Sun Communities, Inc. Reports 2020 Second Quarter Results

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Sun Communities, Inc.
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NEWS RELEASE

July 22, 2020

Sun Communities, Inc. Reports 2020 Second Quarter Results

Southfield, Michigan, July 22, 2020 (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) and recreational vehicle (RV) communities, today reported its second quarter results for 2020.

Financial Results for the Quarter and Six Months Ended June 30, 2020

For the quarter ended June 30, 2020, total revenues decreased $9.2 million, or 2.9 percent, to $303.3 million compared to $312.4 million for the same period in 2019. Net income attributable to common stockholders was $58.9 million, or $0.61 per diluted common share, for the quarter ended June 30, 2020, as compared to net income attributable to common stockholders of $40.4 million, or $0.46 per diluted common share, for the same period in 2019.

For the six months ended June 30, 2020, total revenues increased $13.8 million, or 2.3 percent, to $613.6 million compared to $599.8 million for the same period in 2019. Net income attributable to common stockholders was $42.8 million, or $0.45 per diluted common share, for the six months ended June 30, 2020, as compared to net income attributable to common stockholders of $74.7 million, or $0.86 per diluted common share, for the same period in 2019.

Non-GAAP Financial Measures and Portfolio Performance

  • Core Funds from Operations (Core FFO) (1) for the quarter ended June 30, 2020, was $1.12 per diluted share and OP unit (Share) as compared to $1.18 in the corresponding period in 2019.
     

  • Same Community (2) Net Operating Income (NOI) (1)  increased by 1.4 percent for the quarter ended June 30, 2020, as compared to the corresponding period in 2019, including the impact of $0.9 million of direct COVID-19 related expense.
     

  • Revenue Producing Sites increased by 851 sites for the quarter ended June 30, 2020, bringing total portfolio occupancy to 97.3 percent.
     

  • MH rent collections for the second quarter were approximately 97.0 percent, in line with the corresponding period in 2019. MH rent collections as of July 21 st are approximately 96.0 percent.
     

  • Annual RV rent collections for the second quarter were approximately 98.0 percent, in line with the corresponding period in 2019.

Gary Shiffman, Chief Executive Officer of Sun Communities stated, We are pleased to report, despite the ongoing uncertainty, all of our communities and resorts are open. In the second quarter, our portfolio performed better than our expectations as expense containment efforts helped to mitigate the impact of the pandemic. Furthermore, we achieved total portfolio occupancy of 97.3 percent, adding 851 revenue producing sites during the second quarter, a 27.4 percent increase year over year. Portions of our portfolio were restricted from opening early in the second quarter, but we are now seeing significant gains in demand for our RV resorts with forward reservations trending near or ahead of initial budget.

Mr. Shiffman continued, We remain focused on the health and safety of our residents, guests and team members as we navigate the COVID-19 virus. We are well positioned in the current environment and over the long term given our high-quality locations, affordable home price point and our alignment with the growing demand for the RV lifestyle.


OPERATING HIGHLIGHTS

Portfolio Occupancy

Total portfolio occupancy was 97.3 percent at June 30, 2020, compared to 96.6 percent at June 30, 2019. During the quarter ended June 30, 2020, revenue producing sites increased by 851 sites, as compared to 668 revenue producing sites gained during the second quarter of 2019, a 27.4 percent increase.

During the six months ended June 30, 2020, revenue producing sites increased by 1,151 sites, as compared to an increase of 1,239 revenue producing sites during the six months ended June 30, 2019.


Same Community (2) Results

For the 367 communities owned and operated by the Company since January 1, 2019, NOI (1)  for the quarter ended June 30, 2020 increased 1.4 percent over the same period in 2019, resulting from a 1.8 percent decrease in revenues and an 8.0 percent decrease in operating expenses. Adjusted to remove the impact of $0.9 million of direct COVID-19 related expense, Same Community NOI (1) growth was 2.0 percent. Same Community occupancy (3) increased to 98.7 percent at June 30, 2020 from 96.8 percent at June 30, 2019.

For the six months ended June 30, 2020, NOI (1)  increased 4.0 percent over the same period in 2019, as a result of a 1.6 percent increase in revenues and a 3.4 percent decrease in operating expenses. Adjusted to remove the impact of $0.9 million of direct COVID-19 related expense, Same Community NOI (1) growth was 4.4 percent.


Home Sales

During the quarter ended June 30, 2020, the Company sold 611 homes as compared to 927 homes sold during the same period in 2019. The Company sold 140 and 139 new homes for the quarters ended June 30, 2020 and 2019, respectively. Rental home sales, which are included in total home sales, were 122 and 332 for the quarters ended June 30, 2020 and 2019, respectively.

During the six months ended June 30, 2020, 1,374 homes were sold as compared to 1,725 for the same period in
2019. Rental home sales, which are included in total home sales, were 356 and 542 for the six months ended June 30, 2020 and 2019, respectively.

