Sun Communities, Inc. · NYSE:SUI
Sun Communities — Q3 2023 Earnings Presentation
27 slides from Sun Communities's earnings presentation, Oct 26, 2023
Slide 1: Sun Communities Investor Presentation (NYSE: SUI)
WILLOW CROSSING – FORT LUPTON, CO SUN COMMUNITIES INVESTOR PRESENTATION (NYSE: SUI) NOVEMBER 2023
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This presentation has been prepared for informational purposes only from information supplied by Sun Communities, Inc., referred to herein as “we,” “our,” “Sun,” and “the Company,” and from third-party sources indicated herein. Such third-par
Slide 3: Sun Communities – Company Key Topics
SUN COMMUNITIES – COMPANY KEY TOPICS Key Topics Leading Owner / Operator of Manufactured Housing (“MH”) & Recreational Vehicle (“RV”) Communities, and Marinas Resilient Real Property Operations Drive Earnings FOREST SPRINGS – GRASS VALLEY, CA Compelling Supply-Demand Fundamentals & Best-in-Class Ass
Slide 4: Leading Owner / Operator of MH, RV and Marinas
LEADING OWNER / OPERATOR OF MH, RV AND MARINAS With ~180,200 MH and RV operational sites and ~48,000 wet slips and dry storage spaces, Sun is the largest publicly traded operator of MH, RV and Marinas MH RV Marina Largest publicly traded owner / 182 best-in-class RV communities Largest and m
Slide 5: Resilient Real Property Operations Drive Earnings
RESILIENT REAL PROPERTY OPERATIONS DRIVE EARNINGS NOI from real property operations is largest contributor to results Detail on Earnings Drivers (in mms) $1,400 87% $1,200 $1,000 $800 2020 $600 2021 $400 2022 $200 2023⁽¹⁾ 4% 5% 4% $0 MH, RV and Marina real North America home sales UK home sales NO
Slide 6: Robust Fundamentals Continue to Drive Performance
ROBUST FUNDAMENTALS CONTINUE TO DRIVE PERFORMANCE Steady, Organic Growth 5.8% same property NOI growth in 2022 and expecting 6.0% - 6.4% in 2023 driven by: Consistent annual rental rate increases that exceed expected inflationary cost pressures o Midpoints of 2023 average rental rate increases:
Slide 7: YTD23 Performance Review
RESILIENT REAL PROPERTY OPERATIONS DRIVE EARNINGS YTD23 Performance Review Reported Core FFO per Share of $2.57 for the quarter ended September 30, 2023, exceeded the high end of our guidance range • Total same property NOI growth of 6.7% meaningfully outperformed guidance • Updated 2023 Guidance to
Slide 8: 2023 Guidance Update
RESILIENT REAL PROPERTY OPERATIONS DRIVE EARNINGS 2023 Guidance Update Expected % Change Seasonality 1Q23 2Q23 3Q23 4Q23 FY 2022 in 2023 Actual Results Prior FY Oct. 25, 2023 Same Property NOI Same Property – Expected NOI (millions) Guidance Update MH 25% 25% 25% 25% MH NOI (288 properties) $569.2
Slide 9: Park Holidays Business Model Building Blocks
PARK HOLIDAYS BUSINESS MODEL BUILDING BLOCKS Real Property NOI Home Sales NOI Indicative Current Annual Existing resident turnover in Strong historical and expected income growth communities is largest driver of Home Sales Volume home sales volume o 10-year same property average rental rate incr
Slide 10: Compelling Supply-Demand Fundamentals
COMPELLING SUPPLY-DEMAND FUNDAMENTALS Manufactured Housing (MH) North America UK Supply Supply • Virtually no new supply has been added for years • Irreplaceable coastal ‘destination’ locations that are short drives from London and other urban locations US Inventory Growth by Property Type 6% • Nume
Slide 11: Compelling Supply-Demand Fundamentals: Resilient Demand
COMPELLING SUPPLY – DEMAND FUNDAMENTALS Resilient demand through the Global Financial Crisis Manufactured Housing (MH) – North America Residents Moved into MH Communities in Record Numbers US unemployment rate and SUI same property occupancy 12% 88% 9.6% SUI Same Property Occupancy 9.3% US Unemplo
Slide 12: Compelling Supply-Demand Fundamentals: RV
COMPELLING SUPPLY – DEMAND FUNDAMENTALS RV Continued Demand for Affordable Vacationing Annual Active Camping Households (in mms) Despite Declining RV Sales Growth in annual RV shipments and historical RV revenue growth 8% CAGR 57 58 46.2% 48 42 13.2% 37 39 39 4.8% 0.8% 6.6% 4.2% 5.4% 4.9% 35 32 -32.
