Attached files
| file | filename |
|---|---|
| EX-10.1 - EXHIBIT 10.1 - REPURCHASE AGREEMENT - SUN COMMUNITIES INC | exhibit101repurchase_agree.htm |
| 8-K - FORM 8-K EARNINGS RELEASE AND REPURCHASE AGREEMENT - SUN COMMUNITIES INC | form8-kearningsreleaseq220.htm |
NEWS RELEASE
July 30, 2015
Sun Communities, Inc. Reports 2015 Second Quarter Results and Announces a Repurchase Agreement for Series A-4 Preferred Stock
Southfield, Michigan, July 30, 2015 - Sun Communities, Inc. (NYSE: SUI) (the “Company”), a real estate investment trust (“REIT”) that owns and operates manufactured housing ("MH") and recreational vehicle ("RV") communities, today reported its second quarter results.
Highlights: Three Months Ended June 30, 2015
• | Funds from operations ("FFO")(1) excluding certain items was $0.87 per diluted share and OP unit ("Share") for the three months ended June 30, 2015, representing a 10 percent increase over the same period last year. |
• | Same site Net Operating Income ("NOI")(2) increased by 8.8 percent as compared to the three months ended June 30, 2014. |
• | Revenue producing sites increased by 500 sites during the three months ended June 30, 2015, bringing total portfolio occupancy to 93.5 percent. |
• | New home sales more than doubled as compared to the three months ended June 30, 2014. Total homes sales increased by 10.6 percent for the same period. |
• | Acquired seven MH communities; six in Florida and one in South Carolina adding 3,554 sites for approximately $288.8 million and one RV resort in Texas with 241 sites for $27.1 million. |
“We have successfully merged the operations and cultures of our recent portfolio acquisitions and are operating as a unified portfolio. The acquired communities are delivering solid results which complement the excellent performance of our core portfolio,” said Gary A. Shiffman, Chairman and CEO. “We plan to continue to acquire high quality assets with significant upside potential where Sun's experienced operations team can utilize their expertise to build long term shareholder value,” Shiffman added.
Funds from Operations ("FFO")(1)
FFO(1) excluding certain items was $52.0 million and $34.7 million, or $0.87 and $0.79 per Share, for the three months ended June 30, 2015 and 2014, respectively. For the six months ended June 30, 2015 and 2014 FFO(1) excluding certain items was $100.4 million and $72.9 million, or $1.76 and $1.74 per Share, respectively.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders for the second quarter of 2015 was $12.3 million, or $0.23 per diluted common share, as compared to net income of $4.9 million, or $0.12 per diluted common share for the second quarter of 2014.
Sun Communities, Inc. 2nd Quarter 2015 Page 2
Net income attributable to common stockholders for the six months ended June 30, 2015 was $19.2 million, or $0.36 per diluted common share, as compared to net income of $12.8 million, or $0.33 per diluted common share for the six months ended June 30, 2014.
Community Occupancy
Total portfolio occupancy increased to 93.5 percent at June 30, 2015 from 91.0 percent at June 30, 2014. During the second quarter of 2015, revenue producing sites increased by 500 sites, or 17.1 percent, as compared to 427 revenue producing sites gained in the second quarter of 2014.
Revenue producing sites increased by 999 sites for the six months ended June 30, 2015 as compared to 987 revenue producing sites gained during the six months ended June 30, 2014.
Same Site Results
For the 177 communities owned throughout 2015 and 2014, second quarter 2015 total revenues increased 8.2 percent and total expenses increased 6.8 percent, resulting in an increase in NOI(2) of 8.8 percent over the second quarter of 2014. Same site occupancy increased to 94.6 percent at June 30, 2015 from 93.1 percent at June 30, 2014.
For the six months ended June 30, 2015, total revenues increased 7.4 percent and total expenses increased 4.6 percent, resulting in an increase in NOI(2) of 8.7 percent over the six months ended June 30, 2014.
"Our same site revenue growth is primarily from occupancy gains and rental increases and is being further enhanced by the solid growth in our transient RV revenues which is demonstrated by the 9% year over year revenue growth during the Memorial Day and Fourth of July holiday weekends," said Mr. Shiffman. “We are pleased that our RV communities continue to offer a resort experience attracting both new and loyal repeat travelers.”
Home Sales
Sales of 65 new homes occurred during the second quarter of 2015, representing an increase of over 140% for the same three month period in 2014. Total home sales were 576 for the second quarter as compared to 521 homes sold during the second quarter of 2014.
During the six months ended June 30, 2015, 1,119 homes were sold compared to the 890 for the same period ending 2014, resulting in an additional 229 homes sold during 2015 or a 25.7 percent increase. Rental homes sales, which are included in total home sales, were 388 and 354 for the six months ended June 30, 2015 and 2014.
