NEWS RELEASE
July 26, 2017
Southfield, Michigan, July 26, 2017 - Sun Communities, Inc. (NYSE: SUI) (the "Company"), a real estate investment trust ("REIT") that owns and operates, or has an interest in, manufactured housing ("MH") and recreational vehicle ("RV") communities, today reported its second quarter results.
Financial Results for the Quarter and Six Months Ended June 30, 2017
For the quarter ended June 30, 2017, total revenues increased $47.1 million, or 24.7 percent, to $237.9 million compared to $190.8 million for the same period in 2016. Net income attributable to common stockholders was $12.4 million, or $0.16 per diluted common share, as compared to net loss attributable to common stockholders of $7.8 million, or $0.12 net loss per diluted common share, for the same period in 2016.
For the six months ended June 30, 2017, total revenues increased $106.9 million, or 29.2 percent, to $472.3 million compared to $365.4 million for the same period in 2016. Net income attributable to common stockholders was $33.5 million, or $0.45 per diluted common share, as compared to net income attributable to common stockholders of $0.1 million, or $0.00 per diluted common share, for the same period in 2016.
Non-GAAP Financial Measures and Portfolio Performance
- Funds from Operations ("FFO")(1) excluding certain items was $0.96 per diluted share and OP unit ("Share") for the quarter ended June 30, 2017 as compared to $0.85 for the same period in 2016, an increase of 12.9 percent.
- Revenue producing sites increased by 752 sites for the quarter ended June 30, 2017, as compared to an increase of 501 sites in the same period in 2016.
- Home sales volumes increased by 6.8 percent for the quarter ended June 30, 2017 as compared to the same period in 2016.
- Same Community Net Operating Income ("NOI")(1) increased by 6.1 percent for the quarter ended June 30, 2017 as compared to the same period in 2016.
- Same Community occupancy increased 160 basis points to 97.2 percent, as compared to 95.6 percent(10) at June 30, 2016.
"Our second quarter performance demonstrates our ongoing commitment to deliver consistent operational results, while positioning ourselves for continued growth. Solid occupancy gains, stable rate increases and robust home sales all contributed to the quarter's performance," said Gary A. Shiffman, Chairman and Chief Executive Officer. "On the capital side, we further strengthened our balance sheet from both a debt and equity perspective. With a sizable expansion platform and an active acquisition pipeline, we expect to continue to drive attractive growth."
OPERATING HIGHLIGHTS
Community Occupancy
Total portfolio occupancy was 96.1 percent at both June 30, 2017 and June 30, 2016, including the impact of recently completed but vacant expansion sites. During the quarter ended June 30, 2017, revenue producing sites increased by 752 sites, as compared to 501 revenue producing sites gained during the second quarter of 2016.
Revenue producing sites increased by 1,439 for the six months ended June 30, 2017 as compared to 1,093 revenue producing sites gained during the six months ended June 30, 2016.
Same Community Results
For the 231 communities owned since January 1, 2016, NOI(1) for the quarter ended June 30, 2017 increased 6.1 percent over the same period in 2016, driven by a 6.2 percent increase in revenues and a 6.3 percent increase in operating expenses. Same community occupancy increased to 97.2 percent at June 30, 2017 from 95.6 percent(10) at June 30, 2016.
For the six months ended June 30, 2017, total revenues increased by 5.7 percent while total expenses increased by 3.8 percent, resulting in an increase to NOI(1) of 6.4 percent over the six months ended June 30, 2016.
Home Sales
Total home sales were 801 for the quarter ended June 30, 2017 as compared to 750 homes sold during the same period in 2016, a 6.8 percent increase.
Rental homes sales, which are included in total home sales, were 302 and 278 for the quarters ended June 30, 2017 and 2016, respectively.
During the six months ended June 30, 2017, 1,627 homes were sold compared to 1,515 for the same period ending 2016. Rental home sales, which are included in total home sales, were 542 and 572 for the six months ended June 30, 2017 and 2016, respectively.
BALANCE SHEET AND CAPITAL MARKETS ACTIVITY
Debt Transactions
During the quarter ended June 30, 2017, as previously announced, the Company amended and restated its credit agreement with Citibank, N.A. and certain other lenders. Pursuant to the amendments, the Company can borrow up to $550.0 million under a revolving loan and $100.0 million under a term loan (the "Facility"). The Facility has a four-year term, and replaced the Company's $450.0 million credit facility that was scheduled to mature in August 2019. The Facility bears interest at a floating rate based on the Eurodollar rate plus a margin that can range from 1.35 percent to 2.20 percent for the revolving loan and 1.30 percent to 2.15 percent for the term loan. The Company may borrow up to $100.0 million on the term loan on or before September 30, 2017.
Additionally, during the quarter, the Company completed a $77.0 million secured borrowing that bears interest at a fixed rate of 4.16 percent and has a 25-year term. The Company also repaid a $3.9 million mortgage loan that had an interest rate of 6.54 percent that was due to mature in August 2017.
As of June 30, 2017, the Company had approximately $3.0 billion of debt outstanding. The weighted average interest rate was 4.56 percent and the weighted average maturity was 8.7 years. The Company had $241.6 million of unrestricted cash on hand. At period-end the Company's net debt to trailing twelve month Recurring EBITDA(1) ratio was 6.0 times.
Equity Transactions
During the quarter ended June 30, 2017, the Company closed an underwritten registered public offering of 4,830,000 shares of common stock at a gross price of $86.00 per share. Proceeds from the offering were $408.9 million after deducting expenses related to the offering. The Company utilized proceeds from the offering to fully repay borrowings outstanding on its senior revolving credit facility, redeem certain preferred securities, and fund an acquisition.
The Company also sold 400,000 shares of common stock through its At-the-Market equity sales program ("ATM") at a weighted average price of $85.01 during the quarter ended June 30, 2017. Net proceeds from the sales were $33.6 million.
During the quarter ended June 30, 2017, the Company redeemed 438,448 shares of 6.50% Series A-4 Cumulative Convertible Preferred Stock and 200,000 Series A-4 preferred OP units from certain entities affiliated with the sellers under the Company's previous acquisition of the American Land Lease portfolio for total consideration of $24.7 million.
PORTFOLIO ACTIVITY
Acquisitions(2)
During the quarter ended June 30, 2017, as previously announced, the Company acquired an undeveloped parcel of land near the ocean in Myrtle Beach, South Carolina, for total consideration of $5.9 million. This land parcel has been successfully entitled and zoned to build a 775 site RV resort.
During the quarter, the Company acquired a 489 site RV resort located in Hillsdale, Illinois and a 458 site MH community in Superior Township, Michigan, for total consideration of approximately $25.0 million.
GUIDANCE 2017
The Company is updating its 2017 full year guidance of FFO(1) per Share to be in the range of $4.12 to $4.18. The revised guidance reflects the impacts of the May equity offering and ATM issuances of $(0.12) per Share, and year to date outperformance of the portfolio and contribution from completed acquisitions of $0.06 per Share. The Company anticipates FFO(1) per Share of $1.11 to $1.14 for the third quarter and $0.95 to $0.98 for the fourth quarter.
The Company affirms 2017 full year guidance of Same Community NOI(1) growth of 6.4 percent to 6.8 percent. Guidance does not include prospective acquisitions or capital markets activity.
FFO(1) per Share estimates assume certain non-core items are adjusted from FFO(1). The estimates and assumptions presented above represent a range of possible outcomes and may differ materially from actual results. The estimates and assumptions are forward looking based on the Company's current assessment of economic and market conditions, as well as other risks outlined below under the caption "Forward-Looking Statements."
EARNINGS CONFERENCE CALL
A conference call to discuss second quarter operating results will be held on Thursday, July 27, 2017 at 11:00 A.M. (ET). To participate, call toll-free 877-407-9039. Callers outside the U.S. or Canada can access the call at 201-689-8470. A replay will be available following the call through August 10, 2017 and can be accessed toll-free by calling 844-512-2921 or by calling 412-317-6671. The Conference ID number for the call and the replay is 13661890. The conference call will be available live on Sun Communities' website www.suncommunities.com. Replay will also be available on the website.
Sun Communities, Inc. is a REIT that, as of June 30, 2017, owned or had an interest in a portfolio of 344 communities comprising approximately 120,000 developed sites in 29 states and Ontario, Canada.
