Q2 2024 Sun Communities Inc Earnings Call

Speaker Change: Good afternoon, ladies and gentlemen, and thank you for standing by.

Operator: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Community second quarter 2024 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 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 cannot provide any assurance that its expectations will be achieved.

Unknown Executive: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Community 2nd quarter 2024 earnings conference call.

Speaker Change: Welcome to the Sun Community second quarter 2024 earnings conference call.

Unknown Executive: 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 at 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 differently from expectations are detailed in yesterday's press release, and from time to time in the company's periodic filings with the SEC.

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 meanings of the Private Securities Litigation Reform Act of 1995.

Speaker Change: 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.

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.

Speaker Change: Factors and risks that could cause actual results 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.

Unknown Executive: The company ever takes no obligation to advise or update any forward-looking statements to affect events or circumstances after the date of this release.

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.

Unknown Executive: Having said that, I'd like to introduce management with us today: Gary Schiffman, Chairman, President, and Chief Executive Officer; Fernando Castro-Karitini, Chief Financial Officer; and Alan Weiss, Executive Vice President of Corporate Strategy and Business Development. After the remarks, there'll be an opportunity to ask questions. Those who like to participate in the question and answer session, management asks that you limit yourselves to one question so everyone would like to participate as ample opportunity. As a reminder, this conference is being recorded.

Operator: Having said that, I'd like to introduce management with us today: Gary Shiffman, Chairman, President, and Chief Executive Officer; Fernando Castro Caratini. Chief Financial Officer and Aaron Weiss, Executive Vice President of Corporate Strategy and Business Development. 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 an ample opportunity. As a reminder, this conference 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: Having said that, I'd like to introduce management with us today. Gary Shiffman, Chairman, President, and Chief Executive Officer, Fernando Castro Caratini.

Speaker Change: Chief Financial Officer and Aaron Weiss, Executive Vice President of Corporate Strategy and Business Development. After the 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.

Gary Schiffman: I'll now turn the call over to Gary Schiffman, Chairman, President, and Chief Executive Officer. Mr. Schiffman, you may begin.

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

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

Gary Shiffman: Good afternoon, and thank you for joining us to discuss our second quarter results for 2020. Senate is pleased to report a solid second quarter, or FFO per share of $1.86, in line with guidance driven by same property NOI growth of 3.6% in North America and 9.3% in the UK.

Gary Schiffman: For the afternoon, and thank you for joining us to discuss our second quarter results in 2024 guidance. I'm pleased to report a solid second quarter. For FFO per share of $1.86, it was in line with guidance through the same property NOI growth of 3.6 percent in North America and 9.3 percent of the UK. Manufactured housing, our largest segment, generated same property NOI growth of 6.4 percent in the quarter, driven by strong rental rate growth and occupancy gains. We continue to benefit from the strong demand versus supply dynamics embedded in manufactured housing. In RV, same property NOI decreased 4.6 percent.

Speaker Change: Mr. Shiffman you may begin. Good afternoon and thank you for joining us to discuss our second quarter results in 2024 guidance.

Speaker Change: and is pleased to report a solid second quarter.

Speaker Change: where FFO per share of $1.86 was in line with guidance driven by same property NOI growth of 3.6% in North America and 9.3% in the UK.

Gary Shiffman: Manufactured Housing, our largest segment, generated same property NOI growth of 6.4% in the quarter, driven by strong rental rate growth and occupancy gains. We continue to benefit from the strong demand versus supply dynamics. Better Than Manufactured Housing and RV, same property NOI decreased 4.6%. The climb was driven by weakness in the transient RV segment, but we are seeing continued demand headwinds. Importantly, due to our ongoing transient-to-annual conversion strategy, we have fewer site nights available for transient guests.

Speaker Change: Manufactured housing, our largest segment, generated same property NOI growth of 6.4% in the quarter driven by strong rental rate growth and occupancy gains.

Speaker Change: We continue to benefit from the strong demand versus supply dynamics embedded in manufactured housing.

Speaker Change: In RV, same property NOI, decreased 4.6%.

Gary Schiffman: The decline was driven by weakness in the transient RV segment, but we are seeing continued demand headwinds. Importantly, we are ongoing transient to annual conversion strategy. We have fewer site nights available for transient guests. While we were able to partially offset revenue underperformance by managing expenses, we're even able to hold transient RV margins flat to budget, to cost reductions to not fully mitigate the revenue impact. Our strategic focus on transient to annual conversions increases the contribution of revenue from annual property agreements, improves RV NOI margins over time, and increases occupancy. Since 2020, we have now completed approximately 8,000 conversions, increasing the number of annual RV sites by approximately. These RV conversions supported strong occupancy gains, with their same property adjusted occupancy for MH&RV increased by 150 basis points to 98.7% as of June 30, 2024.

Speaker Change: The decline was driven by weakness in the transient RV segment, but we are seeing continued demand headwinds.

Speaker Change: Importantly, due to our ongoing transient-to-annual conversion strategy, we have fewer site nights available for transient guests.

Gary Shiffman: We were able to partially offset revenue underperformance by managing expenses. We were even able to hold transient RV margins flat to budget. However, cost reductions did not fully mitigate the revenue impact. Our strategic focus on transient to annual conversion increases the contribution of revenue from annual property agreements, improves R-V-N-O-I margins over time, and increases occupancy since 2020. We have now completed approximately 8,000 conversions, increasing the number of annual RV sites by approximately 30%. These are reconversions.

Speaker Change: While we were able to partially offset revenue underperformance by managing expenses,

Speaker Change: We're even able to hold transient RV margins flat to budget, and cost reductions to not fully mitigate the revenue impasse.

Speaker Change: Our strategic focus on transient to annual conversions.

Speaker Change: increases the contribution of revenue from annual property agreements.

Speaker Change: improves RV NOI margins over time and increases occupancy.

Speaker Change: Since 2020, we have now completed approximately 8,000 conversions.

Speaker Change: increasing the number of annual RV sites by approximately 30 percent.

Gary Shiffman: Supportive strong occupancy game, with their same property adjusted occupancy for MH&RV increased by 150 basis points to 98.7% as of June 30th, 2024. Additionally, our revenue-producing sites increased by over 1,200 sites in the quarter compared to 1,000 site increase in the prior year. We're very pleased with the Marina same property results. Has the business achieved 6.1% NOI growth? in line with our guidance. See for the Safe Harbor Network's Unmatched Location.

Speaker Change: These are reconversions.

Speaker Change: Supported strong occupancy gains.

Speaker Change: with their same property adjusted occupancy for MH&RV.

Speaker Change: increased by 150 basis points to 98.7% as of June 30, 2024.

Gary Schiffman: Additionally, our revenue-producing sites increased by over 1,200 sites in the quarter compared to a 1,000 site increase in the prior year. We are very pleased with Marina's same property results as the business achieved 6.1% annual aggro, in line with our guidance. Demand for the Safe Harbor Network's unmatched locations, premium amenities, and expert services remains strong. While we are seeing super yacht transatlantic movement earlier than originally forecast, marina business fundamentals remain strong and Safe Harbor continues to actively manage its operating expenses. Strategy in the UK remains focused on increasing real-property NOI and decreasing the contribution from home sales.

Speaker Change: Additionally, our revenue-producing sites increased by over 1,200 sites in the quarter compared to 1,000 site increase in the prior year.

Speaker Change: We're very pleased with Marina's same property results, as the business achieved 6.1% NOI growth, in line with our guidance.

Gary Shiffman: Premium Amenities, and Expert Services remain strong. While we are seeing superyacht transatlantic movement earlier than originally forecast, Marina Business Fundamentals remain strong, and Safe Harbor continues to actively manage its operating expenses. The strategy in the UK remains focused on increasing real property NOI and decreasing the contribution from home sales. For the six months ended June 30, 2024. Real property NOI in the UK accounted for 55% of total UK NOI, up from 42% during the first six months of 2023 on a same property basis.

Speaker Change: Demand for the Safe Harbor Network's unmatched locations.

Speaker Change: Premium amenities and expert services remains strong.

Speaker Change: While we are seeing superyacht transatlantic movement earlier than originally forecast, Marina Business Fundamentals remains strong and Safe Harbor continues to actively manage its operating expenses.

Speaker Change: Strategy in the UK remains focused on increasing real property NOI and decreasing the contribution from home sales.