On a same site basis the average selling price of new homes sold during the first six months of 2015 was $91,122, an increase of 8.1 percent, from $84,310 during the same period in 2014. The increase in average selling price for pre-owned homes was 10.3 percent, or $26,529 as compared to $24,046 for the first half of 2015 and 2014, respectively.
Acquisitions (3)
In addition to the previously announced $256.2 million acquisition of six manufactured home communities in the Orlando, Florida area, the Company completed the acquisition of two additional communities:
Sun Communities, Inc. 2nd Quarter 2015 Page 3
• | Lakeside Crossing - a high quality age restricted manufactured home community near Myrtle Beach, South Carolina, for cash of $32.6 million (including associated manufactured homes). This community has 419 sites and approximately 275 zoned and approved expansion sites. With this acquisition the Company is now operating in 30 states. |
• | La Hacienda - a high end recreational vehicle resort located in Austin, Texas for $27.1 million in cash. This resort is comprised of 241 sites. In recognition of its superior quality, La Hacienda was recently awarded the 2014 Large Park of the Year Award by the Texas Association of Campground Owners. |
Debt Transaction
In May 2015, the Company defeased a total of $70.6 million aggregate principal amount of collateralized term loans with an interest rate of 5.32% that were due to mature on July 1, 2016. This transaction released ten communities, of which three communities are under contract to be disposed as described below, and three communities are identified as potential disposition communities. As a result of the defeasance, the Company recognized a loss on debt extinguishment of $2.8 million.
Equity Transaction
On July 29, 2015, the Company entered into a repurchase agreement with certain holders of the Company’s 6.50% Series A-4 Cumulative Convertible Preferred Stock under which, at the holders’ election, the Company is obligated to repurchase up to 5,926,322 shares of the Series A-4 preferred stock from the holders of those shares. Each holder may elect to sell its shares to the Company until August 10, 2015. The purchase price is $31.08 per Series A-4 preferred share, which consists of a price per share of $30.90 plus $0.18 for accrued and unpaid distributions from and including June 30, 2015 to, but not including, August 10, 2015. Neither the foregoing description of the repurchase agreement nor this press release is an offer to purchase or a solicitation of an offer to sell the Series A-4 preferred shares.
Anticipated Transactions
The Company has entered into agreements to acquire three recreational vehicle communities containing approximately 1,185 developed sites for a combined purchase price of $76.2 million and has completed its due diligence with respect to such communities.
The Company has entered into an agreement to sell six of its manufactured home communities containing approximately 2,200 sites and associated homes and notes for net proceeds of $68.0 million which transaction includes a significant non-refundable deposit.
The Company has received a commitment letter from certain lenders for a new $450 million senior unsecured credit facility that the Company expects will replace its current $350 million senior secured revolving credit facility.
The Company expects these transactions to close in August 2015, except for the sale of three of the manufactured home communities, which is expected to close in October 2015. The closing of the credit facility is subject to negotiation and execution of definitive agreements, the closing of each of the acquisitions and dispositions is subject to customary closing conditions, and there can be no assurance that any of these transactions will close.
Sun Communities, Inc. 2nd Quarter 2015 Page 4
Guidance
The Company has increased its guidance for full-year 2015 FFO(1) excluding certain items to $3.62 - $3.72 per Share, an increase of $0.07 at the midpoint, from its most recently issued guidance of $3.55 - $3.65 per Share. The revised guidance takes into consideration the Company’s out performance as compared to its internal estimates, incorporates the anticipated acquisition of three communities and disposition of six communities as noted above. Guidance includes no impact from the 6.50% Series A-4 Cumulative Convertible Preferred Stock repurchase agreement as the Company has no indication of how many shareholders will exercise their sale right. FFO(1) excluding certain items assumes that all transaction costs and debt extinguishment costs are added back in the computation of FFO(1) while the distribution from affiliates is removed from FFO(1).
The Company provides guidance for FFO(1) excluding certain items of $1.03 - $1.05 per Share for the third quarter 2015.
Below are updates to the guidance previously provided. Items not addressed below remain unchanged.
