Sun Communities(SUI) - 2025 Q2 - Quarterly Results

Earnings Press Release and Guidance Second Quarter 2025 Results and Highlights Sun Communities reported strong Q2 2025 results, driven by the Safe Harbor Marinas sale, balance sheet strengthening, and operational improvements Financial Metric | Financial Metric | Q2 2025 (USD) | Q2 2024 (USD) | | :--- | :--- | :--- | | Net Income Attributable to Common Shareholders | $1.3 billion | $52.1 million | | Diluted EPS | $10.02 | $0.42 | | Core FFO per Share | $1.76 | $1.86 | - Completed the sale of Safe Harbor Marinas, generating approximately $5.25 billion in pre-tax cash proceeds and a book gain of $1.4 billion. This transaction repositions Sun as a pure-play owner of MH and RV communities[15][21][23] - North America Same Property NOI for MH and RV increased by 4.9% YoY for the quarter, and adjusted blended occupancy for MH and RV rose by 150 basis points to 99.0%[10][19] - Returned over $830 million to shareholders, which includes a $4.00 per share special cash distribution ($521.3 million total) and significant share repurchases[10][25][26] - Appointed Charles D. Young as the new CEO, effective October 1, 2025, succeeding Gary Shiffman who is retiring after 40 years[28] - As of June 30, 2025, the company's Net Debt to trailing twelve-month Recurring EBITDA ratio was significantly reduced to 2.9 times[22] 2025 Guidance The company raised its full-year 2025 Core FFO per share and Same Property NOI growth guidance for both North America and the UK Guidance Metric | Guidance Metric | Q3 2025 Range (per share) | Full Year 2025 Range (per share) | | :--- | :--- | :--- | | Diluted EPS | $1.21 - $1.31 | $11.34 - $11.50 | | Core FFO per Share | $2.13 - $2.23 | $6.51 - $6.67 | Same Property NOI Growth Guidance (FY 2025) | Same Property NOI Growth Guidance (FY 2025) | Prior Range (%) | Updated Range (%) | | :--- | :--- | :--- | | North America (MH and RV) | 3.5% - 5.2% | 3.9% - 5.6% | | UK | 0.9% - 2.9% | 1.3% - 3.3% | - Guidance for Q3 2025 assumes North America Same Property NOI growth of 2.4% - 5.6% and UK Same Property NOI growth of 0.1% - 3.1%[31] Company and Portfolio Overview Company Overview and Investor Information Sun Communities is a publicly traded REIT with a portfolio of 501 MH, RV, and UK properties, holding stable investment-grade credit ratings - As of June 30, 2025, the portfolio consists of 501 developed properties with approximately 174,450 sites across the U.S., Canada, and the U.K[44] Rating Agency | Rating Agency | Rating | Outlook | | :--- | :--- | :--- | | Moody's | Baa2 | Stable | | S&P | BBB+ | Stable | Financial and Operating Highlights Q2 2025 highlights include a diluted EPS of $10.02, Core FFO of $1.76 per share, improved Net Debt to Recurring EBITDA to 2.9x, and strong blended occupancy Metric (Q2 2025) | Metric (Q2 2025) | Value | YoY Change/Comparison | | :--- | :--- | :--- | | Diluted EPS | $10.02 | vs. $0.42 in Q2 2024 | | Core FFO per Share | $1.76 | vs. $1.86 in Q2 2024 | | Real Property NOI | $263.6M | vs. $253.6M in Q2 2024 | | Net Debt / TTM Recurring EBITDA | 2.9x | vs. 6.2x in Q2 2024 | | Blended MH & Annual RV Occupancy | 98.1% | vs. 97.5% in Q2 2024 | Portfolio Overview As of June 30, 2025, the company's portfolio includes 501 properties with 174,450 sites across North America and the UK, showing strong regional occupancy rates Region | Region | Properties | Total Sites | Occupancy (Annual) (%) | | :--- | :--- | :--- | :--- | | North America | 448 | 152,920 | 98.1% | | United Kingdom | 53 | 21,530 | 90.3% | | Total Portfolio | 501 | 174,450 | | - The portfolio has significant geographic concentration in Florida (124 properties, 45,250 sites) and Michigan (85 properties, 33,540 sites)[49] Financial Statements and Reconciliations Consolidated Balance Sheets The June 30, 2025, balance sheet reflects the Safe Harbor Marinas sale, significantly reducing total assets and liabilities while increasing cash Balance Sheet Item | Balance Sheet Item | June 30, 2025 (USD millions) | Dec 31, 2024 (USD millions) | | :--- | :--- | :--- | | Total Assets | $13,362.1 | $16,549.4 | | Cash, cash equivalents and restricted cash | $1,463.1 | $57.1 | | Assets held for sale and discontinued operations, net | $121.1 | $4,461.7 | | Total Liabilities | $5,570.0 | $9,096.8 | | Total debt | $4,283.5 | $7,352.8 | | Total Shareholders' Equity | $7,534.2 | $7,192.8 | Consolidated Statements of Operations Q2 2025 saw a net loss from continuing