Equity LifeStyle Properties' (ELS) CEO Marguerite Nader on Q2 2016 Results - Earnings Call Transcript

| About: Equity Lifestyle (ELS)

Equity LifeStyle Properties, Inc. (NYSE:ELS)

Q2 2016 Earnings Conference Call

July 19, 2016 11:00 ET

Executives

Marguerite Nader - President & CEO

Paul Seavey - EVP & CFO

Patrick Waite - EVP & COO

Analysts

Gaurav Mehta - Cantor Fitzgerald

Juan Sanabria - Bank of America

David Toti - BB&T Capital Markets

Drew Babin - Robert W. Baird

Ryan Burke - Green Street Advisors

Todd Stender - Wells Fargo

Paul Adornato - BMO Capital Markets

Presentation

Operator

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 risk and uncertainty. 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.

Marguerite Nader

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 trend 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 in 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 costumers 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 support our belief that driving customers to the property to experience the lifestyle is the key for continued occupancy in home sales growth. We are over halfway through our 100 days of marketing campaign, and are pleased with the results. While the transient components of our RV business only represent 5% of our overall revenue, it is an important feature 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 Data 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 resort, 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 and RV revenue booked online. We've updated our websites at our reservation app to meet the demands of our customers. Our updated websites are fully responsive, providing optimal experience at any sized 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 the book with us.

Turning to transaction activity. We purchased two properties in the second quarter; one property is 1,200-site age-qualified community outside of Tampa and we 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 effort to deliver a great experience for our customers.

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

Paul Seavey

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 per 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 gain. Our eco-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 seasons 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 1000 trails portfolio.

Core utility and other income was higher than guidance as a result of the 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 400,000 [ph] 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 from 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 increased 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 expectations 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-based rent increase of 4.5% and our resort-based 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 updates for the third and fourth quarters include the impact of the properties we acquired during the second quarter. We expect the acquisition properties will contribute about $3.5 million and come 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 the 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 will 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. Danny and Freddy, 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.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Gaurav Mehta with Cantor Fitzgerald. Your line is now open.

Gaurav Mehta

Yes, thanks, good morning. 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?

Marguerite Nader

Sure. The one property that we bought near Tampa, the 1,000-site property, we purchased it for about $75 million which was about $65,000 per site, and roughly a five 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 seven 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're continuing to work with interested sellers on transactions but never quite sure when deals are going to close which could be evidenced by the closings that we did this quarter. We've been working on them for a while, not sure when they were going to close, though.

Gaurav Mehta

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

Patrick Waite

Yes, Gaurav, this is Patrick. The historical high-water mark 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.

Gaurav Mehta

Okay, thank you.

Marguerite Nader

Thanks, Gaurav.

Operator

Our next question comes from the line of Juan Sanabria with Bank of America. Your line is now open.

Juan Sanabria

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

Patrick Waite

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.

Juan Sanabria

And how did the commissions change?

Patrick Waite

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.

Marguerite Nader

And I think we've talked in the past about the third-party sales or commission rate so to the extent, the mix used towards the in house, you're going to see lower commission.

Juan Sanabria

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

Marguerite Nader

As we look at it, I think we started the year over somewhere to 5.7 in terms of annuals and now when we look out to the rest of the year we are coming in at 5.4 number, I think it is roughly a $500,000 swing, so overall we're pretty specific when we do our reforecast. So overall this is no big adjustment it's the $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 up from 4.0 to something like 4.5, and on the transient side it's really were we get more clarity as we go through the year, I think we started out the year at somewhere in the 4.0 range, brought it down a little bit and now it is back up to 6.0 based on what we're seeing for the second quarter and the reservations in the third quarter.

Juan Sanabria

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

Marguerite Nader

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

Juan Sanabria

Great, thank you very much.

Marguerite Nader

Thank you.

Operator

Our next question comes from the line of David Toti with BB&T. Your line is now open.

David Toti

Hi, good morning.

Marguerite Nader

Good morning, David.

David Toti

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

Marguerite Nader

No, I mean we know those assets very well, they are basically the ARC assets which Patrick was - have operations at ARC. So we were - we're 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 of our asset type.

David Toti

Okay. And then I guess given where pricing is kind of held on your assets, specifically, are you seeing any change in seller attitude or I guess there are sellers who are little bit more willing to transact today? So 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?

Marguerite Nader

No, it continues to be difficult and I think you know it's - 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, often times they think they're going to hand it off to their kids and their kids are 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 are actually willing to part with it.

David Toti

Okay. And then just one last question relative to the home sales, and 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?

Patrick Waite

Let me speak that mostly based on mix, I mean you've see an increase in our new home sales over the last several quarter, we are up 26% in the quarter and over the year-to-date period or 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 uptake from where we were in call it 2012, 2013 and 2014. With respect to used homes, our used home inventory has actually decreased as we came out of the recession, and the single-family housing markets firm and the economy improved, people were more willing to take 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; haven't seen a lot of what I would call price increases on the used home inventory, it's relatively inconsistent, but that shifts to more new home sales, either points to a willingness of that customer to just invest in a newer, more expensive property.

David Toti

Okay. But you're not in the $200,000 a unit price point yet?

Marguerite Nader

That's what.

David Toti

Okay, thanks for the detail.

Marguerite Nader

Thanks, David.

Operator

Our next questions comes from line of Drew Babin of Robert W. Baird. Your line is now open.

Drew Babin

Good morning.

Marguerite Nader

Good morning, Drew.

Drew Babin

A quick question on the home sales business, you know obviously when you're factoring the cost associated with it, it's not always profitable but there are kind of - there is either way there is a before widespread benefits to that program in terms of increasing the quality of your average tenants 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?