• | Recreational Vehicle Revenue: Revenue from the Company's recreational vehicle communities contains a component of transient revenue from guest stays that are other than a full year or full season. Transient revenue is expected to be approximately $39.5 million for the year of which the Company expects to earn 45.3 percent in the third quarter and 15.1 percent in the fourth quarter. |
• | Same Site Portfolio: The Company's same site property portfolio of 171 communities has been adjusted for the out performance of the portfolio and the six anticipated dispositions discussed above. |
SAME SITE PORTFOLIO (171 communities) | 2014 | Forecasted | 2015 | ||||||||
(amounts in millions) | Actual | % Growth | Projected | ||||||||
REVENUES: | |||||||||||
Revenue- annual and seasonal | $ | 266.2 | 7.1 | % | $ | 285.1 | |||||
Revenue- transient | 21.5 | 10.2 | % | 23.7 | |||||||
Other property income | 15.9 | 8.8 | % | 17.3 | |||||||
Income from real property* | 303.6 | 7.4 | % | 326.1 | |||||||
PROPERTY OPERATING EXPENSES: | |||||||||||
Real estate tax | 22.0 | 2.7 | % | 22.6 | |||||||
Property operating and maintenance expense * | 70.5 | 2.4 | % | 72.2 | |||||||
Total operating expense | 92.5 | 2.5 | % | 94.8 | |||||||
NOI (2) from Real Property | $ | 211.1 | 9.6 | % | $ | 231.3 | |||||
*The foregoing table nets $20.3 million of utility revenue against the related utility expense in property operating and maintenance expense.
Sun Communities, Inc. 2nd Quarter 2015 Page 5
• | Acquisition Portfolio: Information pertaining to the 77 properties excluded from the Company's same site portfolio is presented in the table below. |
ACQUISITION PORTFOLIO (77 communities) | 2015 | |||
(amounts in millions) | Projected | |||
REVENUES: | ||||
Revenue- annual and seasonal | $ | 128.2 | ||
Revenue- transient | 15.8 | |||
Utility and other property income | 8.0 | |||
Income from real property | 152.0 | |||
PROPERTY OPERATING EXPENSES: | ||||
Real estate tax | 12.0 | |||
Property operating and maintenance | 35.3 | |||
Total operating expense | 47.3 | |||
NOI (2) from Real Property | $ | 104.7 | ||
• | Home Sales: the table below details the Company's 2015 projected home sales. |
HOME SALES | 2015 | |||
(amounts in millions, except items with *) | Projected | |||
Number of new home sales* | 255 | |||
Average selling price* | $ | 85,861 | ||
Revenue from new home sales | 21.9 | |||
Cost of new home sales | 18.1 | |||
Gross profit/(NOI) (2) | $ | 3.8 | ||
Number of pre-owned home sales* | 2,056 | |||
Average selling price* | $ | 24,525 | ||
Revenue from pre-owned home sales | 50.4 | |||
Cost of pre-owned home sales | 36.2 | |||
Gross profit/(NOI) (2) | $ | 14.2 | ||
The gain on sale of the rental homes, which is included in the table above and excluded from |
FFO(1), is expected to approximate $7.8 million.
• | Other Income, net: Interest income, ancillary revenues net of ancillary expenses, brokerage commissions and other income, net, is expected to approximate $24.2 million. |
Sun Communities, Inc. 2nd Quarter 2015 Page 6
• | Rental Home Program: the table below details the Company's 2015 projected rental program. |
RENTAL PROGRAM | 2014 | Forecasted | 2015 | ||||||||
(amounts in millions) | Actual | % Growth | Projected | ||||||||
Rental home revenue | $ | 39.2 | 18.1 | % | $ | 46.3 | |||||
Rental home operating and maintenance | 23.3 | 2.2 | % | 23.8 | |||||||
Rental Program NOI (2) | $ | 15.9 | 41.5 | % | $ | 22.5 | |||||
• | General and Administrative Expenses-real property: These expenses are estimated at $40.0 - $41.0 million. |
The estimates and assumptions presented above represent the mid-point of a range of possible outcomes and may differ materially from actual results.
The estimates and assumptions presented above 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 “Forward-Looking Statements.”
Sun Communities, Inc. 2nd Quarter 2015 Page 7
Earnings Conference Call
A conference call to discuss second quarter operating results will be held on Thursday July 30, 2015 at 11:00 A.M. (ET). To participate, call toll-free 888-572-7034. Callers outside the U.S. or Canada can access the call at 719-785-1753. A replay will be available following the call through August 13, 2015, and can be accessed toll-free by calling 888-203-1112 or by calling 719-457-0820. The Conference ID number for the call and the replay is 5006919. The conference call will be available live on Sun Communities website www.suncommunities.com. Replay will also be available on the website.
Sun Communities, Inc. is a REIT that currently owns and operates a portfolio of 251 communities comprising approximately 93,100 developed sites.
For more information about Sun Communities, Inc., please visit our website at www.suncommunities.com.
Contact
Please address all inquiries to our investor relations department, at our website www.suncommunities.com, by phone (248) 208-2500, by email investorrelations@suncommunities.com or by mail Sun Communities, Inc. Investor Relations, 27777 Franklin Road, Ste. 200, Southfield, MI 48034.
