on the home sales business. Obviously, when you factor in the cost associated with it, it's not always profitable, but there are kind of -- as you alluded to before, widespread benefits to that program, in terms of increasing the quality of your average tenant, so to speak. Is there anything that can be done going forward on the cost savings side in relation to the home sale business to maybe manage some of that?

I think some of the things that you see inside of our home sales business is just the kind of changing costs across the portfolio. So California will have a higher price point; but as we sell more homes in California, California occupancy overall is 98%-plus -- 95-plus-percent. So it's difficult -- you are competing with difficulty in just finding available sites, so that price point changes.

And then moving to Florida, you have a lower price point in terms of home sales, and the profit margin is less. So I think that, as we look at it, we certainly look to ways that we can put the homes in more efficiently. We can -- to the extent we can increase sales prices, we do that; to the extent we can get some synergies in terms of the costs, we do that.

But to the first part of your question, the benefits of having new homes in the community, and that change that it does the community, is substantial for us. So that's kind of front-of-mind for us.

Okay. And then, secondly, kind of a conceptual question on the transaction market -- is there a portfolio out there -- whether on the market or not on the market yet -- that would be -- that would actually be accretive-portfolio-quality out of the gate?

Well, certainly, if it's from a quality standpoint, there are portfolios that are consistent with our quality. And that it's just a matter of when they're willing to sell and the pricing. But certainly, there are some out there.

Okay. And lastly, just shifting to a balance sheet question. Obviously, at the kind of run rate things going forward, especially after the refinancing, it's easy for leverage, including the preferreds, to go below 5 times. Do you see any marginal benefit to bringing leverage down to, call it, 4.5% versus where you are now? And is there kind of a minimum cash balance that you think of going forward that you'd like to maintain?

I think, overall, our assessment -- just speaking to the cash balance first -- I mean, we go through our process on an annual basis. And we've talked about that quite a bit -- kind of assessing what our expectations are for FFO, what our obligations are in terms of repayment of debt, just normal principal amortization, our recurring capital -- what's available then to fund the dividend, but leaving working capital so that we can address our needs as it relates to acquiring homes to place them in our properties.

And, over the last couple of years, we have had opportunity to use some of that available cash to invest in communities as well.

I think, in terms of the leverage question, we historically -- and continue to believe that a target is not as relevant as making sure that we're maintaining flexibility. And so to the extent that we can impact our flexibility and make sure that we're maintaining that, that's what we're going to do.

Okay. That's helpful. Thank you very much.

Sure.

Thanks, Drew.

Ryan Burke, Green Street Advisors.

In terms of home sales, rental homes now comprise about 7% of your manufactured housing sites. That's down from a 9% peak in 2014. Can you just remind us of what your long-term target is, and perhaps provide an updated view of how long you think it might take you to get there?

Sure. Ryan, I think in -- several years ago, we probably had 2% to 3% of our occupancy was rental, and it was really consisted of some properties in Arizona and Colorado. And then when we were kind of in the 2008 era, difficult to sell homes, we started ramping up our rental program, which is when we got to that 9% number.

So what's happened in that time frame, as we increased the rental percentage in our communities, we found that it drives traffic; it drives traffic to our properties. So we went from a situation where, while it's unbelievable that we have to put rentals into, this is kind of an interesting thing on a property-by-property basis; where, if you can drive traffic and you can convert the owner -- the renter to an owner, that's a positive thing.

So right now, we sit at 7%. We don't -- we have a -- we don't have a target overall. We look to individual properties to say how do we take some of the rentals that are there, and how do we convert that owner -- that renter to an owner? But I would see that that trend has been continuing for the last couple of years where we're increasing homeowners and decreasing renters. And I would see that trend continuing.

Okay. And then back to the transaction market, property ownership in this business is obviously very fragmented. Are you able to quantify what your potential manufactured housing community acquisition universe is? How many properties are there in the US? And how many of those properties would you actually like to own?

Sure. I mean, in terms of just properties that are out there -- so the -- on the MH side, there's about 50,000 manufactured home communities across the country, 3,000 of which we consider to be investment-grade, and we own 200 of those.

Moving to the RV side, on those same parameters, there's about 16,000 RV parks out there; 8,000 are public, so they kind of put them to the side; you have 8,000 that are private. And we would consider about 1,300 of those investment-grade, and we own 200 of those. So -- and those numbers that I just quoted, they don't change, because there isn't new supply coming onboard. So that kind of target list or list of properties that we're interested in owning hasn't changed over time.

Okay. And you made mention earlier that you continue to exchange with, quote/unquote, potential sellers. Can you elaborate a little more on that? How are you actively sort of trying to loosen up properties that you would like to own?

Well, it's the same way we've done it, the same way, frankly, how we got these -- the last two deals that we did in the quarter, which is just communicating with the sellers. We have an acquisitions team that does a very good job of staying in touch with the sellers, understanding and appreciating whatever situation the seller is in, either a life situation or having a life event.

There may be some reason that people want to move. They want to get out of the community -- those types of things. We stay on top of that, and just continually touch base with the owners of both single one-off assets and portfolios.

Okay, thanks. And then one more question that is kind of more macro in nature. Do you have a view on how, call it, a significantly prolonged period of lower interest rates would impact your business? Not from your own balance sheet perspective, but from a consumer demand perspective?

