EXHIBIT 99.1
SUN COMMUNITIES, INC. REPORTS FIRST QUARTER 2006 RESULTS
SOUTHFIELD, Mich., April 28 /PRNewswire-FirstCall/ -- Sun Communities,
Inc. (NYSE: SUI), a real estate investment trust (REIT) that owns and operates
manufactured housing communities, today reported first quarter results.
For the first quarter ended March 31, 2006, total revenues increased 7.4
percent to $56.4 million, compared to $52.5 million in the first quarter of
2005. Funds from operations (FFO)(1) increased to $15.1 million at March 31,
2006 from $14.9 million in the first quarter 2005. On a diluted per share/OP
Unit basis, FFO was $0.76 for the first quarter of 2006 as compared to $0.73 for
the three months ended March 31, 2005. Net loss for the first quarter of 2006
was $(0.4) million or $(0.02) per diluted common share, compared to net income
of $0.7 million, or $0.04 per diluted common share for the same period in 2005.
For 133 communities owned throughout both years, total revenues increased
3.9 percent for the three months ended March 31, 2006 and expenses increased 0.2
percent, resulting in an increase in net operating income(2) of 5.4 percent.
Same property occupancy in the manufactured housing sites increased from 83.9
percent at December 31, 2005 to 84.3 percent at March 31, 2006.
The Company achieved an increase of 136 manufactured housing revenue
producing sites during the quarter. In addition, the Company sold 26 new and 45
pre-owned homes during the first quarter of 2006 as compared to 29 new and 82
pre-owned sales during the same period in 2005. The Company also brokered 170
sales during the quarter.
"The Company's performance continues to be positively affected by its rental
home program. The basis for this program has been to acquire repossessed homes
located in our portfolio from the lenders at significant discounts to
replacement costs and place them in a rental pool. If Sun does not purchase
these repossessed homes, they would likely be removed and sold to others," said
Gary A. Shiffman, Chief Executive Officer.
"This interim strategy was put into place at Sun several years ago to
weather the industry challenges brought about by poor financing practices, as
well as historically low interest rates that favored other forms of housing.
Today, several factors may support the viewpoint that the industry is beginning
a slow, steady recovery. The number of repossessed homes in the company's
portfolio is at its lowest since August 2001. Portfolio delinquencies have also
declined to levels not seen since April 2002. While still too early to draw firm
conclusions, a reduced repossession overhang and higher interest rates should
support stronger demand for manufactured housing's affordable price points,"
Shiffman added.
The Company rented an additional 504 homes in the first quarter of 2006
bringing the total number of rentals to 4,215 at March 31, 2006, as reflected in
the accompanying table. Rental rates for the homes, including site rent, have
increased approximately 10 percent in the past twelve months from an average of
$594 at March 31, 2005 to an average of $653 at March 31, 2006. Renewal rates
have climbed from 49% for 2005 to 64% in the first quarter of 2006. The Company
acquired 34% fewer repossessed homes in the first quarter of 2006 compared to
the first quarter of 2005.
During the quarter the Company acquired one manufactured home community
located in Oakland County, Michigan with occupancy of approximately 95 percent
for a total purchase price of $7.8 million.
The Company closed on a $40 million dollar floor plan facility during the
quarter. The facility allows for draws for new, used and rented homes in the
Company's portfolio.
A conference call to discuss first quarter operating results will be held on
April 28, 2006, at 11:00 A.M. EDT. 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 May 12, 2006, and can be accessed
by dialing 877-660-6853 from the U.S. or 201-612-7415 outside the U.S. or
Canada. To access the replay enter the account code 3055 and the ID number
198018. The conference call will be available live on Sun Communities' website
http://www.suncommunities.com. Replay will also be available on the website.
Sun Communities, Inc. is a real estate investment trust (REIT) that
currently owns and operates a portfolio of 136 communities comprising
approximately 47,600 developed sites and over 6,900 sites suitable for
development mainly in the Midwest and Southeast United States.
(1) Funds from operations ("FFO") is defined by the National Association of
Real Estate Investment Trusts ("NAREIT") as net income (computed in
accordance with generally accepted accounting principles), excluding
gains (or losses) from sales of depreciable operating property, plus
real estate-related depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. FFO is
a non-GAAP financial measure that management believes is a useful
supplemental measure of the Company's operating performance. Management
generally considers FFO to be a useful measure for reviewing
comparative operating and financial performance because, by excluding
gains and losses related to sales of previously depreciated operating
real estate assets and excluding real estate asset depreciation and
amortization (which can vary among owners of identical assets in
similar condition based on historical cost accounting and useful life
estimates), FFO provides a performance measure that, when compared year
over year, reflects the impact to operations from trends in occupancy
rates, rental rates and operating costs, providing perspective not
readily apparent from net income. Management believes that the use of
FFO has been beneficial in improving the understanding of operating
results of REITs among the investing public and making comparisons of
REIT operating results more meaningful.
