Sun Communities (SUI) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 27, 2023 12:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen and thank you for standing by. Welcome to the Sun Communities Second Quarter 2023 Earnings Conference Call.

At this time, management would like me to inform you that certain statements made during this call, which are not historical facts, maybe deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. Factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday’s press release and from time to time in the company’s periodic filings with the SEC. The company undertakes no obligation to advise or update any forward-looking statements to reflect events or circumstances after the date of this release.

Having said that, I would like to introduce management with us today, Gary Shiffman, Chairman, President and Chief Executive Officer; and Fernando Castro-Caratini, Chief Financial Officer. [Operator Instructions] As a reminder, this call is being recorded.

I will now turn the call over to Gary Shiffman, Chairman, President and Chief Executive Officer. Mr. Shiffman, you may begin.

Gary Shiffman

Good afternoon and thank you for joining our call to discuss second quarter results and our updated 2023 guidance. We are pleased to share Sun’s continued strong operating results. Core FFO per share of $1.96 for the quarter was in line with guidance, supported by strong 6.3% year-over-year growth in same-property NOI and 3.4% growth in recurring EBITDA. Our properties share the compelling fundamentals of resilient demand and low to shrinking supply, which when combined with the unparalleled customer services our teams deliver, historically generate high durable cash flow streams throughout economic cycles. Same-property NOI growth in the quarter exceeded the high-end of guidance by 150 basis points and was driven by solid revenue growth and the successful implementation of ongoing expense management.

In manufactured housing, same-property NOI grew 5.7% compared to 2022, driven by strong rental rate growth and bolstered by occupancy gains. In RVs, same-property NOI growth of 3.2% reflected our continued focus on converting transient guests into annual residents, which increases our stream of stable revenue and improved operational efficiencies. At the end of the quarter, same-property adjusted occupancy for our combined MH and RV locations was 98.7%, a year-over-year increase of 170 basis points and reflects the resilience of demand for our properties.