Q1 2020 Earnings Call
[music].
Good morning, ladies and gentlemen, thank you for standing by welcome to the Sun communities first quarter 2020 earnings Conference call.
At this time management would like to inform you that certain statements made during this conference call, which are not historical facts may be deemed forward looking statements within the meaning of private Securities Litigation Reform Act of 1995, although the company believes the expectations reflected in forward looking statements are based on reasonable assumptions. The company kept provide no assurance.
It's it's expectations will be achieved.
Factors and risks that could cause actual results could differ materially from expectations include the effects of the cobot 19, pending <unk> and other detailed in yesterday's press release and from time to time at the company's periodic filings with the FCC.
The company undertakes no obligation to advise or update any forward looking statements to reflect events or circumstances. After the date of this really.
Having said that I would like to introduce management with US today, Gary Shiffman, <unk> Chief Executive Officer.
Maclaurin, President and Chief operating Officer, and Karen Dearing, Chief Financial Officer.
After their remarks, there will be an opportunity to ask questions well known to the Carlo together shipment Chairman and Chief Executive Officer, Mr. shipment you may begin.
Thank you operator, good morning, and thank you for joining us today as we discuss our first quarter results and provide an update on Tom's prepared us to navigate the cobot 19 pandemic.
[music] [laughter] fourth quarter call in mid February the environment has been dramatically challenged by worldwide public health crisis, and before we begin we wish to convey our sincere wishes for everyone's health and safety.
We started the first quarter 2020 ahead of expectations.
Putting up AFFO per share of $1.20 to one kind of how the high end up guidance.
Everyone is focused on how the pandemic will affect our performance over the coming weeks and months.
It's important to note that we entered the year from a position of strength because the underlying fundamentals of providing affordable housing and occasionally options.
Back to sustain a relative position of strength.
As we navigate through the pandemic.
We began 2020 with total portfolio occupancy of 96.7%.
Well position from a balance sheet perspective, with approximately $380 million unrestricted cash as of quarter end.
The trailing net debt to EBITDA ratio of 5.6 times.
We want to command and recognize her team and acknowledge the incredible job they have done stepping up in responding during this challenging time.
Our team acted swiftly to ensure that sun was doing its part to stem the spread or krona virus by adopting work from home practices at our main office and wherever possible at our community.
At our properties, we closed the maladies, where residents and gets gather and implemented recommended sanitation and the hygiene protocols.
Well prioritizing health and safety by adhering to social does something parameters, we're striving to provide SUNS trademark customer service.
[music] given current shelter in place and social dispensing orders, we did not know nor are we in control of the duration of the current changes in operating conditions brought on by the pen.
However, we cannot just certain controllable operating expenses modify our capital deployment plans and manage our liquidity.
On the expense side, SUNS directors and executive officers have set the tone by electing for go their compensation for at least the second quarter.
The balance where main office team members have also taken salary reductions and recognizing that we are in this together.
Additionally, we have placed the number team members on furlough due to the closing of or amenities and the temporary reduction of transaction.
The company will continue to pay both its share and the team member share of costs associated with providing each furlough team members uninterrupted health care benefits.
We have implemented a rent forbearance program for residents financially impacted by the virus, we've elected to apply to provide the necessary information related to their hardship in order to qualify for the program.
Approximately 2.9% of our manufactured housing revenue that's inclusive of our rental home program have applied and been approved.
From our annual RB gosh I've been minimal.
And our manufactured housing portfolio, we have collected in 98% where rents as of April 22nd which is on par with last month and prior year.
And our RV portfolio, approximately 55% Herbert herbicide or at least annual sites.
Annual RV rents currently do collections are at 92%.
Relative to the percent collected at the same time last year.
Of the remaining 45% of RBC sites, which are trends here, we're experiencing an impact from a pandemic with the laid resort openings and canceled reservations.
John will provide additional detail.
Given limited visibility on the returned to normal operating conditions and the duration of the current situation, we're spending or 2020 financial and operating guidance.
We've also determine the prudent to temporarily reduce or suspend certain capital spend on expansions in ground up developments and we continue to evaluate acquisitions with measured caution.
John and Karen will provide further details on the unavoidable financial impact associated with the spend.
However, we believe that even in the times of uncertainty or disruption SUNS portfolio and the industry in which we operate are well suited to withstand the impacts of Earth Sasha.
Sun provides a high quality affordable housing option.