Because FFO excludes significant economic components of net income
including depreciation and amortization, FFO should be used as an
adjunct to net income and not as an alternative to net income. The
principal limitation of FFO is that it does not represent cash flow
from operations as defined by GAAP and is a supplemental measure of
performance that does not replace net income as a measure of
performance or net cash provided by operating activities as a measure
of liquidity. In addition, FFO is not intended as a measure of a REIT's
ability to meet debt principal repayments and other cash requirements,
nor as a measure of working capital. FFO only provides investors with
an additional performance measure. Other REITs may use different
methods for calculating FFO and, accordingly, the Company's FFO may not
be comparable to other REITs.
(2) Investors in and analysts following the real estate industry utilize
net operating income ("NOI") as a supplemental performance measure. NOI
is derived from revenues (determined in accordance with GAAP) minus
property operating expenses and real estate taxes (determined in
accordance with GAAP). NOI does not represent cash generated from
operating activities in accordance with GAAP and should not be
considered to be an alternative to net income (determined in accordance
with GAAP) as an indication of the Company's financial performance or
to be an alternative to cash flow from operating activities (determined
in accordance with GAAP) as a measure of the Company's liquidity; nor
is it indicative of funds available for the Company's cash needs,
including its ability to make cash distributions. The Company believes
that net income is the most directly comparable GAAP measurement to net
operating income. Net income includes interest and depreciation and
amortization which often have no effect on the market value of a
property and therefore limit its use as a performance measure.
In addition, such expenses are often incurred at a parent company level
and therefore are not necessarily linked to the performance of a real
estate asset. The Company believes that net operating income is helpful
to investors as a measure of operating performance because it is an
indicator of the return on property investment, and provides a method
of comparing property performance over time. The Company uses NOI as a
key management tool when evaluating performance and growth of
particular properties and/or groups of properties. The principal
limitation of NOI is that it excludes depreciation, amortization and
non-property specific expenses such as general and administrative
expenses, all of which are significant costs, and therefore, NOI is a
measure of the operating performance of the properties of the Company
rather than of the Company overall.
For more information about Sun Communities, Inc.,
visit our website at http://www.suncommunities.com
This press release contains various "forward-looking statements" within the
meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934,
and the Company intends that such forward-looking statements will be subject to
the safe harbors created thereby. The words "will," "may," "could," "expect,"
"anticipate," "believes," "intends," "should," "plans," "estimates,"
"approximate" and similar expressions identify these forward-looking statements.
These forward-looking statements reflect the Company's current views with
respect to future events and financial performance, but involve known and
unknown risks and uncertainties, both general and specific to the matters
discussed in this press release. These risks and uncertainties 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 ability of manufactured home buyers to obtain
financing, the level of repossessions by manufactured home lenders and those
referenced under the headings entitled "Factors That May Affect Future Results"
or "Risk Factors" contained in the Company's filings with the Securities and
Exchange Commission. 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 Company's expectations
of future events.
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(Amounts in thousands except for per share data)
(Unaudited)
2006 2005
---------- ----------
REVENUES
Income from rental property $ 48,073 $ 45,449
Revenues from home sales 3,256 3,748
Rental home revenue 3,329 1,517
Ancillary revenues, net 269 466
Interest and other income 1,503 1,313
---------- ----------
Total revenues 56,430 52,493
COSTS AND EXPENSES
Property operating and maintenance 11,385 10,965
Real estate taxes 3,894 3,772
Cost of home sales 2,397 2,405
Rental home operating and maintenance 2,613 1,485
General and administrative - rental
property 4,246 3,505
General and administrative - home
sales and rentals 1,566 1,540
Depreciation and amortization 15,001 13,025
Interest 14,725 13,635
Interest on mandatorily redeemable debt 1,089 1,067
Florida storm damage recovery - (500)
---------- ----------
Total expenses 56,916 50,899
---------- ----------
Income (loss) from operations (486) 1,594
Less income (loss) allocated to minority interest:
