Sun Communities, Inc. · NYSE:SUI
Sun Communities — Investor Presentation (March 2017)
24 slides from Sun Communities's investor presentation, Mar 1, 2017
Slide 1: Investor Presentation March 2017
INVESTOR PRESENTATION MARCH 2017
Slide 2: Forward-looking statements
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Slide 3: Current Portfolio as of December 31, 2016
341 communities consisting of approximately 117,000 sites across 29 states and Ontario 226 manufactured housing only communities 28 manufactured housing and recreational vehicle communities 87 recreational vehicle only communities 80,166 manufactured housing sites 37,210 recreational vehicle sites 2
Slide 4: Q4 & 2016 Year-End Highlights
Same-community NOI Growth 2016 - 7.1% Q4 2016 - 9.1% Rent Per Site $489/site for MH & RV as of December 2016 Home Sales 2016 - 3,172 homes sold, increase of 27.8% compared to YE 2015 Q4 2016 - 762 homes sold, increase of 3.3% compared to Q4 2015 Acquisitions 2016 - 111 MH & RV co
Slide 5: 2017 Guidance
2017 GUIDANCE Same-Community Portfolio Growth Other Considerations Number of Communities: 231 = Income from Real Property: 5.6% - 5.8% 2017 Full-Year FFO/share: $4.16 - $4.24 Seasonality of FFO: 1017 2017 3017 4Q17 25.5% 22.3% 28.3% 23.9% Property Operating Expenses: 3.4% - 3.6% * New Home Sales Vol
Slide 6: Building Blocks Position Sun for Sustainable Growth
Nee eee ee ee ee eee eee ESS BUILDING BLOCKS POSITION. SUN FOR SUSTAINABLE GROWTH Premier owner and operator of manufactured home (MH) and recreational vehicle (RV) communities Strong and cycle-tested record of operating, expanding and acquiring MH and RV communities dating back to 1975 ~” “ Top cus
Slide 7: Sun's Favorable Revenue Drivers
Jellystone Larkspur Larkspur, CO 7 Resident Resales Home Move-out 1 Source: Company information. Average since 2011. Sun’s Resident Move-out Trends SUN’S FAVORABLE REVENUE DRIVERS Cost to move a home ranges from $4K-10K, resulting in low move-out of homes Tenure of homes in our communities is ~4
Slide 8: Strong Same-Community Growth
Low-annual resident turnover results in stability of income and occupancy Strong and consistent rental growth creates a stable revenue stream that is recession-resistant Positive NOI growth for 16 consecutive years Occupancy gains are a function of Sun’s integrated platform, which includes:
Slide 9: Expansions Provide Strong Growth and Attractive Returns
Inventory of approximately 10,600 zoned and entitled sites available for expansion at 71 properties in 18 states and Ontario Approximately 2,200 sites are expected to be developed by the end of 2017 1,800 MH sites & 400 RV sites A 100 site expansion at a $35,000 cost per site, that is leased
Slide 10: Expansion Opportunities Supported by Rental Program
Rental Program All-in 5 Year Unleveraged IRR: $42,000 Initial investment in new home Weighted average monthly rental rate - $880 x 12 = $10,560 (3% annual increases) Monthly operating expenses1 + 5% vacancy factor $250 x 12 = $3,000 (2% annual increases) End of 5 year period sell the home an
Slide 11: Extracting Value from Acquisitions
STRATEGIC ACQUISITIONS PROFESSIONAL OPERATIONAL MANAGEMENT CALL CENTER / DIGITAL MARKETING OUTREACH INCREASING MARKET RENT ADDING VALUE WITH EXPANSIONS REPOSITIONING WITH ADDITIONAL CAPEX SKILLED EXPENSE MANAGEMENT EXTRACTING VALUE FROM ACQUISITIONS HOME SALES / RENTAL PROGRAM 10
Slide 12: Acquisition history 2011-2016
2011 2012 2013 2014 2015 2016 159 communities 54,811 sites • 17 MH and 1 RV community Kentland acquisition growing the portfolio 173 communities 63,697 sites • Further strengthened the MH portfolio with the 6 community Rudgate acquisition • Acquired Palm Creek, an irreplaceable age-restricted asset
Slide 13: Balance sheet supports growth strategy
