Q1 2021 Sun Communities Inc Earnings Call
Okay.
Greetings and thank you for joining us today for Sun communities first quarter 2021 earnings conference call.
At this time, all participants are in a listen only mode and of course.
And that's just actually and we'll follow the formal presentation.
If anybody needs operator assistance, you May press Star zero on your telephone keypad.
Please note this conference is being recorded.
I would now like to turn the conference over to your host Gary Shiffman, Chairman and Chief Executive Officer. Thank you you may begin.
Good morning, and thank you for joining us as we discuss our first quarter 2021 results.
We're very pleased with the performance of all of our business lines as 2021 is off to a very strong start.
And the first quarter, we delivered core <unk> per share of $1 26, which exceeded the high end of our guidance of $1 17.
Due to this outperformance and strong visibility into our second and third quarter transient RV bookings.
We are raising our 2021 core F O per share annual guidance range by 13 cents to $5.92 to $6.08 and.
And our expected same community NOI growth for the full year by 190 basis points to a range of seven 5% to eight 5%.
The momentum, we experienced and our RV resorts and 2000 and 'twenty has only accelerated this year as the country continues to reopen.
For the quarter same community NOI growth rose two 7% over last year.
Despite the continued Canadian border closure, and the California stay at home order, which dictated the closure of our California resorts through early February.
We achieved total portfolio occupancy of 97, 3%, a 60 basis point improvement over the first quarter of 2020 by selling 514 revenue producing sites.
We also delivered approximately 350 ground up and expansion sites and the first quarter, which include the Grand opening of our Premier 250 sites Sun outdoors, San Diego Bay resort.
Since the beginning of the year, we have deployed $183 million and day acquisitions comprised of two manufactured housing communities six RV resorts and four and Marina.
Our team continues to find ways to add irreplaceable assets to our portfolio and serve to reinforce the high quality of our brand enhance our offerings to our guests and foster continued growth of our revenues and earnings over time.
And our manufactured housing business and our operations are benefiting from sustained strength and fundamentals and demand for affordable housing evidenced by new and preowned and brokered home sales.
Furthermore, applications to live and a sun community remain at record high levels up 21% over this time last year.
Our RV business, while impacted by the closures and the travel restrictions associated with the pandemic during the quarter.
It's showing resilience with forward bookings well ahead of both 2020 and 'twenty and 19.
As we emerge from the pandemic and as the percentage of the vaccinated population rises we anticipate our best in class resorts to remain a preferred vacationing option.
Our assertion is supported by the RV industry Association, stating record year unit sale expectations for 2021.
As well as our strong advanced bookings for the second and third quarters.
A broader segment of the population rediscovered the outdoors during 2000 and 'twenty and we are seeing that interest carry forward.
And in environment impacted by COVID-19 Irving provides travelers with an incremental level of safety and control.
Moreover, we believe that increased demand and that's being driven by the continued desire of consumers to get back to a degree of normalcy.
Zooming vacation and leisure travel after last year's travel restrictions.
And our marine business results continue to track and of our underwriting and the team is preparing for and active boating season.
According to multiple industry sources, both sales and increase in demand year over year.
With our expanded presence and the sought after and scarce asset class, we're well positioned to benefit from the increased demand for slips and moorings.
We are relying on our four core investment strategies to support long term resilience and the growth of our platform.
Further solidifying our position of delivering industry leading results.
And important part of these core strategies includes expansion and ground up development.
Wanted to highlight the recent opening of Sun outdoors, San Diego Bay first announced nearly four years ago.
It is now open for guests and we are pleased to continue to realize meaningful accretion from our capital deployment activities.
And early March we executed a $1.1 billion equity raise to secure capital to fund our growing acquisition pipeline and other opportunities.
We will match fund these growth initiatives with this equity.
Key contributors to the success of our franchise or our ongoing efforts with regard to our environment and its sustainability and social ecosystem and careful attention to governance.
With that said, we wanted to provide some important updates with regard to our ESG initiatives.
This month, we launched a new partnership with the National Park Foundation, and supported the foundation to outdoor exploration program.
