SUI - Earnings call transcript Q2 2024

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Communities Second Quarter 2024 Earnings Conference Call. At this time, management would like me to inform you that certain statements made during this call, which are not historical facts, may be deemed forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995.

Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. Factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's periodic filings with the SEC. The company undertakes no obligation to advise or update any forward-looking statements to reflect events or circumstances after the date of this release. Weiss, like President management Fernando Development. and Financial and I'd Gary us Castro-Caratini, that, of Officer; Chairman President Shiffman, Chief Aaron said to and with introduce today, Chief Corporate Having Strategy Vice Business Executive Executive Officer; Instructions] conference being reminder, recorded. this a As [Operator is I'll Shiffman, President call and Chief Gary the now to Executive turn over Chairman, Officer. Mr. Shiffman, you may begin.

Gary Shiffman

by North of growth XXXX quarter. report gains. the segment, thank of for of in same-property our FFO results and by in of discuss a NOI share our same-property joining and occupancy second generated to growth driven pleased second to X.X% rate X.X% Good America, and largest guidance. us rental you Housing, $X.XX Manufactured is in afternoon, line Core driven the X.X% and growth NOI per with solid quarter, U.K. Sun quarter was strong guidance,

decline Housing. In in we in continued We NOI decreased continue dynamics supply headwinds. are to embedded The driven benefit versus from RV, segment, but same-property demand demand Transient RV strong was by Manufactured seeing the X.X%. the weakness

transient annual Importantly, ongoing fewer for transient to to conversion guests. have strategy, site due nights we available

by were budget, not to partially to we revenue expenses, the revenue flat offset mitigate able fully While we're and cost even hold underperformance margins able RV did Transient managing to reductions impact.

and revenue Our strategic time focus property occupancy. annual from of improves increases to agreements NOI annual contribution on over increases transient the RV margins conversions,

with adjusted points as In for sites increasing approximately conversions increased June by to now RV, occupancy supported RV [ the number basis our XX, approximately of XXX occupancy ], XXXX XX%. we annual same-property RV XXXX. XX.X% and have gains of completed MH by conversions, These X,XXX strong

business the networks Safe our by expert in increased the amenities year. unmatched the X,XXX same-property prior X.X% site for and sites We're in increase quarter the strong. NOI Harbor compared guidance. Demand revenue-producing services premium results line in pleased as very with to achieved Marina growth, remains a X,XXX with our sites locations, Additionally, over

NOI of policy. concerns ended June arena expected than the is our FFO Buyer total regarding Harbor accounted XX% continues sales. earlier quarter headwinds NOI third is the XX, to increasing, While decreasing end and we transatlantic for U.K. utility indicates increasing forecast, are year-over-year quarter, second fundamentals interest primarily months focused seeing revenue sales surrounding months Overall, the we home before high in X quarter the fiscal the year, dissipating. was some in XXXX, our in related June. of and line Strategy strong the U.K. home outperformance U.K. real-property in remain driven sales lower-than-expected XXXX. guidance same-property contribution and England's remains XX% runoff to line expenses. a the first the range. through elections growth expectations, trends in up of On movement for NOI grew exceeding and originally X from during its real-property from basis, the business The over actively X.X% operating manage the U.K. last the NOI on superyacht Safe our expenses. U.K. slowing uncertainty experienced home range. were was within Strong Early with expectations the in U.K. second elections was May with by but

to leverage we of year-to-date sale last sold our are to net over terms asset $XXX down pay call our We pro forma used a proceeds properties, share we on earnings In reducing ratio strategic since total basis. other proceeds to debt pleased to bringing very X.Xx initiatives, million. X April, in

and on debt income, by strategic active recycling, We expense are revenue laser-focused contribution performance asset annual on maximizing the increasing reduction. management Sun's from

to generate and to convert more Holidays, reduced occupied annual, FFO is sites share attractive grow to transient the As base long-term at of positioned per Park RV we continue from leverage, growth. sites and

the team Fernando? thank and our hard Park for each handing Safe Sun, work, to their Fernando, Harbor, Holidays call and delivering acknowledge support Before member results. in to like dedication I'd over and continued

Fernando Castro-Caratini

million one disposing combined operational in to our end, used our exit delever on improving our were flow the loans, select key borrowings off mentioned, which Subsequent to credit going communities and remaining to to debt asset free allow million Operationally, to priorities provide ratio. X of forward. and disciplined net assets, proceeds debt by As million. markets for these is of communities $XX nonstrategic spend, We allocating remaining the senior were on facility. transactions encumbered to reduction. secured of nonrecurring reduce Gary closed $XXX paid efficiencies at noncore The we of cash closing, us quarter CapEx with a mortgage sale total $XXX our