Gary Schiffman: With 6 months ended June 30, 2024, real-property NOI in the UK counted for 55% of total UK NOI, up from 42% during the first 6 months of 2023. At the same property basis, UK NOI grew 9.3% over the second quarter last year, exceeding the high end of our guidance range. Long year-over-year revenue growth was in line with our expectations, and the outperformance was driven primarily by lower than expected utility expenses. UK home sales were in line with expectations through May before slowing in the run-up to England's elections and the related concerns regarding fiscal policy. Early third quarter trends indicate that their uncertainty surrounding the elections is dissipating.

Speaker Change: The six months ended June 30, 2024. Real property NOI in the UK accounted for 55% of total UK NOI, up from 42% during the first six months of 2023.

Gary Shiffman: UK NOI grew 9.3% over the second quarter of last year, exceeding the high end of our guidance range and strong year-over-year revenue growth, in line with our expectations. The outperformance was driven primarily by lower than expected utility expenses. UK home sales were in line with expectations through May, before slowing in the run-up to England's elections and the related concerns regarding fiscal policy. Early third quarter trends indicate that uncertainty surrounding the elections is dissip

Speaker Change: On the same property basis, UK NOI grew 9.3% over the second quarter last year, exceeding the high end of our guidance range.

Speaker Change: Strong year-over-year revenue growth was in line with our expectations.

Speaker Change: And the outperformance was driven primarily by lower-than-expected utility expenses.

Speaker Change: UK home sales were in line with expectations through May, before slowing in the run-up to England's elections and the related concerns regarding fiscal policy.

Speaker Change: Early third quarter trends indicate that that uncertainty surrounding the elections is dissipating. Buyer interest is increasing from some headwinds we experienced in June .

Gary Schiffman: The buyer interest is increasing of some headwinds we experienced in June. Overall, for the second quarter, UK home sales FFO was within our expected range.

Gary Shiffman: Buyer interest is increasing, but some headwinds we experienced in June. Overall, for the second quarter, UK home sales FFO was within our expected range. In terms of other strategic initiatives, we are very pleased to share that since our last earnings call in April, we sold eight properties, bringing total asset sale proceeds year to date to over $300 million. We use net proceeds to pay down debt, reducing our leverage ratio to 6.0 times, on a pro forma basis.

Speaker Change: Overall, for the second quarter, UK home sales FFO was within our expected range.

Gary Schiffman: In terms of other strategic initiatives, we are very pleased to share that since our last earnings call in April, we sold eight properties, bringing total asset sale proceeds year-to-date to over $300 million. Using that proceeds to pay down debt, reducing our leverage ratio to 6.0 times on a pro forma basis. We are laser focused on maximizing sun's performance by increasing the revenue contribution from annual income, active expense management, on strategic asset recycling and debt reduction. As we continue to convert more RV sites from transient to annual, grow the base of occupied sites at our holidays and reduce leverage.

Speaker Change: In terms of other strategic initiatives, we are very pleased to share that since our last earnings call in April , we've sold eight properties, bringing total asset sale proceeds year-to-date to over $300 million.

Speaker Change: We use net proceeds to pay down debt, reducing our leverage ratio to 6.0 times on a pro-forma basis.

Gary Shiffman: We are laser focused on maximizing Sun's performance by increasing the revenue contribution from annual income through Collective Expense Management, Non-Strategic Asset Recycling, and Debt Reduction. As we continue to convert more RV sites from transient to annual, grow the base of occupied sites at park holidays, and reduce leverage, Sun is positioned to generate long-term attractive FFO per share growth. Before handing the call over to Fernando, I'd like to acknowledge and thank each Sun, Safe Harbor, and Park Holidays team member for their hard work, dedication, and continued support in delivering our results.

Speaker Change: We are laser focused on maximizing sun's performance by increasing the revenue contribution from annual income.

Speaker Change: Active expense management.

Speaker Change: Non-Strategic Asset Recycling and Debt Reduction.

Speaker Change: As we continue to convert more RV sites from transient to annual, grow the base of occupied sites at park holidays, and reduce leverage.

Gary Schiffman: Funded as a position to generate long-term, attractive FFO per share growth.

Speaker Change: Sun is positioned to generate long-term attractive FFO per share growth.

Gary Schiffman: For handing the call over to Fernando, I'd like to acknowledge and thank each son, Dave Harbour, and Park Holiday's team member for their hard work, dedication, and continued support in delivering our results.

Speaker Change: Before handing the call over to Fernando, I'd like to acknowledge and thank each Sun, Safe Harbor, and Park Holidays team member for their hard work, dedication, and continued support in delivering our results.

Fernando Castro: Fernando, thank you. As Gary mentioned, one of our key priorities is to deliver by disposing, select, non-strategic assets, remaining disciplined in our non-recurring cap expend, and allocating free cash flow to debt reduction. Subsequent to quarter end, we close on the sale of seven communities for a combined $263 million. Operationally, these transactions allow us to exit non-core markets and provide operational efficiencies going forward. The communities were encumbered with $79 million of mortgage loans, which were paid off at closing, improving our secured debt to total asset ratio. We used the remaining net proceeds of $171 million to reduce borrowings on our senior credit facility.

Fernando Castro: As Gary mentioned, one of our key priorities is to de-lever by disposing of select non-strategic assets, remaining disciplined in our non-recurring CapEx spend, and allocating free cash flow to debt reduction. Subsequent to quarter end, we closed on the sale of seven communities for a combined $263 million. Operationally, these transactions allow us to exit non-core markets and provide operational efficiencies going forward. The communities were encumbered with $79 million of mortgage loans, which were paid off at closing, improving our secure debt to total asset ratio. We used the remaining net proceeds of $171 million to reduce borrowings on our senior credit fund. During the second quarter, we also sold one Park Holidays property for $5.4 million.

Speaker Change: Fernando.

Fernando: Thank you.

Fernando: As Gary mentioned, one of our key priorities is to de-lever by disposing select, non-strategic assets, remaining disciplined in our non-recurring CapEx spend, and allocating free cash flow to debt reduction.

Fernando: Subsequent to quarter end, we closed on the sale of seven communities for a combined two hundred and sixty three million dollars. Operationally, these transactions allow us to exit non-core markets and provide operational efficiencies going forward.

Fernando: The communities were encumbered with $79 million of mortgage loans which were paid off at closing, improving our secure debt-to-total asset ratio. We used the remaining net proceeds of $171 million to reduce borrowings on our senior credit facility.

Fernando Castro: During the second quarter, we also sold one Park Holiday's property for $5.4 million. Adjusting our June 30th results solely for the July dispositions and the associated debt repayment. Our reform on net debt to trailing 12-month EDA ratio is approximately 6.0 times, and we remain focused on continuing to improve this metric. Importantly, these properties were sold on an FFO a creative basis, with reduced interest expense offsetting loss of income from the assets. For the first half of 2024, our non-recurring property capital expenditures are down approximately 47% year over year. Looking ahead, we are on target with reducing 2024 non-recurring cap expend by approximately 50% from last year's levels.

Fernando: During the second quarter, we also sold one Park Holidays property for $5.4 million.

Fernando Castro: Adjusting our June 30th results solely for the July dispositions and the associated debt repayments, our pro forma net debt to trailing 12-month EBITDA ratio is approximately 6.0 times. And we remain focused on continuing to improve this metric. Importantly, these properties were sold on an FFO accretive basis with reduced interest expense offsetting the loss of income from the asset. For the first half of 2024, our non-recurring property capital expenditures are down approximately 47% year over year.

Fernando: Adjusting our June 30th results solely for the July dispositions and the associated debt repayment, our pro forma net debt to trailing 12-month EBITDA ratio is approximately 6.0 times and we remain focused on continuing to improve this metric.

Fernando: Importantly, these properties were sold on an FFO accretive basis with reduced interest expense offsetting loss of income from the assets.

Fernando: For the first half of 2024, our non-recurring property capital expenditures are down approximately 47% year-over-year.

Fernando Castro: Looking ahead, we are on target with reducing 2024 non-recurring CapEx spend by approximately 50% from last year's level. I'll now walk through our guidance for the remainder of the year. Second quarter core FFO per share of $1.86 was in line with our guidance range. We are reaffirming prior guidance for full year core FFO per share of $7.06 to $7.22 and establishing third quarter guidance in the range of $2.46 to $2.56 per share.

Fernando: Looking ahead, we are on target with reducing 2024 non-recurring CapEx spend by approximately 50% from last year's levels.

Fernando Castro: I'll now walk through our guidance for the remainder of the year. Second quarter, core FFO per share of $1.86 was in line with our guidance range. We are reaffirming prior guidance for full year core FFO per share of $7.06 to $7.22 and establishing third quarter guidance in the range of $2.46 to $2.56 per share. So, it will real property NOI is 80-based points lower for 2024 at the midpoint of guidance, primarily reflecting the recent asset sales and the resultant loss of income from these properties. Interest expense guidance is $6.5 million lower at the midpoint after paying down debt using the net proceeds generated from the asset sales.