Marguerite Nader

I think some of the things that you see inside of our home sale business is just - they are kind of changing cost across the portfolios, so California will have a higher price point. But as we sell more homes in California - California occupancy overall is 98% - 95% plus, so it's difficult, you're competing with difficulty and 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 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 could increase sales prices, we do that; to the extent we can get some synergies, in terms of the cost 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.

Drew Babin

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

Marguerite Nader

Well, certainly does from a quality standpoint. There are portfolios that are consistent with our quality, and then it is just a matter of where they are willing to sell and the pricing but certainly there are some out there.

Drew Babin

Okay. And lastly, just shifting to a balance sheet question, obviously in kinds of run rate things going forward, especially after the refinancing, it's easy for leverage including the preferred to go below five times - do you see any marginal benefit to bringing leverage down to call it 4.5 versus where you are now? I mean [ph], it's kind of a minimum cash balance that you think going forward that you'd like to maintain?

Patrick Waite

I think - overall, our assessment, just speaking of the cash balance first, I mean we go through our process on an annual basis and we've talked about that quite a bit 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 need 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.

Drew Babin

That's helpful. Thank you very much.

Marguerite Nader

Thanks, Drew.

Operator

Our next question comes from the line of Ryan Burke with Green Street Advisors. Your line is now open.

Ryan Burke

Thank you. In terms of home sales, rental homes now comprise about 7% of manufactured housing sites that's down from 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?

Marguerite Nader

Sure. Ryan, I think 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 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 timeframe as we increased the rental percentage in our communities, we found that if it drives traffic - it drives traffic to our property, so we went from a situation where; it's unbelievable that we have to put rentals into - this is kind of an interesting thing on a property-by-property basis where 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 home owners and decreasing renters. And I would see that trend continuing.

Ryan Burke

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 U.S., and how many of those properties would you actually like to own?

Marguerite Nader

Sure. I mean in terms of just properties that are out there - so the - on the MH side, there is 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 is 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 that - 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 overtime.

Ryan Burk

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

Marguerite Nader

Well, it's the same way we've done and 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, 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.

Ryan Burke

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?

Marguerite Nader

Yes, I mean we look to certainly - if you look at the CPI or if you look at CPI, what's happening with CPI overtime 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. I mean it's certainly one of the reasons that it's cited, when we go to our homeowners' meetings to say as we raised rents, geese, 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.

Ryan Burke

Okay, thank you.

Marguerite Nader

Thanks, Ryan.

Operator

Our next question comes from the line of Todd Stender with Wells Fargo. Your line is now open.

Todd Stender

Hi, good morning.

Marguerite Nader

Good morning, Todd.

Todd Stender

Marguerite, you gave the price per site for the Forest Lake Estates deal. Can you break that out, a price per site for MH and RV?

Marguerite Nader

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

Todd Stender

Sure. And how about occupancy and site rents; I just 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?

Marguerite Nader

Sure. The occupancy is 95%, so it's highly occupied property. It's 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 an ability to increase rates on the RV side - kind of throw it into our marketing program to drive traffic. So there is - that's where the opportunity that we saw in just taking it from kind of a one-off manager and put it into institutional management. So I would see that going in at a five cap and being able to increase that over the next twelve months.

Todd Stender

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

Marguerite Nader

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

Todd Stender

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're experiencing a little softness in pricing power?

Patrick Waite

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. The same drivers in Florida mark-to-markets on turnover have helped to drive increases, so both of 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 and an opportunity to increase rates. Florida and Colorado have both increased year-over-year and have held in the last few quarters at 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.

Todd Stender

That's helpful, thank you. And then, Paul, just going back to the secured debt you locked rate on; source, some insurance companies. Can you talk about their appetite for unsecured debt or maybe your appetite for that? I know its 23 years, so maybe they're not going to extend that long for unsecured but just kind of talk about the difference, if you don't mind.

Paul Seavey

Yes, there is 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 the 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.

Todd Stender

Thanks. And 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?

Paul Seavey

Yes, I think that they're both in - they're 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 Fanny 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'll finance.

Todd Stender

Great, thank you.

Operator

[Operator Instructions] Our next question comes from the line of Paul Adornato with BMO Capital Markets. Your line is now open.

Paul Adornato

Thanks. I was wondering if you were able to track the demographics of your RV customer and how that may have changed overtime.

Marguerite Nader

Yes, the demographics haven't changed that much, and you can kind of see that 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 in 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 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.

Paul Adornato

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 do they come to you for the first time?

Marguerite Nader

Yes, we have marketing campaigns and really a lot of social media outreach. I think we have about 250,000 fans or followers between Facebook and Instagram. The pictures in the video I think I referenced in my comments of our locations really helped the customer make the decision to book with us. We use our mobile app for RV reservation and we've seen an increase in - really, people wanting to transact online with us. We right now have our Summer Marketing Campaign which has about 750,000 views, with close to 1,000 pictures being uploading and posted by customers. And we're really focused on those marketing efforts to remind people to take advantage of the 100 days of campaign. So with a lot of social media presence that really didn't exist a couple of years ago in our company.

Paul Adornato

And is that targeting mostly RV owners, current owners or folks who may not even own a vehicle?

Marguerite Nader

It's a little bit of both, I mean we're targeting outdoor enthusiast and what will happen just as you know someone sees the pictures, they see it's kind of neat, they send it to a friend and then it kind of just goes from there. So what we - 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 - we found both on our social media but also just taking the old kind of email campaign, a lot of focus on video in those campaigns because people like to see and understand the properties before they go.

Paul Adornato

Okay, great. Thank you.

Marguerite Nader

Thanks, Paul.

Operator

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 comment.

Marguerite Nader

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

Operator

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