Sun RV resorts has committed to contribute towards the National Park Foundation's mission to connect this and future generations with a social mental and physical health benefits and national parks and outdoor discovery.
With respect to our commitment to diversity equity and inclusion Sun is engaged with the consultancy team with 30 years of experience and the field of equality and justice.
This group has deep expertise and the importance of breaking through unconscious bias and social injustices and the workplace.
Together, we are assessing the current state of inclusion and diversity equity and necessity at Sun and developing and the organization wide strategy to create positive change.
Before handing the call over to John and Karen I wanted to point out that we have enhanced our financial disclosures with the addition of Safe Harbor, we took the opportunity to provide better insight into the primary drivers of our business.
Karen will walk you through the changes we have implemented after John chairs details about our operational performance.
And now I'll turn the call over to John John.
Yeah.
Thank you Gary Sun delivered a strong first quarter across the board and setting the stage for a solid year.
Our results reflect the combination of the stability of our manufactured housing business line and our same community portfolio as well and see incremental benefits of our growth initiatives across MH, and RV and marine business lines.
For the first quarter combined same community NOI increased two 7% the growth and NOI was driven by a three 5% revenue gains supported by a one 9% increase and occupancy to 98, 8% and a 3.5 weighted average rent increase this was offset by a five.
0.5% expense increase.
As part of our revised disclosures, we are now providing same community NOI for our manufactured housing and RV businesses.
Same community manufactured housing NOI increased by four 9% from 2020 and same community RV NOI declined by 4%.
RV revenues were impacted by the Canadian border closure during the first quarter, which affected our snowbird season, and the California shelter and place orders that ran through early February.
Combined these two events had a 6 million dollar impact on our transient RV same community revenue as compared to our previously communicated estimate of $8 million to $10 million.
With respect to RV revenue, we anticipate a significant rebound and the second and third quarters.
Harvey resorts are beneficiaries of the reopening trade and we are fully participating.
Yeah.
Our second quarter transient forecast is already ahead of our original budget by over 20% and training, 57% higher than 2019, which we believe to be a better comparable given COVID-19 related disruptions in 2020.
Likewise, our third quarter transient RV forecast is currently ahead of the original budget by approximately 5% and is trending ahead of 2019 by almost 40%.
In addition, we have a great deal of visibility into our reservations the rest of the year through camp spot, our proprietary RV reservation and revenue management software today.
Today digital reservations comprised over 60% of our total reservations for our same community portfolio as compared to 16% just two years ago.
Moving on to total MH and RV portfolio in the first quarter. We gained 514 revenue producing sites as compared to 300 and the first quarter of 2020.
Bringing our total portfolio occupancy to 97, 3% from 96, 7% a year ago.
Of our revenue producing site gains over 380 transient RV sites were converted to annual leases with the balance being added and our manufactured housing expansion communities.
A key component of our four core growth initiatives is the development of ground up and expansion sites.
And the first quarter, we delivered approximately 350 sites 250 of which and the ground up development and San Diego, and 100, where and MH expansion sites at Sunset Ridge and Texas.
These completed expansion and ground up development sites will contribute to our P. S gains in 2021 and beyond as they fill up and stabilize.
As of the end of the quarter, we have approximately 9700 zoned and entitled sites and our portfolio that once built will contribute to growth in the coming years.
Home sales and the quarter were particularly strong.
We sold 835 homes and increase of nine 4% versus the first quarter of 2020.
Of these 149 were new home sales up over 25% and 686 for pre owned home sales up six 5% as compared to the same period last year respectively.
Average home prices for both new and pre owned homes Rose 17, six and nine 8%, respectively underscoring the overall geographic market mix as well as sustained demand for our product and the strong desire to live and a sun communities.
Brokered home sales throughout SUNS portfolio saw a 36% increase year over year as the resale market continues to show strength.
Average brokered home prices and our communities increased by over 20% as compared to the first quarter 2020.
We believe that a vibrant resale market for homes and our communities demonstrates the benefits of the consistent reinvestment in our properties, creating equity value for our homeowners and increase and the overall value of our portfolio.