So stork, we've demonstrated the ability and resilience during a downturn and a stronger earlier bounced back to recovery of some macro economy improved.
Well different circumstances caused the great financial crisis in 2008.
The underlying business model, it's fun and the demand for affordable housing, which provides resulted in significant growth in the five years after the GRC.
We anticipate that our RV resort business will demonstrate some more pattern as it provides some more affordability in a market what proven strong demand and limited supply.
Our RV resorts provide an affordable vacation option, where guests can travel at an average of two to three hours.
Equally in their own vehicles without the need to get on a plane stay in a hotel or congregate and the public space.
For now the pandemic has galvanized our operations team to stay ahead of the situation than steer us in the right direction.
They need daily to ensure that.
Residence guests and Sun team members are receiving compassion and unparalleled service during these times.
Monitor local show shelter in place mandates and are literally writing the playbook of how to navigate good schooling situation.
There was no precedent for what the World Sun is experiencing we've had to make some extremely difficult but necessary decisions to ensure that sun continues to be the nation's premier owner, operator, a manufactured housing and RV communities.
John and Karen will now provide additional operational and financial updates John.
Thank you Gary.
I'll start with a recap on the strong performance metrics in the first quarter after which I'll provide specific details regarding the impact of the pandemic on operations financials and the actions we've taken.
As Gary mentioned, we're tracking strongly had expectations for the quarter and delivered excellent same community growth even after absorbing disruptions from the onset of shelter place ordinances and mid to late March.
Our total portfolio ended the first quarter, 96.7% occupied improving 30 basis points over last year. We added 300 revenue producing side, you're going to shelter in place restrictions were put into effect.
Our same community and Hawaii increased 6.7% year over year, driven by 5.2% increase the same community revenues and a 1.8% increase in same community expenses.
Same community manufactured housing revenue growth was 6.2% annual RV revenues grew by 9.6% and transient RV revenues decreased by 6% as we felt the first affects the Copel 19 related social distancing orders in March.
In the first quarter, we saw same community occupancy increased the 98.4% from 96.6% in the first quarter 2019.
Even as social distancing began to impact traffic at our properties home sales are quite strong sales of 763 homes, which 119 were new homes and 234 rental home conversions.
Hey, core strength SUNS operations team, it's a continual emphasis on refining our contingency planning an emergency preparedness and disaster recovery protocols, which are in place to rapidly deal with various out of the ordinary circumstances.
By late February the team began deploying recommended protocols throughout the portfolio and assessing how best about compliance with health related orders and the delivery of essential services to our residents you guess, which dictate a number changes in the field.
The steps we implemented our aim to help ensure the safety of our residents guess team members.
Mr residents are facing extreme financial challenges and to support our local communities wherever we can.
In terms of health and safety.
We seamlessly implemented work from home for all positions that can be remote.
We enhanced our cleaning protocols.
Most public amenities and discontinued social gathering.
Our onsite offices remain available for a central services.
We have also stepped up our communications and burchill servicing options for current and prospective residents.
We have adopted a financial hardship program to provide forbearance under certain terms to residents impacted financially by the pandemic temporarily suspend evictions late fees and rental rate increase.
For rest that's a qualified for the financial hardship program, Brett will be deferred through may be payable in 12 equal installments beginning in July 2020.
We estimate the deferred rent equates to $1.9 million for each of the two months and it includes resident on homes on sites.
And our manufactured housing rentals.
Now I'll provide some details related to the current quarter that will help frame our best estimate a financial expectations with regard to the actions just described in the impact.
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We're very pleased with April recollections in our manufactured housing portfolio as Gary indicated earlier, we have collected 98% over eight or rent to date.
While we are experiencing lower traffic communities as would be expected with shelter in place mandates, we're still seeing demand for Movantik and actually expect Bureau move outs. During this time.
For the month of April well total application count was down approximately 30% on a year over year basis.
Web applications are up 111% and represent 45% told applications compared to only 19% April the prior year.
Our technology platform has the capability to capture online applications steer prospective residents use SUNS web services.
Our platform also had capabilities to provide remote virtual home showings and tours, allowing us the nimbly adapting the pace of this evolving landscape.
Now we would like to provide some perspective on our RV portfolio.
Our portfolio consist of were 26000 annual sites and approximately 22000 transients sites.
The annual RV sites are located in resorts that are open your route as well as resorts are open on seasonal business.
