Sun Communities, Inc. Reports 2021 Third Quarter Results

·20 min read

Southfield, MI, Oct. 25, 2021 (GLOBE NEWSWIRE) -- Sun Communities, Inc. (NYSE: SUI) (the "Company"), a real estate investment trust ("REIT") that owns and operates, or has an interest in, manufactured housing ("MH") communities, recreational vehicle ("RV") resorts and marinas, (collectively, the "properties"), today reported its third quarter results for 2021.

Financial Results for the Quarter and Nine Months Ended September 30, 2021

For the quarter ended September 30, 2021, total revenues increased $283.8 million, or 70.9 percent, to approximately $684.3 million compared to $400.5 million for the same period in 2020. Net income attributable to common stockholders increased $150.6 million, or 185.4 percent, to approximately $231.8 million, or $2.00 per diluted common share, compared to net income attributable to common stockholders of $81.2 million, or $0.83 per diluted common share, for the same period in 2020.

For the nine months ended September 30, 2021, total revenues increased $716.1 million, or 70.6 percent, to $1.7 billion compared to approximately $1.0 billion for the same period in 2020. Net income attributable to common stockholders increased $243.3 million, or 196.2 percent, to approximately $367.3 million, or $3.27 per diluted common share, compared to net income attributable to common stockholders of $124.0 million, or $1.29 per diluted common share, for the same period in 2020.

Non-GAAP Financial Measures and Portfolio Performance

  • Core Funds from Operations ("Core FFO")(1) for the quarter ended September 30, 2021, was $2.11 per diluted share and OP unit ("Share") as compared to $1.60 in the corresponding period in 2020, a 31.9 percent increase.

  • Same Community(2) Net Operating Income ("NOI")(1) increased by 12.4 percent for the quarter ended September 30, 2021, as compared to the corresponding period in 2020.

  • Home Sales Volume increased 63.7 percent to 1,162 homes for the quarter ended September 30, 2021, as compared to 710 homes in the same period in 2020.

  • Acquisitions totaled $500.8 million during and subsequent to the quarter ended September 30, 2021, including 9 MH communities, 7 RV resorts and 6 marinas.

Gary Shiffman, Chief Executive Officer stated, "We are pleased with our third quarter results which highlight successful execution across all of our growth strategies. The RV segment continues to deliver strong results producing same community NOI growth of nearly 31 percent in the quarter, as we benefit from the demand for outdoor experiences coming from existing and new Sun customers. As the leading industry consolidator, we have completed $1.1 billion of acquisitions year-to-date, and believe our cycle tested ability to create value through acquisitions will continue to result in accretive growth. We have remained active in the capital markets to support this growth including completing our second bond offering of the year. Our talented team will continue to execute on opportunities across operations, acquisitions, expansions and ground-up developments, providing us with a confident outlook."

OPERATING HIGHLIGHTS

Portfolio Occupancy

Total MH and annual RV occupancy was 97.4 percent at September 30, 2021 as compared to 97.2 percent at September 30, 2020, an increase of 20 basis points.

During the quarter ended September 30, 2021, MH and annual RV revenue producing sites increased by 576 sites as compared to an increase of 776 sites during the quarter ended September 30, 2020.

During the nine months ended September 30, 2021, MH and annual RV revenue producing sites increased by 1,673 sites as compared to an increase of 1,927 sites during the nine months ended September 30, 2020.

Same Community(2) Results

For the 403 MH and RV properties owned and operated by the Company since January 1, 2020, the following table reflects the percentage increases, in total and by segment, for the quarter and nine months ended September 30, 2021:

Quarter Ended September 30, 2021

Total Same Community

MH

RV

Revenue

12.8

%

5.2

%

24.2

%

Expense

13.7

%

12.7

%

14.8

%

NOI

12.4

%

2.6

%

30.6

%


Nine Months Ended September 30, 2021

Total Same Community

MH

RV

Revenue

12.9

%

5.8

%

27.4

%

Expense

14.6

%

10.2

%

20.0

%

NOI

12.1

%

4.3

%

32.8

%

Same Community adjusted occupancy(3) increased to 98.9 percent at September 30, 2021 from 97.4 percent at September 30, 2020, an increase of 150 basis points.

