Q4 2023 Sun Communities Inc Earnings Call

Speaker Change: [music].

Yeah.

[music].

Operator: BF-WATCH TV 2021 and www.suncommunitiesinc.org Good morning, ladies and gentlemen. And thank you for standing by.

Good morning, ladies and gentlemen.

And thank you for standing by.

Operator: Welcome to Sun Communities' fourth quarter and year-end 2023 earnings conference call. At this time, management would like me to inform you that certain statements made during this call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can provide no assurance that its expectations will be achieved.

Speaker Change: Welcome to the Sun communities fourth quarter and year end 2023 earnings conference call.

Speaker Change: At this time management would like me to inform you that certain statements made during this call which are not historical facts may be deemed forward looking statements within the meetings of the private Securities Litigation Reform Act of 1995.

Although the company believes the expectations reflected in any forward looking statements are based on reasonable assumptions. The company can provide no assurance that its expectations will be achieved factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's periodic filings.

Operator: Factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's periodic filings with the SEC. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this release. Having said that, I would like to introduce management with us today: Gary Shiffman, Chairman, President, and Chief Executive Officer. and Fernando Castro Caratini, Chief Financial Officer.

Speaker Change: C C.

Speaker Change: The company undertakes no obligation to advise or update any forward looking statements to reflect events or circumstances. After the date of this release.

Speaker Change: Having said that I would like to introduce management with us today.

Speaker Change: Gary Shiffman, Chairman, President and Chief Executive Officer, and Fernando Castro camera Teeny, Chief Financial Officer.

Operator: After the remarks, there will be an opportunity to ask questions. For those who would like to participate in the question and answer session, management asks that you limit yourselves to one question, so everyone who would like to participate has ample opportunity. As a reminder, this call is being recorded. I'll now turn the call over to Gary Shiffman, Chairman, President, and Chief Executive Officer. Mr. Shiffman, you may begin.

Speaker Change: After their remarks, there will be an opportunity to ask questions.

Speaker Change: For those who would like to participate in the question and answer session management asks that you limit yourselves to one question, so everyone, who would like to participate has ample opportunity.

Speaker Change: As a reminder, this call is being recorded.

Speaker Change: I'll now turn the call over to Gary Shiffman, Chairman, President and Chief Executive Officer.

Gary A. Shiffman: Mr. Shiffman, you may begin.

Gary A. Shiffman: Good morning, and thank you for joining us as we discuss fourth quarter and full year results for 2023 and our guidance for 2024. 2023 results demonstrated the resiliency of our best in class portfolio and our ability to generate reliable, strong, same property analysis. For the year, Sunscore FFO per share of $7.10 was in line with our expectations.

Gary A. Shiffman: Good morning, and thank you for joining us as we discuss fourth quarter and full year results for 2023, and our guidance for 2024.

Gary A. Shiffman: 2023 results demonstrated the resiliency of our best in class portfolio and their ability to generate reliable strong same property NOI.

Gary A. Shiffman: For the year sounds corny I phone per share of $7.

Gary A. Shiffman: It was in line with our expectations.

Gary A. Shiffman: Same property NOI increased 7.3% compared to last year, surpassing the high end of guidance. Our operational strength highlights the enduring robust demand and limited supply fundamentals of our portfolio, which supports continued strong revenue growth complemented by diligent expense management. For the fourth quarter, total same property NOI increased 9.6% compared to the same period in 2022.

Gary A. Shiffman: Same property NOI increased seven 3% compared to last year, surpassing the high end of guidance.

Gary A. Shiffman: Our operational strength.

Gary A. Shiffman: Enduring robust demand and limited supply fundamentals with airports.

Speaker Change: Uh huh.

Which supports continued strong revenue growth complemented I do it expense management.

Speaker Change: So the fourth quarter total same property NOI increased nine 6% compared to the same period in 2022.

Speaker Change: Performance was driven by higher rental revenues from image and marinas and lower expense growth across all segments.

Gary A. Shiffman: For the quarter and year, MH same property NOI increased by 8.6% and 6.8%, and RV same property NOI increased 9.3% and 4.8%. Same property occupancy and MH&RB increased 230 basis points during 2023 as compared to 22. The increase was largely driven by transient to annual RV site conversions of more than 2,100 sites since the start of 2020 when we began to strategically focus on transient to annual RV site conversions. We have completed approximately 6,900 conversions and have increased the number of annual sites by 24%.

Speaker Change: For the quarter a year.

Speaker Change: Same property NOI increased by eight 6% and six 8%.

Speaker Change: And our same property NOI increased nine 3% and four 8%.

Speaker Change: Same property occupancy in MH and RV.

Speaker Change: 230 basis points during 2023, and it's computer to 'twenty two.

Speaker Change: The increase was largely driven by China.

Speaker Change: We think conversions are more.

Speaker Change: And then 'twenty 100 sites.

Speaker Change: Since the start of 2021, we began to strategically focus on transient to annual RV sites conversions.

Speaker Change: We have completed approximately 6900 conversions and have increased the number of annual sites and 24%.

Gary A. Shiffman: Within our Marina same property portfolio, the continued strong demand for wet slips and dry storage spaces led to another positive quarter and year with a 12.5% increase in NOI for the quarter and an 11.7% increase for the year. In the UK, the real property NOI of $66.7 million for the year was in line with guidance. This demonstrates the strong value proposition our holiday parks represent. The value of owning a holiday home in a cartelized property is exhibited by the average resident tenure increasing to approximately eight years. Demand for UK home sales showed signs of stabilizing during the second half of the year.

Speaker Change: Within our marine our same property portfolio. The continued strong demand for wet slip in dry storage space.

Speaker Change: Another positive quarter here with it.

Speaker Change: 12, 5% increase in NOI for the quarter.

Speaker Change: 11, 7% increase for the year.

Speaker Change: In the U K.

Speaker Change: Real property NOI of $66 $7 million for the year was in line with guidance demonstrating the strong value proposition and how they represent.

Speaker Change: The value of owning a home.

Speaker Change: Audi is property as exhibited by the average 10 year increasing to approximately eight years.

Speaker Change: Demand for U K home sales showed signs of stabilizing during the second half of the year.

Gary A. Shiffman: UK home sales and margins were in line with our guidance, which reflected the economic headwinds facing UK consumers, including higher inflation and interest rates. We anticipate a continuation of current volume and margin trends, based on the macroeconomic dynamics in the UK. We have recognized total non-cash impairments of approximately $370 million related to the goodwill associated with the Parks Holidays Platform acquisition. As part of our year-end audit process, it was determined that the impairments should have been recognized in earlier periods, resulting in a material weakness in internal control over financial reporting.

Speaker Change: Gain on sales and margins were in line with our guidance, which reflected economic headwinds facing the U K consumers, including higher inflation and interest rates.

Speaker Change: We anticipate a continuation of current volume and margin trends.

Speaker Change: Maybe just on the macro economic dynamics in the U K.

Speaker Change: We are a recognized total noncash impairments.

Speaker Change: <unk> $370 million related to the goodwill.

Speaker Change: With the holidays platform acquisition.

Speaker Change: As part of our year end audit process. It was determined that the impairment should have been recognized in earlier periods.

Speaker Change: They had a material weakness in internal control over financial reporting.

Gary A. Shiffman: These impairments, which are now recognized as March 31st, June 30th, and September 30th, 2023, reduced balance sheet goodwill and gas net income. They are non-cash, and there is no impact on revenues or FFO or operational metrics. That's it from Paracalites, and as previously...

Speaker Change: These impairments, which are now recognized at March 31st June 30th September 30th 2023.

Speaker Change: This balance sheet goodwill and GAAP net income.

Speaker Change: Non cash and there is no impact on revenues or F F L where operational metrics.

Speaker Change: That's it from Pac holidays, and as previously disclosed in late December we obtained.

Gary A. Shiffman: In late December, we obtained Title III real estate assets securing the UK note. Additionally, we recently completed the receivership and disposition process related to the manufacturing businesses that represented the remaining collateral on the UK note. As we previously stated, because we did not wish to operate the manufacturing business, we moved expeditiously to dispose of them. As of this month, the U.K. note has been completely resolved. At the end of the year, we reclassified Sandy Bay, the high-quality MH community, as Held for Investment. Sandy Bay, along with one operating property and three development parcels that were not part of the original Park Holidays acquisition, are now being operated by the Park Holidays team.

Speaker Change: No state asset securing the U K now.

Speaker Change: Additionally, we recently completed the receivership and disposition processes related to the manufacturing businesses that represented the remaining collateral in the UK now.

Speaker Change: As we've previously stated because we did not wish to operate the manufacturing businesses.

Speaker Change: Expeditious way to dispose of them.

Speaker Change: As of this month.

Speaker Change: I know it's been completely resolved.

Speaker Change: At the end of the year.

Speaker Change: Reclassified Sandy Denny you high quality MH community as held for investment.

Speaker Change: Bandy-bandy, along with one operating property and Redeveloped comparisons that were not part of the room.

Speaker Change: As you know Paragon is acquisition.

Speaker Change: And now being operated by the parents holiday is cheap.

Gary A. Shiffman: We continue to seek to maximize value related to these aspects. We're excited about the prospects awaiting us in 2024 and beyond. Our primary goal remains simplifying our operations while positioning Sun for steady earnings growth. Achieving this involves maintaining focus on our best-in-class portfolio and operating team, which have consistently delivered strong same-property NOI growth, as detailed in our earnings press release. We've sold our shares in Virginia, monetized the portfolio of MH consumer loans, divested their interest in Camp Spot, and meaningfully reduced the number of properties owned in joint ventures. During 2024, we intend to focus on capital recycling strategies, including through select assets. By remaining highly selective with development projects and acquisitions, we intend to allocate our free cash flow and any additional capital proceeds generated to de-leveraging.

Speaker Change: We continue to seek to maximize value related to these assets.

Speaker Change: We're excited about the prospects of leading us in 2024 and beyond.

Our primary goal remains simplifying our operations well positioning for steady earnings growth.

Speaker Change: Achieving this involves maintaining focus on our portfolio and operating team, which has consistently delivered strong same property NOI.

Speaker Change: As detailed in our earnings press release.

Speaker Change: Sold our shares in N genius.

Speaker Change: Monetize the portfolio MH consumer loans.

Speaker Change: They're interested in camps that can meaningfully reduce the number of properties owned in joint ventures.

