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Sun Communities (SUI)
NYSE:SUI
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Sun Communities
(NYSE:SUI)71Outperform
Positive Factors
Asset Sale
SUI entered into an agreement to sell the entirety of its Marina business to Blackstone for an all-cash purchase of $5.65bn, generating $5.5bn in pre-tax proceeds and a $1.3 billion gain on sale.
Debt Reduction
The Company is planning to use the proceeds primarily for debt reduction, resulting in a pro forma net debt/EBITDA ratio expected to be within 2.5-3.0x, down from current levels of 6.0x.
Negative Factors
Impairment Charge
Negatives include another impairment to UK goodwill of $181 million.
Sun Communities (SUI) vs. S&P 500 (SPY)
Market Cap
$17.06B
Dividend Yield2.81%
Average Volume (3M)828.06K
Price to Earnings (P/E)189.7
Beta (1Y)0.57
Revenue Growth0.02%
EPS Growth-33.99%
CountryUS
Employees6,780
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)0.75
Shares Outstanding127,378,160
10 Day Avg. Volume1,154,184
30 Day Avg. Volume828,063
Financial Highlights & Ratios
PEG Ratio47.51
Price to Book (P/B)N/A
Price to Sales (P/S)5.30
Price to Cash Flow (P/CF)36.10
P/FCF Ratio11.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$133.71Price Target Upside1.79% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Sun Communities Business Overview & Revenue Model
Company DescriptionSun Communities, Inc. (SUI) is a real estate investment trust (REIT) that specializes in the ownership and operation of manufactured housing communities, recreational vehicle (RV) resorts, and marinas. The company, founded in 1975 and headquartered in Southfield, Michigan, focuses on providing affordable housing and vacation accommodations across the United States and Canada. Sun Communities is recognized for its well-maintained properties and commitment to offering quality living experiences for its residents and guests.
How the Company Makes MoneySun Communities generates revenue primarily through the leasing of land and facilities to residents in its manufactured housing communities and RV resorts. The company earns rental income from homeowners who lease the land on which their manufactured homes are placed, as well as from RV owners who pay for short-term or long-term site rentals. Additionally, Sun Communities derives income from selling homes within its communities and providing various services, such as utilities and amenities, to residents and guests. The company also operates marinas, generating revenue from slip rentals and related services. Strategic acquisitions and development projects further contribute to Sun Communities' earnings by expanding its portfolio and enhancing its service offerings. Partnerships with homebuilders and RV manufacturers, alongside a strong focus on customer service and property management, play significant roles in maintaining steady income streams.
Sun Communities Financial Statement Overview
Summary
Sun Communities demonstrates strong revenue growth and a solid cash flow position, indicative of a well-managed business in a stable industry. The balance sheet highlights minimal debt obligations, enhancing financial stability. However, profitability metrics suggest room for improvement in cost management and enhancing net income returns.Income Statement
Sun Communities shows a consistent revenue growth trajectory with a TTM increase to $3.23 billion, up from $3.18 billion the previous year, indicating a stable demand for its services. The gross profit margin has been robust in recent periods, and the TTM EBIT margin stands strong at 36.42%. However, the net profit margin is relatively low at 2.86%, indicating potential cost management issues despite a solid EBITDA margin of 68.54%.72
Positive
Balance Sheet
The company displays a stable equity position with a stockholders' equity of $7.08 billion against total assets of $16.55 billion, resulting in a healthy equity ratio of 42.79%. The debt-to-equity ratio is favorable, with no total debt recorded in the TTM period, reducing financial risk. However, the return on equity (ROE) is modest at 1.30%, reflecting limited return on shareholders' investments.68
Positive
Cash Flow
Operating cash flow remains strong at $749.1 million in the TTM period, maintaining a positive free cash flow of the same amount, reflecting strong cash generation capabilities. The operating cash flow to net income ratio is high, indicating efficient earnings conversion to cash flow, though the free cash flow growth rate is flat due to steady operating performance.74
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.22B | 3.18B | 2.93B | 2.26B | 1.39B | Gross Profit |
| 2.09B | 1.49B | 1.42B | 1.15B | 774.22M | EBIT |
| 1.79B | 1.22B | 588.00M | 462.76M | 293.03M | EBITDA |
| 1.10B | 771.60M | 2.27B | 1.68B | 1.26B | Net Income Common Stockholders |
| 89.00M | -213.30M | 242.00M | 380.20M | 131.61M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 17.98B | 29.20M | 217.70M | 265.10M | 223.02M | Total Assets |
| 16.55B | 16.94B | 17.08B | 13.49B | 11.21B | Total Debt |
| 3.21B | 7.78B | 9.33B | 5.67B | 4.69B | Net Debt |
| 3.15B | 7.75B | 9.24B | 5.59B | 4.59B | Total Liabilities |
| 9.36B | 9.77B | 9.20B | 6.76B | 5.58B | Stockholders Equity |
| 7.08B | 7.08B | 7.81B | 6.62B | 5.53B |
| Cash Flow | Free Cash Flow | |||
| 861.00M | 790.50M | 1.60B | 472.37M | 1.07B | Operating Cash Flow |
| 861.00M | 790.50M | 734.90M | 753.57M | 548.95M | Investing Cash Flow |
| -267.40M | -919.50M | -3.06B | -2.34B | -2.49B | Financing Cash Flow |
| -571.60M | 80.30M | 2.35B | 1.57B | 2.00B |
Sun Communities Technical Analysis
Positive
131.36
Price Trends
126.17
Positive
126.85
Positive
126.09
Positive
Market Momentum
2.52
Negative
60.11
Neutral
74.57
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SUI, the sentiment is Positive. The current price of 131.36 is above the 20-day moving average (MA) of 129.24, above the 50-day MA of 126.17, and above the 200-day MA of 126.09, indicating a bullish trend. The MACD of 2.52 indicates Negative momentum. The RSI at 60.11 is Neutral, neither overbought nor oversold. The STOCH value of 74.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SUI.