During approximately debt is we property EBITDA to July for we XX-month solely remain improve the also June trailing net pro the focused Holidays to Park the one Adjusting ratio second $X.X debt X.Xx associated million. on metric. quarter, our repayment, continuing sold results XX forma for our and and this dispositions

with FFO offsetting were these accretive on Importantly, sold loss reduced assets. of expense properties income interest basis an from the

nonrecurring For expenditures approximately are our of year-over-year. XX% half property the down capital first XXXX,

year's Looking ahead, our guidance of are remainder from the target nonrecurring year. on levels. I'll the XXXX spend now CapEx walk by reducing approximately for we with last XX% through

guidance per of FFO with line $X.XX in our share core range. quarter was Second

net sales. North after range FFO We loss these prior and prior results and debt continued $X.XX income Total range XXXX from growth reaffirming lower for sales, share in core asset the using adjusted America, generated is revised share. from X.X% primarily properties quarter is to from for the guidance, XXXX at year. same-property of the we NOI real-property of segment X.X% that expense midpoint the for basis at expected is XX million $X.X in same-property exclude from guidance proceeds paying reflecting year to the growth have to at purposes per third income for points at the actual prior historical full asset full midpoint of maintaining been segment. X.X% establishing guidance NOI are a the down resultant over NOI for year $X.XX year. of X.X% this basis Interest the per Note narrowing properties. and range XXXX guidance year-to-date growth recent points lower we the the and and midpoint of $X.XX prior guidance XX the $X.XX, are strength forecast and of to X.X% this guidance. well, the the NOI A disposed to increase of during MH same-property midpoint represents and of performing

we full prior are our same-property guidance recent to NOI, For year incorporate reducing operating RV trends.

the we decreased expected. revenues X% decline underperforming transient RV quarter, second The XX%,

of achieve of pipeline We excited long-term we that are the is continue X.X% the prior points attractiveness Year-to-date, guidance basis range conversions. believe the adjusted annual X,XXX of is NOI we'll to transient site the annual full same-property X.X% Embedded converted negative X.X%, X-year and our to X,XXX in to same-property RV are below on target. about full revised and business, in guidance. positive to we have RV for year transient approximately our years. Our the year sites, in XX where the conversions of are pace midpoint revenue approximately CAGR coming provide

superyachts, to quarter results. by by earlier Safe prior transatlantic revenues than Our favorable migration continues migration as expenses some expected. manage assumes second far, match is thus Harbor Marina guidance this to occurring demonstrated

bears year new NOI midpoint lowering our XX by We our the vessel reflect for on same-property a increasing to fruit. to to at of X.X% with X.X% strategy expectations as growth are real-property full U.K. real-property points current that basis the continues range dynamics large NOI to movement. outperform

We midpoint expect this strong Overall, the performance in increasing second U.K. XXX the by basis points. with to expectations. the have home in of sales half are continue been and year line

year. some the results did trends to lowering July the reflecting of pipeline or midpoint decreasing midpoint, ahead on the XXX election, and at approximately of momentum, for home points, X.X% the on FFO by While G&A, focus continued midpoint compared by the sales $XXX,XXX increase of growth June $X of in in based show to positive the we the full current basis U.K. expected With sales the the expense and an guidance million remainder see prior expectations corporate at are for regards we contribution rationalization, softness reflecting year. are X.X%

our regarding supplemental our please see year details disclosures. full additional For guidance, updated

and reminder, markets This concludes capital capital activities, or a in through does it our may markets not but analyst includes XX dispositions and acquisitions, include included July dispositions be activity estimates. As guidance of prospective our acquisitions remarks. which impact the prepared research

now up open will questions. call Operator? We for the

Operator

Instructions] [Operator

from UBS. coming Our first question Michael from Goldsmith is

Michael Goldsmith

announced ] million to prior kind $XX of you another the did $XXX quarter. of in the million dispositions so or [ quarter,

line So of $XXX with which that million you brings program. your kind is in last capital recycling to

information some properties would to looking helpful. here? here of can So from do around rates provide you really more my you sold And dispositions the question if the is, be that cap are

Gary Shiffman

for definitely question, plan. is It on your Thanks Michael.