Home Sales

The following table reflects the home sales volume increases for the quarter and nine months ended September 30, 2021:

Quarter Ended

Nine Months Ended

September 30, 2021

September 30, 2020

Change

% Change

September 30, 2021

September 30, 2020

Change

% Change

New home sales volume

207

155

52

33.5

%

583

414

169

40.8

%

Pre-owned home sales volume

955

555

400

72.1

%

2,572

1,670

902

54.0

%

Total home sales volume

1,162

710

452

63.7

%

3,155

2,084

1,071

51.4

%

Marina Results

Marina NOI was $64.5 million and $158.7 million for the quarter and nine months ended September 30, 2021, respectively. Refer to page 15 for additional information regarding the marina portfolio operating results.

PORTFOLIO ACTIVITY

Acquisitions and Dispositions

During and subsequent to the quarter ended September 30, 2021, the Company acquired the following communities, resorts and marinas:

Property Name

Property Type

Sites,
Wet Slips and
Dry Storage Spaces

Development Sites

State / Province

Total
Purchase Price
(in millions)

Month Acquired

Allen Harbor

Marina

165

RI

$

4.0

July

Cisco Grove Campground & RV

RV

18

407

CA

6.6

July

Four Leaf Portfolio(a)

MH

2,545

340

MI / IN

215.0

July

Harborage Yacht Club

Marina

300

FL

22.0

July

Zeman Portfolio(b)

RV

686

IL / NJ

15.2

July

Southern Leisure Resort

RV

496

FL

17.8

August

Sunroad Marina

Marina

617

CA

84.4

August

Lazy Lakes RV

RV

99

FL

9.8

August

Puerto del Rey

Marina

1,450

Puerto Rico

92.3

September

Stingray Point

Marina

219

VA

2.9

September

Detroit River

Marina

440

MI

8.8

September

Jetstream RV Resort

RV

202

TX

17.5

September

Subtotal

7,237

747

496.3

Acquisitions subsequent to quarter end

Beaver Brook Campground

RV

204

150

ME

4.5

October

Subtotal

204

150

4.5

Total acquisitions

7,441

897

$

500.8

(a) Includes nine MH communities.

(b) Includes two RV communities.

During and subsequent to the nine months ended September 30, 2021, the Company acquired 38 properties totaling 11,910 sites, wet slips and dry storage spaces and 897 sites for expansion for a total purchase price of $1.1 billion.

During the quarter ended September 30, 2021, the Company acquired three land parcels, which are located in Ft. Collins and Ft. Lupton, Colorado and Leighton, Michigan, approved for the development of over 500 MH sites, for total consideration of $7.7 million.

During the quarter ended September 30, 2021, the Company sold six MH communities located in Arizona, Illinois, Indiana and Missouri for $162.1 million.

Construction Activity

During the quarter ended September 30, 2021, the Company completed the construction of over 230 sites in two ground-up developments and over 90 expansion sites in two RV resorts.

During the nine months ended September 30, 2021, the Company completed the construction of over 580 sites in four ground-up developments and over 320 expansion sites in three MH communities and three RV resorts.

BALANCE SHEET, CAPITAL MARKETS ACTIVITY AND OTHER ITEMS

Debt

As of September 30, 2021, the Company had approximately $4.7 billion in debt outstanding. The weighted average interest rate was 3.3 percent and the weighted average maturity was 9.6 years. At September 30, 2021, the Company's net debt to trailing twelve month Recurring EBITDA(1) ratio was 4.9 times. The Company had $71.6 million of unrestricted cash on hand.

Senior Unsecured Notes

Subsequent to the quarter ended September 30, 2021, Sun Communities Operating Limited Partnership ("SCOLP"), the Company's operating partnership, issued $450.0 million of senior unsecured notes with an interest rate of 2.3 percent and a seven-year term, due November 1, 2028 (the "2028 Notes"), and $150.0 million of senior unsecured notes with an interest rate of 2.7 percent, with a 10-year term, due July 15, 2031 (the "2031 Notes"). The 2031 Notes are additional notes of the same series as the $600.0 million aggregate principal amount of 2.7 percent Senior Notes which are due July 15, 2031 that SCOLP issued on June 28, 2021. The net proceeds from the offering were approximately $595.5 million after deducting underwriters' discounts and estimated offering expenses.

Equity Transaction

At the Market Offering

In September 2021, the Company completed the sale of 107,400 forward shares of common stock for $21.4 million under the terms of its At the Market Offering Sales Agreement. The average price before underwriting discounts and commissions was $199.42 per share. The Company expects to settle the forward shares by September 2022.