Fernando: I'll now walk through our guidance for the remainder of the year.

Fernando: Second quarter core FFO per share of $1.86 was in line with our guidance range.

Fernando: We are reaffirming prior guidance for full-year core FFO per share of $7.06 to $7.22 and establishing third quarter guidance in the range of $2.46 to $2.56 per share.

Fernando Castro: Total Real Property NOI is 80 basis points lower for 2024 at the midpoint of guidance, primarily reflecting the recent asset sales and the resultant loss of income from these properties. Interest expense guidance is $6.5 million lower at the midpoint after paying down debt using the net proceeds generated from the asset sale.

Fernando: Total real property NOI is 80 basis points lower for 2024 at the midpoint of guidance, primarily reflecting the recent asset sales and the resultant loss of income from these properties.

Fernando: Interest expense guidance is 6.5 million dollars lower at the midpoint after paying down debt using the net proceeds generated from the asset sales.

Fernando Castro: North America, you are maintaining the prior midpoint of expected same property NOI growth for the full year at 5.2% and narrowing the range to 4.7% to 5.7% growth over the prior year. Note that 2023 and year-to-date 2024 actual results have been adjusted in same property NOI for historical and guidance purposes to exclude income from properties disposed of during the year. MH is performing well, and we forecast continued strength from this segment. A revised same property NOI growth range for this segment of 6.8 to 7.4% represents a 50-basis points increase at the midpoint of prior guidance.

Fernando Castro: In North America, we are maintaining the prior midpoint of expected same property NOI growth for the full year at 5.2% and narrowing the range to 4.7% to 5.7% growth over the prior year. Note that 2023 and year-to-date 2024 actual results have been adjusted in Same Property NOI for historical and guidance purposes to exclude income from properties disposed of during the year. MH is performing well, and we forecast continued strength from this segment.

Fernando: North America, we are maintaining the prior midpoint of expected same property NOI growth for the full year at 5.2% and narrowing the range to 4.7% to 5.7% growth over the prior year.

Fernando: Note that 2023 and year-to-date 2024 actual results have been adjusted in Same Property NOI for historical and guidance purposes to exclude income from properties disposed of during the year.

Fernando: MH is performing well and we forecast continued strength from this segment. A revised same property NOI growth range for this segment of 6.8 to 7.4% represents a 50 basis points increase at the midpoint of prior guidance.

Fernando Castro: A revised same property NOI growth range for this segment of 6.8 to 7.4% represents a 50 basis points increase at the midpoint of prior guidance. For same property RV NOI, we are reducing our prior full year guidance to incorporate recent operating trends. In the second quarter, RV transient revenues decreased 12%, underperforming the 8% decline we expected.

Fernando Castro: For same property RV NOI, we are reducing our prior full year guidance to incorporate recent operating trend. Second quarter, RV transient revenues decrease 12%, underperforming the 8% decline we expected. Our revised same property NOI range of negative 0.7% to positive 0.9% is 40 basis points below the midpoint of prior full-year guidance. Embedded in our guidance for same property RV are approximately 1,700 transient to annual conversion. Here to date, we have converted approximately 1,100 sites and are on pace to achieve our full-year target. We believe in the long-term attractiveness of the transient RV business where the five-year site-adjusted revenue catering is 5.6%.

Fernando: For same-property RV NOI, we are reducing our prior full-year guidance to incorporate recent operating trends.

Fernando: The second quarter, RV transient revenues decreased 12%, underperforming the 8% decline we expected.

Fernando Castro: Our revised same property NOI range of negative 0.7% to positive 0.9% is 40 basis points below the midpoint of prior full year guidance. Embedded in our guidance for same property RV are approximately 1,700 transient to annual conversions. To date, we have converted approximately 1,100 sites and are on pace to achieve our full year target. We believe in the long-term attractiveness of the transient RV business, where the five-year site-adjusted revenue CAGR is 5.6%. We are excited about the pipeline of annual conversions that we'll continue to provide in the coming years. Our prior marina guidance assumes some transatlantic migration by superyachts. Thus far, this migration is occurring earlier than expected.

Fernando: Embedded in our guidance for same-property RV are approximately 1,700 transient-to-annual converters.

Fernando: Here to date, we have converted approximately 1,100 sites and are on pace to achieve our full year target.

Fernando: We believe in the long-term attractiveness of the transient RV business, where the five-year site-adjusted revenue CAGR is 5.6%, and we are excited about the pipeline of annual conversions that we'll continue to provide in the coming years.

Fernando Castro: And we are excited about the pipeline of annual conversions that will continue to provide in the coming years. Our prior Marina guidance assumes some transatlantic migration by super yachts. Thus far, this migration is occurring earlier than expected. Faith Harbor continues to manage variable expenses to match revenues, as demonstrated by second quarter results. We are lowering our same property NOI growth expectations for the full year by 30 basis points at the midpoint. To a new range of 6.2 to 7.2%, we reflect current dynamics with that large vessel movement. UK real property continues to outperform as our strategy on increasing real property NOI bears fruit.

Speaker Change: Our prior marina guidance assumes some transatlantic migration by superyachts. Thus far, this migration is occurring earlier than expected.

Fernando Castro: Safe Harbor continues to manage variable expenses to match revenues, as demonstrated by second-quarter results. We are lowering our same-property NOI growth expectations for the full year by 30 basis points at the midpoint to a new range of 6.2% to 7.2% to reflect current dynamics with that large vessel load. UK Real Property continues to outperform as our strategy of increasing real property NOI bears fruit. We expect this strong performance to continue in the second half of the year and are increasing the midpoint by 250 base points.

Speaker Change: Safe Harbor continues to manage variable expenses to match revenues, as demonstrated by second quarter results.

Speaker Change: We are lowering our same property NOI growth expectations for the full year by 30 basis points at the midpoint to a new range of 6.2% to 7.2% to reflect current dynamics with that large vessel movement.

Speaker Change: UK Real Property continues to outperform as our strategy on increasing real property NOI bears fruit.

Fernando Castro: We expect this strong performance to continue in the second half of the year and are increasing the midpoint by 250 basis points. Overall, UK home sales have been in line with expectations. While July results show positive momentum, we did see some softness in the sales pipeline in June ahead of the elections. And our lowering UK home sales have a full contribution by $850,000 at the midpoint based on current trends and expectations for the remainder of the year. With regards to GNA, reflecting continued focus on corporate expense rationalization, we are decreasing the midpoint by approximately $5 million or 210 basis points, reflecting an expected increase of 2.5% at the midpoint compared to prior guidance of 4.6% growth for the full year.

Speaker Change: We expect this strong performance to continue in the second half of the year and are increasing the midpoint by 250 basis points.

Fernando Castro: Overall, UK home sales have been in line with expectations. While July results show positive momentum, we did see some softness in the sales pipeline in June ahead of the elections and are lowering UK home sales FFO contribution by $850,000 at the midterm, based on current trends and expectations for the remainder. With regard to GNA,

Speaker Change: Overall, UK home sales have been in line with expectations. While July results show positive momentum, we did see some softness in the sales pipeline in June ahead of the elections and are lowering UK home sales FFO contribution by $850,000 at the midpoint.

Speaker Change: based on current trends and expectations for the remainder of the year.

Operator: Reflecting continued focus on corporate expense rationalization, we are decreasing the midpoint by approximately $5 million, or 210 basis points, reflecting an expected increase of 2.5% at the midpoint, compared to prior guidance of 4.6% growth for the full year. For additional details regarding our updated full-year guidance, please see our supplemental disclosures. As a reminder, our guidance includes acquisitions and dispositions and capital markets activity through July 31st, but it does not include the impact of prospective acquisitions, dispositions, or capital market activities, which may be included in research analyst estimates. This concludes our prepared remarks. We will now open the call up for questions.

Speaker Change: With regards to GNA...

Speaker Change: Reflecting continued focus on corporate expense rationalization.

Speaker Change: you are decreasing the midpoint by approximately five million dollars.

Speaker Change: for 210 basis points.

Speaker Change: reflecting an expected increase of 2.5% at the midpoint compared to prior guidance of 4.6% growth for the full year.

Fernando Castro: For additional details regarding our updated full-year guidance, please see our supplemental disclosures. As a reminder, our guidance includes acquisitions and dispositions and capital markets activity through July 31st, but it does not include the impact of prospective acquisitions, dispositions, or capital market activities, which may be included in research analyst estimates.

Speaker Change: For additional details regarding our updated full-year guidance, please see our Supplemental Disclosures.

