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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
     
þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2006
or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-11718
EQUITY LIFESTYLE PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
     
Maryland   36-3857664
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
Two North Riverside Plaza, Suite 800, Chicago, Illinois   60606
(Address of principal executive offices)   (Zip Code)
(312) 279-1400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
     
Common Stock, $.01 Par Value   New York Stock Exchange
(Title of Class)   (Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non- accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ            Accelerated filer o            Non-accelerated filer o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
The aggregate market value of voting stock held by non-affiliates was approximately $939.9 million as of June 30, 2006 based upon the closing price of $43.83 on such date using beneficial ownership of stock rules adopted pursuant to Section 13 of the Securities Exchange Act of 1934 to exclude voting stock owned by Directors and Officers, some of whom may not be held to be affiliates upon judicial determination.
At February 26, 2007, 24,065,473 shares of the Registrant’s common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Part III incorporates by reference the Registrant’s Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 15, 2007.
 
 

 


 

Equity LifeStyle Properties, Inc.
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Item 12. Security Ownership of Certain Beneficial Owners and Management
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Item 13. Certain Relationships and Related Transactions
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Item 14. Principal Accountant Fees and Services
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 Amendment of Non-Qualified Employee Stock Purchase Plan
 Form of Indemnification Agreement
 Computation of Ratio of Earnings to Fixed Charges
 Business Ethics and Conduct Policy
 Subsidiaries of the Registrant
 Consent of Independent Registered Public Accounting Firm
 Power of Attorney for Philip C. Calian
 Power of Attorney for Howard Walker
 Power of Attorney for Thomas E. Dobrowski
 Power of Attorney for Gary Waterman
 Power of Attorney for Donald S. Chisholm
 Power of Attorney for Sheli Z. Rosenberg
 Certification of CFO Pursuant to Section 302
 Certification of CEO Pursuant to Section 302
 Certification of CFO Pursuant to Section 906
 Certification of CEO Pursuant to Section 906

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PART I
Item 1. Business
Equity LifeStyle Properties, Inc.
General
     Equity LifeStyle Properties, Inc., a Maryland corporation, together with MHC Operating Limited Partnership (the “Operating Partnership”) and other consolidated subsidiaries (“Subsidiaries”), is referred to herein as the “Company,” “ELS,” “we,” “us,” and “our”. The Company is a fully integrated owner and operator of lifestyle-oriented properties (“Properties”). The Company leases individual developed areas (“sites”) with access to utilities for placement of factory built homes, cottages, cabins or recreational vehicles (“RVs”). The Company was formed in December 1992 to continue the property operations, business objectives and acquisition strategies of an entity that had owned and operated Properties since 1969. As of December 31, 2006, we owned or had an ownership interest in a portfolio of 311 Properties located throughout the United States and Canada containing 112,956 residential sites. These Properties are located in 30 states and British Columbia (with the number of Properties in each state or province shown parenthetically) – Florida (87), California (47), Arizona (35), Texas (15), Pennsylvania (13), Washington (13), Colorado (10), Oregon (9), North Carolina (8), Virginia (8), Delaware (7), Maine (6), Nevada (6), Wisconsin (6), Indiana (5), New York (5), Illinois (4), Massachusetts (4), New Jersey (4), Michigan (3), South Carolina (3), Ohio (2), Tennessee (2), Utah (2), Alabama (1), Iowa (1), Kentucky (1), Montana (1), New Hampshire (1), New Mexico (1), and British Columbia (1).
     Properties are designed and improved for several home options of various sizes and designs that are produced off-site, installed and set on designated sites (“Site Set”) within the Properties. These homes can range from 400 to over 2,000 square feet. The smallest of these are referred to as “Resort Cottages”. Properties may also have sites that can accommodate a variety of RVs. Properties generally contain centralized entrances, internal road systems and designated sites. In addition, Properties often provide a clubhouse for social activities and recreation and other amenities, which may include restaurants, swimming pools, golf courses, lawn bowling, shuffleboard courts, tennis courts, laundry facilities and cable television service. In some cases, utilities are provided or arranged for by us; otherwise, the customer contracts for the utility directly. Some Properties provide water and sewer service through municipal or regulated utilities, while others provide these services to customers from on-site facilities. Properties generally are designed to attract retirees, empty-nesters, vacationers and second home owners; however, certain of the Properties focus on affordable housing for families. We focus on owning properties in or near large metropolitan markets and retirement and vacation destinations.
Employees and Organizational Structure
     We have approximately 1,400 full-time, part-time and seasonal employees dedicated to carrying out our operating philosophy and strategies of value enhancement and service to our customers. The operations of each Property are coordinated by an on-site team of employees that typically includes a manager, clerical and maintenance workers, each of whom works to provide maintenance and care of the Properties. Direct supervision of on-site management is the responsibility of our regional vice presidents and regional and district managers. These individuals have significant experience in addressing the needs of customers and in finding or creating innovative approaches to maximize value and increase cash flow from property operations. Complementing this field management staff are approximately 95 full-time corporate employees who assist on-site management in all property functions.
Formation of the Company
     The operations of the Company are conducted primarily through the Operating Partnership. The Company contributed the proceeds from its initial public offering and subsequent offerings to the Operating Partnership for a general partnership interest. In 2004, the general partnership interest was contributed to MHC Trust (see Note 4 of the Notes to Consolidated Financial Statements contained in this Form 10-K). The financial results of the Operating Partnership and the Subsidiaries are consolidated in the Company’s consolidated financial statements. In addition, since certain activities, if performed by the Company, may not be qualifying REIT activities under the Internal Revenue Code of 1986, as amended (the “Code”), the Company has formed taxable REIT subsidiaries as defined in the Code to engage in such activities.
     Several Properties are wholly owned by taxable REIT subsidiaries of the Company. In addition, Realty Systems, Inc. (“RSI”) is a wholly owned taxable REIT subsidiary of the Company that is engaged in the business of purchasing and selling site set homes that are located in Properties owned and managed by the Company. RSI also provides brokerage services to residents at such Properties for those residents who move from a Property but do not relocate their homes. RSI may provide brokerage services, in competition with other local brokers, by seeking buyers for the site set homes. RSI also leases inventory homes to prospective residents with the expectation that the tenant eventually will purchase the home. Subsidiaries

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of RSI also lease from the Operating Partnership certain real property within or adjacent to certain Properties consisting of golf courses, pro shops, stores and restaurants.
Business Objectives and Operating Strategies
     Our strategy seeks to maximize both current income and long-term growth in income. We focus on Properties that have strong cash flow and we expect to hold such Properties for long-term investment and capital appreciation. In determining cash flow potential, we evaluate our ability to attract and retain high quality customers in our Properties who take pride in the Property and in their home. These business objectives and their implementation are determined by our Board of Directors and may be changed at any time. Our investment, operating and financing approach includes:
    Providing consistently high levels of services and amenities in attractive surroundings to foster a strong sense of community and pride of home ownership;
 
    Efficiently managing the Properties to increase operating margins by controlling expenses, increasing occupancy and maintaining competitive market rents;
 
    Increasing income and property values by continuing the strategic expansion and, where appropriate, renovation of the Properties;
 
    Utilizing management information systems to evaluate potential acquisitions, identify and track competing properties and monitor customer satisfaction;
 
    Selectively acquiring Properties that have potential for long-term cash flow growth and to create property concentrations in and around major metropolitan areas and retirement or vacation destinations to capitalize on operating synergies and incremental efficiencies; and
 
    Managing our debt balances such that we maintain financial flexibility, minimize exposure to interest rate fluctuations, and maintain an appropriate degree of leverage to maximize return on capital.
     Our strategy is to own and operate the highest quality properties in sought-after locations near urban areas, retirement and vacation destinations across the United States. We focus on creating an attractive residential environment by providing a well-maintained, comfortable Property with a variety of organized recreational and social activities and superior amenities as well as offering a multitude of lifestyle housing choices. In addition, we regularly conduct evaluations of the cost of housing in the marketplaces in which our Properties are located and survey rental rates of competing properties. From time to time we also conduct satisfaction surveys of our customers to determine the factors they consider most important in choosing a property. We improve site utilization and efficiency by tracking types of customers and usage patterns and marketing to those specific customer groups.
Acquisitions and Dispositions
     Over the last decade our portfolio of Properties has grown significantly from owning or having an interest in 69 Properties with over 27,000 sites to owning or having an interest in 311 Properties with over 112,000 sites. We continually review the Properties in our portfolio to ensure that they fit our business objectives. Over the last five years we sold 28 Properties, and we redeployed capital to markets we believe have greater long-term potential. In that same time period we acquired 189 Properties located in high growth areas such as Florida, Arizona and California. We believe that opportunities for property acquisitions are still available. Increasing acceptability of and demand for a lifestyle that includes Site Set homes and RVs as well as continued constraints on development of new properties continue to add to their attractiveness as an investment. We believe we have a competitive advantage in the acquisition of additional properties due to our experienced management, significant presence in major real estate markets and substantial capital resources. We are actively seeking to acquire additional properties and are engaged in various stages of negotiations relating to the possible acquisition of a number of properties.
     We anticipate that new acquisitions will generally be located in the United States, although we may consider other geographic locations provided they meet our acquisition criteria. We utilize market information systems to identify and evaluate acquisition opportunities, including a market database to review the primary economic indicators of the various locations in which we expect to expand our operations. Acquisitions will be financed from the most appropriate sources of capital, which may include undistributed funds from operations, issuance of additional equity securities, sales of investments, collateralized and uncollateralized borrowings and issuance of debt securities. In addition, the Company may acquire properties in transactions that include the issuance of limited partnership interests in the Operating Partnership (“Units”) as consideration for the acquired properties. We believe that an ownership structure that includes the Operating Partnership will permit us to acquire additional properties in transactions that may defer all or a portion of the sellers’ tax consequences.

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     When evaluating potential acquisitions, we consider such factors as:
    The replacement cost of the property including land values, entitlements and zoning,
 
    The geographic area and type of the property,
 
    The location, construction quality, condition and design of the property,
 
    The current and projected cash flow of the property and the ability to increase cash flow,
 
    The potential for capital appreciation of the property,
 
    The terms of tenant leases or usage rights, including the potential for rent increases,
 
    The potential for economic growth and the tax and regulatory environment of the community in which the property is located,
 
    The potential for expansion of the physical layout of the property and the number of sites,
 
    The occupancy and demand by customers for properties of a similar type in the vicinity and the customers’ profile,
 
    The prospects for liquidity through sale, financing or refinancing of the property, and
 
    The competition from existing properties and the potential for the construction of new properties in the area.
     When evaluating potential dispositions, we consider such factors as:
    The ability to sell the Property at a price that we believe will provide an appropriate return for our stockholders,
 
    Our desire to exit certain non-core markets and recycle the capital into core markets, and
 
    Whether the Property meets our current investment criteria.
     When investing capital we consider all potential uses of the capital including returning capital to our stockholders. As a result, during 1999 and 2000 we implemented a stock repurchase program, and our Board of Directors continues to review the conditions under which we will repurchase our stock. These conditions include, but are not limited to, market price, balance sheet flexibility, other opportunities and capital requirements. On January 16, 2004, we paid a special dividend of $8.00 per share using proceeds from a recapitalization.
Property Expansions
     Several of our Properties have available land for expanding the number of sites available to be utilized by our customers. Development of these sites (“Expansion Sites”) is evaluated based on the following: local market conditions; ability to subdivide; accessibility through the Property or externally; infrastructure needs including utility needs and access as well as additional common area amenities; zoning and entitlement; costs; topography; and ability to market new sites. When justified, development of Expansion Sites allows us to leverage existing facilities and amenities to increase the income generated from the Properties. Where appropriate, facilities and amenities may be upgraded or added to certain Properties to make those Properties more attractive in their markets. Our acquisition philosophy has included the desire to own Properties with potential Expansion Site development. Approximately 77 of our Properties have expansion potential, with approximately 6,000 acres available for expansion.
Leases or Usage Rights
     At our Properties, a typical lease entered into between the owner of a home and the Company for the rental of a site is for a month-to-month or year-to-year term, renewable upon the consent of both parties or, in some instances, as provided by statute. These leases are cancelable, depending on applicable law, for non-payment of rent, violation of Property rules and regulations or other specified defaults. Non-cancelable long-term leases, with remaining terms ranging up to ten years, are in effect at certain sites within 27 of the Properties. Some of these leases are subject to rental rate increases based on the Consumer Price Index (“CPI”), in some instances taking into consideration certain floors and ceilings and allowing for pass-throughs of certain items such as real estate taxes, utility expenses and capital expenditures. Generally, market rate adjustments are made on an annual basis. At Properties zoned for RV use, long-term customers typically enter into right to use agreements and many typically prepay for their stay. Many resort customers will also leave deposits to reserve a site for the following year. Generally these customers cannot live full time on the Property.
Regulations and Insurance
     General. Our Properties are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities such as swimming pools, clubhouses and other common areas. We believe that each Property has the necessary permits and approvals to operate.
     Rent Control Legislation. At certain of our Properties, state and local rent control laws, principally in California, limit our ability to increase rents and to recover increases in operating expenses and the costs of capital improvements. Enactment of such laws has been considered from time to time in other jurisdictions. We presently expect to continue to maintain Properties, and

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may purchase additional properties, in markets that are either subject to rent control or in which rent-limiting legislation exists or may be enacted. For example, Florida has enacted a law that generally provides that rental increases must be reasonable. Also, certain jurisdictions in California in which we own Properties limit rent increases to changes in the CPI or some percentage thereof. As part of our effort to realize the value of our Properties subject to restrictive regulation, we have initiated lawsuits against several municipalities imposing such regulation in an attempt to balance the interests of our stockholders with the interests of our customers (see Item 3 – Legal Proceedings).
     Insurance. The Properties are covered against fire, flood, property damage, earthquake, windstorm and business interruption by insurance policies containing various deductible requirements and coverage limits. Recoverable costs are classified in other assets as incurred. Insurance proceeds are applied against the asset when received. Recoverable costs relating to capital items are treated in accordance with the Company’s capitalization policy. The book value of the original capital item is written off once the value of the impaired asset has been determined. Insurance proceeds relating to the capital costs are recorded as income in the period they are received.
INDUSTRY
     We believe that modern properties similar to ours provide an opportunity for increased cash flows and appreciation in value. These may be achieved through increases in occupancy rates and rents, as well as expense controls, expansion of existing Properties and opportunistic acquisitions, for the following reasons:
    Barriers to Entry: We believe that the supply of new properties in locations targeted by the Company will be constrained due to barriers to entry. The most significant barrier has been the difficulty of securing zoning from local authorities. This has been the result of (i) the public’s historically poor perception of manufactured housing, and (ii) the fact that properties generate less tax revenue because the homes are treated as personal property (a benefit to the homeowner) rather than real property. Another factor that creates substantial barriers to entry is the length of time between investment in a property’s development and the attainment of stabilized occupancy and the generation of revenues. The initial development of the infrastructure may take up to two or three years. Once a property is ready for occupancy, it may be difficult to attract customers to an empty property. Substantial occupancy levels may take several years to achieve.
 
    Industry Consolidation: According to various industry reports, there are approximately 65,000 properties in the United States, and approximately 10% or approximately 6,000 of the properties have more than 200 sites and would be considered investment-grade. We believe that this relatively high degree of fragmentation provides us, as a national organization with experienced management and substantial financial resources, the opportunity to purchase additional properties.
 
    Customer Base: We believe that properties tend to achieve and maintain a stable rate of occupancy due to the following factors: (i) customers typically own their own homes, (ii) properties tend to foster a sense of community as a result of amenities such as clubhouses and recreational and social activities, (iii) since moving a Site Set home from one property to another involves substantial cost and effort, customers often sell their home in-place (similar to site-built residential housing) with no interruption of rental payments to us.
 
    Lifestyle Choice: According to the Recreational Vehicle Industry Association, nearly 1 in 12 U.S. vehicle-owning households owns an RV. The 80 million people born from 1945 to 1964 or “baby boomers” make up the fastest growing segment of this market. Every day 11,000 Americans turn 50 according to U.S. Census figures. We believe that this population segment, seeking an active lifestyle, will provide opportunities for future cash flow growth for the Company. Current RV owners, once finished with the more active RV lifestyle, will often seek more permanent retirement or vacation establishments. The Site Set housing choice has become an increasingly popular housing alternative for retirement, second-home, and “empty-nest” living. According to a Fannie Mae survey, the baby-boom generation will constitute 18% of the U.S. population within the next 30 years and more than 32 million people will reach age 55 within the next ten years. Among those individuals who are nearing retirement (age 40 to 54), approximately 33% plan on moving upon retirement.
 
      We believe that the housing choices in our Properties are especially attractive to such individuals throughout this lifestyle cycle. Our Properties offer an appealing amenity package, close proximity to local services, social activities, low maintenance and a secure environment. In fact, many of our Properties allow for this cycle to occur within a single Property.

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    Construction Quality: Since 1976, all factory built housing has been required to meet stringent federal standards, resulting in significant increases in quality. The Department of Housing and Urban Development’s (“HUD”) standards for Site Set housing construction quality are the only federally regulated standards governing housing quality of any type in the United States. Site Set homes produced since 1976 have received a “red and silver” government seal certifying that they were built in compliance with the federal code. The code regulates Site Set home design and construction, strength and durability, fire resistance and energy efficiency, and the installation and performance of heating, plumbing, air conditioning, thermal and electrical systems. In newer homes, top grade lumber and dry wall materials are common. Also, manufacturers are required to follow the same fire codes as builders of site-built structures. In addition, although Resort Cottages do not come under the same regulation, many of the manufacturers of Site Set homes also produce Resort Cottages with many of the same quality standards.
 
    Comparability to Site-Built Homes: The Site Set housing industry has experienced a trend towards multi-section homes. Many modern Site Set homes are longer (up to 80 feet, compared to 50 feet in the 1960’s) and wider than earlier models. Many such homes have nine-foot ceilings or vaulted ceilings, fireplaces and as many as four bedrooms, and closely resemble single-family ranch style site-built homes.
 
    Second Home Demographics: According to 2006 National Association of Realtors (“NAR”) reports, sales of second homes in 2005 accounted for four out of ten residential transactions, or 3.34 million second-home sales in 2005. There were approximately 6.8 million vacation homes in 2005. The typical vacation-home buyer is 59 years old and earned $120,600 in 2005. Approximately 67% of vacation home-owners prefer to be near an ocean, river or lake; 39% close to recreational or sporting activities; 38% close to vacation or resort areas; and 31% close to mountains or other natural attractions. In looking ahead, NAR believes that baby boomers are still in their peak earning years, and the leading edge of their generation is approaching retirement. As they continue to have the financial wherewithal to purchase second homes as a vacation property, investment opportunity, or perhaps as a retirement retreat, those baby boomers will continue to drive the market for second-homes. We believe it is likely that over the next decade we will continue to see historically high levels of second home sales.
Available Information
     We file reports electronically with the Securities and Exchange Commission (“SEC”). The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy information and statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. We maintain an Internet site with information about the Company and hyperlinks to our filings with the SEC at http://www.equitylifestyle.com. Requests for copies of our filings with the SEC and other investor inquiries should be directed to:
Investor Relations Department
Equity LifeStyle Properties, Inc.
Two North Riverside Plaza
Chicago, Illinois 60606
Phone: 1-800-247-5279
e-mail: investor_relations@mhchomes.com

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Item 1A. Risk Factors
Our Performance and Common Stock Value Are Subject to Risks Associated With the Real Estate Industry.
Adverse Economic Conditions and Other Factors Could Adversely Affect the Value of Our Properties and Our Cash Flow. Several factors may adversely affect the economic performance and value of our Properties. These factors include:
  changes in the national, regional and local economic climate;
  local conditions such as an oversupply of lifestyle-oriented properties or a reduction in demand for lifestyle-oriented properties in the area, the attractiveness of our Properties to customers, competition from manufactured home communities and other lifestyle-oriented properties and alternative forms of housing (such as apartment buildings and site-built single family homes);
  our ability to collect rent from customers and pay maintenance, insurance and other operating costs (including real estate taxes), which could increase over time;
  the failure of our assets to generate income sufficient to pay our expenses, service our debt and maintain our Properties, which may adversely affect our ability to make expected distributions to our stockholders;
  our inability to meet mortgage payments on any Property that is mortgaged, in which case the lender could foreclose on the mortgage and take the Property;
  interest rate levels and the availability of financing, which may adversely affect our financial condition; and
  changes in laws and governmental regulations (including rent control laws and regulations governing usage, zoning and taxes), which may adversely affect our financial condition.
New Acquisitions May Fail to Perform as Expected and Competition for Acquisitions May Result in Increased Prices for Properties. We intend to continue to acquire properties. Newly acquired properties may fail to perform as expected. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position. Difficulties in integrating acquisitions may prove costly or time-consuming and could divert management attention. Additionally, we expect that other real estate investors with significant capital will compete with us for attractive investment opportunities. These competitors include publicly traded REITs, private REITs and other types of investors. Such competition increases prices for properties. We expect to acquire properties with cash from secured or unsecured financings, proceeds from offerings of equity or debt, undistributed funds from operations and sales of investments. We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms.
Because Real Estate Investments Are Illiquid, We May Not be Able to Sell Properties When Appropriate. Real estate investments generally cannot be sold quickly. We may not be able to vary our portfolio promptly in response to economic or other conditions, forcing us to accept lower than market value. This inability to respond promptly to changes in the performance of our investments could adversely affect our financial condition and ability to service debt and make distributions to our stockholders.
Some Potential Losses Are Not Covered by Insurance. We carry comprehensive liability, fire, extended coverage and business interruption insurance on all of our Properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, certain types of losses, such as lease and other contract claims, that generally are not insured. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a Property, as well as the anticipated future revenue from the Property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the Property.
Debt Financing, Financial Covenants and Degree of Leverage Could Adversely Affect Our Economic Performance.
Scheduled Debt Payments Could Adversely Affect Our Financial Condition. Our business is subject to risks normally associated with debt financing. The total principal amount of our outstanding indebtedness was approximately $1.7 billion as of December 31, 2006. Our substantial indebtedness and the cash flow associated with serving our indebtedness could have important consequences, including the risks that:
  our cash flow could be insufficient to pay distributions at expected levels and meet required payments of principal and interest;

