Sun Communities, Inc. Reports 2021 Third Quarter Results

Southfield, MI, Oct. 25, 2021 (GLOBE NEWSWIRE) -- 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") communities, recreational vehicle ("RV") resorts and marinas, (collectively, the "properties"), today reported its third quarter results for 2021.

Financial Results for the Quarter and Nine Months Ended September 30, 2021

For the quarter ended September 30, 2021, total revenues increased $283.8 million, or 70.9 percent, to approximately $684.3 million compared to $400.5 million for the same period in 2020. Net income attributable to common stockholders increased $150.6 million, or 185.4 percent, to approximately $231.8 million, or $2.00 per diluted common share, compared to net income attributable to common stockholders of $81.2 million, or $0.83 per diluted common share, for the same period in 2020.

For the nine months ended September 30, 2021, total revenues increased $716.1 million, or 70.6 percent, to $1.7 billion compared to approximately $1.0 billion for the same period in 2020. Net income attributable to common stockholders increased $243.3 million, or 196.2 percent, to approximately $367.3 million, or $3.27 per diluted common share, compared to net income attributable to common stockholders of $124.0 million, or $1.29 per diluted common share, for the same period in 2020.

Non-GAAP Financial Measures and Portfolio Performance

• Core Funds from Operations ("Core FFO")⁽¹⁾ for the quarter ended September 30, 2021, was $2.11 per diluted share and OP unit ("Share") as compared to $1.60 in the corresponding period in 2020, a 31.9 percent increase.
  
  

• Same Community⁽²⁾ Net Operating Income ("NOI")⁽¹⁾ increased by 12.4 percent for the quarter ended September 30, 2021, as compared to the corresponding period in 2020.
  
  

• Home Sales Volume increased 63.7 percent to 1,162 homes for the quarter ended September 30, 2021, as compared to 710 homes in the same period in 2020.
  
  

• Acquisitions totaled $500.8 million during and subsequent to the quarter ended September 30, 2021, including 9 MH communities, 7 RV resorts and 6 marinas.
  
  

Gary Shiffman, Chief Executive Officer stated, "We are pleased with our third quarter results which highlight successful execution across all of our growth strategies. The RV segment continues to deliver strong results producing same community NOI growth of nearly 31 percent in the quarter, as we benefit from the demand for outdoor experiences coming from existing and new Sun customers. As the leading industry consolidator, we have completed $1.1 billion of acquisitions year-to-date, and believe our cycle tested ability to create value through acquisitions will continue to result in accretive growth. We have remained active in the capital markets to support this growth including completing our second bond offering of the year. Our talented team will continue to execute on opportunities across operations, acquisitions, expansions and ground-up developments, providing us with a confident outlook."

OPERATING HIGHLIGHTS

Portfolio Occupancy

Total MH and annual RV occupancy was 97.4 percent at September 30, 2021 as compared to 97.2 percent at September 30, 2020, an increase of 20 basis points.

During the quarter ended September 30, 2021, MH and annual RV revenue producing sites increased by 576 sites as compared to an increase of 776 sites during the quarter ended September 30, 2020.

During the nine months ended September 30, 2021, MH and annual RV revenue producing sites increased by 1,673 sites as compared to an increase of 1,927 sites during the nine months ended September 30, 2020.

Same Community⁽²⁾ Results

For the 403 MH and RV properties owned and operated by the Company since January 1, 2020, the following table reflects the percentage increases, in total and by segment, for the quarter and nine months ended September 30, 2021:

	Quarter Ended September 30, 2021
	Total Same Community			MH			RV
Revenue	12.8	%		5.2	%		24.2	%
Expense	13.7	%		12.7	%		14.8	%
NOI	12.4	%		2.6	%		30.6	%

	Nine Months Ended September 30, 2021
	Total Same Community			MH			RV
Revenue	12.9	%		5.8	%		27.4	%
Expense	14.6	%		10.2	%		20.0	%
NOI	12.1	%		4.3	%		32.8	%

Same Community adjusted occupancy⁽³⁾ increased to 98.9 percent at September 30, 2021 from 97.4 percent at September 30, 2020, an increase of 150 basis points.