million program. As we shared in XXXX, we about $XXX disposition did

do on right market dispositions target several in the select we're right So now. We there. other have

We discussion over assets we MH had properties just say. actually sold remove I similar states the are this where in where, from And one the us that those. continue property we should type they X states, MH case, single or single X

we're we could offering operating go look they're as strategy not we properties fact help that market, the locations improve and other with these regard there. to to efficiencies they at in real as strategic the So And that efficiencies similar forward.

the asset nonstrategic appropriate we will to refer updates them I'd sales, time. So provide at opportunistic, and as

Operator

question next is Capital coming Markets. from Our RBC from Heffern Brad

Brad Heffern

you of if term? to assets an those are U.K. Can potentially the you're monetize loan assets any looking among in the collateral near give update and that on the

Fernando Castro-Caratini

were Brad, those part thank No, U.K. that loan potential assets dispositions. you the the not collateral for for question. those are of

call operations detailed and investor investor then, them those, team conference to the taken and since during has call see over excited Holidays continue our to Park we produce. the April and As we're conferences of in

Operator

from Your next coming Khanal Evercore question is Samir ISI. from

Samir Khanal

maybe business Gary, down on being basis XX can Marina this elaborate you points.

mentioned of talk this little bit. to confidence And enough what Maybe around kind at cut that basis point there's the a XX guess, I you say is a vessel that time? movements. gives You large

Gary Shiffman

do up. we continued for greater. certainly, in investor never long-term FFO near- at all Well, fact, in growth about from been We and very bottom remain business. as itself Safe our has Samir. And businesses, Harbor our positive asset build Thanks, Marinas class we the the demand

heading towards guidance our Fernando as really revised said in this large the than the Marinas [ movement transatlantic superyacht the these in is vessels adjustment is, just second forecasted. ], half and we earlier in Med see embedded So

did departure. pent-up have do at the Atlantic, we including back historical the forth and things just and do to return. how like there's the a boats These go earlier And boats numbers and there through look ] on demand These that, things the been Olympics take a over the with of across been has fair agenda this forecast in COVID. stationary. So amount but all have more think been we this [ Med, I

We September. might return other this them with have them built place that early will Cup the in on where America's taking year, fact We're expect the back in these we August, Med over in October. September, of probably the likely come late more to see side boats

Operator

question is from John coming Green Street. from Pawlowski Our next

John Pawlowski

is I expenses. on same-store the understand revenue the to going of in ground shift what's question decline business. in in meaningful My guide, U.K. in on want just the better terms meaningful a

So expected is some the tracking in just to operating revenue to expected love X%. and were grow real-property what's expenses on I roughly portfolio? towards from that color we X%, by now towards X% and happening grow tracking ground X%, started year, the it's

Gary Shiffman

operating But then XX specifics. U.K. England John, as overnight, feeling basis Fernando some start X% inflation of of add and I'll running and looking at at have we is better rates points. announced the out of Bank then cut we environment, about can are

our actually and macro these performance. you consumer for for which our real-property businesses, are trends, well in bode U.K. So are our if should operating positive will, seeing

is So home improving look on believe over best creating stakeholder in increasing big focus our real-property profit value. strategy We there. the picture, continued contribution things positively sales

it really I So real-property we focused over on you, And occupancy, remain contribution. for... to and increasing increasing turn Fernando

Fernando Castro-Caratini

$XX about to the expenses. for total John, contribution same-property U.K. 'XX remind everyone, revenue and I'll right, pool specifics the from relates as million. in And it was Its

can but a from we coming and seeing are have then a the the side. from dollar small large expense line So basis, both top a outperformance percentage amount change

be as to and forecast expected. continued at the lower half the On have of originally second, the allowed lower than what as originally higher going costs we us utility over drivers that we year. has are expense we'd utility meaningfully our the forecasted. And to of the have top than new then from take course as and applies the owners line, and to we're Those the perspective, rates guidance largest of well year outperformance, upward first this as seen an seeing

Operator

of Josh next Bank Our question coming is from America. from Dennerlein

Joshua Dennerlein

on your just I wanted the superyacht movement. up follow comment on to Gary,

think the of you assume come It October. back is Cup. superyachts -- said come that that after kind Or looks Americas the back? some the I to ends expect late in Americas just to that the misspeaking? You Cup that to you started boats Was of October when like

Gary Shiffman

Yes, to them $XXX,XXX month just was Americas that. that be related back I and due midpoint or late two coming to back usually just And making delay probably they the took into that September. a August, -- in the commenting in Cup, there'll we approximately account reduction at come

Joshua Dennerlein

I return? guess, November So assumes kind guidance of current like a

Gary Shiffman

Yes, correct.