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  we will be required to use a substantial portion of our cash flow from operations to pay our indebtedness, thereby reducing the availability of our cash flow to fund the implementation of our business strategy, acquisitions, capital expenditures and other general corporate purposes;
  our debt service obligations could limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
  we may not be able to refinance existing indebtedness (which in virtually all cases requires substantial principal payments at maturity) and, if we can, the terms of such refinancing might not be as favorable as the terms of existing indebtedness;
  if principal payments due at maturity cannot be refinanced, extended or paid with proceeds of other capital transactions, such as new equity capital, our cash flow will not be sufficient in all years to repay all maturing debt; and
  if prevailing interest rates or other factors at the time of refinancing (such as the possible reluctance of lenders to make commercial real estate loans) result in higher interest rates, increased interest expense would adversely affect cash flow and our ability to service debt and make distributions to stockholders.
Financial Covenants Could Adversely Affect Our Financial Condition. If a Property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the mortgagee could foreclose on the Property, resulting in loss of income and asset value. The mortgages on our Properties contain customary negative covenants which, among other things, limit our ability, without the prior consent of the lender, to further mortgage the Property and to discontinue insurance coverage. In addition, our credit facilities contain certain customary restrictions, requirements and other limitations on our ability to incur indebtedness, including total debt to assets ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt. Foreclosure on mortgaged Properties or an inability to refinance existing indebtedness would likely have a negative impact on our financial condition and results of operations.
Our Degree of Leverage Could Limit Our Ability to Obtain Additional Financing. Our debt to market capitalization ratio (total debt as a percentage of total debt plus the market value of the outstanding common stock and Units held by parties other than the Company) is approximately 52% as of December 31, 2006. The degree of leverage could have important consequences to stockholders, including an adverse effect on our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, development or other general corporate purposes, and makes us more vulnerable to a downturn in business or the economy generally.
We Depend on Our Subsidiaries’ Dividends and Distributions.
     Substantially all of our assets are indirectly held through the Operating Partnership. As a result, we have no source of operating cash flow other than from distributions from the Operating Partnership. Our ability to pay dividends to holders of common stock depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions payable to third party holders of its preferred Units and then to make distributions to MHC Trust and common Unit holders. Similarly, MHC Trust must satisfy its obligations to its creditors and preferred shareholders before making common stock distributions to us.
Stockholders’ Ability to Effect Changes of Control of the Company is Limited.
Provisions of Our Charter and Bylaws Could Inhibit Changes of Control. Certain provisions of our charter and bylaws may delay or prevent a change of control of the Company or other transactions that could provide our stockholders with a premium over the then-prevailing market price of their common stock or which might otherwise be in the best interest of our stockholders. These include the Ownership Limit described below. Also, any future series of preferred stock may have certain voting provisions that could delay or prevent a change of control or other transaction that might involve a premium price or otherwise be beneficial to our stockholders.
Maryland Law Imposes Certain Limitations on Changes of Control. Certain provisions of Maryland law prohibit “business combinations” (including certain issuances of equity securities) with any person who beneficially owns ten percent or more of the voting power of outstanding common stock, or with an affiliate of the Company who, at any time within the two-year period prior to the date in question, was the owner of ten percent or more of the voting power of the outstanding voting stock (an “Interested Stockholder”), or with an affiliate of an Interested Stockholder. These prohibitions last for five years after the most recent date on which the Interested Stockholder became an Interested Stockholder. After the five-year period, a business combination with an Interested Stockholder must be approved by two super-majority stockholder votes unless, among other conditions, our common stockholders receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the Interested Stockholder for its shares of common stock. The Board of

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Directors has exempted from these provisions under the Maryland law any business combination with Samuel Zell, who is the Chairman of the Board of the Company, certain holders of Units who received them at the time of our initial public offering, the General Motors Hourly Rate Employees Pension Trust and the General Motors Salaried Employees Pension Trust, and our officers who acquired common stock at the time we were formed and each and every affiliate of theirs.
We Have a Stock Ownership Limit for REIT Tax Purposes. To remain qualified as a REIT for U.S. federal income tax purposes, not more than 50% in value of our outstanding shares of capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the federal income tax laws applicable to REITs) at any time during the last half of any taxable year. To facilitate maintenance of our REIT qualification, our charter, subject to certain exceptions, prohibits Beneficial Ownership (as defined in our charter) by any single stockholder of more than 5% (in value or number of shares, whichever is more restrictive) of our outstanding capital stock. We refer to this as the “Ownership Limit.” Within certain limits, our charter permits the Board of Directors to increase the Ownership Limit with respect to any class or series of stock. The Board of Directors, upon receipt of a ruling from the IRS, opinion of counsel, or other evidence satisfactory to the Board of Directors and upon fifteen days prior written notice of a proposed transfer which, if consummated, would result in the transferee owning shares in excess of the Ownership Limit, and upon such other conditions as the Board of Directors may direct, may exempt a stockholder from the Ownership Limit. Absent any such exemption, capital stock acquired or held in violation of the Ownership Limit will be transferred by operation of law to us as trustee for the benefit of the person to whom such capital stock is ultimately transferred, and the stockholder’s rights to distributions and to vote would terminate. Such stockholder would be entitled to receive, from the proceeds of any subsequent sale of the capital stock transferred to us as trustee, the lesser of (i) the price paid for the capital stock or, if the owner did not pay for the capital stock (for example, in the case of a gift, devise of other such transaction), the market price of the capital stock on the date of the event causing the capital stock to be transferred to us as trustee or (ii) the amount realized from such sale. A transfer of capital stock may be void if it causes a person to violate the Ownership Limit. The Ownership Limit could delay or prevent a change in control of the Company and, therefore, could adversely affect our stockholders’ ability to realize a premium over the then-prevailing market price for their common stock.
Conflicts of Interest Could Influence the Company’s Decisions.
Certain Stockholders Could Exercise Influence in a Manner Inconsistent With the Stockholders’ Best Interests. As of December 31, 2006, Mr. Zell and certain affiliated holders beneficially owned approximately 14.4% of our outstanding common stock (in each case including common stock issuable upon the exercise of stock options and the exchange of Units). Accordingly, Mr. Zell has significant influence on our management and operation. Such influence could be exercised in a manner that is inconsistent with the interests of other stockholders.
Mr. Zell and His Affiliates Continue to be Involved in Other Investment Activities. Mr. Zell and his affiliates have a broad and varied range of investment interests, including interests in other real estate investment companies involved in other forms of housing, including multifamily housing. Mr. Zell and his affiliates may acquire interests in other companies. Mr. Zell may not be able to control whether any such company competes with the Company. Consequently, Mr. Zell’s continued involvement in other investment activities could result in competition to the Company as well as management decisions which might not reflect the interests of our stockholders.
Risk of Eminent Domain and Tenant Litigation.
     We own Properties in certain areas of the country where real estate values have increased faster than rental rates in our Properties either because of locally imposed rent control or long term leases. In such areas, we have learned that certain local government entities have investigated the possibility of seeking to take our Properties by eminent domain at values below the value of the underlying land. While no such eminent domain proceeding has been commenced, and we would exercise all of our rights in connection with any such proceeding, successful condemnation proceedings by municipalities could adversely affect our financial condition. Moreover, certain of our Properties located in California are subject to rent control ordinances, some of which not only severely restrict ongoing rent increases but also prohibit us from increasing rents upon turnover. Such regulation allows customers to sell their homes for a premium representing the value of the future discounted rent-controlled rents. As part of our effort to realize the value of our Properties subject to rent control, we have initiated lawsuits against several municipalities in California. In response to our efforts, tenant groups have filed lawsuits against us seeking not only to limit rent increases, but to be awarded large damage awards. If we are unsuccessful in our efforts to challenge rent control ordinances, it is likely that we will not be able to charge rents that reflect the intrinsic value of the affected Properties. Finally, tenant groups in non-rent controlled markets have also attempted to use litigation as a means of protecting themselves from rent increases reflecting the rental value of the affected Properties. An unfavorable outcome in the tenant group lawsuits could have an adverse impact on our financial condition.

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Environmental Problems Are Possible and Can be Costly.
     Federal, state and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product releases at such property. The owner or operator may have to pay a governmental entity or third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with the contamination. Such laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from environmental contamination emanating from that site.
     Environmental laws also govern the presence, maintenance and removal of asbestos. Such laws require that owners or operators of property containing asbestos properly manage and maintain the asbestos, that they notify and train those who may come into contact with asbestos and that they undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building. Such laws may impose fines and penalties on real property owners or operators who fail to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers.
We Have a Significant Concentration of Properties in Florida and California, and Natural Disasters or Other Catastrophic Events in These or Other States Could Adversely Affect the Value of Our Properties and Our Cash Flow.
     As of December 31, 2006, we owned or had an ownership interest in 311 Properties located in 30 states and British Columbia, including 87 Properties located in Florida and 47 Properties located in California. The occurrence of a natural disaster or other catastrophic event in any of these areas may cause a sudden decrease in the value of our Properties. While we have obtained insurance policies providing certain coverage against damage from fire, flood, property damage, earthquake, wind storm and business interruption, these insurance policies contain coverage limits, limits on covered property and various deductible amounts that the Company must pay before insurance proceeds are available. Such insurance may therefore be insufficient to restore our economic position with respect to damage or destruction to our Properties caused by such occurrences. Moreover, each of these coverages must be renewed every year and there is the possibility that all or some of the coverages may not be available at a reasonable cost. In addition, in the event of such natural disaster or other catastrophic event, the process of obtaining reimbursement for covered losses, including the lag between expenditures incurred by us and reimbursements received from the insurance providers, could adversely affect our economic performance.
Market Interest Rates May Have an Effect on the Value of Our Common Stock.
     One of the factors that investors consider important in deciding whether to buy or sell shares of a REIT is the distribution rates with respect to such shares (as a percentage of the price of such shares) relative to market interest rates. If market interest rates go up, prospective purchasers of REIT shares may expect a higher distribution rate. Higher interest rates would not, however, result in more funds for us to distribute and, in fact, would likely increase our borrowing costs and potentially decrease funds available for distribution. Thus, higher market interest rates could cause the market price of our publicly traded securities to go down.
We Are Dependent on External Sources of Capital.
     To qualify as a REIT, we must distribute to our stockholders each year at least 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and excluding any net capital gain). In addition, we intend to distribute all or substantially all of our net income so that we will generally not be subject to U.S. federal income tax on our earnings. Because of these distribution requirements, it is not likely that we will be able to fund all future capital needs, including for acquisitions, from income from operations. We therefore will have to rely on third-party sources of debt and equity capital financing, which may or may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of things, including conditions in the capital markets generally and the market’s perception of our growth potential and our current and potential future earnings. Moreover, additional equity offerings may result in substantial dilution of stockholders’ interests, and additional debt financing may substantially increase our leverage.
Our Qualification as a REIT is Dependent on Compliance With U.S. Federal Income Tax Requirements.
     We believe we have been organized and operated in a manner so as to qualify for taxation as a REIT, and we intend to continue to operate so as to qualify as a REIT for U.S. federal income tax purposes. Qualification as a REIT for U.S. federal income tax purposes, however, is governed by highly technical and complex provisions of the Code for which there are only limited judicial or administrative interpretations. Our qualification as a REIT requires analysis of various facts and circumstances that may not be entirely within our control, and we cannot provide any assurance that the Internal Revenue Service (the “IRS”) will agree with our analysis. These matters can affect our qualification as a REIT. In addition,

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legislation, new regulations, administrative interpretations or court decisions might significantly change the tax laws with respect to the requirements for qualification as a REIT or the U.S. federal income tax consequences of qualification as a REIT.
     If, with respect to any taxable year, we fail to maintain our qualification as a REIT (and specified relief provisions under the Code were not applicable to such disqualification), we could not deduct distributions to stockholders in computing our net taxable income and we would be subject to U.S. federal income tax on our net taxable income at regular corporate rates. Any U.S. federal income tax payable could include applicable alternative minimum tax. If we had to pay U.S. federal income tax, the amount of money available to distribute to stockholders and pay indebtedness would be reduced for the year or years involved, and we would no longer be required to distribute money to stockholders. In addition, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost, unless we were entitled to relief under the relevant statutory provisions. Although we currently intend to operate in a manner designed to allow us to qualify as a REIT, future economic, market, legal, tax or other considerations may cause us to revoke the REIT election.
Item 1B. Unresolved Staff Comments
     None.
Item 2. Properties
General
     Our Properties provide attractive amenities and common facilities that create a comfortable and attractive home for our customers, with most offering a clubhouse, a swimming pool, laundry facilities and cable television service. Many also offer additional amenities such as sauna/whirlpool spas, golf courses, tennis, shuffleboard and basketball courts, exercise rooms and various social activities such as concerts. Since most of our customers generally rent our sites on a long-term basis, it is their responsibility to maintain their homes and the surrounding area. It is our role to ensure that customers comply with our Property policies and to provide maintenance of the common areas, facilities and amenities. We hold periodic meetings with our Property management personnel for training and implementation of our strategies. The Properties historically have had, and we believe they will continue to have, low turnover and high occupancy rates.
Property Portfolio
     As of December 31, 2006, we owned or had an ownership interest in a portfolio of 311 Properties located throughout the United States and British Columbia containing 112,956 residential sites.
     The distribution of our Properties throughout the United States reflects our belief that geographic diversification helps insulate the portfolio from regional economic influences. We intend to target new acquisitions in or near markets where our Properties are located and will also consider acquisitions of Properties outside such markets. Refer to Note 2(c) of the Notes to Consolidated Financial Statements contained in this Form 10-K.
     Bay Indies located in Venice, Florida and Westwinds located in San Jose, California accounted for approximately 2.5% and 2.2%, respectively, of our total property operating revenues for the year ended December 31, 2006.
     The following table sets forth certain information relating to the Properties we owned as of December 31, 2006, categorized by our major markets (excluding membership campground Properties leased to Privileged Access and Properties owned through joint ventures).

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                                                        Total                        
                                                Total   Number of                        
                                                Number of   Annual Sites   Annual Site   Annual Site           Annual   Annual
                        Acres   Developable   Expansion   Sites as of   as of   Occupancy as   Occupancy as           Rent as of   Rent as of
Property   Address   City   State   ZIP   MH/RV   (c)   Acres (d)   Sites (e)   12/31/06   12/31/06   of 12/31/06   of 12/31/05           12/31/06   12/31/05
 
 
  Florida                                                                                                
East Coast:
                                                                                                   
Sunshine Key
  38801 Overseas Hwy   Big Pine Key   FL   33043   RV     54                       409                                        
Carriage Cove
  Five Carriage Cove Way   Daytona Beach   FL   32119   MH     59                       418       418       93.5 %     92.1 %           $ 5,138     $ 4,949  
Coquina Crossing
  4536 Coquina Crossing Dr.   Elkton   FL   32033   MH     316       65       196       556       556       86.7 %     85.2 %     (b )   $ 4,931     $ 4,629  
Bulow Plantation
  3165 Old Kings Road South   Flagler Beach   FL   32136   MH     323       180       722       276       276       98.9 %     98.9 %     (b )   $ 4,673     $ 4,330  
Bulow RV
  3345 Old Kings Road South   Flagler Beach   FL   32136   RV     (f)                 352       128       100.0 %     100.0 %           $ 4,496     $ 3,681  
Carefree Cove
  3273 N.W. 37th St   Ft. Lauderdale   FL   33309   MH     20                       163       163       90.2 %     92.0 %           $ 5,772     $ 5,693  
Park City West
  10550 W. State Road 84   Ft. Lauderdale   FL   33324   MH     60                       363       363       89.5 %     94.8 %           $ 5,155     $ 4,706  
Sunshine Holiday
  2802 W. Oakland Park Blvd.   Ft. Lauderdale   FL   33311   MH     32                       269       269       90.0 %     90.0 %           $ 5,343     $ 5,078  
Sunshine Holiday RV
  2802 W. Oakland Park Blvd.   Ft. Lauderdale   FL   33311   RV     (f)                     131       35       100.0 %     100.0 %           $ 5,143     $ 4,964  
Maralago Cay
  6280 S. Ash Lane   Lantana   FL   33462   MH     102       5               602       602       92.9 %     93.9 %           $ 5,973     $ 5,747  
Coral Cay
  2801 NW 62nd Avenue   Margate   FL   33063   MH     121                       817       817       82.7 %     88.9 %           $ 5,854     $ 5,750  
Lakewood Village
  3171 Hanson Avenue   Melbourne   FL   32901   MH     68                       349       349       87.7 %     87.4 %           $ 5,292     $ 4,997  
Holiday Village
  1335 Fleming Ave Box 228   Ormond Beach   FL   32174   MH     43                       301       301       87.0 %     85.7 %           $ 4,446     $ 4,308  
Sunshine Holiday
  1701 North US Hwy 1   Ormond Beach   FL   32174   RV     69                       349       132       100.0 %     100.0 %           $ 3,744     $ 3,500  
The Meadows
  2555 PGA Boulevard   Palm Beach Gardens   FL   33410   MH     55                       379       379       85.2 %     84.7 %     (b )   $ 5,615     $ 5,090  
Breezy Hill RV
  800 NE 48th Street   Pompano Beach   FL   33064   RV     52                       762       381       100.0 %     100.0 %           $ 5,230     $ 4,937  
Highland Wood RV
  900 NE 48th Street   Pompano Beach   FL   33064   RV     15                       148       3       100.0 %     100.0 %           $ 5,820     $ 4,258  
Lighthouse Pointe
  155 Spring Drive   Port Orange   FL   32129   MH     64                       433       433       86.8 %     87.1 %     (b )   $ 4,446     $ 4,286  
Pickwick
  4500 S. Clyde Morris Blvd   Port Orange   FL   32119   MH     84       4               432       432       99.1 %     99.3 %           $ 4,606     $ 4,420  
Indian Oaks
  780 Barnes Boulevard   Rockledge   FL   32955   MH     38                       208       208       100.0 %     100.0 %           $ 3,827     $ 3,615  
Lazy Lakes
  311 Johnson Road   Sugar Loaf   FL   33042   RV     13                       100                   100.0 %                 $ 6,342  
Countryside
  8775 20th Street   Vero Beach   FL   32966   MH     125                       643       643       89.6 %     90.1 %     (b )   $ 4,929     $ 4,579  
Heritage Plantation
  1101 Ranch Road   Vero Beach   FL   32966   MH     64                       435       435       84.6 %     86.9 %           $ 4,901     $ 4,743  
Holiday Village
  1000 S.W. 27th Avenue   Vero Beach   FL   32968   MH     20                       128       128       39.8 %     43.8 %           $ 4,190     $ 4,073  
Sunshine Travel
  9455 108th Avenue   Vero Beach   FL   32967   RV     30       6       48       300       213       100.0 %     100.0 %           $ 3,787     $ 3,715  
 
                                                                                                   
Central:
                                                                                                   
Clerbook
  20005 U.S. Highway 27   Clermont   FL   34711   RV     288                       1,255       474       100.0 %           (a )   $ 3,194        
Lake Magic
  9600 Hwy 192 West   Clermont   FL   34714   RV     69                       471       143       100.0 %     100.0 %           $ 3,411     $ 3,141  
Southern Palms
  One Avocado Lane   Eustis   FL   32726   RV     120                       950       403       100.0 %     100.0 %           $ 3,269     $ 2,754  
Grand Island
  13310 Sea Breeze Lane   Grand Island   FL   32735   MH     35                       359       359       59.1 %     58.5 %     (b )   $ 4,378     $ 4,114  
Sherwood Forest
  5302 W. Irlo Bronson Hwy   Kissimmee   FL   34746   MH     124                       754       754       94.2 %     93.8 %     (b )   $ 5,004     $ 4,645  
Sherwood Forest RV
  5300 W. Irlo Bronson Hwy   Kissimmee   FL   34746   RV     107       43       149       513       147       100.0 %     100.0 %           $ 4,403     $ 4,353  
Tropical Palms
  2650 Holiday Trail   Kissimmee   FL   34746   RV     59                       541       37       100.0 %                 $ 4,096        
Coachwood
  2610 Dogwood Place   Leesburg   FL   34748   MH     29                       202       202       92.6 %     94.6 %           $ 3,460     $ 3,207  
Mid-Florida Lakes
  199 Forest Dr.   Leesburg   FL   34788   MH     290                       1,225       1,225       82.5 %     82.4 %     (b )   $ 4,996     $ 4,759  
Southernaire
  1700 Sanford Road   Mt. Dora   FL   32757   MH     14                       108       108       86.1 %     88.0 %           $ 3,945     $ 3,608  
Oak Bend
  10620 S.W. 27th Ave.   Ocala   FL   34476   MH     62                       262       262       89.3 %     87.8 %     (b )   $ 4,023     $ 3,878  
Villas at Spanish Oaks
  3150 N.E. 36th Avenue   Ocala   FL   34479   MH     69                       459       459       87.6 %     87.1 %           $ 4,327     $ 4,230  

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                                                        Total                        
                                                Total   Number of                        
                                                Number of   Annual Sites   Annual Site   Annual Site           Annual   Annual
                        Acres   Developable   Expansion   Sites as of   as of   Occupancy as   Occupancy as           Rent as of   Rent as of
Property   Address   City   State   ZIP   MH/RV   (c)   Acres (d)   Sites (e)   12/31/06   12/31/06   of 12/31/06   of 12/31/05           12/31/06   12/31/05
 
Gulf Coast
(Tampa/Naples):
                                                                                                   