Majority of our annual sites are either park bottles or sites, where rvs are tied down and the guests made significant investments and personalized and their sites by building decks indoor outdoor rooms, and porches installing landscaping hearts, keeping essentially making these very permanent in nature.
These guests return year after year to what is typically their vacation.
On the transient side of our RV business. It has been our experience for more than 25 years. The most the Sun's transient RV guess enjoy the convenience and safety of driving in their own vehicle to a vacation destination, they're familiar with uncomfortable at.
Based on many years of operating experience and engagement with our transient guests, we believe they're likely to return to our resorts once shelter place the non essential travel restrictions lifted.
Historically over 50% more transient RV gets turned the same resort each year, providing a predictable and steady income stream.
For the time being however, we have received an increased number reservation cancellations related to shelter in place direct.
Additionally, we have 44 RV resorts that would've been open on or around April 1st but are being prohibited from opening by local source.
As of now we expect these are sourced open at various points in May this restrictions are lifted.
Thus far for May and June guests are calling frequently inquiring about our opening date and taking a wait and see approach with regard to their plant vacations.
Forecasting for what we know related to cancellations bookings resorts that are not currently open and the fact memorial day weekend is included in this quarter. Our best estimate for the second quarter includes a reduction of $10 million transit revenue from our original budget expectations.
In addition to this forecasted reduction a transient RV revenue just discussed.
Based on the current environment or a number of additional revenue source could be impact temporarily.
These include lower manufactured housing revenue due to rental increases being deferred and lower occupancy gains.
Lower annual RV revenue related to fewer transients annual site conversions and the associated rent pick up.
Lower other and ancillary income due to various fees not being collected as a result delayed resort opening.
And lower home sales and brokerage fees as a result stay at home orders and travel restrictions.
Despite the near term disruption to our operations, we're confident in the long term viability of our mission and business model, which has stood the test the time throughout many of the most difficult economic times downturns over the life for the industry.
During those periods. This industry has been characterized by steady predictable cash flow fueled by strong consumer demand for home ownership as well as the demand for affordable vacationing.
I would now like to turn the call over to Karen to discuss our financial results balance sheet and provides a summary of the potential impact to our second quarter as a result and.
Karen.
Thank you John.
I will begin by revealing our financial results followed by a discussion of our balance sheet as well as the estimated financial implications. The response to the Cold 19 pandemic has had on our business operations under the actions we have taken to date.
For the quarter ended March 31st 2020, we reported $1.22 cents per share in core funds from operations.
A penny ahead of the top end of our previously provided guidance range for the quarter.
We ended the first quarter with approximately $380 million, an unrestricted cash on hand.
After we completed a 15 year 230 million dollar term loan at a rate of 3% that close at the end of March.
The properties for this new financing had been encumbered by a 99.6 million dollar term loan due to mature in 2021.
With an interest rate of 5.84% that was paid off at the end of February.
Additionally, we paid off for term loans totaling approximately $20 million that we're set to mature this year.
We have no material debt maturities until 2023.
We ended the quarter were $3.9 billion in debt outstanding with a weighted average interest rate of 3.64%.
On a weighted average maturity of 10.6 years.
Our net debt to trailing 12 month recurring EBITDA ratio at March 31st was 5.6 times.
We also have flexibility on our balance sheet can support our business operations.
As of March 31st we had $223 million of capacity on our revolving line of credit and how the ability to increase the size of our facility by $350 million to $1.1 billion.
Also our significant unencumbered asset base comprised of 143 property provides us with additional potential funding capacity.
We took decisive measures to reduce our cash spend for the remainder of 2020, we have suspended nonessential capital expenditures of $240 million, including expansion ground up development home purchases and other capital projects.
From a corporate perspective, we've made compensation reductions at the board and executive management level.
And implemented other compensation savings throughout the company through salary reductions and Furloughing certain team members.
We have reviewed our general and administrative cost line items and reduced expenses where possible.
From the operations perspective, we continue to maintain our properties at the highest level, but may see a reduction in certain variable operating costs more broadly when taking into consideration disruptions to our business in both our manufactured housing and RV resort operations discussed earlier by John.
And including projected expense savings.
Forecasted reduction to our original budget for the second quarter is between $15 million to $18 million.
As he said earlier the pandemic is a fluid situation.
Shelter in place and travel restrictions are lifted we expect to see an improvement in our level of transient RV reservations and our second quarter forecast for now we've shared what we believed to be our best estimate based on the information we have today.