Joshua Dennerlein

to clarify. wanted just Okay.

Operator

from from question next Eric is coming Your Wolfe Citi.

Eric Wolfe

interest real-property the NOI an expense accretive taken on around basis. You looks million. were down you million your about took by like is $XX it But mentioned the and down $X.X by that FFO dispositions done

just NOI other that else just dispositions? I whether was So there the real-property was in than curious something

Fernando Castro-Caratini

have Eric, as did slightly development are stabilization. below this that to as of there quarter course the our some acquisitions relates range, assets account movements at midpoint same-property to for in year in and -- our any was the relates are over so would it there's it the were Fernando. the that growth that which our of last is Yes, nonsame-property's the some second of or shifts does portfolio. of the the that shifts for We X.X%, of rest process done pool, any performance

Operator

Capital coming Kim from Markets. from Your BMO John is question next

John Kim

Park you're during mentioned interest on BOE Gary, how lead We I to increased FFO rate But demand cuts, quarter was going contributor wondering being imagine bigger going from the sales manage that for to sales. a to that's margins higher to forward? Holidays. the I you home going also noticed home that

part balance earnings to not forward? going demand going you of are home how big versus being sales So that a

Gary Shiffman

a that on great assets operating history a So I team with strong John, you, I think best-in-class the portfolio, share with would have we that XX-year there.

and So a margins we have of we put increases together will our of reduces in It's velocity -- that forecast. forecast occupancy.

more will there If balance. delicate see we be we So a margin. to to room reduce were continued have

more goal creating stickier margin, and on if We and real-property of will reduce our revenue, side. you revenue valuable the will,

Fernando Castro-Caratini

sales. the we're more owners, is we'll -- seeing real-property John continue are, business -- contribution that from I'll It feeds right? while is to And add to percentage we on it it reducing leading The plan that side. the getting home is outperformance and

real-property is So in larger the percentage the But continue a part to home on sales those result accelerate the here will continue is more in to the basis ultimately and be to the sales, manage in we'll It of velocity margins will on a business, just that reliable contributor than like it income side. U.S. manage U.S.

John Kim

the term buyers are lower higher maybe land a So to with on but that rents saying land rental, or rental? you're willing take longer price, on the

Fernando Castro-Caratini

the on owners Not rent paying side. accelerating, lead right? that ultimately Sales just real-property more to saying

many So up a with many our -- our purchasing it of vacation is home us the our end properties. of within sales guests that holiday funnel as

that that's the the real-property home is and sales -- side or the rental the between So of income business. interplay

Gary Shiffman

if residence, their you they're the fee, will, their fee So on or contracts. pay rent pitch annual but

So in making more reducing fill, expect John. and the we velocity margin of accelerate to occupancy attractive, these

Operator

from Keegan Your is coming Carl from Research. next Wolfe question

Keegan Carl

RV Transient balance on outlook it color the particular, could X, you on And July of just year? more performed? give for if some color your wondering in more Just the how

Gary Shiffman

predictability, forecasting you periods remain I'd to everybody the transient better, the of like bit are pacing to budgeting. annual. the on times, that. laser-focused Obviously, little over and just remind information For have and margins the long that Fernando, if of we share a everything converting

right transient approximately year We XX,XXX have now conversion average. about with a X,XXX sites

that annual, next So around as I'll years. stay we can lot And expect converting, we're the going. really to to X had over holiday more sticky in or a tenure we it's average just Fernando X let sites. And say and right revenue very years is how to convert XX,XXX the a better of to forecast respond pleased success much leading we've

Fernando Castro-Caratini

Sure.

year, second now in us X.X% occupancy, the performed have to that half by The Day pacing and Xth year. results a half the first for this is original So Keegan, is given muted expectations it, second the expected it's we revenue for of for have implies, and July of peak decline decline transient-focused decline comfort to more of year, about XX% closer transient that about results the at call which more the during the full resorts the the are revenue Labor for as half, because year. these saw one

July, of around -- over converted of When I'll up transient revenue. we just note, day, ] over the on the converted sites X% comparing XX% day. of you're That's of the We down annual. For Xth period. the right? to from we were and XX-month We've July Xth Xth just about [ X% for trailing July were

to it currently Labor being Day pacing down it for between relates X% X% revenue pacing, we're weekend. the on As to