Home Sales

The following table reflects the home sales volume increases for the quarter and nine months ended September 30, 2021:

	Quarter Ended												Nine Months Ended
	September 30, 2021			September 30, 2020			Change			% Change			September 30, 2021			September 30, 2020			Change			% Change
New home sales volume	207			155			52			33.5	%		583			414			169			40.8	%
Pre-owned home sales volume	955			555			400			72.1	%		2,572			1,670			902			54.0	%
Total home sales volume	1,162			710			452			63.7	%		3,155			2,084			1,071			51.4	%

Marina Results

Marina NOI was $64.5 million and $158.7 million for the quarter and nine months ended September 30, 2021, respectively. Refer to page 15 for additional information regarding the marina portfolio operating results.

PORTFOLIO ACTIVITY

Acquisitions and Dispositions

During and subsequent to the quarter ended September 30, 2021, the Company acquired the following communities, resorts and marinas:

Property Name		Property Type		Sites, Wet Slips and Dry Storage Spaces			Development Sites			State / Province		Total Purchase Price (in millions)				Month Acquired
Allen Harbor		Marina		165			—			RI		$	4.0			July
Cisco Grove Campground & RV		RV		18			407			CA		6.6				July
Four Leaf Portfolio(a)		MH		2,545			340			MI / IN		215.0				July
Harborage Yacht Club		Marina		300			—			FL		22.0				July
Zeman Portfolio(b)		RV		686			—			IL / NJ		15.2				July
Southern Leisure Resort		RV		496			—			FL		17.8				August
Sunroad Marina		Marina		617			—			CA		84.4				August
Lazy Lakes RV		RV		99			—			FL		9.8				August
Puerto del Rey		Marina		1,450			—			Puerto Rico		92.3				September
Stingray Point		Marina		219			—			VA		2.9				September
Detroit River		Marina		440			—			MI		8.8				September
Jetstream RV Resort		RV		202			—			TX		17.5				September
Subtotal				7,237			747					496.3
Acquisitions subsequent to quarter end
Beaver Brook Campground		RV		204			150			ME		4.5				October
Subtotal				204			150					4.5
Total acquisitions				7,441			897					$	500.8

^(a) Includes nine MH communities.

^(b) Includes two RV communities.

During and subsequent to the nine months ended September 30, 2021, the Company acquired 38 properties totaling 11,910 sites, wet slips and dry storage spaces and 897 sites for expansion for a total purchase price of $1.1 billion.

During the quarter ended September 30, 2021, the Company acquired three land parcels, which are located in Ft. Collins and Ft. Lupton, Colorado and Leighton, Michigan, approved for the development of over 500 MH sites, for total consideration of $7.7 million.

During the quarter ended September 30, 2021, the Company sold six MH communities located in Arizona, Illinois, Indiana and Missouri for $162.1 million.

Construction Activity

During the quarter ended September 30, 2021, the Company completed the construction of over 230 sites in two ground-up developments and over 90 expansion sites in two RV resorts.

During the nine months ended September 30, 2021, the Company completed the construction of over 580 sites in four ground-up developments and over 320 expansion sites in three MH communities and three RV resorts.

BALANCE SHEET, CAPITAL MARKETS ACTIVITY AND OTHER ITEMS

Debt

As of September 30, 2021, the Company had approximately $4.7 billion in debt outstanding. The weighted average interest rate was 3.3 percent and the weighted average maturity was 9.6 years. At September 30, 2021, the Company's net debt to trailing twelve month Recurring EBITDA⁽¹⁾ ratio was 4.9 times. The Company had $71.6 million of unrestricted cash on hand.

Senior Unsecured Notes

Subsequent to the quarter ended September 30, 2021, Sun Communities Operating Limited Partnership ("SCOLP"), the Company's operating partnership, issued $450.0 million of senior unsecured notes with an interest rate of 2.3 percent and a seven-year term, due November 1, 2028 (the "2028 Notes"), and $150.0 million of senior unsecured notes with an interest rate of 2.7 percent, with a 10-year term, due July 15, 2031 (the "2031 Notes"). The 2031 Notes are additional notes of the same series as the $600.0 million aggregate principal amount of 2.7 percent Senior Notes which are due July 15, 2031 that SCOLP issued on June 28, 2021. The net proceeds from the offering were approximately $595.5 million after deducting underwriters' discounts and estimated offering expenses.