Speaker Change: During 2024, we intend to focus on capital recycling strategies, including select asset sales.

By remaining highly selective.

Jackson acquisition, we intend to allocate our free cash flow and any additional capital proceeds generated.

Speaker Change: Deleveraging.

Gary A. Shiffman: As detailed in last night's press release, our board announced a $0.01 per share increase to our quarterly distribution, or $0.04 on an annual basis. I would also like to take this opportunity to welcome Jerry Ellinger and Craig Leopold to our board. We look forward to their contributions and new perspectives. Last but certainly not least, I would like to thank all of our team members for their hard work and dedication. We will now turn the call over to Fernando to discuss the results and guidance in more detail for them.

Speaker Change: As detailed in last Night's press release, our board announced a one cent per share increase to our quarterly distribution work for Samsung on an annual basis.

I would also like to take this opportunity to welcome Jerry Alan Berger, and frankly appalled to our board.

Speaker Change: We look forward to their contribution and new perspectives.

Speaker Change: Yes, and certainly not least I would like to thank all of our team members for their hard work and dedication.

Speaker Change: I will now turn the call over to Fernando will discuss our results and guidance in more detail Fernanda.

Speaker Change: Fernando.

Fernando Castro Caratini: Thank you, Gary. For the year and a quarter, Sun reported core FFO per diluted share of $7.10 and $1.34, respectively, both of which were in line with guidance. During the year, same property NOI grew 7.3% versus the prior year, driven by a 6.2% increase in revenue and a 4.2% increase in expenses. For the quarter, same property NOI increased 9.6% compared to the prior year due to a 6.3% increase in revenues driven by strong rental rate increases and occupancy gains. The expenses grew by only 30 basis points in a quarter, led by utilities and supply and repair cost management and a one-time benefit from lower real estate taxes. Looking at same property results across each segment, manufactured housing performance was strong. NOI grew 8.6% in a quarter due to a 7.6% increase in revenues and expense growth of 4.8%.

Fernando: Thank you Gerry for the year in the quarter Sun reported quarter, if it's one per diluted share of $7.10.

Fernando: The $1.34, respectively, both of which were in line with guidance.

Fernando: During the year same property NOI grew seven 3% versus the prior year driven by a six 2% increase in revenue and a four 2% increase in expenses.

Fernando: For the quarter same property NOI increased nine 6% compared to the prior year due to a six 3% increase in revenues driven by strong rental rate increases and occupancy gains.

Fernando: Expenses grew by only 30 basis points in the quarter led by utility and supply and repair cost management and a one time benefit from lower real estate taxes.

Fernando: Looking at same property results across each segment.

Fernando: Any factoring housing performance was strong.

Fernando: <unk> grew eight 6% in a quarter due to a seven 6% increase in revenues and expense growth of four 8%.

Fernando Castro Caratini: For the year, same-property in a line in manufactured housing increased by 6.8% compared to 2022. However, strong revenue growth for the year of 7% was partially offset by a 7.5% growth in expenses. Same property RV NOI increased 9.3% in the quarter, driven by a 2.1% increase in revenues and a 4.7% reduction in expenses. The expense savings were driven by aligning controllable costs with lower transient revenues, especially in supply and repair, utilities, and payroll.

Fernando: For the year same property NOI and manufactured housing increased by six 8% compared to 2022.

Fernando: Strong revenue growth for the year of 7% was partially offset by a seven 5% growth in expenses.

Fernando: Same property RV NOI increased nine 3% in the quarter driven by a two 1% increase in revenues and a four 7% reduction in expenses.

Fernando: The expense savings were driven by aligning controllable costs, but lower transient revenues, especially in supply and repair utilities and payroll.

Fernando Castro Caratini: For the year, same property RV NOI increased 4.8%. The continued strong volume of transient to annual RV site conversions also supported operational efficiency, as annual RV sites typically allow for lower operating expenses. Our same property adjusted occupancy for manufactured housing and RV increased by 230 bases to 98.9%, reflecting the demand to be a resident in a sun community. On the RV front, we have a long runway of transient sites that can be converted to annual over the coming years. The Marina Sink Property Portfolio had another very positive quarter of the year with a 12.5% increase in NOI for the quarter and an 11.7% increase for the year. The outperformance was driven by continued strong demand for wet slips and dry storage spaces due to higher boat traffic, especially in the southeast.

Fernando: For the year same property NOI increased four 8%.

Fernando: Continued strong volume of trains into annual RV think conversion.

Fernando: Supported operational efficiency.

Fernando: Annual RV sites typically allow for lower operating expenses.

Fernando: Our same property adjusted occupancy for manufactured housing and RV increased by 230 basis points to 98, 9%.

Fernando: Reflecting the demand to be a resident.

Speaker Change: Got it.

Speaker Change: On the <unk> front, we have a long runway of transient can be converted to annual.

Speaker Change: Over the coming years.

Speaker Change: The Marina same property portfolio had another very positive quarter in a year with a 12, 5% increase in NOI for the quarter and an 11, 7% increase for the year.

Speaker Change: Outperformance was driven by continued strong demand for wet slip and drive certain states.

Speaker Change: Due to higher boat traffic, especially in the South east.

Fernando Castro Caratini: Strong revenue growth was supported by expense management and real estate tax savings. As discussed earlier, UK real property performance showed strong growth, and home sales volumes were in line with guidance. Our property level results were partially offset by higher interest expense, G&A, and other corporate costs.

Speaker Change: Strong revenue growth was supported by expense management and real estate tax savings.

Speaker Change: As discussed earlier UK real property performance showed strong growth in home sales volumes were in line with guidance.

Our property level results were partially offset by higher interest expense G&A and other corporate costs.

Fernando Castro Caratini: Regarding new investment activity, during the year, we delivered approximately 800 expansion and development sites in North America. To simplify our business and reduce exposure to variable rate debt, in the fourth quarter, we made strong progress toward monetizing assets no longer deemed to be strategic. We materially simplified our Sun-NG joint venture, an arrangement entered into in 2018 with Northgate Resorts, an experienced RV owner and operator.

Speaker Change: Regarding new investment activity during the year, we delivered approximately 800 expansion and development in North America.

To simplify our business and reduce exposure to variable rate debt in the fourth quarter, we made strong progress towards monetizing assets no longer deep deep strategic.

Speaker Change: We materially simplified our son N G joint venture an arrangement entered into in 2018 with Northgate resorts.

Speaker Change: <unk> army owner and operator.

Fernando Castro Caratini: We have a successful relationship with them, and it's helped us achieve our leading position as an owner and operator of one of the highest quality RV portfolios in the U.S., given our focus on simplifying how we own properties. We sold our majority equity interest in three joint venture properties and acquired their minority interest in 14 joint venture properties so that we now own 100% of them. Notably, we believe these 14 properties have a long runway of embedded growth with meaningful opportunity for transient to annual RV site conversions over the coming years. Five properties remain in consolidated JVs, where we hold approximately 95% ownership. During the quarter, we also sold our ownership interest in ResQuad, whose CampSpot software is a valuable tool that we continue to use for managing our RV bookings.

Speaker Change: We have a successful relationship with them and it has helped us achieve our leading position as an owner and operator and one of the highest quality RV portfolios in the U S.

Speaker Change: Given our focus on simplifying how we owned properties.

Speaker Change: We sold our majority equity interest in three joint venture properties and acquiring or minority interest in 14 joint venture properties. So that we now hold 100%.

Speaker Change: Notably we believe these 14 properties have a long runway of embedded growth with meaningful opportunity for transient to annual RV conversions over the coming years.

Speaker Change: Five properties remain in consolidated JV, where we hold approximately 95% ownership interest.

Speaker Change: During the quarter, we also sold our ownership interest in Rex.

Speaker Change: We can spot software as a valuable tool that we continue to use for managing our R&D bookings.

Fernando Castro Caratini: Given the strong position we helped Camp Spots achieve over the past several years, it was an opportune time to divest our interest. In total, the Sun, Engie, and Resplod transactions netted us a minimal positive cash benefit, which was used to pay down debt. During the quarter, we recycled capital from a $53 million portfolio of manufactured housing consumer loans held on our balance sheet and used the net proceeds to pay down debt. As Gary discussed, we completed the receivership process related to the UK note.

Speaker Change: Given the strong position, we hope to achieve over the past several years. It was an opportune time to divest our interest in.

Speaker Change: In total the Sun and GE in restaurant transactions netted us a minimal positive cash benefit which was used to pay down debt.

Speaker Change: During the quarter, we recycled capital from a $53 million portfolio of manufactured housing consumer loans held on our balance sheet and use the net proceeds to pay down debt.

Speaker Change: As Gary discussed we completed the receivership process related to the U K now.

Fernando Castro Caratini: The three real estate assets are now reflected on our balance sheet at their currently assessed fair market value of $264 million, as supported by an updated third-party valuation. Now that we own them, these assets in Sandy Bay are being managed by the Park Holidays team, and all income derived from their operating performance is included in our 2024 guidance. The remaining assets that collateralized the UK note were manufacturing businesses. Disposing of these businesses expeditiously was a key priority, and in mid-February, they were sold for a total of approximately $10.7 million. We have no further legal, financial, or other obligations to these businesses.

Three real estate assets are now reflected on our balance sheet at their current fair market value of $264 million.

Speaker Change: That's supported by a third party valuations now that we own them. These assets in Sandy Bay are being managed by the park holiday and all income derived from their operating performance is included in our 2024 guidance.

Speaker Change: The remaining assets that collateralize the opinion, we're manufacturing businesses disposing of these businesses expeditiously with a key priority and in mid February they were sold for a total of approximately $10 $7 million.

Speaker Change: We have no further legal financial or other obligations to these businesses.

Fernando Castro Caratini: Regarding our balance sheet, at December 31, 2023, the company had approximately $7.8 billion in net outstanding, and our net debt to trailing 12-month current EBITDA ratio was 6.1 times. Regarding Capital Markets Activity, In January, we issued $500 million of five-year senior unsecured notes with a 5.5% coupon.

Regarding our balance sheet at December 31, 2023, the company had approximately $7 $8 billion in debt outstanding.

Speaker Change: And our net debt to trailing 12 month EBITDA ratio was six one times.

Speaker Change: With respect to capital markets activity in January we issued $500 million of five year senior unsecured notes with a five 5% coupon.