In summary, we've taken a number of actions to support the company's should the impact of the pandemic persist.
We are confident that we have the financial flexibility to ensure our ability to operate in this unprecedented time.
Thank you for joining US today. This concludes our prepared remarks, we would like to open the call now for questions.
Thank you.
This time, we will be conducting a question answer session. If you will like to ask a question. Please press star one on your telephone keypad.
Confirmation tone indicate your line is in a question Q.
You May press star too if you like to remove your question from the Q.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Once again that star one to ask a question at this time.
One moment, while we pull for our first question.
Our first question comes from John Kim with BMO Capital. Please proceed with your question.
Thank you I.
I was wondering John if you could provide some more color on when you think the RV campgrounds will be open as far as the 44 that are not open yet and how many of those 44 I get the opened by Memorial day.
Hey, John.
Thanks for that question, Yeah, It's I mean that is going to be sort of aligned with [noise].
The government mandates and as things start to lift along the way.
I think we said in our prepared remarks, so we expect that sort of start happening you know in may.
And I.
I think you know one of the important things with that John is the fact that you know, we often talk about our playbook.
And the decades or a finding that playbook and all this situation is just a different version of operating conditions pre during post natural disasters hurricanes and things like that we deal with and so.
As you might imagine.
Pretty much as soon as this all started to happen we were preparing our plans for reopening at the same time.
And though through that.
We've developed three phase plan associated with reopening that will align with those government mandates that you that all you really have to do this drop in the open date and it guys to prepare our team leading to opening all the way through normal operations status.
So the plan itself you know include proper sequencing of reopening the resorts in the many starting with the ones that provide better space. Your social doesn't think so we're really looking forward to welcoming our guests back, but again, that's going to be more along the lines of.
Whatever that governmental authorities or allow us to do.
[noise] already business.
There's a 50 to 80 million dollar range is that just.
Taking a wide range of outcomes for.
Many of those type environment All day, just given that's that's a crucial date for you.
Yes, Gary I think that.
Well I'd be cautious or we have been in touch with the counties cities. The municipalities, who have asked us to extend our openings from generally April 1st with the anticipation that they would be opening up in sometime in may.
We haven't heard otherwise so as of right now we do expect to get them. All opened in the month of May but that's of course gonna be dependent on any change that we hear from municipalities.
Okay. So once the RV either open or is there anything you're going to do on your end to limit capacity just true I guess out you know limit human interaction.
Well one of the.
One of the interesting things about an RV resort as opposed to other hospitality options is there sort of some of that built in.
Spread because everybody has their own sites that are on which promotes all by itself social disconcerting.
The things that we've done some examples of some things John that we've already put into play to get ahead of that is we've actually already stock social distancing signage for all entry points. So we have within our communities as well as.
We've seen those before conferences really put the stickers down on the floors and we can do that in the in the you know in not more highly trafficked areas to promote that as well and I think one of the really key things that we're we're able to do is utilize our online expressed checking capabilities, which allows guests to check in and pay.
Early allowing them for a touchless arrival process as well. So you know it's there's a lot of that sort of thing that's happening, but I think by its very nature and RV resort promotes a lot of social distancing right I like it and I also think that Gary and I both agree.
That many people are going to want to get out of their houses.
I'm trying to question is just on the a bit visibility and confidence on demand for RV.
Just given the amount of near term kind of cancellations that you've received so far.
I think we all a sort of feel the same way we can't brushed aside there make light at the financial impact.
Especially the transient RV from the current pandemic, but.
We really have to look through to the value of the fundamental business proposition and the platform itself, which is.
John sort of indicated we're providing an affordable and cost effective vacation experience.
And what really is a safe self contained Harvey.
And we're doing it to all various demographics.
So we would expect really.
On the other side of this unfortunate circumstance that people that are looking for a unique and desirable experience like RV offers.
To both individuals retirees and families.
Spending time, and our rustic camping resorts or one of our high end Glamping expanse I'm really should be in high demand anecdotally.
I've heard from.
At least a dozen people over the last two weeks or so looking to inquire and where to get an RV of course, if we can get them a discount or if we can assist them, but its recent the yesterday.
One of our board members wanted to let me know that they bought an RV.
They've actually left Michigan and they are on their way first to Colorado, a traveling out to California.
So we really feel that Oh, the RV business.
Could benefit strongly from this unfortunate situation.
And I.
I think we'll see that rather rapidly when the.
