Net Income per Diluted Share of $2.31 for the Quarter

Core FFO per Share of $2.34 for the Quarter

     
North America Same Property NOI increased by 0.5% for the Quarter and

3.6% for the First Nine Months of 2024 versus corresponding 2023 Periods

North America Same Property Adjusted Blended Occupancy for MH and RV of 98.8% represents

Get the latest news
delivered to your inbox
Sign up for The Manila Times newsletters
By signing up with an email address, I acknowledge that I have read and agree to the Terms of Service and Privacy Policy.

a 160 basis point year-over-year increase

     
Revising Full-Year Core FFO per Share Guidance for 2024 to $6.76 - $6.84

Revising Full-Year North America Same Property NOI Growth Guidance for 2024 to 2.6% - 3.3% and Revising Full-Year UK Same Property NOI Growth Guidance Range to 7.1% - 8.7%

Establishing Preliminary Guidance for 2025 Rental Rate Increases of 5.2% for MH, 5.1% for Annual RV, and 3.7% for Marina in North America, and 3.7% for UK

Southfield, MI, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Sun Communities, Inc. (NYSE: SUI) (the "Company" or "SUI"), a real estate investment trust ("REIT") that owns and operates, or has an interest in, manufactured housing ("MH") and recreational vehicle ("RV") communities and marinas (collectively, the "properties"), today reported its third quarter results for 2024.

Financial Results for the Quarter and Nine Months Ended September 30, 2024

  • For the quarter ended September 30, 2024, net income attributable to common shareholders was $288.7 million, or $2.31 per diluted share, compared to net income attributable to common shareholders of $120.1 million, or $0.97 per diluted share for the same period in 2023.

  • For the nine months ended September 30, 2024, net income attributable to common shareholders was $313.4 million, or $2.51 per diluted share, compared to a net loss attributable to common shareholders of $132.4 million, or $1.07 per diluted share for the same period in 2023.

Non-GAAP Financial Measures

  • Core Funds from Operations ("Core FFO") for the quarter and nine months ended September 30, 2024, was $2.34 per common share and dilutive convertible securities ("Share") and $5.39 per Share, respectively, as compared to $2.57 and $5.76 for the same periods in 2023.
  • Same Property Net Operating Income ("NOI")
  • North American Same Property NOI increased by $1.9 million and $31.3 million, or 0.5% and 3.6%, respectively, for the quarter and nine months ended September 30, 2024, as compared to the corresponding periods in 2023.

  • UK Same Property NOI decreased by $0.7 million, or 2.3%, for the quarter ended September 30, 2024, and increased by $4.3 million, or 7.7% for the nine months ended September 30, 2024, as compared to the corresponding periods in 2023.

"Year-to-date we have achieved solid growth across our MH, annual RV, marina and UK segments, while continuing to see the volatility in the transient components of our business. Additionally, our third quarter performance reflects the impact of cost pressures which resulted in earnings and revised full year guidance that were below our expectations, and we are not satisfied with our results," said Gary A. Shiffman, Chairman and CEO. "We have continued to execute on our strategic priorities of recycling non-strategic assets, reducing debt, and increasing the revenue contribution from annual real property income, and we are now also implementing a broad restructuring effort to more effectively align the Company's cost structure to deliver sustainable earnings growth. The fundamentals underlying our business and real estate assets remain strong, we anticipate strong rental rate increases next year, and we are confident that by continuing to execute on these strategic priorities, we will position the company for more stable growth in the coming quarters and demonstrate our long-term value."

OPERATING HIGHLIGHTS

North America Portfolio Occupancy

  • MH and annual RV sites were 97.7% occupied at September 30, 2024, as compared to 97.2% at September 30, 2023.

  • During the quarter ended September 30, 2024, the number of MH and annual RV revenue producing sites increased by approximately 1,050 sites, as compared to an increase of approximately 740 sites during the corresponding period in 2023, an increase of approximately 42%. Transient-to-annual RV site conversions during the quarter ended September 30, 2024 accounted for approximately 85% of the gains.

