Sun Communities, Inc. · NYSE:SUI
Sun Communities — Investor Presentation (June 2018)
24 slides from Sun Communities's investor presentation, Jun 4, 2018
Slide 1: Investor Presentation June 2018
Lemon Wood – Ventura, CA INVESTOR PRESENTATION JUNE 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 Overview
SUN COMMUNITIES, INC. (NYSE: SUI) OVERVIEW Current Portfolio as of March 31, 2018 4,884 350 communities consisting of 226 473 1,595 475 more than 122,000 sites 548 26,137 1,768 across 29 states and 324 680 413 6,498 1,276 149 Wine Country RV Resort – Paso Robles, CA 2,904 2,472 2,150 3,567 2,917 Ont
Slide 4: 1Q 2018 Operating and Financial Highlights
1Q 2018 OPERATING AND FINANCIAL HIGHLIGHTS 1Q 2018 Financial Performance Quarter Ended March 31, 2018 2017 % Change Total Portfolio Revenue $257.9mm $234.4mm 10.0% Total Portfolio NOI $149.2mm $137.9mm 8.2% Same Community Revenue $185.1mm $175.2mm 5.7% Same Community NOI $130.0mm $123.5mm 5.3% EPS1
Slide 5: Powering Sun's Growth Engine
POWERING SUN’S GROWTH ENGINE . Sun is the premiere 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 O
Slide 6: 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 6.57% . Tenure of homes in our communities is 481 years 2.09% . Tenure of residents in our communities is approximately 121 years Resident Re-sales Re
Slide 7: Strong Same Community Performance
STRONG SAME COMMUNITY PERFORMANCE NOI Growth Percentage Manufactured Home Weighted Occupancy Percentage Average Monthly Rent per Site 15.5% INCREASE 9.1% 97.3%97.6% 96.6% 95.9% 7.0% 7.7% 6.75% - 2012-2017 93.2% 7.1% 7.25% $542 AVERAGE 6.9% $518 88.9% 5.9% 5.5% $498 86.7% $481 85.8% 84.3% $461 83.4%
Slide 8: 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 . No individual year or rolling 4-quarter period with negative same community NOI growth Same Community NOI G
Slide 9: Manufactured Housing vs. Multifamily
MANUFACTURED HOUSING VS. MULTIFAMILY . Sun’s manufactured homes provide nearly 15% more space at ~30% less cost per square foot Sun’s Manufactured Multifamily Homes VS. Housing PRICE 1 2 $0.75 per sq. ft. $1.05 per sq. ft. SQUARE FOOTAGE 1 2 1,250 sq. ft. 1,100 sq. ft. RENT 1 2 $933 per month
Slide 10: 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 11: 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 12: 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 Manufactured Home Shipments Recreational Vehicle Shipments (in thousands) (in thousands) 92.9 504.6 81.2 430.7 70.5 374.
Slide 13: 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 . 246 sites were delivered at 2 communities during the first quarter of 2018 . A 100-site expansion
Slide 14: 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 15: Expansion Case Study – Eagle Crest in Firestone, CO
EXPANSION CASE STUDY – EAGLE CREST IN FIRESTONE, CO Eagle Crest | Firestone, CO MH OCCUPANCY Sun has owned the property since 96.8% 94.3% 98.6% 99.8% 99.5% 98.9% 100.0% 100.0% December, 1998 76.0% 38.5% 36.1% 32.0% All-age MH community expanded in 2010 21.8% 26.3% 21.9% 11.2% 1.8% 0.2% Start of Expa
Slide 16: 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 17: Strategic Balance Sheet
STRATEGIC BALANCE SHEET . Balance sheet supports growth strategy . Sun’s annual mortgage maturities average 3.4% from 2018 - 2022 1 2 Net Debt / EBITDA Reduced Net Debt / TEV ~33% reduction leverage by 3.5x since 2011 turns since 2011 9.7x 61.5% 8.4x 7.3x 7.5x 7.2x 6.6x 50.4% 6.3x 6.2x 45.8% 34.8% 3
Slide 18: Appendix
APPENDIX RIVERSIDE CLUB GOLF & MARINA – RUSKIN, FL
Slide 19: 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% 70.0% 10.0% 60.0% 51.7% 50.0% 5.0% 40.0% 0.0% -0.8% 30.0% 36.0% -0.8% 20.0% (5.0%) 10.0% 2.7% 0.0% (10.0%) -8.1% (10.0%
Slide 20: 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 $222 Sun Communities $217 Manufactured
Slide 21: 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 22: Net Income to FFO Reconciliation
NET INCOME TO FFO RECONCILIATION (amounts in thousands except per share data) Three Months Ended March 31, Year Ended December 31, 2018 2017 2017 2016 2015 Net income attributable to Sun Communities, Inc. common stockholders $ 29,986 $ 21,104 $ 65,021 $ 17,369 $ 137,325 Adjustments: Depreciation and
Slide 23: Net Income to NOI Reconciliation
NET INCOME TO NOI RECONCILIATION (amounts in thousands) Three Months Ended March 31, Year Ended December 31, 2018 2017 2017 2016 2015 Net income attributable to Sun Communities, Inc., common stockholders $ 29,986 $ 21,104 $ 65,021 $ 17,369 $ 137,325 Other revenues (6,217) (5,525) (24,874) (21,150) (
Slide 24: Net Income to Recurring EBITDA Reconciliation
NET INCOME TO RECURRING EBITDA RECONCILIATION (amounts in thousands) Three Months Ended March 31, Year Ended December 31, 2018 2017 2017 2016 2015 Net income attributable to Sun Communities, Inc., common stockholders $ 29,986 $ 21,104 $ 65,021 $ 17,369 $ 137,325 Adjustments: Interest expense (net of