Toby’s RV
  3550 N.E. Hwy 70   Arcadia   FL   34266   RV     44                       379       263       100.0 %     100.0 %           $ 2,026     $ 1,910  
Manatee
  800 Kay Road NE   Bradenton   FL   34212   RV     42                       415       249       100.0 %     100.0 %           $ 4,092     $ 3,805  
Windmill Manor
  5320 53rd Ave. East   Bradenton   FL   34203   MH     49                       292       292       93.8 %     94.2 %           $ 5,034     $ 4,812  
Glen Ellen
  2882 Gulf to Bay Blvd   Clearwater   FL   33759   MH     12                       106       106       95.3 %     86.8 %           $ 4,239     $ 4,154  
Hillcrest
  2346 Druid Road East   Clearwater   FL   33764   MH     25                       278       278       87.8 %     78.1 %           $ 4,838     $ 4,773  
Holiday Ranch
  4300 East Bay Drive   Clearwater   FL   33764   MH     12                       150       150       91.3 %     87.3 %           $ 4,800     $ 4,701  
Silk Oak
  28488 US Highway 19 N   Clearwater   FL   33761   MH     19                       181       181       91.7 %     78.5 %           $ 5,124     $ 4,711  
Crystal Isles
  11419 W. Ft. Island Drive   Crystal River   FL   34429   RV     32                       260       21       100.0 %     100.0 %           $ 3,502     $ 3,020  
Lake Haven
  1415 Main Street   Dunedin   FL   34698   MH     48                       379       379       89.2 %     83.6 %           $ 5,756     $ 5,546  
Fort Myers Beach Resort
  16299 San Carlos Blvd.   Fort Myers   FL   33908   RV     31                       306       100       100.0 %     100.0 %           $ 5,054     $ 4,911  
Gulf Air Resort
  17279 San Carlos Blvd. SW   Fort Myers   FL   33931   RV     25                       246       167       100.0 %     100.0 %           $ 4,283     $ 4,112  
Barrington Hills
  9412 New York Avenue   Hudson   FL   34667   RV     28                       392       263       100.0 %     100.0 %           $ 2,464     $ 2,378  
Down Yonder
  7001 N. 142nd Avenue   Largo   FL   33771   MH     50                       361       361       99.2 %     96.7 %           $ 5,515     $ 5,350  
East Bay Oaks
  601 Starkey Road   Largo   FL   33771   MH     40                       328       328       97.9 %     95.7 %           $ 5,247     $ 5,101  
Eldorado Village
  2505 East Bay Drive   Largo   FL   33771   MH     25                       227       227       98.2 %     96.0 %           $ 5,208     $ 5,046  
Shangri La
  249 Jasper Street N.W.   Largo   FL   33770   MH     14                       160       160       96.9 %     90.6 %           $ 4,809     $ 4,512  
Vacation Village
  6900 Ulmerton Road   Largo   FL   33771   RV     29                       293       201       100.0 %     100.0 %           $ 3,760     $ 3,660  
Pasco
  21632 State Road 54   Lutz   FL   33549   RV     27                       255       174       100.0 %     100.0 %           $ 3,182     $ 3,077  
Buccaneer
  2210 N. Tamiami Trail N.E.   N. Ft. Myers   FL   33903   MH     223       65       162       971       971       98.2 %     97.8 %           $ 5,269     $ 4,767  
Island Vista
  3000 N. Tamiami Trail   N. Ft. Myers   FL   33903   MH     121                       616       616       88.0 %           (a )   $ 3,809        
Lake Fairways
  19371 Tamiami Trail   N. Ft. Myers   FL   33903   MH     259                       896       896       99.7 %     99.9 %           $ 5,295     $ 5,004  
Pine Lakes
  10200 Pine Lakes Blvd.   N. Ft. Myers   FL   33903   MH     314                       584       584       100.0 %     99.8 %           $ 6,282     $ 6,079  
Pioneer Village
  7974 Samville Rd.   N. Ft. Myers   FL   33917   RV     90                       733       438       100.0 %     100.0 %           $ 3,521     $ 3,326  
The Heritage
  3000 Heritage Lakes Blvd.   N. Ft. Myers   FL   33917   MH     214       22       132       455       455       98.0 %     98.0 %     (b )   $ 4,734     $ 4,457  
Windmill Village
  16131 N. Cleveland Ave.   N. Ft. Myers   FL   33903   MH     69                       491       491       92.9 %     93.7 %           $ 4,294     $ 4,226  
Country Place
  2601 Country Place Blvd.   New Port Richey   FL   34655   MH     82                       515       515       100.0 %     100.0 %           $ 3,672     $ 3,513  
Hacienda Village
  7107 Gibraltar Ave   New Port Richey   FL   34653   MH     66                       505       505       97.4 %     97.4 %           $ 4,319     $ 4,272  
Harbor View
  6617 Louisiana Ave   New Port Richey   FL   34653   MH     69                       471       471       98.5 %     98.9 %           $ 3,462     $ 2,885  
Bay Lake Estates
  1200 East Colonia Lane   Nokomis   FL   34275   MH     34                       228       228       95.6 %     95.2 %           $ 5,692     $ 5,456  
Royal Coachman
  1070 Laurel Road East   Nokomis   FL   34275   RV     111       6       30       546       416       100.0 %     100.0 %           $ 5,531     $ 5,126  
Silver Dollar
  12515 Silver Dollar Drive   Odessa   FL   33556   RV     412                       385       382       100.0 %     100.0 %           $ 3,953     $ 3,613  
Terra Ceia
  9303 Bayshore Road   Palmetto   FL   34221   RV     18                       203       137       100.0 %     100.0 %           $ 2,951     $ 2,849  
Lakes at Countrywood
  745 Arbor Estates Way   Plant City   FL   33565   MH     122                       424       424       91.3 %     91.3 %     (b )   $ 3,596     $ 3,439  
Meadows at Countrywood
  745 Arbor Estates Way   Plant City   FL   33565   MH     140       23       143       799       799       94.6 %     93.5 %     (b )   $ 4,261     $ 4,007  
Oaks at Countrywood
  745 Arbor Estates Way   Plant City   FL   33565   MH     44                     168       168       75.0 %     74.4 %     (b )   $ 3,710     $ 3,462  
Harbor Lakes
  3737 El Jobean Road #294   Port Charlotte   FL   33953   RV     80                       528       279       100.0 %     100.0 %           $ 3,905     $ 3,713  
Gulf View
  10205 Burnt Store Road   Punta Gorda   FL   33950   RV     78                       206       43       100.0 %     100.0 %           $ 3,872     $ 3,749  
Tropical Palms
  17100 Tamiami Trail   Punta Gorda   FL   33955   MH     50                       297       297       85.9 %           (a )   $ 3,053        
Winds of St. Armands No
  4000 N. Tuttle Ave.   Sarasota   FL   34234   MH     74                       471       471       95.1 %     96.2 %           $ 5,121     $ 4,892  
Winds of St. Armands So
  3000 N. Tuttle Ave.   Sarasota   FL   34234   MH     61                       306       306       99.0 %     99.7 %           $ 5,090     $ 4,885  
Topics
  13063 County Line Road   Spring Hill   FL   34609   RV     35                       230       210       100.0 %     100.0 %           $ 2,576     $ 2,458  
Bay Indies
  950 Ridgewood Ave   Venice   FL   34285   MH     210                       1,309       1,309       96.2 %     97.6 %           $ 6,054     $ 5,736  
Ramblers Rest
  1300 North River Rd.   Venice   FL   34293   RV     117                       647       492       100.0 %           (a )   $ 4,008        
Sixth Avenue
  39345 6th Avenue   Zephyrhills   FL   33542   MH     14                       134       134       91.0 %     91.8 %           $ 2,271     $ 2,135  
                         
Total Florida Market
                        6,752       419       1,582       34,548       28,174       93.8 %     93.4 %           $ 4,444     $ 4,276  
                         

14


Table of Contents

     
                                                                                                     
                                                        Total                        
                                                Total   Number of                        
                                                Number of   Annual Sites   Annual Site   Annual Site           Annual   Annual
                        Acres   Developable   Expansion   Sites as of   as of   Occupancy as   Occupancy as           Rent as of   Rent as of
Property   Address   City   State   ZIP   MH/RV   (c)   Acres (d)   Sites (e)   12/31/06   12/31/06   of 12/31/06   of 12/31/05           12/31/06   12/31/05
 
 
  California                                                                                                
Northern California:
                                                                                                   
Monte del Lago
  13100 Monte del Lago   Castroville   CA   95012   MH     54                       310       310       96.1 %     96.5 %     (b )   $ 10,892     $ 9,155  
Colony Park
  3939 Central Avenue   Ceres   CA   95307   MH     20                       186       186       90.9 %     89.8 %           $ 6,494     $ 5,974  
Four Seasons
  3138 West Dakota   Fresno   CA   93722   MH     40                       242       242       89.7 %     89.3 %           $ 3,967     $ 3,680  
Tahoe Valley
  1175 Melba Drive   Lake Tahoe   CA   96150   RV     86       20       200       413                                        
Sea Oaks
  1675 Los Osos Valley Rd., #221   Los Osos   CA   93402   MH     18                       125       125       99.2 %     100.0 %           $ 5,793     $ 5,563  
Coralwood
  331 Coralwood   Modesto   CA   95356   MH     22                       194       194       95.9 %     99.0 %           $ 7,596     $ 6,694  
Concord Cascade
  245 Aria Drive   Pacheco   CA   94553   MH     31                       283       283       99.3 %     98.6 %           $ 7,258     $ 7,089  
San Francisco RV
  700 Palmetto Ave   Pacifica   CA   94044   RV     12                       182                                        
Quail Meadows
  5901 Newbrook Drive   Riverbank   CA   95367   MH     20                       146       146       100.0 %     98.6 %           $ 7,706     $ 6,546  
California Hawaiian
  3637 Snell Avenue   San Jose   CA   95136   MH     50                       418       418       92.8 %     95.2 %           $ 9,120     $ 8,920  
Sunshadow
  1350 Panoche Avenue   San Jose   CA   95122   MH     30                       121       121       95.9 %     96.7 %           $ 8,903     $ 8,656  
Village of the Four Seasons
  200 Ford Road   San Jose   CA   95138   MH     30                       271       271       90.4 %     92.6 %           $ 8,414     $ 8,212  
Westwinds (4 Properties)
  500 Nicholson Lane   San Jose   CA   95134   MH     88                       723       723       89.2 %     90.0 %           $ 9,945     $ 9,555  
Laguna Lake
  1801 Perfumo Canyon Road   San Luis Obispo   CA   93405   MH     100                       290       290       99.7 %     99.7 %           $ 5,219     $ 4,887  
Contempo Marin
  400 Yosemite Road   San Rafael   CA   94903   MH     63                       396       396       98.5 %     98.5 %           $ 8,082     $ 7,958  
DeAnza Santa Cruz
  2395 Delaware Avenue   Santa Cruz   CA   95060   MH     30                       198       198       95.5 %     96.0 %           $ 9,004     $ 8,263  
Royal Oaks
  415 Akers Drive N.   Visalia   CA   93291   MH     20                       149       149       88.6 %     87.9 %           $ 4,456     $ 3,919  
 
                                                                                                   
Southern California:
                                                                                                   
Date Palm Country Club
  36-200 Date Palm Drive   Cathedral City   CA   92234   MH     232       3       24       538       538       97.8 %     96.8 %           $ 9,932     $ 9,396  
Date Palm RV
  36-100 Date Palm Drive   Cathedral City   CA   92234   RV     (f)                 140                                        
Rancho Mesa
  450 East Bradley Ave.   El Cajon   CA   92021   MH     20       5               158       158       81.0 %     86.1 %           $ 10,529     $ 9,936  
Rancho Valley
  12970 Hwy 8 Business   El Cajon   CA   92021   MH     19                       140       140       97.1 %     100.0 %           $ 10,843     $ 10,552  
Royal Holiday
  4400 W Florida Ave   Hemet   CA   92545   MH     22                       179       179       58.1 %     58.7 %           $ 4,503     $ 4,070  
Pacific Dunes Ranch
  1205 Silver Spur Place   Oceana   CA   93445   RV     48                       215       3       100.0 %     100.0 %           $ 5,355     $ 1,800  
Las Palmas
  1025 S. Riverside Ave.   Rialto   CA   92376   MH     18                       136       136       100.0 %     100.0 %           $ 4,796     $ 4,583  
Parque La Quinta
  350 S. Willow Ave. #120   Rialto   CA   92376   MH     19                       166       166       100.0 %     100.0 %           $ 4,922     $ 4,646  
Meadowbrook
  8301 Mission Gorge Rd.   Santee   CA   92071   MH     43                       338       338       97.9 %     98.2 %           $ 8,918     $ 8,691  
Lamplighter
  10767 Jamacha Blvd.   Spring Valley   CA   91978   MH     32       2               270       270       98.1 %     98.9 %           $ 11,104     $ 10,940  
Santiago Estates
  13691 Gavina Ave. #632   Sylmar   CA   91342   MH     113       25               300       300       100.0 %     99.3 %           $ 9,601     $ 9,013  
                         
Total California Market
                        1,280       55       224       7,227       6,280       94.1 %     94.7 %           $ 7,734     $ 7,148  
                         
 
                                                                                                   
 
  Arizona                                                                                                
Countryside RV
  2701 S. Idaho Rd   Apache Junction   AZ   85219   RV     53                       560       258       100.0 %     100.0 %           $ 2,748     $ 2,676  
Golden Sun RV
  999 W Broadway Ave   Apache Junction   AZ   85220   RV     33                       329       191       100.0 %     100.0 %           $ 2,711     $ 2,699  
Casita Verde RV
  2200 N. Trekell Rd.   Casa Grande   AZ   85222   RV     14                       192       97       100.0 %           (a )   $ 2,086        
Fiesta Grande RV
  1511 East Florence Blvd.   Casa Grande   AZ   85222   RV     77                       767       425       100.0 %           (a )   $ 2,451        
Foothills West RV
  10167 N. Encore Dr.   Casa Grande   AZ   85222   RV     16                       188       121       100.0 %           (a )   $ 1,998        
Casa del Sol East II
  10960 N. 67th Avenue   Glendale   AZ   85304   MH     29                       239       239       80.3 %     79.9 %           $ 6,697     $ 6,299  
Casa del Sol East III
  10960 N. 67th Avenue   Glendale   AZ   85304   MH     28                       236       236       84.3 %     78.4 %           $ 6,696     $ 6,565  
Palm Shadows
  7300 N. 51st. Avenue   Glendale   AZ   85301   MH     33                       294       294       80.3 %     79.3 %           $ 5,293     $ 4,991  
Hacienda de Valencia
  201 S. Greenfield Rd.   Mesa   AZ   85206   MH     51                       365       365       90.4 %     81.9 %           $ 5,497     $ 5,205  
Monte Vista
  8865 E. Baseline Road   Mesa   AZ   85209   RV     142       56       515       832       771       100.0 %     100.0 %           $ 5,296     $ 4,957  
The Highlands at Brentwood
  120 North Val Vista Drive   Mesa   AZ   85213   MH     45                       273       273       97.8 %     92.3 %           $ 6,559     $ 6,291  

15


Table of Contents

     
                                                                                                     
                                                        Total                        
                                                Total   Number of                        
                                                Number of   Annual Sites   Annual Site   Annual Site           Annual   Annual
                        Acres   Developable   Expansion   Sites as of   as of   Occupancy as   Occupancy as           Rent as of   Rent as of
Property   Address   City   State   ZIP   MH/RV   (c)   Acres (d)   Sites (e)   12/31/06   12/31/06   of 12/31/06   of 12/31/05           12/31/06   12/31/05
 
Seyenna Vistas
  625 West McKellips   Mesa   AZ   85201   MH     60       4               410       410       56.1 %     56.3 %           $ 5,084     $ 5,046  
Viewpoint
  8700 E. University   Mesa   AZ   85207   RV     332       55       467       1,952       1,494       100.0 %     100.0 %           $ 4,278     $ 4,050  
Casa del Sol West I
  11411 N. 91st Avenue   Peoria   AZ   85345   MH     31                       245       245       87.8 %     83.3 %           $ 6,309     $ 5,989  
Apollo Village
  10701 N. 99th Ave.   Peoria   AZ   85345   MH     29       3               236       236       85.6 %     80.9 %     (b )   $ 5,369     $ 5,243  
Carefree Manor
  19602 N. 32nd Street   Phoenix   AZ   85050   MH     16                       128       128       78.9 %     74.2 %           $ 4,601     $ 4,462  
Central Park
  205 West Bell Road   Phoenix   AZ   85023   MH     37                       293       293       88.1 %     85.7 %           $ 5,623     $ 5,438  
Desert Skies
  19802 N. 32 Street   Phoenix   AZ   85024   MH     24                       165       165       98.2 %     97.0 %           $ 4,864     $ 4,621  
Sunrise Heights
  17801 North 16th Street   Phoenix   AZ   85022   MH     28                       199       199       84.4 %     77.4 %           $ 5,532     $ 5,241  
Whispering Palms
  19225 N. Cave Creek Rd.   Phoenix   AZ   85024   MH     15                       116       116       94.0 %     96.6 %           $ 4,234     $ 4,127  
Sedona Shadows
  6770 W. U.S. Hwy 89A   Sedona   AZ   86336   MH     48       6       10       198       198       100.0 %     97.0 %           $ 6,316     $ 5,696  
Venture In
  270 N. Clark Rd.   Show Low   AZ   85901   RV     26                       389       265       100.0 %           (a )   $ 2,511        
Paradise
  10950 W. Union Hill Drive   Sun City   AZ   85373   RV     80                       950       830       100.0 %     100.0 %           $ 3,623     $ 3,385  
The Meadows
  2401 W. Southern Ave.   Tempe   AZ   85282   MH     60                       391       391       85.2 %     78.8 %           $ 5,989     $ 5,822  
Fairview Manor
  3115 N. Fairview Avenue   Tucson   AZ   85705   MH     28                       235       235       75.7 %     77.4 %           $ 4,506     $ 4,392  
Araby
  6649 E. 32nd. St.   Yuma   AZ   85365   RV     25                       337       286       100.0 %     100.0 %           $ 2,686     $ 2,604  
Cactus Gardens
  10657 S. Ave. 9-E   Yuma   AZ   85365   RV     43                       430       276       100.0 %     100.0 %           $ 1,798     $ 1,775  
Capri RV
  3380 South 4th Ave   Yuma   AZ   85365   RV     20                       303       221       100.0 %           (a )   $ 2,560        
Desert Paradise
  10537 South Ave., 9E   Yuma   AZ   85365   RV     26                       260       123       100.0 %     100.0 %           $ 1,859     $ 1,800  
Foothill
  12705 E. South Frontage Rd.   Yuma   AZ   85367   RV     18                       180       66       100.0 %     100.0 %           $ 1,908     $ 1,860  
Suni Sands
  1960 East 32nd Street   Yuma   AZ   85365   RV     34                       336       180       100.0 %     100.0 %           $ 2,217     $ 2,193  
                         
Total Arizona Market
                        1,501       124       992       12,028       9,627       92.5 %     89.1 %           $ 4,190     $ 4,363  
                         
 
                                                                                                   
 
  Colorado                                                                                                
Hillcrest Village
  1600 Sable Boulevard   Aurora   CO   80011   MH     72                       601       601       74.2 %     75.5 %           $ 6,477     $ 6,247  
Cimarron
  12205 North Perry   Broomfield   CO   80020   MH     50                       327       327       85.3 %     87.5 %           $ 6,142     $ 5,945  
Holiday Village
  3405 Sinton Road   Co. Springs   CO   80907   MH     38                       240       240       78.8 %     82.5 %           $ 6,468     $ 6,173  
Bear Creek
  3500 South King Street   Denver   CO   80236   MH     12                       122       122       94.3 %     92.6 %           $ 6,173     $ 6,110  
Holiday Hills
  2000 West 92nd Avenue   Denver   CO   80260   MH     99                       735       735       86.1 %     85.4 %           $ 6,145     $ 6,053  
Golden Terrace
  17601 West Colfax Ave.   Golden   CO   80401   MH     32                       265       265       84.9 %     86.4 %           $ 6,667     $ 6,536  
Golden Terrace South
  17601 West Colfax Ave.   Golden   CO   80401   MH     15                       80       80       70.0 %     76.3 %           $ 6,506     $ 6,322  
Golden Terrace South RV
  17801 West Colfax Ave.   Golden   CO   80401   RV     (f)                     80                                        
Golden Terrace West
  17601 West Colfax Ave.   Golden   CO   80401   MH     39       7               316       316       82.9 %     86.1 %           $ 6,556     $ 6,551  
Pueblo Grande
  999 Fortino Blvd. West   Pueblo   CO   81008   MH     33                       251       251       90.0 %     92.4 %           $ 3,899     $ 3,876  
Woodland Hills
  1500 W. Thornton Pkwy.   Thornton   CO   80260   MH     55                       434       434       82.9 %     82.5 %           $ 5,523     $ 5,606  
                         
Total Colorado Market
                        445       7       0       3,451       3,371       82.9 %     84.7 %           $ 6,056     $ 5,932  
                         

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Table of Contents

                                                                                             
                                                  Total                
                                            Total   Number of                
                                            Number of   Annual   Annual Site   Annual Site   Annual   Annual
                      Acres   Developable   Expansion   Sites as of   Sites as of   Occupancy as   Occupancy as   Rent as of   Rent as of
Property   Address   City   State   ZIP   MH/RV   (c)   Acres (d)   Sites (e)   12/31/06   12/31/06   of 12/31/06   of 12/31/05   12/31/06   12/31/05
 
 
  Northeast                                                                                        
Waterford
  205 Joan Drive   Bear   DE   19701   MH     159                       731       731       94.7 %     94.7 %(b)   $ 5,663     $ 5,433  
Whispering Pines
  32045 Janice Road   Lewes   DE   19958   MH     67       3               392       392       86.7 %     86.7 %   $ 4,205     $ 4,033  
Mariners Cove
  35356 Sussex Lane #1   Millsboro   DE   19966   MH     101                       376       376       94.7 %     94.1 %(b)   $ 6,534     $ 6,270  
Aspen Meadows
  303 Palace Lane   Rehoboth   DE   19971   MH     46                       200       200       100.0 %     99.5 %   $ 4,757     $ 4,497  
Camelot Meadows
  303 Palace Lane   Rehoboth   DE   19971   MH     61                       301       301       99.0 %     97.7 %   $ 4,412     $ 4,164  
McNicol
  303 Palace Lane   Rehoboth   DE   19971   MH     25                       93       93       100.0 %     100.0 %   $ 4,215     $ 3,991  
Sweetbriar
  83 Big Burn Lane   Rehoboth   DE   19958   MH     38                       146       146       97.3 %     97.9 %   $ 4,335     $ 4,090  
Old Chatham RV
  310 Old Chatham Road   South Dennis   MA   02660   RV     47       11               312       279       100.0 %     100.0 %   $ 3,055     $ 2,926  
Pinehurst RV Park
  7 Oregon Avenue, P.O. Box 174   Old Orchard Beach   ME   04064   RV     58                       550       523       100.0 %     100.0 %   $ 2,403     $ 2,317  
Scenic
  1314 Tunnel Rd.   Asheville   NC   28805   MH     28                       205       205       79.5 %     (a)   $ 3,261        
Waterway RV
  850 Cedar Point Blvd.   Cedar Point   NC   28584   RV     27                       336       331       100.0 %     100.0 %   $ 2,755     $ 2,602  
Twin Lakes
  1618 Memory Lane   Chocowinity   NC   27817   RV     132       14       54       400       300       100.0 %     100.0 %   $ 2,255     $ 2,215  
Lake Myers RV
  2862 US Highway 64 West   Mocksville   NC   27028   RV     74                       425       313       100.0 %     (a)   $ 2,004        
Goose Creek
  350 Red Barn Road   Newport   NC   28570   RV     92       10       92       598       571       100.0 %     100.0 %   $ 2,842     $ 2,775  
Sandy Beach RV
  677 Clement Hill Road   Contoocook   NH   03229   RV     40                       190       141       100.0 %     100.0 %   $ 2,870     $ 2,709  
Alpine Lake
  78 Heath Road   Corinth   NY   12822   RV     200       54               500       190       100.0 %     100.0 %   $ 2,391     $ 2,339  
Lake George Escape
  175 E. Schroon River Road, P.O. Box 431   Lake George   NY   12845   RV     178       30               576             100.0 %         $ 6,097        
Greenwood Village
  370 Chapman Boulevard   Manorville   NY   11949   MH     79       14       7       512       512       99.8 %     100.0 %   $ 6,189     $ 5,789  
Brennan Beach
  80 Brennan Beach   Pulaski   NY   13142   RV     201                       1,377       1,141       100.0 %     100.0 %   $ 1,605     $ 1,525  
Green Acres
  8785 Turkey Ridge Road   Breinigsville   PA   18031   MH     149                       595       595       93.6 %     93.3 %   $ 5,871     $ 5,852  
Appalachian
  60 Motel Drive   Shartlesville   PA   19554   RV     86       30       200       357       180       100.0 %     (a)   $ 2,561        
Spring Gulch
  475 Lynch Road   New Holland   PA   17557   RV     114                       420       60       100.0 %     100.0 %   $ 3,571     $ 3,421  
Inlet Oaks
  5350 Highway 17   Murrells Inlet   SC   29576   MH     35                       178       178       94.4 %     (a)   $ 3,348        
Meadows of Chantilly
  4200 Airline Parkway   Chantilly   VA   22021   MH     82                       500       500       91.4 %     92.4 %   $ 8,850     $ 8,402  
                         
Total Northest Market
                        2,119       166       353       10,270       8,264       97.1   %     97.7   %   $ 3,911     $ 3,966  
                         
 
                                                                                           
 
  Midwest                                                                                        
Holiday Village
  3700 28th Street   Sioux City   IA   51105   MH     160                       519       519       49.5 %     51.3 %   $ 3,232     $ 3,171  
O’Connell’s
  970 Green Wing Road   Amboy   IL   61310   RV     286       100       600       668       343       100.0 %     100.0 %   $ 2,375     $ 2,245  
Willow Lake Estates
  161 West River Road   Elgin   IL   60123   MH     111                       617       617       75.4 %     77.6 %   $ 9,082     $ 8,919  
Golf Vista Estates
  25807 Firestone Drive   Monee   IL   60449   MH     144       4               408       408       99.0 %     98.0% (b)   $ 6,309     $ 5,981  
Twin Mills RV
  1675 W SR 120   Howe   IN   46746   RV     137       5       50       501       258       100.0 %     (a)   $ 1,812        
Lakeside
  7089 N. Chicago Road   New Carlisle   IN   46552   RV     13                       95       65       100.0 %     100.0 %   $ 1,958     $ 1,714  
Oak Tree Village
  254 Sandalwood Ave.   Portage   IN   46368   MH     76                       361       361       74.2 %     76.5 %   $ 4,616     $ 4,443  
Creekside
  5100 Clyde Pk. Ave. SW   Wyoming   MI   49509   MH     29                       165       165       67.3 %     75.8 %   $ 5,219     $ 4,920  
Caledonia
  8425 Hwy 38   Caledonia   WI   53108   RV     76                       247                                
Fremont
  E. 6506 Highway 110   Fremont   WI   54940   RV     98                       325       45       100.0 %     100.0 %   $ 2,495     $ 2,130  
Yukon Trails
  N2330 Co Rd. HH   Lyndon Station   WI   53944   RV     150                       214       124       100.0 %     100.0 %   $ 1,448        
Tranquil Timbers
  3668 Grondin Road   Sturgeon Bay   WI   54235   RV     125                       270       107       100.0 %     (a)   $ 1,569        
Arrowhead
  W1530 Arrowhead Road   Wisconsin Dells   WI   53965   RV     166       40       200       377       134       100.0 %     (a)   $ 1,415        
                         