operations due to impairments and debt extinguishment, but a significant gain from discontinued operations resulted in a total net income of $1.27 billion Statement of Operations | Statement of Operations | Q2 2025 (USD millions) | Q2 2024 (USD millions) | | :--- | :--- | :--- | | Total Revenues | $623.5 | $596.3 | | Net (Loss) / Income from Continuing Operations | $(92.2) | $32.7 | | Income from discontinued operations, net | $1,422.5 | $25.7 | | Net Income Attributable to SUI Common Shareholders | $1,273.6 | $52.1 | - Significant expenses in Q2 2025 included a $166.1 million asset impairment charge and a $102.4 million loss on extinguishment of debt[51] Reconciliation to Core FFO Q2 2025 FFO decreased to $1.36 per share, and Core FFO was $1.76 per share, with key adjustments including asset impairments and Safe Harbor sale-related items Per Share Data | Per Share Data | Q2 2025 (per share) | Q2 2024 (per share) | | :--- | :--- | :--- | | FFO per Share | $1.36 | $1.79 | | Core FFO per Share | $1.76 | $1.86 | - Major adjustments from Net Income to FFO included a $1.445 billion gain on disposition from discontinued operations and a $166.1 million asset impairment charge[52] - Key adjustments from FFO to Core FFO included a $102.4 million loss on extinguishment of debt and $48.4 million in transaction costs from discontinued operations (Safe Harbor Sale)[52] Reconciliation to NOI Q2 2025 total Net Operating Income (NOI) slightly increased to $295.5 million, primarily from real property operations, home sales, and ancillary services NOI Breakdown | NOI Breakdown | Q2 2025 (USD millions) | Q2 2024 (USD millions) | | :--- | :--- | :--- | | Real property NOI | $263.6 | $253.6 | | Home sales NOI | $23.3 | $30.7 | | Ancillary NOI | $8.6 | $8.4 | | Total NOI | $295.5 | $292.7 | Reconciliation to Recurring EBITDA Q2 2025 Recurring EBITDA was $291.3 million, with adjustments from Net Income including property dispositions and Safe Harbor sale transaction costs EBITDA Metric | EBITDA Metric | Q2 2025 (USD millions) | Q2 2024 (USD millions) | | :--- | :--- | :--- | | Net Income Attributable to SUI Common Shareholders | $1,273.6 | $52.1 | | EBITDAre | $250.4 | $313.8 | | Recurring EBITDA | $291.3 | $335.9 | Supplemental Disclosure: Real Property Operations Total Portfolio Q2 2025 total portfolio Real Property NOI increased to $263.6 million, primarily from MH and RV segments, with a slight decrease in properties due to dispositions Real Property NOI | Real Property NOI | Q2 2025 (USD millions) | Q2 2024 (USD millions) | | :--- | :--- | :--- | | MH | $168.6 | $160.7 | | RV | $72.9 | $74.2 | | UK | $22.1 | $18.7 | | Total | $263.6 | $253.6 | - As of June 30, 2025, the total portfolio had 174,450 sites across 501 properties, compared to 181,760 sites across 529 properties in the prior year[55] North America Same Property Portfolio North America Same Property portfolio showed strong Q2 2025 results with a 4.9% total NOI increase, driven by MH growth and improved blended occupancy North America Same Property (Q2 2025 vs Q2 2024) | North America Same Property (Q2 2025 vs Q2 2024) | Revenue Change (%) | Expense Change (%) | NOI Change (%) | | :--- | :--- | :--- | :--- | | MH | +6.9% | +4.7% | +7.7% | | RV | +0.9% | +3.1% | -1.1% | | Total | +4.6% | +3.9% | +4.9% | - Same Property adjusted blended occupancy for MH and RV increased by 150 basis points to 99.0% at June 30, 2025, from 97.5% at June 30, 2024[59] - Average monthly base rent per site increased by 5.3% for MH sites (to $730) and 5.0% for annual RV sites (to $677)[58] UK Same Property Portfolio The UK Same Property portfolio showed strong Q2 2025 performance with a 10.2% NOI increase on a constant currency basis, driven by revenue growth and improved occupancy UK Same Property (Q2 2025 vs Q2 2024) | UK Same Property (Q2 2025 vs Q2 2024) | % Change (Constant Currency) | | :--- | :--- | | Total Operating Revenues | +9.5% | | Same Property Operating Expenses | +8.8% | | Real Property NOI | +10.2% | - Average monthly base rent per site increased by 5.3% to $584[60] Other Operating Information Home Sales Summary Q2 2025 total home sales NOI decreased by 24.1% to $23.3 million, primarily due to a significant decline in North American sales Home Sales (Q2 2025) | Home Sales (Q2 2025) | North America | UK | Total | | :--- | :--- | :--- | :--- | | Units Sold | 480 (-23.0% YoY) | 805 (+2.3% YoY) | 1,285 (-8.9% YoY) | | Average Selling Price | $87,083 (-6.8% YoY) | $72,422 (+15.6% YoY) | - | | NOI (in millions) | $6.8 (-48.5% YoY) | $16.5 (-5.7% YoY) | $23.3 (-24.1% YoY) | Operating Statistics for MH and Annual RVs As of June 30, 2025, the resident move-out rate for MH and RVs slightly decreased, resulting in a net gain of 474 leased sites Metric | Metric | YTD June 30, 2025 | Full Year 2024 | | :--- | :--- | :--- | | Resident Move-outs (% of Total Sites) | 4.2% | 4.3% | | Leased Sites, Net Gain | 474 | 3,209 | Investment Activity Acquisitions and Dispositions Year-to-date disposition activity, primarily the Safe Harbor Marinas sale, generated over $5.5 billion in proceeds from various property types Disposition | Disposition | Properties | Proceeds (USD millions) | Month | | :--- | :--- | :--- | :--- | | Safe Harbor Marinas - Initial Closing | 123 | $5,250.0 | April | | Safe Harbor Marinas - Delayed Consent | 6 | $136.7 | May/June | | RV Portfolio | 2 | $92.9 | January | | MH Portfolio | 3 | $27.8 | March | | Total Dispositions to Date | 135 | $5,510.9 | | Capital Expenditures and Investments For the six months ended June 30, 2025, the company invested $113.0 million in capital expenditures, primarily in non-recurring expansion and development projects Capital Expenditures (Six Months Ended June 30, 2025) | Capital Expenditures (Six Months Ended June 30, 2025) | Amount (USD millions) | | :--- | :--- | | Recurring Capital Expenditures | $27.8 | | Non-Recurring Capital Expenditures | $85.2 | |     - Lot Modifications | $18.2 | |     - Growth Projects | $7.2 | |     - Acquisitions | $9.6 | |     - Expansion and Development | $49.7 | | Total | $113.0 | Capitalization Capitalization Overview As of June 30, 2025, Sun Communities reported a total market capitalization of $16.6 billion, $4.3 billion in debt, and maintained stable investment-grade credit ratings Capitalization Metric | Capitalization Metric | As of June 30, 2025 (USD millions) | | :--- | :--- | | Diluted shares outstanding and market capitalization | $16,581.2 | | Total debt, per consolidated balance sheet | $4,283.5 | | Total capitalization | $20,864.7 | | Enterprise Value | $19,970.8 | Summary of Outstanding Debt As of June 30, 2025, total debt was $4.3 billion at a 3.38% weighted average interest rate, comprising secured and unsecured notes Debt Type | Debt Type | Debt Outstanding (USD millions) | Weighted Average Interest Rate (%) | | :--- | :--- | :--- | | Secured Debt | $2,498.2 | 3.73% | | Unsecured Debt | $1,785.3 | 2.90% | | Total Debt | $4,283.5 | 3.38% | Debt Maturities The company maintains a well-staggered debt maturity profile with minimal near-term obligations and the largest portion maturing after 2029 Year | Year | Total Debt Maturing (USD millions) | | :--- | :--- | | 2025 | $24.5 | | 2026 | $534.9 | | 2027 | $37.4 | | 2028 | $667.2 | | 2029 | $351.8 | | Thereafter | $2,689.5 | Debt Analysis As of June 30, 2025, the company's credit metrics significantly improved, with a Net Debt to TTM Recurring EBITDA ratio of 2.9x, ensuring compliance with all debt covenants Select Credit Ratios | Select Credit Ratios | As of June 30, 2025 | | :--- | :--- | | Net Debt / TTM Recurring EBITDA | 2.9x | | Net Debt / Enterprise Value | 17.0% | | Unencumbered Assets / Total Assets | 80.7% | | TTM Recurring EBITDA / Interest | 3.8x | - The company is in compliance with all debt covenants, with its total debt to total assets ratio at 26.0% versus a requirement of ≤60.0%, and its debt service coverage ratio at 7.48x versus a requirement of ≥1.50x[71] Definitions and Notes Definitions and Notes This section defines non-GAAP financial measures like FFO, Core FFO, NOI, and EBITDAre, and provides explanatory notes on key accounting treatments and financial statement line items - The sale of Safe Harbor Marinas is treated as a strategic shift, with its results presented as discontinued operations. The initial closing generated a gain on sale of $1.4 billion[74][75] - Asset impairments of $166.1 million in Q2 2025 were recorded, consisting of $132.7 million for three UK development properties and $32.2 million for three US/Canada RV properties due to changes in strategic plans[73] Other adjustments, net - continuing operations (Q2 2025) | Other adjustments, net - continuing operations (Q2 2025) | Amount (USD millions) | | :--- | :--- | | Deferred tax benefit | $(32.1) | | Long term lease termination gains | $(25.7) | | Cash flow hedge gains from debt extinguishments | $(7.4) | | Total | $(60.8) |