Operator

is Our Fargo. coming Feldman from next question Wells from Jamie

James Feldman

we core when path down at Safe think Is margins, enjoy thinking you're do this was are it got, the there on with let's was that like leverage a the that asset is either something our spin-off there U.K. pipe? of lot plan businesses, Or the about lot whether whether through targets coming around discussed is, with guys sales? kind noncore level or bigger you to Board now NAREIT, NOI team sounds of now picture talk of may we've and get sell assets. at way what a to and be Harbor It things the maximize the spinoffs business. met stick the So to your or some a sales, with was the all potential else

Gary Shiffman

anything I in certainly in conversions share and indicated, all FFO to and contribution consequence. the say that real-property major we the of grow would and continue by over U.S., of and would platforms we U.K. Well, to contribution increase the Marina growth sales, our both in business home returns We as annual operate maximize transient FFO to growth, segment. Jamie,

And being said starting about we've I'd we're stakeholder they evaluate on across. When think I translate just that we'll all believe NOI tried laser fact into think see our where growth will plan we we is targeted to said, the options. continue growth. create The to I of last the what FFO we what shared see That just into translate be headwinds can we're before, of met with really without That our into what will strategic I that's we forward, said, gone looking get NOI better we're when you. 'XX. 'XX we're focused, the for year to value. a much And that at. how as growth. suggest And strategies into, we've benefit now,

nothing change would really suggest new So or I time. of recent that period

James Feldman

is think when the anything way for growth? about 'XX would options, potential But you that of trajectory in your there current get

Gary Shiffman

I we're is would 'XX. that and that say how nothing towards evaluating There working change

Operator

Bank. is Deutsche from Okusanya Omotayo Next coming question from

Omotayo Okusanya

see at And you more Just some industry that's are on RV. you going Transient guess for green think what to "stabilizing"? for some year. like business, look those the ultimately to signs? entire confident stick looking it make may And very that to I of what of about Again, kind the actually this you forecast when point, do start shoots it's feel of all when of signs you you're of been think kind the about to to at hard

Gary Shiffman

add out, Fernando. start you I'll can Well, and

shared the converting Fernando we in CAGR as certainly, transient X the I lot a segment about the growth over of Transient think about last benefit And the think things, we've annual. to years. shared X%

transient as very very, converting we move sites X,XXX today, a about The been as that's we're So forward. I said, favorable year.

benefit the go a add through cyclicality forward. And transient as that well-located for thing now. good And pre-Covid there. great to it. We're funnel can. operating I I very the transient we continue really the think pushing to to growth a levels, communities think and Manage good see expenses. over right having has for control RV great that very, period platform we'll probably The of is conversions. I'd variable We're and best-in-class, the headed of time expenses we business, that So some that the long RV is last a a

us growth annual get on portfolio the the helps and side the that annual So the of get transient side. in on margin things the profit we we

Fernando Castro-Caratini

CAGR term transient to impact the volatility going of reaffirm, just conversion that continues I minimize basis, in the to business our strategy we XX% right, right, years was ago over short-term near mentioned, I on the Transient approaching revenues as has side. X on continue our adjusted grown an But of site a side, pool. any will the on about revenue total They're in represented at to X% of minimize. that revenues now XX%. same-property

strategy our average fruit. continued hard to work a time. And continue for us on and with so we're to then And bearing for seeing We're family demand that is at of extend conversions, that is period tenure. X-year

near-term impact. all it So minimizing to part strategy of that is continue the

Operator

The Mason next coming Baird. Guell question is from from

Mason P. Guell

balance, the credit online. GBP there's like of down pay any line [ X there looks ] borrowings? plans to U.K. the Are Regarding billion over it

Fernando Castro-Caratini

strategy our or that on that immediate capital down. use is to cash borrowings with recycling, continue are pay of to credit free our short-term look facility. the That for cash opportunities flow We free any flow the it conversion is paydown recycling of we relates to would and as capital proceeds consistent

Operator

turn the floor back further closing over our Thank session. you. for comments. Gary I'd We question-and-answer the to like to reach any of end or

Gary Shiffman

their everybody to thank for look results. forward you. we third Thank sharing do quarter you we with Well, participation, and

Operator

today's teleconference. does you. That Thank conclude

today. wonderful thank You your for your have time, at We may disconnect lines this and you a day. participation

Sun Communities (SUI) 1 Aug 242024 Q2 Earnings call transcript