Total Midwest Market
                        1,571       149       850       4,767       3,146       88.8 %     86.6 %   $ 3,461     $ 4,190  
                         

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Table of Contents

                                                                                             
                                                        Total                
                                                Total   Number of                
                                                Number of   Annual Sites   Annual Site   Annual Site   Annual   Annual
                        Acres   Developable   Expansion   Sites as of   as of   Occupancy as   Occupancy as   Rent as of   Rent as of
Property   Address   City   State   ZIP   MH/RV   (c)   Acres (d)   Sites (e)   12/31/06   12/31/06   of 12/31/06   of 12/31/05   12/31/06   12/31/05
 
 
  Nevada, Utah, New Mexico                                                                                        
Del Rey
  7311 Louisiana N.E.   Albuquerque   NM   87109   MH     59                       407       407       11.5 %     21.9 %   $ 4,812     $ 4,759  
Bonanza
  3700 East Stewart Ave   Las Vegas   NV   89110   MH     43                       353       353       65.2 %     64.3 %   $ 6,310     $ 6,293  
Boulder Cascade
  1601 South Sandhill Rd   Las Vegas   NV   89104   MH     39                       299       299       80.6 %     77.6 %   $ 5,975     $ 5,741  
Cabana
  5303 East Twain   Las Vegas   NV   89122   MH     37                       263       263       99.2 %     96.6 %   $ 6,107     $ 5,921  
Flamingo West
  8122 West Flamingo Rd.   Las Vegas   NV   89147   MH     37                       258       258       100.0 %     99.6 %   $ 6,654     $ 6,381  
Villa Borega
  1111 N. Lamb Boulevard   Las Vegas   NV   89110   MH     40                       293       293       86.0 %     82.9 %   $ 6,171     $ 5,906  
Westwood Village
  1111 N. 2000 West   Farr West   UT   84404   MH     46                       314       314       93.3 %     92.4 %(b)   $ 3,874     $ 3,719  
All Seasons
  290 N. Redwood Rd   Salt Lake City   UT   84116   MH     19                       121       121       83.5 %     86.8 %   $ 4,949     $ 4,778  
                         
Total Nevada, Utah, New Mexico Market
                        320     0       0       2,308       2,308       77.4 %     77.8 %   $ 5,606     $ 5,437  
                         
 
  Northwest                                                                                        
Casa Village
  14 Goldust Dr   Billings   MT   59102   MH     63                       490       490       74.7 %     74.1 %   $ 3,934     $ 3,879  
Mt. Hood
  65000 E Highway 26   Welches   OR   97067   RV     115       30       202       436       61       100.0 %     100.0 %   $ 4,570     $ 4,279  
Shadowbrook
  13640 S.E. Hwy 212   Clackamas   OR   97015   MH     21                       156       156       97.4 %     97.4 %   $ 6,789     $ 6,321  
Falcon Wood Village
  1475 Green Acres Road   Eugene   OR   97408   MH     23                       183       183       84.2 %     86.9 %   $ 5,371     $ 5,129  
Quail Hollow
  2100 N.E. Sandy Blvd.   Fairview   OR   97024   MH     21                       137       137       94.2 %     94.2 %   $ 6,668     $ 6,570  
Kloshe Illahee
  2500 S. 370th Street   Federal Way   WA   98003   MH     50                       258       258       97.7 %     95.3 %   $ 8,112     $ 7,862  
                         
Total Northwest Market
                        293       30       202       1,660       1,285       91.4 %     91.3 %   $ 5,907     $ 5,673  
                         
 
                                                                                           
 
  Texas                                                                                        
Lakewood
  4525 Graham Road   Harlingen   TX   78552   RV     30                       301       108       100.0 %     100.0 %   $ 1,821     $ 1,764  
Paradise Park RV
  1201 N. Expressway 77   Harlingen   TX   78552   RV     60                       563       304       100.0 %     100.0 %   $ 2,728     $ 2,616  
Sunshine RV
  1900 Grace Avenue   Harlingen   TX   78550   RV     84                       1,027       409       100.0 %     100.0 %   $ 2,160     $ 2,097  
Paradise South
  9909 N. Mile 2 West Rd.   Mercedes   TX   78570   RV     49                       493       170       100.0 %     100.0 %   $ 1,904     $ 1,837  
Fun n Sun RV
  1400 Zillock Rd   San Benito   TX   78586   RV     135       40               1,435       625       100.0 %     100.0 %   $ 2,633     $ 2,568  
Southern Comfort
  1501 South Airport Drive   Weslaco   TX   78596   RV     40                       403       336       100.0 %     100.0 %   $ 2,403     $ 2,344  
Tropic Winds
  1501 N Loop 499   Harlingen   TX   78550   RV     112       74               531       83       100.0 %     100.0 %   $ 2,635     $ 2,691  
Country Sunshine
  1601 South Airport Road   Weslaco   TX   78596   RV     37                       390       199       100.0 %     100.0 %   $ 2,365     $ 2,277  
                         
Total Texas Market
                        547       114       0       5,143       2,234       100.0 %     100.0 %   $ 2,331     $ 2,274  
                         
 
                                                                                           
Grand Total All Markets
                        14,828       1,064       4,203       81,402       64,689       90.9 %     90.6 %   $ 5,001     $ 4,689  
                         
 
(a)   Represents Properties acquired in 2006.
 
(b)   The process of filling Expansion Sites at these Properties is ongoing. A decrease in occupancy may reflect development of additional Expansion Sites.
 
(c)   Acres are approximate. Acreage for some recent acquisitions was estimated based upon 10 sites per acre.
 
(d)   Acres are approximate. There can be no assurance that developable acres will be developed. Development is contingent on many factors including, but not limited to, cost, ability to subdivide, accessibility, infrastructure needs, zoning, entitlement and topography.
 
(e)   Expansion sites are approximate and only represent sites that could be developed and is further dependent upon necessary approvals. Certain Properties with expansion sites noted may have vacancy and therefore, expansion sites may not be added.
 
(f)   Acres for this RV park are included in the acres for the adjacent manufactured home community listed directly above this Property.

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Table of Contents

     The following table sets forth certain information relating to membership campground Properties owned as of December 31, 2006 and leased to Privileged Access.
                                                     
                                                Total
                                                Number
                                                of Sites as
                        Acres   Developable   Expansion   of
Property   Address   City   State   ZIP   (b)   Acres (c)   Sites (d)   12/31/06
 
Hidden Cove Outdoor Resort
  687 Country Road 3916   Arley   AL     35541       81       60       200       79 (a)
Verde Valley
  6400 Thousand Trails Rd, SP # 16   Cottonwood   AZ     86326       273       160       600       352  
Cultus Lake (Canada)
  1855 Columbia Valley Hwy   Lindell Beach   BC     V2R 4W6       15                       178  
Idyllwild
  24400 Canyon Trail Drive   Idyllwild   CA     92549       191       52       120       287  
Lake Minden
  1256 Marcum Rd   Nicolaus   CA     95659       165       82       342       323  
Lake of the Springs
  14152 French Town Rd   Oregon House   CA     95962       954       507               541  
Morgan Hill
  12895 Uvas Rd   Morgan Hill   CA     95037       62                       339  
Oakzanita
  11053 Highway 79   Descanso   CA     91916       145       102               146  
Palm Springs
  77500 Varner Rd   Palm Desert   CA     92211       35                       401  
Pio Pico
  14615 Otay Lakes Rd   Jamul   CA     91935       176                       512  
Ponderosa
  7291 Highway 49   Lotus   CA     95651       22                       170 (a)
Rancho Oso
  3750 Paradise Rd   Santa Barbara   CA     93105       310       78               187  
Russian River
  33655 Geysers Rd   Cloverdale   CA     95425       41                       135  
San Benito
  16225 Cienega Rd   Paicines   CA     95043       199       35               523  
Snowflower
  41776 Yuba Gap Dr   Emigrant Gap   CA     95715       551       200               268  
Soledad Canyon
  4700 Crown Valley Rd   Acton   CA     93510       273                       1,251  
Turtle Beach
  703 E Williamson Rd   Manteca   CA     95337       39                       79  
Wilderness Lakes
  30605 Briggs Rd   Menifee   CA     92584       73                       529  
Yosemite Lakes
  31191 Harden Flat Rd   Groveland   CA     95321       403       50       160       299  
Orlando
  2110 US Highway 27 S   Clermont   FL     34714       270       34               850  
Peace
  2555 US Highway 17   South Wauchula   FL     33873       72       38               454 (a)
Three Flags RV Resort
  1755 E State Rd 44   Wildwood   FL     34785       23                       221 (a)
Pine Country
  5710 Shattuck Road   Belvidere   IL     61008       131                       126 (a)
Horsehoe Lakes
  12962 S. 225 W.   Clinton   IN     47842       289       96       96       123  
Indian Lakes
  7234 E. SR Highway 46   Batesville   IN     47006       545       159       318       1,000  
Diamond Caverns Resort
  1878 Mammoth Cave Pkwy   Park City   KY     42160       714       368       469       220 (a)
Gateway to Cape Cod
  90 Stevens Rd PO Box 217   Rochester   MA     02770       80                       194 (a)
Sturbridge
  19 Mashapaug Rd   Sturbridge   MA     01566       223                       155 (a)
Moody Beach
  266 Post Road   Moody   ME     04054       48                       203 (a)
Bear Cave Resort
  4085 N. Red Bud Trail   Buchanan   MI     49107       26       10               136 (a)
Saint Claire
  1299 Wadhams Rd   Saint Claire   MI     48079       210       100               229  
Forest Lake
  192 Thousand Trails Dr   Advance   NC     27006       306       160               305  
Green Mountain Park
  2495 Dimmette Rd   Lenoir   NC     28645       1077       400       360       447 (a)
Lake Gaston
  561 Fleming Dairy Road   Littleton   NC     27850       69                       235 (a)
Chestnut Lake
  631 Chestnut Neck Rd   Port Republic   NJ     08241       32                       185  
Lake & Shore
  545 Corson Tavern Rd   Ocean View   NJ     08230       162                       401 (a)
Sea Pines
  US Route #9 Box 1535   Swainton   NJ     08210       75                       549 (a)
Las Vegas
  4295 Boulder Highway   Las Vegas   NV     89121       11                       217  
Rondout Valley Resort
  105 Mettachonts Rd   Accord   NY     12404       184       121               398 (a)
Kenisee Lake
  2021 Mill creek Rd   Jefferson   OH     44047       143       50               119  
Wilmington
  1786 S.R. 380   Wilmington   OH     45177       109       41               169  
Pacific City
  30000 Sandlake Rd   Cloverdale   OR     97112       105                       307  
Seaside Resort
  1703 12th Ave   Seaside   OR     97138       80                       251  
South Jetty
  05010 South Jetty Rd   Florence   OR     97439       57                       204  
Thousand Trails Bend
  17480 S Century Dr   Bend   OR     97707       289       100               351  
Whaler’s Rest Resort
  50 SE 123rd St   South Beach   OR     97366       39                       170  
Circle M
  2111 Millersville Road   Lancaster   PA     17603       103                       380 (a)
Gettysburg Farm
  6200 Big Mountain Rd   Dover   PA     17315       124                       265 (a)
Hershey Preserve
  493 S. Mt. Pleasant Rd   Lebanon   PA     17042       196       96               297  
PA Dutch County
  185 Lehman Road   Manheim   PA     17545       102                       269 (a)
Scotrun
  PO Box 428 Route 611   Scotrun   PA     18355       66                       178 (a)
Timohty Lake South
  RR #6,Box 6627 Timothy Lake Rd   East Stroudsburg   PA     18301       65                       327 (a)
Timothy Lake North
  RR #6,Box 6627 Timothy Lake Rd   East Stroudsburg   PA     18301       98                       323 (a)

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                                                        Total
                                                        Number
                                                        of Sites as
                                Acres   Developable   Expansion   of
Property   Address   City   State           ZIP   (b)   Acres (c)   Sites (d)   12/31/06
 
Carolina Landing
  120 Carolina Landing Dr   Fair Play   SC             29643       73                       192  
The Oaks at Point South
  1292 Campground Rd   Yemassee   SC             29945       10                       93 (a)
Cherokee Landing
  PO Box 37   Middleton   TN             38052       254       124               339  
Natchez Trace
  1363 Napier Rd   Hohenwald   TN             38462       672       140               531  
Bay Landing
  2305 Highway 380 W   Bridgeport   TX             76426       443       235               293  
Colorado River
  1062 Thousand Trails Lane   Columbus   TX             78934       218       89               132  
Lake Conroe
  11720 Old Montgomery Rd   Willis   TX             77318       129       30       300       363  
Lake Tawakoni
  1246 Rains Co. Rd 1470   Point   TX             75472       480                       320  
Lake Texoma
  209 Thousand Trails Dr   Gordonville   TX             76245       201       40               301  
Lake Whitney
  417 Thousand Trails Dr   Whitney   TX             76692       403       158               261  
Medina Lake
  215 Spettle Rd   Lakehills   TX             78063       208       50               387  
Chesapeake Bay
  12014 Trails Lane   Gloucester   VA             23061       282       80               392  
Harbor View
  15 Harbor View Circle   Colonial Beach   VA             22443       76                       146 (a)
Lynchburg
  405 Mollies Creek Rd   Gladys   VA             24554       170       59               222  
Virginia Landing
  40226 Upshur Neck Rd   Quinby   VA             23423       839       348               233  
Williamsburg
  4301 Rochambeau Drive   Williamsburg   VA             23188       65                       211 (a)
Birch Bay
  8418 Harborview Rd   Blaine   WA             98230       31                       246  
Cascade Resort
  34500 SE 99th St   Snoqualmie   WA             98065       20                       163  
Chehalis
  2228 Centralia-Alpha Rd   Chehalis   WA             98532       309       85               360  
Crescent Bar Resort
  9252 Crescent Bar Rd NW   Quincy   WA             98848       14                       115  
La Conner
  16362 Snee Oosh Rd   La Conner   WA             98257       106       30               319  
Leavenworth
  20752-4 Chiwawa Loop Rd   Leavenworth   WA             98826       300       50               266  
Little Diamond
  1002 McGowen Rd   Newport   WA             99156       360       119               520  
Long Beach
  2215 Willows Rd   Seaview   WA             98644       17                       144  
Mt. Vernon
  5409 N. Darrk Ln   Bow   WA             98232       311       200       600       251  
Oceana Resort
  2733 State Route 109   Oceana City   WA             98569       16                       84  
Paradise Resort
  173 Salem Plant Rd   Silver Creek   WA             98585       60                       214  
Thunderbird Resort
  26702 Ben Howard Rd   Monroe   WA             98272       45       2               136  
   
 
                                16,243       4,938       3,565       24,091  
   
 
(a)   Represents Properties acquired in 2006.
 
(b)   Acres are approximate.
 
(c)   Acres are approximate. There can be no assurance that developable acres will be developed. Development is contingent on many factors including, but not limited to, cost, ability to subdivide, accessibility, infrastructure needs, zoning, entitlement and topography.
 
(d)   Expansion sites are approximate and only represent sites that could be developed and is further dependent upon necessary approvals. Certain Properties with expansion sites noted may have vacancy and therefore, expansion sites may not be added.
Item 3. Legal Proceedings
California Rent Control Litigation
     As part of the Company’s effort to realize the value of its Properties subject to rent control, the Company has initiated lawsuits against several municipalities in California. The Company’s goal is to achieve a level of regulatory fairness in California’s rent control jurisdictions, and in particular those jurisdictions that prohibit increasing rents to market upon turnover. Regulations in California allow tenants to sell their homes for a premium representing the value of the future discounted rent-controlled rents. In the Company’s view, such regulation results in a transfer of the value of the Company’s stockholders’ land, which would otherwise be reflected in market rents, to tenants upon the sales of their homes in the form of an inflated purchase price that cannot be attributed to the value of the home being sold. As a result, in the Company’s view, the Company loses the value of its asset and the selling tenant leaves the Property with a windfall premium. The Company has discovered through the litigation process that certain municipalities considered condemning the Company’s Properties at values well below the value of the underlying land. In the Company’s view, a failure to articulate market rents for sites governed by restrictive rent control would put the Company at risk for condemnation or eminent domain proceedings based on artificially reduced rents. Such a physical taking, should it occur, could represent substantial lost value to stockholders. The Company is cognizant of the need for affordable housing in the jurisdictions, but asserts that restrictive rent regulation does not promote this purpose because the benefits of such regulation are fully capitalized into the prices of the homes sold. The Company estimates that the annual rent subsidy to tenants in these jurisdictions may be in excess of $15 million. In a more well balanced regulatory environment, the Company would receive market rents that would eliminate the subsidy and homes would trade at or near their intrinsic value.

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     In connection with such efforts, the Company announced it has entered into a settlement agreement with the City of Santa Cruz, California and that, pursuant to the settlement agreement, the City amended its rent control ordinance to exempt the Company’s Property from rent control as long as the Company offers a long term lease which gives the Company the ability to increase rents to market upon turnover and bases annual rent increases on the CPI. The settlement agreement benefits the Company’s stockholders by allowing them to receive the value of their investment in this Property through vacancy decontrol while preserving annual CPI based rent increases in this age-restricted Property.
     The Company has filed two lawsuits in federal court against the City of San Rafael, challenging its rent control ordinance on constitutional grounds. The Company believes that one of those lawsuits was settled by the City agreeing to amend the ordinance to permit adjustments to market rent upon turnover. The City subsequently rejected the settlement agreement. The Court initially found the settlement agreement was binding on the City, but then reconsidered and determined to submit the claim of breach of the settlement agreement to a jury. In October 2002, the first case against the City went to trial, based on both breach of the settlement agreement and the constitutional claims. A jury found no breach of the settlement agreement; the Company then filed motions asking the Court to rule in its favor on that claim, notwithstanding the jury verdict. The Court postponed decision on those motions and on the constitutional claims, pending a ruling on some property rights issues by the United States Supreme Court. The Company also had pending a claim seeking a declaration that the Company could close the Property and convert it to another use which claim was not tried in 2002. The United States Supreme Court issued the property rights rulings in 2005 and subsequently on January 27, 2006, the Court hearing the San Rafael cases issued a ruling that granted the Company’s motion for leave to amend to assert alternative takings theories in light of the United States Supreme Court’s decisions. The Court’s ruling also denied the Company’s post trial motions related to the settlement agreement and dismissed the park closure claim without prejudice to the Company’s ability to reassert such claim in the future. As a result, the Company has filed a new complaint challenging the City’s ordinance as violating the takings clause and substantive due process. The City of San Rafael filed a motion to dismiss the amended complaint. On December 5, 2006, the Court denied portions of the City’s motion to dismiss that had sought to eliminate certain of the Company’s taking claims and substantive due process claims. Further, the Court set a trial date in this matter for June 2007 on the taking claims and substantive due process claims.
     The Company’s efforts to achieve a balanced regulatory environment incentivize tenant groups to file lawsuits against the Company seeking large damage awards. The homeowners association at Contempo Marin (“CMHOA”), a 396 site Property in San Rafael, California, sued the Company in December 2000 over a prior settlement agreement on a capital expenditure pass-through after the Company sued the City of San Rafael in October 2000 alleging its rent control ordinance is unconstitutional. In the Contempo Marin case, the CMHOA prevailed on a motion for summary judgment on an issue that permits the Company to collect only $3.72 out of a monthly pass-through amount of $7.50 that the Company believed had been agreed to by the CMHOA in a settlement agreement. The CMHOA continued to seek damages from the Company in this matter. The Company reached a settlement with the CMHOA in this matter which allows the Company to recover $3.72 of the requested monthly pass-through and does not provide for the payment of any damages to the CMHOA. Both the CMHOA and the Company brought motions to recover their respective attorneys’ fees in the matter, which motions were heard by the Court in January 2007. On January 12, 2007, the Court granted CMHOA’s motion for attorneys’ fees in the amount of $347,000 and denied the Company’s motion for attorneys’ fees. These fees have been fully accrued by the Company as of December 31, 2006. The Company expects to appeal both decisions. The Company believes that such lawsuits will be a consequence of the Company’s efforts to change rent control since tenant groups actively desire to preserve the premium value of their homes in addition to the discounted rents provided by rent control. The Company has determined that its efforts to rebalance the regulatory environment despite the risk of litigation from tenant groups are necessary not only because of the $15 million annual subsidy to tenants, but also because of the condemnation risk.
     Similarly, in June 2003, the Company won a judgment against the City of Santee in California Superior Court (case no. 777094). The effect of the judgment was to invalidate, on state law grounds, two (2) rent control ordinances the City of Santee had enforced against the Company and other property owners. However, the Court allowed the City to continue to enforce a rent control ordinance that predated the two invalid ordinances (the “prior ordinance”). As a result of the judgment the Company was entitled to collect a one-time rent increase based upon the difference in annual adjustments between the invalid ordinance(s) and the prior ordinances and to adjust its base rents to reflect what the Company could have charged had the prior ordinance been continually in effect. The City of Santee appealed the judgment. The court of appeal and California Supreme Court refused to stay enforcement of these rent adjustments pending appeal. After the City was unable to obtain a stay, the City and the tenant association each sued the Company in separate actions alleging the rent adjustments pursuant to the judgment violate the prior ordinance (Case Nos. GIE 020887 and GIE 020524). They seek to rescind the rent adjustments, refunds of amounts paid, and penalties and damages in these separate actions. On January 25, 2005, the California Court of Appeal reversed the judgment in part and affirmed it in part with a remand. The Court of Appeal affirmed that one ordinance was unlawfully adopted and therefore void and that the second ordinance contained unconstitutional provisions. However, the Court ruled the City had the authority to cure the issues with the first ordinance retroactively and that the City could sever the unconstitutional provisions in the second ordinance. On remand the trial court is directed to decide the issue of damages to the Company which the Company believes is consistent with the Company

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receiving the economic benefit of invalidating one of the ordinances and also consistent with the Company’s position that it is entitled to market rent and not merely a higher amount of regulated rent. In the remand action, the City of Santee filed a motion seeking restitution of amounts collected by the Company following the judgment which motion was denied. The Company intends to vigorously pursue its damages in the remand action and to vigorously defend the two new lawsuits.
     In addition, the Company has sued the City of Santee in federal court alleging all three of the ordinances are unconstitutional under the Fifth and Fourteenth Amendments to the United States Constitution. Thus, it is the Company’s position that the ordinances are subject to invalidation as a matter of law in the federal court action. Separately, the Federal District Court granted the City’s Motion for Summary Judgment in the Company’s federal court lawsuit. This decision was based not on the merits, but on procedural grounds, including that the Company’s claims were moot given its success in the state court case. The Company has appealed the decision.
     In October 2004, the United States Supreme Court granted certiorari in State of Hawaii vs. Chevron USA, Inc., a Ninth Circuit Court of Appeal case that upheld the standard that a regulation must substantially advance a legitimate state purpose in order to be constitutionally viable under the Fifth Amendment. On May 24, 2005 the United States Supreme Court reversed the Ninth Circuit Court of Appeal in an opinion that clarified the standard of review for regulatory takings brought under the Fifth Amendment. The Supreme Court held that the heightened scrutiny applied by the Ninth Circuit is not the applicable standard in a regulatory takings analysis, but is an appropriate factor for determining if a due process violation has occurred. The Court further clarified that regulatory takings would be determined in significant part by an analysis of the economic impact of the regulation. The Company believes that the severity of the economic impact on its Properties caused by rent control will enable it to continue to challenge the rent regulations under the Fifth Amendment and the due process clause.
     As a result of the Company’s efforts to achieve a level of regulatory fairness in California, a commercial lending company, 21st Mortgage Corporation, a Delaware corporation, sued MHC Financing Limited Partnership. Such lawsuit asserts that certain rent increases implemented by the partnership pursuant to the rights afforded to the property owners under the City of San Jose’s rent control ordinance were invalid or unlawful. 21st Mortgage has asserted that it should benefit from the vacancy control provisions of the City’s ordinance as if 21st Mortgage were a “homeowner” and contrary to the ordinance’s provision that rents may be increased without restriction upon termination of the homeowners’ tenancy. In each of the disputed cases, the partnership had terminated the tenancy of the homeowner (21st Mortgage’s borrower) through the legal process. The Court, in granting 21st Mortgage’s motion for summary judgment, has indicated that 21st Mortgage may be a “homeowner” within the meaning of the ordinance. The Company has filed a motion for reconsideration of the ruling in light of the fact that 21st Mortgage has never applied for tenancy, entered into a rental agreement or been accepted as a homeowner in the communities. Moreover, California Civil Code Section 798.21 specifically exempts non-principal residents from the benefits of rent control. The Company intends to continue vigorously defending this matter.
Dispute with Las Gallinas Valley Sanitary District
     In November 2004, the Company received a Compliance Order (the “Compliance Order”) from the Las Gallinas Valley Sanitary District (the “District”), relating to the Company’s Contempo Marin Property in San Rafael, California. The Compliance Order directed the Company to submit and implement a plan to bring the Property’s domestic wastewater discharges into compliance with the applicable District ordinance (the “Ordinance”), and to ensure continued compliance with the Ordinance in the future.
     Without admitting any violation of the Ordinance, the Company promptly engaged a consultant to review the Property’s sewage collection system and prepare a compliance plan to be submitted to the District. The District approved the compliance plan in January 2005, and the Company promptly took all necessary actions to implement same.
     Thereafter, the Company received a letter dated June 2, 2005 from the District’s attorney (the “June 2 Letter”), acknowledging that the Company has “taken measures to bring the Property’s private sanitary system into compliance” with the Ordinance, but claiming that prior discharges from the Property had damaged the District’s sewers and pump stations in the amount of approximately $368,000. The letter threatened legal action if necessary to recover the cost of repairing such damage. By letter dated June 23, 2005, counsel for the Company denied the District’s claims set forth in the June 2 Letter.
     On July 1, 2005, the District filed a Complaint for Enforcement of Sanitation Ordinance, Damages, Penalties and Injunctive Relief in the California Superior Court for Marin County, and on August 17, 2005, the District filed its First Amended Complaint (the “Complaint”). On September 26, 2005, the Company filed its Answer to the Complaint, denying each and every allegation of the Complaint and further denying that the District is entitled to any of the relief requested therein.
     The District subsequently issued a Notice of Violation dated December 12, 2005 (the “NOV”), alleging additional violations of the Ordinance. By letter dated December 23, 2005, the Company denied the allegations in the NOV.

