Sun Communities Inc., a Southfield, Mich.-based real estate investment trust (REIT) that owns and operates 136 manufactured housing and recreational vehicle communities, reported it plans to buy a 521-site RV community in Orange City, Fla.
The company previously provided third-party management services to the community and has good working knowledge of the property, Sun stated in a news release announcing its first quarter financial results. The approximate purchase price is $6.5 million and, subject to the execution of a definitive purchase agreement and the satisfaction of customary closing conditions, the closing is expected in May.
Highlights of the company’s news release follows:
Three Months Ended March 31, 2011, vs. March 31, 2010
- Funds from Operations (FFO) excluding certain items described in this release was $19 million compared to $17.7 million in the first quarter of 2010, an increase of 1.3 million or 7.3%.
- Same Site Net Operating Income (NOI) increased by 4.2%.
- Total revenues were $69.6 million, up $2.2 million or 3.3%.
- Home sales increased 9.8%, from 325 units to 357 units.
“We completed another solid quarter producing additional occupancy growth, increased home sales and strong same site NOI growth, as well as adding $32.1 million of equity to our balance sheet and refinancing $104.0 million of our 2011 debt maturities,” said Gary A. Shiffman, chairman and CEO. “These transactions strengthen our balance sheet and when added to growth from our core portfolio, as well as from several community expansion and acquisition opportunities, present a compelling prospect for a successful year at Sun.”
Funds from Operations
FFO increased to $18.8 million, or $0.82 per diluted share and OP Unit, in the first quarter of 2011 as compared to $17.6 million, or $0.84 per Share, in the first quarter of 2010.
Net Income Attributable to Common Stockholders
Net income attributable to common stockholders for the first quarter of 2011 was $2.4 million, or $0.11 per diluted common share, compared with net income of $1.3 million, or $0.07 per diluted common share, for the first quarter of 2010.
During the first quarter of 2011, revenue producing sites increased by 143 sites, compared to an increase of 242 sites during the first quarter of 2010.
Occupancy increased to 84.6% at March 31, 2011 from 83.9% at March 31, 2010. Excluding the 78 recently developed expansion sites that remained vacant at March 31, 2011; occupancy would have been 84.8%.
The company rented an additional 94 homes during the three months ended March 31, 2011, bringing the total number of occupied rentals to 6,235.
Same Site Results
For 136 communities owned throughout 2011 and 2010, first quarter 2011 total revenues increased 3.1% and total expenses increased 0.4%, resulting in an increase in NOI of 4.2% over the first quarter of 2010.
During the first quarter of 2011, 357 homes were sold, an increase of 9.8% from the 325 homes sold during the first quarter of 2010. Rental home sales, included in total home sales above, totaled 216 and 178 for the three months ended March 31, 2011 and March 31, 2010, respectively, resulting in an increase of 21.3%.
During the quarter, the company sold 975,882 shares of common stock at a weighted average price of $32.93 per share, resulting in additional net capital of approximately $32.1 million. This additional capital is expected to be utilized in connection with the previously announced portfolio acquisition expected to close in May. Currently, the funds have been used to pay down the company’s unsecured line of credit.
On March 1, 2011, Sun completed a collateralized mortgage backed security financing with JPMorgan Chase Bank, National Association for $115 million bearing an interest rate of 5.837% and a maturity of March 1, 2021. The loan refinanced $104.8 million of CMBS debt which was scheduled to mature in July 2011 and was collateralized using the same property pool.
The company has also entered into a term sheet to complete a $23.8 million CMBS financing with Merrill Lynch Mortgage Lending, Inc. The financing is expected to bear interest at approximately 5.8%, based on current indicative pricing, with a 10-year maturity and replaces currently existing mortgage debt on three properties which was scheduled to mature in June 2012.
The previously announced acquisition of 18 manufactured housing communities and one recreational vehicle community continues to progress and is expected to close in May. The acquisition remains subject to certain final closing conditions including the consent of existing lenders.