Sun Communities (SUI) Q3 2024 Earnings Transcript | The Motley Fool

Image source: The Motley Fool. Date Nov. 6, 2024 at 5 p.m. ET Call participants Chairman & Chief Executive Officer - Gary Shiffman Chief Financial Officer - Fernando Castro-Caratini President - John McLaren Takeaways Core FFO per share -- $2.34 for the quarter, reflecting the primary market earnings metric. Total North America same-property NOI -- Increased 0.5%, as a 2.8% rise in revenues was offset by a 7.7% increase in expenses. Manufactured housing same-property NOI -- Rose 5.3% year over year, with year-to-date growth of 6.6% driven by rental increases, but impacted by higher supply and repair expenses. RV segment same-property NOI -- Declined 6.9%, driven by a 10.4% reduction in transient revenue; transient-to-annual conversions reached 900 sites in the quarter and nearly 2,000 year-to-date. Marina segment same-property NOI -- Increased 2.5% in the quarter and 5% year-to-date; headwinds included delayed vessel returns due to storms, lower occupancy, and higher payroll expenses. UK same-property NOI -- Declined approximately $700,000 (2.3%) in the quarter as a result of timing factors and a 13% increase in UK minimum wage costs, but year-to-date NOI growth was 7.7% supported by rent and vacation revenue. Asset dispositions -- Eight manufactured housing communities and two land parcels sold for a total of $392 million year-to-date; $100 million to $200 million in further non-core dispositions possible near term. Debt reduction -- Total debt was $7.36 billion as of September 30, down about $450 million from 2023 year-end; floating-rate debt reduced from 21% to 6% over two years. Capital raise and use -- $362 million in net proceeds raised from settling 2.7 million shares under ATM program in August and early September, combined with asset sale proceeds to pay down secured debt and the revolving line of credit. Updated 2024 full-year core FFO guidance -- Lowered to a range of $6.76 to $6.84 per share (down 4.8% at midpoint); North American same-property NOI guidance reduced to 2.6%-3.3%. 2024 segment NOI guidance revisions -- Manufactured housing now 5.6%-6.2%, RV negative 5.3% to negative 4.1%, Marina 4.4%-5.2%, and UK 7.1%-8.7% growth, each segment adjusted downward due to higher expenses and revenue headwinds. Cost reduction initiatives -- Identified annualized G&A and operating expense savings of $15 million-$20 million (or $0.11-$0.15 per share) expected for 2025, to be driven by restructuring and efficiency improvements. Rent increase notifications for 2025 -- 35% of manufactured housing residents given a 5.2% average rent rise; 55% of RV sites at a 5.1% average increase; all UK residents and 51% of marina members at 3.7% increases. CEO retirement and leadership transition -- Gary Shiffman intends to retire in 2025; a search committee led by independent board members will conduct the CEO selection process, with John McLaren returning as President to oversee restructuring. Hurricane impact -- $2.2 million of impairment charges in 5 MH and RV communities and $1.7 million for 9 marinas; one small RV property remains partially closed, expected to reopen in early 2025. Audit committee investigation -- An independent third-party law firm concluded its investigation...

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