Company Reports

Sun Communities is a residential REIT that focuses on owning manufactured housing and recreational vehicle communities after the company completed the sale of its marina segment for $5.5 billion in the second quarter of 2025. The company has grown significantly over the past decade after spending $11.8 billion since 2010 to build a portfolio of 455 properties from just 136 at the end of 2010. Sun targets owning properties that are desirable as second homes or vacation properties, with nearly 50% of the portfolio located in either Florida or Michigan near major bodies of water.

Sun Communities reported core funds from operations of $1.84 per share and same-store net operating income growth of 6.0% for the second quarter.

Sun Communities reported core funds from operations of $1.40 per share and same-store net operating income growth of 6.3% for the first quarter.

Sun Communities is a residential REIT that focuses on owning manufactured housing and recreational vehicle communities after the company completed the sale of its marina segment for $5.5 billion in the second quarter of 2025. The company has grown significantly over the past decade after spending $11.8 billion since 2010 to build a portfolio of 513 properties from just 136 at the end of 2010. Sun targets owning properties that are desirable as second homes or vacation properties, with nearly 50% of the portfolio located in either Florida or Michigan near major bodies of water.

Sun Communities reported core funds from operations of $1.40 per share and same-store net operating income growth of 7.9% for the fourth quarter.

Sun Communities reported core funds from operations of $2.28 per share and same-store net operating income growth of 5.4% for the third quarter.

Sun Communities is a residential REIT that focuses on owning manufactured housing and residential vehicle communities after the company completed the sale of its marina segment for $5.5 billion in the second quarter of 2025. The company has grown significantly over the past decade after spending $11.8 billion since 2010 to build a portfolio of 501 properties from just 136 at the end of 2010. Sun targets owning properties that are desirable as second homes or vacation properties, with nearly 50% of the portfolio located in either Florida or Michigan near major bodies of water.

Sun Communities reported core funds from operations of $1.76 per share and same-store net operating income growth of 4.9% for the second quarter.

Sun Communities is a residential REIT that focuses on owning manufactured housing and residential vehicle communities after the company completed the sale of its marina segment for $5.5 billion in the second quarter of 2025. The company has grown significantly over the past decade after spending $11.8 billion since 2010 to build a portfolio of 502 properties from just 136 at the end of 2010. Sun targets owning properties that are desirable as second homes or vacation properties, with nearly 50% of the portfolio located in either Florida or Michigan near major bodies of water.

Sun Communities reported core funds from operations of $1.26 per share and same-store net operating income growth of 4.6% for the first quarter.

Sun Communities is a residential REIT that focuses on owning manufactured housing, residential vehicle communities, and marinas, though the company recently announced the sale of the marina segment for $5.65 billion that is expected to close in the second quarter of 2025. The company has grown significantly over the past decade after spending $11.8 billion since 2010 to build a portfolio of 645 properties from just 136 at the end of 2010. Sun targets owning properties that are desirable as second homes or vacation properties with nearly 50% of the portfolio located in either Florida or Michigan near major bodies of water.

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.

Over the past few years, we have observed an inverse relationship between share prices in the REIT sector and interest-rate movements. We believe a major reason is that all commercial real estate valuations are connected to interest rates. Capitalization rates directly indicate the return expectations for a real estate investment and expectations for risk and growth. Historically, we have observed that commercial real trades at cap rates consistently spread above the 10-year US Treasury. If interest rates rise, investors will require a higher return, and thus a higher cap rate, to accept the risk associated with an investment in a real estate asset. Since return expectations have held relatively steady for most real estate sectors over the past few years, higher cap rates translate to falling prices for real estate.

Third-quarter results for no-moat Sun Communities were mixed compared with our expectations. However, we don't see anything from the quarter that would materially change our $172 per share fair value estimate. Same-store occupancy for the manufactured housing segment increased 20 basis points sequentially to 96.9%, better than our estimate of flat growth, while rental rates were up 5.9%, above our estimate of 4.7% growth. As a result, Sun reported 6.4% same-store revenue growth for the manufactured housing segment, which is also better than our estimate of 5.8% same-store growth.

Sun Communities is a residential REIT that focuses on owning manufactured housing, residential vehicle communities, and marinas. The company has grown significantly over the past decade after spending $11.8 billion since 2010 to build a portfolio of 666 properties from just 136 at the end of 2010. Sun targets owning properties that are desirable as second homes or vacation properties with nearly 50% of the portfolio located in either Florida or Michigan near major bodies of water.

Despite a rally over the past two months, we still view the US REIT sector as being undervalued. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors led combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past three years, with many reaching historical levels of net operating income growth, the REIT sector has underperformed the broader equity markets in 2023 and into the first half of 2024. We believe that the cause has been due to the sector's negative correlation with interest rates as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, interest rates have fallen since the end of July, leading to a rally for the REIT sector. We believe that US REITs will continue to see share price movements that are inverse of interest rate movements.

Sun Communities reported second-quarter results that were relatively in line with our expectations, giving us confidence in our $172 fair value estimate for the no-moat company. Same-store occupancy for the manufactured home segment remained flat sequentially at 96.7%. However, after adjusting for recently completed expansion projects, occupancy increased 150 basis points year over year to 98.5%. Rental rates increased 6.0%, leading to same-store revenue growth of 7.2% and same-store net operating income growth of 6.4%, which was in line with our 6.7% estimate. While annual membership revenue for recreational vehicles was up 11.0%, transient business for RVs was down 12.0%. As a result, same-store revenue for RVs was down 0.7% and same-store NOI fell 4.6%, which was worse than our estimate of a 1.8% decline. The company’s marina segment saw same-store NOI growth of 6.1%, so total company same-store NOI growth was 3.6% for the second quarter, which was in line with our 4.0% estimate. Sun reported core funds from operations of $1.86 per share for the second quarter, which was below our $1.89 estimate.

The US REIT sector remains significantly undervalued, in our perspective. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past two years, with many REITs reaching historical levels of net operating income growth, the sector has underperformed the broader equity markets over the past two years. We believe that the cause has been the sector’s negative correlation with interest rates as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, we don’t believe that higher rates significantly change our fair value estimates for the sector. Additionally, interest rates are down from the October 2023 highs, and REIT share prices have generally inversely followed the movements of the US 10-year Treasury.

Sun Communities is a residential REIT that focuses on owning manufactured housing, residential vehicle communities, and marinas. The company has grown significantly over the past decade after spending $11.8 billion since 2010 to build a portfolio of 666 properties from just 136 at the end of 2010. Sun targets owning properties that are desirable as second homes or vacation properties with nearly 50% of the portfolio located in either Florida or Michigan near major bodies of water.

No-moat Sun Communities' first-quarter results were slightly better than we anticipated, and we are reaffirming our $172 fair value estimate. Same-store occupancy for the manufactured home segment fell 60 basis points sequentially but rose 70 basis points year over year to 96.7%. Rental rates increased 6.0%, leading to same-store revenue growth of 6.8%, beating our 4.9% estimate. Operating expenses were up only 3.4%, so same-store net operating income grew 8.0% for the segment. Recreational vehicle revenue growth continued to show significant divergence, with the annual business up 13.4% and the transient business down 13.1%. However, operating expenses for the segment were down 1.7%, so same-store NOI growth came in at 8.1%. Combined with marina same-store NOI that was up 7.5%, total company same-store NOI grew 7.9%, better than our 7.0% estimate. As a result, Sun reported core funds from operations of $1.19 per share, $0.04 better than our $1.15 estimate.