Sun Communities, Inc. · NYSE:SUI
Sun Communities — Investor Presentation (November 2018)
27 slides from Sun Communities's investor presentation, Nov 7, 2018
Slide 1: Investor Presentation November 2018
PALM CREEK – CASA GRANDE, AZ INVESTOR PRESENTATION NOVEMBER 2018
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation has been prepared for informational purposes only from information supplied by Sun Communities, Inc. (the “Company” or “Sun”) and from third- party sources indicated herein. Such third-party information has not been independently verified. The Company mak
Slide 3: Sun Communities, Inc. (NYSE: SUI) Overview
SUN COMMUNITIES, INC. (NYSE: SUI) OVERVIEW Current Portfolio as of September 30, 2018 4,888 370 communities 226 1,595 consisting of over 561 475 127,000 sites across 588 2,100 696 26,745 680 149 413 1,520 31 states and Ontario, 324 2,920 2,917 2,150 562 3,608 916 2,472 7,706 Canada 998 1,387 976 671
Slide 4: Operating and Financial Highlights
OPERATING AND FINANCIAL HIGHLIGHTS Financial Performance Quarter Ended September 30, YTD Ended September 30, Total Revenue $323.5mm $268.2mm 20.6% $852.9mm $740.5mm 15.2% Total NOI $175.8mm $147.0mm 19.6% $473.1mm $416.0mm 13.7% Same Community Revenue $198.9mm $187.1mm 6.3% $565.2mm $532.7mm 6.1% Sa
Slide 5: 2018 YTD Acquisitions
2018 YTD ACQUISITIONS . Acquired 20 communities and 6 land parcels in 15 states with ~4,900 developed sites and ~3,000 additional sites for expansion or development as of October 31, 2018 2 333 1 1 88 1 2 696, 194 3 332 1 474, 297 2 1 1 244, 30 4 866 2 1 231, 30 562, 50 1 258, 86 1,454 Total Acquisi
Slide 6: Investment in Australia's Ingenia Communities Group and Concurrent JV Agreement
INVESTMENT IN AUSTRALIA’S INGENIA COMMUNITIES GROUP AND CONCURRENT JV AGREEMENT . Sun invested ~$54mm for a 9.9% stake in Ingenia Communities Group (ASX: INA), a leading owner, operator and developer of senior manufactured housing communities and holiday resorts in Australia . Sun and Ingenia will a
Slide 7: Compelling Australian Manufactured Housing Estate Sector Opportunity
COMPELLING AUSTRALIAN MANUFACTURED HOUSING ESTATE SECTOR OPPORTUNITY Why Australia? Strong Underlying Demand Drivers Favorable demographic trends and supportive Outsized Core Customer Proportion of Core Customer market dynamics Population Growth Population Expanding Australians over 55 in age ar
Slide 8: Ingenia Communities Overview
INGENIA COMMUNITIES OVERVIEW About Ingenia Business Overview . Active and successful owner, manager and developer of Communities 61 a diversified portfolio of rental, lifestyle and holiday communities across Australia Income Producing Sites Over 7,000 . INA’s vision is to create Australia’s best lif
Slide 9: Powering Sun's Growth Engine
POWERING SUN’S GROWTH ENGINE . Sun is the premier owner and operator of manufactured home (“MH”) and recreational vehicle (“RV”) communities . Strong cycle-tested record of operating, expanding and acquiring MH and RV communities dating back to 1975 INTERNAL EXTERNAL Contractual Rent Increases MH Oc
Slide 10: Sun's Favorable Revenue Drivers
SUN’S FAVORABLE REVENUE DRIVERS 1 . The average cost to move a home ranges from Resident Move-out Trends $5K-$10K, resulting in low move-out of homes . 1 Tenure of homes in our communities is 48 years 6.7% . Tenure of residents in our communities is 2.1% approximately 121 years Resident Re-sales Res
Slide 11: Strong Same Community Performance
STRONG SAME COMMUNITY PERFORMANCE NOI Growth Percentage Manufactured Home Weighted Occupancy Percentage Average Monthly Rent per Site INCREASE 97.3%97.8% 96.6% 95.9% 9.1% $551 93.2% 7.0% 2012-2017 7.7% AVERAGE 7.1% $518 6.9% 6.9% 88.9% $498 5.9% 86.7% 5.5% $481 85.8% 84.3% $461 83.4% 82.1% $445 $437
Slide 12: Consistent and Cycle Tested Internal Growth
CONSISTENT AND CYCLE TESTED INTERNAL GROWTH . Sun’s average same community NOI growth has exceeded REIT industry average by ~180 bps and the apartment sector’s average by ~170 bps since 1998 . Every individual year or rolling 4-quarter period has positive same community NOI growth Same Community NOI
Slide 13: Manufactured Housing vs. Multifamily
MANUFACTURED HOUSING VS. MULTIFAMILY . Sun’s manufactured homes provide nearly 15% more space at ~30% less cost per square foot PRICE $0.75 per sq. ft. $1.06 per sq. ft SQUARE FOOTAGE 1,250 sq. ft. 1,100 sq. ft. RENT $940 per month $1,170 per month 1 Source: Company information. 2 Source: The
Slide 14: Manufactured Housing vs. Single Family
