Sun Communities, Inc. (SUI) Announces Intent to Increase Distributions and Provides 2014 Guidance
(Thomson Reuters ONE Via Acquire Media NewsEdge)
FOR FURTHER INFORMATION AT THE COMPANY:
Karen J. Dearing
Chief Financial Officer
Southfield, MI, January 23, 2014 - Sun Communities, Inc. (NYSE:SUI) (the
"Company"), a real estate investment trust ("REIT") that owns and operates
manufactured housing and recreational vehicle communities, today announced its
Board of Directors has approved setting the 2014 target annual distribution rate
at $2.60 per common share, an increase of $0.08 over the current $2.52 per
common share for 2013. This increase will begin with the 2014 first quarter
distribution that the Company expects to be declared in March and paid in April.
While the Board of Directors has adopted the new annual distribution rate
policy, the amount of each quarterly distribution on the Company's common stock
will be subject to approval by the Board of Directors.
The Company anticipates FFO((1)) per diluted share and operating partnership
unit ("Share") for the full year 2014 will range from $3.52 to $3.62 per Share,
indicating FFO((1)) growth of 9.7% to 12.8% when compared to the midpoint of
guidance for 2013.
Revenues and expenses contain a component of seasonality; therefore, FFO((1))
per Share is not earned evenly throughout the year. The Company expects 26% of
estimated FFO((1)) to be earned in the first quarter, and 22.5% , 27.5% and 24%
of estimated FFO((1)) to be earned in the second, third and fourth quarters,
FFO((1)) guidance for the first quarter of 2014 is $0.92-$0.94 per Share.
The Company's guidance is based on several key variables and assumptions, which
are summarized below.
* Rent Increase: The weighted average site rental increase for the total
portfolio is expected to be 3.2%.
* Occupancy: Revenue producing sites in the Company's total portfolio are
expected to increase by approximately 1,900 sites. Excluding vacant newly
completed expansion sites, total portfolio occupancy is expected to be
approximately 92% at December 31, 2014.
* 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 $26.7 million and is expected to be earned
30%, 18.5%, 37.5%, 14% in the first, second, third and fourth quarters,
* Same Site Portfolio: At the midpoint of guidance the Company's same property
portfolio of 173 communities is expected to generate revenue growth of
approximately 5.9% and property and operating expense growth of 3.2%
resulting in NOI ((2) )growth of approximately 7.1%. Revenue producing
sites are expected to increase by approximately 1,790 sites in the Company's
same site portfolio.
SAME SITE PORTFOLIO (173 communities) Forecasted
2013 Forecasted 2014
(amounts in millions) Forecast % Growth Midpoint
---------------------------------------- ----------- ------------ ------------
Revenue- annual and seasonal $ 255.3 6.0 % $ 270.6
Revenue- transient 12.2 9.8 % 13.4
Other income 14.4 0.7 % 14.5
Total revenue 281.9 5.9 % 298.5
PROPERTY OPERATING EXPENSES:
Real estate tax 21.8 4.0 % 22.7
Property operating and maintenance (*) 62.9 2.9 % 64.7
Total operating expense 84.7 3.2 % 87.4
NOI( (2) )from Real Property $ 197.2 7.1 % $ 211.1
( * )The foregoing table nets $19.3 million of utility revenue against
the related utility expense in property operating and maintenance expense.
* Acquisition Portfolio: Information pertaining to the 17 properties excluded
from the Company's same site portfolio is presented in the table below.
ACQUISITION PORTFOLIO (17 communities) Forecasted 2014
(amounts in millions) Midpoint
Revenue- annual and seasonal $ 10.6
Revenue- transient 13.3
Other income 1.9
Total revenue 25.8
PROPERTY OPERATING EXPENSES:
Real estate tax 1.4
Property operating and maintenance 11.4
Total operating expense 12.8
NOI( (2) )from Real Property $ 13.0
* Home Sales: The Company expects to sell approximately 2,200 homes, an
increase of 14% over 2013. The budgeted average gross profit per home sale
is $6,250. Total home sales include the sale of 1,100 rental homes which
will convert approximately 11% of the Company's renters to owners.
* Rental Home Program: Guidance assumes an increase of approximately 770
occupied rental units. Approximately 54% of these additions are expected to
be in communities acquired or expanded in the past two years.
RENTAL PROGRAM Forecasted
2013 Forecasted 2014
(amounts in millions) Forecast % Growth Midpoint
--------------------------------------- ---------- ------------ ------------
Rental home revenues $ 30.2 18.2 % $ 35.7
Rental home operating and maintenance 17.8 11.9 % 19.9
NOI( (2) )from Real Property $ 12.4 27.3 % $ 15.8
* Recurring Capital Expenditures: The Company expects recurring capital
expenditures to approximate $11.5 million ($165 per developed site) for
2014, or about $0.29 per Share. Using the midpoint of earnings guidance and
after consideration of recurring capital expenditures, the payout ratio is
expected to be approximately 79.3% when compared to an annual distribution
rate of $2.60 per Share.
* General and Administrative Expenses-real property: These expenses are
estimated at $29.0-$30.0 million. The increase in expense is primarily a
result of an increase in payroll costs due to staffing increases, an
increase in deferred compensation amortization related to recent restricted
stock awards and an increase in software licensing. The Company is also
investing in technological efficiencies to further streamline its processes
and anticipates limited additional personnel necessary to administer the
business, as it expects to continue to acquire properties in 2014.
* Debt: Mortgage debt maturities in 2014 are $11.5 million. The Company's Debt
to EBITDA((3)) multiple is projected to approximate 6.9X at year end.
* Expansions: The Company continues to expand communities that are near 95%
occupied and which continue to exhibit strong demand. Guidance includes the
expansion of five communities in Texas and one community in Colorado, which
are expected to add approximately 765 developed sites by year end. The
expansions have an estimated fill rate of six to eight sites per month.
* Acquisitions: Since November 21, 2013, the Company has acquired four
recreational vehicle communities and one manufactured housing community for
an aggregate purchase price of approximately $86.1 million. The
recreational vehicle communities are located in New York, California (2) and
Maryland and the manufactured housing community is located in Michigan.
Guidance includes these completed acquisitions but no prospective
acquisitions. The Company continues to evaluate additional acquisition
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 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. is a REIT that currently owns and operates a portfolio of
190 communities comprising approximately 69,800 developed sites.
For more information about Sun Communities, Inc. visit our website at
1. Funds from operations ("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. EBITDA is defined as NOI plus other income, plus (minus) equity earnings
(loss) from affiliates, minus general and administrative expenses. EBITDA
includes EBITDA from discontinued operations.
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
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, 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 2012 Annual Report, 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.
2014 Distributions and Guidance:
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Sun Communities via GlobeNewswire
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