The impact of social do stay at home and the travel bans lifted.
Appreciate the color. Thank you.
<unk>.
Our next question comes from Nicholas Joseph with Citi. Please proceed with your question.
Thanks I appreciate the details on April MH collections, but I'm just curious as we go forward over the next few months. If you expect any performance differential given different demand drivers between the all age and the age restricted MH portfolios that I'd, maybe within along.
This is Ron Paul as well.
Yeah. Nick This is John I think I think the wed characterizes the you know what the April run collections Oh, They all age for formally portfolio is showed its resilience.
And I think it also benefits along with the rest of the portfolio sort of the <unk>.
The proactive nature of our culture, one of things that we've said.
As a company for a decade or longer has been the best revenue producing site you can gain as the one you never lose and I think everybody knows that our average residency in our communities. This 14 years, there's a value proposition is the reason why people want to be there.
From a REIT collection standpoint in April.
You know recollection for eight all age communities is on par with last month.
I mean, and so I think that that really kind of shows.
Come on right into this when there was a lot of uncertainty coming into this pandemic.
That that value proposition that people see is realized the other thing I'd add is a component of the all age portfolio is it's been a reminder, that that we shared before that.
From a retirees standpoint, or where you compare 55, plus first is all age.
Not every person who's over 55 wants to live in a retirement community. So we have a healthy component of residents within our all age communities that are retirees.
So those folks are going to be less impacted by things like job loss.
Than others, and so I think you know looking out.
You know looking into may.
I would add that you know I think that our hardship program did what it was designed to do.
And that takes pressure off as well.
And I would like to think that.
Some of the things that our government has done to help promote.
What people's needs are with the stimulus plan.
And the checks that are starting to arrive that I would hope that the experience for me rent collection will be similar to that of April.
Thanks, and then anything on the rental program versus owned in terms of different risk profiles going forward.
No I mean, it's it's really it's it's pretty much. It's about 50 50 as far as the utilization of the hardship program. So it was a.
It's it's very similar in nature I will tell you that.
An interesting.
Thing that's happened during this terrible crisis has done.
With the rental home program our applications in April are actually up versus where they were of April last year.
Thanks, So not just you mentioned a change to expansion and developments and.
How does that impact the Australian JV or would those comments just for the U.S.
Well speaking to the U.S.
You know really I think one of the things on our expansion development spend has been the fact that and I think we might have shared this before as well I apologize from I'm, putting myself, but we are we're fortunate that we're always in a position.
Going ahead and stand a year year and a half ahead of what the supply needs are for expansion sites.
As we shared on other calls we had 2100 sites built and 17 1200 sites in 18 1200 in 2019, and so we've got a good supply the site. So take bring it down for a bit really shouldn't have an impact.
Yeah, and then scary Johns remarks did reflect a what's taking place in the U.S.
With regard to and GGR and Australia.
It's a little bit of a different business proposition they've been a little bit less impacted.
I'd like to think maybe that social distancing.
The size of the country versus the population that allows them.
Little bit more natural.
Barrier to what we're experiencing here on the U.S., but demand has remained strong there's been a.
As John said a.
Tendency for people, maybe we're going to move out of Sun communities to kinda postpone those moves and in the sort of opposite way in Australia.
They queue up what they referred to as their settlements or the home closings long in advance and.
That's dictated by a resident Homesale primary home sale as their downsizing they look to downsize to release equity.
To be used in their retirement, so it's a very very important to them to understand and know that as they sell their home. They have a place to go so if anything there's been a little bit of an acceleration on.
Those who have reservations and plan to move into the end GGR community. So that's been a positive thing there.
Thank you.
Our next question comes from drew Babin with Baird. Please proceed with your question.
Hey, good morning.
Born Andrew.
Quick question on I'm, just related to the transient Reopenings I know a lot of the threat premium that you're able to command associated with just upgraded amenities things like that the properties.
You gave will give a little more detail on kind of amenities might be available upon the opening.
Wish amenities make kind of lag and whether you know as far as there are bookings or any clarity.
Is that affecting pricing at all.
Yeah, I mean that sort of the natural sequence true with many openings is going to.
Start with ones that are.
More social distancing promoting so call it more of the outdoor type stuff that we have out there were there can be less contact.
I think some other things that we're doing in terms of signage you know one other things that we're also doing and we're starting to secure supply of infrared thermometers, where we can check temperatures as our team comes in for the day and as well as when our guest check in and those sorts of things and we're actually going to be providing wrist bands.