Speaker Change: As a reminder, our guidance includes acquisitions and dispositions and capital markets activity through July 31st, but it does not include the impact of prospective acquisitions, dispositions, or capital market activities, which may be included in research analyst estimates.

Unknown Executive: This concludes our prepared remarks.

Unknown Executive: We will now open the call up for questions.

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

Unknown Executive: Operator? Thank you. And now to conduct the old question-and-answer session. As a reminder of the interest of time, please ask one question and return to the queue. If you'd like to be placed in the question queue, please press star one on your telephone keypad. If you'd like to remove your question, please press star two. One moment, please. I will be pulled for questions.

Operator: Thank you. We will now be conducting a question and answer session. As a reminder, in the interest of time, please ask one question, then return to the queue. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. If you'd like to remove your question, please press star 2. One moment, please, while we poll for questions. Our first question is coming from Michael Goldsmith from UBS. Your line is now live.

Speaker Change: Operator.

Speaker Change: Thank you. We will now be conducting a question and answer session. As a reminder, in the interest of time, please ask one question and return to the queue. If you would like to be placed in the question queue, please press star 1 on your telephone keypad. If you would like to remove your question, please press star 2. One moment please while we pull for questions.

Michael Goldsmith: Our first question is coming from Michael Goldsmiths from UBS Irvine. Is that right? Good afternoon. Thanks a lot for taking my question. 260 million dollars of disposition kind of announced in the quarter; you did another 50 million or so prior to the quarter. So that brings you to 300 million, which is kind of in line with your last capital recycling program.

Speaker Change: Our first question is coming from Michael Goldsmith from UBS. Your line is now live.

Michael Goldsmith: Good afternoon. Thanks a lot for taking my question. $260 million of dispositions were kind of announced in the quarter. You did another $50 million or so prior to the quarter. So that brings you to $300 million, which is kind of in line with your last capital recycling program. So my question here is, are you looking to do more dispositions from here? And if you can provide some information on the cap rates of the property sold, that would be really helpful. Thank you.

Michael Goldsmith: Good afternoon. Thanks a lot for taking my question. $260 million of dispositions kind of announced in the quarter. You did another $50 million or so prior to the quarter. So that brings you to $300 million, which is kind of in line with your last capital recycling program. So my question here is...

Michael Goldsmith: So my question here is, you know, are you looking to do more dispositions from here? And if you can provide some information around the cap rates of the property sold, that would be really helpful. Thank you.

Speaker Change: You know, are you looking to do more dispositions from here and if you can provide some information around the cap rates of the property sold, that would be really helpful. Thank you.

Gary Schiffman: So thanks for your question, Michael. It definitely is on plan as we shared in 2014. We did about 300 million dollar disposition programs, so we're right on target there. We do have several other select expeditions in the market right now.

Unknown Executive: question, Michael. It definitely is on plan, as we shared in 2014, we did about a $300 million disposition program, so we're right on target there. We do have several other select. Unknown Speaker Select, dispositions in the market right now.

Speaker Change: Michael.

Speaker Change: It definitely is on plan, as we shared in 2014, we did about $300 million disposition program, so we're right on target there. We do have several other select,

Unknown Executive: We continue to discuss over those. And they are similar-type assets where, in this case, the six MH properties that we sold actually remove us from single states where we just had one single MH property or four states, I should say. So real efficiency is there. And as we look at these other properties that we're offering in the market, a similar strategy with regard to the fact that they're not strategic locations, and they could help to improve operating efficiencies as we go forward. So I'd refer to them as opportunistic non-strategic asset sales.

Gary Schiffman: We continue discussion over those, and they are the similar type assets where, in this case, the six MH properties that we sold actually remove us from single states where we just had one single MH property or four states, I should say. So real efficiencies there, and as we look at these other properties that we're offering in the market, some more strategy with regard to the fact that they're not strategic locations, and they could help to improve operating efficiencies as we go forward.

Speaker Change: dispositions.

Speaker Change: in the market right now. We continue discussion over those.

Speaker Change: and they are the similar...

Speaker Change: type assets where, in this case, the six MH properties that we sold actually remove us from single states.

Speaker Change: where we just had one single MH property, or four states I should say.

Speaker Change: So, real efficiency is there, and as we look at these other properties that we're offering in the market, similar strategy with regard to the fact that they're not strategic locations and they could help.

Gary Schiffman: So I refer to them as opportunistic non-strategic, as that fails, and we will provide updates at the appropriate time.

Speaker Change: to improve operating efficiencies as we go forward. So I'd refer to them as opportunistic non-strategic asset sales, and we will provide updates at the appropriate time.

Gary Schiffman: Thank you.

Operator: And we will provide updates at the appropriate time. Thank you. The next question is coming from Brad Heffern from RBC Capital Markets. Your line is now live.

Brad Heffern: Next question is coming from Brad Heffern from RBC Capital Markets; Treline is now live. Yeah, everybody. Can you give an update on the UK loan collateral and if any of those assets are potentially among the assets that you're looking to monetize in the near term?

Speaker Change: Thank you. Next question is coming from Brad Heffern from RBC Capital Markets. Your line is now live.

Brad Heffern: Yeah, hey everybody. Can you give an update on the UK loan collateral and if any of those assets are potentially among the assets that you're looking to monetize in the near term?

Brad Heffern: Brad, thank you for the question. No, those assets that work collateral for the UK loan are not part of those potential dispositions, as we detailed during our call and investor conference call in April. Since then, the park holidays team has taken over the operations of those, and we're excited to see them continue to produce.

Unknown Executive: Hey, Brad, thank you for the question. No, those assets that were collateral for the UK loan are not part of those potential dispositions.

Speaker Change: Hey Brad, thank you for the question. No, those assets that were collateral for the UK loan are not part of those potential dispositions. As we detailed during our call in April and investor conferences since then, the Park Holidays team has taken over the operations of those and we're

Unknown Executive: As we detailed during our call and investor conferences call in April, the park holidays team has taken over the operations of those, and we're excited to see them continue to produce. Thank you. The next question is coming from Samir Khanal from Evercore ISI.

Brad Heffern: We're excited to see them continue to produce.

Samir Khanal: Thank you.

Operator: Your next question is coming from Samir Khanal from Evercore ISI. Your line is now live. Hey, good afternoon, everybody. Hey, Gary, maybe you could

Samir Khanal: Next question is coming from Samir Canal from Evercore ISI; Treline is now live. Hey, good afternoon, everybody. Hey Gary, maybe you can elaborate on this marine business, you know, being down 30 basis points. You kind of mentioned there's large vessel movements. We talk around that a little bit, and I guess what gives you the touch, and it's to say that at a 30 basis point cut, as you know, at this at this time. Thanks. Thanks, Samir.

Speaker Change: Thank you. Next question is coming from Samir Khanal from Evercore ISI. Your line is now live.

Operator: Your line is now live. Hey, good afternoon, everybody. Hey, Gary.

Samir Kunal: Hey, good afternoon everybody. Hey Gary, maybe you can elaborate on this marina business, you know, being down 30 basis points. You kind of mentioned those large vessel movements.

Samir Kunal: Let me talk around that a little bit and I guess what gives you the confidence to say that Got a 30 basis point cut is enough at this at this time. Thanks

Gary Shiffman: Thanks, Samir. Well, certainly, as we do at all our businesses, we build from the bottom up. We remain very positive about continued near and long-term FFO growth for our safe harbor marinas business. And, in fact, investor demand for the asset class itself has never been greater.

Gary Schiffman: Well, certainly as we do it all our businesses, we build from the bottom up. We remain very positive about continued near and long-term FFO growth for safe hardware marinas business, and in fact, investor demand in the asset class itself has never been greater. So embedded in our revised guidance is this adjustment in marinas in the second half; we really see these large super yacht vessels heading towards the transatlantic and the Med movement, just as Fernando said earlier than forecasted. So we did forecast this, but there has been a fair amount of pent-up demand through COVID.

Gary Shiffman: Thanks, Samir. Well, certainly, as we do with all our businesses, we build from the bottom up.

Speaker Change: We remain very positive about continued near and long-term FFO growth for our safe harbor marinas business.

Gary Shiffman: So embedded in our revised guidance is this adjustment in marinas in the second half because we really see these large superyacht vessels heading towards the transatlantic and the MED movement, just as Fernando said, earlier than forecast. So we did forecast this, but there has been a fair amount of pent-up demand through COVID. These boats have been more stationary, and I think with all that's on the agenda over in the MED, including the Olympics and things like that, there's just been earlier departures.

Speaker Change: And in fact, investor demand in the asset class itself has never been greater.