For more information about Sun Communities, Inc., please visit the website at www.suncommunities.com.
CONTACT
Please address all inquiries to our investor relations department at our website www.suncommunities.com, by phone (248) 208-2500, by email investorrelations@suncommunities.com or by mail Sun Communities, Inc. Attn: Investor Relations, 27777 Franklin Road, Ste. 200, Southfield, MI 48034.
Forward-Looking Statements
This press release contains various "forward-looking statements" within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the Company intends that such forward-looking statements will be subject to the safe harbors created thereby. Forward-looking statements can be identified by words such as "will," "may," "could," "expect," "anticipate," "believes," "intends," "should," "plans," "estimates," "approximate," "guidance," and similar expressions in this press release that predict or indicate future events and trends and that do not report historical matters.
These forward-looking statements reflect the Company's current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control. These risks, uncertainties, and other factors may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, the performance of recent acquisitions, the ability to integrate future acquisitions smoothly and efficiently, changes in market rates of interest, changes in foreign currency exchange rates, the ability of manufactured home buyers to obtain financing and the level of repossessions by manufactured home lenders. Further details of potential risks that may affect the Company are described in our periodic reports filed with the U.S. Securities and Exchange Commission, including in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2016.
The forward-looking statements contained in this press release speak only as of the date hereof and the Company expressly disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in the Company's assumptions, expectations of future events, or trends.
Investor Information
| RESEARCH COVERAGE | ||||||
| Firm | Analyst | Phone | ||||
| Bank of America Merrill Lynch | Joshua Dennerlein | (646) 855-1681 | joshua.dennerlein@baml.com | |||
| BMO Capital Markets | John Kim | (212) 885-4115 | johnp.kim@bmo.com | |||
| Citi Research | Michael Bilerman | (212) 816-1383 | michael.bilerman@citi.com | |||
| Nicholas Joseph | (212) 816-1909 | nicholas.joseph@citi.com | ||||
| Evercore ISI | Steve Sakwa | (212) 446-9462 | steve.sakwa@evercoreisi.com | |||
| Gwen Clark | (212) 446-5611 | gwen.clark@evercoreisi.com | ||||
| Green Street Advisors | Ryan Burke | (949) 640-8780 | rburke@greenstreetadvisors.com | |||
| RBC Capital Markets | Neil Malkin | (440) 715-2651 | neil.malkin@rbccm.com | |||
| Robert W. Baird & Co. | Drew Babin | (610) 238-6634 | dbabin@rwbaird.com | |||
| Wells Fargo | Todd Stender | (562) 637-1371 | todd.stender@wellsfargo.com | |||
| INQUIRIES | ||||||
| Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media, or any prospective investor. Please address all inquiries to our Investor Relations department. | ||||||
| At Our Website | www.suncommunities.com | |||||
| By Email | investorrelations@suncommunities.com | |||||
| By Phone | (248) 208-2500 | |||||
Portfolio Overview
(As of June 30, 2017)
Balance Sheets
(amounts in thousands)
| 6/30/2017 | 12/31/2016 | |||||||
| ASSETS: | ||||||||
| Land | $ | 1,066,792 | $ | 1,051,536 | ||||
| Land improvements and buildings | 4,934,110 | 4,825,043 | ||||||
| Rental homes and improvements | 507,362 | 489,633 | ||||||
| Furniture, fixtures and equipment | 137,546 | 130,127 | ||||||
| Investment property | 6,645,810 | 6,496,339 | ||||||
| Accumulated depreciation | (1,128,671 | ) | (1,026,858 | ) | ||||
| Investment property, net | 5,517,139 | 5,469,481 | ||||||
| Cash and cash equivalents | 241,646 | 8,164 | ||||||
| Inventory of manufactured homes | 25,582 | 21,632 | ||||||
| Notes and other receivables, net | 110,499 | 81,179 | ||||||
| Collateralized receivables, net (3) | 138,696 | 143,870 | ||||||
| Other assets, net | 145,151 | 146,450 | ||||||
| Total assets | $ | 6,178,713 | $ | 5,870,776 | ||||
| LIABILITIES: | ||||||||
| Mortgage loans payable | $ | 2,832,819 | $ | 2,819,567 | ||||
| Secured borrowings (3) | 139,496 | 144,477 | ||||||
| Preferred OP units - mandatorily redeemable | 45,903 | 45,903 | ||||||
| Lines of credit | 435 | 100,095 | ||||||
| Distributions payable | 56,283 | 51,896 | ||||||
| Other liabilities | 298,759 | 279,667 | ||||||
| Total liabilities | 3,373,695 | 3,441,605 | ||||||
| Series A-4 preferred stock | 32,414 | 50,227 | ||||||
| Series A-4 preferred OP units | 11,051 | 16,717 | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Series A preferred stock | 34 | 34 | ||||||
| Common stock | 790 | 732 | ||||||
| Additional paid-in capital | 3,780,599 | 3,321,441 | ||||||
| Accumulated other comprehensive loss | (981 | ) | (3,181 | ) | ||||
| Distributions in excess of accumulated earnings | (1,089,428 | ) | (1,023,415 | ) | ||||
| Total SUI stockholders' equity | 2,691,014 | 2,295,611 | ||||||
| Noncontrolling interests: | ||||||||
| Common and preferred OP units | 67,135 | 69,598 | ||||||
| Consolidated variable interest entities | 3,404 | (2,982 | ) | |||||
| Total noncontrolling interest | 70,539 | 66,616 | ||||||
| Total stockholders' equity | 2,761,553 | 2,362,227 | ||||||
| Total liabilities & stockholders' equity | $ | 6,178,713 | $ | 5,870,776 | ||||
Statements of Operations - Quarter to Date Comparison
(amounts in thousands, except per share amounts)
| Three Months Ended June 30, | ||||||||||||||
| 2017 | 2016 | Change | % Change | |||||||||||
| REVENUES | ||||||||||||||
| Income from real property (excluding transient revenue) | $ | 163,770 | $ | 129,117 | $ | 34,653 | 26.8 | % | ||||||
| Transient revenue | 15,691 | 10,884 | 4,807 | 44.2 | % | |||||||||
| Revenue from home sales | 30,859 | 26,039 | 4,820 | 18.5 | % | |||||||||
| Rental home revenue | 12,678 | 11,957 | 721 | 6.0 | % | |||||||||
| Ancillary revenues | 8,850 | 7,383 | 1,467 | 19.9 | % | |||||||||
| Interest | 5,043 | 4,672 | 371 | 7.9 | % | |||||||||
| Brokerage commissions and other revenues, net | 1,008 | 747 | 261 | 34.9 | % | |||||||||
| Total revenues | 237,899 | 190,799 | 47,100 | 24.7 | % | |||||||||
| EXPENSES | ||||||||||||||
| Property operating and maintenance | 53,446 | 37,067 | 16,379 | 44.2 | % | |||||||||
| Real estate taxes | 13,126 | 10,153 | 2,973 | 29.3 | % | |||||||||
| Cost of home sales | 22,022 | 18,684 | 3,338 | 17.9 | % | |||||||||
| Rental home operating and maintenance | 4,944 | 5,411 | (467 | ) | (8.6 | )% | ||||||||
| Ancillary expenses | 7,058 | 5,599 | 1,459 | 26.1 | % | |||||||||
| Home selling expenses | 2,990 | 2,460 | 530 | 21.5 | % | |||||||||
| General and administrative | 19,989 | 16,543 | 3,446 | 20.8 | % | |||||||||
| Transaction costs | 2,437 | 20,979 | (18,542 | ) | (88.4 | )% | ||||||||
