Sun Communities, Inc., a real estate investment trust that owns and operates, or has an interest in, manufactured housing communities, recreational vehicle resorts, and marinas on Monday reported its fourth-quarter results for 2021.
Financial Results for the Quarter and Year Ended December 31, 2021
For the quarter ended December 31, 2021, total revenues increased by $158.2 million, or 41.2 percent, to $542.4 million compared to approximately $384.3 million for the same period in 2020. Net income attributable to common stockholders increased by $5.2 million, or 69.1 percent, to $12.8 million, or $0.11 per diluted common share, compared to net income attributable to common stockholders of $7.6 million, or $0.07 per diluted common share, for the same period in 2020.
For the year ended December 31, 2021, total revenues increased by $874.3 million, or 62.5 percent, to approximately $2.3 billion compared to $1.4 billion for the same period in 2020. Net income attributable to common stockholders increased by $248.5 million, or 188.8 percent, to $380.2 million, or $3.36 per diluted common share, compared to net income attributable to common stockholders of $131.6 million, or $1.34 per diluted common share, for the same period in 2020.
Non-GAAP Financial Measures and Portfolio Performance
- Core Funds from Operations for the quarter ended December 31, 2021, was $1.31 per diluted share and OP unit as compared to $1.16 in the corresponding period in 2020, a 12.9 percent increase. Core FFO for the year ended December 31, 2021, was $6.51 per Share as compared to $5.09 in the prior year, an increase of 27.9 percent.
- Same Community Net Operating Income increased by 8.4 percent and 11.2 percent for the quarter and year ended December 31, 2021, as compared to the corresponding period in 2020.
- Home Sales Volume increased 19.3 percent to 933 homes for the quarter ended December 31, 2021, as compared to 782 homes in the same period in 2020, and 42.6 percent to 4,088 homes for the year ended December 31, 2021, as compared to 2,866 homes in the same period in 2020.
- Acquisitions totaled $385.4 million during and subsequent to the quarter ended December 31, 2021, including 12 RV resorts and 7 marinas.
“A strong fourth quarter concluded an incredibly productive year for Sun Communities, where we made meaningful progress in each of our internal and external growth initiatives,” said Gary A. Shiffman, Chairman and CEO.
“Robust demand for the attainable housing and outdoor experiences that Sun provides resulted in compelling organic growth, driving an 11.2 percent same community NOI increase for the year, further building on our demonstrated strength throughout the pandemic. We expanded our portfolio, completing $1.4 billion of high-quality acquisitions across manufactured housing communities, RV resorts, and marinas, and opened four new ground-up development properties. We also continued to grow our pipeline for future growth with land purchases for greenfield development and site expansions. We are particularly excited to be entering the UK market with our announced planned acquisition of Park Holidays, a leading holiday park platform with irreplaceable seaside communities. With a proven track record of execution, accretive growth, and favorable tailwinds supporting ongoing demand, we are continuing to invest in our platform in order to realize additional opportunities of accelerated growth and create shareholder value for years to come.”
OPERATING HIGHLIGHTS
Portfolio Occupancy
Total MH and annual RV occupancy was 97.4 percent on December 31, 2021 as compared to 97.3 percent on December 31, 2020, an increase of 10 basis points.
During the quarter ended December 31, 2021, MH and annual RV revenue producing sites increased by 810 sites as compared to an increase of 578 sites during the quarter ended December 31, 2020, a 40.1 percent increase.
During the year ended December 31, 2021, MH and annual RV revenue producing sites increased by 2,483 sites as compared to an increase of 2,505 sites during the year ended December 31, 2020.
PORTFOLIO ACTIVITY
Acquisitions
During and subsequent to the year ended December 31, 2021, the Company acquired 56 properties totaling 16,045 sites, wet slips, and dry storage spaces and 1,062 sites for expansion for a total purchase price of $1.5 billion.
During the quarter ended December 31, 2021, the Company entered into a definitive agreement to acquire Park Holidays UK, an owner, and operator of holiday communities in the United Kingdom, for £950.0 million, or approximately $1.3 billion. The Company anticipates that the closing of the Park Holidays acquisition will occur in mid-March of 2022. The closing of the Park Holidays Acquisition is subject to the receipt of a required regulatory approval. There can be no assurances as to the actual closing or timing of the closing.
During the quarter ended December 31, 2021, the Company acquired Leisure Systems, Inc. for a total purchase price of $23.0 million. LSI is the franchisor for the Jellystone Park system.
Development Activity
During the quarter ended December 31, 2021, the Company completed the construction of nearly 450 sites in six ground-up developments and over 250 expansion sites in three MH communities and three RV resorts.
During the year ended December 31, 2021, the Company completed the construction of over 1,030 sites in eight ground-up developments and re-developments, and nearly 580 expansion sites in six MH communities and five RV resorts.
During the quarter ended December 31, 2021, the Company acquired eight land parcels, which are located across the United States and the United Kingdom for the potential development of nearly 3,300 sites, for total consideration of $165.1 million.
During the year ended December 31, 2021, the Company acquired 11 land parcels, which are located across the United States and the United Kingdom, for the potential development of nearly 4,000 sites for total purchase price of $172.8 million.
BALANCE SHEET, CAPITAL MARKETS ACTIVITY, AND OTHER ITEMS
Debt
As of December 31, 2021, the Company had approximately $5.7 billion in debt outstanding. The weighted average interest rate was 3.0 percent and the weighted average maturity was 8.8 years. On December 31, 2021, the Company’s net debt to trailing twelve month Recurring EBITDA ratio was 5.7 times. The Company had $65.8 million of unrestricted cash on hand.
Senior Unsecured Notes
During the quarter ended December 31, 2021, Sun Communities Operating Limited Partnership, 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, 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 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.
2022 Distributions
The Company’s Board of Directors has approved setting the 2022 annual distribution rate at $3.52 per common share, an increase of $0.20, or 6.0 percent, over the current $3.32 per common share for 2021. This increase will begin with the first quarter distribution to be paid in April 2022. While the Board of Directors has adopted the new annual distribution policy, the amount of each quarterly distribution on the Company’s common stock will be subject to approval by the Board of Directors.
2022 Guidance
The estimates and assumptions presented below represent a range of possible outcomes and may differ materially from actual results. These estimates include contributions from all acquisitions completed through the date of this release, the expected contribution from the Park Holidays Acquisition, expected borrowings under the Proposed Loan Amendment, and expected proceeds from the physical settlement of the Outstanding Forward Sale Agreements.
These estimates exclude prospective acquisitions other than the Park Holidays Acquisition and prospective capital markets activity other than as described in the preceding sentence. The estimates and assumptions are forward-looking based on the Company’s current assessment of economic and market conditions, are based in part on the assumptions described below under the caption Notes and Assumptions to 2022 Guidance, and are subject to the other risks outlined below under the caption Cautionary Statement Regarding Forward-Looking Statements.
EARNINGS CONFERENCE CALL
A conference call to discuss fourth-quarter results will be held on Tuesday, February 22, 2022 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 March 8, 2022 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 13725426. 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 December 31, 2021, owned, operated, or had an interest in a portfolio of 602 developed MH, RV and marina properties comprising over 159,000 developed sites and over 45,000 wet slips and dry storage spaces in 39 states, Canada and Puerto Rico.
For more information about Sun Communities, Inc., please visit www.suncommunities.com.
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