Speaker Change: So, embedded in our revised guidance is this adjustment, the marinas in the second half is, we really see these large superyacht vessels heading towards the transatlantic and the MED movement.

Speaker Change: Just as Fernando said earlier than forecasted, so we did forecast this.

Gary Schiffman: These boats have been more stationary, and I think with all its on the agenda over in the Med, including the Olympics and things like that. There's just been an earlier departure. These boats go back and forth across the Atlantic, and we do have the historical numbers to take a look at how things do return. We have built-in the fact that with America's Cup taking place over on the other side of the Med this year, these boats will probably return where we might expect them in August, September, or more likely to see them come back in late September, early October.

Fernando: But there has been a fair amount of pent-up demand through COVID. These votes have been more stationary and I think with all that's on the agenda over in the Met, including the Olympics and things like that, there's just been earlier departure.

Gary Shiffman: These boats go back and forth across the Atlantic, and we do have the historical numbers to take a look at how things do return. We have built in the fact that with the America's Cup taking place over on the other side of the Med this year, these boats will probably return where we might expect them in August and September or, more likely to see them come back in late September or early October.

Speaker Change: These boats go back and forth across the Atlantic and we do have the historical

Speaker Change: numbers to take a look at how things do return. We have built in the fact that with America's Cup taking place over on the other side of the Med this year these boats will probably return.

Speaker Change: where we might expect him in August-September. We're more likely to see him come back in late September, early October.

Unknown Executive: Thank you.

Operator: Thank you. Our next question is coming from John Pawlowski from Green Street. Your line is now live.

John Pawlowski: Next question is coming from John Pawlowski from Green Treat Your Line. Is that live? Thanks for the time.

Speaker Change: Thank you. Our next question is coming from John Pulaski from Green Street. Your line is now live.

Gary Schiffman: A question on the UK business. I just want to better understand what's going on on the ground in terms of the meaningful shift in the Center Revenue Guide. It's a kind of meaningful decline in expenses. So we started the year. Real property revenue is expected to grow roughly 5% now. It's tracking towards 7% expenses. We're expected to grow by 8% and the tracking towards 4%. There's just lots of on-the-ground operating color from what's happening in that portfolio. I'll start out, and Fernando can add some specifics, but looking at the UK operating environment, we are feeling better than we have, as inflation is running at 2%, and overnight, the Bank of England announced a kind of race of about 25 basis points.

Unknown Executive: understand what's going on on the ground in terms of the meaningful shift in the Sanford Revenue Guide and meaningful decline in expenses. So we started the year with real property revenue expected to grow roughly 5%. Now it's tracking towards 7%. Expenses were expected to go by 8%, but they're tracking towards 4%. Just want some operating color on what's happening in that portfolio.

John Pulaski: Thanks for the time. A question on the UK business. I just want to better understand what's going on on the ground in terms of the

Speaker Change: is going to talk to you about the Sanford Revenue Guide and Meaningful Decline in Expenses. So we started the year, real property revenue is expected to grow roughly 5%. Now it's

Speaker Change: tracking towards 7% and expenses were expected to go by 8% and tracking towards 4%. So just a lot of some on-the-ground operating color from what's happening in that portfolio.

Gary Shiffman: And I'll start out, and Fernando can add some specifics, but looking at the UK operating environment, we are feeling better. Then we have inflation running at 2%, and overnight, the Bank of England announced a cut in rates of about 25 basis points.

Speaker Change: I'll start out and then Fernando can add some specifics but

Fernando: Looking at the UK operating environment, we are feeling better.

Speaker Change: Then we have, as inflation is running at 2%,

Speaker Change: and overnight Bank of England announced

Fernando Castro: So these macro trends, if you will, are positive for our consumer and should both well for our UK operating businesses, which are actually seeing in a real property performance.

Gary Shiffman: So these macro trends, if you will, are positive for our consumer and should bode well for our UK operating businesses, which we are actually seeing in our real property performance. So, big picture, things look positively improving there. We believe our continued focus on increasing real property contribution over home sales profit is the best strategy for creating stakeholder value. So we remain really focused on increasing occupancy and increasing real property contribution. And I turn it over to you, Fernando.

Speaker Change: cut of rates of about 25 basis points, so.

Fernando: These macro trends, if you will, are positive for our consumer.

Fernando: and should bode well for our UK operating businesses, which are actually seeing in our real property performance. So big picture, things look positively improving there. We believe our continued focus on increasing real property contribution.

Fernando Castro: So big picture, things look positively improving there. We believe our continued focus on increasing real property contribution over home sales profit is the best strategy and creating stakeholder value. So we remain really focused on increasing occupancy and increasing real property contribution.

Fernando: over home sales profit is the best strategy in creating stakeholder value. So we remain really focused on increasing occupancy and increasing real property contribution. And I turn it over to you, Fernando, for.

Fernando Castro: And it turned over to you for an offer, and John from a specifics as it relates to revenue and expenses. I'll remind everyone to write the same property pool for the UK. It's total contribution in 23 was what's about $70 million. So a small dollar amount can have a large change from a percentage basis. But we are seeing the outperformance coming both from the top line and then expense side on the top line. We're seeing our new owners at higher at higher rates than then originally forecasted, and then from an expense perspective, and this applies to the first half of the year as well as a second.

Fernando Castro: And John, for most specifics as it relates to revenue and expenses, I'll remind everyone that the same property pool for the UK, its total contribution in 23 was about $70 million. So a small dollar amount can make a large difference on a percentage basis. But we are seeing outperformance coming both from the top line and then from the expense side. On the top line, we're seeing our new owners at higher rates than originally forecasted.

Fernando: and John for most specifics as it relates to revenue and expenses.

Fernando: I'll remind everyone, right, the same property pool for the UK, its total contribution in 23 was about $70 million. So a small dollar amount can have a large change from a percentage basis.

Fernando: but we are seeing the outperformance coming.

Fernando: Both from the top line and then expense side on the top line, we're seeing our new owners at higher at higher rates.

Fernando Castro: And then from an expense perspective, and this applies to the first half of the year as well as the second, we have seen lower utility costs and forecast lower utility costs than we'd originally expected. Those are going to be the largest drivers of that continued outperformance and what has allowed us to take guidance upward as meaningfully as we have over the course of the year.

Fernando: than originally forecasted. And then from an expense perspective, and this applies to the first half of the year as well as the second, we have seen lower utility and forecast lower utility costs than we'd originally expected. Those are gonna be the largest drivers.

Fernando Castro: We have seen lower lower utility and forecast lower utility costs than than we originally expected. Those are going to be the largest drivers of that continued outperformance and what has allowed us to take guidance upward as meaningful as we have over the course of the year.

Fernando: of that continued outperformance and what has allowed us to take guidance upward as meaningfully as we have over the course of the year.

Unknown Executive: Thank you.

Operator: Thank you. Our next question is coming from Josh Dennerlein from Bank of America. Your line is now.

Unknown Executive: Our next question is coming from Just our line from Bank of America.

Gary Schiffman: Your line is not live. Gary, I just wanted to follow up on your comment on the Super Yacht movement. You said the, you expect the book, I think some of the Super Yacht's will start to come back in October after the America Cup. It looks like the America Cup ends late October. Was that just this speaking, or is that when you kind of assume the boats to come back? Yeah, you're just making, I was just commenting that they usually come back late August, September, and due to America Cup, they'll probably be a month or two delay in them coming back, and we took that into account in the approximately $750,000 reduction at the midpoint related to that.

Speaker Change: Thank you. Our next question is coming from Josh Deinerlein from Bank of America. Your line is now live.

Unknown Executive: Hey guys, Gary, I just wanted to follow up on your comment on the superyacht movement. You said you expect some of the superyachts to start coming back in October after the America's Cup. It looks like the America's Cup ends in late October. This speaking, or is that when you kind of assume the boats will just make it? I was just commenting that they usually come back in late August, September and due to the America's Cup, there'll probably be a month or two delay in them coming back. And we took that into account, and the approximately $750,000 reduction at the midpoint related to that.

Josh Deinerlein: Hey guys, Gary, I just wanted to follow up on your comment on the superyacht movement. You said you expect some of the superyachts to start to come back in October after the America's Cup. It looks like the America's Cup ends late October.

Speaker Change: this speaking or is that when you kind of assume the both the kind of just making I was just commenting that they usually come back late August September and

Speaker Change: due to America's Cup, there'll probably be a month or two delay in them coming back, and we took that into account in the approximately $750,000 reduction at the midpoint related to that.

Unknown Executive: OK, so I guess turn guidance assumes kind of like a November return. Yes, correct. OK, OK, just wanted to clarify.