Sun Communities, Inc. 2nd Quarter 2015 Page 8
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. Forward-looking statements can be identified by words such as “will,” “may,” “could,” “expect,” “anticipate,” “believes,” “intends,” “should,” “plans,” “estimates,” “approximate”, “guidance” and similar expressions in this press release that predict or indicate future events and trends and that do not report historical matters.
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, some of which are beyond our control. These risks, uncertainties, and other factors may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, the performance of the recent acquisitions, the ability to integrate future acquisitions smoothly and efficiently, changes in market rates of interest, the ability of manufactured home buyers to obtain financing, the level of repossessions by manufactured home lenders and those risks and uncertainties referenced under the headings entitled “Risk Factors” contained in our 2014 Annual Report on Form 10-K, and the Company’s other periodic filings with the Securities and Exchange Commission.
The forward-looking statements contained in this press release speak only as of the date hereof and the Company expressly disclaims any obligation to provide public updates, revisions or amendments to any forward- looking statements made herein to reflect changes in the Company’s assumptions, expectations of future events, or trends.
Sun Communities, Inc. 2nd Quarter 2015 Page 9
(1) | Funds from operations attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities ("FFO") is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as net income (loss) (computed in accordance with generally accepted accounting principles “GAAP”), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company's operating performance. Management generally considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not readily apparent from net loss. Management believes that the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. FFO is computed in accordance with the Company's interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company. |
Because FFO excludes significant economic components of net income (loss) including depreciation and amortization, FFO should be used as an adjunct to net income (loss) and not as an alternative to net income (loss). The principal limitation of FFO is that it does not represent cash flow from operations as defined by GAAP and is a supplemental measure of performance that does not replace net income (loss) as a measure of performance or net cash provided by operating activities as a measure of liquidity. In addition, FFO is not intended as a measure of a REIT's ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO only provides investors with an additional performance measure.
(2) | Investors in and analysts following the real estate industry utilize NOI as a supplemental performance measure. NOI is derived from revenues minus property operating expenses and real estate taxes. NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity; nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions. The Company believes that net income (loss) is the most directly comparable GAAP measurement to NOI. Net income (loss) includes interest and depreciation and amortization which often have no effect on the market value of a property and therefore limit its use as a performance measure. In addition, such expenses are often incurred at a parent company level and therefore are not necessarily linked to the performance of a real estate asset. The Company believes that NOI is helpful to investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key management tool when evaluating performance and growth of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense, and non-property specific expenses such as general and administrative expenses, all of which are significant costs, and therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall. |
(3) | The consideration amounts presented with respect to acquired communities represent the economic transaction and do not contemplate the fair value purchase accounting required by GAAP. |
Sun Communities, Inc. 2nd Quarter 2015 Page 10
Consolidated Balance Sheets
(in thousands, except per share amounts)
(unaudited) June 30, 2015 | December 31, 2014 | ||||||
ASSETS | |||||||
Investment property, net (including $92,687 and $94,230 for consolidated variable interest entities at June 30, 2015 and December 31, 2014) | $ | 3,716,141 | $ | 2,568,164 | |||
Cash and cash equivalents | 11,930 | 83,459 | |||||
Inventory of manufactured homes | 10,246 | 8,860 | |||||
Notes and other receivables, net | 188,036 | 174,857 | |||||