Sun Communities Risk Analysis
Sun Communities disclosed 41 risk factors in its most recent earnings report. Sun Communities reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sun Communities Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $31.72B | 29.36 | 9.10% | 3.05% | 4.85% | 16.04% | |
74 Outperform | $13.63B | 34.78 | 23.13% | 2.81% | 2.17% | 15.94% | |
71 Outperform | $17.06B | 189.69 | 1.39% | 2.81% | 0.02% | -33.99% | |
70 Outperform | $20.76B | 99.68 | 4.67% | 3.32% | 8.16% | -37.84% | |
69 Neutral | $13.16B | 82.06 | 3.38% | 3.34% | 0.55% | -59.48% | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
61 Neutral | $20.17B | 37.49 | 8.73% | 3.48% | 1.98% | -4.78% |
* Real Estate Sector Average
Performance Comparison
SUI
Sun Communities
131.36
3.17
2.47%
AVB
AvalonBay
218.50
39.49
22.06%
ELS
Equity Lifestyle
67.76
3.75
5.86%
MAA
Mid-America Apartment
166.77
39.46
31.00%
CPT
Camden Property
121.82
26.69
28.06%
INVH
Invitation Homes
33.79
0.31
0.93%
Sun Communities Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -1.95% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant strategic moves that improved financial metrics and set the company on a path for future growth, particularly with the successful sale of Safe Harbor Marinas. While there were some challenges noted in the U.K. operations and RV segment, the overall sentiment was positive, driven by strategic asset disposals, improved leverage, and strong core property performance.Highlights
Strategic Asset Disposal Success
Successfully disposed of approximately $570 million of nonstrategic assets and announced the sale of Safe Harbor Marinas for $5.65 billion, representing a 21x multiple on 2024 FFO and a $1.3 billion gain.
Improved Leverage Profile
Improved net debt-to-EBITDA ratio to 6x by year-end 2024, with an expected post-sale net debt-to-EBITDA ratio between 2.5 and 3x.
Strong Core Property Performance
North American same-property NOI growth was 4.1% for the year, with manufactured housing segment same-property NOI increasing by 7.1%.
Record FFO Per Share
Core FFO per share was $6.81 for the full year, a 5.2% increase from the prior year.
Cost Savings Achievements
Captured approximately $11 million of G&A savings and $4 million in operating expense savings in the fourth quarter, with expectations to expand savings by an additional $3 million to $5 million.
Lowlights
Rising Expenses in U.K. Operations
U.K. same-property expenses grew by 8.1% due to increases in national minimum wage and payroll taxes, offsetting revenue growth.
RV Segment Challenges
RV same-property NOI grew by only 0.4% due to a 6% decline in transient RV revenue, although transient to annual conversions continued.
Company Guidance
During the Sun Communities Fourth Quarter and Year-End 2024 Earnings Conference Call, management provided detailed guidance for 2025, including a strategic repositioning through the sale of Safe Harbor Marinas to Blackstone Infrastructure for $5.65 billion, which is expected to significantly enhance the company's financial metrics. This transaction is anticipated to improve Sun's net debt-to-EBITDA ratio from 6x to between 2.5 and 3x post-sale. The sale, representing a 21x multiple on Safe Harbor's 2024 FFO, will refocus Sun on its core manufactured housing (MH) and recreational vehicle (RV) segments, increasing these segments' contribution to over 90% of total NOI. For 2025, the company projects North American same-property NOI growth of 5%, driven by a 4.2% revenue increase and a 3% expense growth, while core FFO per share guidance is yet to be finalized pending the transaction's closing. The company is also implementing a $15 million to $20 million restructuring plan, having already realized $11 million in G&A savings, and plans to continue seeking efficiencies in operations.Sun Communities Corporate Events
M&A TransactionsBusiness Operations and Strategy
Sun Communities Sells Safe Harbor Marinas for $5.65B
Positive
Feb 27, 2025
Sun Communities, Inc. announced the sale of its Safe Harbor Marinas to Blackstone Infrastructure for $5.65 billion, aiming to refocus its business strategy on its core MH and RV operations. The transaction is expected to significantly de-leverage Sun’s balance sheet, enhance financial flexibility, and generate an estimated book gain of approximately $1.3 billion, benefiting shareholders and reinforcing the company’s focus on durable annual income streams.
M&A TransactionsBusiness Operations and Strategy
Sun Communities Sells Safe Harbor Marinas for $5.65B
Positive
Feb 24, 2025
On February 24, 2025, Sun Communities announced the sale of its Safe Harbor Marinas business to Blackstone Infrastructure for $5.65 billion. This strategic move allows Sun to refocus on its core MH and RV segments, enhancing its financial flexibility and leverage profile. The transaction is expected to generate approximately $5.5 billion in pre-tax proceeds, which will be used for debt reduction, shareholder distributions, and reinvestment in core businesses. The sale is anticipated to close in the second quarter of 2025, subject to customary conditions, and is expected to significantly improve Sun’s balance sheet and financial metrics.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.