Rent Collections

For the second quarter of 2020, MH and annual RV rent collections approximated 97.0 percent and 98.0 percent, respectively, after adjusting for the impact of hardship deferrals and prepaid rent balances. These collection percentages are in line with the second quarter of 2019.


PORTFOLIO ACTIVITY

Acquisitions and Dispositions

During and subsequent to the quarter ended June 30, 2020, the Company acquired the following communities:

Community Name

 

Type

 

Sites

 

 

State

 

Total Purchase Price (in millions)

 

Month Acquired

Forest Springs (a)

 

MH

 

372 

 

 

 

CA

 

$

56.5 

 

 

May

Crown Villa

 

RV

 

123 

 

 

 

OR

 

$

16.8 

 

 

June

Flamingo Village

 

RV

 

421 

 

 

 

FL

 

$

34.0 

 

 

July

(a)   In conjunction with the acquisition, the Company issued Series F preferred Operating Partnership (OP) units and Common OP units. As of June 30, 2020, 90,000 Series F preferred OP units and 82,420 common OP units, specific to this acquisition, were outstanding.

Year to date, the Company has acquired five communities totaling 1,445 sites for a total purchase price of $132.3 million.

Subsequent to the quarter ended June 30, 2020, the Company sold a MH community located in Great Falls, Montana, containing 226 sites, for $13.0 million. The assets and liabilities associated with the transaction were classified as held for sale on the Consolidated Balance Sheets as of June 30, 2020.

Construction Activity

During the quarter ended June 30, 2020, the Company completed the construction of nearly 180 expansion sites in five communities and nearly 320 sites in three ground-up developments and one redevelopment community.


BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

During the quarter, the Company repaid four term loans totaling $52.7 million collateralized by six properties. These loans had a weighted average interest rate of 5.98 percent and were set to mature in 2021.

As of June 30, 2020, the Company had $3.4 billion of debt outstanding. The weighted average interest rate was 3.86 percent and the weighted average maturity was 11.6 years. The Company had $373.5 million of unrestricted cash on hand. At period-end the Companys net debt to trailing twelve-month Recurring EBITDA (1) ratio was 4.8 times.

Equity Transactions

During the quarter ended June 30, 2020, the Company closed an underwritten registered public offering of 4,968,000 shares of common stock. Proceeds from the offering were $633.1 million after deducting expenses related to the offering. The Company used a portion of the net proceeds of the offering to repay borrowings outstanding under its senior credit facility. The Company intends to use the proceeds of this offering to fund acquisitions, working capital needs and for general corporate purposes.


COVID-19 FINANCIAL IMPACT

Given the uncertainty surrounding the impact from the COVID-19 pandemic on its operations, the Company has withdrawn full year 2020 operational and financial guidance previously provided on February 19, 2020.

For the second quarter of 2020, the Company had a net reduction of $10.8 million from its original budget as compared to its estimated net reduction of $15.0 million to $18.0 million.

The Companys third quarter is typically the largest contributor to earnings due to seasonality. The Companys original budget for the third quarter of 2020 was approximately 31.0 percent of FFO (1) for the year. The Company has estimated a net reduction of $12.0 million to $15.0 million from its original budget for the third quarter of 2020. This range includes an expected $9.5 million of impact to income from real property across manufactured housing, annual RV and transient RV, and a reduction of $2.5 million and $2.0 million in net contribution from ancillary services and home sales, respectively.


EARNINGS CONFERENCE CALL

A conference call to discuss second quarter operating results will be held on Thursday, July 23, 2020 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 August 6, 2020 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 13704750. 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 June 30, 2020, owned, operated, or had an interest in a portfolio of 426 communities comprising nearly 143,000 developed sites in 33 states and Ontario, Canada.

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

CONTACT

Please address all inquiries to our investor relations department at our website www.suncommunities.com, by phone to (248) 208-2500, by email to investorrelations@suncommunities.com or by mail to Sun Communities, Inc. Attn: Investor Relations, 27777 Franklin Road, Ste. 200, Southfield, MI 48034.


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. Forward-looking statements can be identified by words such as will, may, could, expect, anticipate, believes, intends, should, plans, estimates, approximate, guidance, and similar expressions in this press release that predict or indicate future events and trends and that do not report historical matters.

These forward-looking statements reflect the Companys current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, some of which are beyond the Companys control. These risks, uncertainties, and other factors may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include the effects of the COVID-19 pandemic and related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations; national, regional and local economic climates; the ability to maintain rental rates and occupancy levels; competitive market forces; the performance of recent acquisitions; the ability to integrate future acquisitions smoothly and efficiently; changes in market rates of interest; changes in foreign currency exchange rates; the ability of manufactured home buyers to obtain financing and the level of repossessions by manufactured home lenders. Further details of potential risks that may affect the Company are described in its periodic reports filed with the U.S. Securities and Exchange Commission, including in the Risk Factors section of the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

The forward-looking statements contained in this press release speak only as of the date hereof and the Company expressly disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in the Companys assumptions, expectations of future events, or trends.