Other assets, net | 106,496 | 102,352 | |||||
TOTAL ASSETS | $ | 4,032,849 | $ | 2,937,692 | |||
LIABILITIES | |||||||
Debt (including $64,968 and $65,849 for consolidated variable interest entities at June 30, 2015 and December 31, 2014) | $ | 2,343,821 | $ | 1,826,293 | |||
Lines of credit | 37,742 | 5,794 | |||||
Other liabilities | 235,508 | 165,453 | |||||
TOTAL LIABILITIES | $ | 2,617,071 | $ | 1,997,540 | |||
Commitments and contingencies | |||||||
Series A-4 preferred stock, $0.01 par value. Issued and outstanding: 6,365 shares at June 30, 2015 and 483 shares at December 31, 2014 | $ | 190,079 | $ | 13,610 | |||
Series A-4 preferred OP units | $ | 24,155 | $ | 18,722 | |||
STOCKHOLDERS’ EQUITY | |||||||
Series A preferred stock, $0.01 par value. Issued and outstanding: 3,400 shares at June 30, 2015 and December 31, 2014 | $ | 34 | $ | 34 | |||
Common stock, $0.01 par value. Authorized: 90,000 shares; Issued and outstanding: 53,783 shares at June 30, 2015 and 48,573 shares at December 31, 2014 | 538 | 486 | |||||
Additional paid-in capital | 2,038,229 | 1,741,154 | |||||
Distributions in excess of accumulated earnings | (911,628 | ) | (863,545 | ) | |||
Total Sun Communities, Inc. stockholders' equity | 1,127,173 | 878,129 | |||||
Noncontrolling interests: | |||||||
Common and preferred OP units | 75,356 | 30,107 | |||||
Consolidated variable interest entities | (985 | ) | (416 | ) | |||
Total noncontrolling interest | 74,371 | 29,691 | |||||
TOTAL STOCKHOLDERS’ EQUITY | 1,201,544 | 907,820 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 4,032,849 | $ | 2,937,692 | |||
Sun Communities, Inc. 2nd Quarter 2015 Page 11
Consolidated Statements of Operations
(Unaudited - dollars in thousands, except per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
REVENUES | |||||||||||||||
Income from real property | $ | 125,833 | $ | 86,105 | $ | 245,358 | $ | 173,602 | |||||||
Revenue from home sales | 18,734 | 14,813 | 35,568 | 24,936 | |||||||||||
Rental home revenue | 11,495 | 9,733 | 22,624 | 19,135 | |||||||||||
Ancillary revenues | 5,254 | 4,254 | 8,445 | 6,690 | |||||||||||
Interest | 3,893 | 3,526 | 7,877 | 6,880 | |||||||||||
Brokerage commissions and other income, net | 729 | 95 | 1,266 | 382 | |||||||||||
Total revenues | 165,938 | 118,526 | 321,138 | 231,625 | |||||||||||
COSTS AND EXPENSES | |||||||||||||||
Property operating and maintenance | 34,507 | 25,193 | 63,721 | 48,382 | |||||||||||
Real estate taxes | 8,796 | 6,079 | 17,511 | 12,088 | |||||||||||
Cost of home sales | 13,702 | 11,100 | 26,259 | 18,948 | |||||||||||
Rental home operating and maintenance | 5,479 | 5,213 | 11,084 | 10,464 | |||||||||||
Ancillary expenses | 4,149 | 3,139 | 6,695 | 5,057 | |||||||||||
General and administrative - real property | 10,486 | 8,393 | 20,316 | 16,206 | |||||||||||
General and administrative - home sales and rentals | 3,957 | 3,119 | 7,445 | 5,618 | |||||||||||
Transaction costs | 2,037 | 1,104 | 11,486 | 1,864 | |||||||||||
Depreciation and amortization | 41,411 | 30,045 | 85,412 | 58,934 | |||||||||||
Extinguishment of debt | 2,800 | — | 2,800 | — | |||||||||||
Interest | 26,751 | 17,940 | 52,140 | 35,530 | |||||||||||
Interest on mandatorily redeemable debt | 787 | 806 | 1,639 | 1,609 | |||||||||||
Total expenses | 154,862 | 112,131 | 306,508 | 214,700 | |||||||||||
Income before other gains (losses) | 11,076 | 6,395 | 14,630 | 16,925 | |||||||||||
(Loss) gain on disposition of properties, net | (13 | ) | 885 | 8,756 | 885 | ||||||||||
Provision for state income taxes | (77 | ) | (70 | ) | (152 | ) | (139 | ) | |||||||
Distributions from affiliate | 7,500 | 400 | 7,500 | 800 | |||||||||||
Net income | 18,486 | 7,610 | 30,734 | 18,471 | |||||||||||
Less: Preferred return to Series A-1 preferred OP units | 622 | 664 | 1,253 | 1,336 | |||||||||||
Less: Preferred return to Series A-3 preferred OP units | 46 | 46 | 91 | 91 | |||||||||||
Less: Preferred return to Series A-4 preferred OP units | 353 | — | 706 | — | |||||||||||
Less: Preferred return to Series C preferred OP units | 340 | — | 340 | — | |||||||||||
Less: Amounts attributable to noncontrolling interests | 743 | 458 | 1,007 | 1,242 | |||||||||||
Net income attributable to Sun Communities, Inc. | 16,382 | 6,442 | 27,337 | 15,802 | |||||||||||
Less: Preferred stock distributions | 4,088 | 1,514 | 8,174 | 3,028 | |||||||||||
Net income attributable to Sun Communities, Inc. common stockholders | $ | 12,294 | $ | 4,928 | $ | 19,163 | $ | 12,774 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 52,846 | 40,331 | 52,672 | 38,413 | |||||||||||
Diluted | 53,237 | 40,546 | 53,060 | 38,631 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.23 | $ | 0.12 | $ | 0.36 | $ | 0.33 | |||||||
Diluted | $ | 0.23 | $ | 0.12 | $ | 0.36 | $ | 0.33 | |||||||
