Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: It seems like you guys have been able to convert the strategy for -- in the U.K. from generating the bulk of the -- or you've been able to convert from generating a lot of the NOI from home sales, and you've made progress on generating it more from rent growth, like how are you able to achieve that in such a short period of time that it kind of influenced the guidance in such a large way.
A: Gary A. Shiffman, Chairman, President & CEO of Sun Communities, Inc., explained that the U.K. business is performing in line with expectations, focusing on creating dependable real property income by sacrificing a bit of margin on home sales. This strategy has been effective, especially in the first quarter, despite economic pressures in the U.K.
Q: And my follow-up question is, there were several moving pieces in the 2024 expectations, and that came 2 months after issuing your initial outlook 2 months ago. So as we look forward from here, do you sit here and think, okay, now we've got a much better grasp on the year sitting in the middle of spring. And so there shouldn't be as much volatility with the guidance going forward?
A: Gary A. Shiffman responded that the company is focused on delivering a reliable plan, emphasizing the importance of the adjustments made in the first quarter. He assured that the company is positioned to deliver the results shared, with a focus on converting transient RV sites to annual agreements.
Q: Just wanted to follow up on the FFO guidance, which you maintained, but when you look at the non-same-store real property items, it looks like a $0.15 reduction in your outlook. Part of that is higher G&A but that's another question. But how confident are you to make -- that you can make up that $0.15 or 2% of FFO in your same-store portfolio?
A: Fernando Castro-Caratini, Executive VP, CFO, Treasurer & Secretary, addressed concerns about the guidance adjustments, explaining that the changes reflect the best information currently available and aim to provide clear expectations to the market.
Q: Maybe just wanted to touch on the asset sales and just like how that marketing process is going.
A: Gary A. Shiffman discussed the asset sales process, noting that the company is actively marketing selected assets and feels positive about the ability to transact. He highlighted that there are still buyers in the market despite shifts in debt costs.
Q: I appreciate that, Gary. And then I just wanted to follow up on Michael's question about the guidance. When I think about your guides, it almost seems like every line item, the range was revised. Just maybe stepping back and thinking big picture, how do you -- like what's your philosophy on providing these guidance ranges.
A: Fernando Castro-Caratini explained that the company aims to provide as much disclosure as possible to the market regarding its business platforms and expectations. He noted that while some guidance figures shift upwards or downwards, they represent the best current estimates.
Q: Is there any color that you can give about the pace at which you expect to move NOI out of the U.K. home sales business and into real property going forward? Should we continue to see sort of big chunky moves like this as the year goes on? Or does the guidance kind of fully reflect the underlying change in strategy?
A: Fernando Castro-Caratini confirmed that the guidance fully reflects the ongoing strategy of shifting income into more reliable real property, indicating that the company is on track with its strategic objectives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