Speaker Change: We used the majority of the net proceeds to repay borrowings outstanding under our senior credit facility.

Speaker Change: Adjusting our year end debt balances for this new issuance, we reduced our variable rate debt to approximately 10% total debt.

Fernando Castro Caratini: We used the majority of the net proceeds to repay borrowings outstanding under our senior credit. Adjusting our year-end debt balances for this new issuance, we reduced our variable rate debt to approximately 10% of total debt. Turning to guidance for 2024. For 2024, we are establishing full-year guidance for core FFO per share in the range of $7.04 to $7.24. We are also establishing guidance for first quarter 2024 core FFO per share in the range of $1.14 to $1.19.

Speaker Change: Turning to guidance for 2024.

Speaker Change: For 2024, we are establishing full year guidance for core <unk> per share in the range of $7 four seven.

Speaker Change: $7 24.

Speaker Change: We are also establishing guidance for first quarter 2024 core <unk> per share in the range of $1 14.

Speaker Change: 19.

Speaker Change: For 2024, 95% of our properties are included in our same property pool, including park holidays.

Speaker Change: North America at the midpoint, we expect same property NOI growth of six 5% for manufactured housing two 8% from RBS and <unk>.

Fernando Castro Caratini: For 2024, 95% of our properties are included in the same property pool, including Park Holiday. In North America, at the midpoint, we expect same property NOI growth of 6.5% from manufactured housing, 2.8% from RVs, and 6.8% from arenas to generate total same property NOI growth of 5.6% for the year. In the UK, we forecast real property operations will generate same property NOI growth of 1.3 to 3.3% for the year.

Speaker Change: 8% from arena.

Generate total same property NOI growth of five 6% for the year.

Speaker Change: In the U K, we forecast real property operations will generate same property NOI growth of 1.3 to three 3% for the year.

Speaker Change: Our outlook for same property NOI is anchored on solid expected rental rate growth and we are confirming the average rental rate guidance provided in October of a five 4% increase for manufactured housing in North America, six 5% to RMB five six per cent for marine and seven 1% for manufactured housing.

Speaker Change: Okay.

Speaker Change: For home sales in North America, our guidance assumes an <unk> contribution from $14 four to $15 $9 million in 2024.

Speaker Change: In the U K, our 2024 guidance assumes an <unk> contribution from home sales of 62.3 to $69 $9 million, reflecting home sales volume.

Fernando Castro Caratini: Our outlook for same-property NOI is anchored on solid expected rental rate growth, and we are confirming the average rental rate guidance provided in October of a 5.4% increase for manufactured housing in North America, 6.5% for RVs, 5.6% for marinas, and 7.1% for manufactured housing in the UK. For home sales in North America, our guidance assumes an FFO contribution of $14.4 to $15.9 million in 2024. In the UK, our 2024 guidance assumes an FFO contribution from home sales of $62.3 to $69.9 million, reflecting a home sales volume of 2,750 homes at the minute. At the midpoint, our guidance assumes we increase revenue-producing sites in North America across manufactured housing and RV by 2,600 sites in 2020. For ground-up development and expansion activity, our 2024 guidance assumes we allocate approximately $115 million to advance or complete projects already in progress.

Speaker Change: 2000, and 750 homes estimate.

Speaker Change: At the midpoint our guidance assumes we increase revenue producing sites in North America across manufactured housing and RMB 2600 sites in 2024.

Speaker Change: For ground up development and expansion activity, our 2024 guidance assumes we allocate approximately $115 million to advance our complete projects already in progress.

Speaker Change: Includes approximately $50 million of spending related to the redevelopment of our hurricane impacted properties in Fort Myers.

Speaker Change: We are not planning to commence any new ground up developments and our average expected investment this year would mark a 54% decrease from our development spend in 2023.

Speaker Change: For the year, we expect G&A expense to run between $262 to 267 $4 million, which equates to a two 7% decrease over 23 at the midpoint.

Speaker Change: Adjusting for anticipated add backs of nonrecurring expenses.

Speaker Change: G&A increased five 3% at the midpoint.

Speaker Change: As a reminder, our guidance includes acquisitions and dispositions and capital market activity through February 20th, but it does not include the impact of prospective acquisitions dispositions or capital markets activities, which may be included in research analyst estimates.

Fernando Castro Caratini: This includes approximately $50 million of spending related to the redevelopment of our Hurricane Ian-impacted properties in Fort Myers. We are not planning to commence any new ground-up developments, and our average expected investment this year would mark a 54% decrease from our development spend in 2023. For the year, we expect GNA expense to run between $262.2 and $267.4 million, which equates to a 2.7% decrease over 2023 GNA estimates. Adjusting for anticipated add-backs of non-recurring expenses, we expect G&A to increase 5.3% at the mid-term.

Speaker Change: This concludes our prepared remarks, we will now open the call up for questions operator.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we'll now open up call for questions. Please limit yourself to one question. So everyone who would like to participate has ample opportunity. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Information tone will indicate that your line is in the question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Our first question comes from Michael Goldsmith with UBS. Please state your question.

Michael Goldsmith: Good morning, Thanks for taking my question my question's on the flow through of the NOI growth of six 3% to seven 3% to <unk> growth.

Operator: As a reminder, our guidance includes acquisitions and dispositions and capital markets activity through February 20th, but it does not include the impact of prospective acquisitions, dispositions, or capital markets activities, which may be included in Research Analyst. This concludes our prepared remarks. We will now open the call to questions. Operator.

Michael Goldsmith: Flat to up 2% that seems to be driven by a number of factors. So as you look to evolve the business. How can you drive better flow through and then specifically can you walk through the interest expense guidance.

Speaker Change: Your debt load in the fourth quarter was 7.8 billion at $12, two 3% a $330 million annualized so how do you bridge the gap there too so kind of your guidance, which is $35 million.

Speaker Change: For 24.

Speaker Change: Hi, Michael Good morning. This is this is fernando.

Operator: Thank you. Ladies and gentlemen, we will now open up our call for questions. Please limit yourself to one question so everyone who would like to participate has ample opportunity. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question. You may press star 2 if you would like to remove your question.

Speaker Change: <unk>.

Fernando: The primary driver for this flow through to a flat too.

Just over 1% growth expected in core <unk> per share in 2024.

Fernando: It's primarily due to.

Speaker Change: Excuse me.

Speaker Change: This is primarily due to a D. The interest income from the real life no.

Speaker Change: We will not have in 2024 and had been communicated with our with the market with that headwind.

Speaker Change: As we stepped into 2025 will not be there, which will which will aid in.

Michael Goldsmith: For participants using speaker equipment, it may be necessary to pick up your handset before pressing. Our first question comes from Michael Goldsmith with UBS. Please state your question. Good morning.

Speaker Change: Re accelerating that growth and that flows through.

Speaker Change: Strong same property NOI growth expected not just for this year, but for next year as well as you've seen in underwritten for the company for.

Michael Goldsmith: Thanks a lot for taking my question. My question is on the flow through of the NLI growth of 6.3% to 7.3% to FFO growth that's flat to up 2%. You know, this seems to be driven by a number of factors.

Speaker Change: For many years.

Speaker Change: As it relates to interest expense this year, starting the year off with our $500 million bond issuance.

We start the year with about 10% of floating rate debt, so that will be the.

Michael Goldsmith: So as you look to evolve the business, how can you drive better flow through? And then specifically, can you walk through the interest expense guidance? You know, your debt load in the fourth quarter was $7.8 billion at 4.23% or $330 million annualized. So how do you bridge the gap there to kind of your guidance, which is $35 million higher for 24? Michael, good morning. This is Fernando.

Speaker Change: The largest component of contributing to.

Speaker Change: An increase in our in year over year interest expense from 23.

Speaker Change: Into 'twenty four.

Speaker Change: Embedded in.

Speaker Change: In our guidance is are the latest forward curves as it relates to a sofa and Sonya for.

Speaker Change: Floating rate piece of about 10% of our.

Speaker Change: Our current our current debt stack.

Speaker Change: <unk>.

Speaker Change: Step up in interest expense.

Speaker Change: Is related to the secured borrowings that are now on our balance sheet.

Fernando Castro Caratini: The, The primary driver for the flow through to flat to just over 1% growth expected in core FFO per share in 2024 is primarily due to, excuse me, is primarily due to the interest income from the real life note that we will not have in 2024 and have communicated with the market. That headwind as we step into 2025 will not be there, which will aid in re-accelerating that growth and that flow through of strong same property NOI growth expected, not just for this year, but for next year as well, as you've seen and underwritten for the company for many years. As it relates to interest expense this year, starting the year off with our five hundred million dollar bond issuance, we start the year with about 10 percent of floating rate debt.

From our consumer note sale during the fourth quarter that is.

Speaker Change: From an accounting perspective.

Speaker Change: These notes that were sold are still on our balance sheet and are recognized as both an asset and a liability on the asset side, it's a collateralized receivable.

Speaker Change: On the on the liability side, it's a secured borrowing.

Speaker Change: And those those amounts offset each other from an income and expense standpoint, but that is adding about $5 million of interest expense.

Speaker Change: To to the number.

Speaker Change: Thank you very much good luck in 2024.

Speaker Change: Our next question comes from John Kim with BMO capital markets. Please state your question.

John P. Kim: Thank you I wanted to ask about the Marina guidance, that's still expected to be down this year.

John P. Kim: Conversely service dining retail and entertainment.

John P. Kim: B is expected to decline, 11% and I thought those two would probably be a little bit more correlated.

Fernando Castro Caratini: So that will be the largest component of contributing to an increase in year over year interest expense from twenty three to twenty four. Also, embedded in our guidance are the latest forward curves as it relates to SOFR and SONIA for that floating rate piece of about 10% of our current debt stack. A step-up in interest expense is related to the secured borrowings that are now on our balance sheet from our consumer note sale during the fourth quarter. That is, From an accounting perspective, these notes that were sold are still on our balance sheet and are recognized as both an asset and a liability. On the asset side, it's a collateralized receivable. On the liability side, it's a secured borrowing. And those amounts offset each other from an income and expense standpoint, but that is adding about $5 million of interest expense to the number. Thank you very much.

John P. Kim: Just wanted to ask you about that.

Speaker Change: Sure So John transient revenue expectations.

Speaker Change: In total four four R&D are expected to be down two and three quarter percent.

Speaker Change: And Marina we are expecting an increase our underwriting and increase in Marina transient revenue.