2021 GUIDANCE

The Company is providing revised or initial 2021 guidance for the following metrics:

Previous Range

Revised Range

FY 2021E

FY 2021E

4Q 2021E

Basic earnings per share

$2.24 - $2.36

$3.42 - $3.48

$0.15 - $0.21

Core FFO(1) per fully diluted Share

$6.25 - $6.37

$6.44 - $6.50

$1.24 - $1.30

Basic earnings per share and Core FFO(1) per fully diluted share and calculated independently for each quarter; as a result, the sum of the quarters may differ from the annual calculation. Full year 2021 guidance is based on the annual calculation.

Previous Range

Revised Range

FY 2021E

FY 2021E

4Q 2021E

Same Community NOI(1) growth

9.9% - 10.7%

10.9% - 11.1%

7.2% - 8.0%

Guidance estimates include acquisitions completed through the date of this release and exclude any prospective acquisitions or capital markets activity.

The estimates and assumptions presented above represent a range of possible outcomes and may differ materially from actual results. The estimates and assumptions are forward looking based on the Company's current assessment of economic and market conditions, as well as other risks outlined below under the caption "Cautionary Statement Regarding Forward-Looking Statements."

EARNINGS CONFERENCE CALL

A conference call to discuss third quarter results will be held on Tuesday, October 26, 2021 at 11:00 A.M. (ET). To participate, call toll-free (877) 407-9039. Callers outside the U.S. or Canada can access the call at (201) 689-8470. A replay will be available following the call through November 9, 2021 and can be accessed toll-free by calling (844) 512-2921 or (412) 317-6671. The Conference ID number for the call and the replay is 13722742. The conference call will be available live on Sun Communities' website located at www.suncommunities.com. The replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of September 30, 2021, owned, operated, or had an interest in a portfolio of 584 developed MH, RV and marina properties comprising nearly 155,900 developed sites and nearly 44,900 wet slips and dry storage spaces in 38 states, Canada and Puerto Rico.

For more information about Sun Communities, Inc., please visit www.suncommunities.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This press release contains various "forward-looking statements" within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the Company intends that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this press release that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as "forecasts," "intends," "intend," "intended," "goal," "estimate," "estimates," "expects," "expect," "expected," "project," "projected," "projections," "plans," "predicts," "potential," "seeks," "anticipates," "anticipated," "should," "could," "may," "will," "designed to," "foreseeable future," "believe," "believes," "scheduled," "guidance," "target" and similar expressions are intended to identify forward-looking statements, although not all forward looking statements contain these words. These forward-looking statements reflect the Company's current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties and other factors, both general and specific to the matters discussed in or incorporated herein, some of which are beyond the Company's control. These risks, uncertainties and other factors may cause the Company's actual results to be materially different from any future results expressed or implied by such forward-looking statements. In addition to the risks disclosed under "Risk Factors" contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and in the Company's other filings with the Securities and Exchange Commission from time to time, such risks, uncertainties and other factors include but are not limited to:

  • outbreaks of disease, including the COVID-19 pandemic, and related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations;

  • changes in general economic conditions, the real estate industry and the markets in which the Company operates;

  • difficulties in the Company's ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;

  • the Company's liquidity and refinancing demands;

  • the Company's ability to obtain or refinance maturing debt;

  • the Company's ability to maintain compliance with covenants contained in its debt facilities and its senior unsecured notes;

  • availability of capital;

  • changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian and Australian dollars;

  • the Company's ability to maintain rental rates and occupancy levels;

  • the Company's ability to maintain effective internal control over financial reporting and disclosure controls and procedures;

  • increases in interest rates and operating costs, including insurance premiums and real property taxes;

  • risks related to natural disasters such as hurricanes, earthquakes, floods, droughts and wildfires;

  • general volatility of the capital markets and the market price of shares of the Company's capital stock;

  • the Company's ability to maintain its status as a REIT;

  • changes in real estate and zoning laws and regulations;

  • legislative or regulatory changes, including changes to laws governing the taxation of REITs;

  • litigation, judgments or settlements;

  • competitive market forces;

  • the ability of purchasers of manufactured homes and boats to obtain financing; and

  • the level of repossessions by manufactured home and boat lenders.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements included in this press release, whether as a result of new information, future events, changes in its expectations or otherwise, except as required by law.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by these cautionary statements.

