Sun Communities Sells Safe Harbor Marinas for $5.65B Cash – RVBusiness – Breaking RV Industry News
SOUTHFIELD, Mich. – Sun Communities, Inc. (NYSE: SUI), a real estate investment trust (REIT) that owns and operates or has an interest in manufactured housing and recreational vehicle communities, today announced that it has entered into a definitive agreement to sell 100% of its interests in the Safe Harbor Marinas business, the largest marina and superyacht servicing business in the U.S., to affiliates of Blackstone Infrastructure. The transaction accelerates Sun’s strategic goal of re-focusing on its core MH and RV segments and significantly enhances its leverage profile and financial flexibility.
Upon the closing of the transaction, Blackstone will purchase Safe Harbor from the company for an all-cash purchase price of $5.65 billion, subject to certain post-closing adjustments. The base purchase price represents an approximate 21x multiple on the estimated 2024 Funds From Operations (“FFO”) of the Safe Harbor business.
The transaction is expected to produce approximately $5.5 billion of pre-tax proceeds after transaction costs, which will strengthen the Company’s balance sheet. Proceeds are anticipated to be used to support a combination of debt reduction, distributions to shareholders and reinvestment in the Company’s core businesses.
Gary Shiffman, chairman and CEO of Sun, said: “We are very pleased with this transaction which further accelerates Sun’s strategy to improve the Company’s leverage profile and refocus on our core segments. On behalf of everyone at Sun, I would like to thank the Safe Harbor team for their dedication and hard work throughout our over four-year partnership. We are incredibly pleased with the performance of Safe Harbor and with the outcome of this highly successful sale process. We anticipate that Blackstone will further Safe Harbor’s position as the leading marina and superyacht servicing business in the U.S.”
Jeff Blau, chair of Sun’s Capital Allocation Committee, commented: “This transaction allows Sun to focus on our core businesses which operate at high margins and produce durable income streams, and we are confident they will continue to deliver strong, consistent long-term growth. Safe Harbor has been an outstanding performer for Sun, and this sale allows us to realize substantial value from our investment, while positioning the Company for future growth and enhanced return opportunities for our stakeholders.”
Transaction Benefits
- Re-focuses Business Strategy. Post-transaction, Sun’s North America MH and RV portfolio is expected to account for approximately 90% of the Company’s Net Operating Income (“NOI”), streamlining its strategic focus as a pure-play MH and RV owner and operator.
- Enhances Financial and Strategic Flexibility. The transaction, once completed, is expected to meaningfully de-leverage Sun’s balance sheet. Initially following the transaction, the Company expects its net debt to trailing 12 months EBITDA, on a pro forma basis, to be reduced from approximately 6.0x to between 2.5x and 3.0x at closing.
- Reinforces Focus on Durable, Annual Income Streams. The transaction is expected to reduce the Company’s exposure to Service, Retail, Dining and Entertainment (“SRD&E”) and other non-annual income streams while positively impacting the Company’s financial metrics including its margin profile, overhead efficiency, capital expenditure requirements and revenue-to-cash flow conversion.
- Realizes Substantial Gain. The transaction is expected to monetize a successful investment, generating strong returns for shareholders, including an estimated book gain of approximately $1.3 billion from Sun’s approximately four-year ownership of Safe Harbor.
Tax Treatment
The company is actively evaluating its available strategies to maximize efficiency for Sun and its shareholders with respect to gains realized from the transaction, including various tax and distribution options. The company expects to provide further guidance on the tax implications of the transaction prior to closing.
Timing
The transaction is subject to customary closing conditions, and the initial closing of the transaction is expected in the second quarter of 2025. Certain properties representing approximately 10% of the total consideration may be transferred and paid for in one or more subsequent closings, subject to receipt of certain third-party approvals.
Advisors
Lazard Frères & Co. is acting as financial advisor and Latham & Watkins LLP and Taft Stettinius & Hollister are acting as legal advisors to the company on the transaction.
Earnings and Transaction Discussion
The company will be reporting its fourth quarter and year-end earnings results after the market closes on Feb. 26. The company will host a conference call to discuss these results at 2 p.m. ET Feb. 27.
The company intends to discuss the transaction on the call after which additional questions can be answered.
To Participate in the Conference Call, dial U.S. and Canada: (877) 407-9039 in the U.S. and Canada or (201) 689-8470 for international participants. The conference call will also be available live on the Company’s website www.suninc.com.
