Sun Communities Inc (SUI) Reports Mixed 2023 Results and Sets 2024 Guidance
Total Revenue: Increased by 7.8% for the quarter and 8.6% for the full year.
Net Loss: Reported a net loss per diluted share of $0.65 for the quarter and $1.72 for the full year.
Core FFO: Achieved $1.34 per share for the quarter and $7.10 per share for the full year.
Same Property NOI: Grew by 9.6% for the quarter and 7.3% for the full year.
Occupancy: Same Property adjusted occupancy for MH and RV increased by 230 basis points year-over-year.
2024 Guidance: Expects Total Same Property NOI growth of 4.8% - 6.0% and Core FFO per share of $7.04 to $7.24.
Annual Distribution: Increased by 1.1% for 2024, to $3.76 per share.
On February 20, 2024, Sun Communities Inc (NYSE:SUI) released its 8-K filing, detailing the financial results for the fourth quarter and full year ended December 31, 2023. The residential REIT, which focuses on manufactured housing, residential vehicle communities, and marinas, reported a mixed financial performance with an increase in total revenue but also a net loss per diluted share.
Company Overview
Sun Communities is a residential REIT that owns a diverse portfolio of 670 properties, including 353 manufactured housing communities, 182 residential vehicle communities, and 135 marina properties. With a strategic focus on properties desirable as second homes or vacation spots, nearly half of Sun Communities' portfolio is located in Florida or Michigan, near major bodies of water.
Financial Performance and Challenges
The company reported a net loss attributable to common shareholders of $80.9 million, or $0.65 per diluted share, for the quarter, and $213.3 million, or $1.72 per diluted share, for the full year. This represents a significant shift from the net income reported in the previous year. Despite the net loss, Core Funds from Operations (Core FFO) per share stood at $1.34 for the quarter and $7.10 for the full year, indicating a strong operational performance.
Same Property Net Operating Income (NOI) increased by 9.6% for the quarter and 7.3% for the year, reflecting the resilience of Sun Communities' portfolio amidst robust demand and limited supply. The company also experienced solid occupancy gains in its manufactured housing and RV communities and realized significant site conversions from transient to annual RV sites.
Financial Achievements and Importance
The company's financial achievements, particularly the growth in Same Property NOI and Core FFO, underscore the strength of Sun Communities' operating model and the demand for its properties. These metrics are crucial for REITs as they reflect the ability to generate and grow rental income from properties, which is vital for sustaining distributions to shareholders.
Key Financial Metrics
Important financial metrics from the earnings report include:
"The fourth quarter culminated a year of solid real property performance. Same property NOI surpassed our expectations and highlights the resilience of our portfolio, supported by the robust demand and limited supply fundamentals of our properties," said Gary A. Shiffman, Chairman, President and CEO.
Additionally, the company's balance sheet showed $7.8 billion in debt with a weighted average interest rate of 4.2% and a weighted average maturity of 6.8 years. The net debt to trailing twelve-month Recurring EBITDA ratio was 6.1 times.
Analysis of Company's Performance
While the net loss per share is a concern, the increase in Core FFO and Same Property NOI is indicative of a strong underlying operational performance. The company's strategic focus on high-demand areas and its ability to convert transient sites to annual leases are likely to continue to support its financial health. However, the net loss highlights the challenges faced, including macroeconomic headwinds and the impact of non-cash goodwill impairment related to its Park Holidays business.
Looking ahead, Sun Communities has provided guidance for 2024, expecting growth in Total Same Property NOI and an increase in Core FFO per share. The company's confidence in its strategic positioning and disciplined approach to acquisitions, development activity, and balance sheet management suggests a positive outlook for re-accelerating earnings growth in the coming years.
For more detailed information and to view the full financial statements, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from Sun Communities Inc for further details.
This article first appeared on GuruFocus.