| Depreciation and amortization | 62,721 | 49,670 | 13,051 | 26.3 | % | |||||||||
| Extinguishment of debt | 293 | - | 293 | N/A | ||||||||||
| Interest | 32,358 | 28,428 | 3,930 | 13.8 | % | |||||||||
| Interest on mandatorily redeemable preferred OP units | 787 | 787 | - | - | % | |||||||||
| Total expenses | 222,171 | 195,781 | 26,390 | 13.5 | % | |||||||||
| Income / (loss) before other items | 15,728 | (4,982 | ) | 20,710 | 415.7 | % | ||||||||
| Other income, net (4) | 875 | - | 875 | N/A | ||||||||||
| Current tax benefit / (expense) | 7 | (56 | ) | 63 | 112.5 | % | ||||||||
| Deferred tax benefit | 364 | - | 364 | N/A | ||||||||||
| Net income / (loss) | 16,974 | (5,038 | ) | 22,012 | 436.9 | % | ||||||||
| Less: Preferred return to preferred OP units | (1,196 | ) | (1,263 | ) | 67 | (5.3 | )% | |||||||
| Less: Amounts attributable to noncontrolling interests | (1,315 | ) | 695 | (2,010 | ) | (289.2 | )% | |||||||
| Less: Preferred stock distribution | (2,099 | ) | (2,197 | ) | 98 | (4.5 | )% | |||||||
| NET INCOME / (LOSS) ATTRIBUTABLE TO SUI | $ | 12,364 | $ | (7,803 | ) | $ | 20,167 | 258.5 | % | |||||
| Weighted average common shares outstanding: | ||||||||||||||
| Basic | 74,678 | 64,757 | 9,921 | 15.3 | % | |||||||||
| Diluted | 75,154 | 64,757 | 10,397 | 16.1 | % | |||||||||
| Earnings / (loss) per share: | ||||||||||||||
| Basic | $ | 0.16 | $ | (0.12 | ) | $ | 0.28 | 233.3 | % | |||||
| Diluted | $ | 0.16 | $ | (0.12 | ) | $ | 0.28 | 233.3 | % | |||||
Statements of Operations - Year to Date Comparison
(amounts in thousands, except per share amounts)
| Six Months Ended June 30, | ||||||||||||||
| 2017 | 2016 | Change | % Change | |||||||||||
| REVENUES: | ||||||||||||||
| Income from real property (excluding transient revenue) | $ | 325,646 | $ | 248,201 | $ | 77,445 | 31.2 | % | ||||||
| Transient revenue | 36,869 | 21,035 | 15,834 | 75.3 | % | |||||||||
| Revenue from home sales | 58,122 | 50,776 | 7,346 | 14.5 | % | |||||||||
| Rental home revenue | 25,017 | 23,665 | 1,352 | 5.7 | % | |||||||||
| Ancillary revenues | 15,069 | 11,996 | 3,073 | 25.6 | % | |||||||||
| Interest | 9,689 | 8,617 | 1,072 | 12.4 | % | |||||||||
| Brokerage commissions and other revenues, net | 1,887 | 1,153 | 734 | 63.7 | % | |||||||||
| Total revenues | 472,299 | 365,443 | 106,856 | 29.2 | % | |||||||||
| EXPENSES: | ||||||||||||||
| Property operating and maintenance | 100,612 | 68,268 | 32,344 | 47.4 | % | |||||||||
| Real estate taxes | 26,269 | 19,738 | 6,531 | 33.1 | % | |||||||||
| Cost of home sales | 42,905 | 36,868 | 6,037 | 16.4 | % | |||||||||
| Rental home operating and maintenance | 10,046 | 11,287 | (1,241 | ) | (11.0 | )% | ||||||||
| Ancillary expenses | 11,726 | 9,248 | 2,478 | 26.8 | % | |||||||||
| Home selling expenses | 6,101 | 4,597 | 1,504 | 32.7 | % | |||||||||
| General and administrative | 37,921 | 30,335 | 7,586 | 25.0 | % | |||||||||
| Transaction costs | 4,823 | 23,700 | (18,877 | ) | (79.7 | )% | ||||||||
| Depreciation and amortization | 125,487 | 98,082 | 27,405 | 27.9 | % | |||||||||
| Extinguishment of debt | 759 | - | 759 | N/A | ||||||||||
| Interest | 63,680 | 54,722 | 8,958 | 16.4 | % | |||||||||
| Interest on mandatorily redeemable preferred OP units | 1,571 | 1,574 | (3 | ) | (0.2 | )% | ||||||||
| Total expenses | 431,900 | 358,419 | 73,481 | 20.5 | % | |||||||||
| Income before other items | 40,399 | 7,024 | 33,375 | 475.2 | % | |||||||||
| Other income, net (4) | 1,627 | - | 1,627 | N/A | ||||||||||
| Current tax expense | (171 | ) | (284 | ) | 113 | 39.8 | % | |||||||
| Deferred tax benefit | 664 | - | 664 | N/A | ||||||||||
| Net income | 42,519 | 6,740 | 35,779 | 530.9 | % | |||||||||
| Less: Preferred return to preferred OP units | (2,370 | ) | (2,536 | ) | 166 | (6.6 | )% | |||||||
| Less: Amounts attributable to noncontrolling interests | (2,403 | ) | 419 | (2,822 | ) | (673.5 | )% | |||||||
| Less: Preferred stock distribution | (4,278 | ) | (4,551 | ) | 273 | (6.0 | )% | |||||||
| NET INCOME ATTRIBUTABLE TO SUI | $ | 33,468 | $ | 72 | 33,396 | 46,383.3 | % | |||||||
| Weighted average common shares outstanding: | ||||||||||||||
| Basic | 73,677 | 61,247 | 12,430 | 20.3 | % | |||||||||
| Diluted | 74,272 | 61,673 | 12,599 | 20.4 | % | |||||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | 0.45 | $ | 0.00 | $ | 0.45 | N/A | |||||||
| Diluted | $ | 0.45 | $ | 0.00 | $ | 0.45 | N/A | |||||||
Outstanding Securities and Capitalization
(in thousands except for *)
| Outstanding Securities - As of June 30, 2017 | |||||||||
| Number of Units/Shares Outstanding | Conversion Rate* | If Converted | Issuance Price per unit* | Annual Distribution Rate* | |||||
| Convertible Securities | |||||||||
| Series A-1 preferred OP units | 361 | 2.4390 | 880 | $100 | 6.0% | ||||
| Series A-3 preferred OP units | 40 | 1.8605 | 74 | $100 | 4.5% | ||||
| Series A-4 preferred OP units | 429 | 0.4444 | 191 | $25 | 6.5% | ||||
| Series C preferred OP units | 328 | 1.1100 | 364 | $100 | 4.5% | ||||
| Common OP units | 2,770 | 1.0000 | 2,770 | N/A | Mirrors common shares distributions | ||||
| Series A-4 cumulative convertible preferred stock | 1,085 | 0.4444 | 482 | $25 | 6.5% | ||||
| Non-Convertible Securities | |||||||||
| Preferred stock (SUI-PrA) | 3,400 | N/A | N/A | $25 | 7.125% | ||||
| Common shares | 78,987 | N/A | N/A | N/A | $2.68^ | ||||
| ^ Annual distribution is based on the last quarterly distribution annualized. | |||||||||
| Capitalization - As of June 30, 2017 | |||||||||||
| Equity | Shares | Share Price* | Total | ||||||||
| Common shares | 78,987 | $ | 87.69 | $ | 6,926,370 | ||||||
| Common OP units | 2,770 | $ | 87.69 | 242,901 | |||||||
| Subtotal | 81,757 | $ | 7,169,271 | ||||||||
| Series A-1 preferred OP units | 880 | $ | 87.69 | 77,167 | |||||||
| Series A-3 preferred OP units | 74 | $ | 87.69 | 6,489 | |||||||
| Series A-4 preferred OP units | 191 | $ | 87.69 | 16,749 | |||||||
| Series C preferred OP units | 364 | $ | 87.69 | 31,919 | |||||||
| Total diluted shares outstanding | 83,266 | $ | 7,301,595 | ||||||||
| Debt | |||||||||||
| Mortgage loans payable | $ | 2,832,819 | |||||||||
| Secured borrowings (3) | 139,496 | ||||||||||
| Preferred OP units - mandatorily redeemable | 45,903 | ||||||||||
| Lines of credit | 435 | ||||||||||
| Total Debt | $ | 3,018,653 | |||||||||
| Preferred | |||||||||||
| Perpetual preferred | 3,400 | $ | 25.00 | $ | 85,000 | ||||||
| A-4 preferred stock | 1,085 | $ | 25.00 | $ | 27,125 | ||||||
| Total Capitalization | $ | 10,432,373 | |||||||||
Reconciliations to Non-GAAP Financial Measures
Reconciliation of Net Income / (Loss) Attributable to Sun Communities, Inc. Common Stockholders to Funds from Operations
(amounts in thousands except for per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net income / (loss) attributable to Sun Communities, Inc. common stockholders | $ | 12,364 | (7,803 | ) | $ | 33,468 | $ | 72 | |||||||