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     The trial in this matter has been rescheduled for March 2007.
     The Company believes that it has complied with the Compliance Order and the Ordinance. The Company further believes that the allegations in the Complaint and the NOV are without merit, and will vigorously defend against any such claims by the District.
Countryside at Vero Beach
     The Company previously received letters dated June 17, 2002 and August 26, 2002 from Indian River County (“County”), claiming that the Company owed sewer impact fees in the amount of approximately $518,000 with respect to the Property known as Countryside at Vero Beach, located in Vero Beach, Florida, purportedly under the terms of an agreement between the County and a prior owner of the Property. In response, the Company advised the County that these fees are no longer due and owing as a result of a 1996 settlement agreement between the County and the prior owner of the Property, providing for the payment of $150,000 to the County to discharge any further obligation for the payment of impact or connection fees for sewer service at the Property. The Company paid this settlement amount (with interest) to the County in connection with the Company’s acquisition of the Property. In February 2006, the Company was served with a complaint filed by the County in Indian River County Circuit Court, requesting a judgment declaring a lien against the Property for allegedly unpaid impact fees, and foreclosing said lien. On March 30, 2006, the Company served its answer and affirmative defenses, and the case is now in the discovery stage. The Company will vigorously defend the lawsuit.
     On January 12, 2006, the Company was served with a complaint filed in Indian River County Circuit Court on behalf of a purported class of homeowners at Countryside at Vero Beach. The complaint includes counts for alleged violations of the Florida Mobile Home Act and the Florida Deceptive and Unfair Trade Practices Act, and claims that the Company required homeowners to pay water and sewer impact fees, either to the Company or to the County, “as a condition of initial or continued occupancy in the Park”, without properly disclosing the fees in advance and notwithstanding the Company’s position that all such fees were fully paid in connection with the settlement agreement described above. On February 8, 2006, the Company served its motion to dismiss the complaint, which is currently pending. The Company will vigorously defend the lawsuit.
Colony Park
     On December 1, 2006, a group of tenants at the Company’s Colony Park Property in Ceres, California filed a complaint in the California Superior Court for Stanislaus County, alleging that the Company has failed to properly maintain the Property and has improperly reduced the services provided to the tenants, among other allegations. The Company believes that the allegations in the complaint are without merit, and intends to vigorously defend the lawsuit.
     California’s Department of Housing and Community Development (“HCD”) issued a Notice of Violation dated August 21, 2006 regarding the sewer system at Colony Park. The notice ordered the Company to replace the Property’s sewer system or show justification from a third party explaining why the sewer system does not need to be replaced. The Company has provided such third party report to HCD and believes that the sewer system does not need to be replaced. Based upon information provided by the Company to HCD to date, HCD has indicated that it agrees that the entire system does not need to be replaced.
Other
     The Company is involved in various other legal proceedings arising in the ordinary course of business. Additionally, in the ordinary course of business, the Company’s operations are subject to audit by various taxing authorities. Management believes that all proceedings herein described or referred to, taken together, are not expected to have a material adverse impact on the Company. In addition, to the extent any such proceedings or audits relate to newly acquired Properties, the Company considers any potential indemnification obligations of sellers in favor of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
     None.

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PART II
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
     Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol ELS. On February 8, 2007, the reported closing price per share of ELS common stock on the NYSE was $58.92 and there were approximately 6,585 beneficial holders of record. The high and low sales prices and closing sales prices on the NYSE and distributions for our common stock during 2006 and 2005 are set forth in the table below:
                                 
                            Distributions
    Close   High   Low   Declared
2006
                               
1st Quarter
  $ 49.75     $ 51.81     $ 44.30     $ 0.075  
2nd Quarter
    43.83       50.00       40.91       0.075  
3rd Quarter
    45.71       47.27       41.45       0.075  
4th Quarter
    54.43       56.00       44.90       0.075  
 
                               
2005
                               
1st Quarter
  $ 35.25     $ 36.26     $ 32.73     $ 0 .025  
2nd Quarter
    39.76       40.15       34.33       0 .025  
3rd Quarter
    45.00       48.00       39.82       0 .025  
4th Quarter
    44.50       47.53       38.70       0 .025  
Issuer Purchases of Equity Securities
                         
                    Total Number of Shares   Maximum Number of
    Total Number   Average Price   Purchased as Part of   Shares that May Yet
    of Shares   Paid per   Publicly Announced   be Purchased Under
Period   Purchased(a)   Share(a)   Plans or Programs   the Plans or Programs
 
12/1/06-12/31/06
    17,640     $ 52.53     None   None
 
(a)   Of the common stock repurchased on December 11, 2006, 17,640 shares were repurchased at the open market price and represent common stock surrendered to the Company to satisfy income tax withholding obligations due as a result of the vesting of Restricted Share Grants.

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Item 6. Selected Financial Data
     The following table sets forth selected financial and operating information on a historical basis. The historical operating data has been derived from the historical financial statements of the Company. The following information should be read in conjunction with all of the financial statements and notes thereto included elsewhere in this Form 10-K.
Equity LifeStyle Properties, Inc.
Consolidated Historical Financial Information

(Amounts in thousands, except for per share and property data)
                                         
    (1) Years ended December 31,  
    2006     2005     2004     2003     2002  
Property Operations:
                                       
Community base rental income
  $ 225,815     $ 213,280     $ 204,190     $ 189,915     $ 187,406  
Resort base rental income
    89,925       74,371       54,661       11,551       9,145  
Utility and other income
    30,643       27,367       24,496       19,666       19,083  
 
                             
Property operating revenues
    346,383       315,018       283,347       221,132       215,634  
 
                                       
Property operating and maintenance
    116,179       103,832       91,812       61,945       59,839  
Real estate taxes
    26,246       24,671       22,723       18,011       16,919  
Property management
    17,079       15,919       12,852       9,373       9,292  
 
                             
Property operating expenses (exclusive of depreciation shown separately below)
    159,504       144,422       127,387       89,329       86,050  
 
                             
Income from property operations
    186,879       170,596       155,960       131,803       129,584  
 
                                       
Home Sales Operations:
                                       
Gross revenues from inventory home sales
    61,247       66,014       47,404       36,472       33,262  
Cost of inventory home sales
    (54,498 )     (57,471 )     (41,577 )     (31,615 )     (26,922 )
 
                             
Gross profit from inventory home sales
    6,749       8,543       5,827       4,857       6,340  
Brokered resale revenues, net
    2,129       2,714       2,176       1,714       1,558  
Home selling expenses
    (9,836 )     (8,838 )     (8,630 )     (7,287 )     (7,570 )
Ancillary services revenues, net
    3,027       2,227       2,280       135       296  
 
                             
Income (loss) from home sales operations & other
    2,069       4,646       1,653       (581 )     624  
 
                                       
Other Income (Expenses):
                                       
Interest income
    1,975       1,406       1,391       1,695       967  
Income from other investments, net (2)
    20,102       16,609       3,475       956       316  
General and administrative
    (12,760 )     (13,624 )     (9,243 )     (8,060 )     (8,192 )
Rent control initiatives
    (1,157 )     (1,081 )     (2,412 )     (2,352 )     (5,698 )
Interest and related amortization (3)
    (103,161 )     (100,712 )     (91,154 )     (58,206 )     (50,725 )
Loss on early debt retirement (4)
          (20,630 )                  
Depreciation on corporate assets
    (410 )     (804 )     (1,657 )     (1,240 )     (1,277 )
Depreciation on real estate assets and other costs
    (60,276 )     (55,608 )     (47,467 )     (35,924 )     (33,160 )
 
                             
Total other expenses, net
    (155,687 )     (174,444 )     (147,067 )     (103,131 )     (97,769 )
 
                                       
Income before minority interests, equity in income of unconsolidated joint ventures, loss on extinguishment of debt, gain on sale of property and discontinued operations
    33,261       798       10,546       28,091       32,439  
 
                                       
(Income) loss allocated to Common OP Units
    (4,267 )     1,329       (565 )     (3,431 )     (4,230 )
Income allocated to Perpetual Preferred OP Units (5)
    (16,138 )     (13,974 )     (11,284 )     (11,252 )     (11,252 )
Equity in income of unconsolidated joint ventures
    3,583       6,508       3,739       340       235  
 
                             
 
                                       
Income (loss) before gain on sale of properties and other, and discontinued operations
    16,439       (5,339 )     2,436       13,748       17,192  
 
                             
 
                                       
Gain on sale of properties and other
                2              
 
                             
Income (loss) from continuing operations
    16,439       (5,339 )     2,438       13,748       17,192  
 
                             
 
                                       
Discontinued Operations:
                                       
Discontinued operations
    520       1,927       2,750       4,607       7,387  
Depreciation on discontinued operations
    (84 )     (410 )     (1,427 )     (1,476 )     (2,150 )
Gain on sale of discontinued properties and other
    (192 )     2,279       636       10,826       13,014  
Minority interests on discontinued operations
    (51 )     (790 )     (371 )     (2,573 )     (3,556 )
 
                             
Income from discontinued operations
    193       3,006       1,588       11,384       14,695  
 
                             
Net income (loss) available for Common Shares
  $ 16,632     $ (2,333 )   $ 4,026     $ 25,132     $ 31,887  
 
                             

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Equity LifeStyle Properties, Inc.
Consolidated Historical Financial Information

(continued)
(Amounts in thousands, except for per share and property data)
                                         
    (1) As of December 31,  
    2006     2005     2004     2003     2002  
Earnings per Common Share — Basic:
                                       
Income (loss) from continuing operations
  $ 0.70     $ (0.23 )   $ 0.11     $ 0.62     $ 0.80  
Income from discontinued operations
  $ 0.01     $ 0.13     $ 0.07     $ 0.52     $ 0.68  
Net income (loss) available for Common Shares
  $ 0.71     $ (0.10 )   $ 0.18     $ 1.14     $ 1.48  
 
                                       
Earnings per Common Share — Fully Diluted:
                                       
Income (loss) from continuing operations
  $ 0.68     $ (0.23 )   $ 0.10     $ 0.61     $ 0.78  
Income from discontinued operations
  $ 0.01     $ 0.13     $ 0.07     $ 0.50     $ 0.66  
Net income (loss) available for Common Shares
  $ 0.69     $ (0.10 )   $ 0.17     $ 1.11     $ 1.44  
 
                                       
Distributions declared per Common Share outstanding (3)
  $ 0.30     $ 0.10     $ 0.05     $ 9.485     $ 1.90  
 
                                       
Weighted average Common Shares outstanding – basic
    23,444       23,081       22,849       22,077       21,617  
Weighted average Common OP Units outstanding
    6,165       6,285       6,067       5,342       5,403  
Weighted average Common Shares outstanding – fully diluted
    30,241       29,366       29,465       28,002       27,632  
 
                                       
Balance Sheet Data:
                                       
Real estate, before accumulated depreciation (6)
  $ 2,337,460     $ 2,152,567     $ 2,035,790     $ 1,309,705     $ 1,296,007  
Total assets
    2,055,831       1,948,874       1,886,289       1,463,507       1,154,794  
Total mortgages and loans (3)
    1,717,212       1,638,281       1,653,051       1,076,183       760,233  
Minority interests (5)
    212,794       209,379       134,771       124,634       166,889  
Stockholders’ equity (3)
    47,118       32,516       31,844       (2,528 )     171,175  
 
                                       
Other Data:
                                       
Funds from operations (7)
  $ 82,367     $ 52,827     $ 54,448     $ 58,479     $ 62,695  
 
                                       
Total Properties (at end of period)
    311       285       275       142       142  
Total sites (at end of period)
    112,956       106,337       102,178       53,429       51,582  
 
(1)   See the Consolidated Financial Statements of the Company contained in this form 10-K. Certain revenue amounts reported in previously issued statements of operations have been reclassified in the attached statements of operations due to the Company’s expansion of the related revenue activity.
 
    Property operations and home sale operations are discussed in Item 7 contained in this Form 10-K.
 
(2)   In November 2004, we acquired 57 Properties and approximately 3,000 acres of vacant land, for $160 million (“Thousand Trails Transaction”). The Company provided a long-term lease of the real estate (excluding the vacant land) to Thousand Trails (“TT”), which operates the Properties for the benefit of its members nationwide. The November 2004 lease generated $16 million in annual cash lease payments to the Company, subject to annual escalations of 3.25%, and was amended in April 2006 when TT was sold to Privileged Access (see Item 7 contained in this Form 10-K). The new lease includes two additional Properties acquired in April 2006 and an annual lease cash payment increase to $17.5 million, subject to annual CPI increases (see Note 2(i) in the Notes to Consolidated Financial Statements contained in this Form 10-K).

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Equity LifeStyle Properties, Inc.
Consolidated Historical Financial Information

(continued)
 
(3)   On October 17, 2003, we closed 49 mortgage loans collateralized by 51 Properties (the “Recap”) providing total proceeds of approximately $501 million at a weighted average interest rate of 5.84% per annum and with a weighted average maturity at that time of approximately 9 years. Approximately $170 million of the proceeds were used to repay amounts outstanding on our lines of credit and term loan. Approximately $225 million was used to pay a special distribution of $8.00 per share on January 16, 2004. The remaining funds were used for investment purposes in 2004. The Recap resulted in increased interest and amortization expense and the special distribution resulted in decreased stockholders’ equity.
 
    In connection with the $501 million borrowing and subsequent special distribution, on February 27, 2004, the Company contributed all of its assets to MHC Trust, a newly formed Maryland real estate investment trust, including the Company’s entire partnership interest in the Operating Partnership. Due to the Company’s tax basis in its interest in the Operating Partnership, the Company recognized $180 million of taxable income as a result of the contribution. This restructuring resulted in a step-up in the Company’s tax basis in its assets, generating future depreciation deductions, which in turn will reduce the Company’s future distribution requirements. This provides the Company with greater financial flexibility and greater growth potential (see Note 4 of the Notes to Consolidated Financial Statements contained in this Form 10-K).
 
(4)   On December 2, 2005, we refinanced approximately $293 million of secured debt maturing in 2007 with an effective interest rate of 6.8% per annum. This refinanced debt was secured by two cross-collateralized loan pools consisting of 35 Properties. The transaction generated approximately $337 million in proceeds from loans secured by individual mortgages on 20 Properties. The blended interest rate on the refinancing was approximately 5.3% per annum, and the loans mature in 2015. Transaction costs resulting from early debt retirement were approximately $20.0 million.
 
(5)   During 2005, we issued $25 million of 8.0625% Series D and $50 million of 7.95% Series F Cumulative Redeemable Perpetual Preference Units to institutional investors. Proceeds were used to pay down amounts outstanding under the Company’s lines of credit (see Note 4 of the Notes to Consolidated Financial Statements contained in this Form 10-K).
 
(6)   We believe that the book value of the Properties, which reflects the historical costs of such real estate assets less accumulated depreciation, is less than the current market value of the Properties.
 
(7)   Refer to Item 7 contained in this Form 10-K for information regarding why we present funds from operations and for a reconciliation of this non-GAAP financial measure to net income.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
     The following discussion should be read in conjunction with “Selected Financial Data” and the historical Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K.
2006 Accomplishments
    Approved the sale of Thousand Trails to Privileged Access. Privileged Access is owned by an experienced industry veteran, Joe McAdams, the former CEO of Affinity Group, Inc. with over 18 years experience in the RV industry.
 
    Acquired 24 membership campground Properties which have been leased to Privileged Access opening up additional access along the East Coast for the Privileged Access members.
 
    Acquired our outside joint venture partners’ interest in 15 Properties containing over 6,700 sites, primarily in the important markets of Arizona and Florida.
 
    First year since 2000 where our manufactured home Properties owned year over year finished the year with a higher number of occupied sites than where we started the year.
 
    Raised annual dividend to $0.60 per share in 2007, up from $0.30 per share in 2006.
 
    Successfully refinanced maturing lines of credit and term loan with favorable terms and an increased borrowing capacity.
Overview and Outlook
     Occupancy in our Properties as well as our ability to increase rental rates directly affect revenues. Our revenue streams are predominantly derived from customers renting our sites on a long-term basis.
     We have approximately 64,600 annual sites, approximately 8,000 seasonal sites, which are leased to customers generally for 3 to 6 months, and approximately 8,800 transient sites, occupied by customers who lease sites on a short-term basis. We expect to service over 100,000 customers with these transient sites. However, we consider this revenue stream to be our most volatile. It is subject to weather conditions, gas prices, and other factors affecting the marginal RV customer’s vacation and travel preferences. Finally, we have approximately 24,100 membership sites for which we currently receive ground rent of approximately $19.5 million annually. This rent is classified in Income from other investments, net in the Consolidated Statements of Operations. We also have interests in Properties containing approximately 7,500 sites for which revenue is classified as Equity in income from unconsolidated joint ventures in the Consolidated Statements of Operations.
                 
    Total Sites as of Dec. 31,
    (rounded to 000s)
    2006   2005
Community sites (1)
    45,700       44,900  
Resort sites (2):
               
Annual
    18,900       15,500  
Seasonal
    8,000       8,000  
Transient
    8,800       6,500  
Membership (3)
    24,100       17,900  
Joint Ventures (4)
    7,500       13,500  
 
               
 
    113,000       106,300  
 
               
 
(1)   Includes 1,581 and 2,076 sites from discontinued operations as of December 31, 2006 and 2005, respectively.
 
(2)   Includes 100 sites from discontinued operations, subsequently sold in January 2007.
 
(3)   All sites are currently leased to Privileged Access.
 
(4)   Joint Venture income is included in Equity in income of unconsolidated joint ventures.
Supplemental Property Disclosure
     We provide the following disclosures with respect to certain assets:
    Sunshine Key – Sunshine Key is a 409-site lifestyle-oriented resort Property containing a 200-slip marina located in the Florida Keys. The Property is an individual 54-acre island. We purchased Sunshine Key for approximately $21 million in February 2004 as part of a larger portfolio. In 2005 and 2006, the Property generated approximately $2.2 million and $2.5 million, in income from its property and home sales operations, respectively. Sunshine Key is owned by a taxable REIT subsidiary. Subject to certain provisions, there are rights to redevelop the Property into 104 attached hotel units, 152 detached hotel units (park models) and 146 RV sites.

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      We believe that because of the size, quality and location of Sunshine Key, it represents an irreplaceable asset and therefore, would not normally be considered for sale. However, based on unsolicited purchase inquiries, we determined that a sale may be beneficial if we could defer the gain on sale and reinvest the proceeds from the sale into a diversified portfolio of properties meeting our long-term investment criteria, or if we could significantly increase cash flow from the Property by participating in a transaction with a developer where we could retain an interest in the Property through a ground lease structure.
 
      In November 2005, we entered into a contract to sell Sunshine Key. At the time, we were negotiating for the acquisition of a portfolio that we believed would be an appropriate alternative use of the capital gained from the sale. A provision of the contract allowed us to terminate the contract through June 2006 to the extent we were unable to find appropriate alternative investments. Discussions with respect to a potential replacement portfolio did not lead to a transaction and we communicated such to the potential acquirer of Sunshine Key. In response, the potential acquirer discussed potential alternative transactions with us including, among others the sale of the Property at an increased price, and entering into a long-term ground lease transaction. After consideration, we exercised our right to terminate the contract. The purchase price of the Property under the contract was $70 million.
 
    Lazy Lakes – Lazy Lakes is a 100-site lifestyle-oriented resort Property located in Sugar Loaf Key, Florida on approximately 13 acres, including an 8-acre lagoon. We purchased Lazy Lakes for approximately $3 million in February 2004 as part of a larger portfolio. The Property generated approximately $170,000 and $85,000 in income from its property and home sales operations in 2005 and 2006, respectively.
 
      In January, 2007 we sold Lazy Lakes for approximately $8 million resulting in an approximate gain on sale of $5 million. The Property operations appear in Income from discontinued operations for all periods presented.
 
    Monte Vista – Monte Vista is a lifestyle-oriented resort Property located in Mesa, Arizona containing approximately 56 acres of vacant land. We have obtained approval to develop 275 manufactured home and 240 RV sites on this land. In connection with evaluating the development of Monte Vista, we evaluated selling the land and subsequently decided to list 26 acres of the land for sale. We have received several bids of approximately $10.4 million and are now evaluating those bids. No assurances can be given that any sale transaction will materialize. With respect to the land not listed for sale, we intend to develop additional RV sites and may consider other alternative uses for the land or sale of the acreage. We anticipate that we will proceed with the development if we determine that any offers or the terms thereof are unacceptable.
 
