Sun Communities, Inc. · NYSE:SUI
Sun Communities — Investor Presentation (September 2018)
25 slides from Sun Communities's investor presentation, Sep 19, 2018
Slide 1: Investor Presentation September 2018
Moab Valley RV Resort – Moab, UT (acquired June 13, 2018) INVESTOR PRESENTATION SEPTEMBER 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. Overview
SUN COMMUNITIES, INC. (NYSE: SUI) OVERVIEW Current Portfolio as of June 30, 2018 4,885 367 communities 226 1,595 consisting of over 561 475 126,000 sites across 588 2,101 695 26,389 680 149 413 1,518 31 states and Ontario, 324 2,920 2,917 2,150 448 3,608 916 2,472 7,071 Canada 998 1,387 976 671 392
Slide 4: Operating and Financial Highlights
OPERATING AND FINANCIAL HIGHLIGHTS Financial Performance Quarter Ended June 30, YTD Ended June 30, Total Portfolio Revenue $271.4mm $237.9mm 14.1% $529.3mm $472.3mm 12.1% Total Portfolio NOI $148.1mm $131.2mm 12.9% $297.2mm $269.0mm 10.5% Same Community Revenue $181.2mm $170.4mm 6.3% $366.3mm $345.7
Slide 5: 2018 YTD Acquisitions
2018 YTD ACQUISITIONS . Acquired 20 communities and 3 land parcels in 14 states with ~4,500 developed sites and ~2,500 additional sites for expansion or development as of August 31, 2018 2 333 1 1 88 1 2 695, 311 3 333 1 474, 297 2 1 1 242, 30 4 865 1 1 231, 30 562, 50 1 1,144 258, 86 Acquisition Co
Slide 6: 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 7: Sun's Favorable Revenue Drivers
SUN’S FAVORABLE REVENUE DRIVERS 1 . The average cost to move a home ranges from Resident Move-out Trends $4K-$10K, resulting in low move-out of homes 6.6% . Tenure of homes in our communities is 481 years . Tenure of residents in our communities is 2.1% approximately 121 years Resident Re-sales Resi
Slide 8: Strong Same Community Performance
STRONG SAME COMMUNITY PERFORMANCE NOI Growth Percentage Manufactured Home Weighted Occupancy Percentage Average Monthly Rent per Site INCREASE 9.1% 97.3%97.8% 96.6% 95.9% 7.0% 7.7% 2012-2017 $545 93.2% AVERAGE 7.1% 6.9% 7.0% $518 88.9% 5.9% $498 5.5% 86.7% $481 85.8% 84.3% $461 83.4% 82.1% 3.6% $445
Slide 9: 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 10: 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 1 2 $0.74 per sq. ft. $1.06 per sq. ft SQUARE FOOTAGE 1 2 1,250 sq. ft. 1,100 sq. ft. RENT 1 2 $927 per month $1,170 per month 1 Source: Company information. 2
Slide 11: 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 12: 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 13: 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 14: 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 . 130 sites were delivered at 3 communities during the second quarter of 2018, bringing YTD expansio
Slide 15: 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 16: How Does a Transient RV Site Convert to an Annual RV Site?
HOW DOES A TRANSIENT RV SITE CONVERT TO AN ANNUAL RV SITE? . Transient RV site conversions to annual leases have historically increased revenue per site by 40% - 60% for the first full year after conversion . Recent example from Lake San Marino in Naples, FL Transient Site 40.4% $380 $4,560 Annual $
Slide 17: 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 18: Strategic Balance Sheet
STRATEGIC BALANCE SHEET . Balance sheet supports growth strategy . Sun’s annual mortgage maturities average 3.2% from 2018 - 2022 1 2 Net Debt / EBITDA Reduced Net Debt / TEV ~33% reduction leverage by 3.2x since 2011 since 2011 9.7x 61.5% 8.4x 7.2x 7.3x 7.5x 6.6x 6.3x 6.5x 50.4% 45.8% 34.8% 34.0% 3
Slide 19: Appendix
APPENDIX Oceanside RV Resort – Coos Bay, OR (acquired June 13, 2018)
Slide 20: 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% 75% 70.0% 10.0% 60.0% 7% 50.0% 5.0% 40% 3% 40.0% 0.0% 1% 30.0% 26% 20.0% (5.0%) 10.0% 0.0% (10.0%) (10.0%) (15.0%) (20.0%
Slide 21: 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 22: 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 23: Net Income to FFO Reconciliation
NET INCOME TO FFO RECONCILIATION (amounts in thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, Year Ended December 31, 2018 2017 2018 2017 2017 2016 2015 Net income attributable to Sun Communities, Inc. common stockholders $ 20,408 $ 12,364 $ 50,394 $ 33,468 $ 65
Slide 24: Net Income to NOI Reconciliation
NET INCOME TO NOI RECONCILIATION (amounts in thousands) Three Months Ended June 30, Six Months Ended June 30, Year Ended December 31, 2018 2017 2018 2017 2017 2016 2015 Net income attributable to Sun Communities, Inc., common stockholders $ 20,408 $ 12,364 $ 50,394 $ 33,468 $ 65,021 $ 17,369 $ 137,3
Slide 25: Net Income to Recurring EBITDA Reconciliation
NET INCOME TO RECURRING EBITDA RECONCILIATION (amounts in thousands) Three Months Ended June 30, Six Months Ended June 30, Year Ended December 31, 2018 2017 2018 2017 2017 2016 2015 Net income attributable to Sun Communities, Inc., common stockholders $ 20,408 $ 12,364 $ 50,394 $ 33,468 $ 65,021 $ 1
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