Speaker Change: Of about 10%.

Speaker Change: For the year.

Speaker Change: And in the in the U K, we are expecting trends yet our revenue increased just about two and a half a percent.

Speaker Change: For the year from an srd.

Speaker Change: S or D any perspective, and the decline expected underwritten forecasted for this year that is primarily coming from the Marina side, where we are forecasting lower.

Speaker Change: Lower boat sales for for this year.

Michael Goldsmith: Good luck in 2024. Our next question comes from John Kim with DMO Capital Markets. Please stay.

Speaker Change: And you are right.

Speaker Change: Revenue is.

Speaker Change: Frankly is correlated to the srd any side.

John P. Kim: Thank you. I wanted to ask about the marina guidance that's still expected to be strong this year. But conversely, service, dining, retail, and entertainment, or F&B, is expected to decline 11 percent. And I thought those two would probably be a little bit more correlated.

Speaker Change: Overall.

Speaker Change: Thank you for that my second question is on your decision to sell camp spot I know, it's not a very big investment for you I thought it was a pretty interesting prop tech investment.

Speaker Change: Were you concerned with the optics of being a large RV owner and having ownership up this third party data.

John P. Kim: So I just wanted to ask you about that. Sure. So, John, transient revenue expectations in total for RV are expected to be down two and a quarter percent. In Marina, we are expecting an increase, or underwriting an increase, in Marina transient revenue of about 10% for the year. And in the UK, we are expecting transient revenue to increase just about two and a half percent for the year from an SRD, SRD&E perspective, and the decline expected underwritten forecasted for this year. That is primarily coming from the Marina side, where we are forecasting lower, lower boat sales for this year. And you are right that the most of our revenue is correlated to the SRD&E set. Thank you all.

Speaker Change: It's just simply a distraction and you just you don't wanted to sell at this time.

Speaker Change: Hey, Jonathan that's a great question. This is Gary I think that will continue.

Gary A. Shiffman: This year over this call and as we have been sharing with our stakeholders over the last few quarters.

And this effort to get back to basics and focus on this.

Gary A. Shiffman: Strong growth in our.

Gary A. Shiffman: Our core businesses and translate that directly to per share.

Gary A. Shiffman: Growth.

Gary A. Shiffman: We're looking to simplify our business to remove complexity both from a modeling standpoint, but also from an investment standpoint, so we can.

Gary A. Shiffman: Redirect capital that would be required to continue to develop and invest in cam start another type.

Gary A. Shiffman: <unk> like that to the reduction of debt so.

Gary A. Shiffman: This is a decision where we can get the best of both worlds we can continue.

Gary A. Shiffman: Using <unk>, which.

John P. Kim: Thank you for that. My second question is about your decision to sell Camp Spot. I know it's not a very big investment for you.

Gary A. Shiffman: Is the right.

Gary A. Shiffman: Best software that's out there to manage our RV communities and monetize it and use the monetization to pay down debt.

John P. Kim: I thought it was a pretty interesting prop tech investment. Were you concerned with the optics of being a large RV owner and having ownership of this third-party data? Or was it just simply a distraction, and you just wanted to sell this property? Hey, John, that's a great question. This is Gary.

Gary A. Shiffman: Just to clarify were there any regulatory concerns.

Gary A. Shiffman: Investing and cancel.

Speaker Change: None that we're aware of.

Gary A. Shiffman: Okay.

Great. Thank you.

Gary A. Shiffman: Our next question comes from Jamie Feldman with Wells Fargo. Please state your question.

James Feldman: Oh, great. Thanks for taking the question you know it was a very active quarter and earnings release for the simplification process.

James Feldman: How should we think about what's left to do yeah. Your two new board members do you have a new investment review Committee.

Gary A. Shiffman: I think that as we'll continue to share on this call, and as we have been sharing with our stakeholders over the last few quarters, in this effort to get back to basics and focus on this strong growth in our core businesses and translate that directly to per share growth, we're looking to simplify our business to remove complexities, both from a modeling standpoint, but also from an investment standpoint, so we can redirect any capital that would be required to continue to develop and invest So this is a decision where we can get the best of both worlds. We can continue using Camp Spot, which is the really best software that's out there to manage our REIT communities, and monetize it, and use the monetization to pay down debt. Just to clarify, were there any regulatory concerns about investing in cancer? None that we're aware of.

James Feldman: When do you think you'd get to just kind of a clean quarter or quarter, where youre not taking impairments are accounting reviews, and we can just kind of get back to the fundamentals of the business.

James Feldman: So maybe asked another way what what do you still have to work through in the simplification process to get to that momentum and when do you think that is.

Speaker Change: But that is a great question and something we're very eager to share and demonstrate.

As we move forward in 2024.

Speaker Change: We.

Speaker Change: Previously uneven during this call talked about some of those projects.

Speaker Change: We are painfully aware and recognize how challenging 2023 was for all of our stakeholders.

Speaker Change: The headwinds faced by pipe holidays, and the difficulties brought on by the UK no restructuring.

Speaker Change: We had a meaningful impact.

Speaker Change: Formats.

Speaker Change: The stack and investors perceptions of Sun.

Speaker Change: So what we can share with you the extinguishment of the UK note that included the sale of the manufacturing businesses the transfer of land parcels onto our balance sheet.

All of them to move them towards higher quality as a management team. We are continuing to share our absolutely outstanding so that'd be able to operate that group of properties and seek to maximize its millions.

Gary A. Shiffman: Great, thank you. Our next question comes from Jamie Feldman with Wells Fargo. Great, thanks for taking the question. You know, it was a very active quarter and earnings release for the simplification process. So how should we think about what's left to do? You know, you have two new board members, you have a new investment review committee. And when do you think you'll get to just kind of a clean quarter or, you know, a quarter where you're not taking impairments, accounting reviews, and we can just kind of get back to the fundamentals of the business? So maybe ask another way: what do you still have to work through in the simplification process to get to that moment?

So who wants to be able to report on that.

Speaker Change: As the year goes forward.

Speaker Change: Uh huh.

Speaker Change: Five properties that's L b.

Speaker Change: Taking over in this process, we talked about Sandy Bay is income producing.

Speaker Change: Second one is still fairly good.

Speaker Change: Minor amount of income coming through it now and the.

Mm three other development parcels. So we're eager to get those in the hands and parents holidays. In fact, there are now overseeing it.

Speaker Change: <unk> itself has performed well in a pretty challenging environment. They have been gaining market share overall in increasing their real property NOI.

James Feldman: And when do you think that will be? Well, that is a great question and something we're very eager to share and demonstrate as we move forward in 2024. Previously, and even during this call, we talked about some of those projects, but we are painfully aware and recognize how challenging 2023 was for all of our stakeholders. The headwinds faced by partilities and the difficulties brought on by the UK note restructuring had a meaningful impact on our performance, the stock, and investors' perceptions of sales. So what we can share with you, the extinguishment of the UK note that included the sale of the manufacturing businesses, and the transfer of the land parcels onto our balance sheet allows them to move them towards Park Holidays. The management team, which we continue to share, is absolutely outstanding. So they'll be able to operate that group of properties and seek to maximize their value.

Hmm.

Speaker Change: Frustrated as everyone is with the added complication of.

Speaker Change: He announced noncash goodwill impairment here at Sun.

Speaker Change: Impac does not affect any of frac holidays historical cash flow or their operating metrics.

Speaker Change: Including NOI Corp, fourth quarter <unk>.

Speaker Change: <unk> future growth prospects. So I, we're happy to move forward or not and that we expect <unk> 2023 performance to really be a baseline for future growth.

Speaker Change: Yeah, and as we've reflected in guidance.

Speaker Change: While somewhat flattish we believe we will continue to see improvement with continued improvements in the macroeconomics in the U K.

Speaker Change: We've continued to talk about.

Speaker Change: As we reflect towards 2024 and our guidance.

Speaker Change: Things were focused on.

Speaker Change: We've announced the sale of the stake of and junior.

Northgate Recalculation recapitalization, which we just.

Speaker Change: Shared which really.

Gary A. Shiffman: So we'll look to be able to report on that as the year goes forward. There are five properties that they'll be taking over in this process. We talked about Sandy Bay; it is income-producing. There is a second one, Stoufford, that has a minor amount of income coming through it now, three other development parcels. So we're eager to get those in the hands of the students, and Park Valley is, in fact, they are now overseeing it. Park College itself has performed well in a pretty challenging environment.

Speaker Change: It does take a lot of complexity.

Speaker Change: How did the JV in the reporting.

Leaves us with the best communities that we think we can optimize growth are excellent properties.

Speaker Change: Have a great runway to be able to convert transient.

Speaker Change:

Speaker Change: Two annual so should be positive as we go forward.

Speaker Change: Fernando mentioned, reducing our exposure to floating rate debt.

Speaker Change: And continued reduction in transient revenue through conversion of more stable.

Gary A. Shiffman: They have been gaining market share overall and increasing their real property NOI. While we're frustrated, as everyone is, with the added complication of the announced non-cash goodwill impairment here at SUN, the impact does not affect any of Park Holiday's historical cash flow or its operating metrics, including NOI, Core FFO, or its future growth prospects. So we're happy to move forward on that. We expect Park Holiday's 2023 performance to really be a baseline for future growth.

Speaker Change: Purdue predictable annual RV revenue all of these things I think position us going forward to return to the kind of year over year translation of core growth and a meaningful <unk> per share growth. So this is something we're gonna have to demonstrate quarter.

Speaker Change: By quarter.

Speaker Change: Our guidance for 24 does have the headwinds that Fernando shared with regard to.

Speaker Change: The income interest and we don't have starting off the year, but it leads to a solid growth and solid guidance in all our business platforms, and we look to be able to update im sure everybody at quarter by quarter as we continue to make progress on these goals.

Gary A. Shiffman: And as we've reflected in guidance, while somewhat flattish, we believe we will continue to see improvement with continued improvements in macroeconomics in the UK. We've continued to talk about, as we look towards 2024, the things we're focused on. We've announced the sale of the stake in Ingenia, and the Northgate recapitalization, which we just shared, which really does take a lot of complexity out of the JV and the reporting and leaves us with the best communities that we think we can optimize growth, excellent properties. They have a great runway to be able to convert transient to annual, so should be positive as we go forward. Fernando mentioned reducing our exposure to floating rate depth and continued reduction in transient revenue through the conversion of more stable and predictable annual IRV revenue.