Equity Transaction

At the Market Offering

In September 2021, the Company completed the sale of 107,400 forward shares of common stock for $21.4 million under the terms of its At the Market Offering Sales Agreement. The average price before underwriting discounts and commissions was $199.42 per share. The Company expects to settle the forward shares by September 2022.

2021 GUIDANCE

The Company is providing revised or initial 2021 guidance for the following metrics:

			Previous Range		Revised Range
			FY 2021E		FY 2021E		4Q 2021E
Basic earnings per share			$2.24 - $2.36		$3.42 - $3.48		$0.15 - $0.21
Core FFO(1) per fully diluted Share			$6.25 - $6.37		$6.44 - $6.50		$1.24 - $1.30

Basic earnings per share and Core FFO⁽¹⁾ per fully diluted share and calculated independently for each quarter; as a result, the sum of the quarters may differ from the annual calculation. Full year 2021 guidance is based on the annual calculation.

			Previous Range		Revised Range
			FY 2021E		FY 2021E		4Q 2021E
Same Community NOI(1) growth			9.9% - 10.7%		10.9% - 11.1%		7.2% - 8.0%

Guidance estimates include acquisitions completed through the date of this release and exclude any prospective acquisitions or capital markets activity.

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 "Cautionary Statement Regarding Forward-Looking Statements."

EARNINGS CONFERENCE CALL

A conference call to discuss third quarter results will be held on Tuesday, October 26, 2021 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 November 9, 2021 and can be accessed toll-free by calling (844) 512-2921 or (412) 317-6671. The Conference ID number for the call and the replay is 13722742. The conference call will be available live on Sun Communities' website located at www.suncommunities.com. The replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of September 30, 2021, owned, operated, or had an interest in a portfolio of 584 developed MH, RV and marina properties comprising nearly 155,900 developed sites and nearly 44,900 wet slips and dry storage spaces in 38 states, Canada and Puerto Rico.

For more information about Sun Communities, Inc., please visit www.suncommunities.com.

CAUTIONARY STATEMENT REGARDING 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. For this purpose, any statements contained in this press release that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as "forecasts," "intends," "intend," "intended," "goal," "estimate," "estimates," "expects," "expect," "expected," "project," "projected," "projections," "plans," "predicts," "potential," "seeks," "anticipates," "anticipated," "should," "could," "may," "will," "designed to," "foreseeable future," "believe," "believes," "scheduled," "guidance," "target" and similar expressions are intended to identify forward-looking statements, although not all forward looking statements contain these words. 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, both general and specific to the matters discussed in or incorporated herein, some of which are beyond the Company's control. These risks, uncertainties and other factors may cause the Company's actual results to be materially different from any future results expressed or implied by such forward-looking statements. In addition to the risks disclosed under "Risk Factors" contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and in the Company's other filings with the Securities and Exchange Commission from time to time, such risks, uncertainties and other factors include but are not limited to:

• outbreaks of disease, including the COVID-19 pandemic, and related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations;

• changes in general economic conditions, the real estate industry and the markets in which the Company operates;

• difficulties in the Company's ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;

• the Company's liquidity and refinancing demands;

• the Company's ability to obtain or refinance maturing debt;

• the Company's ability to maintain compliance with covenants contained in its debt facilities and its senior unsecured notes;

• availability of capital;

• changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian and Australian dollars;

• the Company's ability to maintain rental rates and occupancy levels;

• the Company's ability to maintain effective internal control over financial reporting and disclosure controls and procedures;

• increases in interest rates and operating costs, including insurance premiums and real property taxes;

• risks related to natural disasters such as hurricanes, earthquakes, floods, droughts and wildfires;

• general volatility of the capital markets and the market price of shares of the Company's capital stock;

• the Company's ability to maintain its status as a REIT;

• changes in real estate and zoning laws and regulations;

• legislative or regulatory changes, including changes to laws governing the taxation of REITs;

• litigation, judgments or settlements;

• competitive market forces;

• the ability of purchasers of manufactured homes and boats to obtain financing; and

• the level of repossessions by manufactured home and boat lenders.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements included in this press release, whether as a result of new information, future events, changes in its expectations or otherwise, except as required by law.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by these cautionary statements.