Investor Information                                                           

 

RESEARCH COVERAGE

 

 

 

 

 

 

 

 

 

 

 

 

 

Firm

 

Analyst

 

Phone

 

Email

Bank of America Merrill Lynch

 

Joshua Dennerlein

 

(646) 855-1681

 

joshua.dennerlein@baml.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

RBC Capital Markets

 

Wes Golladay

 

(440) 715-2650

 

wes.golladay@rbccm.com

Wells Fargo

 

Todd Stender

 

(562) 637-1371

 

todd.stender@wellsfargo.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 June 30, 2020)

 



Financial and Operating Highlights

(amounts in thousands, except for *)

 

 

Quarter Ended

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

 

6/30/2019

Financial Information

 

 

 

 

 

 

 

 

 

Total revenues

$

303,266 

 

 

$

310,302 

 

 

 

$

301,819 

 

 

$

362,443 

 

 

$

312,445 

 

Net income / (loss)

$

63,355 

 

 

$

(15,478

)

 

 

$

30,685 

 

 

$

64,451 

 

 

$

45,116 

 

Net Income / (loss) attributable to Sun Communities Inc. common stockholders

$

58,910 

 

 

$

(16,086

)

 

 

$

28,547 

 

 

$

57,002 

 

 

$

40,385 

 

Basic earnings / (loss) per share*

$

0.61 

 

 

$

(0.17

)

 

 

$

0.31 

 

 

$

0.63 

 

 

$

0.46 

 

Diluted earnings / (loss) per share*

$

0.61 

 

 

$

(0.17

)

 

 

$

0.31 

 

 

$

0.63 

 

 

$

0.46 

 

 

 

 

 

 

 

 

 

 

 

Cash distributions declared per common share*

$

0.79 

 

 

$

0.79 

 

 

 

$

0.75 

 

 

$

0.75 

 

 

$

0.75 

 

 

 

 

 

 

 

 

 

 

 

Recurring EBITDA (1)

$

148,650 

 

 

$

156,552 

 

 

 

$

144,738 

 

 

$

179,953 

 

 

$

151,502 

 

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

$

118,092 

 

 

$

95,046 

 

 

 

$

105,533 

 

 

$

119,496 

 

 

$

108,112 

 

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

$

110,325 

 

 

$

117,267 

 

 

 

$

104,534 

 

 

$

137,369 

 

 

$

108,002 

 

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

$

1.20 

 

 

$

0.98 

 

 

 

$

1.11 

 

 

$

1.27 

 

 

$

1.18 

 

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

$

1.12 

 

 

$

1.22 

 

 

 

$

1.10 

 

 

$

1.46 

 

 

$

1.18 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

 

 

 

 

 

 

 

 

 

Total assets

$

8,348,659 

 

 

$

8,209,047 

 

 

 

$

7,802,060 

 

 

$

7,397,854 

 

 

$

7,222,084 

 

Total debt

$

3,390,771 

 

 

$

3,926,494 

 

 

 

$

3,434,402 

 

 

$

3,271,341 

 

 

$

3,107,775 

 

Total liabilities

$

3,845,308 

 

 

$

4,346,127 

 

 

 

$

3,848,104 

 

 

$

3,720,983 

 

 

$

3,542,188 

 

 

Quarter Ended

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

 

6/30/2019

Operating Information*

 

 

 

 

 

 

 

 

 

Communities

426 

 

 

424 

 

 

 

422 

 

 

389 

 

 

382 

 

 

 

 

 

 

 

 

 

 

 

Manufactured home sites

94,232 

 

 

93,834 

 

 

 

93,821 

 

 

88,024 

 

 

87,555 

 

Annual RV sites

26,240 

 

 

26,148 

 

 

 

26,056 

 

 

25,756 

 

 

25,009 

 

Transient RV sites

22,360 

 

 

21,880 

 

 

 

21,416 

 

 

20,882 

 

 

20,585 

 

Total sites

142,832 

 

 

141,862 

 

 

 

141,293 

 

 

134,662 

 

 

133,149 

 

 

 

 

 

 

 

 

 

 

 

MH occupancy

96.5 

%

 

95.8 

 

%

 

95.5 

%

 

95.7 

%

 

95.7 

%

RV occupancy

100.0 

%

 

100.0 

 

%

 

100.0 

%

 

100.0 

%

 

100.0 

%

Total blended MH and RV occupancy

97.3 

%

 

96.7 

 

%

 

96.4 

%

 

96.7 

%

 

96.6 

%

 

 

 

 

 

 

 

 

 

 

New home sales

140 

 

 

119 

 

 

 

140 

 

 

167 

 

 

139 

 

Pre-owned home sales

471 

 

 

644 

 

 

 

668 

 

 

739 

 

 

788 

 

Total home sales

611 

 

 

763 

 

 

 

808 

 

 

906 

 

 

927 

 

 

Quarter Ended

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

 

6/30/2019

Net Leased Sites (5)

 