Thank you that's very helpful. If I could just ask one clarification just in terms of kind of accounting review impairment risk.

Speaker Change: And what what's the latest conversation with the auditors is it.

Speaker Change: That kind of a clean bill of health going forward.

Speaker Change: But there's still stuff under review.

Speaker Change: Jamie was last last nights release, we did.

Speaker Change: We did announce the b and the noncash impairment to goodwill charges that will be.

Speaker Change:

Speaker Change: That will flow through when we file our our 10-K, but we've provided.

Speaker Change: We provided details to it in our supplemental that totaled $370 million.

Speaker Change: Noncash goodwill impairment for cumulatively for for.

Speaker Change: For the year itself.

Gary A. Shiffman: All these things, I think, position us going forward to return to the kind of year-over-year translation of core growth into meaningful FFO per share growth. So this is something we're going to have to demonstrate quarter by quarter. Our guidance for 24 does have the headwinds that Fernando shared with regard to the income interest that we don't have starting out the year, but it leads to solid growth and solid guidance on all our business platforms, and we look to be able to update and share everybody quarter by quarter as we continue to make progress on these goals. Thank you. That's very helpful.

Speaker Change: So there is I mean.

Speaker Change: Nothing else is contemplated as it relates to impairment at this time.

Speaker Change: Okay, Alright, thank you for your thoughts.

Speaker Change: Our next question comes from Josh <unk> with Bank of America. Please state your question.

Josh: Yeah, Hey, guys, maybe just a follow up to Jamie's last question read the 8-K last night on the material weakness in companies and internal controls.

Josh: Just what.

Josh: Was it just related to how are you guys reviewed goodwill or is there anything else you guys wanted to improve as far as internal controls just just kind of curious the scope.

Josh: Yeah.

Speaker Change: Sure Josh.

Speaker Change: Our material weaknesses as a deficiency in internal control over financial reporting which results in a reasonable possibility that a material misstatement of our financial statements will occur.

James Feldman: If I could just ask one clarification, just in terms of the kind of accounting review impairment risk. I mean, what was the latest conversation with the auditors? Is it... a kind of clean bill of health going forward, or are there still stuff under review? Danny, with last night's release, we did announce the non-cash impairment to goodwill charges that will be, That will flow through when we file our 10-K, but we provided details on it in our supplemental that totaled $370 million of non-cash goodwill impairment cumulatively for the year itself. So there's nothing else contemplated as it relates to impairment at this time.

Speaker Change: <unk> identified a material weakness specific to the design of accounting controls over ADESA assessing goodwill.

Speaker Change: Park holidays.

Speaker Change: As a result of the material weakness in the design of.

Speaker Change: Of this control.

Speaker Change: We failed to take the material goodwill impairment charge at the appropriate quarters, we will now reflect that.

Speaker Change: In our 10-K, we are working on the remediation plan for this control moving forward.

Fernando Castro Caratini: Okay. All right. Thank you for your thoughts. Our next question comes from Josh Dennerlein with Bank of America. Please state your question.

Speaker Change: And we can we can update the market as we as we move forward over the course of the next couple of quarters.

Joshua Dennerlein: Yeah, hey, guys, maybe just a follow-up to Jamie's last question. You know, I read the AK last night on the material weaknesses and companies, I guess, just, was it just related to how you guys reviewed Goodwill, or is there anything else you guys want to improve as far as internal controls? Just kind of curious about the scope. Here, Josh.

Speaker Change: Okay, and then Gary I appreciate your comments on just getting back to the basics focusing on core growth.

Gary A. Shiffman: Ah I see like you've cleaned up the J vs. The campsite is there anything larger that you guys are contemplating as far as like like shedding asset wise or just simplifying any kind of color there and would that potentially include like an exit from the UK.

Gary A. Shiffman: So great question, Josh I think that in general we have shared.

Fernando Castro Caratini: A material weakness is a deficiency in internal control over financial reporting, which results in a reasonable possibility that a material misstatement of our financial statements will occur. We identified a material weakness specific to the design of accounting controls over assessing goodwill at park holidays. As a result of the material weakness in the design of this control, we failed to take the material goodwill impairment charge at the appropriate quarters.

Speaker Change: Our intention to look at certain assets, we can define them as noncore smaller regionally.

Speaker Change: Not located.

Speaker Change: Located in areas, where we have efficiencies. So we will continue.

Speaker Change: A relatively small magnitude.

Speaker Change: Certain dispositions we mentioned.

Speaker Change: We have two of them held for sale that we expect to close very shortly.

The magnitude of those is something equal to or less than what we lost it I think in 2014 or 15, a total of up to $300 million.

Fernando Castro Caratini: We will now reflect that in our 10-K. We are working on the remediation plan for this control moving forward, and we can update the market as we move forward over the course of the next couple of quarters. Okay. And then, Gary, I appreciate your comments on just getting back to the basics, focusing on core growth. I feel like you cleaned up the JVs, and the campsite. Is there anything larger that you guys are contemplating as far as shedding assets-wise or just simplifying? Any kind of color there?

Speaker Change: But with no certainty theres, nothing, forcing us to sell those assets.

Speaker Change: And.

Speaker Change: We will oh manage those and as we find interest and determine that we can sell them on a logical on an accretive basis.

Speaker Change: So with regard to.

Those types of dispositions, we're focused on that and we've shared that in the market with regard to the U K I think that.

Speaker Change: We've discussed the certainly the macro headwinds have impacted home sales.

Joshua Dennerlein: And would that potentially include an exit from the UK? So, great question, Josh. I think that, in general, we have shared our intention to look at certain assets; we can define them as non-core or smaller or regionally, not located in areas where we have efficiencies. So we will continue, on a relatively small scale, certain dispositions we mentioned. We have two of them held for sale that we expect to close very shortly.

And at the same time real property contribution has been growing during the.

Speaker Change: Current difficult financial environment in the U K and guidance reflects flat, but a little bit of growth for 24. So I won't go at this time based on market in the UK and the fact that we have are really well located.

Gary A. Shiffman: And the magnitude of those is something equal to or less than what we lasted, I think, in 2014 or 15, a total of up to $300 million. But with no certainty, there's nothing forcing us to sell those assets, and we will manage those as we find interest and determine that we can sell them on a logical and accretive basis. So with regard to those types of dispositions, we're focused on that.

Speaker Change: Properties and an excellent management team is managing through these difficult times.

Speaker Change: That we will continue to operate the platform.

Speaker Change: Maximize growth and value.

Speaker Change: What we consider a great management team.

Speaker Change: And make determinations.

Speaker Change: On a quarterly and annually basis as to best decisions moving forward.

Speaker Change: Thank you thanks.

Speaker Change: And our next question comes from Samir Khanal with Evercore ISI. Please state your question.

Hey, Gary or Fernando I guess.

Gary A. Shiffman: And we've shared that in the market. With regard to the UK, I think that, We've discussed that certainly the macro headwinds have impacted home sales. And at the same time, real property contribution has been growing during the current difficult financial environment in the UK, and guidance reflects a little bit of growth for 24. So, our goal at this time, based on the market in the UK and the fact that we have really well-located properties and an excellent management team that is managing through these difficult times, is that we will continue to operate the platform, but to maximize growth and value with what we consider a great management Thank you.

Can you expand on on the U K home sales a little bit more here.

Samir Khanal: No. When you look at the sales volume I think youre expecting it to be sort of flat to down.

Samir Khanal: But then kind of what you alluded to in the prior question. You are you, saying the contribution will be up so maybe help us think through that maybe the margins you're assuming for the business.

Thank you Samir.

Samir Khanal: Youre correct at the high end of the range, we are expecting flat volume for on a year over year basis at the midpoint of three 5% decline.

Samir Khanal: And volume.

Samir Khanal: On an adjusted basis 2023, U K NOI from home sales margins were.

Speaker Change: We're just above $21000 per home.

Speaker Change: For 2024, our margin expectations are higher than in 2023, given the contribution to overall margin from home sales at Sandy Bay, which is now as Gary stated being operated by <unk>.

Samir Khanal: And our next question comes from Samir Khanal with Evercore ISI. Please state your name. Hey, Gary or Fernando, I guess, just can you expand on the UK home sales a little bit more here? I know when you look at the sales volume, I think you're expecting it to be sort of flat to down. But then, kind of like what you alluded to in the prior question, you know, you're saying the contribution will be up. So maybe, you know, help us think through that. Maybe the margins you're assuming for the business. Thank you, Samir. You're correct.

Speaker Change: Park holidays team.

Speaker Change: Given that this community is a year on year round.

Speaker Change: Primary home community. It typically sees higher home prices and gross NOI dollar margins.

Speaker Change: Above $110000 per per home too.

Speaker Change: To frame our expectations of volume.

Fernando Castro Caratini: At the high end of the range, we are expecting flat volume on a year-over-year basis. At the midpoint, we are expecting about a 3.5% decline in volume. On an adjusted basis, 2023 UK NOI from home sales margins, we're just above $21,000 per home. For 2024, our margin expectations are higher than in 2023, given the contribution to overall margin from home sales at Sandy Bay, which is now, as Gary had stated, being operated by the Park Holidays team. Given that this community is a year-round primary home community, it typically sees higher home prices and gross NOI dollar margins above $110,000 per home. To frame expectations of volume at Sandy, we are expecting somewhere within 30 to 50 homes sold in that community, which is driving overall margin for the year up above the 2023 level. Okay, I got it.

Speaker Change: Sandy.

We are expecting somewhere within a 30 to 50 homes sold in that community, which is driving overall margin for the year up above the 2023 levels.

Speaker Change: Okay got it and if I could.

Just ask one more here on the expense side.

Speaker Change: You know I I know insurance.

Speaker Change: The growth has moderated this year, but that expense growth is still expected to be higher than what we were anticipating maybe give us color around sort of the components of expenses and kind of what your how you're thinking about the various line items.

Speaker Change: Sure Samir.

Speaker Change: During 2003, we had active cost containment strategies in place mainly across payroll utilities, our supply and repair and advertising that are Budd.

Speaker Change: It to return to.

Speaker Change: Normalized at the normalized state in 2024 this is leading.

Speaker Change: To that expense growth year over year in North America same property.

Speaker Change: Eight 6% at the at the midpoint.