Sun Communities, Inc. 2nd Quarter 2015 Page 12
Reconciliation of Net Income to FFO(1)
(in thousands, except per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income attributable to Sun Communities, Inc. common stockholders | $ | 12,294 | $ | 4,928 | $ | 19,163 | $ | 12,774 | |||||||
Adjustments: | |||||||||||||||
Preferred return to Series A-1 preferred OP units | 622 | 664 | 1,253 | 1,336 | |||||||||||
Preferred return to Series A-3 preferred OP units | 46 | 46 | 91 | 91 | |||||||||||
Preferred return to Series A-4 preferred stock | 2,574 | — | — | — | |||||||||||
Amounts attributable to noncontrolling interests | 566 | 458 | 779 | 1,242 | |||||||||||
Depreciation and amortization | 40,969 | 30,374 | 85,234 | 59,542 | |||||||||||
Loss (gain) on disposition of properties, net | 13 | (885 | ) | (8,756 | ) | (885 | ) | ||||||||
Loss (gain) on disposition of assets, net | (2,426 | ) | (2,014 | ) | (4,128 | ) | (3,028 | ) | |||||||
Funds from operations ("FFO") attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1)(4) | 54,658 | 33,571 | 93,636 | 71,072 | |||||||||||
Adjustments: | |||||||||||||||
Distribution from affiliate | (7,500 | ) | — | (7,500 | ) | — | |||||||||
Transaction costs | 2,037 | 1,104 | 11,486 | 1,864 | |||||||||||
Extinguishment of debt | 2,800 | — | 2,800 | — | |||||||||||
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items (1)(4) | $ | 51,995 | $ | 34,675 | $ | 100,422 | $ | 72,936 | |||||||
Weighted average common shares outstanding: | 52,846 | 40,331 | 52,672 | 38,413 | |||||||||||
Add: | |||||||||||||||
Common stock issuable upon conversion of stock options | 12 | 14 | 14 | 15 | |||||||||||
Restricted stock | 379 | 201 | 374 | 203 | |||||||||||
Common OP units | 2,916 | 2,069 | 2,738 | 2,069 | |||||||||||
Common stock issuable upon conversion of Series A-1 preferred OP units | 1,012 | 1,082 | 1,026 | 1,095 | |||||||||||
Common stock issuable upon conversion of Series A-3 preferred OP units | 75 | 75 | 75 | 75 | |||||||||||
Common stock issuable upon conversion of Series A-4 preferred stock | 2,829 | — | — | — | |||||||||||
Weighted average common shares outstanding - fully diluted | 60,069 | 43,772 | 56,899 | 41,870 | |||||||||||
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) per Share - fully diluted | $ | 0.91 | $ | 0.77 | $ | 1.65 | $ | 1.70 | |||||||
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items(1) per Share - fully diluted | $ | 0.87 | $ | 0.79 | $ | 1.76 | $ | 1.74 | |||||||
(4) The effect of certain anti-dilutive convertible securities is excluded from these items.
Sun Communities, Inc. 2nd Quarter 2015 Page 13
Statement of Operations – Same Site
(in thousands except for Other Information)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
2015 | 2014 | Change | % Change | 2015 | 2014 | Change | % Change | |||||||||||||||||||||||
Income from real property | $ | 80,836 | $ | 74,727 | $ | 6,109 | 8.2 | % | $ | 164,719 | $ | 153,301 | $ | 11,418 | 7.4 | % | ||||||||||||||
PROPERTY OPERATING EXPENSES: | ||||||||||||||||||||||||||||||
Payroll and benefits | 7,354 | 6,620 | 734 | 11.1 | % | 14,027 | 12,731 | 1,296 | 10.2 | % | ||||||||||||||||||||
Legal, taxes, & insurance | 1,423 | 1,091 | 332 | 30.4 | % | 2,808 | 2,356 | 452 | 19.2 | % | ||||||||||||||||||||
Utilities | 4,893 | 4,825 | 68 | 1.4 | % | 10,045 | 9,906 | 139 | 1.4 | % | ||||||||||||||||||||
Supplies and repair | 3,683 | 3,467 | 216 | 6.2 | % | 5,532 | 5,649 | (117 | ) | (2.1 | )% | |||||||||||||||||||
Other | 2,629 | 2,407 | 222 | 9.2 | % | 4,741 | 4,606 | 135 | 2.9 | % | ||||||||||||||||||||
Real estate taxes | 5,723 | 5,648 | 75 | 1.3 | % | 11,518 | 11,293 | 225 | 2.0 | % | ||||||||||||||||||||
Property operating expenses | 25,705 | 24,058 | 1,647 | 6.8 | % | 48,671 | 46,541 | 2,130 | 4.6 | % | ||||||||||||||||||||
NET OPERATING INCOME ("NOI")(2) | $ | 55,131 | $ | 50,669 | $ | 4,462 | 8.8 | % | $ | 116,048 | $ | 106,760 | $ | 9,288 | 8.7 | % | ||||||||||||||
As of June 30, | |||||||||||
OTHER INFORMATION | 2015 | 2014 | Change | ||||||||
Number of properties | 177 | 177 | — | ||||||||
Developed sites | 66,516 | 66,237 | 279 | ||||||||
Occupied sites (5) | 56,063 | 54,376 | 1,687 | ||||||||
Occupancy % (5) (6) | 94.6 | % | 93.1 | % | 1.5 | % | |||||
Weighted average monthly rent per site - MH | $ | 468 | $ | 453 | $ | 15 | |||||
Weighted average monthly rent per site - RV (7) | $ | 399 | $ | 389 | $ | 10 | |||||
Weighted average monthly rent per site - Total | $ | 458 | $ | 444 | $ | 14 | |||||
Sites available for development | 6,197 | 6,118 | 79 | ||||||||
(5) Includes manufactured housing and annual/seasonal recreational vehicle sites, and excludes transient recreational vehicle sites, which are included in total developed sites.