 

 

 

 

 

 

 

 

MH net leased sites

759 

 

 

287 

 

 

 

437 

 

 

296 

 

 

410 

 

RV net leased sites

92 

 

 

13 

 

 

 

232 

 

 

470 

 

 

258 

 

Total net leased sites

851 

 

 

300 

 

 

 

669 

 

 

766 

 

 

668 

 



Consolidated Balance Sheets
(amounts in thousands)

 

 

(Unaudited)

 

 

 

 

June 30, 2020

 

December 31, 2019

Assets

 

 

 

 

 

Land

 

$

1,433,272 

 

 

 

$

1,414,279 

 

 

Land improvements and buildings

 

6,826,741 

 

 

 

6,595,272 

 

 

Rental homes and improvements

 

652,177 

 

 

 

627,175 

 

 

Furniture, fixtures and equipment

 

312,139 

 

 

 

282,874 

 

 

Investment property

 

9,224,329 

 

 

 

8,919,600 

 

 

Accumulated depreciation

 

(1,826,810

)

 

 

(1,686,980

)

 

Investment property, net

 

7,397,519 

 

 

 

7,232,620 

 

 

Cash, cash equivalents and restricted cash

 

389,214 

 

 

 

34,830 

 

 

Marketable securities

 

100,564 

 

 

 

94,727 

 

 

Inventory of manufactured homes

 

58,744 

 

 

 

62,061 

 

 

Notes and other receivables, net

 

180,391 

 

 

 

157,926 

 

 

Other assets, net

 

222,227 

 

 

 

219,896 

 

 

Total Assets

 

$

8,348,659 

 

 

 

$

7,802,060 

 

 

Liabilities

 

 

 

 

Mortgage loans payable

 

$

3,205,507 

 

 

 

$

3,180,592 

 

 

Preferred Equity - Sun NG Resorts - mandatorily redeemable

 

35,249 

 

 

 

35,249 

 

 

Preferred OP units - mandatorily redeemable

 

34,663 

 

 

 

34,663 

 

 

Lines of credit (6)

 

115,352 

 

 

 

183,898 

 

 

Distributions payable

 

79,549 

 

 

 

71,704 

 

 

Advanced reservation deposits and rent

 

169,931 

 

 

 

133,420 

 

 

Accrued expenses and accounts payable

 

124,324 

 

 

 

127,289 

 

 

Other liabilities

 

80,733 

 

 

 

81,289 

 

 

Total Liabilities

 

3,845,308 

 

 

 

3,848,104 

 

 

Commitments and contingencies

 

 

 

 

Series D preferred OP units

 

50,171 

 

 

 

50,913 

 

 

Series F preferred OP units

 

8,948 

 

 

 

 

 

 

Equity Interests - NG Sun LLC and NG Sun Whitewater LLC

 

24,863 

 

 

 

27,091 

 

 

Stockholders' Equity

 

 

 

 

Common stock

 

983 

 

 

 

932 

 

 

Additional paid-in capital

 

5,847,598 

 

 

 

5,213,264 

 

 

Accumulated other comprehensive loss

 

(4,475

)

 

 

(1,331

)

 

Distributions in excess of accumulated earnings

 

(1,496,542

)

 

 

(1,393,141

)

 

Total Sun Communities, Inc. stockholders' equity

 

4,347,564 

 

 

 

3,819,724 

 

 

Noncontrolling interests

 

 

 

 

Common and preferred OP units

 

61,555 

 

 

 

47,686 

 

 

Consolidated variable interest entities

 

10,250 

 

 

 

8,542 

 

 

Total noncontrolling interests

 

71,805 

 

 

 

56,228 

 

 

Total Stockholders' Equity

 

4,419,369 

 

 

 

3,875,952 

 

 

Total Liabilities, Temporary Equity and Stockholders' Equity

 

$

8,348,659 

 

 

 

$

7,802,060 

 

 



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

 

 

Three Months Ended

 

Six Months Ended

 

June 30, 2020

 

June 30, 2019

 

Change

 

% Change

 

June 30, 2020

 

June 30, 2019

 

Change

 

% Change

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from real property (excluding transient revenue)

$

210,445 

 

 

 

$

195,503 

 

 

 

$

14,942 

 

 

 

7.6 

 

%

 

$

422,975 

 

 

 

$

386,068 

 

 

 

$

36,907 

 

 

 

9.6 

 

%

Transient revenue

21,039 

 

 

 

28,141 

 

 

 

(7,102

)

 

 

(25.2

)

%

 

46,294 

 

 

 

52,659 

 

 

 

(6,365

)

 

 

(12.1

)

%

Revenue from home sales

38,530 

 

 

 

47,242 

 

 

 

(8,712

)

 

 

(18.4

)

%

 

79,117 

 

 

 

86,860 

 

 

 

(7,743

)

 

 

(8.9

)

%

Rental home revenue

14,968 

 

 

 

14,412 

 

 

 

556 

 

 

 

3.9 

 

