Sun Communities Reports More Growth During 3rd Quarter

Sun Communities Inc., a real estate investment trust that owns and operates, or has an interest in, manufactured housing (MH) and RV communities, and marinas, has announced that during the third quarter of 2022 earnings totaled $162.6 million.

Financial Results for the Quarter and Nine Months Ended Sept. 30.

For the quarter that ended Sept. 30, net income attributable to common shareholders was $162.6 million, or $1.32 per diluted share, compared to net income attributable to common shareholders of $231.7 million, or $2.00 per diluted share, for the same period in 2021.

For the nine months ended Sept. 30, net income attributable to common shareholders was $237.3 million, or $1.97 per diluted share, compared to net income attributable to common shareholders of $367.3 million, or $3.27 per diluted share, for the same period in 2021.

Non-GAAP Financial Measures and Portfolio Performance

Constant Currency Core Funds from Operations for the quarter and nine months ended Sept. 30, was $2.71 per common share and dilutive convertible securities and $6.11 per share, respectively, representing 28.4% and 17.5% increases, respectively, as compared to the corresponding periods in 2021.

Core Funds from Operations for the quarter and nine months ended Sept. 30, were $2.65 per share and $6.04 per share, respectively, representing 25.6% and 16.2% increases, respectively, as compared to the corresponding periods in 2021.

Same Property (2) Net Operating Income (1) for MH and RV properties increased by 6.4% and 5.8% for the quarter and nine months ended Sept. 30, respectively, as compared to the corresponding periods in 2021. For the company’s marina properties, Same Property NOI (1) increased by 9.6% and 6.8% for the quarter and nine months ended Sept. 30, respectively, as compared to the corresponding periods in 2021.

Acquisitions totaled $213.9 million during the quarter that ended Sept. 30, including one MH community in the United Kingdom and one marina in the United States.

“Our strong third-quarter results highlight the sustained compelling attributes of the Sun platform, including a best-in-class portfolio of assets in high-demand locations and operational execution that is second to none,” said Gary A. Shiffman, chairman and CEO. “We delivered strong growth in each of our segments, and earnings that exceeded our expectations. With stable high occupancy in our manufactured housing portfolio, we are anticipating solid rental rate increases. Strong demand in RV has driven record conversions to annual sites, and over 85 percent of our marinas have wait lists to join as a member. We have a long-term track record of execution and a business model that is positioned to perform and create value through varying economic cycles.”

OPERATING HIGHLIGHTS

Portfolio Occupancy

Total MH and annual RV occupancy (excluding UK Operations) was 97.1% on Sept. 30, as compared to 97.4% on Sept. 30, 2021.

During the quarter that ended Sept. 30, the number of MH and annual RV revenue-producing sites increased by 689 sites as compared to an increase of 576 sites during the corresponding period in 2021, a 19.6% increase. Transient RV site conversions to annual leases accounted for 82% of the increase in the quarter.

During the nine months that ended Sept. 30, MH and annual RV revenue-producing sites increased by 2,309 sites as compared to an increase of 1,673 sites during the corresponding period in 2021, a 38% increase. Transient RV site conversions to annual leases accounted for 86% of the increase during the nine months ended Sept. 30. Additionally, the 1,990 site conversions in transient RV for the nine months ended Sept. 30 have already surpassed the record full-year volume achieved during 2021.

UK Operations Results

UK Operations, a component of the company’s MH segment, contributed $64.5 million of NOI (1) in the quarter that ended Sept. 30, and contributed $105.0 million of NOI (1) in the period from the date of acquisition to September 30, 2022. On a constant currency basis, UK Operations contributed $73.3 million of NOI (1) in the quarter that ended Sept. 30, and contributed $116.9 million of NOI (1) in the period from the date of acquisition to Sept. 30. Refer to page 13 for additional information regarding UK operating results.

PORTFOLIO ACTIVITY

Acquisitions and Dispositions

During and subsequent to the quarter that ended Sept. 30, the company acquired two properties totaling 612 sites, wet slips and dry storage spaces, and 1,060 sites for expansion for a total purchase price of $213.9 million. During the quarter that ended Sept. 30, the company sold an RV community located in California with 514 sites for $15.0 million, bringing year-to-date dispositions to $44.5 million.

Refer to page 15 for additional detail on acquisitions and dispositions.

Development and Expansion Activities

During and subsequent to the quarter that ended Sept. 30, the company acquired four land parcels located in the United States and UK for the potential development of nearly 800 sites, for an aggregate purchase price of $20 million. During the quarter and nine months that ended Sept. 30, the company completed the construction of over 170 sites and over 300 sites, respectively, at two ground-up developments and six expansion properties.

Impact of Hurricane Ian

On Sept. 28, Hurricane Ian made landfall on Florida’s western coast. The storm primarily affected four properties in the Fort Myers area. Three RV properties, comprising approximately 2,500 sites, sustained significant flooding and wind damage from the hurricane, and the sea wall and certain docks at one marina were damaged. At other affected MH and RV properties, most of the damage was limited to trees, roofs, fences, skirting and carports. At other affected marina properties, docks, buildings and landscaping sustained limited wind and water damage.

The company recognized $29.9 million for impaired assets. The company expects these charges to be partially offset by insurance recoveries, currently estimated at $17.7 million. The estimated net charges of $12.2 million are classified as catastrophic event-related charges, net, in the Consolidated Statements of Operations. The company maintains property, casualty, flood and business interruption insurance for its properties, subject to customary deductibles and limits.

Expected insurance recoveries for loss of income and redevelopment costs greater than the impairment charges cannot be estimated at this time.

The foregoing impairment, expected insurance recovery and net charge estimates are based on current information available, and the company continues to assess these estimates. The actual final impairment, insurance recoveries and net charges could vary significantly from these estimates. Any changes to these estimates will be recognized in the period(s) in which they are determined.

You can read the full report here. 

Source: https://rvbusiness.com/sun-communities-reports-more-growth-during-3rd-quarter/