Moving on to Safe Harbor during the quarter, the Marina portfolio contributed over $31 $4 million to total NOI.
The marinas are performing ahead of our underwriting and the team continues to source acquisitions and irreplaceable locations, which for the first quarter include two marinas, an aisle marotta and the Florida keys and two marinas on Martha's vineyard.
We are optimistic about the underlying trends, we are observing across all of our business lines with the vaccination rate increasing across the country, we are anticipating and accelerated growth and our RV and marine businesses.
We are well positioned to see follow through of this quarter's outperformance and look forward to sharing our progress with you and the coming quarters.
Karen will now discuss our financial results in more detail Caren.
Thanks, John for the first quarter Sun reported core <unk> per share of one dollar and 26 and three.
And three 3% above the prior year and nine cents ahead of the top end of our first quarter guidance range.
During and subsequent to quarter, and we acquired $183 million of operating property comprised of two manufactured home communities six RV resorts and form arena.
To support our growth activities, we completed a 1.1 billion dollar equity raise representing approximately 8 million shares of our common stock.
Day, we have settled 4 million shares receiving $538 million and net proceeds which was used to pay down borrowings on our credit facility.
We expect to settle the remaining 4 million shares no later than March 2020 two.
We ended the first quarter with $4 $4 billion of debt outstanding at a three 4% weighted average rate and a weighted average maturity of nine five years.
As of March 31st we had $105 million of unrestricted cash on hand, and a net debt to trailing 12 month recurring EBITDA ratio of six one times.
On a pro forma basis, including the estimated full year EBITDA contribution from Safe Harbor and other acquisition, our net debt to trailing 12 month recurring EBITDA ratio is in the low five times.
As a result of our outperformance during the quarter, we are raising our core wrap up all expectations for full year 2021 to a range of $5 and 92 sun to $6.08 per share.
We expect core and that's all for the second quarter to be and the range of $1 57, and 10 to one dollar and 63 cents per share.
We are also revising full year same community NOI growth guidance to a range of seven and a half day, 8.5%.
As a reminder, our guidance includes acquisitions through the date of this call, but does not include the impact of prospective acquisitions or capital markets activities, which may be included and research analyst estimate.
As Gary mentioned earlier, we enhanced our financial disclosures this quarter.
The addition of the Marina portfolio gave us the opportunity to re envision how we report key aspects of our business.
To provide more insight into each of our business lines. We now have a same communities schedule, which details performance by our MH and RV portfolios separately and.
Additionally, our same community revenue now include rental home program revenue and Daycation rental home revenue. So the entire payment for these rentals is now included and real property revenue.
Same community property operating expense now includes the related costs for these rental home programs.
We are also netting all utility income against utility expense, which provides a better view on what sun direct utility costs are since the majority of these costs are passed through to our customers.
We have retained our legacy disclosures for our rental program and have added a new page on the Marina portfolio.
Please see the 2021 summary of reporting changes document, which is contained and the Investor Relations section of our website for additional information and an illustration of these changes.
This completes our prepared remarks, we will now open up the call for questions operator.
Thank you, ladies and gentlemen at this time and well be conducting a question and answer session. If you'd like to ask a question you May press star one on your telephone keypad a call for basically talking about and they can't your line is there any question queue you.
You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment, and it may be necessary to pick up your handset before pressing the star key our first question comes from the line of Nick Joseph with Citigroup. Please proceed with your question.
Thank you Gary how does the current acquisition pipeline work and where are you seeing and the best opportunities.
Good morning, Nick.
As we've shared you know.
Recently that.
Current pipeline across manufactured housing RV and marine is has.
Ever been as full as it is right now.
I think that we're.
We're seeing a little bit more outreach and we even expected with some of the discussion about change and capital gains and things like that moving forward by the current administration without obviously uncertainty as to where that's going.
And.
And we do believe that we match fund our match funded the right amount of capital to be able to go out and utilize that capital.
And the relatively near term.
Based on.
The pipeline throughout all three aspects of our business.
Thanks, and I know.