%

 

30,440 

 

 

 

28,383 

 

 

 

2,057 

 

 

 

7.2 

 

%

Ancillary revenue

12,375 

 

 

 

19,720 

 

 

 

(7,345

)

 

 

(37.2

)

%

 

22,570 

 

 

 

29,898 

 

 

 

(7,328

)

 

 

(24.5

)

%

Interest income

2,635 

 

 

 

4,919 

 

 

 

(2,284

)

 

 

(46.4

)

%

 

4,985 

 

 

 

9,719 

 

 

 

(4,734

)

 

 

(48.7

)

%

Brokerage commissions and other revenues, net

3,274 

 

 

 

2,508 

 

 

 

766 

 

 

 

30.5 

 

%

 

7,187 

 

 

 

6,188 

 

 

 

999 

 

 

 

16.1 

 

%

Total Revenues

303,266 

 

 

 

312,445 

 

 

 

(9,179

)

 

 

(2.9

)

%

 

613,568 

 

 

 

599,775 

 

 

 

13,793 

 

 

 

2.3 

 

%

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating and maintenance

65,204 

 

 

 

65,888 

 

 

 

(684

)

 

 

(1.0

)

%

 

129,261 

 

 

 

123,797 

 

 

 

5,464 

 

 

 

4.4 

 

%

Real estate taxes

17,723 

 

 

 

15,726 

 

 

 

1,997 

 

 

 

12.7 

 

%

 

34,899 

 

 

 

31,056 

 

 

 

3,843 

 

 

 

12.4 

 

%

Cost of home sales

29,181 

 

 

 

34,435 

 

 

 

(5,254

)

 

 

(15.3

)

%

 

59,213 

 

 

 

63,712 

 

 

 

(4,499

)

 

 

(7.1

)

%

Rental home operating and maintenance

4,685 

 

 

 

5,177 

 

 

 

(492

)

 

 

(9.5

)

%

 

10,179 

 

 

 

10,009 

 

 

 

170 

 

 

 

1.7 

 

%

Ancillary expenses

8,226 

 

 

 

12,480 

 

 

 

(4,254

)

 

 

(34.1

)

%

 

15,708 

 

 

 

19,581 

 

 

 

(3,873

)

 

 

(19.8

)

%

Home selling expenses

2,864 

 

 

 

3,626 

 

 

 

(762

)

 

 

(21.0

)

%

 

6,856 

 

 

 

6,950 

 

 

 

(94

)

 

 

(1.4

)

%

General and administrative expenses

26,733 

 

 

 

23,697 

 

 

 

3,036 

 

 

 

12.8 

 

%

 

52,250 

 

 

 

45,584 

 

 

 

6,666 

 

 

 

14.6 

 

%

Catastrophic weather-related charges, net

(566

)

 

 

179 

 

 

 

(745

)

 

 

N/M

 

40 

 

 

 

961 

 

 

 

(921

)

 

 

(95.8

)

%

Depreciation and amortization

87,265 

 

 

 

76,153 

 

 

 

11,112 

 

 

 

14.6 

 

%

 

170,954 

 

 

 

152,709 

 

 

 

18,245 

 

 

 

11.9 

 

%

Loss on extinguishment of debt

1,930 

 

 

 

70 

 

 

 

1,860 

 

 

 

N/M

 

5,209 

 

 

 

723 

 

 

 

4,486 

 

 

 

N/M

Interest expense

31,428 

 

 

 

33,661 

 

 

 

(2,233

)

 

 

(6.6

)

%

 

63,844 

 

 

 

67,675 

 

 

 

(3,831

)

 

 

(5.7

)

%

Interest on mandatorily redeemable preferred OP units / equity

1,042 

 

 

 

1,181 

 

 

 

(139

)

 

 

(11.8

)

%

 

2,083 

 

 

 

2,275 

 

 

 

(192

)

 

 

(8.4

)

%

Total Expenses

275,715 

 

 

 

272,273 

 

 

 

3,442 

 

 

 

1.3 

 