  • During the nine months ended September 30, 2024, MH and annual RV revenue producing sites increased by approximately 2,500 sites, as compared to an increase of approximately 2,590 sites during the corresponding period in 2023, a decrease of approximately 3%. Transient-to-annual RV site conversions during the nine months ended September 30, 2024 accounted for approximately 79% of the gains.

Same Property Results

For the properties owned and operated by the Company since at least January 1, 2023, the following table reflects the percentage changes for the quarter and nine months ended September 30, 2024, as compared to the same periods in 2023:

 Quarter Ended September 30, 2024
 North America  
 MH RV Marina Total UK
Revenue        6.4        %         (2.2)        %         4.8        %         2.8        %         3.2        %
Expense        9.2        %         5.4        %         10.0        %         7.7        %         12.2        %
NOI        5.3        %         (6.9)        %         2.5        %         0.5        %         (2.3)        %
          
 Nine Months Ended September 30, 2024
 North America  
 MH RV Marina Total UK
Revenue        6.8        %         (0.5)        %         5.7        %         4.2        %         5.8        %
Expense        7.3        %         3.0        %         7.0        %         5.5        %         3.9        %
NOI        6.6        %         (3.2)        %         5.0        %         3.6        %         7.7        %
          
Number of Properties283  164  127  574  52 
North America Same Property adjusted blended occupancy for MH and RV increased by 160 basis points to 98.8% at September 30, 2024, from 97.2% at September 30, 2023.

INVESTMENT ACTIVITY

During the quarter ended September 30, 2024, the Company completed the following dispositions:

  • In July, a portfolio of six MH properties across six states for total cash consideration of $224.6 million, with a gain on sale of $142.0 million.

  • In July, one MH property for total cash consideration of $38.0 million, with a gain on sale of $16.0 million.

  • In September, one MH property for total cash consideration of $38.0 million, with a gain on sale of $22.2 million.

  • In September, two MH land parcels under development for total cash consideration of $37.2 million.

Net proceeds from the dispositions were used to pay off an aggregate of $93.5 million of mortgage debt and $225.7 million of borrowings under the Company's senior credit facility.

During the quarter ended September 30, 2024, the Company acquired one marina property and one marina expansion asset for total consideration of $51.8 million, including $31.5 million in the form of common OP units.

Refer to page 14 for additional details related to the Company's acquisition and disposition activity.

Impact of Hurricane Helene

On September 26, 2024, Hurricane Helene made landfall in Florida and subsequently affected the Mid-Atlantic region of the U.S. Preliminary assessments indicate that material damage to the Company's properties was largely avoided. During the quarter ended September 30, 2024, the Company recognized charges of $2.2 million for impaired assets at two MH communities and three RV communities, and charges of $1.7 million for impaired assets at nine marinas. The impacted properties are located in Florida, South Carolina, North Carolina and Georgia.

The foregoing impairment is based on current information available, and the Company continues to assess these estimates. The actual final impairment could vary significantly from these estimates. Any changes to these estimates will be recognized in the period(s) in which they are determined.

Impact of Hurricane Milton

On October 9, 2024, Hurricane Milton made landfall in Florida and affected certain of the Company's properties in the region. The Company responded quickly to the event and clean-up and restoration efforts are in progress.

The Company maintains property, casualty, flood, and business interruption insurance for its properties, subject to customary deductibles and limits.

BALANCE SHEET, CAPITAL MARKETS ACTIVITY AND OTHER ITEMS

As of September 30, 2024, the Company had $7.4 billion in debt outstanding with a weighted average interest rate of 4.1% and a weighted average maturity of 6.4 years. At September 30, 2024, the Company's Net Debt to trailing twelve-month Recurring EBITDA ratio was 6.0 times and approximately 6.0% of its outstanding debt is floating rate.

Equity Transactions

During the quarter ended September 30, 2024, the Company entered into and settled all outstanding forward sale agreements with respect to 2,713,571 shares of common stock under its At the Market Offering Sales Agreement. Net proceeds of $361.7 million from the settlement of these forward sale agreements were used to repay borrowings outstanding under the Company's senior credit facility.

