Sun Communities Earnings: Growth Reported in Q4 and Forecast for 2024 Higher Than Anticipated

Sun Communities reported fourth-quarter results that were ahead of our estimates, giving us confidence in our $170 fair value estimate for the no-moat company. Same-store occupancy for the manufactured housing portfolio increased 70 basis points year over year to 97.3%, slightly better than our 97.0% estimate, and same-store revenue was up 8.6%, also slightly better than our estimate of 8.3% growth. Revenue for the residential vehicle segment was up 2.1% as the membership portion grew 15.8% while the transient portion declined 17.7%. Finally, the marina segment saw revenue growth of 8.2% in the fourth quarter. Combined, same-store revenue growth for the whole company was 6.3% in the fourth quarter. Meanwhile, operating expenses for the same-store portfolio were only up 0.3% as supplies and repairs fell 16.3% and utility costs were down 8.3%. As a result, total same-store net operating income, or NOI, grew 9.6% in the fourth quarter. Sun reported core funds from operations, or FFO, of $1.34 per share, which was ahead of our $1.25 estimate.