% 550,496 525,032 25,464 4.8 %Income Before Other Items27,551 40,172 (12,621) (31.4)% 63,072 74,743 (11,671) (15.6)%Gain / (loss) on remeasurement of marketable securities24,519 3,620 20,899 N/M (4,128) 3,887 (8,015) N/MGain / (loss) on foreign currency translation10,374 1,116 9,258 N/M (7,105) 3,081 (10,186) N/MOther expense, net (7)(552) (95) (457) N/M (854) (162) (692) N/MGain / (loss) on remeasurement of notes receivable246 — 246 N/A (1,866) — (1,866) N/AIncome from nonconsolidated affiliates92 479 (387) (80.8)% 144 867 (723) (83.4)%Gain / (loss) on remeasurement of investment in nonconsolidated affiliates1,132 — 1,132 N/A (1,059) — (1,059) N/ACurrent tax expense(119) (272) 153 (56.3)% (569) (486) (83) 17.1 %Deferred tax benefit112 96 16 16.7 % 242 313 (71) (22.7)%Net Income63,355 45,116 18,239 40.4 % 47,877 82,243 (34,366) (41.8)%Less: Preferred return to preferred OP units / equity1,584 1,718 (134) (7.8)% 3,154 3,041 113 3.7 %Less: Income attributable to noncontrolling interests2,861 2,585 276 10.7 % 1,899 3,626 (1,727) (47.6)%Net Income Attributable to Sun Communities, Inc.58,910 40,813 18,097 44.3 % 42,824 75,576 (32,752) (43.3)%Less: Preferred stock distribution— 428 (428) (100.0)% — 860 (860) (100.0)%Net Income Attributable to Sun Communities, Inc. Common Stockholders$58,910 $40,385 $18,525 45.9 % $42,824 $74,716 $(31,892) (42.7)% Weighted average common shares outstanding - basic95,859 87,130 8,729 10.0 % 94,134 86,325 7,809 9.0 %Weighted average common shares outstanding - diluted96,165 87,564 8,601 9.8 % 94,525 86,770 7,755 8.9 % Basic earnings per share$0.61 $0.46 $0.15 32.6 % $0.45 $0.86 $(0.41) (47.7)%Diluted earnings per share$0.61 $0.46 $0.15 32.6 % $0.45 $0.86 $(0.41) (47.7)%

N/M = Percentage change is not meaningful


Outstanding Securities and Capitalization
(amounts in thousands except for *)


Outstanding Securities - As of June 30, 2020

Number of Units/Shares Outstanding

Conversion Rate*

If Converted

Issuance Price per unit*

Annual Distribution Rate*

Non-convertible Securities

Common shares

98,274

N/A

N/A

N/A

$3.16^

Convertible Securities

Series A-1 preferred OP units

300

2.4390

732

$

100

6.0

%

Series A-3 preferred OP units

40

1.8605

75

$

100

4.5

%

Series C preferred OP units

310

1.1100

345

$

100

4.5

%

Series D preferred OP units

489

0.8000

391

$

100

3.8

%

Series E preferred OP units

90

0.6897

62

$

100

5.25

%

Series F preferred OP units

90

0.6250

56

$

100

3.0

%

Common OP units

2,477

1.0000

2,477

N/A

Mirrors common shares distributions

^ Annual distribution is based on the last quarterly distribution annualized.


Capitalization - As of June 30, 2020

Equity

Shares

Share Price*

Total

Common shares

98,274

$

135.68

$

13,333,816

Common OP units

2,477

$

135.68

336,079

Subtotal

100,751

$

13,669,895

Series A-1 preferred OP units

732

$

135.68

$

99,318

Series A-3 preferred OP units

75

$

135.68

10,176

Series C preferred OP units

345

$

135.68

46,810

Series D preferred OP units

391

$

135.68

53,051

Series E preferred OP units

62

$

135.68

8,412

Series F preferred OP units

56

$

135.68

7,598

Total diluted shares outstanding

102,412

$

13,895,260

Debt

Mortgage loans payable

$

3,205,507

Preferred Equity - Sun NG Resorts - mandatorily redeemable

35,249

Preferred OP units - mandatorily redeemable

34,663

Lines of credit (6)

115,352

Total debt

$

3,390,771

Total Capitalization

$

17,286,031


Reconciliations to Non-GAAP Financial Measures


Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to FFO(1)
(amounts in thousands except for per share data)

Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Net Income Attributable To Sun Communities, Inc. Common Stockholders

$

58,910

$

40,385

$

42,824

$

74,716

Adjustments

Depreciation and amortization

87,296

76,294

171,048

153,006

Depreciation on nonconsolidated affiliates

19

19

(Gain) / loss on remeasurement of marketable securities

(24,519

)

(3,620

)

4,128

(3,887

)

(Gain) / loss on remeasurement of investment in nonconsolidated affiliates

(1,132

)

1,059

(Gain) / loss on remeasurement of notes receivable

(246

)

1,866

Income attributable to noncontrolling interests

1,942

2,158

1,646

2,881

Preferred return to preferred OP units

537

1,000

1,064

Preferred distribution to Series A-4 preferred stock

428

860

Gain on disposition of assets, net

(4,178

)

(8,070

)

(9,740

)

(13,749

)

FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4)

$

118,092

$

108,112

$

213,850

$

214,891

Adjustments

Other acquisition related costs (8)

504

366

889

526

Loss on extinguishment of debt

1,930

70

5,209

723

Catastrophic weather-related charges, net

(567

)

194

39

976

Loss of earnings - catastrophic weather related (9)

377

300

377

(Gain) / loss on foreign currency translation

(10,374

)

(1,116

)

7,105

(3,081

)

Other expense, net (7)

552

95

854

162

Other adjustments (a)

188

(96

)

58

(313

)

Core FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4)