Investor Information

RESEARCH COVERAGE
Firm		Analyst		Phone		Email
Bank of America Merrill Lynch		Joshua Dennerlein		(646) 855-1681		joshua.dennerlein@baml.com
Barclays		Anthony Powell		(212) 526-8768		anthony.powell@barclays.com
		Allison Gelman		(212) 526-3367		allison.gelman@barclays.com
Berenberg Capital Markets		Keegan Carl		(646) 949-9052		keegan.carl@berenberg-us.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
		Samir Khanal		(212) 888-3796		samir.khanal@evercoreisi.com
Green Street Advisors		John Pawlowski		(949) 640-8780		jpawlowski@greenstreetadvisors.com
Robert W. Baird & Co.		Wesley Golladay		(216) 737-7510		wgolladay@rwbaird.com
RBC Capital Markets		Brad Heffern		(512) 708-6311		brad.heffern@rbccm.com
UBS		Michael Goldsmith		(212) 713-2951		michael.goldsmith@ubs.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 September 30, 2021)

Financial and Operating Highlights
(amounts in thousands, except for *)

	Quarter Ended
	9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020
Financial Information
Total revenues	$	684,294			$	603,863			$	442,015			$	384,265			$	400,514
Net income	$	250,161			$	120,849			$	27,941			$	9,818			$	89,756
Net income attributable to Sun Communities Inc. common stockholders	$	231,770			$	110,770			$	24,782			$	7,586			$	81,204
Basic earnings per share*	$	2.00			$	0.98			$	0.23			$	0.07			$	0.83
Diluted earnings per share*	$	2.00			$	0.98			$	0.23			$	0.07			$	0.83
Cash distributions declared per common share*	$	0.83			$	0.83			$	0.83			$	0.79			$	0.79
Recurring EBITDA(1)	$	314,499			$	268,225			$	190,830			$	168,527			$	199,321
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4)	$	223,069			$	198,017			$	135,925			$	110,849			$	165,209
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4)	$	244,535			$	209,620			$	141,036			$	124,872			$	162,624
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted*	$	1.92			$	1.70			$	1.22			$	1.03			$	1.63
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted*	$	2.11			$	1.80			$	1.26			$	1.16			$	1.60
Balance Sheet
Total assets	$	12,583,296			$	12,040,990			$	11,454,209			$	11,206,586			$	8,335,717
Total debt	$	4,689,437			$	4,311,175			$	4,417,935			$	4,757,076			$	3,340,613
Total liabilities	$	5,488,469			$	5,099,563			$	5,101,512			$	5,314,879			$	3,791,922

	Quarter Ended
	9/30/2021			6/30/2021			3/31/2021			12/31/2020			9/30/2020
Operating Information*
Properties	584			569			562			552			432
Manufactured home sites	98,301			97,448			96,876			96,688			95,209
Annual RV sites	29,640			28,807			28,441			27,564			26,817
Transient RV sites	27,922			27,032			26,295			25,043			23,728
Total sites	155,863			153,287			151,612			149,295			145,754
Marina wet slips and dry storage spaces	44,859			41,275			38,753			38,152			N/A
MH occupancy	96.6	%		96.7	%		96.5	%		96.6	%		96.4	%
Annual RV occupancy	100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Blended MH and annual RV occupancy	97.4	%		97.4	%		97.3	%		97.3	%		97.2	%
New home sales volume	207			227			149			156			155
Pre-owned home sales volume	955			931			686			626			555
Total home sales volume	1,162			1,158			835			782			710

	Quarter Ended
	9/30/2021		6/30/2021		3/31/2021			12/31/2020		9/30/2020
Revenue Producing Site Net Gains(5)
MH net leased sites	144		226		127			247		349
RV net leased sites	432		357		387			331		427
Total net leased sites	576		583		514			578		776

Consolidated Balance Sheets
(amounts in thousands)