Unknown Executive: Okay, so current guidance assumes kind of like a November return. Yes, correct. Okay. Okay. Just wanted to clarify. All right. Thank you.

Speaker Change: Okay, so I guess Trent Gaddens assumes kind of like a November return.

Unknown Executive: All right, thank you.

Speaker Change: Yes, correct.

Speaker Change: Okay, okay, just wanted to clarify. All right, thank you.

Eric Wolfe: Thank you. Next question is coming from Eric Wolf from City. Your line is alive.

Operator: Thank you. The next question is coming from Eric Wolfe from Citi. Your line is now live.

Speaker Change: Thank you. Next question is coming from Eric Wolf from Citi. Your line is now live.

Fernando Castro: OK, you mentioned that the distributions where we're done on the next so creative basis, but it looks like you took down your real property in a wide by around 10 million in the interest expenses, taking down by about six and a half million. So we just curious whether there was something else in that real property in one other than other than just the distributions. Thanks.

Eric Wolfe: Hey, you mentioned that the dispositions were done on an accretive basis, but it looks like you took down your real property in a wide by around 10 million, and the interest expenses taken down by about six and a half million. So I was just curious whether there was something else in that real property in Hawaii other than just those dispositions. Thanks. Hey, Eric, this is Fernando.

Eric Wolf: Hey, you mentioned that the dispositions were done on an FFO accretive basis, but it looks like you took down your real property NOI by around $10 million, and the interest expense was taken down by about $6.5 million. So I was just curious whether there was something else in that real property NOI other than...

Fernando Castro: Eric, this is Fernando. Yes, there are some shifts that relate to performance over the course of the second quarter for the rest of the portfolio. We did our same property growth was at three at three six slightly below the midpoint of the range, so it does have some shifts as it relates to that and movements in our non same property pool, which would account for any acquisitions that were done last year or any of our development assets that are in the process of stabilization. Thank you.

Fernando Castro: Eric, this is Fernando. Yes, there are some shifts as it relates to performance over the course of the second quarter. For the rest of the portfolio, we did find our same property growth was at three, at three, six, slightly below the midpoint of the range. So it does have some shifts as it relates to that, and movements in, in our non-same property pool, which would account for any acquisitions that were done last year or any of our development assets that are in the process of stabilization.

Speaker Change: Other than just those definitions. Thanks.

Speaker Change: Hey Eric, this is Fernando. Yes, there's...

Eric Wolf: There are some shifts as it relates to performance over the course of the second quarter for the rest of the portfolio.

Eric Wolf: Our same property growth was at 3.6, slightly below the midpoint of the range. So it does have some shifts as it relates to that, and movements in our non-same property pool, which would account for any acquisitions that were done last year, or any of our development assets that are in the process of stabilization.

Operator: Thank you. The next question is coming from John Kim from BMO Capital Markets. Your line is now live.

John Kim: Next question is coming from John Kim from BMO Capital Market; why does that live? Thank you. Gary, you mentioned the the B of a beauty interest rate cuts.

Speaker Change: Thank you.

Speaker Change: Thank you. Next question is coming from John Kim from BMO Capital Markets. Your line is now live.

John Kim: Thank you. Gary, you mentioned the BOV interest rate cut. I imagine that's going to lead to a higher demand for park holidays, but I was wondering how you're going to manage home sales from not being a bigger contributor to FFO going forward. We noticed that margins on home sales also increased during the quarter. So how are you going to balance that demand versus home sales not being a big part of earnings going forward?

John Kim: Thank you. Gary, you mentioned the BofE.

Gary Schiffman: I imagine that's going to lead to higher demand for park holidays, but I was wondering how are you going to manage home sales from not being a bigger contributor to FFO going forward. We noticed that margins also increased during the quarter on home else. So how are you going to balance that demand versus, you know, home sales not being a big part of earnings going forward. So I think that I would share with you, John, that we have a great operating team with a strong tenure history on the portfolio, best in class assets there. So we will we have put together a forecast that reduces margins and increases velocity, velocity of occupancy.

John Kim: interest rate cuts, I imagine that's going to lead to higher demand.

John Kim: for Park Holidays, but I was wondering how you are going to manage home sales from not being a bigger contributor to FFO going forward. We noticed that margins also increased during the quarter on home sales.

Speaker Change: So how are you going to balance that demand versus, you know, home sales not being a big part of earnings going forward?

Gary Shiffman: So I think that I would share with you, John, that we have a great operating team with a strong 10-year history on the portfolio, and best-in-class assets there. So we will, we have put together a forecast that reduces margins and increases the velocity of occupancy that's in our forecast. So there will be a continued delicate balance if we were to see we have more room to reduce margin, we would reduce margin, and our goal of creating stickier revenue, if you will, and more valuable revenue on the real property side.

Speaker Change: So, I think that I would share with you, John, that we have a great operating team with a strong 10-year history on the portfolio, best-in-class assets there.

Speaker Change: So we will, we have put together a forecast.

Speaker Change: that reduces margins and increases the velocity of occupancy. It's in our forecast.

Fernando Castro: It's in our forecast. So there'll be a continued delicate balance. If we were to see we have more room to reduce margin, we will reduce margin. In our goal of creating stickier revenue, if you will, and more valuable revenue on the real property side. And John will sit, will I'll add while you are right that the business plan is to continue reducing the percentage contribution from home sales. It is it feeds getting more owners, and it is leading to that out performance that we're seeing on the real property side. So home sales will continue to be part of the business, just like it is here in the U.S.

Speaker Change: So there will be a continued delicate balance if we were to see we have more room to reduce margin. We will reduce margin. Our goal of creating stickier revenue, if you will, and more valuable revenue on the real property side.

Fernando Castro: And John will say, well, I'll add while we are right, the business plan is to continue reducing the percentage contribution from home sales. It is it feeds, getting more owners, and it is leading to that outperformance that we're seeing on the real property side. So home sales will continue to be part of the business, just like they are here in the US. It is a larger contributor on a percentage basis than in the US, but we'll continue to manage those sales, manage the margins to accelerate velocity, and that ultimately will result in a more reliable income on the real property side.

John: And John, I'll add, while the business plan is to continue reducing the percentage contribution from home sales, it is, it feeds.

John: getting more owners and it is leading to that outperformance that we're seeing on the real property side. So home sales will continue to be part of the business just like

Fernando Castro: It's a larger contributor on a percentage basis than in the U.S. But we'll continue to manage manage those sales, manage the margins to accelerate velocity, and that ultimately will result in in a more reliable income on the real property side. So you're saying that buyers are willing to take a lower price, but with longer term on the land rental, or maybe a higher rent on the land rental? I was just saying that accelerating sales ultimately lead to more owners paying rent on the real property side. So it's our sales funnel as many of the many of our guests that vacation with us end up purchasing holiday homes within our property so that's that is the interplay between the home sales and the real property or rental income side of the business.

John: It is here in the U.S. It's a it is a larger contributor on a percentage basis than in the U.S. But we'll continue to manage Manage those sales manage the margins to accelerate velocity and that ultimately will result in in

John: More reliable income on the real property side.

Unknown Executive: So you're saying that buyers are willing to take a lower price but with a longer term on the land rental? Or maybe a higher rent than land rental.

Speaker Change: So you're saying that buyers are willing to take a lower price but with longer term on on the land rental?

Unknown Executive: Just saying that accelerating sales ultimately leads to more owners paying rent on the real property side. So it is our sales funnel, as many of our guests that vacation with us end up purchasing a holiday home within our property. So that is the interplay between the home sales and the real property or rental income side of the business. So the residents, if you will, pay.

Speaker Change: or maybe a higher rent than land rental.

Speaker Change: Just saying that accelerating sales ultimately lead to more owners paying rent on the real property side.

Speaker Change: It is...

Speaker Change: Our sales funnel is many of our guests that vacation with us end up purchasing a holiday home within our property. So that is the interplay between the home sales and the real property or rental income side of the business.

Unknown Executive: So the residents, if you will, pay their pitch fee or their rent fee, but they're on annual contracts. So in reducing margin and making these more attractive, we expect to accelerate the velocity of occupancy, Phil John.

Fernando Castro: So the residents if you will pay their pitch fee or their rent fee, but they're on annual contracts, so in reducing margin and making these more attractive. We expect to accelerate the velocity of occupancy, Phil John. Thank you.

Speaker Change: So the residents, if you will, pay their pitch fee or their rent fee.

Speaker Change: But they're on annual contracts, so in reducing margin and making these more attractive, we expect to accelerate the velocity of occupancy, Phil John.