MANUFACTURED HOUSING VS. SINGLE FAMILY . Sun’s communities offer affordable options in attractive locations Manufactured Homes Single Family Homes Average cost of a new Manufactured Home is Average cost of Single Family is $286,814 or $70,600 or roughly 2 years median income roughly 8 years medi
Slide 15: The Increasing Need for Affordable Homeownership
THE INCREASING NEED FOR AFFORDABLE HOMEOWNERSHIP . Widening gap in income distribution trends has resulted in increased demand for affordable home ownership and rental properties . Percentage of the US population in the Lower Income bracket has increased by 4% to 29% of the total adult population ov
Slide 16: MH and RV Manufacturing Businesses Increasing Shipments
MH AND RV MANUFACTURING BUSINESSES INCREASING SHIPMENTS . The demand for affordable homeownership and vacationing is reflected in the increased output from MH and RV manufacturers . Current yearly MH shipments as a percentage of single family starts are significantly below long-term averages Manufac
Slide 17: Expansions Provide Strong Growth and Attractive Returns
EXPANSIONS PROVIDE STRONG GROWTH AND ATTRACTIVE RETURNS . At the start of 2018, inventory of ~7,900 zoned and entitled sites available for expansion at ~60 properties in 16 states and Ontario, Canada . 375 sites were delivered at 4 communities during the third quarter of 2018, bringing YTD expansion
Slide 18: Expansion Opportunities Supported by Rental Program
EXPANSION OPPORTUNITIES SUPPORTED BY RENTAL PROGRAM . Sun’s rental program is a key onboarding and conversion tool for our communities Rental Program All-in 5-Year Unlevered IRR . $42,000 initial investment in new home . Weighted average monthly rental rate ~$900 x 12 = $10,800 (3% annual increases)
Slide 19: Extracting Value from Strategic Acquisitions
EXTRACTING VALUE FROM STRATEGIC ACQUISITIONS REPOSITIONING PROFESSIONAL WITH ADDIT’L SKILLED OPERATIONAL CAPEX MANAGEMENT EXPENSE MANAGEMENT HOME SALES ENTAL & R ADDING ROGRAM P VALUE WITH EXPANSIONS INCREASING MARKET CALL RENT CENTER & DIGITAL MARKETING OUTREACH Year-end Communities and Sites . Sin
Slide 20: Strategic Balance Sheet
STRATEGIC BALANCE SHEET . Balance sheet supports growth strategy . Sun’s annual mortgage maturities average 3.0% from 2018 - 2022 1 2 Net Debt / EBITDA Reduced Net Debt / TEV ~38% reduction leverage by 4.3x since 2011 since 2011 61.5% 9.7x 8.4x 7.2x 7.3x 7.5x 50.4% 6.6x 6.3x 45.8% 5.4x 34.8% 34.0% 3
Slide 21: Appendix
APPENDIX Oceanside RV Resort – Coos Bay, OR (acquired June 13, 2018)
Slide 22: Strategy-Driven Outperformance
STRATEGY-DRIVEN OUTPERFORMANCE . Sun has significantly outperformed major REIT and broader market indices over the last ten years YTD Total Return 3-year Total Return 15.0% 80.0% 12% 70.0% 11% 65% 10.0% 60.0% 61% 50.0% 5.0% 2% 40.0% 30.0% 0.0% 25% 20.0% (5.0%) 10.0% 0.0% (10.0%) (10.0%) (20.0%) (15.
Slide 23: Consistent NOI Growth
CONSISTENT NOI GROWTH . Manufactured housing is one of the most recession-resistant sectors of the housing and commercial real estate sectors and has consistently outperformed multifamily in same community NOI growth since 2000 NOI Growth $230 $225 Self-storage $224 Sun Communities $219 Manufactured
Slide 24: Non-GAAP Terms Defined
NON-GAAP TERMS DEFINED Investors in and analysts following the real estate industry utilize funds from operations (“FFO”), net operating income (“NOI”), and earnings before interest, tax, depreciation and amortization (“EBITDA”) as supplemental performance measures. The Company believes that FFO, NO
Slide 25: Net Income to FFO Reconciliation
NET INCOME TO FFO RECONCILIATION (amounts in thousands except per share data) Three Months Ended September 30, Nine Months Ended September 30, Year Ended December 31, 2018 2017 2018 2017 2017 2016 2015 Net income attributable to Sun Communities, Inc. common stockholders $ 46,060 $ 24,115 $ 96,454 $
Slide 26: Net Income to NOI Reconciliation
NET INCOME TO NOI RECONCILIATION (amounts in thousands) Three Months Ended September 30, Nine Months Ended September 30, Year Ended December 31, 2018 2017 2018 2017 2017 2016 2015 Net income attributable to Sun Communities, Inc., common stockholders $ 46,060 $ 24,115 $ 96,454 $ 57,583 $ 65,021 $ 17,
Slide 27: Net Income to Recurring EBITDA Reconciliation
NET INCOME TO RECURRING EBITDA RECONCILIATION (amounts in thousands) Three Months Ended September 30, Nine Months Ended September 30, Year Ended December 31, 2018 2017 2018 2017 2017 2016 2015 Net income attributable to Sun Communities, Inc., common stockholders $ 46,060 $ 24,115 $ 96,454 $ 57,583 $
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