(6) Occupancy % excludes recently completed but vacant expansion sites.
(7) Weighted average rent pertains to annual/seasonal RV sites and excludes transient RV sites.
Sun Communities, Inc. 2nd Quarter 2015 Page 14
Rental Program Summary
(amounts in thousands except for *)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2015 | 2014 | Change | % Change | 2015 | 2014 | Change | % Change | ||||||||||||||||||||||
REVENUES: | |||||||||||||||||||||||||||||
Rental home revenue | $ | 11,495 | $ | 9,733 | $ | 1,762 | 18.1 | % | $ | 22,624 | $ | 19,135 | $ | 3,489 | 18.2 | % | |||||||||||||
Site rent included in Income from real property | 15,551 | 13,514 | 2,037 | 15.1 | % | 30,678 | 26,616 | 4,062 | 15.3 | % | |||||||||||||||||||
Rental Program revenue | 27,046 | 23,247 | 3,799 | 16.3 | % | 53,302 | 45,751 | 7,551 | 16.5 | % | |||||||||||||||||||
EXPENSES: | |||||||||||||||||||||||||||||
Commissions | 752 | 621 | 131 | 21.1 | % | 1,586 | 1,222 | 364 | 29.8 | % | |||||||||||||||||||
Repairs and refurbishment | 2,322 | 2,405 | (83 | ) | (3.5 | )% | 4,738 | 4,810 | (72 | ) | (1.5 | )% | |||||||||||||||||
Taxes and insurance | 1,544 | 1,254 | 290 | 23.1 | % | 3,020 | 2,622 | 398 | 15.2 | % | |||||||||||||||||||
Marketing and other | 861 | 933 | (72 | ) | (7.7 | )% | 1,740 | 1,810 | (70 | ) | (3.9 | )% | |||||||||||||||||
Rental Program operating and maintenance | 5,479 | 5,213 | 266 | 5.1 | % | 11,084 | 10,464 | 620 | 5.9 | % | |||||||||||||||||||
NET OPERATING INCOME ("NOI") (3) | $ | 21,567 | $ | 18,034 | $ | 3,533 | 19.6 | % | $ | 42,218 | $ | 35,287 | $ | 6,931 | 19.6 | % | |||||||||||||
Occupied rental home information as of June 30, 2015 and 2014: | |||||||||||||||||||||||||||||
Number of occupied rentals, end of period* | 11,395 | 10,226 | 1,169 | 11.4 | % | ||||||||||||||||||||||||
Investment in occupied rental homes | $ | 445,446 | $ | 384,064 | $ | 61,382 | 16.0 | % | |||||||||||||||||||||
Number of sold rental homes* | 388 | 354 | 34 | 9.6 | % | ||||||||||||||||||||||||
Weighted average monthly rental rate* | $ | 835 | $ | 804 | $ | 31 | 3.9 | % | |||||||||||||||||||||
Sun Communities, Inc. 2nd Quarter 2015 Page 15
Homes Sales Summary
(amounts in thousands except for *)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2015 | 2014 | Change | % Change | 2015 | 2014 | Change | % Change | ||||||||||||||||||||||
New home sales | $ | 5,175 | $ | 2,412 | $ | 2,763 | 114.6 | % | $ | 10,421 | $ | 4,575 | $ | 5,846 | 127.8 | % | |||||||||||||
Pre-owned home sales | 13,559 | 12,401 | 1,158 | 9.3 | % | 25,147 | 20,361 | 4,786 | 23.5 | % | |||||||||||||||||||
Revenue from home sales | 18,734 | 14,813 | 3,921 | 26.5 | % | 35,568 | 24,936 | 10,632 | 42.6 | % | |||||||||||||||||||
New home cost of sales | 4,418 | 2,041 | 2,377 | 116.5 | % | 8,609 | 3,875 | 4,734 | 122.2 | % | |||||||||||||||||||
Pre-owned home cost of sales | 9,284 | 9,059 | 225 | 2.5 | % | 17,650 | 15,073 | 2,577 | 17.1 | % | |||||||||||||||||||
Cost of home sales | 13,702 | 11,100 | 2,602 | 23.4 | % | 26,259 | 18,948 | 7,311 | 38.6 | % | |||||||||||||||||||
NOI / Gross Profit (2) | $ | 5,032 | $ | 3,713 | $ | 1,319 | 35.5 | % | $ | 9,309 | $ | 5,988 | $ | 3,321 | 55.5 | % | |||||||||||||
