Sun Communities, Inc. Reports 2021 First Quarter Results (2024)

Southfield, MI, April 26, 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 first quarter results for 2021.

Financial Results for the Quarter Ended March 31, 2021

For the quarter ended March 31, 2021, total revenues increased $131.7 million, or 42.4 percent, to approximately $442.0million compared to $310.3 million for the same period in 2020. Net income attributable to common stockholders was $24.8million, or $0.23 per diluted common share, for the quarter ended March 31, 2021, as compared to net loss attributable to common stockholders of $16.1million, or $0.17 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 March 31, 2021, was $1.26 per diluted share and OP unit ("Share") as compared to $1.22 in the corresponding period in 2020, a 3.3 percent increase.
• Same Community⁽²⁾ Net Operating Income ("NOI")⁽¹⁾increased by 2.7 percent for the quarter ended March 31, 2021, as compared to the corresponding period in 2020.
• Same Community⁽²⁾ Occupancyincreased by 190 basis points to 98.8 percent, as compared to 96.9 percent at March 31, 2020.
• MH and Annual RV Revenue Producing Sites increased by 514 sites in the quarter ended March 31, 2021, bringing total portfolio occupancy to 97.3 percent at March 31, 2021, as compared to an increase of 300 sites in the corresponding period in 2020 and total portfolio occupancy of 96.7 percent at March 31, 2020.
• Home Sales Volume increased 9.4 percent for the quarter ended March 31, 2021, as compared to the same period in 2020.
• Acquisitions totaled $183.0 million during and subsequent to the quarter ended March 31, 2021, including 2 MH communities, 6 RV resorts and 4 marinas.

Gary Shiffman, Chief Executive Officer stated, "Sun delivered a strong start to the year, as we continued to benefit from both the stability of our portfolio and the contribution of our growth initiatives across manufactured housing, RV resorts and marinas. Sustained demand for affordable housing and the desire for RV vacations are providing strong tailwinds, while marinas continue to exhibit durable customer retention and growth. With increased rates of vaccination and the beginning of a return to normalcy, we are seeing higher forward RV bookings providing better visibility into a stronger year ahead. Accordingly, we have increased our earnings guidance to reflect this confidence. To enhance our growth, we delivered approximately 350 ground-up development and expansion sites, and deployed $183.0 million into the acquisition of irreplaceable assets. As we execute on our investment strategies and further reinforce the high quality of our brand and offerings to our residents and guests, we are well positioned to continue to deliver industry-leading results."

OPERATING HIGHLIGHTS

Portfolio Occupancy

Total MH and annual RV occupancy was 97.3 percent at March 31, 2021, compared to 96.7 percent at March 31, 2020, an increase of 60 basis points.

During the quarter ended March 31, 2021, MH and annual RV revenue producing sites increased by 514 sites, as compared to an increase of 300 revenue producing sites during the quarter ended March 31, 2020.

Same Community⁽²⁾ Results

For the 407 MH and RV properties owned and operated by the Company since January 1, 2020, NOI⁽¹⁾for the quarter ended March 31, 2021 increased 2.7 percent over the same period in 2020, driven by a 3.5 percent increase in revenues. Same Community occupancy⁽³⁾ increased to 98.8 percent at March 31, 2021 from 96.9 percent at March 31, 2020.

For the MH same community properties, NOI⁽¹⁾ increased by 4.9 percent in the quarter ended March 31, 2021, driven by a 5.1 percent increase in revenues and offset by a 5.7 percent increase in property operating expenses.

For the RV same community properties, NOI⁽¹⁾ declined by 4.0 percent in the quarter ended March 31, 2021, driven by a 0.2 percent decline in revenues and a 5.3 percent increase in property operating expenses. RV same community revenues were impacted by the continued Canadian border closure and the California shelter-in-place order that ran through early February 2021.

