David Siegel

David Siegel asked about the drivers behind the increasing rate of move-outs over the last couple of years, differentiating between the MH and annual RV portfolios, and also inquired about the reasons for higher expenses in the UK recently.

Answer

President John McLaren attributed the 2025 move-out rate mainly to RV, specifically Canadian impact, which led to a focus on retention and replacing with domestic move-ins, now seen in improved renewal rates. He noted MH move-outs typically involve residents moving, often generating a brokered home sale commission. CFO Fernando Castro-Caratini and President John McLaren stated that higher UK expenses are primarily due to the national minimum wage increase, particularly impacting the payroll line, and this trend is expected to continue into 2026.

David Siegel asked about the increasing rate of move-outs over the past couple of years, its drivers, and how it bifurcates between the MH and annual RV portfolios, and also inquired about the drivers of higher expenses in the U.K. recently.

Answer

President John McLaren attributed 2025 move-outs mainly to the RV segment, partly due to Canadian impact, and highlighted the company's focus on retention and replacing with domestic move-ins, which is reflected in improved renewal rates. He noted MH move-outs typically involve residents, not homes, often generating brokered home sale commissions. For U.K. expenses, John and CFO Fernando Castro-Caratini both pointed to the national minimum wage increase, particularly impacting payroll, as the primary driver, with similar expectations for 2026.

David Siegel inquired whether American Homes 4 Rent would require additional sales activity or dispositions to fund any incremental share buybacks beyond current plans, and if the 20,000 homes released from collateral last year would serve as a source of additional funding for buybacks this year.

Answer

CFO Chris Lau explained that the company balances development, balance sheet commitment, and dispositions. He noted that there is approximately $200 million of incremental capital capacity already on the balance sheet for opportunistic deployment. Beyond that, additional capital could be recycled through dispositions, leveraging the healthy runway of candidates, including the 20,000 previously securitized homes. However, he highlighted that the natural governor for disposition volume is the need for homes to be vacant before sale, as the company prioritizes existing residents.

David Siegel asked if additional sales activity or dispositions would be necessary to fund further share buybacks, and whether the 20,000 homes released from collateral last year would serve as a source of additional funding.

Answer

Chris Lau, Chief Financial Officer, emphasized balancing development, balance sheet commitments, and dispositions. He noted $200 million of incremental capital capacity on the balance sheet for buybacks, with additional dispositions as a potential source. He confirmed the 20,000 freed-up homes provide a healthy disposition runway, but the natural governor is the need for homes to be vacant and leases to roll before they can be sold to individual homeowners via the MLS.

David Siegel asked if the MH portfolio guidance, which implies most growth from rent and a small bump from other income, combined with higher expansion sites, suggests a further dip in occupancy for the year. He also questioned why RV performance in Q4 landed below guidance, specifically what factors in December caused the lag.

Answer

Paul Seavey (EVP and CFO) clarified that the company's practice is not to make specific occupancy gain assumptions in guidance. Marguerite Nader (CEO) explained that the Q4 RV performance lagged due to a 'weather effect' in December, with moderate temperatures in the north leading to fewer bookings compared to previous years, which was the opposite of the positive weather-driven bookings seen in January.

David Siegel asked if the guidance for the MH portfolio, implying most growth from rent rather than occupancy, suggests a further dip in occupancy this year, especially with more expansion sites. He also sought to understand why Q4 RV performance landed below guidance, despite Canadian booking pace being in line with prior discussions.

Answer

Paul Seavey (EVP and CFO) stated that the company does not make specific occupancy gain assumptions in its guidance. Marguerite Nader (CEO) attributed the Q4 RV performance lag to unusually moderate temperatures in the north during December, which reduced bookings compared to previous years, contrasting with the positive weather-driven bookings seen in January.

David Siegel sought to clarify if ELS's 2025 guidance assumes annual RV churn returns to the historical 5% level and asked for a breakdown of the drivers behind the implied improvement in transient RV demand after Q1.

Answer

Executive Paul Seavey confirmed the business is projected to run consistent with historical norms, with churn normalizing. For transient and seasonal RV revenue after Q1, he explained that guidance is based on a conservative 'flat to up slightly' assumption due to the short booking window and lack of visibility, rather than an expectation of improving underlying demand.