2024 GUIDANCE

The Company is updating full-year, and establishing fourth quarter 2024 guidance for diluted EPS and Core FFO per Share:

  Full-Year Ending December 31, 2024 Fourth Quarter Ending December 31, 2024
  Prior FY Guidance Revised FY Range 
Reconciliation of Diluted EPS to Core FFO per Share Low High Low High Low High
Diluted EPS $        2.92          $        3.08          $        2.73          $        2.81          $        0.21          $        0.29         
Depreciation and amortization          5.53                   5.53                   5.46                   5.46                   1.29                   1.29         
Gain on sale of assets          (0.26)          (0.26)          (0.21)          (0.21)          (0.05)          (0.05)
Gain on sale of properties          (1.18)          (1.18)          (1.45)          (1.45)          -                   -         
Distributions on preferred OP units          0.10                   0.10                   0.10                   0.10                   0.02                   0.02         
Noncontrolling interest          0.08                   0.08                   0.12                   0.12                   0.01                   0.01         
Transaction costs and other non-recurring G&A expenses          0.18                   0.18                   0.29                   0.29                   0.05                   0.05         
Deferred tax benefit          (0.23)          (0.23)          (0.24)          (0.24)          (0.11)          (0.11)
Difference in weighted average share count attributed to dilutive convertible securities          (0.14)          (0.14)          (0.13)          (0.13)          (0.01)          (0.01)
Other adjustments(a)          0.06                   0.06                   0.09                   0.09                   (0.04)          (0.04)
Core FFO(b)(c) per Share $        7.06          $        7.22          $        6.76          $        6.84          $        1.37          $        1.45         
(a) Other adjustments consist primarily of remeasurement (gains) / losses, contingent legal and insurance gains and other items presented in the table Reconciliation of Net Income / (Loss) Attributable to SUI Common Shareholders to Core FFO on page 6.

(b) The diluted share counts for the quarter and year ending December 31, 2024 are estimated to be 132.5 million and 130.4 million, respectively.

(c) The Company's updated guidance translates forecasted results from operations in the UK using the relevant exchange rate in effect provided in the table presented below. The impact of fluctuations in Canadian and Australian foreign currency rates on revised and initial guidance are not material.

Exchange Rates in Effect at: December 31, 2023 June 30, 2024 September 30, 2024
U.S. Dollar ("USD") / Pound Sterling ("GBP") 1.27 1.26 1.34
USD / Canadian Dollar ("CAD") 0.75 0.73 0.74
USD / Australian Dollar ("AUD") 0.68 0.67 0.69
The Company's updated guidance for the full-year ending December 31, 2024 is reflected below. Note that certain prior period amounts have been reclassified to conform with current period presentation, with no effect on Net income / (loss) and Core FFO. The reclassifications more precisely align certain indirect expenses with underlying activity drivers.

Key adjustments versus prior guidance are:

  • Total Real Property NOI growth is 3.5% - 3.9%, 240 basis points lower at the midpoint of guidance for 2024, primarily reflecting year-to-date property dispositions and the resultant loss of income from those properties, increased costs versus an anticipated reduction in costs and expense savings incorporated into previous guidance, and lower expected transient revenue in our RV and marina businesses.

  • Interest expense - lowering full-year interest expense guidance by $2.0 million at the midpoint, primarily due to reduced debt balances, partially offset by GBP to USD foreign currency exchange movement.

  • Same Property Portfolio
    • In North America, the Company is reducing the midpoint for Same Property NOI growth for the full-year to approximately 3.0%.

      • MH - reducing Same Property NOI growth to a range of 5.6% - 6.2%, a decrease of 120 basis points at the midpoint, reflecting higher operating expenses than anticipated in prior guidance, primarily in supplies and repairs and utilities.

      • RV - reducing Same Property NOI growth to a range of (5.3%) - (4.1%), a decrease of 480 basis points at the midpoint, reflecting ongoing headwinds in the transient RV segment, particularly in September including storm-related disruption, and higher operating expenses than anticipat