Home Sales

During the quarter ended March 31, 2021, the Company sold 835 homes as compared to 763 homes in the same period in 2020. The Company sold 149 and 119 new homes for the quarters ended March 31, 2021 and 2020, respectively, an increase of 25.2 percent. Pre-owned home sales were 686 in the first quarter 2021 as compared to 644 in the same period in 2020, an increase of 6.5 percent.

Marina Results

Marina NOI was $31.4 million for the quarter ended March 31, 2021. Refer to page 14 for additional information regarding the marina portfolio operating results.

PORTFOLIO ACTIVITY

Acquisitions

During and subsequent to the quarter ended March 31, 2021, the Company acquired the following communities, resorts and marinas:

^(a) Includes two marinas.

^(b) In conjunction with the acquisition, the Company issued 240,000 Series J preferred OP units.

Construction Activity

During the quarter ended March 31, 2021, the Company completed the construction of nearly 250 sites in its newly opened ground-up development in San Diego, California, and over 100 expansion sites in a Texas MH community.

BALANCE SHEET, CAPITAL MARKETS ACTIVITY AND OTHER ITEMS

Debt

As of March 31, 2021, the Company had approximately $4.4 billion of debt outstanding. The weighted average interest rate was 3.4 percent and the weighted average maturity was 9.5 years. The Company had $105.1million of unrestricted cash on hand. At March 31, 2021, the Company's net debt to trailing twelve month Recurring EBITDA⁽¹⁾ ratio was 6.1 times.

Equity Transaction

In March 2021, the Company completed a $1.1billion underwritten public offering of an aggregate 8,050,000 shares at a public offering price of $140.00 per share, before underwriting discounts and commissions. The offering consisted of 4,000,000 shares offered directly by the Company and 4,050,000 shares offered under a forward equity sales agreement. The Company sold the 4,000,000 shares on March 9, 2021 and received net proceeds of $537.6 million which it used to pay down revolving debt. The Company expects to settle the remaining forward equity sales agreement by March 2022.

Reporting Changes

Refer to the Summary of 2021 Reporting Changes document, which can be found in the Investor Relations section of the Company’s website, for additional information regarding updated and expanded reporting implemented during the quarter.

2021 GUIDANCE

The Company is revising its 2021 guidance for the following metrics:

Seasonality of Core FFO⁽¹⁾ per fully diluted Share is based off of the midpoint of full year guidance.

Guidance estimates include acquisitions completed through the date of this release and exclude any prospective acquisitions or capital markets activity. The settlement of the remaining 4,050,000 shares offered under the March 2021 forward equity sales agreement, is not included in guidance.

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 first quarter results will be held on Tuesday, April27, 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 May11, 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 13717209. 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 March 31, 2021, owned, operated, or had an interest in a portfolio of 562 developed MH, RV and marina properties comprising over 151,600 developed sites and nearly 38,800 wet slips and dry storage spaces in 39 states and Ontario, Canada.

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 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;
• 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, 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;
• ability of purchasers of manufactured homes and boats to obtain financing; and
• level of repossessions by manufactured home and 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

Portfolio Overview
(As of March 31, 2021)

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

Consolidated Balance Sheets
(amounts in thousands)

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

N/M = Percentage change is not meaningful.

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

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

Reconciliations to Non-GAAP Financial Measures

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

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

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

Non-GAAP and Other Financial Measures

Debt Analysis
(amounts in thousands)

Same Community⁽²⁾
(amounts in thousands except for Other Information)

Marina Summary
(amounts in thousands except for statistical data)

^(a) Marina properties comprised of four properties acquired in 2021 and 106 properties acquired in 2020.

MH and RV Acquisitions and Other Summary⁽¹³⁾
(amounts in thousands except for statistical data)

Home Sales Summary
(amounts in thousands except for *)

Rental Program Summary
(amounts in thousands except for *)

The Rental Program NOI is included in Real Property NOI. The Rental Program NOI is separately reviewed to assess the overall growth and performance of the Rental Program and its financial impact on the Company's operations.

^(a) Total wet slips and dry storage spaces are adjusted each quarter based on sites configuration and usability.

Capital Improvements, Development and Acquisitions
(amounts in thousands except for *)