Samir Khanal: And I could just ask one more here on the expense side. Um, you know, I know insurance. The growth has moderated this year, but expense growth is still expected to be higher than what we were anticipating. Maybe give us some color around sort of the components of expenses and kind of how you're thinking about the various line items. Sure, Samir.

Speaker Change: So certainly in supply and repair.

Speaker Change: Sorry, a decrease year over year for example in 'twenty three and we are growing off of that base north of north of 10% from an expectation standpoint.

Fernando Castro Caratini: During 23, we had active cost containment strategies in place, mainly across payroll, utilities, supply, and repair, and advertising that are budgeted to return to a normalized state in 2024. This is leading to that expense growth year over year. In North America, same property, 8.6% at the midpoint.

Speaker Change: We certainly will.

Speaker Change: We'll look to <unk>.

Speaker Change: <unk> managing our costs in.

Speaker Change: In response right to.

Speaker Change: Any any revenues.

Speaker Change: Especially on the on the RV side, and so that could that could change over the over the course of the year.

Fernando Castro Caratini: So certainly in supply and repair, we saw a decrease year over year. For example, in 23, and we are growing off of that base north of 10% from an expectation standpoint. We certainly will look to continue managing our costs in response to any revenues, especially on the RV side. So that could change over the course of the year. But those are the primary drivers that are taking overall expense growth higher than in 2023. Thank you, Fernando.

Speaker Change: Those are the primary drivers.

Speaker Change: That are that are taking call. It overall, our overall expense growth are higher than that in 2023.

Speaker Change: Thank you Fernando.

Speaker Change: Our next question comes from Keegan Karl with Wolfe Research. Please state your question.

Keegan Karl: Yeah. Thanks for the time guys.

Keegan Karl: A more bigger picture approach here I guess first maybe I'm marinas, Gary I mean, how should we think about pricing power going forward and then I guess, specifically where are you seeing your waiting list demands at today and how does that compare to last year.

Keegan Carl: Our next question comes from Keegan Carl with Wolf Research Police Theory. Yeah, thanks for the time, guys. I guess, first, maybe on marinas, Gary. I mean, how should we think about pricing power going forward? And then, specifically, where are you seeing your waiting list demands at today? And how does that compare to last year? Great questions, Keegan.

Speaker Change: Quick questions Kian.

Speaker Change: Obviously as we've stated in our remarks that we continue to see strong demand for west.

Brian: Brian its storage.

Brian: Over 80%.

The.

Brian: Marina portfolio.

Brian: We're experiencing continued waitlist.

Gary A. Shiffman: Obviously, as we stated in our remarks that we continue to see strong demand for wet slips and dry storage at over 80% of the Marina portfolio, we're experiencing continued waitlists for at least one size. So there's still a continuing demand. We've had over 7% and over 11% same property growth in 22 and 23. And as we've guided in 24, we still expect continued growth. I think that we look at everything in our core businesses as a marathon, as we've shared, even with the headwinds that we had in 23. Obviously, we're all aware of how the portfolios perform. So in thinking through rental increases, expense control, and CapEx investment for the long term, our expectation is that for all of our businesses, including Marina's, we look forward to continued steady growth, the type of core growth that we've exhibited and seen throughout Sun's ownership of these platforms. So we feel very good going forward. And we're laser focused on resolving the things that we want to resolve to be able to translate that growth for our stakeholders going forward. That's really helpful.

Brian: Least one size. So there is still a continuing demand.

We've had.

Brian: Over 7% and over 11%.

Brian: Same property growth in 'twenty, two and 'twenty three.

Brian: And.

Brian: As we've guided in 'twenty four we still expect continued growth I think that we.

Brian: We look at everything in our core businesses.

Brian: Marathon is we've shared even with the headwinds that we had in 'twenty three.

Brian: So they were all aware of how the portfolios perform so in thinking through.

Brian: Rental increases expense control Capex investment for the long term.

Brian: Our expectation is that.

Brian: For all of our businesses, including marinas.

Brian: We look forward to continued steady growth type of core growth that we've exhibited and seen oh well the Sun's ownership of these platform. So we feel very good going forward.

Brian: We are laser focused on.

And I'm resolving the fingers that we went to resolve to be able to translate that growth to our stakeholders going forward.

Speaker Change: Got it that's really helpful. And then I guess just shifting to the other you know big picture theme here on park holidays. I know, we spent a lot of time on the call on it but with the impairments behind you I guess I'm trying to get more clarity on what the outlook is for the business going forward and I guess I'm looking more from what are your plans for this platform right, if if you're gaining market share.

Keegan Carl: And then I guess just shifting to the other, you know, big picture theme here on Park Holidays. I know we spent a lot of time on the call discussing it, but with the impairment behind you, I guess I'm trying to get more clarity on what the outlook is for the business going forward. And I guess I'm looking more at what are your plans for this platform, right? If you're gaining market share, you know, if the business de-levers, and the macro environment improves, and, you know, in theory, this business outgrows your portfolio average, should we expect you to grow your exposure to this platform over time? And if not, why not?

If the business de levers in the macro environment improves and you know in theory. This business Outgrows your portfolio average should we expect you to grow your exposure to this platform over time and if not why.

Speaker Change: I can say at this time, we are very.

Speaker Change: I'm comfortable with where our exposure is.

Back to the same thing.

Speaker Change: Reasons for the investment there were to gain continued exposure to manufactured housing revenue, which is highly sticky highly valued it had a disproportionate fair to home sale disproportionate share of contribution from home sales, we are committed to working through that.

Gary A. Shiffman: I can say at this time we're very comfortable with where our exposure is. You know, I go back to the same thing. The reasons for the investment there were to gain continued exposure to manufactured housing revenue, which is highly sticky and highly valued. It had a disproportionate share of contribution from home sales.

Speaker Change: Five to seven year basis, where we're two years into that right now and we're continuing to see the benefit where we can.

Speaker Change: Reduce home sales margin, whether intentional or not and seek to increase occupancy and contribution through real property rent.

Gary A. Shiffman: We've committed to working through that on a five to seven-year basis. We're over two years into that right now, and we're continuing to see the benefit where we reduce home sales margin, whether intentional or not, and seek to increase occupancy and contribution through real property rent and lease payments, if you will. That's all going very well.

Rent and lease payments if you will.

Speaker Change: That's all going very well certainly.

Speaker Change: As we've shared the disproportionate attention and focus and the downward guidance, we experienced in 'twenty three.

Speaker Change: All areas that Oh.

Speaker Change: <unk> then as we continue to focus in 24 to grow the company to create value who can take on the assets that they are now operating and to create value from them, we'll make a determination.

Gary A. Shiffman: Certainly, as we've shared, the disproportionate attention and focus and the downward guidance we experienced in 23 are all areas that we are focused on. And as we continue to focus in 24 to grow the company, to create value, to take on the assets that they're now operating and to create value from them, we'll make a determination. However, there are no determinations made at this time.

Speaker Change: There are no determinations made at this time, but as always you know all options around the table.

Speaker Change: And.

Speaker Change: We're excited for the management team to turn on the best results that they can in 'twenty four.

Speaker Change: And kian, if I can add a similar to our.

Fernando Castro Caratini: But as always, all options are on the table, and we're excited for the management team to turn in the best results to take in within 24 hours. And Keegan, if I can add, similar to our non-strategic asset capital recycling program here in the US, we are under those plans in the UK as well, where we can potentially monetize a few assets from the portfolio over the course of this year. Great.

Speaker Change: Non strategic asset capital recycling program here in the U S.

Under we are under those plans are in the U K as well.

Speaker Change: We can potentially monetize.

Speaker Change: A few assets from the portfolio over the course of this year.

Great: Great. Thanks for the time guys.

Great: Our next question comes from Eric Wolfe with Citibank. Please state your question.

Keegan Carl: Thanks for your time, guys. Our next question comes from Eric Wolfe with Citibank Police. Nick here with Eric.

Great: Thanks, It's Nick here with Eric.

Eric Wolfe: Gary at the end of last week, you, obviously announced a cooperation agreement standstill.

Eric Wolfe: Gary, at the end of last week, you obviously announced the cooperation agreement and the standstill and the new board appointees, but also the Capital Allocation Committee. So I was hoping if you could dive into that a bit in terms of what the Capital Allocation Committee will be doing, how it's different than what you were doing previously, and kind of what additional rigor. Yeah, thanks, Eric. I think that we're very pleased that the board has established the Capital Allocation Committee to review the company's use and investment of capital and to make recommendations to the full board. It's a more formalized process of what has always taken place at the board level.

Two new board appointees, but also the capital allocation Committee, just hoping if you could dive into that a bit.

Eric Wolfe: Of what the capital allocation committee will be doing and how it's different than what you were doing previously and kind of what additional work or do you think that brings together.

Eric Wolfe: Definitely decisions.

Yeah. Thanks, Eric.

Speaker Change: I think that.

Speaker Change: We're very pleased.

Speaker Change: But the fact that the board has established the capital allocation Committee to review the company's use an investment of capital and to make recommendations to the full bore.

Speaker Change: There's some more formalized process.

Speaker Change: What has always taken place at a board level.

Speaker Change: We're pleased to have Craig Leopold serve on that capital allocation Committee.

Speaker Change: And we will have two independent board members are on the committee as well.

Gary A. Shiffman: We're pleased to have Craig Leopold serve on the Capital Allocation Committee, and we will have two independent board members on that committee as well, and we have formulated and begun to formulate a charter for that. So we look forward to their contribution, and we think it will be a continued benefit as we move forward and strengthen the board and the company in the future. Hey, it's Eric here.

Speaker Change: And we are.

Speaker Change: Have formulated and begun to formulate a charter for that so we look forward to their.

Speaker Change: Contribution.

Speaker Change:

Speaker Change: We think it will be a continued benefit as we move forward and strengthened the board.

And the company.

Speaker Change: In the future.

Eric Wolfe: Hey, it's Eric here.

Eric Wolfe: I guess since everyone's breaking the rules, just a quick one on your CapEx guidance. You know, I was just curious if you could maybe give us a sense for what's included in terms of recurring and non-recurring CapEx as well as free cash flow. And I think you mentioned that you might have some free cash flow that would be used to pay down debt, but I'm trying to understand how then you would sort of get to that $360 million of interest expense that's in your guidance because the fourth-quarter run rate, you know, would suggest something that's a bit lower. I understand the $5 million of secured borrowing impact, but it still seems like there's another $10 million or so more to get to your guidance. Thanks.

