Sun Communities, Inc. · NYSE:SUI
Sun Communities — Investor Presentation (November 2020)
33 slides from Sun Communities's investor presentation, Nov 16, 2020
Slide 1: Investor Presentation November 2020
RIVER RUN RANCH – GRANBY, CO OPENED IN JULY 2019 INVESTOR PRESENTATION NOVEMBER 2020
Slide 2: Forward-Looking Statements
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,” and “Sun,” and from third-party sources indicated herein. Such third-party information has not been independently veri
Slide 3: Company Highlights
COMPANY HIGHLIGHTS Leading owner and operator of manufactured housing OCEAN BREEZE – MARATHON, FL (“MH”) communities, recreational vehicle (“RV”) resorts, and marinas Favorable demand drivers combined with supply constraints Consistent organic growth enhanced with embedded expansion opportunities SU
Slide 4: Sun Communities, Inc. Overview
SUN COMMUNITIES, INC. OVERVIEW (NYSE: SUI) Current Portfolio as of October 31, 2020 532 properties across 38 states and Ontario, Canada Indicative Annual Rental Revenue(2) as of December 31, 2019 RV 28% Marinas 15% Manufactured Housing 57% Property Count Hybrid MH & RV 12% MH Communities RV Resorts
Slide 5: Sun Continues to Outperform Operationally
SUN CONTINUES TO OUTPERFORM OPERATIONALLY… . Positive Operating Momentum Amidst the Pandemic ─ Total portfolio occupancy increased 50bps year-over-year to 97.2% at September 30, 2020 ─ MH and Annual RV rent collections for the third quarter were 97% and 98%, respectively ─ In 3Q, better than expecte
Slide 6: Powering Sun's Growth Engine - Internal
POWERING SUN’S GROWTH ENGINE - INTERNAL . Sun is the premier owner and operator of MH and RV communities . Strong cycle-tested record of operating, expanding and acquiring MH and RV communities dating back to 1975 INTERNAL LEVERS Contractual Rent Increases MH Occupancy Gains 96.4% Annual historical
Slide 7: Powering Sun's Growth Engine - External
POWERING SUN’S GROWTH ENGINE - EXTERNAL EXTERNAL LEVERS Acquisitions Development ~$2.3bn Targeting 2 - 4 investment in 11 properties and 99 marinas 2020 YTD new development project starts / year 3.9x increase Target 7% – 9% in properties since year end 2010 ground-up development IRRs(1) High degree
Slide 8: Financial Highlights
FINANCIAL HIGHLIGHTS Financial Performance Quarter Ended September 30, YTD Ended September 30, 2020 2019 % Change 2020 2019 % Change Total Revenue $400.5mm $362.4mm 10.5% $1,014.1mm $962.2mm 5.4% Total NOI $221.7mm $196.7mm 12.7% $573.8mm $532.4mm 7.8% Same Community Revenue $243.4mm $231.0mm 5.4% $
Slide 9: 2020 Acquisition & Development Activity
2020 ACQUISITION & DEVELOPMENT ACTIVITY Investment Activity Summary Acquisitions Ground-up & Redevelopments Expansions CHERRYWOODJELLYSTONE NATURAL – CLINTON, BRIDGE NY – NATURAL BRIDGE, VA RIVER RUN RANCHRV RESORT – GRANBY, – GRANBY, CO CO KING’SSHADOW COURT WOOD – VILLAGETRAVERSE – HUDSON, CITY, M
Slide 10: Sun's Favorable Revenue Drivers
SUN’S FAVORABLE REVENUE DRIVERS . Yearly home move-outs in Sun’s MH communities are less than 1% . Tenure of residents in Sun’s MH communities is approximately 15(1) years . RVs stay in our resorts for approximately 11(1) years SIESTA BAY – FT. MYERS, FL MH Resident Move-out Trends MAJESTIC OAKS – Z
Slide 11: 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 ~210 bps and the apartment sector’s average by ~200 bps since 1998 . Since 1998, every individual year or rolling 4-quarter period has had positive same community NOI growth Sa
Slide 12: Renting - MH vs. Other Rental Options
RENTING - MH VS. OTHER RENTAL OPTIONS . Manufactured homes in Sun’s communities provide 25% more space at ~53% less cost per square foot Manufactured Homes in Other Rental Sun’s Communities1 Options2 PRICE $0.83 per sq. ft. $1.76 per sq. ft. SQUARE FOOTAGE 1,250 sq. ft. 1,000 sq. ft. RENT $1,032
Slide 13: Homeownership - MH vs. Single Family
HOMEOWNERSHIP – MH 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 $299,415 or $81,900 or roughly 2 years median income roughly 7 years median
Slide 14: Expansions Provide Attractive Returns
EXPANSIONS PROVIDE ATTRACTIVE RETURNS . Investment in expansion sites boosts growth in highly accretive manner . Sun expands in communities and resorts with high occupancies and continued strong demand 12 – 24 months average lease-up for 100-site expansion $40k - $45k typical per site construction c
Slide 15: Maximizing Value from Strategic Acquisitions
MAXIMIZING VALUE FROM STRATEGIC ACQUISITIONS Professional Operational Management Adding Value with Expansions Home Sales & Rental Program Call Center & Digital Marketing Outreach Skilled Expense Management Repositioning with Additional Capex YTD Properties and Sites . Since 2010, Sun has acquired co
Slide 16: Strategic Balance Sheet
STRATEGIC BALANCE SHEET . Balance sheet supports growth strategy . No near-term debt maturities with 3.7% of total debt maturing per year through 2024 Mortgage Debt Outstanding Mortgage Debt 5-Year Maturity Ladder principal amounts in thousands amounts in thousands Quarter Ended September 30, 2020 F