Investor Information


RESEARCH COVERAGE

Firm

Analyst

Phone

Email

Bank of America Merrill Lynch

Joshua Dennerlein

(646) 855-1681

joshua.dennerlein@baml.com

Barclays

Anthony Powell

(212) 526-8768

anthony.powell@barclays.com

Allison Gelman

(212) 526-3367

allison.gelman@barclays.com

Berenberg Capital Markets

Keegan Carl

(646) 949-9052

keegan.carl@berenberg-us.com

BMO Capital Markets

John Kim

(212) 885-4115

johnp.kim@bmo.com

Citi Research

Michael Bilerman

(212) 816-1383

michael.bilerman@citi.com

Nicholas Joseph

(212) 816-1909

nicholas.joseph@citi.com

Evercore ISI

Steve Sakwa

(212) 446-9462

steve.sakwa@evercoreisi.com

Samir Khanal

(212) 888-3796

samir.khanal@evercoreisi.com

Green Street Advisors

John Pawlowski

(949) 640-8780

jpawlowski@greenstreetadvisors.com

Robert W. Baird & Co.

Wesley Golladay

(216) 737-7510

wgolladay@rwbaird.com

RBC Capital Markets

Brad Heffern

(512) 708-6311

brad.heffern@rbccm.com

UBS

Michael Goldsmith

(212) 713-2951

michael.goldsmith@ubs.com

INQUIRIES

Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media or any prospective investor. Please address all inquiries to our Investor Relations department.

At Our Website

www.suncommunities.com

By Email

investorrelations@suncommunities.com

By Phone

(248) 208-2500

Portfolio Overview
(As of September 30, 2021)


Financial and Operating Highlights
(amounts in thousands, except for *)


Quarter Ended

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

Financial Information

Total revenues

$

684,294

$

603,863

$

442,015

$

384,265

$

400,514

Net income

$

250,161

$

120,849

$

27,941

$

9,818

$

89,756

Net income attributable to Sun Communities Inc. common stockholders

$

231,770

$

110,770

$

24,782

$

7,586

$

81,204

Basic earnings per share*

$

2.00

$

0.98

$

0.23

$

0.07

$

0.83

Diluted earnings per share*

$

2.00

$

0.98

$

0.23

$

0.07

$

0.83

Cash distributions declared per common share*

$

0.83

$

0.83

$

0.83

$

0.79

$

0.79

Recurring EBITDA(1)

$

314,499

$

268,225

$

190,830

$

168,527

$

199,321

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4)

$

223,069

$

198,017

$

135,925

$

110,849

$

165,209

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4)

$

244,535

$

209,620

$

141,036

$

124,872

$

162,624

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted*

$

1.92

$

1.70

$

1.22

$

1.03

$

1.63

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted*

$

2.11

$

1.80

$

1.26

$

1.16

$

1.60

Balance Sheet

Total assets

$

12,583,296

$

12,040,990

$

11,454,209

$

11,206,586

$

8,335,717

Total debt

$

4,689,437

$

4,311,175

$

4,417,935

$

4,757,076

$

3,340,613

Total liabilities

$

5,488,469

$

5,099,563

$

5,101,512

$

5,314,879

$

3,791,922


Quarter Ended

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

Operating Information*

Properties

584

569

562

552

432

Manufactured home sites

98,301

97,448

96,876

96,688

95,209

Annual RV sites

29,640

28,807

28,441

27,564

26,817

Transient RV sites

27,922

27,032

26,295

25,043

23,728

Total sites

155,863

153,287

151,612

149,295

145,754

Marina wet slips and dry storage spaces

44,859

41,275

38,753

38,152

N/A

MH occupancy

96.6

%

96.7

%

96.5

%

96.6

%

96.4

%

Annual RV occupancy

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Blended MH and annual RV occupancy

97.4

%

97.4

%

97.3

%

97.3

%

97.2

%

New home sales volume

207

227

149

156

155

Pre-owned home sales volume

955

931

686

626

555

Total home sales volume

1,162

1,158

835

782

710


Quarter Ended

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

Revenue Producing Site Net Gains(5)

MH net leased sites

144

226

127

247

349

RV net leased sites

432

357

387

331

427

Total net leased sites

576

583

514

578

776

Consolidated Balance Sheets
(amounts in thousands)