Eric Wolfe: The second one is breaking the rules and just a quick one on one.

Eric Wolfe: Your Capex guidance I was just curious if you could maybe give us a sense for what's included in terms of recurring nonrecurring capex as well as free cash flow.

Eric Wolfe: Hum.

Eric Wolfe: You mentioned that you might have some free cash flow that.

Eric Wolfe: That would be used to pay down debt, but trying to understand how then you would sort of get.

Eric Wolfe: It's about $360 million of interest expense that's in your guidance because the fourth quarter run rate would suggest something.

Eric Wolfe: That's a bit lower I understand the $5 million secured borrowing.

Eric Wolfe: It still seems like there's another call it 10 million.

Speaker Change: So more to get to your to your guidance. Thanks.

Speaker Change: Yeah.

Speaker Change: Eric on the on the interest expense quickly you're right there were increases to underlying rates over the course of 2023. So there is a full year of that of that impact that at higher rates than where they started in <unk> and <unk>.

Fernando Castro Caratini: Eric, on the interest expense, quickly, right, there were increases to underlying rates over the course of 2023, so there is a full year of that impact at higher rates than where they started in 2023, which should help bridge that gap. As it relates to recurring capital expenditures for our business, we are expecting about $120-125 million of recurring CapEx across our platform in total currently. And this is something that we are continuing to work through, but we are underwriting in all other categories, right? We've mentioned expansion, roundup development, and redevelopment, but spending over 50% less in CapEx in the other categories than we did in 2023. Thank you. Our next question... Wes Golladay with BEARS.

Speaker Change: 'twenty, three which should help bridge.

Speaker Change: Bridge that gap as it relates to <unk>.

Speaker Change: Recurring recurring capital expenditures for for our business we are expecting.

Speaker Change: 120, $125 million of recurring capex across across our platform.

Speaker Change: In total currently and this is something that we are continue continuing to work through.

Speaker Change: But we are underwriting.

Speaker Change: All other categories right, we mentioned expansion ground up development and redevelopment.

Speaker Change: But spending over 50% less.

Speaker Change: In Capex and.

Speaker Change: The other categories than we did in 2023.

Speaker Change: Thank you.

Our next question comes from Wes Golladay with Baird. Please state your question.

Wes Golladay: Hey, everyone, if I could just follow up on that interest expense question, what do you think for capitalized interest? Given that we are spending less on the ground up development and expansion side, there is a reduction year over year in capitalized interest. Wes, let me get back to you with that exact amount. I don't have it in front of me.

Wes Golladay: Hey, everyone. If I could just follow up on the interest expense question. What do you think for capitalized interest this year.

Wes Golladay: Given that we are spending.

Wes Golladay: Spending less on the ground up development and expansion side, there is a production year over year in capitalized interest.

Speaker Change: Last let me get back to you with that exact amount.

Speaker Change: Don't happen in front of me sounds good.

Fernando Castro Caratini: Sounds good. Okay, and then can you talk about what drove the reclassification of the indirect expenses this quarter? Sure.

Speaker Change: Okay, and then can you talk about what drove the reclassification of the indirect expenses this quarter.

Speaker Change: Sure.

Speaker Change: So.

Speaker Change: This is in an effort to.

Fernando Castro Caratini: Wes, this is in an effort to better refine the indirect expenses to their revenue drivers. This is no different. If you'll recall, when the Marina portfolio joined the same property pool, we did have a reclass exercise between real property and SRD&E, mainly. As the Park Holidays Portfolio joined our same property pool, we did undertake the same exercise in best aligning those indirect expenses to their revenue drivers. The indirect expenses are in home sales and SRD&E. The indirect expenses being reallocated are payroll benefits, shared payroll benefits, and taxes, advertising, utilities, and credit card processing fees that are now best going to those revenue drivers themselves. And there's no impact on overall NOI productivity from the properties themselves.

Speaker Change: To better refine the indirect indirect expenses too.

Speaker Change: Revenue drivers. This is no different if you'll recall when the when the Marina portfolio joined the same property pool, we did have a re class exercise between real property and <unk>.

Speaker Change: Lee.

Speaker Change:

Speaker Change: As the oncology portfolio joined our same property pool, we did undertake.

Speaker Change: The same exercise in and aligning.

Speaker Change: And first aligning.

Indirect expenses too to the revenue drivers while there are there is some impact across.

Speaker Change: Across other categories the primary.

Speaker Change: The primary ones are.

Speaker Change: Our in home sales and <unk>.

Speaker Change: The indirect expenses being reallocated or.

Speaker Change: Payroll benefit shared payroll benefits and taxes.

Speaker Change: Advertising utilities credit card processing fees that.

Speaker Change: That are now best going to to those revenue drivers themselves.

Speaker Change: Okay. Thank you and there is no there is no in fact, the overall NOI productivity from from the properties themselves.

Wes Golladay: Got it. Thank you. Our next question comes from Brad Heffern with RBC Capital. Everybody, thanks.

Got it thank you.

Speaker Change: Our next question comes from Brad Heffern with RBC capital. Please state your question.

Brad Heffern: Great. Thanks, So for the properties received in the U K receivership process, how far away are those from being meaningful earnings contributor or is that do you plan to market those are to hold them.

Brad Heffern: So for the properties received in the UK receivership process, how far away are those from being meaningful earnings contributors? And do you plan to market those or hold them? I think it's an excellent question.

Brad Heffern: Excellent.

Gary A. Shiffman: Again, as it relates to the five, what we call non-paracality UK assets that are now going to be managed by paracalities. They consist of two operating assets, Brad, and three development parcels, four of which were related to the UK loan. So now that we have full ownership of them and operational control, we're able to really assess the best way to move forward with them and how to maximize value with them. So I think we're going to be able to share that with you over the next couple of quarters, but there are only two of the properties that are actually contributing to guidance this coming year. And the other three will have to determine what the next steps will be with the undeveloped properties. And Brad, to frame roughly on the UK home sales NOI, Sandy is expected to contribute about 10% of our overall NOI contribution for the year. The other asset that Gary mentioned, Stouffer has a nominal contribution to real property of about $1 million.

Brad Heffern: Excellent question again as it relates to the five.

Brad Heffern: What we call non parents holiday U K assets that are now going to be management Pac holidays. They consist of two operating assets Brad.

Brad Heffern: And three.

Brad Heffern: Redevelopment parcels.

Brad Heffern:

Brad Heffern: Four of which were related to the U K alone.

So now that we have full ownership of them and operational control, we're able to really assess best how to move forward with them and how to maximize value with them. So I think we're going to be able to share that with you over the next couple of quarters, but.

Brad Heffern: There are only two of the properties that are actually contributing to.

Brad Heffern: Two our guidance this coming year.

Brad Heffern: And the other three we will have to determine.

Brad Heffern: What next steps will be with your undeveloped properties.

Brad Heffern: And Brad just to frame roughly on the <unk>.

Brad Heffern: Okay home sales NOI.

Brad Heffern: Sandy is expected to contribute about 10% of our of the overall NOI contribution.

Brad Heffern: For the for the year.

Brad Heffern: The other asset that Gary mentioned Stouffer has a nominal contribution to real property about $1 million.

Brad Heffern: Okay, thank you for that. And then for the Arizona and Florida communities that you're selling, can you give the details of what those assets are and also the expected cap rate? I'm going to suggest, Fernando might have the exact number of the sale, but as we discussed, we are looking at the disposition of properties on an accretive basis, and as we are discussing with interested parties, those properties, cap rates come into play, and at an appropriate time in the future, when we've completed the transactions, we'll be able to share the specifics of the cap rates with you. Okay, understood. Thank you. The next question comes from John Pawlowski with Green Street Police. Thanks for your time. I have a follow-up question on the disposition program in the US.

Speaker Change: Okay. Thank you for that and then for the Arizona and Florida communities that you're selling can you give the details of what those assets are and also the expected cap rate.

Brad Heffern: Yeah.

Speaker Change: I'm going to suggest Fernando might have the exact number of the sale but.

Fernando: As we discussed we are looking at for disposition.

Fernando: Our properties on an accretive basis.

Fernando: As we are discussing with interested parties.

Fernando: Those properties are cap rates come into play.

Fernando: Play in.

Fernando: At an appropriate time in the future, where we've completed the transactions will be able to share the specifics of the cap rates with you.

Speaker Change: Okay understood. Thank you.

Speaker Change: Our next question comes from John Pawlowski with Green Street. Please state your question.

John Bandini McLaren: Thanks for the time I have a follow up question on the disposition program in the U S. Gary you guys have been talking about the capital recycling sensitive last September or so curious it feels like it's taking longer than expected. So what has changed in terms of volume youre looking to sell and how is pricing.

John Bandini McLaren: Gary, you guys have been talking about capital recycling since I think last September. Curious, it feels like it's taking longer than expected. So what has changed in terms of the volume you're looking to sell? And how has pricing changed as you brought these assets to market? How have your pricing expectations changed versus the fall? Thank you, John, and thanks for the question.

John Bandini McLaren: Change is you bought these assets to market.

John Bandini McLaren: How are your pricing expectations changed versus the fall.

Gary A. Shiffman: Hi, John and thanks for the question.

Gary A. Shiffman: I think that when we've talked about capital recycling, it's included both the properties as well as some of the other things that we've shared with you, selling our position in Genia, the balance sheet notes, unwinding the complexity in our very large JV, and other things that we continue to look at, of which dispositions are just one part. Since we discussed that, as you referenced, we spent a good deal of time assessing the portfolio, determining which assets might be candidates, running all the pre-work, and preparing to be able to market some of those properties, the fruit of which is just coming to bear for the first time this week. It has been an ongoing process that we hope to be able to continue to share more on those dispositions as we can do so.

Speaker Change: I think that.

Gary A. Shiffman: When we've talked about capital capital recycling.

Gary A. Shiffman: Included both the properties as well yes.

Speaker Change: Some of the other things that we've shared with you are selling our position in junior the balance sheet notes.

Speaker Change: Unwinding the.

Speaker Change: The complexity and a very large TV and other things that we continue to look at.

Speaker Change: Which dispositions is just one part of it.

Speaker Change: Since we've discussed that.

Speaker Change: As you referenced we've spent a good deal of time.

Assessing the portfolio determining which assets might be candidates.