$

110,325

$

108,002

$

228,304

$

214,261

Weighted average common shares outstanding - basic

95,859

87,130

94,134

86,325

Add

Common OP units

2,448

2,487

2,430

2,605

Common stock issuable upon conversion of stock options

1

1

1

1

Restricted stock

305

433

390

444

Common stock issuable upon conversion of Series A-3 preferred OP units

75

75

75

Common stock issuable upon conversion of Series A-1 preferred OP units

793

740

798

Common stock issuable upon conversion of Series A-4 preferred stock

467

467

Weighted Average Common Shares Outstanding - Fully Diluted

98,613

91,386

97,770

90,715

FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4) Per Share - Fully Diluted

$

1.20

$

1.18

$

2.19

$

2.37

Core FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4) Per Share - Fully Diluted

$

1.12

$

1.18

$

2.34

$

2.36

(a) Adjustments include deferred compensation amortization upon retirement and deferred tax benefits.


Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to Recurring EBITDA (1)
(amounts in thousands)

Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Net Income Attributable to Sun Communities, Inc. Common Stockholders

$

58,910

$

40,385

$

42,824

$

74,716

Adjustments

Depreciation and amortization

87,265

76,153

170,954

152,709

Loss on extinguishment of debt

1,930

70

5,209

723

Interest expense

31,428

33,661

63,844

67,675

Interest on mandatorily redeemable preferred OP units / equity

1,042

1,181

2,083

2,275

Current tax expense

119

272

569

486

Deferred tax benefit

(112

)

(96

)

(242

)

(313

)

Income from nonconsolidated affiliates

(92

)

(479

)

(144

)

(867

)

Less: Gain on dispositions of assets, net

(4,178

)

(8,070

)

(9,740

)

(13,749

)

EBITDAre (1)

$

176,312

$

143,077

$

275,357

$

283,655

Adjustments

Catastrophic weather related charges, net

(566

)

179

40

961

(Gain) / loss on remeasurement of marketable securities

(24,519

)

(3,620

)

4,128

(3,887

)

(Gain) / loss on foreign currency translation

(10,374

)

(1,116

)

7,105

(3,081

)

Other expense, net (7)

552

95

854

162

(Gain) / loss on remeasurement of notes receivable

(246

)

1,866

(Gain) / loss on remeasurement of investment in nonconsolidated affiliates

(1,132

)

1,059

Preferred return to preferred OP units / equity

1,584

1,718

3,154

3,041

Income attributable to noncontrolling interests

2,861

2,585

1,899

3,626

Preferred stock distribution

428

860

Plus: Gain on dispositions of assets, net

4,178

8,070

9,740

13,749

Recurring EBITDA (1)

$

148,650

$

151,416

$

305,202

$

299,086



Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to NOI (1)
(amounts in thousands)

Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Net Income Attributable to Sun Communities, Inc. Common Stockholders

$

58,910

$

40,385

$

42,824

$

74,716

Interest income

(2,635

)

(4,919

)

(4,985

)

(9,719

)

Brokerage commissions and other revenues, net

(3,274

)

(2,508

)

(7,187

)

(6,188

)

Home selling expenses

2,864

3,626

6,856

6,950

General and administrative expenses

26,733

23,697

52,250

45,584

Catastrophic weather-related charges, net

(566

)

179

40

961

Depreciation and amortization

87,265

76,153

170,954

152,709

Loss on extinguishment of debt

1,930

70

5,209

723

Interest expense

31,428

33,661

63,844

67,675

Interest on mandatorily redeemable preferred OP units / equity

1,042

1,181

2,083

2,275

Gain / (loss) on remeasurement of marketable securities

(24,519

)

(3,620

)

4,128

(3,887

)

(Gain) / loss on foreign currency translation

(10,374

)

(1,116

)

7,105

(3,081

)

Other expense, net (7)

552

95

854

162

(Gain) / loss on remeasurement of notes receivable

(246

)

1,866

Income from nonconsolidated affiliates

(92

)

(479

)

(144

)

(867

)

(Gain) / loss on remeasurement of investment in nonconsolidated affiliates

(1,132

)

1,059

Current tax expense

119

272

569

486

Deferred tax benefit

(112

)

(96

)

(242

)

(313

)

Preferred return to preferred OP units / equity

1,584

1,718

3,154

3,041

Income attributable to noncontrolling interests

2,861

2,585

1,899

3,626

Preferred stock distribution

428

860

NOI (1) / Gross Profit

$

172,338

$

171,312

$

352,136

$

335,713


Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Real Property NOI (1)

$

148,557

$

142,030

$

305,109

$

283,874

Home Sales NOI (1) / Gross Profit

9,349

12,807

19,904

23,148

Rental Program NOI (1)

28,874

26,413

56,859

52,430

Ancillary NOI (1) / Gross Profit

4,149

7,240

6,862

10,317

Site rent from Rental Program (included in Real Property NOI) (1) (10)

(18,591

)

(17,178

)

(36,598

)

(34,056

)

NOI (1) / Gross Profit

$

172,338

$

171,312

$

352,136

$

335,713



Non-GAAP and Other Financial Measures


Debt Analysis
(amounts in thousands)