Gross profit – new homes | $ | 757 | $ | 371 | $ | 386 | 104.0 | % | $ | 1,812 | $ | 700 | $ | 1,112 | 158.9 | % | |||||||||||||
Gross margin % – new homes | 14.6 | % | 15.4 | % | (0.8 | )% | 17.4 | % | 15.3 | % | 2.1 | % | |||||||||||||||||
Average selling price - new homes* | $ | 79,607 | $ | 89,260 | $ | (9,653 | ) | (10.8 | )% | $ | 79,546 | $ | 84,730 | $ | (5,184 | ) | (6.1 | )% | |||||||||||
Gross profit – pre-owned homes | $ | 4,275 | $ | 3,342 | $ | 933 | 27.9 | % | $ | 7,497 | $ | 5,288 | $ | 2,209 | 41.8 | % | |||||||||||||
Gross margin % – pre-owned homes | 31.5 | % | 26.9 | % | 4.6 | % | 29.8 | % | 26.0 | % | 3.8 | % | |||||||||||||||||
Average selling price - pre-owned homes* | $ | 26,534 | $ | 25,107 | $ | 1,427 | 5.7 | % | $ | 25,453 | $ | 24,355 | $ | 1,098 | 4.5 | % | |||||||||||||
Home sales volume: | |||||||||||||||||||||||||||||
New home sales* | 65 | 27 | 38 | 140.7 | % | 131 | 54 | 77 | 142.6 | % | |||||||||||||||||||
Pre-owned home sales* | 511 | 494 | 17 | 3.4 | % | 988 | 836 | 152 | 18.2 | % | |||||||||||||||||||
Total homes sold* | 576 | 521 | 55 | 10.6 | % | 1,119 | 890 | 229 | 25.7 | % | |||||||||||||||||||
Sun Communities, Inc. 2nd Quarter 2015 Page 16
Acquisition Summary - Properties Acquired in 2014 and 2015
(amounts in thousands except for statistical data)
Three Months Ended June 30, 2015 | Six Months Ended June 30, 2015 | ||||||
REVENUES: | |||||||
Income from real property (excluding transient revenue) | $ | 36,615 | $ | 66,138 | |||
Transient revenue | 3,192 | 3,692 | |||||
Revenue from home sales | 4,835 | 9,514 | |||||
Rental home revenue | 715 | 1,438 | |||||
Ancillary revenues | 2,340 | 2,766 | |||||
Total revenues | 47,697 | 83,548 | |||||
COSTS AND EXPENSES: | |||||||
Property operating and maintenance | 10,129 | 16,639 | |||||
Real estate taxes | 2,743 | 5,664 | |||||
Cost of home sales | 3,878 | 7,514 | |||||
Rental home operating and maintenance | 151 | 233 | |||||
Ancillary expense | 1,409 | 1,692 | |||||
Total expenses | 18,310 | 31,742 | |||||
NET OPERATING INCOME ("NOI") (2) | $ | 29,387 | $ | 51,806 | |||
As of June 30, 2015 | |||||||
Other information: | |||||||
Number of properties | 74 | ||||||
Developed sites | 26,569 | ||||||
Occupied sites (5) | 22,620 | ||||||
Occupancy % (5) | 91.9 | % | |||||
Weighted average monthly rent per site - MH | $ | 483 | |||||
Weighted average monthly rent per site - RV (7) | $ | 431 | |||||
Weighted average monthly rent per site - MH/RV | $ | 481 | |||||
Home sales volume : | |||||||
New homes | 83 | ||||||
Pre-owned homes | 191 | ||||||
Occupied rental home information : | |||||||
Number of occupied rentals, end of period | 451 | ||||||
Investment in occupied rental homes (in thousands) | $ | 11,752 | |||||
Weighted average monthly rental rate | $ | 1,018 | |||||
(5) Includes manufactured housing and annual/seasonal recreational vehicle sites, and excludes transient recreational vehicle sites, which are included in total developed sites.
(7) Weighted average rent pertains to annual/seasonal RV sites and excludes transient RV sites.
Sun Communities, Inc. 2nd Quarter 2015 Page 17