		September 30, 2021					December 31, 2020
Assets
Land		$	2,457,236				$	2,119,364
Land improvements and buildings		9,469,247					8,480,597
Rental homes and improvements		591,367					637,603
Furniture, fixtures and equipment		590,829					447,039
Investment property		13,108,679					11,684,603
Accumulated depreciation		(2,232,243		)			(1,968,812		)
Investment property, net		10,876,436					9,715,791
Cash, cash equivalents and restricted cash		85,619					92,641
Marketable securities		160,321					124,726
Inventory of manufactured homes		43,708					46,643
Notes and other receivables, net		256,924					221,650
Goodwill		461,609					428,833
Other intangible assets, net		297,625					305,611
Other assets, net		401,054					270,691
Total Assets		$	12,583,296				$	11,206,586
Liabilities
Secured debt		$	3,403,436				$	3,489,983
Unsecured debt		1,286,001					1,267,093
Distributions payable		98,453					86,988
Advanced reservation deposits and rent		223,471					187,730
Accrued expenses and accounts payable		232,590					148,435
Other liabilities		244,518					134,650
Total Liabilities		5,488,469					5,314,879
Commitments and contingencies
Temporary equity		292,394					264,379
Stockholders' Equity
Common stock		1,160					1,076
Additional paid-in capital		8,170,322					7,087,658
Accumulated other comprehensive income		1,752					3,178
Distributions in excess of accumulated earnings		(1,475,634		)			(1,566,636		)
Total Sun Communities, Inc. stockholders' equity		6,697,600					5,525,276
Noncontrolling interests
Common and preferred OP units		85,756					85,968
Consolidated entities		19,077					16,084
Total noncontrolling interests		104,833					102,052
Total Stockholders' Equity		6,802,433					5,627,328
Total Liabilities, Temporary Equity and Stockholders' Equity		$	12,583,296				$	11,206,586

Statements of Operations - Quarter to Date and Year to Date Comparison
(In thousands, except per share amounts) (Unaudited)

	Three Months Ended																			Nine Months Ended
	September 30, 2021					September 30, 2020					Change					% Change				September 30, 2021					September 30, 2020					Change					% Change
Revenues
Real property (excluding transient)	$	352,553				$	240,076				$	112,477				46.9		%		$	979,537				$	693,491				$	286,046				41.2		%
Real property - transient	126,072					80,412					45,660					56.8		%		235,606					136,473					99,133					72.6		%
Home sales	81,099					47,662					33,437					70.2		%		215,146					126,779					88,367					69.7		%
Service, retail, dining and entertainment	113,039					23,859					89,180					373.8		%		270,103					36,662					233,441					636.7		%
Interest	2,690					2,624					66					2.5		%		8,040					7,609					431					5.7		%
Brokerage commissions and other, net	8,841					5,881					2,960					50.3		%		21,740					13,068					8,672					66.4		%
Total Revenues	684,294					400,514					283,780					70.9		%		1,730,172					1,014,082					716,090					70.6		%
Expenses
Property operating and maintenance	158,095					98,775					59,320					60.1		%		391,609					239,413					152,196					63.6		%
Real estate tax	24,751					17,442					7,309					41.9		%		70,361					52,341					18,020					34.4		%
Home costs and selling	56,567					39,899					16,668					41.8		%		156,920					105,989					50,931					48.1		%
Service, retail, dining and entertainment	87,106					17,615					69,491					394.5		%		211,122					31,539					179,583					569.4		%
General and administrative	43,276					26,834					16,442					61.3		%		126,606					78,710					47,896					60.9		%
Catastrophic event-related charges, net	328					14					314					N/M				3,097					54					3,043					N/M
Business combination	—					—					—					N/A				1,031					—					1,031					N/A
Depreciation and amortization	127,091					88,499					38,592					43.6		%		378,068					259,453					118,615					45.7		%
Loss on extinguishment of debt	—					—					—					N/A				8,108					5,209					2,899					55.7		%
Interest	39,026					30,214					8,812					29.2		%		116,224					94,058					22,166					23.6		%
Interest on mandatorily redeemable preferred OP units / equity	1,047					1,047					—					—		%		3,124					3,130					(6		)			(0.2	)	%
Total Expenses	537,287					320,339					216,948					67.7		%		1,466,270					869,896					596,374					68.6		%
Income Before Other Items	147,007					80,175					66,832					83.4		%		263,902					144,186					119,716					83.0		%
Gain / (loss) on remeasurement of marketable securities	12,072					1,492					10,580					709.1		%		43,227					(2,636		)			45,863					N/M
Gain / (loss) on foreign currency translation	(7,028		)			5,023