Guidance doesn't assume any acquisitions or our funding, but as you think about funding that pipeline. We use your line and then settle the equity towards E and or do you plan to settle the equity as you go in terms of acquisition volume.
Yeah, I think that's on a case by case basis, but for the foreseeable future I think.
We rely on our line and for certainty quick access and the ability to close them one of the things that Sun is known for and such a and acquisitive period and I'm part of the reason why we get so many pocket listings. If you will that don't go to the market is the fact that oh through a process of underwriting due.
Diligence.
He has.
To get through a.
The purchase agreements and to work through a tax deferred structuring and then finally to a rapid close would lead me to believe we would be utilizing the credit facility.
And our first basis, and then fund off the forward from there.
Thank you.
Our next question comes from the line of Karl with Bahrenburg. Please proceed with your question.
And <unk> I think that one of the things that we did take a look at going into the budgeting process with the management team over it's safe Harbor is that we did allocate properly for minimum wage and pricing pressure on labor. So we feel pretty comfortable that's all built into everything and the safe Harbor budget.
Which we're very pleased that they were able to exceed this past quarter and strong growth drivers and.
You know there is no doubt and the material side.
Four homebuilding lumber steal other products have been under pricing pressure for over 12 to 18 months now so we're seeing small incremental price increases and the homes are being delivered for manufactured housing.
Communities, but.
And I think they're they're smaller and nature than what site build is experiencing right now and perhaps Mike.
And might continue to give us.
At Sun communities, a little bit of and edge against.
Increases and site of housing and make the manufactured housing even more obtainable and affordable come.
Many customers out there so.
It could be a positive trend for us.
Got it and just one more quick one uhm what are the cap right and your two marine and transactions and you guys seeing any further cap recompression and space.
There is no doubt, there's continued competition and the space coming from private equity and even our our public competitor went out and some small transaction this past quarter, but uhm cap rates for the time being you know, it's a very unconcerned sedated and this.
Three are governed by all the typical things of.
Real estate location demand.
And sometimes.
Quality of.
The ability to bolt on to existing marinas and the safe Harbor portfolio. So it's a range uhm and I would share that.
The manufactured housing and R V communities acquired since the beginning of the quarter here, probably average right around four and a half.
Per cent cap rate and.
And the marinas have range 200 to 250 basis points above that so we continue to look for the marinas and the sixth and nine cap raid range and then of course, there's always exceptions when.
There's a.
Very very.
Difficult replacement value set it on a particular marina that might come down below that.
Alright, that's it for me thanks, guys.
Thank you.
Our next question comes from the line of bread and I've heard with our V. C capital markets. Please proceed with your questions.
Hey, good morning, everyone and thanks for for taking my question.
And I appreciate the commentary that you had about the high level of advance reservations that you've seen and the second corner and the third corner I was noticing on the balance sheet and that the category for advance reservation deposits and rent is apparantly dramatically. So it was $188 million at the end of last year, it's $280 million now.
Is that reflective of the underlying strength.
And our people reserving more and demands and they normally would be and that's that's driving that number higher and I'm just trying to get a feel of.
Whether that that large delta sort of represents the strength that you're seeing.
And there is there is a bit of impact.
Impact from Safe Harbor, and the seasonality of their portfolio and Wednesday Uhm.
Do their advanced billings there.
And then and about $26 million to $30 million I think it's from safe Harbor and there and the rest of it I think it's just a seasonality of art advanced reservations and deposits and hour Uhm RV portfolio.
And I'm sure there is some impact from advanced reservations in there and what we're seeing but it it's more about seasonality and safe Harbor.
Okay got it thanks for that and then just talking about the guide.
You all beat the original first quarter guide by 11 cents and the guys up about 13 cents I'm just curious how much of the strength that you saw and the first quarter and that you're expecting for the second quarter is it really being read into the full year guide or if the portfolio content continues to perform like it has or like it did and and the first quarter and <unk>.
Outside.
And.
Yes, I would characterize the FSL raise which I think is about 13 cents at the midpoint that it reflects all of the outperformance and Q1, plus additional expected outperformance and the transient RV.
