Sun Communities, Inc. · NYSE:SUI
Sun Communities — Investor Presentation (June 2020)
24 slides from Sun Communities's investor presentation, Jun 2, 2020
Slide 1: Investor Presentation June 2020
FOREST SPRINGS – GRASS VALLEY, CA ACQUIRED IN MAY 2020 INVESTOR PRESENTATION JUNE 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. (the “Company” or “Sun”) and from third-party sources indicated herein. Such third-party information has not been independently verified. The Company make
Slide 3: Company Highlights
COMPANY HIGHLIGHTS Leading owner and operator of manufactured housing (“MH”) and recreational vehicle (“RV”) communities Favorable demand drivers combined with supply constraints Consistent organic growth enhanced with embedded expansion opportunities SUNSET RIDGE – PORTLAND, MI Industry consolidato
Slide 4: Sun Communities, Inc. Overview
SUN COMMUNITIES, INC. OVERVIEW (NYSE: SUI) Current Portfolio as of May 31, 2020 425 communities consisting of over 142,000 sites across 33 states and Ontario, Canada Trailing Twelve Months Rental Revenue as of March 31, 2020 84% Annual Revenues 267 MH Communities RV - RV Communities 44% Annual 124 1
Slide 5: Business Update: Long-Term Tailwinds
BUSINESS UPDATE: LONG-TERM TAILWINDS . We provide a high quality and affordable housing and vacation option that we expect will demonstrate stability and resilience during a downturn and a stronger, earlier bounce-back through recovery . Continued strong MH rent collection in April and May – 99%+ on
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 95.8% Annual historical
Slide 7: Powering Sun's Growth Engine - External
POWERING SUN’S GROWTH ENGINE - EXTERNAL EXTERNAL LEVERS Acquisitions Development ~$900mm Targeting 3-4 investment in 49 communities from 2019 through 2020 YTD new development project starts / year 3.1x increase Target 7% – 9% in communities since year end 12/31/10 ground-up development IRRs1 High de
Slide 8: Financial Highlights
FINANCIAL HIGHLIGHTS Financial Performance Quarter Ended March 31, 2020 2019 % Change Total Revenue $310.3mm $287.3mm 8.0% Total NOI $179.8mm $164.4mm 9.4% Same Community Revenue $214.7mm $204.1mm 5.2% Same Community NOI $150.2mm $140.8mm 6.7% EPS1 $(0.17) $0.40 (142.5)% Core FFO / Share1,2 $1.22 $1
Slide 9: 2019-2020 Acquisition & Development Activity
2019-2020 ACQUISITION & DEVELOPMENT ACTIVITY Investment Activity Summary1 Acquisitions Ground-up & Redevelopments Expansions JELLYSTONE NATURAL BRIDGE – NATURAL BRIDGE, VA RIVER RUN RV RESORT – GRANBY, CO SHADOW WOOD VILLAGE – HUDSON, FL ACQUIRED IN FEBRUARY 2020 FIRST PHASE OPENED IN JULY 2019 2 OP
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 141 years . RVs stay in our resorts for approximately 111 years MH Resident Move-out Trends MAJESTIC OAKS – ZEPHYRHILLS, FL (3 Year Average)
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 ~200 bps and the apartment sector’s average by ~190 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 50% less cost per square foot Manufactured Homes in Other Rental Sun’s Communities1 Options2 PRICE $0.81 per sq. ft. $1.60 per sq. ft. SQUARE FOOTAGE 1,250 sq. ft. 1,000 sq. ft. RENT $1,009
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 $297,747 or $78,500 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 Communities and Sites . Since 2010, Sun has acquired c
Slide 16: Strategic Balance Sheet
STRATEGIC BALANCE SHEET . Balance sheet supports growth strategy . Sun’s annual mortgage maturities in the years 2020 - 2024 average 4.0% of total mortgage debt outstanding Mortgage Debt Outstanding Mortgage Debt 5-Year Maturity Ladder principal amounts in thousands amounts in thousands Quarter Ende
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 . In 2020, we will continue to enhanc
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% 120.0% 10.0% 0.0% 95.0% (5.0)% (10.0%) 72.6% (8.0)% 70.0% (20.0%) (20.8)% 45.0% (30.0%) 34.0% (40.0%) 20.0% (50.0%) (5.0%)
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 $258 Sun Communities $247 Manufactured Housing $235 Self-storage $172 M
Slide 20: Appendix
APPENDIX FRIENDLY VILLAGE OF MODESTO – MODESTO, CA
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) Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended March 31, 2020 as well as Press Releases and SEC Filings after March 31, 2020 for additional information. 22
Slide 23: 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 March 31, 2020 as well as Press Releases and SEC Filings after March 31, 2020 for additional information. 23
Slide 24: 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 March 31, 2020 as well as Press Releases and SEC Filings after March 31, 2020 for additional information. 24