September 30, 2021

December 31, 2020

Assets

Land

$

2,457,236

$

2,119,364

Land improvements and buildings

9,469,247

8,480,597

Rental homes and improvements

591,367

637,603

Furniture, fixtures and equipment

590,829

447,039

Investment property

13,108,679

11,684,603

Accumulated depreciation

(2,232,243

)

(1,968,812

)

Investment property, net

10,876,436

9,715,791

Cash, cash equivalents and restricted cash

85,619

92,641

Marketable securities

160,321

124,726

Inventory of manufactured homes

43,708

46,643

Notes and other receivables, net

256,924

221,650

Goodwill

461,609

428,833

Other intangible assets, net

297,625

305,611

Other assets, net

401,054

270,691

Total Assets

$

12,583,296

$

11,206,586

Liabilities

Secured debt

$

3,403,436

$

3,489,983

Unsecured debt

1,286,001

1,267,093

Distributions payable

98,453

86,988

Advanced reservation deposits and rent

223,471

187,730

Accrued expenses and accounts payable

232,590

148,435

Other liabilities

244,518

134,650

Total Liabilities

5,488,469

5,314,879

Commitments and contingencies

Temporary equity

292,394

264,379

Stockholders' Equity

Common stock

1,160

1,076

Additional paid-in capital

8,170,322

7,087,658

Accumulated other comprehensive income

1,752

3,178

Distributions in excess of accumulated earnings

(1,475,634

)

(1,566,636

)

Total Sun Communities, Inc. stockholders' equity

6,697,600

5,525,276

Noncontrolling interests

Common and preferred OP units

85,756

85,968

Consolidated entities

19,077

16,084

Total noncontrolling interests

104,833

102,052

Total Stockholders' Equity

6,802,433

5,627,328

Total Liabilities, Temporary Equity and Stockholders' Equity

$

12,583,296

$

11,206,586

Statements of Operations - Quarter to Date and Year to Date Comparison
(In thousands, except per share amounts) (Unaudited)


Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

Change

% Change

September 30, 2021

September 30, 2020

Change

% Change

Revenues

Real property (excluding transient)

$

352,553

$

240,076

$

112,477

46.9

%

$

979,537

$

693,491

$

286,046

41.2

%

Real property - transient

126,072

80,412

45,660

56.8

%

235,606

136,473

99,133

72.6

%

Home sales

81,099

47,662

33,437

70.2

%

215,146

126,779

88,367

69.7

%

Service, retail, dining and entertainment

113,039

23,859

89,180

373.8

%

270,103

36,662

233,441

636.7

%

Interest

2,690

2,624

66

2.5

%

8,040

7,609

431

5.7

%

Brokerage commissions and other, net

8,841

5,881

2,960

50.3

%

21,740

13,068

8,672

66.4

%

Total Revenues

684,294

400,514

283,780

70.9

%

1,730,172

1,014,082

716,090

70.6

%

Expenses

Property operating and maintenance

158,095

98,775

59,320

60.1

%

391,609

239,413

152,196

63.6

%

Real estate tax

24,751

17,442

7,309

41.9

%

70,361

52,341

18,020

34.4

%

Home costs and selling

56,567

39,899

16,668

41.8

%

156,920

105,989

50,931

48.1

%

Service, retail, dining and entertainment

87,106

17,615

69,491

394.5

%

211,122

31,539

179,583

569.4

%

General and administrative

43,276

26,834

16,442

61.3

%

126,606

78,710

47,896

60.9

%

Catastrophic event-related charges, net

328

14

314

N/M

3,097

54

3,043

N/M

Business combination

N/A

1,031

1,031

N/A

Depreciation and amortization

127,091

88,499

38,592

43.6

%

378,068

259,453

118,615

45.7

%

Loss on extinguishment of debt

N/A

8,108

5,209

2,899

55.7

%

Interest

39,026

30,214

8,812

29.2

%

116,224

94,058

22,166

23.6

%

Interest on mandatorily redeemable preferred OP units / equity

1,047

1,047

%

3,124

3,130

(6

)

(0.2

)

%

Total Expenses

537,287

320,339

216,948

67.7

%

1,466,270

869,896

596,374

68.6

%

Income Before Other Items

147,007

80,175

66,832

83.4

%

263,902

144,186

119,716

83.0

%

Gain / (loss) on remeasurement of marketable securities

12,072

1,492

10,580

709.1

%

43,227

(2,636

)

45,863

N/M

Gain / (loss) on foreign currency translation

(7,028

)

5,023

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