Business and it's that uhm those offset those increases are offset by the equity that we raised and I am settled to date, which we will deploy into acquisitions and see your progressive.
Okay. Thank you.
Our next question comes from the line of West Goliday with Robert W. Bird. Please proceed with your question.
Good morning, everyone. Just wanted to look at the the RV business or you've seen incremental strength on annual conversions right now.
Yes.
And.
Q.
We had a great.
First quarter was 380.
Three seven and number conversions and we had.
Which is a share before and blue.
A range of about a thousand years.
And there is a little and seasonality too.
And just the way there and characterizing.
Uhm.
A lot of strength and do that for the.
Most of the year as well and all kind of goes back to.
And we've talked about over the last year.
I called the rediscovery of the outdoors and to someone and.
Guess.
And communities.
Discover our communities and and that's really eating and conversion as well so and just as a reminder, every time. We may we have a conversion. This a 40 to 60 per cent revenue pick up that we get and that year. Each time, we do that so very positive and very excited about the results we've had thus far.
Got it and then maybe can you discuss camp spot you mentioned, 60% of bookings I believe come from that that website or application and can you give me I guess context, and what that was maybe last year and is that just sun communities or is it open to everybody.
And a great question. So cancel it was originally developed by our Northgate partners and what's jointly on my Sun and North Gate and it's as I said and my remarks as a revenue management system, coupled with is proprietary reservation system and I think that the.
The thing that's most interesting about it is <unk>.
<unk> resort and our portfolio really represents and multifaceted occupancy rate equation literally each and every one day of the year and.
And at the core of camp spot is a built an algorithm and.
Optimises right occupancy equation and the most efficient way and so that's been some of the driving force behind and.
Aiding through 2020, and really brought us back as well as what's happening and 2021 and it's been a big contributor and if you go back to I think two years ago or online reservation.
60% versus 60 per cent of it as today.
So.
There are other users of camp spot through the Ofta.
But.
And certainly our entire portfolios on it now.
And.
That's being marketed across the country right now so we're pretty excited to see.
And how it performs for everybody.
Got it and then maybe just one on the development and San Diego is that gonna actually deliberate negative and why this year positive and when will stabilization b and when you do set of stabilized yield does that include the benefit of selling homes.
Yeah, So the resort some outdoor San Diego Bay, those and RV resort and discuss.
And RV sites and vacation rentals and.
And typically on and Army ground up development, we would see stabilization and and three year period of time and you will have benefits to the RV development as we can accept guests and we already are in fact on hand and out there on Monday night for the official Grand opening before that we've worked with for clothes and for years.
And it will.
And it will generate positive NOI, even and 2021.
Got it thank you.
Oh, that's question comes from the line of John Polaski with Green Street Advisors. Please proceed with your question.
Thanks, I wanted to follow up on the and the inflation and conversation Tomorrow and then the demand side John the as the price of other housing alternatives kind of skyrocketed and certain markets are there any are there any regions, where you think huge maybe second gassar.
Pivot the typical 2% to 4% rent increase policy. You've had is there are there any markets, where you push rent's 567 per cent like how many years you think.
Well.
For for 20, plus years ago, as you know Todd stayed and that.
2% to 4% range on average across the portfolio to say that and certain markets, where we're higher and increase can be achieved we do.
We always try to keep everything from we are and the attainable affordable housing business and we'd take a very long term view on that within the portfolio because there's so many benefits that come with sort of have and the rent increases and the right level. Okay inclusive of the kind of equity growth that we're seeing and cross.
Our broker sales and our communities, which is real value to the customers as well as real value to our portfolio overall, so to answer your question somewhat be above that range.
And and we certainly would look too and places areas and countries that have more strength.
And we would have.
Okay, great. Thanks, and then the last one for me Gary and just in terms of the acquisition mix in recent years tilted considerably towards R V and and not as active on the and and the traditional MH side.
Is it is that more of an indication of just more RV price volume hitting the market or is it an indication where more times and not a traditional and nature acquisition no longer pencils for Ya.