Slide 17: Sun Communities' ESG Initiatives
SUN COMMUNITIES’ ESG INITIATIVES . Sun published its inaugural ESG report in late 2019 . We are committed to sustainable business practices to benefit all stakeholders: team members, residents and guests, shareholders and the broader communities where we operate . We will continue to enhance Sun’s s
Slide 18: Strategy-Driven Outperformance
STRATEGY-DRIVEN OUTPERFORMANCE . Sun has significantly outperformed major REIT and broader market indices over the last ten years 2020 YTD Total Return 3-year Total Return 20.0% 10.0% 120.0% 0.0% 2.8% 95.0% (10.0%) (6.7)% 70.0% 64.6% (20.0%) (19.3)% 45.0% 34.6% (30.0%) 20.0% (40.0%) (5.0%) (0.7)% (5
Slide 19: Consistent NOI Growth
CONSISTENT NOI GROWTH . Manufactured housing is one of the most recession-resistant sectors in real estate and has consistently outperformed multifamily and most sectors in same community NOI growth since 2000 Indexed NOI Growth $253 Sun Communities $242 Manufactured Housing $228 Self-storage $162 M
Slide 20: Marina & Safe Harbor Overview
MARINA & SAFE HARBOR OVERVIEW SAFE HARBOR CABRILLO ISLE – SAN DIEGO, CA
Slide 21: Attractive Industry Fundamentals
ATTRACTIVE INDUSTRY FUNDAMENTALS Supportive Fragmented Industry High Barriers to Entry Demographic Trends . Most marinas are owned by small 1 . The majority of boaters in the United Strict Regulatory Environment mom-and-pop operators States are 55 and older . Regulatory hurdles continue to . . Signi
Slide 22: Attractive Industry Fundamentals (Cont'd)
ATTRACTIVE INDUSTRY FUNDAMENTALS (CONT’D) . Fundamentals are strong as a result of the limited supply of new marinas, stable stock of boats and increasing vessel size that may require a marina for storage Marina Supply U.S. Marinas (in 000’s) Slow & Steady Decrease 4.3 4.0 3.8 '04 – '16 CAGR: (0.6%)
Slide 23: Safe Harbor Is the Best Marina Operator
SAFE HARBOR IS THE BEST MARINA OPERATOR . Safe Harbor is the largest and most diversified marina owner and operator in the United States 99 30,000 8,000 22 70% 77% 40,000 8.3 Owned Approximate Approximate States of Marinas Located of Marinas Owned Approximate Years Average (1) Marinas Wet Slips Dry
Slide 24: Experienced Team with Proven Track Record
EXPERIENCED TEAM WITH PROVEN TRACK RECORD . The Safe Harbor team joined Sun Communities and will continue to drive day-to-day operations and identify future marina investment opportunities Experienced Team of Industry Executives Supported by a Deep Bench Operationally-focused Built regional manageme
Slide 25: Marina Sector Pioneer and Consolidator
MARINA SECTOR PIONEER AND CONSOLIDATOR Safe Harbor Portfolio Evolution Same-Marina Performance 2015-2019 CAGR(1) Revenue NOI 3.9% 5.5% (2) Key Transactions(3) 1 2 3 4 5 6 Newport 7 Shipyard/N.E. Flagship CNL Brewer OPC Charleston Boatworks Tri-W 3Q 2015 2Q 2016 1Q 2017 1Q 2018 4Q 2018 4Q 2019 3Q 202
Slide 26: Illustrative Marina Revenue & Margin Detail
ILLUSTRATIVE MARINA REVENUE & MARGIN DETAIL . Approximately 90% of NOI from Safe Harbor comes from recurring sources like wet slip and dry storage rental and service. Recurring Revenue Ancillary Revenue Wet Slip Rental, Dry Storage, Commercial Leases & Service Fuel, F&B, Rental, Retail & Other % of
Slide 27: Resilient Revenue and NOI Performance
RESILIENT REVENUE AND NOI PERFORMANCE . Safe Harbor has minimized COVID-19 related NOI impact through careful cost management 2020 Same-Marina Quarterly Performance(1) Revenue Δ: 3.7% Δ: (8.9%) Δ: 0.1% $97 $98 $88 $80 $58 $60 1Q19 1Q20 2Q19 2Q20 3Q19 3Q20 NOI Δ: 6.2% Δ: 8.3% Δ: 10.8% $38 $42 $32 $35
Slide 28: Case Study - Old Port Cove Marina
CASE STUDY - OLD PORT COVE MARINA . Since acquiring Old Port Cove Marina for $65mm in 2018, total additional capital invested of $3.3mm and operational improvements made by Safe Harbor management have increased Old Port Cove Marina’s NOI by 58% Old Port Cove Pre-Acquisition Old Port Cove Today Marin
Slide 29: Appendix
APPENDIX EMERALD COAST RV RESORT– PANAMA CITY BEACH, FL
Slide 30: 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 31: Net Income to FFO Reconciliation
NET INCOME TO FFO RECONCILIATION (amounts in thousands except per share data) Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended September 30, 2020 as well as Press Releases and SEC Filings after September 30, 2020 for additional information.
Slide 32: Net Income to NOI Reconciliation
NET INCOME TO NOI RECONCILIATION (amounts in thousands) Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended September 30, 2020 as well as Press Releases and SEC Filings after September 30, 2020 for additional information. 32
Slide 33: Net Income to Recurring EBITDA Reconciliation
NET INCOME TO RECURRING EBITDA RECONCILIATION (amounts in thousands) Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended September 30, 2020 as well as Press Releases and SEC Filings after September 30, 2020 for additional information. 33
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