| Adjustments: | |||||||||||||||
| Depreciation and amortization | 62,842 | 49,340 | 125,659 | 97,416 | |||||||||||
| Amounts attributable to noncontrolling interests | 1,202 | (779 | ) | 2,102 | (430 | ) | |||||||||
| Preferred return to preferred OP units | 586 | 618 | 1,172 | 1,243 | |||||||||||
| Preferred distribution to Series A-4 preferred stock | 560 | - | 1,225 | - | |||||||||||
| Gain on disposition of assets, net | (4,352 | ) | (3,903 | ) | (7,033 | ) | (7,558 | ) | |||||||
| FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) | 73,202 | 37,473 | 156,593 | 90,743 | |||||||||||
| Adjustments: | |||||||||||||||
| Transaction costs | 2,437 | 20,979 | 4,823 | 23,700 | |||||||||||
| Other acquisition related costs (5) | 1,525 | - | 2,369 | - | |||||||||||
| Extinguishment of debt | 293 | - | 759 | - | |||||||||||
| Other income, net (4) | (875 | ) | - | (1,627 | ) | - | |||||||||
| Debt premium write-off | (24 | ) | - | (438 | ) | - | |||||||||
| Deferred tax benefit | (364 | ) | - | (664 | ) | - | |||||||||
| FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items (1) (6) | $ | 76,194 | $ | 58,452 | $ | 161,815 | $ | 114,443 | |||||||
| Weighted average common shares outstanding - basic: | 74,678 | 64,757 | 73,677 | 61,247 | |||||||||||
| Add: | |||||||||||||||
| Common stock issuable upon conversion of stock options | 2 | 9 | 2 | 9 | |||||||||||
| Restricted stock | 474 | 444 | 593 | 417 | |||||||||||
| Common OP units | 2,757 | 2,863 | 2,756 | 2,863 | |||||||||||
| Common stock issuable upon conversion of Series A-1 preferred OP units | 882 | 933 | 887 | 939 | |||||||||||
| Common stock issuable upon conversion of Series A-3 preferred OP units | 75 | 75 | 75 | 75 | |||||||||||
| Common stock issuable upon conversion of Series A-4 preferred stock | 645 | - | 690 | - | |||||||||||
| Weighted average common shares outstanding - fully diluted | 79,513 | 69,081 | 78,680 | 65,550 | |||||||||||
| FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share - fully diluted | $ | 0.92 | $ | 0.54 | $ | 1.99 | $ | 1.38 | |||||||
| FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share excluding certain items - fully diluted | $ | 0.96 | $ | 0.85 | $ | 2.06 | $ | 1.75 | |||||||
Reconciliation of Net Income / (Loss) Attributable to Sun Communities, Inc. Common Stockholders to Recurring EBITDA
(amounts in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net income / (loss) attributable to Sun Communities, Inc., common stockholders | $ | 12,364 | $ | (7,803 | ) | $ | 33,468 | $ | 72 | ||||||
| Interest | 32,358 | 28,428 | 63,680 | 54,722 | |||||||||||
| Interest on mandatorily redeemable preferred OP units | 787 | 787 | 1,571 | 1,574 | |||||||||||
| Depreciation and amortization | 62,721 | 49,670 | 125,487 | 98,082 | |||||||||||
| Extinguishment of debt | 293 | - | 759 | - | |||||||||||
| Transaction costs | 2,437 | 20,979 | 4,823 | 23,700 | |||||||||||
| Other income, net (4) | (875 | ) | - | (1,627 | ) | - | |||||||||
| Current tax (benefit) / expense | (7 | ) | 56 | 171 | 284 | ||||||||||
| Deferred tax benefit | (364 | ) | - | (664 | ) | - | |||||||||
| Preferred return to preferred OP units | 1,196 | 1,263 | 2,370 | 2,536 | |||||||||||
| Amounts attributable to noncontrolling interests | 1,315 | (695 | ) | 2,403 | (419 | ) | |||||||||
| Preferred stock distributions | 2,099 | 2,197 | 4,278 | 4,551 | |||||||||||
| RECURRING EBITDA (1) | $ | 114,324 | $ | 94,882 | $ | 236,719 | $ | 185,102 | |||||||
Reconciliation of Net Income / (Loss) Attributable to Sun Communities, Inc. Common Stockholders to Net Operating Income
(amounts in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net income / (loss) attributable to Sun Communities, Inc., common stockholders: | $ | 12,364 | $ | (7,803 | ) | $ | 33,468 | $ | 72 | ||||||
| Other revenues | (6,051 | ) | (5,419 | ) | (11,576 | ) | (9,770 | ) | |||||||
| Home selling expenses | 2,990 | 2,460 | 6,101 | 4,597 | |||||||||||
| General and administrative | 19,989 | 16,543 | 37,921 | 30,335 | |||||||||||
| Transaction costs | 2,437 | 20,979 | 4,823 | 23,700 | |||||||||||
| Depreciation and amortization | 62,721 | 49,670 | 125,487 | 98,082 | |||||||||||
| Extinguishment of debt | 293 | - | 759 | - | |||||||||||
| Interest expense | 33,145 | 29,215 | 65,251 | 56,296 | |||||||||||
| Other income, net (4) | (875 | ) | - | (1,627 | ) | - | |||||||||
| Current tax (benefit) / expense | (7 | ) | 56 | 171 | 284 | ||||||||||
| Deferred tax benefit | (364 | ) | - | (664 | ) | - | |||||||||
| Preferred return to preferred OP units | 1,196 | 1,263 | 2,370 | 2,536 | |||||||||||
| Amounts attributable to noncontrolling interests | 1,315 | (695 | ) | 2,403 | (419 | ) | |||||||||
| Preferred stock distributions | 2,099 | 2,197 | 4,278 | 4,551 | |||||||||||
| NOI(1) / Gross Profit | $ | 131,252 | $ | 108,466 | $ | 269,165 | $ | 210,264 | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Real Property NOI (1) | $ | 112,889 | $ | 92,781 | $ | 235,634 | $ | 181,230 | |||||||
| Rental Program NOI (1) | 23,743 | 21,959 | 46,699 | 43,009 | |||||||||||
| Home Sales NOI(1) / Gross Profit | 8,837 | 7,355 | 15,217 | 13,908 | |||||||||||
| Ancillary NOI(1) / Gross Profit | 1,792 | 1,784 | 3,343 | 2,748 | |||||||||||
| Site rent from Rental Program (included in Real Property NOI) (1)(7) | (16,009 | ) | (15,413 | ) | (31,728 | ) | (30,631 | ) | |||||||
| NOI(1) / Gross profit | $ | 131,252 | $ | 108,466 | $ | 269,165 | $ | 210,264 | |||||||
Non-GAAP and Other Financial Measures
Financial Highlights
(amounts in thousands, except per share data)
| Quarter Ended | |||||||||||||||||||
| 6/30/2017 | 3/31/2017 | 12/31/2016 | 9/30/2016 | 6/30/2016 | |||||||||||||||
| OPERATING INFORMATION | |||||||||||||||||||
| Total revenues | $ | 237,899 | $ | 234,400 | $ | 218,634 | $ | 249,701 | $ | 190,799 | |||||||||
| Net income / (loss) | $ | 16,974 | $ | 25,545 | $ | 1,501 | $ | 23,230 | $ | (5,038 | ) | ||||||||
| Net income / (loss) attributable to common stockholders | $ | 12,364 | $ | 21,104 | $ | (1,600 | ) | $ | 18,897 | $ | (7,803 | ) | |||||||
| Earnings / (loss) per share basic | $ | 0.16 | $ | 0.29 | $ | (0.02 | ) | $ | 0.27 | $ | (0.12 | ) | |||||||
| Earnings / (loss) per share diluted | $ | 0.16 | $ | 0.29 | $ | (0.02 | ) | $ | 0.27 | $ | (0.12 | ) | |||||||
| Recurring EBITDA (1) | $ | 114,324 | $ | 122,395 | $ | 105,850 | $ | 123,276 | $ | 94,882 | |||||||||
| FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1) (6) | $ | 73,202 | $ | 83,391 | $ | 57,572 | $ | 78,023 | $ | 37,473 | |||||||||
| FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items(1) (6) | $ | 76,194 | $ | 85,621 | $ | 69,192 | $ | 83,181 | $ | 58,452 | |||||||||
| FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share - fully diluted | $ | 0.92 | $ | 1.07 | $ | 0.75 | $ | 1.06 | $ | 0.54 | |||||||||
| FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share excluding certain items - fully diluted | $ | 0.96 | $ | 1.10 | $ | 0.91 | $ | 1.13 | $ | 0.85 | |||||||||
| BALANCE SHEETS | |||||||||||||||||||
| Total assets | $ | 6,178,713 | $ | 5,902,447 | $ | 5,870,776 | $ | 5,904,706 | $ | 5,823,191 | |||||||||
| Total debt | $ | 3,018,653 | $ | 3,140,547 | $ | 3,110,042 | $ | 3,102,993 | $ | 3,340,329 | |||||||||
| Total liabilities | $ | 3,373,695 | $ | 3,478,132 | $ | 3,441,605 | $ | 3,429,743 | $ | 3,645,744 | |||||||||
Debt Analysis
(amounts in thousands)
| Quarter Ended | |||||||||||||||||||
| 6/30/2017 | 3/31/2017 | 12/31/2016 | 9/30/2016 | 6/30/2016 | |||||||||||||||
| DEBT OUTSTANDING | |||||||||||||||||||
| Mortgage loans payable | $ | 2,832,819 | $ | 2,774,645 | $ | 2,819,567 | $ | 2,854,831 | $ | 2,792,021 | |||||||||
| Secured borrowings (3) | 139,496 | 141,671 | 144,477 | 144,522 | 144,684 | ||||||||||||||
| Preferred OP units - mandatorily redeemable | 45,903 | 45,903 | 45,903 | 45,903 | 45,903 | ||||||||||||||
| Lines of credit (8) | 435 | 178,328 | 100,095 | 57,737 | 357,721 | ||||||||||||||
| Total debt | $ | 3,018,653 | $ | 3,140,547 | $ | 3,110,042 | $ | 3,102,993 | $ | 3,340,329 | |||||||||
| % FIXED/FLOATING | |||||||||||||||||||
| Fixed | 94.9% | 89.4% | 91.8% | 93.1% | 84.5% | ||||||||||||||
| Floating | 5.1% | 10.6% | 8.2% | 6.9% | 15.5% | ||||||||||||||
| Total | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | ||||||||||||||
| WEIGHTED AVERAGE INTEREST RATES | |||||||||||||||||||
| Mortgage loans payable | 4.26% | 4.26% | 4.24% | 4.30% | 4.38% | ||||||||||||||
| Preferred OP units - mandatorily redeemable | 6.87% | 6.87% | 6.87% | 6.87% | 6.87% | ||||||||||||||
| Lines of credit | -% | 2.52% | 2.14% | 1.93% | 1.89% | ||||||||||||||
| Average before Secured borrowings | 4.30% | 4.19% | 4.21% | 4.29% | 4.13% | ||||||||||||||
| Secured borrowings (3) | 9.99% | 10.01% | 10.03% | 10.06% | 10.09% | ||||||||||||||
| Total average | 4.56% | 4.45% | 4.48% | 4.56% | 4.39% | ||||||||||||||
| DEBT RATIOS | |||||||||||||||||||
| Net Debt / Recurring EBITDA(1) (TTM) | 6.0 | 7.0 | 7.5 | 7.7 | 9.1 | ||||||||||||||
| Net Debt / Enterprise Value | 27.2% | 32.8% | 33.8% | 32.8% | 36.6% | ||||||||||||||
| Net Debt + Preferred Stock / Enterprise Value | 28.4% | 34.2% | 35.2% | 34.2% | 38.0% | ||||||||||||||
| Net Debt / Gross Assets | 38.0% | 44.8% | 45.0% | 44.1% | 49.0% | ||||||||||||||
| COVERAGE RATIOS | |||||||||||||||||||
| Recurring EBITDA(1) (TTM) / Interest | 3.4 | 3.3 | 3.2 | 3.1 | 3.1 | ||||||||||||||
| Recurring EBITDA(1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution | 3.1 | 3.0 | 2.9 | 2.9 | 2.8 | ||||||||||||||
| MATURITIES/PRINCIPAL AMORTIZATION NEXT FIVE YEARS | 2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||||||
| Mortgage loans payable: | |||||||||||||||||||
| Maturities | $ | - | $ | 26,186 | $ | 64,314 | $ | 58,078 | $ | 270,680 | |||||||||
| Weighted average rate of maturities | - | % | 6.13 | % | 6.24 | % | 5.92 | % | 5.53 | % | |||||||||
| Principal amortization | 26,533 | 55,143 | 55,937 | 56,558 | 55,503 | ||||||||||||||
| Secured borrowings (3) | 2,763 | 5,923 | 6,440 | 7,028 | 7,550 | ||||||||||||||
| Preferred OP units - mandatorily redeemable | 3,670 | 7,570 | - | - | - | ||||||||||||||
| Lines of credit | - | 435 | - | - | - | ||||||||||||||
| Total | $ | 32,966 | $ | 95,257 | $ | 126,691 | $ | 121,664 | $ | 333,733 | |||||||||
Statements of Operations - Same Community
(amounts in thousands except for Other Information)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2017 | 2016 | Change | % Change | 2017 | 2016 | Change | % Change | ||||||||||||||||||||
| REVENUES: | |||||||||||||||||||||||||||
| Income from real property | $ | 131,008 | $ | 123,399 | $ | 7,609 | 6.2 | % | $ | 259,764 | $ | 245,842 | $ | 13,922 | 5.7 | % | |||||||||||
| PROPERTY OPERATING EXPENSES: | |||||||||||||||||||||||||||
| Payroll and benefits | 11,615 | 11,143 | 472 | 4.2 | % | 21,710 | 20,811 | 899 | 4.3 | % | |||||||||||||||||
| Legal, taxes & insurance | 1,564 | 1,418 | 146 | 10.3 | % | 2,748 | 2,717 | 31 | 1.1 | % | |||||||||||||||||
| Utilities | 7,192 | 6,577 | 615 | 9.4 | % | 13,944 | 13,261 | 683 | 5.2 | % | |||||||||||||||||
| Supplies and repair | 5,560 | 5,130 | 430 | 8.4 | % | 9,010 | 8,612 | 398 | 4.6 | % | |||||||||||||||||
| Other | 3,296 | 3,180 | 116 | 3.7 | % | 6,472 | 6,457 | 15 | 0.2 | % | |||||||||||||||||
| Real estate taxes | 9,767 | 9,224 | 543 | 5.9 | % | 19,473 | 18,795 | 678 | 3.6 | % | |||||||||||||||||
| Property operating expenses | 38,994 | 36,672 | 2,322 | 6.3 | % | 73,357 | 70,653 | 2,704 | 3.8 | % | |||||||||||||||||
| NET OPERATING INCOME (NOI)(1) | $ | 92,014 | $ | 86,727 | $ | 5,287 | 6.1 | % | $ | 186,407 | $ | 175,189 | $ | 11,218 | 6.4 | % | |||||||||||
| As of June 30, | |||||||||||||||
| 2017 | 2016 | Change | % Change | ||||||||||||
| OTHER INFORMATION | |||||||||||||||
| Number of properties | 231 | 231 | - | ||||||||||||
| Overall occupancy (9) | 97.2 | % | 95.6 | % | (10) | 1.6 | % | ||||||||
| Sites available for development | 6,193 | 6,919 | (726 | ) | (10.6 | )% | |||||||||
| Monthly base rent per site - MH | $ | 510 | $ | 493 | $ | 17 | 3.4 | % | (12) | ||||||
| Monthly base rent per site - RV (11) | $ | 448 | $ | 432 | $ | 16 | 3.6 | % | (12) | ||||||
| Monthly base rent per site - Total | $ | 502 | $ | 486 | $ | 16 | 3.4 | % | (12) | ||||||
Rental Program Summary
(amounts in thousands except for *)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2017 | 2016 | Change | % Change | 2017 | 2016 | Change | % Change | ||||||||||||||||||||||
| REVENUES: | |||||||||||||||||||||||||||||
| Rental home revenue | $ | 12,678 | $ | 11,957 | $ | 721 | 6.0 | % | $ | 25,017 | $ | 23,665 | $ | 1,352 | 5.7 | % | |||||||||||||
| Site rent included in Income from real property | 16,009 | 15,413 | 596 | 3.9 | % | 31,728 | 30,631 | 1,097 | 3.6 | % | |||||||||||||||||||
| Rental program revenue | 28,687 | 27,370 | 1,317 | 4.8 | % | 56,745 | 54,296 | 2,449 | 4.5 | % | |||||||||||||||||||
| EXPENSES: | |||||||||||||||||||||||||||||
| Commissions | 401 | 384 | 17 | 4.4 | % | 1,011 | 1,159 | (148 | ) | (12.8 | )% | ||||||||||||||||||
| Repairs and refurbishment | 2,363 | 3,273 | (910 | ) | (27.8 | )% | 4,644 | 5,939 | (1,295 | ) | (21.8 | )% | |||||||||||||||||
| Taxes and insurance | 1,506 | 1,167 | 339 | 29.1 | % | 2,943 | 2,732 | 211 | 7.7 | % | |||||||||||||||||||
| Marketing and other | 674 | 587 | 87 | 14.8 | % | 1,448 | 1,457 | (9 | ) | (0.6 | )% | ||||||||||||||||||
| Rental program operating and maintenance | 4,944 | 5,411 | (467 | ) | (8.6 | )% | 10,046 | 11,287 | (1,241 | ) | (11.0 | )% | |||||||||||||||||
| NET OPERATING INCOME (NOI) (1) | $ | 23,743 | $ | 21,959 | $ | 1,784 | 8.1 | % | $ | 46,699 | $ | 43,009 | $ | 3,690 | 8.6 | % | |||||||||||||
| Occupied rental home information as of June 30, 2017 and 2016: | |||||||||||||||