Speaker Change: Running all the pre work in preparation to be able to market.

Speaker Change: Some of those properties.

The fruit of which is just coming to bear for the first time this week.

Speaker Change: It is.

Speaker Change: Been an ongoing process that we hope to be able to continue this share.

Speaker Change: More on those dispositions, yes, we can do so.

Gary A. Shiffman: As we shared before, we don't typically announce dispositions or capital market impacts until they're actually closed. So I think that as far as how we're viewing things, they're pretty similar to how we have in the past. Certainly, interest rates have impacted both pricing and how we look at the accretiveness of the transactions. And we feel comfortable with what we're looking at in the near term. And as we negotiate through these, we look forward to being able to share them with you.

Speaker Change: We shared before we don't typically announce.

Speaker Change: The dispositions or capital market impacts.

Speaker Change: Until they're actually close so.

Speaker Change: <unk>.

Speaker Change: As far as how we're viewing things, they're pretty similar to how we have in the past certainly interest rates.

Speaker Change: Impact of it.

Speaker Change: Both pricing.

And how are we looking at.

Speaker Change: The accretive ness of the transactions.

Speaker Change: And we.

Speaker Change: We feel comfortable with what we're looking at near term.

Speaker Change: And as we negotiate through those we look forward to being able to share it with you but.

John Bandini McLaren: But it's just a little bit too early, John, to know exactly how the market is going to price everything. But moving forward, we're, I could say we're within 25 to 75 basis points of the areas that we expected to be in. Thank you. Our next question comes from Anthony Howe with Truist Securities. Please state your question.

Speaker Change: It's just a little bit too early John too.

Speaker Change: No exactly how the market is going to price everything.

Speaker Change: Moving forward were.

Speaker Change: I could say within 25 to 75 basis points of the areas that we expect it to be.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Anthony Hau with Chewy Securities. Please state your question.

Anthony Powell: Hey guys, thanks for taking my question. Can you guys provide any color on the transaction market for holiday parks? What EBITDA multiple and cap rates are these assets trading at today compared to three years ago? Anthony and Gary, I guess I should just overall say that there just aren't very many cops out there, obviously.

Anthony Powell: Hey, guys. Thanks for taking my question can you guys provide any color on the transaction market for holiday parks, what multiple EBITDA multiple and cap rates are these assets trading at today compared to three years ago.

Speaker Change: Yeah, Anthony it's scary.

Speaker Change: I guess I would suggest that over all.

Just aren't very many many comps out there.

Speaker Change: Obviously.

Gary A. Shiffman: As it goes into our recognition of the valuation of the Park Holidays platform, as we think about opportunities to acquire or dispose of assets, we're very, very focused on keeping a pulse on the market there. And the fact of the matter is that while we believe firmly Park Holidays is gaining market share from other of the big operators out there, who are struggling both due to macroeconomics and some internal issues that are being made aware at those companies, we are grabbing that market share. We are working through creating operational value through home sales and occupancy, and we'll have to continue to study and share with you what we're seeing with valuation in the market. But as of right now, I just have nothing to turn to.

Speaker Change: As it goes into a recognition.

Speaker Change: Valuation of the park holidays platform as we think about opportunities too.

Speaker Change: A player or dispose of assets, we're very very focused on keeping a pulse on the market there and the fact of the matter is that while we believe firmly alright.

Speaker Change: <unk> is gaining market share from other <unk>.

Speaker Change: The big operators out there who are struggling both due to the macroeconomics of some internal issues that are being made aware that those companies.

Speaker Change: We grab that market share.

Speaker Change: After working through creating operational values home sales through occupancy.

Speaker Change: And we will have to continue to study and.

Speaker Change: And share with you what we're seeing with valuation the market, but as of right now there's just nothing to turn to <unk>.

Gary A. Shiffman: And I also turn it over to the US as well. When we look at the limited, limited amount of transactions going on in manufactured housing, in particular in the US, there just isn't a lot to reference out there as indicative cap rates or indicative pricing. So we will continue to watch it very thoughtfully. Thanks. If I can just squeeze another quick one in, Fernando, I saw that, you know, the same property's revenue in the UK is 200 bps lower than the average rental rate increase. Just curious, like, what's the difference?

Speaker Change: So I'll turn it over to the U S as well when we look at the limited limited amount of transactions going on.

Speaker Change: Manufactured housing in particular in the U S. There just isn't a lot to reference out there is indicative kind of pretty sort of indicative pricing.

Speaker Change: We continue to watch it very thoughtfully.

Speaker Change: Thanks, if I can just squeeze a quick one another quick one then.

Speaker Change: Fernando I saw that they can have the same sort staying properties revenue or U K, it's 200 bps lower than the average rental rate increase just curious like what's the what's the difference is it because that the change in size a little bit weaker.

Anthony Powell: Is it because the transient size is a little bit weaker? Or is it because of occupancy? So Anthony, their transient growth expected in the UK for this year is at about 250 basis points of growth year over year. So that certainly is a driver of revenue growth being less than the rental increase of north of seven percent. And then it would be timing, timing of non renewals to when we are expecting the sales and bringing in new homeowners. So there is right timing.

Speaker Change: Or is it because occupancy.

So Anthony there.

Anthony: Transient growth expected in the in the U K for this year is at about 250 basis points of growth year over year. So that certainly is a is a driver.

Speaker Change: <unk> revenue being revenue growth being less than the rental increase of north of 7%.

Speaker Change: And then it would be timing.

Speaker Change: The timing of.

Speaker Change: Non renewals to win when we are expecting the sales and bringing in new homeowners. So there is.

Fernando Castro Caratini: As you know, our rental increases go out in the fall. We already have over a 90 percent renewal rate for the portfolio, but it essentially is timing differences from an occupancy perspective. Thank you. Our next question comes from Anthony Powell with Barclays. Please state your question. Hi, good morning.

Speaker Change: Alright, Thats you know our rental increases go out in in the fall we already have over 90%.

Speaker Change: Renewal for the for the portfolio, but it essentially is timing differences from a from an occupancy perspective.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question comes from Anthony Powell with Barclays. Please state your question.

Anthony Powell: Hi, Good morning, I had a question on the RV NOI growth guidance of two point wanted to accomplish that but I think the bet license given the strong annual growth rate. So can you talk about your changing demand assumptions and also your incentives for Harvey expense growth this year.

Anthony Powell: I have a question on the RV NOI growth guidance of 2.1 to 2.5%. And that seems a bit light to me given the strong annual growth rate. So you talked about your transient demand assumptions and also your assumptions for RV expense growth this year. Anthony, thank you for the question.

Speaker Change: So Anthony Thank you for the question.

Anthony: On the on the revenue side a prior that's.

Fernando Castro Caratini: On the revenue side, we are expecting transient revenue growth for the portfolio to be down about 2.75% for the year. That is what we are currently underwriting. And we do have higher expenses expected for the portfolio this year. And again, it's a little bit of returning to more normal conditions. Last year we put in a number of active cost containment strategies across payroll, utilities, and supply and repair.

Anthony: We are expecting.

Speaker Change: <unk> revenue growth.

Anthony: For the portfolio to be at to.

Anthony: To be down about 2% to 75%.

For the year.

Anthony: We are currently underwriting and we are we do have higher expenses expected.

Anthony: For the portfolio this year and again it's.

Anthony: Returning to more normal conditions last year, we did put in a number of active cost containment strategies across our payroll utilities and supply and repair and budgeting forecasting for those two to be at more normal levels over the course of 2020 for us.

Fernando Castro Caratini: And forecasting for those to be at more normal levels over the course of 2024 is driving an expense increase year over year of just under 10% for the year. Those are the two drivers, where our NOI growth at the midpoint is expected at 2.8%. We are forecasting another very strong year of conversions for our portfolio that will continue to drive operational efficiencies over the course of the next couple of years. So, is that transient revenue demand assumption all driven by sector burdens, or is that also assuming weaker, I guess, visitation, and weaker pricing? And ma'am, I'm sorry, can you ask the question? Yeah, sorry.

Anthony: <unk>.

Anthony: <unk> expense.

Anthony: Expense increase year over year.

Oh, just under 10%.

Anthony: For the year.

Anthony: Those are the two drivers.

Anthony: Where are our NOI growth at the midpoint is expected in two points to 8%. We are we are forecasting another very strong year of conversions.

Anthony: For for our portfolio that will continue to drive operational efficiencies over the course of the next couple of years.

Anthony: So is that transient revenue demand assumptions, all driven by second burdens or is that also assuming weaker I guess, if it's what you're saying in gold prices.

Speaker Change: Anthony I'm I'm I'm, sorry can you ask the question.

Speaker Change: Got it.

Speaker Change: Yes, sorry.

Anthony Powell: I'm a transient revenue decline assumption. Is that driven all by site conversions? Or is that also driven by vegetation or other assumptions that drive that decline?

Anthony: Revenue quite assumptions is that driven all by site conversions or is that also driven by legislation or other assumptions.

Anthony: That's what I'm driving at the five.

Fernando Castro Caratini: That is primarily driven by the site conversions that occurred over the course of last year and continued conversions into this year. Given that we converted last year over 6% of our sites, we are underwriting strong rate growth on the transient side. That gets you to the down year over year, about 2.75% currently. Thank you. If there are no further questions at this time, I'll hand the floor back to management for closing remarks. We thank everybody for participating in the conference call, and we really do look forward to sharing with you the first quarter results and the rest of the results as they are able to be shared throughout the year. Thank you, operator. Thank you. And that concludes today's call. All parties may disconnect at any time.

Anthony: That is that is primarily driven by the site conversions.

Anthony: That occurred over the course of last year and continued conversions into this year.

Anthony: Given that we've we converted last year over 6% of our sites, we are underwriting a strong rate growth on the transient side.

Anthony: That is that that gets you to the <unk>.

Anthony: Down year over year about 275% currently.

Speaker Change: Thank you.

Speaker Change: Further questions at this time I'll hand, the floor back to management for closing remarks.

Speaker Change: We thank everybody for participating.

Speaker Change: <unk> conference call and we really do look forward to.

Speaker Change: Sharing with you our first quarter results and the rest of the results.

Speaker Change: They are able to be shared throughout the year. Thank.

Speaker Change: Thank you operator.

Speaker Change: Thank you.

Speaker Change: That concludes today's call all parties may disconnect have a good day.