Yeah, I think it's a farm are definitely not the ladder.
Consolidation sequence and chronology is that manufactured housing.
Became a prized asset.
<unk> way.
Way before RV.
Resorts, we're really understood. So as you may recall, there were for public companies and now there are actually five and now there are three.
And you want my and.
And.
I think that it's just a factor of the scarcity of available manufactured housing communities out there.
And then following that sequence I'd like to give credit to the Sun team for really taking a deep dive and two business and understanding how it grew over the last 20 years and and strategically determining that we were going to increase our view holdings.
And sons portfolio, and and doing so kind of looked at cap rates and RV very similar to manufactured housing because we determined the revenues. The NOI growth was just a steady if and that in some cases stronger than what we saw and manufactured housing so.
As we followed and pursued aggressively acquisitions and the service that.
Asset class has begin to consolidate and then as you follow that even further into marinas as many of you are aware there was recapitalization and.
Restructuring suntech, the second largest marina holder and another portfolio a small portfolio acquired by Elas. So while there is absolutely opportunity for Sun and M. H R. V. You know Marina is right now.
Getting to garner interest by other investors and I anticipate will see some pressure on cap rates, but as I indicated earlier that we are able to buy them and acquire them and 252 250 basis points and above spread to and I mentioned rv's.
So.
There is occasionally manufactured housing that we won't pursue to the levels that they're being acquired but for the most part.
What we're seeing and what we're acquiring is and broadly market and that's just.
A phone call into our acquisitions department or personal relationship from someone on the team here reaching out.
Okay. Thank you for that day.
Our next question comes from the line of John Kim with BMO Capital markets. Please proceed with your question.
Thank you and thanks for the increase disclosure.
I was wondering on the increase and Arvida man, you're seeing this year, how much of that do you think as a temporary phenomenon.
And will recede potentially next year when people feel more comfortable flying and go ahead and Christmas.
Yeah. Good question.
Definitely COVID-19 has been and part of that but.
Really prospects for both RV and Marina growth have never been stronger.
I think as I said, a couple of times as the normal thing and it's just a rediscovers its happen.
Is really I mean, we saw.
Particularly and the fall, Okay, which was.
Growth like we've never seen and the fall and.
And what we saw during that time, many many of those guest re book, Okay, and other parts of the year as well the other thing that.
Provide some strength was two is that the vast majority of our visitors and our guests that come to our resorts are coming with and the 90 mile radius. So.
And naturally will be some moving back to other forms and travel and vacation, but we will retain many of the new guess because of the experience and 2020 and the point with the radius that we have for most of our guests to come to our communities. Even if they do go back to other forms and traveled easy and affordable and easy and affordable vacation and they can take.
Something they can do on the weekend or we can add it on and so it's sort of it and can be serve and Adam and Eve and they go back.
Yeah. Thank John I would add to Johns remarks that I think what we're looking for is the incremental residual impact so.
So we won't retain everybody, but I can share with you that we will retain a residual portion of the increased demand as a result of the experience out there.
That has been positive so.
I think it bodes well for and.
Incremental growth on what we would naturally expect and the RV resort business.
And and what do you think is the best leading indicator for that demand is it RV shipment switch and increased.
Significantly this past month.
Months.
I think historically it hasn't really been a high correlation between shipments and your occupancy, but I'm just wondering what your thoughts were and this.
Okay, well you asked for it. So here. It is I think the best indicators anecdotal indication of this individual and myself and my family taking several several COVID-19 RV property inspections, and vacations and what a great time, we had and and that's pretty much echoed by.
Hi, even some people and this analysts call who of share their experiences with us.
But as we continue to do our exit surveys, we're just finding the enjoyment that John referenced.
And it's a leading indicator of.
Why we think that it will be this residual and increased post COVID-19 to our business and there are estimated to be around 11 million arby's.
Registered today.
There are new options to be able to rent existing rovs and an air Bnb model out there. So just continue to see increase and the consumer or guest pool available for a very limited amount of.
Uhm, RV resorts, and and I always like to point out to the RV resorts are generally about being able to have the utility hookups sewer water electric.