| Number of occupied rentals, end of period* | 11,083 | 10,997 | 86 | 0.8 | % | ||||||||||
| Investment in occupied rental homes, end of period | $ | 479,503 | $ | 453,869 | $ | 25,634 | 5.7 | % | |||||||
| Number of sold rental homes (YTD)* | 542 | 572 | (30 | ) | (5.2 | )% | |||||||||
| Weighted average monthly rental rate, end of period* | $ | 897 | $ | 868 | $ | 29 | 3.3 | % | |||||||
Home Sales Summary
(amounts in thousands except for *)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2017 | 2016 | Change | % Change | 2017 | 2016 | Change | % Change | ||||||||||||||||||||||
| New home sales | $ | 7,546 | $ | 5,612 | $ | 1,934 | 34.5 | % | $ | 14,429 | $ | 11,081 | $ | 3,348 | 30.2 | % | |||||||||||||
| Pre-owned home sales | 23,313 | 20,427 | 2,886 | 14.1 | % | 43,693 | 39,695 | 3,998 | 10.1 | % | |||||||||||||||||||
| Revenue from home sales | 30,859 | 26,039 | 4,820 | 18.5 | % | 58,122 | 50,776 | 7,346 | 14.5 | % | |||||||||||||||||||
| New home cost of sales | 6,497 | 4,773 | 1,724 | 36.1 | % | 12,345 | 9,617 | 2,728 | 28.4 | % | |||||||||||||||||||
| Pre-owned home cost of sales | 15,525 | 13,911 | 1,614 | 11.6 | % | 30,560 | 27,251 | 3,309 | 12.1 | % | |||||||||||||||||||
| Cost of home sales | 22,022 | 18,684 | 3,338 | 17.9 | % | 42,905 | 36,868 | 6,037 | 16.4 | % | |||||||||||||||||||
| NOI / Gross Profit (1) | $ | 8,837 | $ | 7,355 | $ | 1,482 | 20.2 | % | $ | 15,217 | $ | 13,908 | $ | 1,309 | 9.4 | % | |||||||||||||
| Gross profit - new homes | $ | 1,049 | $ | 839 | $ | 210 | 25.0 | % | $ | 2,084 | $ | 1,464 | $ | 620 | 42.4 | % | |||||||||||||
| Gross margin % - new homes | 13.9 | % | 15.0 | % | (1.1 | )% | 14.4 | % | 13.2 | % | 1.2 | % | |||||||||||||||||
| Average selling price - new homes* | $ | 93,161 | $ | 95,119 | $ | (1,958 | ) | (2.1 | )% | $ | 91,905 | $ | 88,648 | $ | 3,257 | 3.7 | % | ||||||||||||
| Gross profit - pre-owned homes | $ | 7,788 | $ | 6,516 | $ | 1,272 | 19.5 | % | $ | 13,133 | $ | 12,444 | $ | 689 | 5.5 | % | |||||||||||||
| Gross margin % - pre-owned homes | 33.4 | % | 31.9 | % | 1.5 | % | 30.1 | % | 31.3 | % | (1.2 | )% | |||||||||||||||||
| Average selling price - pre-owned homes* | $ | 32,379 | $ | 29,562 | $ | 2,817 | 9.5 | % | $ | 29,723 | $ | 28,558 | $ | 1,165 | 4.1 | % | |||||||||||||
| Home sales volume: | |||||||||||||||||||||||||||||
| New home sales* | 81 | 59 | 22 | 37.3 | % | 157 | 125 | 32 | 25.6 | % | |||||||||||||||||||
| Pre-owned home sales* | 720 | 691 | 29 | 4.2 | % | 1,470 | 1,390 | 80 | 5.8 | % | |||||||||||||||||||
| Total homes sold* | 801 | 750 | 51 | 6.8 | % | 1,627 | 1,515 | 112 | 7.4 | % | |||||||||||||||||||
Acquisitions Summary - Properties Acquired in 2017 and 2016
(amounts in thousands except for statistical data)
| Three Months Ended June 30, 2017 | Six Months Ended June 30, 2017 | |||||||
| REVENUES: | ||||||||
| Income from real property | $ | 42,455 | $ | 89,956 | ||||
| PROPERTY AND OPERATING EXPENSES: | ||||||||
| Payroll and benefits | 6,640 | 11,466 | ||||||
| Legal, taxes & insurance | 326 | 670 | ||||||
| Utilities | 6,649 | 13,137 | ||||||
| Supplies and repair | 1,752 | 3,001 | ||||||
| Other | 2,854 | 5,659 | ||||||
| Real estate taxes | 3,359 | 6,796 | ||||||
| Property operating expenses | 21,580 | 40,729 | ||||||
| NET OPERATING INCOME (NOI) (1) | $ | 20,875 | $ | 49,227 | ||||
| As of June 30, 2017 | ||||||||
| Other information: | ||||||||
| Number of properties | 113 | |||||||
| Occupied sites (13) | 21,728 | |||||||
| Developed sites (13) | 22,395 | |||||||
| Occupancy % (13) | 97.0 | % | ||||||
| Transient sites | 7,358 | |||||||
| Monthly base rent per site - MH | $ | 620 | ||||||
| Monthly base rent per site - RV (11) | $ | 404 | ||||||
| Monthly base rent per site - Total (11) | $ | 507 | ||||||
| Ancillary revenues, net (in thousands) | $ | 1,217 | ||||||
| Home sales: | ||||||||
| Gross profit from home sales (in thousands) | $ | 1,958 | ||||||
| New homes sales | 44 | |||||||
| Pre-owned homes sales | 172 | |||||||
| Occupied rental home information: | ||||||||
| Rental program NOI (1) (in thousands) | $ | 297 | ||||||
| Number of occupied rentals, end of period | 352 | |||||||
| Investment in occupied rental homes (in thousands) | $ | 8,163 | ||||||
| Weighted average monthly rental rate | $ | 991 | ||||||
| Property Summary | |||||||||||||||
| (includes MH and Annual/Seasonal RV's) | |||||||||||||||
| COMMUNITIES | 6/30/2017 | 3/31/2017 | 12/31/2016 | 9/30/2016 | 6/30/2016 | ||||||||||
| FLORIDA | |||||||||||||||
| Communities | 121 | 121 | 121 | 121 | 121 | ||||||||||
| Developed sites (13) | 36,661 | 36,533 | 36,326 | 36,050 | 36,119 | ||||||||||
| Occupied (13) | 35,479 | 35,257 | 35,021 | 34,745 | 34,720 | ||||||||||
| Occupancy % (13) | 96.8 | % | 96.5 | % | 96.4 | % | 96.4 | % | 96.1 | % | |||||
| Sites for development | 1,368 | 1,359 | 1,465 | 1,259 | 1,259 | ||||||||||
| MICHIGAN | |||||||||||||||
| Communities | 68 | 67 | 67 | 67 | 66 | ||||||||||
| Developed sites (13) | 25,496 | 25,024 | 24,512 | 24,388 | 24,387 | ||||||||||
| Occupied (13) | 23,924 | 23,443 | 23,248 | 23,218 | 23,198 | ||||||||||
| Occupancy % (13) | 93.8 | % | 93.7 | % | 94.8 | % | 95.2 | % | 95.1 | % | |||||
| Sites for development | 1,752 | 1,798 | 2,589 | 2,628 | 2,248 | ||||||||||
| TEXAS | |||||||||||||||
| Communities | 21 | 21 | 21 | 21 | 21 | ||||||||||
| Developed sites (13) | 6,312 | 6,292 | 6,186 | 6,088 | 6,071 | ||||||||||
| Occupied (13) | 6,021 | 5,943 | 5,862 | 5,774 | 5,771 | ||||||||||
| Occupancy % (13) | 95.4 | % | 94.5 | % | 94.8 | % | 94.8 | % | 95.1 | % | |||||
| Sites for development | 1,345 | 1,387 | 1,474 | 1,455 | 1,347 | ||||||||||
| CALIFORNIA | |||||||||||||||
| Communities | 23 | 23 | 22 | 22 | 22 | ||||||||||
| Developed sites (13) | 4,894 | 4,865 | 4,862 | 4,863 | 4,864 | ||||||||||
| Occupied (13) | 4,834 | 4,804 | 4,793 | 4,792 | 4,796 | ||||||||||
| Occupancy % (13) | 98.8 | % | 98.7 | % | 98.6 | % | 98.5 | % | 98.6 | % | |||||
| Sites for development | 367 | 411 | 332 | 332 | 332 | ||||||||||
| ARIZONA | |||||||||||||||
| Communities | 11 | 11 | 11 | 11 | 11 | ||||||||||
| Developed sites (13) | 3,589 | 3,582 | 3,565 | 3,567 | 3,532 | ||||||||||
| Occupied (13) | 3,383 | 3,370 | 3,338 | 3,305 | 3,281 | ||||||||||
| Occupancy % (13) | 94.3 | % | 94.1 | % | 93.6 | % | 92.7 | % | 92.9 | % | |||||
| Sites for development | 269 | 269 | 358 | 358 | 358 | ||||||||||
| ONTARIO, CANADA | |||||||||||||||
| Communities | 15 | 15 | 15 | 15 | 15 | ||||||||||
| Developed sites (13) | 3,564 | 3,451 | 3,368 | 3,453 | 3,375 | ||||||||||
| Occupied (13) | 3,564 | 3,451 | 3,368 | 3,453 | 3,375 | ||||||||||
| Occupancy % (13) | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||
| Sites for development | 1,628 | 1,628 | 1,599 | 2,029 | 2,029 | ||||||||||
| INDIANA | |||||||||||||||
| Communities | 11 | 11 | 11 | 11 | 11 | ||||||||||
| Developed sites (13) | 2,900 | 2,900 | 2,900 | 2,900 | 2,900 | ||||||||||