    Bulow Plantation – Bulow Plantation is a 628-site mixed lifestyle-oriented resort Property and manufactured home community located in Flagler Beach, Florida which contains approximately 180 acres of adjacent vacant land. We have obtained approval for an additional manufactured home community development of approximately 700 sites on this land. In connection with evaluating the possible development and based on inquiries from single-family home developers, we evaluated a sale of the land. Subsequently, we listed the land for sale for a purchase price of $28 million. We anticipate that we will proceed with the development if we determine that any offers or the terms thereof are unacceptable.
 
    Holiday Village, Florida – Holiday Village is a 128-site manufactured home community located in Vero Beach, Florida, on approximately 20 acres of land. As a result of the 2004 hurricanes, this Property is less than 50% occupied. The residents have been notified that the Property was listed for sale for a purchase price of $6 million.
Privileged Access
     Privileged Access is leasing sites at certain of our Properties for the purpose of creating flexible use products. These products may include the sale of timeshare or fractional interests in resort homes or cottages and membership and vacation-club products. Leasing our sites to Privileged Access allows us to participate in these products and activities while achieving long-term rental of our sites. We expect to lease additional sites to Privileged Access for this purpose at other Properties in the future.
     On April 14, 2006, Privileged Access acquired our tenant, Thousand Trails (“TT”). Under the terms of the lease with TT, we consented to the ownership change. In addition, we waived an existing right of first offer due to the relatively accelerated timing of the transaction and the lack of definitive guidance regarding the tax treatment of gross income from membership contracts for REIT gross income test purposes. In connection with the transaction, we acquired two additional Properties for $10 million and amended the lease to include those Properties for a total of 59 Properties and 18,535 sites. The annual lease payment for 2007 increased to approximately $17.9 million. In addition, we entered into an option, subject to certain contingencies, to acquire TT beginning in April of 2009. One of the option contingences requires us to obtain assurance

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regarding the qualification of the income from membership contracts for REIT income test purposes. In order to facilitate the closing of the transaction, we loaned Privileged Access approximately $12.3 million at a per annum interest rate of prime plus 1.5%, maturing in one year (see Note 7 of the Notes to Consolidated Financial Statements contained in this Form 10-K) and secured by approximately $23 million of TT membership sales contract receivables. We financed the acquisition of the additional Properties and the loan with a draw on our existing lines of credit.
     On April 25, 2006, we acquired seven lifestyle-oriented Properties (“Mid-Atlantic Portfolio”) which contain 1,594 sites including 950 acres of developable expansion land and are located in Florida, New York, North Carolina, South Carolina, Michigan, Kentucky and Alabama (see Note 5 of the Notes to Consolidated Financial Statements contained in this Form 10-K). The resort sites, which service an existing member base in excess of 7,000 active members, were leased to Privileged Access for a term of approximately one year at $735,000 per annum. We intend to re-lease these sites beyond the expiration of the original lease.
     On December 15, 2006, we acquired 15 membership campground resort Properties (“Outdoor World Portfolio”) which contain 3,962 sites and are located in Illinois, Massachusetts, Maine, North Carolina, New Jersey, Pennsylvania and Virginia (see Note 5 of the Notes to Consolidated Financial Statements contained in this Form 10-K). The resort sites, which service an existing member base of approximately 24,000 members, were leased to Privileged Access for an annual lease payment of approximately $1 million for an original term expiring in February 2007 and a one month extension option. We intend to re-lease theses sites beyond the initial term.
     As of December 31, 2006, we are leasing approximately 24,100 sites at 81 membership campground resort Properties to Privileged Access or its subsidiaries. We expect to continue this type of leasing activity with Privileged Access, as well as exploring other products and services. One example of such a lease is a one-year lease with Privileged Access for 130 sites at Tropical Palms, a Property located near Orlando, Florida, for an annual rate of approximately $1.3 million. Privileged Access intends to sell fractional interests in some resort homes at this Property.
Insurance
     Approximately 70 Florida Properties suffered damage from the four hurricanes that struck the state during August and September 2004. As of February 8, 2007, the Company estimates its total claim to be $20.1 million, of which approximately $18.9 million of claims, including business interruption, have been submitted to its insurance companies for reimbursement. Through December 31, 2006, the Company has made total expenditures of approximately $13.8 million and expects to incur additional expenditures to complete the work necessary to restore the Properties to their pre-hurricanes condition. The Company has reserved approximately $2.0 million related to these expenditures ($0.7 million in 2005 and $1.3 million in 2004). Approximately $5.0 million of these expenditures have been capitalized per the Company’s capitalization policy through December 31, 2006.
     Approximately 33 Properties located in southern Florida were impacted by Hurricane Wilma in October 2005. As of December 31, 2006, approximately $4.4 million of claims have been submitted to the Company’s insurance company for reimbursement. Through December 31, 2006, the Company has made total expenditures of approximately $2.5 million and is still evaluating the total costs it expects to incur. Through December 31, 2006, $1.6 million has been charged to operations ($0.3 million in 2006 and $1.3 million in 2005) and $0.6 million was capitalized to fixed assets.
     The Company has received proceeds from insurance carriers of approximately $5.6 million through December 31, 2006. Approximately $1.5 million is included in other assets as a receivable from insurance providers as of December 31, 2006, and approximately $3.9 million was included in other assets as of December 31, 2005.

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Property Acquisitions, Joint Ventures and Dispositions
     The following chart lists the Properties or portfolios acquired, invested in, or sold since January 1, 2005:
             
Property   Transaction Date   Sites
Total Sites as of January 1, 2005
        102,178  
 
           
Property or Portfolio (# of Properties in parentheses):
           
San Francisco RV (1)
  June 20, 2005     182  
Morgan Portfolio (5)
  August 12, 2005     2,929  
Lake George Escape
  September 15, 2005     576  
Thousand Trails (2)
  April 14, 2006     624  
Mid-Atlantic Portfolio (7)
  April 25, 2006     1,594  
Tranquil Timbers (1)
  June 13, 2006     270  
Outdoor World Portfolio (15)
  December 15, 2006     3,962  
 
           
Joint Ventures:
           
Maine Portfolio (3)
  April 7, 2005     495  
Blazing Star (1)
  November 18, 2005     254  
Morgan Portfolio (5)
  Various, 2006     1,134  
 
           
Expansion Site Development and other:
           
Sites added (reconfigured) in 2005
        113  
Sites added (reconfigured) in 2006
        134  
 
           
Dispositions:
           
Five Seasons (1)
  November 10, 2005     (390 )
Indian Wells (Joint Venture) (1)
  April 18, 2006     (350 )
Forest Oaks (1)
  April 25, 2006     (227 )
Windsong (1)
  April 25, 2006     (268 )
Blazing Star (Joint Venture) (1)
  June 29, 2006     (254 )
 
           
Total Sites as of December 31, 2006
        112,956  
 
           
     Since December 31, 2004, the gross investment in real estate increased from $2,036 million to $2,337 million as of December 31, 2006, due primarily to the aforementioned acquisitions and dispositions of Properties during the period. In addition, we acquired the remaining interests in 15 Properties containing 6,717 sites previously held as joint ventures (see Note 5 of the Notes to Consolidated Financial Statements contained in this Form 10-K).
Markets
     The following table identifies our five largest markets by number of sites and provides information regarding our Properties (excludes membership campground Properties leased to Privileged Access and Properties owned through Joint Ventures).
                                 
                            Percent of Total
Major   Number of           Percent of   Property Operating
Market   Properties   Total Sites   Total Sites   Revenues
Florida
    80       34,548       42.4 %     43.7 %
Arizona
    31       12,028       14.8 %     12.1 %
California
    30       7,227       8.9 %     17.6 %
Texas
    8       5,143       6.3 %     2.3 %
Colorado
    10       3,451       4.2 %     5.2 %
Other
    51       19,005       23.3 %     19.1 %
 
                               
Total
    210       81,402       100.0 %     100.0 %
 
                               

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Critical Accounting Policies and Estimates
     Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures. We believe that the following critical accounting policies, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Long-Lived Assets
     In accordance with the Statement of Financial Accounting Standards No. 141 (“SFAS No. 141”), we allocate the purchase price of Properties we acquire to net tangible and identified intangible assets acquired based on their fair values. In making estimates of fair values for purposes of allocating purchase price, we utilize a number of sources, including independent appraisals that may be available in connection with the acquisition or financing of the respective Property and other market data. We also consider information obtained about each Property as a result of our due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired.
     We periodically evaluate our long-lived assets, including our investments in real estate, for impairment indicators. Our judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal factors. Future events could occur which would cause us to conclude that impairment indicators exist and an impairment loss is warranted.
     Real estate is recorded at cost less accumulated depreciation. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets. We use a 30-year estimated life for buildings acquired and structural and land improvements, a ten-to-fifteen-year estimated life for building upgrades and a three-to-seven-year estimated life for furniture, fixtures and equipment. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred and significant renovations and improvements that improve the asset and extend the useful life of the asset are capitalized over their estimated useful life.
Allowance for Doubtful Accounts
     Rental revenue from our tenants is our principal source of revenue and is recognized over the term of the respective lease or the length of a customer’s stay, the majority of which are for a term of not greater than one year. We monitor the collectibility of accounts receivable from our tenants on an ongoing basis. We will reserve for receivables when we believe the ultimate collection is less than probable and maintain an allowance for doubtful accounts. An allowance for doubtful accounts is recorded during each period and the associated bad debt expense is included in our property operating and maintenance expense in our Consolidated Statements of Operations. The allowance for doubtful accounts is netted against rents receivable on our consolidated balance sheets. Our provision for uncollectible rents receivable was approximately $0.9 million as of December 31, 2006 and $1.2 million as of December 31, 2005.
     We may also finance the sale of homes to our customers through loans (referred to as “Chattel Loans”). The valuation of an allowance for doubtful accounts for the Chattel Loans is calculated based on a comparison of the outstanding principal balance of each note compared to the N.A.D.A. (National Automobile Dealers Association) value and the current market value of the underlying manufactured home collateral. A bad debt expense is recorded in home selling expense in our Consolidated Statements of Operations. The allowance for doubtful accounts is netted against the notes and interest receivables on our consolidated balance sheets. The allowance for these Chattel Loans as of December 31, 2006 and December 31, 2005 was $110,000 and $81,000, respectively.
Inventory
     Inventory consists of new and used Site Set homes and is stated at the lower of cost or market after consideration of the N.A.D.A. Manufactured Housing Appraisal Guide and the current market value of each home included in the home inventory. Inventory sales revenues and resale revenues are recognized when the home sale is closed. Inventory is recorded net of an inventory reserve as of December 31, 2006 and December 31, 2005 of $580,000. The expense for the inventory reserve is included in the cost of home sales in our Consolidated Statements of Operations.
Variable Interest Entities
     In December 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46R, Consolidation of Variable Interest Entities (“FIN 46R”) – an interpretation of ARB 51. The objective of FIN 46R is to provide guidance on how to identify a variable interest entity (“VIE”) and determine when the assets, liabilities, non-controlling interests, and results of operations of a VIE need to be included in a company’s consolidated financial statements. A company that holds variable

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interests in an entity will need to consolidate such entity if the company absorbs a majority of the entity’s expected losses or receives a majority of the entity’s expected residual returns if they occur, or both (i.e., the primary beneficiary). The Company will apply FIN 46R to all types of entity ownership (general and limited partnerships and corporate interests).
     The Company will re-evaluate and apply the provisions of FIN 46R to existing entities if certain events occur which warrant re-evaluation of such entities. In addition, the Company will apply the provisions of FIN 46R to all new entities in the future. The Company also consolidates entities in which it has a controlling direct or indirect voting interest. The equity method of accounting is applied to entities in which the Company does not have a controlling direct or indirect voting interest, but can exercise influence over the entity with respect to its operations and major decisions. The cost method is applied when (i) the investment is minimal (typically less than 5%) and (ii) the Company’s investment is passive.
Stock-Based Compensation
     The valuation of financial instruments under Statement of Financial Accounting Standards No. 107, “Disclosures About Fair Value of Financial Instruments” (“SFAS No. 107”) and Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”) requires us to make estimates and judgments that affect the fair value of the instruments. Where possible, we base the fair values of our financial instruments, including our derivative instruments, on listed market prices and third party quotes. Where these are not available, we base our estimates on other factors relevant to the financial instrument.
     The Company adopted the fair-value-based method of accounting for share-based payments effective January 1, 2003 using the modified prospective method described in FASB Statement No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure. The Company adopted Statement of Financial Accounting Standards No. 123(R) (“SFAS 123(R)”), “Share Based Payment” on July 1, 2005 which did not have a material impact on the Company’s results of operations or its financial position. The Company uses the Black-Scholes-Merton formula to estimate the value of stock options granted to employees, consultants and directors.
Off-Balance Sheet Arrangements
     We do not have any off-balance sheet arrangements with any unconsolidated investments or joint ventures that we believe have or are reasonably likely to have a material effect on our financial condition, results of operations, liquidity or capital resources.
Recent Accounting Pronouncements
     In June 2006, FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FAS109, Accounting for Income Taxes (“FIN 48”), to create a single model to address accounting for uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company will adopt FIN 48 as of January 1, 2007, as required. The cumulative effect of adopting FIN 48 will be recorded in retained earnings and other accounts as applicable. The Company does not expect that the adoption of FIN 48 will have a significant impact on the Company’s financial position and results of operations.

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Results of Operations
Comparison of Year Ended December 31, 2006 to Year Ended December 31, 2005
     The following table summarizes certain financial and statistical data for the Property Operations for all Properties owned throughout both periods (“Core Portfolio”) and the Total Portfolio for the years ended December 31, 2006 and 2005 (amounts in thousands).
                                                                 
    Core Portfolio     Total Portfolio  
                    Increase /                             Increase /        
    2006     2005     (Decrease)     % Change     2006     2005     (Decrease)     % Change  
Community base rental income
  $ 222,767     $ 213,280     $ 9,487       4.4 %   $ 225,815     $ 213,280     $ 12,535       5.9 %
Resort base rental income
    74,063       71,015       3,048       4.3 %     89,925       74,371       15,554       20.9 %
Utility and other income
    28,831       27,202       1,629       6.0 %     30,643       27,367       3,276       12.0 %
 
                                               
Property operating revenues
    325,661       311,497       14,164       4.5 %     346,383       315,018       31,365       10.0 %
 
                                                               
Property operating and maintenance
    106,382       102,158       4,224       4.1 %     116,179       103,832       12,347       11.9 %
Real estate taxes
    24,736       24,490       246       1.0 %     26,246       24,671       1,575       6.4 %
Property management
    15,995       15,392       603       3.9 %     17,079       15,919       1,160       7.3 %
 
                                               
Property operating expenses
    147,113       142,040       5,073       3.6 %     159,504       144,422       15,082       10.4 %
 
                                               
Income from property operations
  $ 178,548     $ 169,457     $ 9,091       5.4 %   $ 186,879     $ 170,596     $ 16,283       9.5 %
 
                                               
Property Operating Revenues
     The 4.5% increase in the Core Portfolio property operating revenues reflects (i) a 4.4% increase in rates for our community base rental income combined with a 0.1% increase in occupancy, (ii) a 4.3% increase in revenues for our core resort base income, and (iii) an increase in utility income primarily due to the pass-through of higher utility rates. Total Portfolio operating revenues increased due to site rental rate increases and our 2005 and 2006 acquisitions (see Note 5 of the Notes to Consolidated Financial Statements contained in this Form 10-K).
Property Operating Expenses
     The 3.6% increase in property operating expenses for the Core Portfolio reflects a 4.1% increase in property operating and maintenance due primarily to increases in utilities and repair and maintenance. Property management expense for the Core Portfolio reflects costs of managing the Properties and is estimated based on a percentage of Property operating revenues. Total Portfolio operating expenses increased due to our 2005 and 2006 acquisitions, as well as increases in utilities and repair and maintenance. Property management expense for the Total Portfolio increased primarily due to 2005 and 2006 acquisitions and payroll increases.

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Results of Operations (continued)
Home Sales Operations
     The following table summarizes certain financial and statistical data for the Home Sales Operations for the years ended December 31, 2006 and 2005 (amounts in thousands, except sales volumes).
                                 
    2006     2005     Variance     % Change  
Gross revenues from new home sales
  $ 58,799     $ 62,664     $ (3,865 )     (6.2 %)
Cost of new home sales
    (52,394 )     (53,899 )     1,505       2.8 %
 
                       
Gross profit from new home sales
    6,405       8,765       (2,360 )     (26.9 %)
 
                               
Gross revenues from used home sales
    2,448       3,350       (902 )     (26.9 %)
Cost of used home sales
    (2,104 )     (3,572 )     1,468       41.1 %
 
                       
Gross profit (loss) from used home sales
    344       (222 )     566       255.0 %
 
                               
Brokered resale revenues, net
    2,129       2,714       (585 )     (21.6 %)
Home selling expenses
    (9,836 )     (8,838 )     (998 )     (11.3 %)
Ancillary services revenues, net
    3,027       2,227       800       35.9 %
 
                       
 
                               
Income from home sales operations
  $ 2,069     $ 4,646     $ (2,577 )     (55.5 %)
 
                       
 
                               
Home sales volumes:
                               
New home sales (1)
    783       771       12       1.6 %
Used home sales (2)
    370       271       99       36.5 %
Brokered home resales
    1,255       1,526       (271 )     (17.8 %)
 
(1)   Includes third party home sales of 79 and 84 for the years ended December 31, 2006 and 2005, respectively.
 
(2)   Includes third party home sales of 13 and zero for the years ended December 31, 2006 and 2005, respectively.
     New home sales gross profit reflects a decrease in the gross margin. Used home sales gross profit reflects higher gross margin per home and higher volumes. Brokered resale revenues reflect decreased resale volumes. The increase in home selling expenses relates primarily to advertising. The increase in ancillary service revenue relates primarily to our acquisitions.
Other Income and Expenses
     The following table summarizes other income and expenses for the years ended December 31, 2006 and 2005 (amounts in thousands).
                                 
    2006     2005     Variance     % Change  
Interest income
  $ 1,975     $ 1,406     $ 569       40.5 %
Income from other investments, net
    20,102       16,609       3,493       21.0 %
General and administrative
    (12,760 )     (13,624 )     864       6.3 %
Rent control initiatives
    (1,157 )     (1,081 )     (76 )     (7.0 %)
Interest and related amortization
    (103,161 )     (100,712 )     (2,449 )     (2.4 %)
Loss on early debt retirement
          (20,630 )     20,630       100.0 %
Depreciation on corporate assets
    (410 )     (804 )     394       49.0 %
Depreciation on real estate assets
    (60,276 )     (55,608 )     (4,668 )     (8.4 %)
 
                       
Total other expenses, net
  $ (155,687 )   $ (174,444 )   $ 18,757       10.8 %
 
                       
     Interest income increased due to interest earned on our Privileged Access note as discussed above. This note will mature in April 2007.
     Income from other investments, net increased due to: the previously discussed increase in ground lease activity with Privileged Access, corporate expense savings of $0.9 million, one-time gains including a $1.0 million non-refundable deposit received upon termination of the contract for the sale of Del Rey (see Note 5 of the Notes to the Consolidated Financial Statements contained in this Form 10-K) and a $0.9 million gain on sale of our preferred partnership interest in College Heights. This investment was previously classified as other assets. These increases were offset by a write-off of costs related to potential transactions no longer being considered of $0.9 million.

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Results of Operations (continued)
     General and administrative expense decreased due to decreased legal costs and banking fees, partially offset by an increase in payroll. Interest and related amortization increased due to acquisitions offset by a decrease in our average interest rates due to refinancings in 2005.
     Loss on early debt retirement decreased due to transaction costs on early debt retirement related to refinancings in 2005 (see Note 8 of the Notes to the Consolidated Financial Statements contained in this Form 10-K).
     Depreciation on corporate assets decreased as a result of assets being fully depreciated. Depreciation on real estate increased $4.7 million primarily relating to acquisitions.
Equity in Income of Unconsolidated Joint Ventures
     For the year ended December 31, 2006, equity in income of unconsolidated joint ventures decreased $2.9 million primarily due to the purchase of the remaining interest in the Mezzanine Properties in the first quarter of 2006 (see Liquidity and Capital Resources – Investing Activities), as well as distributions received in 2005 from three joint ventures relating to debt refinancings by the ventures. Two of these distributions exceeded the Company’s basis and therefore were included in income from unconsolidated joint ventures in 2005. These decreases are partially offset by the net gain on sale of the property owned by the Indian Wells joint venture.
Comparison of Year Ended December 31, 2005 to Year Ended December 31, 2004
     The following table summarizes certain financial and statistical data for the Property Operations for all Properties owned throughout both periods (“Core Portfolio”) and the Total Portfolio for the years ended December 31, 2005 and 2004 (amounts in thousands).
                                                                 
    Core Portfolio     Total Portfolio  
                    Increase /                             Increase /        
    2005     2004     (Decrease)     % Change     2005     2004     (Decrease)     % Change  
Community base rental income
  $ 204,150     $ 196,292     $ 7,858       4.0 %   $ 213,280     $ 204,190     $ 9,090       4.5 %
Resort base rental income
    14,994       14,537       457       3.1 %     74,371       54,661       19,710       36.1 %
Utility and other income
    20,886       20,244       642       3.2 %     27,367       24,496       2,871       11.7 %
 
                                               
Property operating revenues
    240,030       231,073       8,957       3.9 %     315,018       283,347       31,671       11.2 %
Property operating and maintenance
    70,592       66,483       4,109       6.2 %     103,832       91,812       12,020       13.1 %
Real estate taxes
    19,931       19,085       846       4.4 %     24,671       22,723       1,948       8.6 %
Property management
    9,978       9,358       620       6.6 %     15,919       12,852       3,067       23.9 %
 
                                               
Property operating expenses
    100,501       94,926       5,575       5.9 %     144,422       127,387       17,035       13.4 %
 
                                               
 
                                                               
Income from property operations
  $ 139,529     $ 136,147     $ 3,382       2.5 %   $ 170,596     $ 155,960     $ 14,636       9.4 %
 
                                               
Property Operating Revenues
     The 3.9% increase in the Core Portfolio property operating revenues reflects (i) a 4.7% increase in rates for our community base rental income combined with a 0.7% decrease in occupancy, (ii) a 3.1% increase in revenues for our core resort base income, and (iii) an increase in utility income due to higher utility rates. Total Portfolio operating revenues increased due to current year acquisitions and 2004 acquisitions owned for the full year in 2005 (see Note 5 of the Notes to Consolidated Financial Statements contained in this Form 10-K).
Property Operating Expenses
     The 6.2% increase in property operating and maintenance expense for the Core Portfolio is due primarily to increases in administrative expense, utility expense increases greater than CPI, and increased insurance expenses. The 4.4% increase in Core Portfolio real estate taxes is generally due to higher property tax assessments on certain Properties. Property management expense for the Core Portfolio, which reflects costs of managing the Properties and is estimated based on a percentage of Property operating revenues, increased due to payroll costs, but remained at approximately 4% of revenue. Property management expense for the Total Portfolio increased primarily due to overall Company growth and new marketing initiatives. Total Portfolio operating expenses increased due to our current year acquisitions and 2004 acquisitions owned for the full year in 2005.

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Results of Operations (continued)
Home Sales Operations
     The following table summarizes certain financial and statistical data for the Home Sales Operations for the years ended December 31, 2005 and 2004 (amounts in thousands, except sales volumes).
                                 