<unk> Boondock and.
You don't have those hook ups and then the amenities and the features related to those R V resort so.
We just think that it's a very very exciting time and the RV business to be part of its growth.
I would love to ask the same question on Super yacht demand by mail and maybe I'll share that first type of discussion.
I would like to tell you I have been on the Super yachts, but it hasn't happened yet and.
Okay I wasn't electric boat, however, and is quite fascinating to get a glimpse of what the future might be with regard to moving from fossil fuel and the boating business to some.
Expanded research and development and actually.
Offerings, now and electronic electric boats battery powered.
Separate topic with all the acquisition activity you've had in the past few years can you just remind us what percentage of institutional quality and MAGE communities and RV parks you currently on.
Yeah, It's Gary got and and.
And.
Unfortunately, there is not a national repository of information or index is on the related items to manufactured housing communities.
As.
You're referencing them I would suggest that.
And the vast majority of institutional quality manufactured housing communities have been consolidated by the public companies and.
The what we referenced the three or four other high quality private companies that are out there today with the best and class portfolios. So uhm I would not be able to unnecessarily give you a percentage, but I've heard from.
Our competitors that are probably represents anywhere from 10 to 15 per cent of overall manufactured housing and.
And every resorts and probably closer to 50% of what we would consider institutional quality.
Okay. That's helpful. And then Uhm My final question is on your rental home business.
Which had strong rental growth, but it's coming down and it's proportion of your real property revenue and and year over year basis.
Do you have any views or update abused on potentially increasing this business give them the strength that that single family and lots of market.
Yeah, absolutely I mean and run a home program and.
As you know as to the test of time, and it's an excellent tool and accelerated occupancy revenue growth. So we will continue to use it as we share for expansion's, new development and acquisitions for Lisa.
Ultimately converting renters, and homeowners and and that would that would be the strategy and though John okay to use it going forward and and have and and kind of align with the acquisitions and the development that we do along the way to move that forward faster.
Alright, great. Thank you.
[laughter].
Our next question comes from the line of Joshua done along with Bank of America. Please proceed with your question.
Hey, Gary John Care, and hope you're doing well just wanted to touch base on John comments and the opening remarks about how.
Safe Harbor portfolios.
Doing better than your underwriting.
And what's driving that is it like something on the revenue side expense side or or something else just curious.
That's a great question, Josh and what I would probably suggest what we've seen as we've reviewed performance against budget is key first quarter drivers are revenue growth and Florida, and the east coast and and the southern portion.
And of the portfolio again strong strong demand limited supply and.
And we.
Look what's really trance, what's really taken place and the port phone folio, we're seeing right growth pretty much in line with budget, but we're seeing increase and demand and occupancy and most notably what we're seeing.
<unk> is.
Summer Marina expectations, you know that are a little bit ahead of.
Where regions were last year, so baked into our guidance are part of our guidance as I'm expecting continued good solid growth and the Marina business. So it's no. One thing just demand I think you know and we talked about and a lot.
The escapist the.
Monotony and challenges of the COVID-19 environment getting out and do the fresh air enjoying being on the boats on the water.
Those types of things like we're seeing and the Arab you are very very similar.
Okay, I hear Ya I can't wait to get back out there [laughter], we know you like your boat.
[laughter] I'll go check out and did.
The question is do you like your Marina.
Yeah, I I wanted to I wanted to say virus for a few years, but this year I cut just and it was on the on the vineyard I tried getting into prime they wouldn't let me and.
And.
That maybe next summer.
That's it for me for questions now thank you.
Josh Josh.
Our next question comes from the line of Todd Stender with Wells Fargo. Please proceed with your question.
Hi, Thanks, just looking at new home sales on average, they're exceeding 150000, and what's the highest price point that you see and new homes and and what's the square footage on something like that.
Yes, our highest price point is going to be and.
And our Colorado are new development River running Colorado as well, so we're doing down and the keys and.
And that's going to push above $300000.
But again I think the important thing to note when you're talking about 300000 dollar manufactured home and that is on a relative and basis very affordable and the environment and location where it is.