| Occupied (13) | 2,758 | 2,741 | 2,724 | 2,712 | 2,700 | ||||||||||
| Occupancy % (13) | 95.1 | % | 94.5 | % | 93.9 | % | 93.5 | % | 93.1 | % | |||||
| Sites for development | 330 | 330 | 316 | 316 | 316 | ||||||||||
| OHIO | |||||||||||||||
| Communities | 9 | 9 | 9 | 9 | 9 | ||||||||||
| Developed sites (13) | 2,735 | 2,719 | 2,715 | 2,719 | 2,718 | ||||||||||
| Occupied (13) | 2,643 | 2,623 | 2,595 | 2,602 | 2,616 | ||||||||||
| Occupancy % (13) | 96.6 | % | 96.5 | % | 95.6 | % | 95.7 | % | 96.2 | % | |||||
| Sites for development | 75 | 75 | - | - | - | ||||||||||
| COLORADO | |||||||||||||||
| Communities | 8 | 8 | 8 | 7 | 7 | ||||||||||
| Developed sites (13) | 2,335 | 2,335 | 2,335 | 2,335 | 2,335 | ||||||||||
| Occupied (13) | 2,326 | 2,329 | 2,325 | 2,323 | 2,320 | ||||||||||
| Occupancy % (13) | 99.6 | % | 99.7 | % | 99.6 | % | 99.5 | % | 99.4 | % | |||||
| Sites for development | 656 | 656 | 656 | 304 | 304 | ||||||||||
| OTHER STATES | |||||||||||||||
| Communities | 57 | 56 | 56 | 55 | 54 | ||||||||||
| Developed sites (13) | 14,891 | 14,567 | 14,313 | 14,415 | 14,337 | ||||||||||
| Occupied (13) | 14,439 | 14,130 | 13,919 | 13,991 | 13,912 | ||||||||||
| Occupancy % (13) | 97.0 | % | 97.0 | % | 97.3 | % | 97.1 | % | 97.0 | % | |||||
| Sites for development | 2,582 | 1,977 | 1,827 | 1,823 | 1,728 | ||||||||||
| TOTAL - PORTFOLIO | |||||||||||||||
| Communities | 344 | 342 | 341 | 339 | 337 | ||||||||||
| Developed sites (13) | 103,377 | 102,268 | 101,082 | 100,778 | 100,638 | ||||||||||
| Occupied (13) | 99,371 | 98,091 | 97,193 | 96,915 | 96,689 | ||||||||||
| Occupancy % (13) | 96.1 | % | 95.9 | % | 96.2 | % | 96.2 | % | 96.1 | % | |||||
| Sites for development | 10,372 | 9,890 | 10,616 | 10,504 | 9,921 | ||||||||||
| % Communities age restricted | 32.8 | % | 33.0 | % | 33.1 | % | 33.3 | % | 33.5 | % | |||||
| TRANSIENT RV PORTFOLIO SUMMARY | |||||||||||||||
| Location | |||||||||||||||
| Florida | 6,244 | 6,467 | 6,497 | 7,232 | 6,990 | ||||||||||
| Ontario, Canada | 1,314 | 1,451 | 1,500 | 1,485 | 1,657 | ||||||||||
| Texas | 1,403 | 1,412 | 1,407 | 1,446 | 1,455 | ||||||||||
| Arizona | 1,025 | 1,032 | 1,049 | 1,047 | 1,055 | ||||||||||
| New Jersey | 1,028 | 1,059 | 1,042 | 1,047 | 1,084 | ||||||||||
| New York | 630 | 588 | 830 | 484 | 483 | ||||||||||
| Maine | 533 | 543 | 555 | 556 | 571 | ||||||||||
| California | 808 | 840 | 513 | 478 | 518 | ||||||||||
| Indiana | 520 | 520 | 502 | 501 | 501 | ||||||||||
| Michigan | 260 | 210 | 204 | 203 | 126 | ||||||||||
| Ohio | 169 | 194 | 198 | 194 | 195 | ||||||||||
| Other locations | 2,253 | 1,966 | 1,997 | 1,801 | 1,864 | ||||||||||
| Total transient RV sites | 16,187 | 16,282 | 16,294 | 16,474 | 16,499 | ||||||||||
Capital Improvements, Development, and Acquisitions
(amounts in thousands except for *)
| Recurring | ||||||||||||||||||||||||
| Capital | Recurring | |||||||||||||||||||||||
| Expenditures | Capital | Lot | Expansion & | Revenue | ||||||||||||||||||||
| Average/Site* | Expenditures (14) | Modifications (15) | Acquisitions (16) | Development (17) | Producing (18) | |||||||||||||||||||
| YTD 2017 | $ | 94 | $ | 8,410 | $ | 10,703 | $ | 69,402 | $ | 32,541 | $ | 784 | ||||||||||||
| 2016 | $ | 211 | $ | 17,613 | $ | 19,040 | $ | 1,822,564 | $ | 47,958 | $ | 2,631 | ||||||||||||
| 2015 | $ | 230 | $ | 20,344 | $ | 13,961 | $ | 1,214,482 | $ | 28,660 | $ | 4,497 | ||||||||||||
Operating Statistics for Manufactured Homes and Annual/Seasonal RV's
| Resident | Net Leased | New Home | Pre-owned | Brokered | |||||||||||
| LOCATIONS | Move-outs | Sites (19) | Sales | Home Sales | Re-sales | ||||||||||
| Florida | 540 | 458 | 79 | 227 | 681 | ||||||||||
| Michigan | 265 | 386 | 16 | 651 | 60 | ||||||||||
| Texas | 123 | 159 | 15 | 183 | 17 | ||||||||||
| California | 12 | 11 | 2 | 10 | 8 | ||||||||||
| Arizona | 32 | 45 | 16 | 14 | 100 | ||||||||||
| Ontario, Canada | 88 | 196 | 8 | 20 | 79 | ||||||||||
| Indiana | 22 | 34 | 1 | 114 | 12 | ||||||||||
| Ohio | 55 | 48 | - | 57 | 3 | ||||||||||
| Colorado | 4 | 1 | 3 | 65 | 27 | ||||||||||
| Other locations | 373 | 101 | 17 | 129 | 79 | ||||||||||
| Six Months Ended June 30, 2017 | 1,514 | 1,439 | 157 | 1,470 | 1,066 | ||||||||||
| Resident | Net Leased | New Home | Pre-owned | Brokered | |||||||||||
| TOTAL FOR YEAR ENDED | Move-outs | Sites (19) | Sales | Home Sales | Re-sales | ||||||||||
| 2016 | 1,722 | 1,686 | 329 | 2,843 | 1,655 | ||||||||||
| 2015 | 1,344 | 1,905 | 273 | 2,210 | 1,244 | ||||||||||
| Resident | Resident | |||||
| PERCENTAGE TRENDS | Move-outs | Re-sales | ||||
| 2017 (TTM) | 2.1 | % | 6.3 | % | ||
| 2016 | 2.0 | % | 6.1 | % | ||
| 2015 | 2.0 | % | 5.9 | % | ||
Footnotes and Definitions
(1) Investors in and analysts following the real estate industry utilize funds from operations (FFO), net operating income (NOI), and recurring earnings before interest, tax, depreciation and amortization (Recurring EBITDA) as supplemental performance measures. We believe FFO, NOI, and Recurring EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation/amortization of real estate assets. NOI provides a measure of rental operations and does not factor in depreciation/amortization and non-property specific expenses such as general and administrative expenses. Recurring EBITDA, a metric calculated as EBITDA exclusive of certain nonrecurring items, provides a further tool to evaluate ability to incur and service debt and to fund dividends and other cash needs. Additionally, FFO, NOI, and Recurring EBITDA are commonly used in various ratios, pricing multiples/yields and returns and valuation calculations used to measure financial position, performance and value.
FFO is defined by the National Association of Real Estate Investment Trusts (NAREIT) as net income (loss) computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company's operating performance. Management generally considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared period over period, reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from net income (loss). Management believes that the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. FFO is computed in accordance with the Company's interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company. The Company also uses FFO excluding certain items, which excludes certain gain and loss items that management considers unrelated to the operational and financial performance of our core business. We believe that this provides investors with another financial measure of our operating performance that is more comparable when evaluating period over period results.