Yes, I mean, we look to -- certainly, if you look at the CPI, right? -- if you look at CPI, what's happening with CPI over time and how that affects -- that's something that could impact our customer, because they're generally retired and looking to, you know, what is their increase going to be in Social Security? So it's something that we look at and try to evaluate what the impact it has.

And it's certainly one of the reasons that it's cited, when we go to our homeowners meetings to say as we raise rents is, well, geez, my Social Security is only going up by X, and how can I handle this rent increase? So I think it's certainly on a market by market basis. But -- and we've seen periods, for the last couple of years, of low CPI rates, and we've been able to continually increase the rates on the MH side.

Okay. Thank you.

Thanks, Ryan.

Todd Stender, Wells Fargo.

Marguerite, you gave price per site for the Forest Lake Estate still. Can you break that out of price per site for MH and RV?

You know, Todd, I don't have that in front of me, but I can circle back with you and get that for you.

Oh, sure. And how about occupancy and site rents? I just kind of want to get a feel of the community relative to where site rents are to market, and maybe what kind of value creation opportunities exist at this property?

Sure. The occupancy is 95%, so it's highly occupied properties; age-qualified property with really no rentals. That's on the MH side.

On the RV side, I'd say this was not institutionally managed, and there is the -- there is an ability to increase rates on the RV side, kind of throw it into our marketing programs, drive traffic. So there's -- that's where the opportunity that we saw in just taking it from kind of a one-off manager and put it into an institutional management. So I would see that going in at a 5-cap and being able to increase that over the next 12 months.

So, site rent bumps are opportunity on the RV side. How about the MH side?

The MH side is 3% to 4%, I think, increases over the next two years.

Okay. That's helpful. And then just in general, can you talk about any specific markets across your portfolio where you're pushing rate maybe a little better than you forecasted? And then also maybe an example of a market where you are experiencing a little softness in pricing power?

Sure. This is Patrick. I'll speak to the strengths first. California has done well for us, particularly where we have an opportunity to increase out of previous long-term agreements. Same drivers in Florida -- mark-to-markets on turnover have helped to drive increases. So those -- both those markets have done well for us.

I can speak to it a little bit -- new home sales are also indicative of strength in the market, an opportunity to increase rates. Florida and Colorado have both increased year-over-year, and have held, in the last few quarters, roughly 70% of our new home sales. Colorado -- the greater Denver market has been very strong for us.

Particular areas of softness -- I wouldn't say that I have that in the portfolio currently. Our Midwest markets are stable. I think our Northeast markets are doing strong, and our Pacific Northwest market is virtually 100% occupied. And all of our growth there is coming from rate increases.

That's helpful. Thank you. And then, Paul, just going back to the secured debt you locked rate on, sourced from insurance companies -- can you talk about their appetite for unsecured debt? Or maybe your appetite for that? I know it's 23 years, so maybe they are not going to extend that long for unsecured, but just kind of talk about the difference, if you don't mind.

Yes. There's definitely interest from life companies on an unsecured basis. We have not pursued it generally because of the requirements in terms of just the amount of secured debt that's on our balance sheet. So they have a rating system that's not quite -- it's not exactly the same as rating on bond issuance, but it's similar. And so they look unfavorably at the amount of secured debt that we carry on our balance sheet. And so we haven't really pursued it. But there is an appetite there.

Thanks. And then just finally, Fannie Mae has been a consistent lender in this space; Freddie has kind of come in and out. Can you just talk about where each of those lie right now?

I think that they are both in; they are both very interested in the space. They definitely compete for the same properties. The one thing that I'll say is Freddie Mac has a greater appetite for RV assets, it seems, than Fannie Mae. And I would say that both of them are very focused on the percentage of park mile annuals that are in the RV assets that they will finance.

Great. Thank you.

Sure.

(Operator Instructions) Paul Adornato, BMO Capital Markets.

Was wondering if you were able to track the demographics of your RV customer, and how that may have changed over time?

Yes, the demographics haven't changed that much, and you can kind of see the difference between the RV customer versus the MH customer. The RV customer tends to be younger and a little bit more affluent than the MH customer. And what we're seeing today, and this summer, in transient traffic, just a younger kind of 40 to 50-year-old coming to our properties with their family. And a lot of it's first-time experience with camping, which we see as a positive and we see as a way to kind of build on experiences, and make those memories so that people come back.

And in terms of reaching out to that first-time customer, how do you do that? Is that just through your normal marketing channels? Or how did they come to you for the first time?

Yes. We (technical difficulty) -- customers. And we're really focused on those marketing efforts to remind people to take advantage of the 100 days of camping. So it's a lot of social media presence that really didn't exist a couple of years ago in our Company.

And is that targeting mostly RV owners? Current owners? Or folks who may not even own a vehicle?

It's a little bit of both. I mean, we're targeting outdoor enthusiasts. And what will happen -- just as you know, if someone sees a picture, they see it's kind of neat, they send it along to a friend, and then it kind of just goes from there. So what we look to action shots of people that would be interested in forwarding along to their -- and sending along to their friends.

That's a lot of our focus -- to get people to really understand what we have and what we offer at the property level. And what we found both on our social media front, but also just taking the old kind of email campaigns, a lot of focus on video in those campaigns, because people like to see and understand the properties before they go.

Okay. Great. Thank you.

Thanks, Paul.

Since we have no more questions on the line at this time, I would like to turn it back to Marguerite Nader for closing comments.

Thank you all very much. Paul will be around for any additional questions.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the programming. You may now disconnect. Everyone, have a great day.