Those price points are are buyers financing them and I guess, we're kind of used to seeing mostly cash buyers, but maybe any comments regarding the increasing financing is these price points just at higher.
Yes and.
And at those price points silence, it's generally and cash fire, that's coming and for those.
Usually 90% or cash.
Where they go to a local bank.
Got it okay, maybe for Karen just kind of switching to the balance sheet with debt to EBITDA right around six times just for modeling purposes looking at the forward equity is it fair to assume a million shares at a clip for the next four quarters or has that feature call for all four.
A million shares at once.
No. That's the feature doesn't call for all all.
4 million share that once and and I think we'll.
We'll.
Try and the line is Gary suggested initially for acquisitions, and then will shortly thereafter match fund well with the acquisition volume that we're doing.
And then so and a pro forma basis do you have and that to EBITDA.
Assuming the forward equity.
Without the Florida equity, we are gonna be at the low five times I think with the forward equity will be below.
And and then on the death side.
And for modeling what kind of that are you looking at right now and and he coupon or duration you could share.
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We really have.
No and maturity.
That basis.
Been very very active on refinance and get so there's really nothing and to refinance on that side from.
For this year and little for next chair and I would say a typical tenure money at 65% is and that two and a half to three and five per cent for the Gsc's and and and life companies also we do take a look at we do and evaluate unsecured borrowing.
And you know and at this time.
With the companies increased size and capital needs look at that unsecured market and.
Makes more sense than what we've done in the past. So we are currently evaluating the unsecured market.
Got it last one probably for John San Diego RV development are there more sites coming in addition to the 250 that would just completed.
Essentially we're looking at and another 90 sites and we can add to that.
Great. Thank you.
Thank you.
Our next question comes from the line of Samir Tunnel with Evercore. Please proceed with your question.
And good morning, everyone. So I guess counter care and when I looked at the the Marina business, what's the right and and why margin to think about.
Well, what I just did the mass here and <unk> you know what day, it looked a bit light and the quarter and again I you know, it's possibly due to seasonality here, but just maybe going back and.
The last few years would safe harbor, what's been the trend for for NOI margin for Marina.
Ah severe I think.
Comment regarding seasonality in Q4, and and Kimball Q1, Uhm is accurate and typically and see Oh and margins on the Marina business. The high thirties total low 40.
Okay got it and and I guess I'm, just remind me and if I missed this I apologize, but you to update the Marina guidance preferred for N O Y 163 million to 216, and neither do you provide the last quarter.
And he did not update the Marina guidance.
And and if you're trending sorted and and the high you know kind of and the 31 million, which and and your commentary sort of suggest that you're kind of training higher on the Marina side is it fair to assume that.
And the tracking kind of a head of that one six you need and 169 at this point.
I would say we in line with our expectations likely into the high and and it has been that outperformance has been included in our FSL guidance.
Got it and and and my My final question is on the expense side I did not see a breakdown this quarter and does it for the various line items.
And how are you training on maybe operating expenses and how are you thinking about maybe.
Uhm for the for the remainder of the year for those for those line items.
Oh, that's a tough one because.
COVID-19 impact right. So the comparative and for the prior year are you interest Cieri technical term very wonky so uhm.
Set and that expense increases and it.
And you will see higher on it and comparative basis, but for the quarter and what we saw was.
And increase.
Lower than expected expenses for utilities, and also for advertising and I expect some of those advertising costs to shift into.
Future quarters.
Okay got it alright, thanks, so much.
We have a follow up question from the line of John Polaski with Green Street Advisors. Please proceed with your question.
Hey, Thanks for taking the follow up maybe care and could you just break out the full year NOI growth guidance and between revenue and expense.
Yeah, we haven't we have not presented that previously channel, so I'm going to decline to respond.
Alright take care.
There are no further questions and the queue I'd like to hear and a call back to management for closing remarks.
Well, we thank you all for participating and the call and all of US are available for any follow up and we look forward to getting together with everybody. After a second quarter is complete.
Your operator.
Thank you ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.
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