    2005     2004     Variance     % Change  
Gross revenues from new home sales
  $ 62,664     $ 43,324     $ 19,340       44.6 %
Cost of new home sales
    (53,899 )     (38,067 )     (15,832 )     (41.6 %)
 
                       
Gross profit from new home sales
    8,765       5,257       3,508       66.7 %
 
                               
Gross revenues from used home sales
    3,350       4,080       (730 )     (17.9 %)
Cost of used home sales
    (3,572 )     (3,510 )     (62 )     (1.8 %)
 
                       
Gross (loss) profit from used home sales
    (222 )     570       (792 )     (138.9 %)
 
                               
Brokered resale revenues, net
    2,714       2,176       538       24.7 %
Home selling expenses
    (8,838 )     (8,630 )     (208 )     (2.4 %)
Ancillary services revenues, net
    2,227       2,280       (53 )     (2.3 %)
 
                       
 
                               
Income from home sales operations
  $ 4,646     $ 1,653     $ 2,993       181.1 %
 
                       
 
                               
Home sales volumes:
                               
New home sales (1)
    771       514       257       50.0 %
Used home sales
    271       341       (70 )     (20.5 %)
Brokered home resales
    1,526       1,415       111       7.8 %
 
(1)   Includes third party home sales of 84 and 0 for the years ended December 31, 2005 and 2004, respectively.
     New home sales gross profit reflects a 50% increase in sales volume combined with an increase in average selling price of approximately $7,000 per home or approximately 8%. Used home sales gross profit reflects lower gross margin per home and lower volumes. Brokered resale revenues reflect increased resale volumes. Home selling expenses had a modest increase of 2.4%.
Other Income and Expenses
     The following table summarizes other income and expenses for the years ended December 31, 2005 and 2004 (amounts in thousands).
                                 
    2005     2004     Variance     % Change  
Interest income
  $ 1,406     $ 1,391     $ 15       1.1 %
Income from other investments, net
    16,609       3,475       13,134       378.0 %
General and administrative
    (13,624 )     (9,243 )     (4,381 )     47.4 %
Rent control initiatives
    (1,081 )     (2,412 )     1,331       (55.2 %)
Interest and related amortization
    (100,712 )     (91,154 )     (9,558 )     10.5 %
Loss on early debt retirement
    (20,630 )           (20,630 )      
Depreciation on corporate assets
    (804 )     (1,657 )     853       (51.5 %)
Depreciation on real estate assets
    (55,608 )     (47,467 )     (8,141 )     17.2 %
 
                       
Total other expenses, net
  $ (174,444 )   $ (147,067 )   $ (27,377 )     18.6 %
 
                       
     The increase in other expenses, net of approximately $27 million relates to the following: approximately $20.6 million for transaction costs on early debt retirement related to refinancings in 2005 (see Note 8 of the Notes to the Consolidated Financial Statements contained in this Form 10-K); an increase in interest expense of approximately $10 million related to the full year effect in 2005 of our 2004 acquisition debt and additional 2005 acquisition debt; and increased general and administrative expense of $4.5 million due to increased payroll, legal, recruiting and travel costs. Depreciation on real estate increased $8.1 million relating to the full year effect in 2005 of our 2004 acquisitions. These are partially offset by increased income from other investments, net that includes approximately $16.1 million of lease income from the Thousand Trails ground lease entered into on November 10, 2004.

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Results of Operations (continued)
Equity in Income of Unconsolidated Joint Ventures
     During 2005, we received distributions from three joint ventures relating to debt refinancings by the ventures. Two of these distributions exceeded the Company’s basis and therefore were included in the income from unconsolidated joint ventures. Our 2005 acquisitions and the full year effect of our 2004 acquisitions also contributed to the increase.
Liquidity and Capital Resources
Liquidity
     As of December 31, 2006, the Company had $1.6 million in cash and cash equivalents and $143.8 million available on its lines of credit. The Company expects to meet its short-term liquidity requirements, including its distributions, generally through its working capital, net cash provided by operating activities and availability under the existing lines of credit. The Company expects to meet certain long-term liquidity requirements such as scheduled debt maturities, property acquisitions and capital improvements by long-term collateralized and uncollateralized borrowings including borrowings under its existing lines of credit and the issuance of debt securities or additional equity securities in the Company, in addition to net cash provided by operating activities. The table below summarizes cash flow activity for the twelve months ended December 31, 2006, 2005 and 2004 (amounts in thousands).
                         
    For the twelve months ended  
    December 31,  
    2006     2005     2004  
Cash provided by operating activities
  $ 99,457     $ 90,326     $ 46,733  
Cash used in investing activities
    (67,086 )     (66,246 )     (366,654 )
Cash used in financing activities
    (31,376 )     (28,775 )     (514 )
 
                 
Net increase (decrease) in cash
  $ 995     $ (4,695 )   $ (320,435 )
 
                 
Operating Activities
     Net cash provided by operating activities increased $9.1 million for the year ended December 31, 2006. As discussed in “Results of Operations” above, this increase reflects increases in property operating income and income from other investments, net, offset by an increase in interest expense and a decrease in home sales. Net cash provided by operating activities increased $43.6 million for the year ended December 31, 2005 from $46.7 million for the year ended December 31, 2004. This increase reflects increased property operating income as discussed in “Results of Operations” above and a decrease in working capital.
Investing Activities
     Net cash used in investing activities reflects the impact of the following investing activities:
Acquisitions
2006 Acquisitions
     During the year ended December 31, 2006, we completed the following transactions:
    Purchased the remaining interest in the Mezzanine Properties (the “Mezzanine Portfolio”) in which we had initially invested approximately $30.0 million to acquire preferred equity interests during the first quarter of 2004. The Mezzanine Portfolio consists of 11 Properties containing 5,057 sites: five Properties are located in Arizona, four in Florida, and one each in North Carolina and South Carolina. The total purchase price was approximately $105.0 million, including our existing investment in these Properties of $32.2 million and our general partnership investment of $1.4 million. The acquisition was funded by new debt financing of $47.1 million and assumed debt of approximately $25.9 million. Net working capital acquired included $3.2 million of rents received in advance and $0.4 million in other net payables. In connection with this acquisition we also purchased $1.9 million of inventory.

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Liquidity and Capital Resources (continued)
    Purchased seven membership campground Properties (“Mid-Atlantic Portfolio”) which contain 1,594 sites including 950 acres of developable expansion land and are located in Florida, New York, North Carolina, South Carolina, Michigan, Kentucky and Alabama. The total purchase price of approximately $14.3 million was funded by the exchange of two all-age Properties, located in Indiana, previously held for sale containing 495 sites, and $5.0 million in cash. We provided short-term seller financing of $3.4 million. This note has been repaid in full. Net working capital acquired included $0.6 million of rents received in advance. The acquisition was funded from our lines of credit.
 
    Purchased two additional Thousand Trails Properties, located in California and Florida, and certain personal property for $10.0 million. These Properties were leased back as part of the amended TT lease (see Privileged Access discussion above). The acquisition was funded from our lines of credit.
 
    Purchased Tranquil Timbers, a Property located in Door County, Wisconsin, containing 270 sites for a total purchase price of $2.8 million. The acquisition was funded from our lines of credit.
 
    Purchased 15 Membership Campground Properties (“Outdoor World Portfolio”) which contain 3,962 sites and are located in Illinois, Massachusetts, Maine, North Carolina, New Jersey, Pennsylvania and Virginia. The total purchase price of approximately $10 million was funded from our lines of credit.
 
    Purchased the remaining 75% interest in four Diversified joint venture Properties in which we had an existing 25% joint venture ownership interest. The gross purchase price was approximately $20.5 million and we assumed debt of $12.8 million. Net working capital acquired included $1.2 million of rents received in advance and $0.6 million of escrow deposits.
     Certain purchase price adjustments may be made within one year following the acquisitions.
2005 Acquisitions
     During the year ended December 31, 2005, we acquired seven Properties (see Note 5 of the Notes to Consolidated Financial Statements contained in this Form 10-K). The combined real estate investment in these Properties was approximately $89.9 million and was funded with money drawn from our lines of credit and debt assumed of $53.5 million. We also assumed approximately $5.4 million in escrow deposits and $4.0 million of rents received in advance as a result of these acquisitions.
2004 Acquisitions
     During the year ended December 31, 2004, we acquired 111 Properties. The combined investment in real estate for these 111 Properties was approximately $703 million and was funded with monies held in short-term investments, debt assumed of $352 million which includes a mark-to-market adjustment of $10.4 million, new financing of $124 million, and borrowings from our lines of credit. Included in the above as previously described are 57 Properties purchased as part of the Thousand Trails Transaction; the income related to this transaction is classified as Income from other investments, net on the Consolidated Statements of Operations.
     We assumed inventory of approximately $1.2 million, other assets of $4.9 million, rents received in advance of approximately $13.6 million and other liabilities of approximately $5.8 million in connection with the 2004 acquisitions. The Company also issued common OP Units for value of approximately $32.2 million.
     We continue to look at acquiring additional assets and are at various stages of negotiations with respect to potential acquisitions. Funding is expected to be provided by either proceeds from potential dispositions, lines of credit draws, or other financing.
Dispositions
     During the year ended December 31, 2006, we exchanged two Properties located in Indiana as part of the Mid-Atlantic Portfolio acquisition discussed above. We recorded a loss on sale for this transaction of $0.2 million.
     During the year ended December 31, 2005, we sold one Property located in Cedar Rapids, Iowa for a selling price of $6.7 million. Net proceeds of $6.3 million were used to repay amounts outstanding on our lines of credit. A gain on sale of approximately $2.3 million was recorded during the fourth quarter of 2005.

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Liquidity and Capital Resources (continued)
     During the year ended December 31, 2004, we sold one Property located in Lake Placid, Florida for a selling price of $3.4 million, with net proceeds of $0.8 million received in July 2004. No gain or loss on disposition was recognized in the period. In addition, we sold approximately 1.4 acres of land in Montana for a gain and net proceeds of $0.6 million.
     We currently have four all-age Properties held for disposition and are in various stages of negotiations for sale. We plan to reinvest the sale proceeds or reduce outstanding lines of credit. On January 10, 2007, we sold Lazy Lakes, a 100 site resort Property in the Florida Keys for proceeds of $8 million and an approximate gain of $5 million.
     The operating results of all properties sold or held for disposition have been reflected in the discontinued operations of the Consolidated Statements of Operations contained in this Form 10-K.
Notes Receivable Activity
     On April 14, 2006, in connection with Privileged Access purchase of TT (see Privileged Access discussion above) the Company loaned Privileged Access $12.3 million. This loan is secured by the net contract receivables owned by Privileged Access. The note receivable bears interest at a per annum rate of prime plus 1.5% and matures on April 14, 2007. The note contains certain quarterly covenants. On August 21, 2006, the seller financing of $3.4 million provided in connection with the Mid-Atlantic Portfolio acquisition described above was repaid.
Investments in and distributions from unconsolidated joint ventures
     During the year ended December 31, 2006, the Company invested approximately $1.1 million in five joint ventures owning five Properties located in Florida, Massachusetts, Maine and two in Virginia. The Company also invested approximately $1.6 million in developing one of the Bar Harbor joint venture Properties, which resulted in an increase of the Company’s ownership interest per the joint venture agreement.
     During the year ended December 31, 2006, the Company received approximately $5.1 million in distributions from our joint ventures. $3.5 million of these distributions were classified as return on capital and were included in operating activities. The remaining distributions of approximately $1.6 million were classified as a return of capital and were included in investing activities and related to our sale of the Property owned by the Indian Wells joint venture and the sale of our interest in the Blazing Star joint venture.
     During the year ended December 31, 2005, the Company invested approximately $7.0 million for a 50% preferred joint venture interest in three Properties located near Bar Harbor, Maine. The Company also invested approximately $0.6 million for a 40% interest in a Texas Property owned by a joint venture controlled by Diversified Investments, Inc (“Diversified”).
     During the year ended December 31, 2005, the Company received approximately $11.3 million in distributions from our joint ventures. $5.8 million of these distributions were classified as return on capital and were included in operating activities. The remaining distributions of approximately $5.5 million were classified as a return of capital, were included in investing activities, and related to refinancings at three of our joint venture Properties.
     During the year ended December 31, 2004, the Company invested approximately $29.7 million in preferred equity interests in six entities controlled by Diversified (the “Mezzanine Investment”). These entities owned in the aggregate 11 Properties, containing 5,057 sites. Approximately $11.7 million of the Mezzanine Investment accrued at a per annum average rate of 10%, with a minimum pay rate of 6.5% per annum, and approximately $17.9 million of the Mezzanine Investment accrued at a per annum average rate of 11%, with a minimum pay rate of 7% per annum. As discussed above, on March 22, 2006, we acquired the remaining interests in these Properties.
     During the year ended December 31, 2004, the Company invested approximately $4.1 million in 11 joint ventures controlled by Diversified. The joint venture agreements included terms to allow the Company to purchase these Properties on various dates. As previously discussed, during the fourth quarter of 2006 we acquired four of these Properties. An additional Property was purchased in January 2007.
     In addition, the Company recorded approximately $3.6 million, $6.5 million and $3.7 million of net income from joint ventures, net of $1.9 million, $2.0 million and $1.2 million of depreciation, in the years ended December 31, 2006, 2005 and 2004, respectively.
     Due to the Company’s inability to control the joint ventures, the Company accounts for its investment in the joint ventures using the equity method of accounting.

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     Liquidity and Capital Resources (continued)
Proceeds from sale of investment
     During the year ended December 31, 2006, the Company sold its preferred partnership interest in College Heights for approximately $9.0 million. At the time of the sale, College Heights owned a portfolio of 11 Properties with approximately 1,900 sites located in Michigan, Ohio and Florida. The proceeds received represent a per site value of approximately $22,000.
Capital improvements
     Capital expenditures for improvements are identified by the Company as recurring capital expenditures (“Recurring CapEx”), site development costs and corporate costs. Recurring CapEx was approximately $14.6 million, $15.9 million and $13.7 million for the years ended December 31, 2006, 2005 and 2004, respectively. Included in Recurring CapEx for the years ended 2006 and 2005 is approximately $2.0 million and $3.4 million of costs incurred to replace hurricane damaged assets. Site development costs were approximately $17.3 million, $16.2 million and $13.0 million for the years ended December 31, 2006, 2005 and 2004, respectively, and represent costs to develop expansion sites at certain of the Company’s Properties and costs for improvements to sites when a smaller used home is replaced with a larger new home. Corporate costs such as computer hardware, office furniture and office improvements and expansion were $0.3 million, $0.8 million and $0.4 million for the years ended December 31, 2006, 2005 and 2004, respectively.
Financing Activities
     Net cash used in financing activities reflects the impact of the following:
Mortgages and Credit Facilities
Financing, Refinancing and Early Debt Retirement
2006 Activity
     During the year ended December 31, 2006, the Company completed the following transactions:
    Assumed $25.9 million in mortgage debt on four of the eleven Properties related to the acquisition of the Mezzanine Portfolio. During the second and third quarters of 2006, this mortgage debt was defeased. Net proceeds of approximately $10.4 million were used to pay down the lines of credit. The four mortgages bear interest at weighted average interest rates ranging from 5.69% to 6.143% per annum and mature in 2016. In addition, we financed $47.1 million of mortgage debt to acquire the remaining seven Properties in the Mezzanine Portfolio. The seven mortgages bear interest at weighted average rates ranging from 5.70% to 5.72% per annum, and mature in April 2016.
 
    Received $3.0 million and $2.9 million in mortgage debt proceeds as a result of meeting certain operational criteria at the Monte Vista Property and the Viewpoint Property, respectively. These proceeds were used to pay down the lines of credit.
 
    Renewed our unsecured debt. We replaced the term loan which had a remaining balance of $100 million maturing in 2007, and a $110 million line of credit maturing in August 2006 with a $225 million line of credit with a four-year maturity and one-year extension option. The new facility bears interest at the London Interbank Offered Rate (“LIBOR”) plus 1.20% per annum with a 0.15% facility fee per annum. The interest rate on the term loan was LIBOR plus 1.75% per annum and the $110 million line of credit had an interest rate of LIBOR plus 1.65% and had a 0.15% unused fee, both per annum. The interest rate on $75 million of the outstanding balance on the new lines of credit is fixed at 6.38% per annum through mid-December 2007. We also renewed our $50 million line of credit which bears interest at LIBOR plus 1.20% per annum with a 0.20% facility fee per annum, and matures on June 29, 2010. The renewal increases our financial flexibility and lowers our credit spread.
 
    Acquired for $2.4 million land formerly subject to a ground lease previously classified as mortgage debt relating to the Golden Terrace South Property.
 
    Assumed $12.8 million in mortgage debt in connection with the acquisition of the remaining interests in four Diversified Properties. The four mortgages have a weighted average interest rate of approximately 5.5% per annum and a weighted average maturity of three years.

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Liquidity and Capital Resources (continued)
2005 Activity
     During the third quarter of 2005, the Company refinanced two mortgage loans for proceeds of $34 million at an interest rate of 4.95% per annum. Net proceeds were used to pay down approximately $20 million in other secured financing maturing in 2006.
     On December 2, 2005, the Company refinanced approximately $293 million of secured debt maturing in 2007 with an effective interest rate of 6.8% per annum. This debt was secured by two cross-collateralized loan pools consisting of 35 Properties. The transaction generated approximately $337 million in proceeds from loans secured by individual mortgages on 20 Properties. The blended interest rate on the refinancing was approximately 5.3% per annum and the loans mature in 2015. Transaction costs were approximately $20.0 million ($0.67 per fully diluted share) and are classified as loss on early debt retirement on the Consolidated Statements of Operations. The remaining excess proceeds were used to repay outstanding amounts on our lines of credit. This transaction strengthened the Company’s balance sheet by extending the weighted average years to maturity by approximately two years.
     During the third quarter of 2005, in connection with its acquisitions, the Company assumed mortgage debt of approximately $53.5 million at a weighted average interest rate of approximately 5.9% per annum.
2004 Activity
     In 2004, the Company assumed mortgage and other debt relating to acquisitions of approximately $157 million. The Company borrowed an additional $194 million of mortgage debt for other acquisitions. The mortgages bear interest at weighted average rates ranging from 5.14% to 5.81% per annum, and mature at various dates through November 1, 2027. In addition, in connection with the Thousand Trails Transaction, we secured a $120 million three-year term loan at LIBOR plus 1.75%. As noted above, in 2006, the term loan was replaced by a renewal of our unsecured lines of credit.
Secured Debt
     As of December 31, 2006, our secured long-term debt balance was approximately $1.6 billion, with a weighted average interest rate in 2006 of approximately 6.1% per annum. The debt bears interest at rates between 4.96% and 9.25% per annum and matures on various dates mainly ranging from 2007 to 2016, with one additional loan maturing in 2027. Included in our debt balance are three capital leases with an imputed interest rate of 11.6% per annum. We do not have any significant long-term debt maturing in 2007 or 2008, with $205 million being the maximum amount maturing in any of the succeeding 5 years beginning in 2008. The weighted average term to maturity for the long-term debt is approximately 6.5 years.
Unsecured Debt
     We have two unsecured lines of credit of $225 million and $50 million which bear interest at a per annum rate of LIBOR plus 1.20% per annum and a 0.15% facility fee and 0.20% facility fee, respectively. Throughout the year ended December 31, 2006, we borrowed $193.6 million and paid down $200.1 million on our lines of credit. The weighted average interest rate in 2006 for our unsecured debt was approximately 6.3% per annum. The balance outstanding as of December 31, 2006 was $131.2 million. In December 2006, we fixed one-year LIBOR on $75 million of our outstanding lines of credit balance. As of February 15, 2007, approximately $162 million is available to be drawn on these combined lines of credit.

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Liquidity and Capital Resources (continued)
Other Loans
     During 2006, the Company borrowed $3.6 million to finance its insurance premium payments. As of December 31, 2006, $0.3 million remained outstanding. This loan has been paid off. We are currently assessing our financing options for the 2007 insurance year.
     Certain of the Company’s mortgages and credit agreements contain covenants and restrictions including restrictions as to the ratio of secured or unsecured debt versus encumbered or unencumbered assets, the ratio of fixed charges-to-earnings before interest, taxes, depreciation and amortization (“EBITDA”), limitations on certain holdings and other restrictions.
Contractual Obligations
     As of December 31, 2006, we were subject to certain contractual payment obligations as described in the table below (dollars in thousands):
                                                         
Contractual                            
Obligations   Total   2007(2)   2008   2009   2010(3)   2011   Thereafter
Long Term Borrowings (1)
  $ 1,711,819     $ 38,228     $ 202,434     $ 85,925     $ 359,572     $ 65,136     $ 960,524  
Weighted average interest rates
    6.09 %     7.15 %     5.65 %     6.87 %     6.79 %     6.97 %     5.71 %
 
(1)   Balance excludes net premiums and discounts of $5.4 million.
 
(2)   Includes principal amortizations and one loan maturing in November 2007 for approximately $20 million. We are currently assessing our refinancing options for this loan.
 
(3)   Includes lines of credit repayments in 2010 of $131 million. We have an option to extend this maturity for one year to 2011.
     Included in the above table are certain capital lease obligations totaling approximately $6.5 million. These agreements expire June 2009 and are paid semi-annually at an imputed interest rate of 11.6% per annum.
     The Company does not include preferred OP Unit distributions, interest expense, insurance, property taxes and cancelable contracts in the contractual obligations table above.
     The Company also leases land under non-cancelable operating leases at certain of the Properties expiring in various years from 2008 to 2032, with terms which require twelve equal payments per year plus additional rents calculated as a percentage of gross revenues. For the years ended December 31, 2006, 2005 and 2004, ground lease rent was approximately $1.6 million per year. Minimum future rental payments under the ground leases are approximately $1.6 million per year for each of the next five years and approximately $20.7 million thereafter.
     With respect to maturing debt, the Company has staggered the maturities of its long-term mortgage debt over an average of approximately 7 years, with no more than $600 million in principal maturities coming due in any single year. The Company believes that it will be able to refinance its maturing debt obligations on a secured or unsecured basis; however, to the extent the Company is unable to refinance its debt as it matures, it believes that it will be able to repay such maturing debt from asset sales and/or the proceeds from equity issuances. With respect to any refinancing of maturing debt, the Company’s future cash flow requirements could be impacted by significant changes in interest rates or other debt terms, including required amortization payments.

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Liquidity and Capital Resources (continued)
Equity Transactions
     In order to qualify as a REIT for federal income tax purposes, the Company must distribute 90% or more of its taxable income (excluding capital gains) to its stockholders. The following regular quarterly distributions have been declared and paid to common stockholders and minority interests since January 1, 2004.
             
