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Sun Communities Inc. Reports Q3 Results

October 25, 2011 by   - () Leave a Comment

Sun Communities Inc., a real estate investment trust (REIT) that owns and operates manufactured housing and recreational vehicle communities, today (Oct.  25) reported its third quarter results.

The company reported an 8.7% increase in funds from operations and a 4.7% increase in same site net operating income.

“We are pleased to report that we have completed the integration of our acquisition properties into our operations model ahead of schedule. This has resulted in the Kentland portfolio, located entirely in Michigan, gaining 103 revenue producing sites in our first 90 days of ownership,” Gary A. Shiffman, chairman and CEO, stated in a news release. “Based on these positive results and operational efficiencies already realized, we are confident this acquisition will continue to meet or exceed anticipated pro forma results.”

Highlights of the release follow.

Funds from Operations

Funds from operations (FFO) increased to $18.5 million, or 74 cents per share, in the third quarter of 2011 as compared to $14.8 million, or 69 cents per share, in the third quarter of 2010. Adjusted funds from operations (AFFO) was $18.6 million, or 75 cents per share for the third quarter of 2011 as compared to $14.8 million, or 69 cents per share in the third quarter of 2010.

FFO increased to $54 million, or $2.27 per share, for the nine months ended Sept. 30, 2011,  compared to $45.6 million, or $2.15 per share, for the nine months ended Sept. 30, 2010. AFFO was $55.1 million or $2.32 per share for the nine months ended Sept. 30, 2011, compared to $46.5 million, or $2.19 per share, for the nine months ended Sept. 30, 2010.

Net (Loss) Income Attributable to Common Stockholders

Net loss attributable to common stockholders for the third quarter of 2011 was $400,000, or 2 cents per common share, compared with a net loss of $1.4 million, or 7 cents per common share, for the third quarter of 2010. Net income attributable to common stockholders for the nine months ended Sept. 30, 2011, was $1.1 million, or 5 cents per common share, compared with a loss of $2.5 million, or 13 cents per common share, for the nine months ended Sept. 30, 2010.

Community Occupancy

During the third quarter of 2011, same site revenue producing sites increased by 199 sites, compared to an increase of 76 sites during the third quarter of 2010. For the nine months ended Sept. 30, 2011, same site revenue producing sites increased by 629 sites, compared to an increase of 510 sites for the nine months ended Sept. 30, 2010. Same site occupancy increased to 85.% at Sept. 30, 2011 from 84.5% at Sept. 30, 2010.

In addition to the increases in same site revenue producing sites discussed above, 4,511 revenue producing sites were added during the year from the acquired Kentland properties and Orange City RV Resort, including 103 sites added during the quarter.

The company rented an additional 293 homes during the three months ended September 30, 2011, bringing the total number of occupied rentals to 6,737.

“The rate of occupancy growth in our same site portfolio has tripled, from 0.5% in 2009 to an estimated 1.5% for 2011, and we believe this momentum will carry us to 90% occupancy in the next two to three years,” said Shiffman.

Same Site Results

For 136 communities owned throughout 2011 and 2010, third quarter 2011 total revenues increased 3.9% and total expenses increased 2.1%, resulting in an increase in NOI of 4.7% over the third quarter of 2010. For the nine months ended Sept. 30, 2011, total revenues increased 3.4% and total expenses increased 1.8% resulting in an increase in NOI of 4.2% over the nine months ended Sept. 30, 2010.

Home Sales

During the third quarter of 2011, 367 homes were sold, an increase of 7% from the 343 homes sold during the third quarter of 2010. Rental home sales included in total home sales above totaled 180 and 193 for the third quarters of 2011 and 2010, respectively.

During the nine months ended Sept. 30, 2011, 1,086 homes were sold, an increase of 1% from the 1,075 homes sold during the nine months ended Sept. 30, 2010. Rental home sales, included in total home sales above, totaled 596 and 585 for the nine months ended Sept. 30, 2011, and Sept. 30, 2010, respectively.

Stock Issuance

During the quarter, the company sold 200,000 shares of common stock at a weighted average price of $38.91 per share, resulting in additional net capital of approximately $7.6 million.

Line of Credit

On Sept. 28, the company entered into a secured revolving credit facility in the amount of $130 million which replaced the company’s $115 million revolving line of credit. The facility is secured by a first priority lien on all of the company’s equity interests in each entity that owns all or a portion of the properties constituting the borrowing base and collateral assignments of the company’s senior and mezzanine debt positions in certain borrowing base properties.

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