Operator: Thank you. Thank you. The next question is coming from...

Operator: Thank you. The next question is coming from Keegan Carl from Wolfe Research. Your line is now live.

Keegan Carl: Next question is coming from Keegan Carl from Wolf Researcher. Line is now live. Yeah, thanks for the time, guys. Just wondering if you could give some more color on your transient RV outlook for the balance of the year, just more color on how July 4th in particular performed. For Fernando, if you have a little bit of pacing information to share and everything like that, I just remind everybody that we remain laser focused on converting. Transient to annual; obviously, over long periods of time, the margins are better, the predictability, the forecasting, and the budgeting. We have about 25,000 transient sites right now, with approximately 2,000 a year conversion average, so we expect over the next five years to convert 10,000 or more sites.

Phil John: Thank you.

Speaker Change: Thank you. Next question is coming from Keegan Carl from Wolf Research. Your line is now live.

Keegan Carl: Yeah, thanks for the time guys. Just wondering if you could give some more color in your transient RV outlook for the balance of the year and just more color on how July 4th in particular performed.

Gary Shiffman: For Fernando, if you have a little bit of pacing information to share and everything like that, I just remind everybody that we remain laser focused on converting transient to annual. Obviously, over long periods of time, the margins are better, the predictability, the forecasting, and the budgeting.

Keegan Carl: Fernando, if you have a little bit of pacing information to share and everything like that, I just remind everybody that we remain laser focused on converting

Keegan Carl: transient

Fernando: to annual, obviously over long periods of time, the margins are better, the predictability, the forecasting and the budgeting.

Fernando Castro: We have about 25,000 transient sites right now with an average of 2,000 per year conversion rate. So we expect over the next five years to convert 10,000 or more sites. And we're just very pleased to say that we've had a lot of success. In converting, and it's really leading to a sticky revenue as we can forecast annual much better average tenure stay right around six years. And I'll let Fernando respond to how the holiday is going. Sure. So, Keegan, uh, transient revenue for the company.

Fernando: We have about 25,000

Speaker Change: transient sites right now with a approximately 2,000 a year conversion average. So we expect over the next five years to convert 10,000 or more sites and we're just very pleased to say that

Fernando Castro: And we're just very pleased to say that we've had a lot of success in converting, and it's really leading to a sticky revenue as we can forecast annual much better. Average 10 years, day right around six years, and I'll let Fernando respond to how the holiday is going. So Keegan transient revenue for the full year is now expected to decline by about 10% for the year, which implies call it a decline of about 8.8% or the second half of the year. The 4th of July results and pacing for Labor Day have given us comfort that the revenue decline is more muted in the second half as the results that we saw during the first half because it's when more transient-focused resorts are at peak occupancy and these have performed closer to original expectations this year.

Speaker Change: We've had a lot of success.

Fernando: In converting, and it's really leading to a sticky revenue as we can forecast annual much better average tenure stay right around six years, and I'll let Fernando respond to.

Fernando Castro: So, Keegan, transient revenue for the full year is now expected to decline by about 10% for the year, which implies, call it, a decline of about 8.8% for the second half of the year. The 4th of July results and pacing for Labor Day have given us comfort that the revenue decline is more muted in the second half than in the first half because it's when more transient-focused resorts are at peak occupancy, and these have performed closer to original expectations this year. For the 4th of July, we were down about 7% on revenue. That's an out note, right?

Fernando: for how it is going.

Fernando: Transient revenue for the full year is now expected to decline by about 10% for the year, which implies

Fernando: call it a decline of about 8.8% for the second half of the year.

Fernando: The 4th of July results and pacing for Labor Day have given us comfort that the revenue decline is more muted.

Fernando: in the second half, as the results that we saw during the first half, because it's when more transient-focused resorts are at peak occupancy, and these have performed closer to original expectations this year.

Fernando Castro: For the 4th of July, we were down about 7% on revenue. That's an I'll know, right? We've converted over the trailing 12-month period, we converted around 7% of sites from transient to annual. When you're comparing just the 4th of July day, we were up over 24% for just the 4th of July day. As it relates to Labor Day pacing, we're currently pacing it being down between 4% to 6% on revenue for the week.

Fernando: For the 4th of July, we were down about 7%.

Fernando Castro: We've converted over the trailing 12-month period, we converted around 7% of sites from transient to annual. When you compare just the 4th of July day, we were up over 24% for just the 4th of July day. As it relates to Labor Day pacing, we're currently pacing it being down between 4% to 6% on revenue for the weekend.

Fernando: on revenue. That's an out note, right? We've converted over the trailing 12-month period, we converted around 7% of sites from transient.

Speaker Change: to annual. When you're comparing just the 4th of July day, we were up over 24%.

Fernando: for just the 4th of July day.

Fernando: As it relates to Labor Day pacing, we're currently pacing it being down between 4-6% on revenue for the weekend.

Jamie Feldman: Thank you. Next question is coming from Jamie Feldman from Wells Fargo. Your line is now live. Great, thank you.

Operator: Thank you. Our next question is coming from Jamie Feldman from Wells Fargo. Your line is now live.

Speaker Change: Thank you. Our next question is coming from Jamie Feldman from Wells Fargo. Your line is now live.

Jamie Feldman: So when we met with your team at Nayree, there was a lot of talk around bigger picture potential, either spin-offs or sales, whether it was a safe harbor spin-off or things to do at the UK business. It sounds like now you're on the path of stick with all the core businesses, sell some non-core assets. Is that the way to think about this?

Jamie Feldman: Great, thank you. So when we met with your team at NARIT, you know, there was a lot of talk around, you know, bigger picture potential, either spinoffs or sales, whether it was a Safe Harbor spinoff or things to do with the UK business. It sounds like now you're on the path of, you know, stick with all the core businesses.

James Feldman: Thank you, sells some non-core assets. Is that the way to think about this kind of a lot was discussed, whether at the board level and, you guys, are now thinking the plan is to let's enjoy what we've got, maximize NOI margins and, you know, get to our leverage targets through asset sales? Or is there something else that may be coming down the pike?

Gary Schiffman: Kind of a lot was discussed, whether at the board level, and you guys are now thinking the plan is, let's enjoy what we've got, maximize NOI margins, and get to our leverage targets through asset sales, or is there something else that may be coming down the pipe? Jamie, I would say that we certainly would share anything of major consequence. We operate all of our business platforms to increase FFO growth, real property contribution, over home sales as we indicated both in the UK and in the US, maximize returns and conversions by transient to annual and continue to grow contribution and FFO growth in the Marina segment.

Speaker Change: sells some non-core assets.

Speaker Change: Is that the way to think about this? Kind of a lot was discussed, whether at the board level and you guys are now thinking the plan is, let's enjoy what we've got, maximize.

Speaker Change: and You know get to our leverage targets through asset sales, or is there is there something else that may be coming down the pipe?

Gary Shiffman: Well, Jamie, I would say that we certainly wouldn't share anything of major consequence. We operate all of our business platforms to increase FFO growth, real property contribution over home sales, as we indicated, both in the UK and in the US, maximize returns and conversions from transient to annual, and continue to grow contribution and FFO growth in the marina segment. That being said, we're just laser focused, as I said before, on our strategies that we've shared with you.

Speaker Change: Well, Jamie, I would say that we certainly

Speaker Change: share anything of major consequence. We operate all of our business platforms to increase FFO growth, real property contribution, over home sales as we indicated both in the UK and in the US.

Speaker Change: maximize returns and conversions by

Gary Schiffman: That being said, we're just laser focus, as I said before, on our strategies that we've shared with you. We believe they will create stakeholder value. That said, we'll continue to evaluate all options. And when I think about our looking forward, I'd suggest we're just starting to see the benefit of our strategic plan translate into NOI growth, and I think what we tried to get across when we met last is the fact that without the headwinds of what we've gone into into 24, the 25 will be a much better year where we can see NOI growth translate into FFO growth.

Speaker Change: contribution and FFO growth in the

Speaker Change: We're just laser focused, as I said before, on our strategies that we've shared with you. We believe they will create stakeholder value. That said, we'll continue to evaluate all options.

Gary Shiffman: We believe they will create stakeholder value. That said, we'll continue to evaluate all options. And when I think about how we're looking forward, I'd suggest we're just starting to see the benefit of our strategic plan translate into NOI growth. And I think what we tried to get across when we met last is the fact that, without the headwinds of what we've gone into in 24, the 25 will be a much better year where we can see NOI growth translate into FFO growth. And for now, that's really what we' So nothing really new or changed that I would suggest in the recent period of time.

