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Sun Communities Inc. Message Board

  • dar200 dar200 May 17, 2013 9:38 AM Flag

    Takes my breath away

    But I love it.

    Actually it's just a psycological boost as I have no intention of selling or buying (except to flip) since I am at position limit and am in it for a safe annuity, not stock price.

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    • jockeyshortscausejockitch jockeyshortscausejockitch May 22, 2013 12:19 PM Flag

      If this keeps up, or keeps going up I should say, I'm going to have to do something. Perhaps it's the just the PPS which is making me nervous. Maybe a 2-1 split for make me feel better.


    • sui was most of my portfolio, But I trimmed it back to get more diverse, but sui is still my favorite company,

    • You have been at your position limit for a long time. With the stock up dramatically, I would think you would be well over your position limit. SUI is up 40% this year alone! It has doubled in less than three years and tripled over four years. But I guess you look at cost rather than value. Nice annuity, no doubt.

      While I like SUI, I see little prospect of a dividend increase. To be "under" 80% of FAD for a full year requires a substantial increase in FFO and FAD well above not only the last twelve months, but well above this year's guidance as well. Given the seasonality, they may get there or close for a peak qtr - but a full year is another matter. (This qtr adjusted FFO was 90c, guidance is for 70 cents next qtr - stock dilution hits hard).

      Though SUI has delevered some, they still have a large amount of debt and little to negative free cash flow once they pay dividends and capex. This stock price is a gift to SUI, and they should take advantage of it, especially since they issued tons of shares at lower prices.

      • 2 Replies to maverick7572000
      • Maverick,
        The problem is that debt is so high that it would take a ton of stock issuance to raise an amount significant enough to materially reduce the debt mountain. That amount of share issuance would cause SUI to have to reduce the dividend, which would hurt the stock price. As such, SUI is in a catch 22. I think SUI should adopt a long term stance of certainly NOT increasing the debt pile, and communicating to the street a plan to slowly nick away at the debt (this is all they could do anyway-- but it removes the fear of a potential debt increase). Long term, SUI should seek to refinance when possible and lengthen maturies to lock in lower rates. In the future, should the USA see higher inflation due to the massive money printing efforts of the Fed, SUI will likely have an appreciating asset base with the ability to raise fees/rents to live in their communities while having nailed down LONG TERM low rates on the mountain of debt they carry. They should be in the process of this now, because if inflation rears its ugly head and interest rates rise significantly, SUI would be faced with a big increase in the cost of interest which--in and of itself-- could force SUI to reduce the dividend or sell assets whose income supports the dividend. One last thought--at some point here, when the market is receptive, SUI should do a thorough examination of the properties and cull the weakest of the portfolio and sell them to reduce the debt pile. Hopefully these sales won't impact income much, and the dividend could be maintained while debt is reduced.


      • Not that it's any of your business, but I have two position limits: I generally will not add to a position (except to flip) if the addition brings the value of the position to more than 5% of my portfolio. If a position grows to more than 10% of my portfolio, I consider trimming the excess over 10% if I have reasonable alternatives with the after tax proceeds.

        The trim consideration includes my weighing the likelihood of an overnight catastrophic event causing a huge decrease in price immediately. I'm much more likely to trim, say, SCCO where a well-placed earthquake in either Mexico or Peru could stop about 50% of copper production for an extended period of time than trim SUI with such a "glacier" revenue base.

        Also, it's obvious the market values a more conservative balance sheet over higher leverage to increase the distribution. The last two common SPOs have been followed by substantial price increases.

        SUI is an asset class like no other in my portfolio with a stability of cash flow like no other. JPM is increasing their dividend by over 26%, NEE was 10%, PM and MO, GE, PFE, ABBV etc, etc will also increase. I'm not worried about my dividends not increasing by at least inflation.

        Your condescending post did not tell me anything I did not already know.

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