Distributions   For the Quarter   Stockholder    
Per Share   Ending   Record Date   Payment Date
$0.0125
  March 31, 2004   March 26, 2004   April 9, 2004
$0.0125
  June 30, 2004   June 25, 2004   July 9, 2004
$0.0125
  September 30, 2004   September 24, 2004   October 8, 2004
$0.0125
  December 31, 2004   December 31, 2004   January 14, 2005
 
$0.0250
  March 31, 2005   March 25, 2005   April 8, 2005
$0.0250
  June 30, 2005   June 24, 2005   July 8, 2005
$0.0250
  September 30, 2005   September 30, 2005   October 14, 2005
$0.0250
  December 31, 2005   December 30, 2005   January 13, 2006
 
$0.0750
  March 31, 2006   March 31, 2006   April 14, 2006
$0.0750
  June 30, 2006   June 30, 2006   July 14, 2006
$0.0750
  September 30, 2006   September 29, 2006   October 13, 2006
$0.0750
  December 31, 2006   December 29, 2006   January 12, 2007
2006 Activity
     On November 7, 2006, the Company announced that in 2007 the annual distribution per common share will be $0.60 per share up from $0.30 per share in 2006 and $0.10 per share in 2005. This decision recognizes the Company’s investment opportunities and the importance of its dividend to its stockholders.
     On December 29, 2006, September 29, 2006, June 30, 2006 and March 31, 2006, the Operating Partnership paid distributions of 8.0625% per annum on the $150 million of Series D 8% Units and 7.95% per annum on the $50 million of Series F 7.95% Units.
     During the year ended December 31, 2006, we received approximately $3.8 million in net proceeds from stock option exercises and the employee stock purchase plan.
2005 Activity
     The 2006 annual distribution per common share was $0.30 per share, up from $0.10 per share in 2005 and $0.05 per share in 2004.
     On March 24, 2005, the Operating Partnership issued $25 million of 8.0625% Series D Cumulative Redeemable Perpetual Preference Units (the “Series D 8% Units”), to institutional investors. The Series D 8% Units are non-callable for five years. In addition, the Operating Partnership had an existing $125 million of 9.0% Series D Cumulative Redeemable Perpetual Preference Units (the “Series D 9% Units”) outstanding that were callable by the Company as of September 2004. In connection with the new issue, the Operating Partnership agreed to extend the non-call provision of the Series D 9% Units to be coterminous with the new issue, and the institutional investors holding the Series D 9% Units agreed to lower the rate on such units to 8.0625%. All of the units have no stated maturity or mandatory redemption. Net proceeds from the offering were used to pay down amounts outstanding under the Company’s lines of credit.
     On June 30, 2005, the Operating Partnership issued $50 million of 7.95% Series F Cumulative Redeemable Perpetual Preference Units (the “Series F Units”), to institutional investors. The Series F Units are non-callable for five years and have no stated maturity or mandatory redemption. Net proceeds from the offering were used to pay down amounts outstanding under the Company’s lines of credit.
     On March 24, 2005, the Operating Partnership paid distributions of 9.0% per annum on the $125 million of Series D 9% Units. For the seven days ended March 31, 2005 and the nine months thereafter, the Operating Partnership paid distributions of 8.0625% per annum on the $150 million of Series D 8% Units. For the six months ended December 31, 2005, the Operating Partnership paid distributions of 7.95% per annum on the $50 million of Series F Units. Distributions on the Units were paid quarterly on the last calendar day of each quarter.

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Liquidity and Capital Resources (continued)
     During the year ended December 31, 2005, we received approximately $4.0 million in net proceeds from stock option exercises and the employee stock purchase plan.
2004 Activity
     During the twelve months ended December 31, 2004, in connection with its 2004 acquisitions the Company issued 1.2 million common OP Units valued at $36.7 million, of which approximately $28.7 million has been classified as paid-in capital. On December 21, 2004, we redeemed 126,765 common OP Units for approximately $4.5 million, of which approximately $3.5 million has been classified as paid-in capital.
     During the year ended December 31, 2004, we received approximately $4.9 million in net proceeds from stock option exercises and the employee stock purchase plan.
Inflation
     Substantially all of the leases at the Properties allow for monthly or annual rent increases which provide us with the opportunity to achieve increases, where justified by the market, as each lease matures. Such types of leases generally minimize the risks of inflation to the Company. In addition, our resort Properties are not generally subject to leases and rents are established for these sites on an annual basis.
Funds From Operations
     Funds from Operations (“FFO”) is a non-GAAP financial measure. We believe FFO, as defined by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), to be an appropriate measure of performance for an equity REIT. While FFO is a relevant and widely used measure of operating performance for equity REITs, it does not represent cash flow from operations or net income as defined by GAAP, and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performance.
     FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from sales of Properties, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We believe that FFO is helpful to investors as one of several measures of the performance of an equity REIT. We further believe that by excluding the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and among other equity REITs. Investors should review FFO, along with GAAP net income and cash flow from operating activities, investing activities and financing activities, when evaluating an equity REIT’s operating performance. We compute FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. FFO does not represent cash generated from operating activities in accordance with GAAP, nor does it represent cash available to pay distributions and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of our financial performance, or to cash flow from operating activities, determined in accordance with GAAP, as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make cash distributions.

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Liquidity and Capital Resources (continued)
     The following table presents a calculation of FFO for the years ended December 31, 2006, 2005 and 2004 (amounts in thousands):
                         
    2006     2005     2004  
Computation of funds from operations:
                       
Net income (loss) available for Common Shares
  $ 16,632     $ (2,333 )   $ 4,026  
Income (loss) allocated to Common OP Units
    4,318       (539 )     936  
Depreciation on real estate assets
    60,276       55,608       47,467  
Depreciation expense included in discontinued operations
    84       410       1,427  
Depreciation expense included in equity in income from joint ventures
    1,909       1,960       1,230  
Gain on sale of Properties
    (852 )     (2,279 )     (638 )
 
                 
Funds from operations available for Common Shares
  $ 82,367     $ 52,827     $ 54,448  
 
                 
 
                       
Weighted average Common Shares outstanding – fully diluted
    30,241       29,927       29,465  
 
                 
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
     Market risk is the risk of loss from adverse changes in market prices and interest rates. Our earnings, cash flows and fair values relevant to financial instruments are dependent on prevailing market interest rates. The primary market risk we face is long-term indebtedness, which bears interest at fixed and variable rates. The fair value of our long-term debt obligations is affected by changes in market interest rates. At December 31, 2006, approximately 96% or approximately $1.6 billion of our outstanding debt had fixed interest rates, which minimizes the market risk until the debt matures. For each increase in interest rates of 1% (or 100 basis points), the fair value of the total outstanding debt would decrease by approximately $99.3 million. For each decrease in interest rates of 1% (or 100 basis points), the fair value of the total outstanding debt would increase by approximately $106.1 million.
     At December 31, 2006, approximately 4% or approximately $75.8 million of our outstanding debt was short-term and at variable rates. Earnings are affected by increases and decreases in market interest rates on this debt. For each increase/decrease in interest rates of 1% (or 100 basis points), our earnings would increase/decrease by approximately $0.8 million annually.

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FORWARD-LOOKING STATEMENTS
     This report includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used, words such as “anticipate,” “expect,” “believe,” “project,” “intend,” “may be” and “will be” and similar words or phrases, or the negative thereof, unless the context requires otherwise, are intended to identify forward-looking statements. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including, but not limited to: in the age-qualified Properties, home sales results could be impacted by the ability of potential homebuyers to sell their existing residences as well as by financial markets volatility; in the all-age Properties, results from home sales and occupancy will continue to be impacted by local economic conditions, lack of affordable manufactured home financing, and competition from alternative housing options including site-built single-family housing; our ability to maintain rental rates and occupancy with respect to Properties currently owned or pending acquisitions; our assumptions about rental and home sales markets; the completion of pending acquisitions and timing with respect thereto; the effect of interest rates as well as other risks indicated from time to time in our filings with the Securities and Exchange Commission. These forward-looking statements are based on management’s present expectations and beliefs about future events. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

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Item 8. Financial Statements and Supplementary Data
     See Index to Consolidated Financial Statements on page F-1 of this Form 10-K.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
     None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
     The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, maintains a system of disclosure controls and procedures, designed to provide reasonable assurance that information the Company is required to disclose in the reports that the Company files under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.
     The Company’s management with the participation of the Chief Executive Officer and the Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2006. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this annual report.
Changes in Internal Control Over Financial Reporting
     There were no material changes to the Company’s internal controls over financial reporting during the fourth quarter.
Report of Management on Internal Control Over Financial Reporting
     Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
     Based on management’s assessment, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework.”
     The Company’s independent registered public accounting firm has issued an attestation report on management’s assessment of the Company’s internal control over financial reporting. That report appears on page F-2 of the Consolidated Financial Statements.
Item 9B. Other Information
     On December 28, 2006, the Compensation, Nominating and Corporate Governance Committee of the Board of Directors (the “Compensation Committee”) approved the issuance of 147,500 shares of restricted common stock to the executive officers and one additional employee of the Company (the “2006 Award Program”). The 2006 Award Program was created pursuant to the authority set forth in the Company’s 1992 Stock Option and Award Plan, as amended and restated (the “Stock Option and Award Plan”). On December 28, 2006, the executive officers were granted shares of restricted common stock in accordance with the 2006 Award Program as follows: Mr. Tom Heneghan, President and Chief Executive Officer, was granted 40,000 shares; Mr. Roger Maynard, Executive Vice President and Chief Operating Officer, was granted 30,000 shares; Mr. Michael Berman, Executive Vice President and Chief Financial Officer, was granted 25,000 shares; Ms. Ellen Kelleher, Executive Vice President and General Counsel, was awarded 25,000 shares; and, Ms. Marguerite Nader, Vice President of New Business Development, was awarded 20,000 shares. Such shares are subject to a three year vesting schedule, with one-third vesting on each of December 31, 2007, December 31, 2008 and December 31, 2009.
     Pursuant to the authority granted in the Stock Option and Award Plan, in November 2006 the Compensation Committee approved the annual award of stock options to be granted to the Chairman of the Board, the Compensation Committee Chairperson and Lead Director, the Executive Committee Chairperson, and the Audit Committee Chairperson and Audit Committee Financial Expert on January 31, 2007 for their services rendered in 2006. On January 31, 2007, Mr. Samuel Zell was awarded options to purchase 100,000 shares of common stock for services rendered as Chairman of the Board in 2006; Mrs. Sheli Rosenberg was awarded options to purchase 25,000 shares of common stock, which she elected to receive as 5,000 shares of restricted common stock, for services rendered as Lead Director and Chairperson of the Compensation Committee; Mr. Howard Walker was awarded options to purchase 15,000 shares of common stock, for services rendered as Chairperson of the Executive Committee during 2006; and Mr. Philip Calian was awarded options to purchase 15,000 shares of common stock, for services rendered as Audit Committee Financial Expert and Audit Committee Chairperson. One-third of the options to purchase common stock and the shares of restricted common stock covered by these awards vests on each of December 31, 2007, December 31, 2008 and December 31, 2009.

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PART III
Item 10. Directors and Executive Officers of the Registrant
     The information required by Item 10 will be contained in the 2007 Proxy Statement, and thus this Part has been omitted in accordance with General Instruction G(3) to Form 10-K.
Items 11, 12, 13 and 14.
Executive Compensation, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Certain Relationships and Related Transactions, and Director Independence, and Principal Accountant Fees and Services
     The information required by Item 11, Item 12, Item 13 and Item 14 will be contained in the 2007 Proxy Statement, and thus this Part has been omitted in accordance with General Instruction G(3) to Form 10-K.

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PART IV
Item 15. Exhibits and Financial Statements Schedules
     1. Financial Statements
See Index to Financial Statements and Schedules on page F-1 of this Form 10-K.
     2. Financial Statement Schedules
See Index to Financial Statements and Schedules on page F-1 of this Form 10-K.
     3. Exhibits:
         
 
  2(a)   Admission Agreement between Equity Financial and Management Co., Manufactured Home Communities, Inc. and MHC Operating Partnership
 
       
 
  3.1(e)   Amended and Restated Articles of Incorporation of Manufactured Home Communities, Inc. effective May 21, 1999
 
       
 
  3.2(j)   Articles of Amendment of Articles of Incorporation of Manufactured Home Communities, Inc., effective May 13, 2003
 
       
 
  3.3(i)   Articles of Amendment to Articles of Incorporation of Manufactured Home Communities, Inc., effective November 16, 2004
 
       
 
  3.4(j)   Amended Bylaws of Manufactured Home Communities, Inc. dated December 31, 2003
 
       
 
  3.5(k)   Amended and Restated Articles Supplementary of Equity LifeStyle Properties, Inc. effective March 16, 2005
 
       
 
  3.6(k)   Articles Supplementary of Equity LifeStyle Properties, Inc. effective June 23, 2005
 
       
 
  4   Not applicable
 
       
 
  9   Not applicable
 
       
 
  10.3(b)   Agreement of Limited Partnership of MHC-De Anza Financing Limited Partnership
 
       
 
  10.4(c)   Second Amended and Restated MHC Operating Limited Partnership Agreement of Limited Partnership, dated March 15, 1996
 
       
 
  10.5(l)   Amendment to Second Amended and Restated Agreement of Limited Partnership for MHC Operating Limited Partnership, dated February 27, 2004
 
       
 
  10.10(d)   Form of Manufactured Home Communities, Inc. 1997 Non-Qualified Employee Stock Purchase Plan
 
       
 
  10.11(g)   Amended and Restated Manufactured Home Communities, Inc. 1992 Stock Option and Stock Award Plan effective March 23, 2001
 
       
 
  10.12(f)   $110,000,000 Amended, Restated and Consolidated Promissory Note (DeAnza Mortgage) dated June 28, 2000
 
       
 
  10.19(h)   Agreement of Plan of Merger (Thousand Trails), dated August 2, 2004
 
       
 
  10.20(h)   Amendment No. 1 to Agreement of Plan of Merger (Thousand Trails), dated September 30, 2004
 
       
 
  10.21(h)   Amendment No. 2 to Agreement of Plan of Merger (Thousand Trails), dated November 9, 2004
 
       
 
  10.22(h)   Thousand Trails Lease Agreement, dated November 10, 2004
 
       
 
  10.27(n)   Credit Agreement ($225 million Revolving Facility) dated June 29, 2006
 
       
 
  10.28(n)   Second Amended and Restated Loan Agreement ($50 million Revolving Facility) dated July 14, 2006
 
       
 
  10.29(m)   Amended and Restated Thousand Trails Lease Agreement dated April 14, 2006
 
       
 
  10.30(m)   Option Agreement (Thousand Trails) dated April 14, 2006
 
       
 
  10.31(m)   Amendment No. 3 to Agreement and Plan of Merger (Thousand Trails) dated April 14, 2006
 
       
 
       
 
  10.33(o)   Amendment of Non-Qualified Employee Stock Purchase Plan dated May 3, 2006
 
       
 
  10.34(o)   Form of Indemnification Agreement
 
       
 
  11   Not applicable
 
       
 
  12(o)   Computation of Ratio of Earnings to Fixed Charges
 
       
 
  13   Not applicable
 
       
 
  14(o)   Equity LifeStyle Properties, Inc. Business Ethics and Conduct Policy, dated July 2006
 
       
 
  16   Not applicable
 
       
 
  18   Not applicable
 
       
 
  21(o)   Subsidiaries of the registrant
 
       
 
  22   Not applicable

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Item 15.      Exhibits and Financial Statements Schedules (continued)
         
 
  23(o)   Consent of Independent Registered Public Accounting Firm
 
       
 
  24.1(o)   Power of Attorney for Philip C. Calian dated February 26, 2007
 
       
 
  24.2(o)   Power of Attorney for Howard Walker dated February 20, 2007
 
       
 
  24.3(o)   Power of Attorney for Thomas E. Dobrowski dated February 22, 2007
 
       
 
  24.4(o)   Power of Attorney for Gary Waterman dated February 23, 2007
 
       
 
  24.5(o)   Power of Attorney for Donald S. Chisholm dated February 20, 2007
 
       
 
  24.6(o)   Power of Attorney for Sheli Z. Rosenberg dated February 22, 2007
 
       
 
  31.1(o)   Certification of Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act Of 2002
 
       
 
  31.2(o)   Certification of Chief Executive Officer Pursuant To Section 302 of the Sarbanes-Oxley Act Of 2002
 
       
 
  32.1(o)   Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
 
       
 
  32.2(o)   Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
 
       
   
The following documents are incorporated herein by reference.
 
       
 
  (a)   Included as an exhibit to the Company’s Form S-11 Registration Statement, File No. 33-55994
 
  (b)   Included as an exhibit to the Company’s Report on Form 10-K dated December 31, 1994
 
  (c)   Included as an exhibit to the Company’s Report on Form 10-Q for the quarter ended June 30, 1996
 
  (d)   Included as Exhibit A to the Company’s definitive Proxy Statement dated March 28, 1997, relating to Annual Meeting of Stockholders held on May 13, 1997
 
  (e)   Included as an exhibit to the Company’s Form S-3 Registration Statement, filed November 12, 1999 (SEC File No. 333-90813)
 
  (f)   Included as an exhibit to the Company’s Report on Form 10-K dated December 31, 2000
 
  (g)   Included as Appendix A to the Company’s Definitive Proxy Statement dated March 30, 2001
 
  (h)   Included as an exhibit to the Company’s Report on Form 8-K dated November 16, 2004
 
  (i)   Included as an exhibit to the Company’s Report on Form 8-K dated November 22, 2004
 
  (j)   Included as an exhibit to the Company’s Report on Form 10-K dated December 31, 2004
 
  (k)   Included as an exhibit to the Company’s Report on Form 10-Q dated June 30, 2005
 
  (l)   Included as an exhibit to the Company’s Report on Form 10-K dated December 31, 2005
 
  (m)   Included as an exhibit to the Company's Report on Form 8-K dated April 14, 2006
 
  (n)   Included as an exhibit to the Company’s Report on Form 10-Q dated June 30, 2006
 
  (o)   Filed herewith

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SIGNATURES
     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
             
    EQUITY LIFESTYLE PROPERTIES, INC.,    
    a Maryland corporation    
 
           
Date: February 27, 2007
  By:   /s/ Thomas P. Heneghan    
 
           
    Thomas P. Heneghan    
    President and Chief Executive Officer    
    (Principal Executive Officer)    
 
           
Date: February 27, 2007
  By:   /s/ Michael B. Berman    
 
           
    Michael B. Berman    
    Executive Vice President and Chief Financial Officer    
    (Principal Financial Officer and Principal Accounting Officer)    

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Equity LifeStyle Properties, Inc. — Signatures
     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
         
Name   Title   Date
 
       
 /s/ Thomas P. Heneghan
 
  President, Chief Executive Officer and Director    
           Thomas P. Heneghan
  *Attorney-in-Fact   February 27, 2007
 
       
 
       
 /s/ Michael B. Berman
  Executive Vice President and Chief Financial Officer    
 
       
           Michael B. Berman
  *Attorney-in-Fact   February 27, 2007
 
       
 /s/ Samuel Zell
  Chairman of the Board    
 
       
           Samuel Zell
      February 27, 2007
 
       
 *Howard Walker
  Vice-Chairman of the Board    
 
       
           Howard Walker
      February 27, 2007
 
 *Philip C. Calian
  Director    
 
       
           Philip C. Calian
      February 27, 2007
 
       
 *Donald S. Chisholm
  Director    
 
       
           Donald S. Chisholm
      February 27, 2007
 
       
 *Thomas E. Dobrowski
  Director    
 
       
           Thomas E. Dobrowski
      February 27, 2007
 
       
 * Sheli Z. Rosenberg
  Director    
 
       
           Sheli Z. Rosenberg
      February 27, 2007
 
       
 *Gary Waterman
  Director    
 
       
           Gary Waterman
      February 27, 2007

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INDEX TO FINANCIAL STATEMENTS
EQUITY LIFESTYLE PROPERTIES, INC.
         
    Page  
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
    F-2  
    F-3  
    F-4  
  F-5 and F-6
    F-7  
  F-8 and F-9
    F-10  
    S-1  
    S-2  
    Certain schedules have been omitted as they are not applicable to the Company.

F-1


Table of Contents

Report of Independent Registered Public Accounting Firm on Internal Control
Over Financial Reporting
The Board of Directors and Stockholders of Equity Lifestyle Properties, Inc.
     We have audited management’s assessment, included in the accompanying Report of Management on Internal Control over Financial Reporting in Item 9A, that Equity Lifestyle Properties, Inc. (Equity Lifestyle Properties or the Company) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Equity Lifestyle Properties’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of Equity Lifestyle Properties’ internal control over financial reporting based on our audit.
     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
     A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
     In our opinion, management’s assessment that Equity Lifestyle Properties, Inc. maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Equity Lifestyle Properties, Inc. has maintained effective internal control over financial reporting as of December 31, 2006, based on the COSO criteria.
     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of December 31, 2006 and 2005, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2006, and the financial statement schedules listed in the Index at Item 15, of Equity Lifestyle Properties, Inc., and our report dated February 27, 2007, expressed an unqualified opinion thereon.
ERNST & YOUNG LLP
Chicago, Illinois
February 27, 2007

F-2


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Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of Equity Lifestyle Properties, Inc.
     We have audited the accompanying consolidated balance sheets of Equity Lifestyle Properties, Inc. (“Equity Lifestyle Properties”), as of December 31, 2006 and 2005, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and the schedules are the responsibility of Equity Lifestyle Properties’ management. Our responsibility is to express an opinion on these financial statements and the schedules based on our audits.
     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
     In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Equity Lifestyle Properties at December 31, 2006 and 2005, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Equity Lifestyle Properties internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2007 expressed an unqualified opinion thereon.
ERNST & YOUNG LLP
Chicago, Illinois
February 27, 2007

F-3


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Equity LifeStyle Properties, Inc.
Consolidated Balance Sheets
As of December 31, 2006 and 2005
(amounts in thousands)
                 
    December 31,     December 31,  
    2006     2005  
Assets
               
Investment in real estate:
               
Land
  $ 531,302     $ 493,213  
Land improvements
    1,664,964       1,523,564  
Buildings and other depreciable property
    141,194       135,790  
 
           
 
    2,337,460       2,152,567  
Accumulated depreciation
    (435,809 )     (378,325 )
 
           
Net investment in real estate
    1,901,651       1,774,242  
Cash and cash equivalents
    1,605       610  
Notes receivable
    22,045       11,631  
Investment in joint ventures
    14,718       46,211  
Rents receivable, net
    1,294       1,619  
Deferred financing costs, net
    14,799       15,096  
Inventory
    70,091       59,412  
Escrow deposits and other assets
    29,628       40,053  
 
           
Total Assets
  $ 2,055,831     $ 1,948,874  
 
           
 
               
Liabilities and Stockholders’ Equity
               
Liabilities:
               
Mortgage notes payable
  $ 1,586,012     $ 1,500,581  
Unsecured lines of credit
    131,200       37,700  
Unsecured term loan
          100,000  
Accrued payroll and other operating expenses
    30,936       31,508  
Accrued interest payable
    9,066       8,549  
Rents received in advance and security deposits
    36,454       27,868  
Distributions payable
    2,251       773  
 
           
Total Liabilities
    1,795,919       1,706,979  
 
               
Commitments and contingencies
               
Minority interests – Common OP Units and other
    12,794       9,379  
Minority interests – Perpetual Preferred OP Units
    200,000       200,000  
 
               
Stockholders’ Equity:
               
Preferred stock, $.01 par value 10,000,000 shares authorized; none issued
           
Common stock, $.01 par value 50,000,000 shares authorized; 23,928,652 and 23,479,753 shares issued and outstanding for 2006 and 2005, respectively
    229       226  
Paid-in capital
    304,483       299,444  
Distributions in excess of accumulated earnings
    (257,594 )     (267,154 )
 
           
Total stockholders’ equity
    47,118       32,516  
 
           
 
Total Liabilities and Stockholders’ Equity
  $ 2,055,831     $ 1,948,874  
 
           
The accompanying notes are an integral part of the financial statements.

F-4


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Equity LifeStyle Properties, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2006, 2005 and 2004
(amounts in thousands, except per share data)
                         
    2006     2005     2004  
Property Operations:
                       
Community base rental income
  $ 225,815     $ 213,280     $ 204,190  
Resort base rental income
    89,925       74,371       54,661  
Utility and other income
    30,643       27,367       24,496  
 
                 
Property operating revenues
    346,383     &nb