Quarter Ended

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

Debt Outstanding

Mortgage loans payable

$

3,205,507

$

3,273,808

$

3,180,592

$

2,967,128

$

2,863,485

Secured borrowings on collateralized receivables (11)

93,669

98,299

Preferred Equity - Sun NG Resorts - mandatorily redeemable

35,249

35,249

35,249

35,249

35,249

Preferred OP units - mandatorily redeemable

34,663

34,663

34,663

34,663

34,663

Lines of credit (6)

115,352

582,774

183,898

140,632

76,079

Total debt

$

3,390,771

$

3,926,494

$

3,434,402

$

3,271,341

$

3,107,775

% Fixed / Floating

Fixed

96.6

%

85.2

%

94.7

%

95.7

%

97.6

%

Floating

3.4

%

14.8

%

5.3

%

4.3

%

2.4

%

Total

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Weighted Average Interest Rates

Mortgage loans payable

3.88

%

3.91

%

4.05

%

4.13

%

4.24

%

Preferred Equity - Sun NG Resorts - mandatorily redeemable

6.00

%

6.00

%

6.00

%

6.00

%

6.00

%

Preferred OP units - mandatorily redeemable

5.93

%

5.93

%

6.50

%

6.50

%

6.50

%

Lines of credit (6)

2.03

%

1.85

%

2.71

%

3.23

%

3.34

%

Average before secured borrowings (11)

3.86

%

3.64

%

4.03

%

4.14

%

4.27

%

Secured borrowings on collateralized receivables (11)

%

%

%

9.92

%

9.93

%

Total average

3.86

%

3.64

%

4.03

%

4.30

%

4.44

%

Debt Ratios

Net Debt / Recurring EBITDA (1) (TTM)

4.8

5.6

5.5

5.3

5.2

Net Debt / Enterprise Value

17.8

%

22.6

%

19.0

%

18.7

%

20.2

%

Net Debt / Gross Assets

29.7

%

35.6

%

36.0

%

36.0

%

35.1

%

Coverage Ratios

Recurring EBITDA (1) (TTM) / Interest

4.5

4.5

4.4

4.4

4.2

Recurring EBITDA (1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution

4.4

4.3

4.2

4.2

4.0


Maturities / Principal Amortization Next Five Years

2020

2021

2022

2023

2024

Mortgage loans payable

Maturities

$

$

$

82,155

$

185,618

$

315,330

Principal amortization

28,842

59,615

61,326

60,604

57,082

Preferred Equity - Sun NG Resorts - mandatorily redeemable

35,249

Preferred OP units - mandatorily redeemable

27,373

Lines of credit (6)

3,006

11,440

10,000

90,906

Total

$

31,848

$

71,055

$

188,730

$

337,128

$

399,785

Weighted average rate of maturities

%

%

4.46

%

4.08

%

4.47

%



Real Property Operations – Same Community(2)
(amounts in thousands except for Other Information)

Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

Change

% Change

June 30, 2020

June 30, 2019

Change

% Change

Financial Information

Income from real property (12)

$

204,478

$

208,214

$

(3,736

)

(1.8

)

%

$

419,150

$

412,352

$

6,798

1.6

%

Property operating expenses

Payroll and benefits

17,981

21,232

(3,251

)

(15.3

)

%

36,793

39,656

(2,863

)

(7.2

)

%

Legal, taxes, and insurance

2,427

2,272

155

6.8

%

5,315

4,611

704

15.3

%

Utilities (12)

13,476

14,512

(1,036

)

(7.1

)

%

28,586

30,232

(1,646

)

(5.4

)

%

Supplies and repair (13)

8,188

9,325

(1,137

)

(12.2

)

%

14,317

15,627

(1,310

)

(8.4

)

%

Other (a)

6,276

7,262

(986

)

(13.6

)

%

11,843

12,667

(824

)

(6.5

)

%

Real estate taxes

16,076

15,436

640

4.1

%

32,040

30,596

1,444

4.7

%

Property operating expenses

64,424

70,039

(5,615

)

(8.0

)

%

128,894

133,389

(4,495

)

(3.4

)

%

Real Property NOI (1)

$

140,054

$

138,175

$

1,879

1.4

%

$

290,256

$

278,963

$

11,293

4.0

%

(a) Includes COVID-19 personal protective equipment expense of $910.

As of

June 30, 2020

June 30, 2019

Change

% Change

Other Information

Number of properties

367

367

-

MH occupancy (3)

96.9

%

RV occupancy (3)

100.0

%

MH & RV blended occupancy (3)

97.6

%

Adjusted MH occupancy (3)

98.4

%

Adjusted RV occupancy (3)

100.0

%

Adjusted MH & RV blended occupancy (3)

98.7

%

96.8

%

1.9

%

Monthly base rent per site - MH

$

593

$

570

$

23

3.9% (15)

Monthly base rent per site - RV (14)

$

499

$

472