Slide 13: Compelling Supply-Demand Fundamentals: Marinas
COMPELLING SUPPLY - DEMAND FUNDAMENTALS Marinas • Existing base of ~12 million registered boats within the • As boats become longer and wider, many marinas cannot keep U.S. and an estimated supply of 900K - 1 million leasable up with increasing vessel size wet slips and dry storage racks • Recent ex
Slide 14: Sun's Track Record of Growth
SUN’S TRACK RECORD OF GROWTH Consistent, cycle-tested internal growth Resilient demand, high barriers to entry, and Sun’s investment and operational platform have resulted in consistent, and cycle tested organic cash flow growth For more than 20 years, every individual year or rolling 4-quarte
Slide 15: Sun's Strong Track Record of Internal Growth
SUN’S STRONG TRACK RECORD OF INTERNAL GROWTH Multiple Levers Drive Resilient FFO and Cash Flow Growth Growth Levers Potential Annual Revenue Growth / Contribution - 5.0% weighted average rate increase for 2022 Contractual Rent Increases - Over 90% MH sites “market rent” or tied to CPI - ~95% MH Oc
Slide 16: Operating Efficiencies Support Same Property NOI Results
SUN’S TRACK RECORD OF GROWTH Operating efficiencies support strong same property NOI results Same property operating expense growth is now projected to be 5.2% – 5.4% in 2023, despite 80% increase in insurance expense for Sun’s MH/RV same property portfolio Lower than original expectations of
Slide 17: Investment Grade Balance Sheet
INVESTMENT GRADE BALANCE SHEET Upcoming Mortgage Maturities ($ in millions)(1) Credit Statistics % of Total Rate Type(1)(3) 2.1% 2.3% 0.9% 11.8% BBB 17.5% $658 variable rate $118 ⁽²⁾ $129 $51 2023 2024 2025 2026 82.5% fixed rate Baa3 Total Debt Outstanding ($ in millions)(1)(4) Encumbrance(1) As of
Slide 18: Robust ESG Initiatives
ROBUST ESG INITIATIVES Our board and executive leadership are committed to sustainable business practices that benefit all stakeholders including the broader communities in which we operate Current initiatives to advance our ESG platform include policy enhancement, establishing environmental tar
Slide 19: Appendix
APPENDIX SUN OUTDOORS ISLAMORADA – ISLAMORADA, FL
Slide 20: Renting – MH vs. Other Rental Options
COMPELLING SUPPLY – DEMAND FUNDAMENTALS Renting – MH vs. Other Rental Options Manufactured homes in Sun’s communities provide 25% more space at ~50% less cost per square foot Manufactured Homes in Other Rental Sun’s Communities Options(1) PRICE $1.03 per sq. ft. $2.05 per sq. ft. SQUARE FOOTAGE
Slide 21: Conversion of RV Transient-to-Annual Leases Generates Significant Uplift
CONVERSION OF RV TRANSIENT-TO-ANNUAL LEASES GENERATES SIGNIFICANT UPLIFT IN REVENUE Transient RV site conversions to annual leases have historically increased revenue per site by 40 - 60% for the first full year after conversion and increases our annual RV sites 2,257 transient to annual RV conv
Slide 22: Premier Owner / Operator of Marinas
PREMIER OWNER / OPERATOR OF MARINAS Service Offerings Increase Member Tenure Average Marina member tenure (in years) 135 ~38,900 ~9,100 9.4 8.8 Marinas in 24 States Wet Slips Dry Storage Spaces(1) 8.2 8.1 7.0 6.7 6.5 6.4 6.0 6.0 5.6 5.0 ~89% 81% 76% Marinas Marinas Located in Marinas Owned 2017 2018
Slide 23: Defined Non-GAAP Terms
DEFINED NON-GAAP TERMS Investors and analysts following the real estate industry use non-GAAP supplemental performance measures, including net operating income ("NOI"), earnings before interest, tax, depreciation and amortization ("EBITDA") and funds from operations ("FFO") to assess REITs. The Comp
Slide 24: Net Income to FFO Reconciliation
NET INCOME TO FFO RECONCILIATION Three Months Ended Nine Months Ended Year Ended September 30, September 30, September 30, September 30, December 31, December 31, December 31, (amounts in millions except per share data) 2023 2022 2023 2022 2022 2021 2020 Net Income Attributable to SUI Common Shareho
Slide 25: Net Income to NOI Reconciliation
NET INCOME TO NOI RECONCILIATION Three Months Ended Nine Months Ended Year Ended September 30, September 30, September 30, September 30, December 31, December 31, December 31, (amounts in millions) 2023 2022 2023 2022 2022 2021 2020 Net Income Attributable to SUI Common Shareholders $ 163.1 $ 162.6
Slide 26: Consolidated NOI by Segment
CONSOLIDATED NOI BY SEGMENT Consolidated Real Property NOI (amounts in millions) (1) (1) 3Q23 2Q23 1Q23 4Q22 3Q22 2Q22 1Q22 MH North America $153.5 $151.3 $150.6 $143.1 $141.6 $142.8 $143.5 UK 29.0 17.4 6.3 10.4 25.2 15.4 NA Total MH $182.5 $168.7 $156.9 $153.5 $166.8 $158.2 $143.5 RV 128.4 76.5 45.
Slide 27: Net Income to Recurring EBITDA Reconciliation
NET INCOME TO RECURRING EBITDA RECONCILIATION Three Months Ended Nine Months Ended Year Ended September 30, September 30, September 30, September 30, December 31, December 31, December 31, (amounts in millions) 2023 2022 2023 2022 2022 2021 2020 Net Income Attributable to SUI Common Shareholders $ 1