Sun Communities Earnings: Solid Same-Store NOI Growth; Announces $5.65 Billion Marina Business Sale

Sun Communities reported fourth-quarter results that were mixed compared with our expectations, though we did not see anything in the results that would materially change our $172 per share fair value estimate for the no-moat company. Same-store occupancy for the manufactured housing segment increased 50 basis points year over year to 97.6%, better than our 96.7% estimate, while rental rates were up 5.5%, also better than our estimate of 3.8% growth. As a result, same-store net operating income for the manufactured housing segment increased 7.1% in the fourth quarter, better than our estimate of 5.8% growth. The recreational vehicle segment continues to see mixed results, with revenue growing 9.2% among the annual membership portion but falling 8.3% among the transient component. Combined with an expense growth of 6.2%, recreational vehicle same-store NOI was only up 0.4%, though that is much better than our estimate of a 3.2% decline. Meanwhile, the marina segment saw same-store NOI growth of 6.6%, which was also slightly better than our 5.2% estimate for the segment. Therefore, total company same-store NOI growth came in at 5.7%, well ahead of our estimate of 3.9% growth. However, Sun reported core funds from operations of $1.41 per share in the fourth quarter, which was 5 cents below our estimate.