Balance sheet supports growth strategy Reduced leverage through 2016 equity offerings Anticipates further delevering by mid-2017 through full-year EBITDA contribution from Carefree and earnings growth Source: Company Information. Refer to Sun Communities, Inc. Form 10-K and Supplemental for th
Slide 14: Mortgage Debt Maturity Profile
Sun’s annual mortgage maturities average 3.2% over the next 5 years WEIGHTED AVERAGE INTEREST RATE CMBS $492,294 5.18% Fannie Mae $1,046,803 4.26% Freddie Mac $391,765 3.86% Life Companies $888,705 3.87% Total $2,819,567 4.24% PRINCIPAL OUTSTANDING 1 $32.7 $26.2 $64.3 $58.1 $270.7 Riptide RV Resor
Slide 15: Strong Internal Growth
Source: Citi Investment research, September, 2016. “REITs”- includes an index of REITs across a variety of asset classes including self storage, mixed office, regional malls, shopping centers, multifamily, student housing, manufactured homes and specialty. Refer to information regarding non-GAAP fin
Slide 16: Strategy-Driven Outperformance
1-Year Total Return Percentage Source: SNL Financial as of December 31, 2016. 3-Year Total Return Percentage Sun has significantly outperformed major REIT and broader market indices over the last ten years STRATEGY-DRIVEN OUTPERFORMANCE 15 5-Year Total Return Percentage 10-Year Total Return Percen
Slide 17: Appendix
APPENDIX Palm Creek Golf & RV Resort Casa Grande, AZ Gulfstream Harbor Orlando, FL San Pedro RV Resort & Marina Islamorada, FL Adirondack Gateway RV Resort & Campground Gansevoort, NY
Slide 18: 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 multi-family in same-community NOI growth since 2000 Source: SNL Financial as of December 31, 2016. Refer to information reg
Slide 19: Manufactured Housing vs. Multi-Family
Sun’s Manufactured Homes VS. Sun’s manufactured homes provide nearly 15% more space at over 30% less cost per square foot RENT ~$860 1 per month Multi-Family Housing ~$1,1002 per month SQUARE FOOTAGE PRICE ~1,2501 sq. ft. ~1,1002 sq. ft. $0.69 per sq. ft. $1.00 per sq. ft. 1 Source: Company
Slide 20: Manufactured vs. single-family home costs
1 Source: Manufactured Housing Institute, Quick Facts: “Trends and Information About the Manufactured Housing Industry, 2016.” Represents average 2 bedroom household in major metropolitan areas Sun operates in as of December 2016. 2 Source: US Census Bureau - 2010-2014 American Community Survey 5-Ye
Slide 21: Non-GAAP financial measure definitions
Funds from operations (FFO) represents net (loss) income (computed in accordance with US Generally Accepted Accounting Principles (GAAP)) and gain (loss) on sales of depreciable property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after ad
Slide 22: Net Income to FFO Reconciliation
20 NET INCOME TO FFO RECONCILATION Reconciliation of Net (Loss) Income Attributable to Sun Communities, Inc. Common Stockholders to Funds from Operations (amounts in thousands except for per share data) 2016 2015 2016 2015 2014 Net (loss) income attributable to Sun Communities, Inc. common stockhold
Slide 23: NOI to Net Income Reconciliation
21 NOI TO NET INCOME RECONCILIATION Reconciliation of Net Operating Income to Net (Loss) Income Attributable to Sun Communities, Inc. Common Stockholders (amounts in thousands) 2016 2015 2016 2015 2014 Real Property NOI 107,256$ 81,129$ 403,337$ 335,567$ 232,478$ Rental Program NOI 20,863 20,427 85,
Slide 24: Recurring EBITDA to Net Income Reconciliation
22 RECURRING EBITDA TO NET INCOME RECONCILIATION Reconciliation of Recurring EBITDA to Net (Loss) Income Attributable to Sun Communities, Inc. Common Stockholders (amounts in thousands) 2016 2015 2016 2015 2014 Recurring EBITDA 105,850$ 83,580$ 414,228$ 347,873$ 239,912$ Interest 30,641 28,066 119,1