Preferred OP Units - 961
Common OP Units (57) 77
---------- ----------
Income (loss) from continuing operations (429) 556
Income from discontinued operations - 131
---------- ----------
Net income (loss) $ (429) $ 687
========== ==========
Weighted average common shares outstanding:
Basic 17,534 17,848
========== ==========
Diluted 17,534 17,950
========== ==========
Basic and diluted earnings (loss) per share:
Continuing operations $ (0.02) $ 0.03
Discontinued operations - 0.01
---------- ----------
Net income (loss) $ (0.02) $ 0.04
========== ==========
RECONCILIATION OF NET INCOME (LOSS) TO FUNDS FROM OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(Amounts in thousands except for per share data)
(Unaudited)
2006 2005
---------- ----------
Net income (loss) $ (429) $ 687
Adjustments:
Depreciation and amortization 15,611 13,664
Valuation adjustment(3) 43 359
(Gain) loss on disposition
of assets, net (32) 47
Income (loss) allocated to
minority interest (57) 95
---------- ----------
Funds from operations (FFO) $ 15,136 $ 14,852
========== ==========
FFO - Continuing Operations $ 15,136 $ 14,660
========== ==========
FFO - Discontinued Operations $ - $ 192
========== ==========
Weighted average common shares/OP Units outstanding:
Basic 19,857 20,319
========== ==========
Diluted 20,007 20,421
========== ==========
Continuing Operations:
FFO per weighted average Common
Share/OP Unit - Basic $ 0.76 $ 0.72
========== ==========
FFO per weighted average Common
Share/OP Unit - Diluted $ 0.76 $ 0.72
========== ==========
Discontinued Operations:
FFO per weighted average Common
Share/OP Unit - Basic $ - $ 0.01
========== ==========
FFO per weighted average Common
Share/OP Unit - Diluted $ - $ 0.01
========== ==========
Total Operations:
FFO per weighted average Common
Share/OP Unit - Basic $ 0.76 $ 0.73
========== ==========
FFO per weighted average Common
Share/OP Unit - Diluted $ 0.76 $ 0.73
========== ==========
(3) The Company entered into three interest rate swaps and an interest rate
cap agreement. The valuation adjustment reflects the theoretical
noncash profit and loss were those hedging transactions terminated at
the balance sheet date. As the Company has no expectation of
terminating the transactions prior to maturity, the net of these
noncash valuation adjustments will be zero at the various maturities.
As any imperfection related to hedging correlation in these swaps is
reflected currently in cash as interest, the valuation adjustments
reflect volatility that would distort the comparative measurement of
FFO and on a net basis approximate zero. Accordingly, the valuation
adjustments are excluded from FFO. The valuation adjustment is included
in interest expense.
SUN COMMUNITIES, INC.
SELECTED BALANCE SHEET DATA
(Amounts in thousands)
(Unaudited)
MARCH 31, 2006 DECEMBER 31, 2005
-------------- -----------------
Investment in rental property before
accumulated depreciation $ 1,481,742 $ 1,458,122
Total assets $ 1,327,629 $ 1,320,536
Total debt $ 1,144,002 $ 1,123,468
Total minority interests and
stockholders' equity $ 153,034 $ 164,801
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(Amounts in thousands)
(Unaudited)
2006 2005
-------- --------
Net income (loss) $ (429) $ 687
Unrealized income on interest rate swaps 844 1,174
-------- --------
Comprehensive income $ 415 $ 1,861
======== ========
SUN COMMUNITIES, INC.
ADDITIONAL INFORMATION
SAME PROPERTY RESULTS
---------------------
For 133 communities owned throughout both years (amounts in thousands):
THREE MONTHS ENDED
MARCH 31,
---------------------------------
2006 2005 % CHANGE
--------- --------- ---------
Total revenue $ 45,069 $ 43,358 3.9%
Total expense 12,355 12,328 0.2%
--------- ---------
Net operating income(2) $ 32,714 $ 31,030 5.4%
========= =========
Same property occupancy and average monthly rent information at March 31,
2006 and 2005:
2006 2005
--------- ---------
Total manufactured housing sites 41,785 41,688
Occupied manufactured housing sites 35,226 35,287
Manufactured housing occupancy % 84.3% 84.6%
Average monthly rent per site $ 360 $ 347
RENTAL PROGRAM SUMMARY
----------------------
THREE MONTHS ENDED
March 31,
-----------------------------
2006 2005
------------- -------------
(in thousands except for *)
Rental home revenue $ 3,329 $ 1,517
Site rent included in Income from
rental property 4,186 2,207
------------- -------------
Rental program revenue 7,515 3,724
Expenses
Payroll and commissions 475 427
Repairs and refurbishment 957 541
Taxes and insurance 594 281
Other 587 236
------------- -------------
Rental program operating and maintenance 2,613 1,485
------------- -------------
Net operating income (1) $ 4,902 $ 2,239
============= =============
Number of occupied rentals, end of period* 4,215 2,536
Cost of occupied rental homes $ 124,007 $ 70,033
Weighted average monthly rental rate* $ 653 $ 594
SOURCE Sun Communities, Inc.
-0- 04/28/2006
/CONTACT: Jeffrey P. Jorissen, Chief Financial Officer of Sun
Communities, Inc., +1-248- 208-2500 /
/Web site: http://www.suncommunities.com/
(SUI)