Because FFO excludes significant economic components of net income (loss) including depreciation and amortization, FFO should be used as an adjunct to net income (loss) and not as an alternative to net income (loss). The principal limitation of FFO is that it does not represent cash flow from operations as defined by GAAP and is a supplemental measure of performance that does not replace net income (loss) as a measure of performance or net cash provided by operating activities as a measure of liquidity. In addition, FFO is not intended as a measure of a REIT's ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO only provides investors with an additional performance measure that, when combined with measures computed in accordance with GAAP such as net income (loss), cash flow from operating activities, investing activities and financing activities, provide investors with an indication of our ability to service debt and to fund acquisitions and other expenditures. Other REITs may use different methods for calculating FFO, accordingly, our FFO may not be comparable to other REITs.
NOI is derived from revenues minus property operating expenses and real estate taxes. NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity; nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions. The Company believes that net income (loss) is the most directly comparable GAAP measurement to NOI. Because of the inclusion of items such as interest, depreciation, and amortization, the use of net income (loss) as a performance measure is limited as these items may not accurately reflect the actual change in market value of a property, in the case of depreciation and in the case of interest, may not necessarily be linked to the operating performance of a real estate asset, as it is often incurred at a parent company level and not at a property level. The Company believes that NOI is helpful to investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key management tool when evaluating performance and growth of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization interest expense and non-property specific expenses such as general and administrative expenses, all of which are significant costs, therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.
EBITDA is defined as NOI plus other income, plus (minus) equity earnings (loss) from affiliates, minus general and administrative expenses. EBITDA includes EBITDA from discontinued operations. The Company believes that net income (loss) is the most directly comparable GAAP measurement to EBITDA.
(2) The consideration amounts presented with respect to acquired communities represent the economic transaction and do not contemplate the fair value purchase accounting required by GAAP.
(3) This is a transferred asset transaction which has been classified as collateralized receivables and the cash received from this transaction has been classified as a secured borrowing. The interest income and interest expense accrue at the same rate/amount.
(4) Other income, net for the three months ended June 30, 2017, is comprised of a foreign currency translation gain of $2.2 million partially offset by contingent liability re-measurement of $0.8 million, hurricane related expenses of $0.3 million and other expenses of $0.2 million. For the six months ended June 30, 2017, Other income, net is comprised primarily of a foreign currency translation gain of $3.0 million, partially offset by contingent liability re-measurement of $1.0 million and hurricane related expenses of $0.4 million.
(5) These costs represent the first year expenses incurred to bring acquired properties up to the Company's operating standards, including items such as tree trimming and painting costs that do not meet the Company's capitalization policy.
(6) The effect of certain anti-dilutive convertible securities is excluded from these items.
(7) The renter's monthly payment includes the site rent and an amount attributable to the leasing of the home. The site rent is reflected in Real Property NOI. For purposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the Rental Program, and to assess the overall growth and performance of the Rental Program and financial impact on our operations.
(8) Lines of credit balance of $0.4 million at June 30, 2017 represents the Company's MH floor plan facility. There were no borrowings outstanding on the revolving loan or term loan as of June 30, 2017. As of June 30, 2017, the effective interest rate on the MH floor plan facility was 7.0 percent, however, the Company pays no interest if the floor plan balance is repaid within 60 days.
(9) Includes manufactured housing (MH) and annual/seasonal recreational vehicle (RV) sites, and excludes transient RV sites and recently completed but vacant expansion sites.
(10) Occupancy reflects current year gains from expansion sites and the conversion of transient RV guests to annual/seasonal RV contracts as vacant in 2016.
(11) Monthly base rent per site pertains to annual/seasonal RV sites and excludes transient RV sites.
(12) Calculated using actual results without rounding.
(13) Includes MH and annual/seasonal RV sites, and excludes transient RV sites.
(14) Includes capital expenditures necessary to maintain asset quality, including purchasing and replacing assets used to operate the community. These capital expenditures include items such as: major road, driveway, and pool improvements; clubhouse renovations; adding or replacing street lights; playground equipment; signage; maintenance facilities; manager housing and property vehicles. The minimum capitalized amount is five hundred dollars.
(15) Includes capital expenditures which improve the asset quality of the community. These costs are incurred when an existing older home moves out, and the site is prepared for a new home, more often than not, a multi-sectional home. These activities which are mandated by strict manufacturer's installation requirements and state building code include items such as new foundations, driveways, and utility upgrades.
(16) Acquisitions represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. Acquisitions for the six months ended June 30, 2017 also include $29.5 million of capital improvements identified during due diligence that are necessary to bring the community up to the Company's standards. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, they sometimes require 24 to 36 months after closing to complete.
(17) Expansion and development costs consist primarily of construction costs and costs necessary to complete home site improvements.
(18) Capital costs related to revenue generating activities, consist primarily of garages, sheds, and sub-metering of water, sewer and electricity. Revenue generating attractions at our RV resorts are also included here and, occasionally, a special capital project requested by residents and accompanied by an extra rental increase will be classified as revenue producing.
(19) Net leased sites do not include occupied sites acquired in that year.
Certain financial information has been revised to reflect reclassifications in prior periods to conform to current period presentation.