Everybody indicated they think cleared.
And just out of an abundance of caution that we do this in helping to build confidence for our guests coming back because they're excited to come back and they want to be there and so so that's sort of the sequencing of Oh, we have not to date made any adjustments in terms of rate.
Okay I appreciate the color there and just one follow up for me just on the pace of expansions in development deliveries I know you mentioned the online traffic is up.
Obviously on site traffic has been down amidst all this.
Is there any kind of update on the pacing the delivery of revenue producing sites throughout this year, whether its sites that were put in place kind of coming into the year at the end of last year or ones that you maybe.
Planning on adding later this year any update there as we model it out.
Yeah as far as the expansion so delivers again I don't think that.
There's a lot of impact from an availability or supply standpoint made it really is you know from an application standpoint as we shared in the remarks, you know the apps are down only 13% thus far.
We've got excellent.
Web based connectivity to be able to continue to collect applications and as well as do virtual showings and that sort of thing and frankly I've seen a lot of great creativity out of our teams out in the field and so.
You know again, it's going to line up more with.
Without being able to tell you exactly what's going to happen. It's it's all going to line up with.
Kind as these things start to ease up a little bit but in the end we are still building a pipeline.
That we will remain engaged with with those prospects and customers that when the time comes on we can you know.
Sort of be it appears to be it the pace we're used to being a then it's all really about the throughput that we do after that.
Thanks, John and on the appreciate the transparency on the transient reopening plans. It's very helpful. Thank you.
Thank you.
Our next question comes from John Polasky with Green Street Advisors. Please proceed with your question.
Hey, Thanks for the time, maybe just a clarification on the first question. So it sounds like can correct me if I'm wrong, it sounds like the $10 million in transient revenue impacts.
Jim as you know it basically zero revenue coming in the door in April and the vast majority of ne revenue is still achievable is that fair.
I would say that it's somewhere in between there yet.
Ramps up to the.
Hi, its double in June obviously, but I'm, sorry, you're correct. It there's a minimal amount of revenue is expected in.
April.
Ramping up from there.
Okay, and then the 98% collections on the an h. side in April.
Is that a cash or GAAP basis.
Roughly 3% of rents are deferred or is the cash collection 95 or is the cash collection actually 98.
98.
Okay.
A final one from me.
So $15 million to $18 million it to Q impact on in July 10 million of it coming from the transient side, what kind of impact are you assuming on the true yeah on the MH portfolio and thank you.
Oh, Okay. So John we knew that providing that estimated impact impacted dollar amount.
It's going to assay lead you to be wanting some more details we felt it was the right thing to do.
And so we've done it our effort is let's provide as much detail as we could therefore these are the things that we have included a transient revenue reduction of 10 million that makes up the majority of the range and the remaining $5 million to $8 million split between home sales in brokerage.
Other and ancillary.
Annual revenues and MH revenues.
It's Matt of expense reductions.
Okay understood. How are you assuming at this point that you see any ammunition in occupancy on the NH portfolio.
No.
Alright sounds good thanks for that.
[music].
Thank you.
Next question comes from Wes Golladay with RBC. Please proceed with your question.
Hey, good morning, everyone how is financing availability.
They'll ability changing for home. So are you seeing any changes on that.
No.
It hasn't been good before it hasn't gotten any better it hasn't gotten anywhere [laughter] fair fair enough will that somebody doing any more on that on that front.
<unk>.
I think that we actually have a subcommittee are up board of directors that is really focused on improving the availability of home financing.
They were on track to be able to work through probably the first.
Manufactured housing loan securitization.
At the end of second quarter I know John's worked very hard on it we have any more color at this time.
Time, it's kind of yep. So we we will keep everybody posted but the home financing today is pretty much the same as it was a two months ago.
Got you. Okay, then looking up the cares act the increased unemployment benefits that many of the tenant should receive a we you need to extend that hardship program beyond may and hold off on rent increases and then a quick addition to that one is how many leases in a major expire in twoq.
Well that's it's good question because that's precisely why we designed the program to include April and May because the thought process was well the hardship program that it was going to be very difficult for people to go out and find jobs in April.
And so we wanted to kind of wrap it over both of those months and then as we've talked about in our prepared remarks begin the payments.
Lighter payment starting over a 12 month period of time in July. So I think that provides a lot of support for our residents. The you know my hope would be that that will one promote like I said earlier on this call. Good may rent collections as well as a you know put some things that east for people.
Kind of putting things back together one.
The the pandemic starts to hopefully.
Taper down the ran collections by quarter does someone to have those available a rent increases renewals.
There might be not the thing the ex brakes I'm sorry, what was the last part of your question a lot. Yeah. It was yeah, sorry, I was just the expirations like how many expire yeah this quarter.
I don't I don't have the detail if that number.
No problem and then maybe one last one you know what does the typical booking window for transient RV.
It's a it's a pretty wide range I mean, it can be.
Anywhere from a year in advance and a lot of people that are booking before they even leave the resort from the year before to be the day off.
Okay. Thanks, a lot.
[music].
Our next question comes from Josh We're doing this thing with Bank of America. Please proceed with your question.
Hey, guys. Thanks for the question.
Maybe just a follow up on on the last question.
Sure.
For NH rent increases do those all go through on January one where they staggered throughout the year.
Yeah. So have you considered maybe.
Not pushing through any rent increase for for people this year.
Yeah, So <unk>.
The increases that are out there about 50% is what happens in the first quarter and so those are those are already out Josh and then yeah, we have.
Put a whole on further rent increases until things start to open up or ease up a little bit and so I think.
When you look at the sort of.
Overall, it could have about maybe a 50 point 50 basis point impact on the the guided rent rent increase for 2020.
It's our best estimate at this point in time.
Okay, and that's all right.
Related to MH communities, where is that also with.
It is for annuals that's both.
Oh, Okay Yep.
Okay, and then if if that pandemic goes on for longer.
Yeah.
Maybe if things can't start opening up and may on the RV side.
Has there been any thought given to how you would respond as far as like.
People can access their sites.
MRV side, maybe like.
Reducing their rent for the year anything on that front.
Okay.
Yeah, I think it's a something that we talk about in something that we're just going to have to watch and continue to.
See what does take place just like.
You know across the country, but we have a we haven't been conservative in our thought process through the quarter.
Slowly ramping up as we indicated earlier we have deferred.
Rental increases for the time being we have eliminated all fees related to lead charges of various.
Other fees that we often or do collect and tried to.
The you know there for our residents as John said our residents.
Are there long term and so.
It'll just be a work in process things continue on we're gonna have to be able to provide additional transparency to you and to the market, but oh, we do.
I think that we really did take a very good hard look at our best estimates and that's what we've put forward with the concept to what we know now.
Great. Thank you guys.
Thank you. Thank you next question comes from Todd Stender with Wells Fargo. Please proceed with your question.
Hi, everyone I hope you're all well.
And thank you too Todd Thanks, so back to the hardship program.
You're talking about April and May.
Tennis, then pick up.
It's in July what about.
How does it seems like jumped over June but.
Yeah, So it's sort of like what Gary said, just a minute ago I mean, I think that.
We launched the program even before April rent was due trying to think ahead of it and so we are thinking about that but the thought process was to cover April may based on data that we had at the time that's out there to try and set up the program sort sort of fits with the various models that are out there and.
Provide some space between.
When things hopefully start to slow down when people have to start making payments back and you know so I would say as far as June is concerned Todd I mean, something that we will closely monitor.
As as things evolve or emerge as we need to.
So if they were to start making their first rental payment in June we didn't want a burden them with the forbearance payback. So that's why we delayed at an additional 30 days right and that's also why we.
Took the route of 12 equal payments to extended over the longest period of time.
To make it Oh.
Easiest on the residents.
All right I get it. Thank you so April and May well be.
Being paid back in July but trophy just your standard.
That's ever got it. Thank you appreciate that a and then foregoing based compensation for the board and it is giving numbers around this just for us to look at start looking at our GE and I asked about going forward.
We don't really have a numbers.
And at the Adam what really quickly and my in my head. There just they just came out in the proxy Todd I think he can add them up and take a quarter of that.
Okay. So it's one quarter's worth for now yeah, yes duration.
Yeah, you're right.
We were very pleased proactively our board of directors reached out.
To us.
I'm very early on in this situation and wanted to.
Do whatever they could and obviously from a distance and strategically they've done some but are they continue to do some but they were able to oh contribute a financially in this way.
Finally, just for Karen your line of credit balance ramped, but also so did your cash balance have you still that how much you've tapped to just kind of sit on cash to preferred preserve liquidity right now.
I'm, sorry, I missed the last part.
Well tapping your line how much is that are you just sitting on cash I just to preserve liquidity right now.
I also yeah, you're right, we had $380 million unrestricted cash on hand, we just finished that 230 million dollar financing, we true about $200 million. Additionally, on a line and we Havent John subsequent to quarter and we feel like that is enough to me.
Meet our near term needs and we did our distribution in April.
So like we think that so that balance less distributions I think we did about 70 $75 million in distributions.
Puts us in a good position to have the flexibility when we need at this point in time.
Got it thank you.
Our next question comes from Samir Khanal with Evercore. Please proceed with your question.
Yeah. Good afternoon, guys I guess for Gary for you do you have any early read as to what the impact is going to maybe.
You know underwriting for new deals are kind of Unlevered I ours tariff rates on new required a lot last few years and on the other side of this could you see the opportunity to maybe and pick up any assets.
I just want to going to get your initial thoughts here.
That's an excellent question.
I would state the following that we have seen.
Significant interest.
In three different areas, we're seeing.
Several types of communities that.
In total recent events were not likely to be for sale.
So that's been probably the biggest surprise.
Properties that were or have been for sale, but we're not priced appropriately.
Well I'm getting a lot of inbound traffic.
And entering and.
Dialogue in discussions as to whether or not those are things we.
Want to look at right now and then a properties that could have been acquired.
But we didn't act on.
Or we weren't proactive to getting to them, they're starting to surface. So I think the overall responses that we are seeing kind of a turned up a interest in acquisition offerings.
And as I said in my earlier remarks, we're taking a very up.
Cautious approach to those acquisitions, but I think that a for the time being we're seeing a.
More realistic approach to how sellers might be thinking about their valuations.
Okay.
Thanks for that for sure.
Yep.
Our next question comes from John Kim with BMO. Please proceed with your question.
Thanks.
Hello.
On your suspension of rent increases in an age what would be the catalyst or catalyst kinda lists to return back to your and your projected escalations.
Where they'd be macro economic factors or metrics tied specifically within your portfolio.
Yeah, I think that we've talked about this I think are there metrics, specifically tied to our portfolio.
Sitting in March along with the rest of the World. We had no idea how our residents what and when our residents would be paying April rat, we've gotten through April rent, a really pleasantly pleased.
We've now got a look at a.
May.
I'm, assuming that Oh, we see continued strength with our residents in the desire to stay in the communities.
We'll take it a one month at a time and I think it will be a combination of what we see.
And the macro world as well as Oh, we feel about the quality of what we're offering against other opportunities and being compassionate to our residents who stuck by us and what we want to continue sticking bias. So it's a fluid situation on just something.
John in the ops team will have to present to management here and making a full decision as we step forward really month by month.
And the first thing we'd like to accomplish as we shared with everybody is to get our transients seasonal or our transient business back in our seasonal.
Communities open I think having that step behind us I will be a positive thing on how we approach.
When or if we put in rental increases.
Great. Thank you.
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Our next question comes from Nicholas Joseph with Citi. Please proceed with your question.
Thanks, just want to follow up on I guess, the transient and seasonal revenues appreciate the color.
Second quarter expectation.
Just curious what.
Scope revenue that's been received that could be potentially funded.
The properties open later than expected.
Remain.
Thanks.
I don't think a the concept of Ah refunding has been anything that.
We are expecting and I think that if anything were to approach the magnitude or discussion.
I think it's also Nick important to note that the the vast majority of on the seasonal or the annual side and the seasonal resorts.
Those sites remain occupancy occupied 12 months of the year.
Like we shared in the script, where that's either apart model or it's a tied down unit, where they've done a significant investment and their sites and so.
Similar to I'm age, it's there's a very significant investment that's been made by them. So I think that in a lot of frankly, they expect to pay the ramp.
So.
It's not something weve been actually kind of planning at this time.
Thanks.
Yep.
At this time I would like to turn the call back to management for closing comments.
I just.
I want to wrap it up by a thanking everybody for participating.
Participating on this call.
We've shared and firmly believe that Sun is well positioned to navigate the cobot 19 pandemic.
We provide a highly desirable.
Experience at our communities in our resorts and we continue to have access to capital and our dedicated to see this through as always a Karen John myself and others in the comp favorite <unk> main around to follow up with any questions that you have and we look forward to Oh.
Anyone in the near future.
Thank you operator.
Thank you. This does concludes today's teleconference. You may disconnect your lines at this time and everything.