Speaker Change: And when I think about

Speaker Change: We're looking forward. I'd suggest we're just starting to see the benefit of our strategic plan translate into NOI growth and I think what we

Speaker Change: tried to get across when we met last, is the fact that without the headwinds of what we've gone into into 24, the 25 will be a much better year where we can see

Gary Schiffman: And for now, that's really what we're targeted at.

Speaker Change: NOI growth translate into FFO growth and for now that's that's really what we're targeted on.

Gary Schiffman: So nothing really knew or changed that I would suggest in some period of time.

Speaker Change: So nothing really new or changed that I would suggest in a recent period of time.

Gary Schiffman: But when you think about potential options, is there anything that would get in the way of your current trajectory for 25 growth? There is nothing that I think would change how we're evaluating and working towards 25. Okay, great.

Unknown Executive: When you think about potential options, is there anything that would get in the way of your current trajectory for 25% growth?

Speaker Change: When you think about potential options, is there anything that would get in the way of your current trajectory for 25 growth?

Gary Shiffman: There is nothing that I see that, you know, would change how we're evaluating and working towards 25.

Speaker Change: There is nothing that I think that, you know, would change how we're evaluating and working towards 25.

Unknown Executive: Okay, great.

Gary Schiffman: Thank you.

Speaker Change: Okay, great. Thank you.

Operator: Thank you. The next question is coming from Omoteo Okusanya from Deutsche Bank. Your line is now live.

Omotayo Okusanya: Next question is coming from Omoteo, Oksania from Deutsche Bank. Good afternoon, everyone. Just to stick on transient RV, again, it's been very hard for the entire industry to kind of forecast what that's going to look like for all year. And I guess at this point, when you think about that business, what are some of the signs or the green sheets you're looking at to kind of make you feel more confident about it ultimately, quote-unquote, stabilizing? And when do you think it may actually start to see some of those signs?

Speaker Change: [inaudible]

Speaker Change: Thank you. Next question is coming from Omoteo Okusanya from Deutsche Bank. Your line is now live.

Unknown Executive: Good afternoon, everyone. Just to stick on transient RV, again, it's been very hard for the entire industry to kind of forecast what that's going to look like at the end of this year. And I guess at this point, when you think about that business, what are some of the signs or the green sheets you're looking at to kind of make you feel more confident about it ultimately, you know, quote unquote, stabilizing? And when do you think you may actually start to see some of those signs?

Omoteo Okusanya: Ah yes, good afternoon everyone.

Omoteo Okusanya: Um, just to stick on Transient RV.

Speaker Change: Again, it's been very hard for the entire industry to kind of forecast what that's going to look like for, you know, all year. And I guess at this point when you think about that business, what are some of the signs or the green sheets you're looking at?

Speaker Change: to kind of make you feel more confident about it ultimately, you know, quote-unquote, stabilizing. And when do you think you may actually start to see some of those signs?

Gary Schiffman: Well, I'll start out, Gary, and you can add, Fernando. I think Fernando shared the 5% cager growth and the transient segment over the last five years. And as we think about things, certainly we've shared a lot about the benefit of converting transient to annual. So that's been very, very favorable as we move forward. The transient sites today, as I said, were converting about 2000 a year for good growth there. And I think that we see RV over a long period of time as a very, very good business; the transient has some cyclicality to it. We're pushing through the levels, and we'll continue to control expenses, manage the variable expenses that we can.

Gary Shiffman: Well, I'll start out Gary, and you can add Fernando. I think Fernando has shared the 5% CAGR growth in the transient segment over the last five years. And as we think about things, certainly, we've shared a lot about the benefit of converting transient to annual. So that's been very, very favorable as we move forward. Transient sites. Today, as I said, we're converting about 2000 a year. So there is good growth there.

Speaker Change: Well, I'll start out, Kerry, and then you can add Fernando. I think Fernando shared the...

Fernando: 5% CAGR growth in the transient segment over the last five years and as we think about things

Kerry: Certainly, we've shared a lot about the benefit of converting transient to annual, so that's been very, very favorable as we move forward.

Gary Shiffman: And I think that we see RV over a long period of time as a very, very good business. The transient has some cyclicality to it. We're pushing through that right now. We're probably headed for the pre-COVID level.

Kerry: Transient sites today as I said we're converting about 2,000 a year so good growth there and I think that we see RV over a long period of time.

Kerry: as a very, very good business. The transient has some cyclicality to it. We're pushing through that right now. We're probably headed for the pre-COVID levels.

Gary Shiffman: And we'll continue to control expenses, manage the variable expenses that we can. I think the benefit of really having the best in class, well-located RV communities and a great operating platform to go forward. The last thing I'd add is that the Transient is a great funnel for conversion. So the transient portfolio helps us with the profit margin that we get on the annual side of things and the growth we get on the annual side.

Kerry: We'll continue to control expenses, manage the variable expenses that we can. I think the benefit of really having best-in-class, well-located RV communities and a great operating platform to go

Fernando Castro: I think the benefit of really having best in class, well-located RV communities and a great operating platform to go forward. The last thing I'd add is that the transient is a great funnel for conversions. So the transient portfolio helps us in the profit margin that we get on the annual side of things in the growth we get on the annual site.

Kerry: forward. The last thing I'd add is that

Kerry: So, the transient portfolio helps us in the profit margin that we get on the annual side of things and the growth we get on the annual side.

Fernando Castro: I was just going to reaffirm, right, our strategy of conversion continues to minimize the impact in the near term of any short-term volatility on the transient side. That business, on a site-adjusted basis, as I mentioned, has grown at an over 5% CAGR on the revenue side. But that, right, we will continue to minimize. Transient revenues four years ago represented about 60% of total revenues in our same property pool. They're now approaching 40%.

Fernando Castro: I was just going to reaffirm, right. Our strategy of conversion continues to minimize the impact in the near term of any short-term volatility on the transient side. That business on a site adjusted basis, as I mentioned, has grown at an over 5% CAGR on the revenue side. But that, right, we will continue to minimize transient revenues. Four years ago, they represented about 60% of total revenues in our same property pool. They're now approaching 40%. And so our strategy is bearing fruit. We're seeing continued demand for conversions, and then that family is with us on average for a six-year period of time.

Speaker Change: Yeah, I was just going to reaffirm, right, our strategy of conversion continues to minimize.

Speaker Change: the impact in the near term of any short-term volatility on the transient side, that business

Speaker Change: on a site-adjusted basis, as I mentioned, has grown at an over five percent.

Speaker Change: Cager on the revenue side But that right we will continue to minimize transient revenues four years ago represented

Speaker Change: about 60% of total revenues in our same property pool. They're now approaching 40%. And so our strategy is bearing fruit. We're seeing continued demand for conversions.

Fernando Castro: And so our strategy is bearing fruit. We're seeing continued demand for conversions. And then that family is with us on average for a six-year period of time. And we're hard at work to continue to extend that tenure. So it is all part of the strategy to continue minimizing that near-term impact.

Fernando Castro: And we're hard at work to continue to extend that tenure. So it is all part of the strategy to continue minimizing that near-term impact. Gotcha.

Speaker Change: and then that family is with us, on average, for a six-year period of time. And we're hard at work to continue to extend that tenure. So it is all part of the strategy to continue minimizing that near-term impact.

Unknown Executive: Gotcha. Thank you. Thank you. The next question is coming from Mason Gale from Badger Live.

Speaker Change: Gotcha. Thank you.

Operator: Thank you. The next question is coming from Mason Gale from Bearderline. Good afternoon, everyone.

Unknown Executive: Next question is coming from Mason-Gel from Baird; your line is our line. Good afternoon, everyone. Regarding the line of growth, balance looks like there's over 1 billion pounds on line. Are there any plans to pay down as you can borrow it? We are consistent with the strategy as it relates to capital recycling and free cash flow conversion that we would look to continue to pay that down. That is our immediate use of proceeds for any capital recycling opportunities. Or free cash flow is the pay down of short-term borrowings on our credit facility. Thank you.

Speaker Change: Thank you. Next question is coming from Mason Gale from Badger Line is now live.

Unknown Executive: Regarding the line of credit balance, it looks like

Mason Gale: Good afternoon everyone. Regarding the line of credit balance, looks like there's over 1 billion pounds on the line. Are there any plans to pay down these UK borrowings?

Fernando Castro: We are consistent with the strategy as it relates to capital recycling and free cash flow conversion, that is, our immediate use of proceeds for any capital recycling opportunities or free cash flow is the pay-down of short-term borrowings on our credit facility.

Speaker Change: We are, you know, consistent with the strategy as it relates to capital recycling and free cash flow conversion that we would look to continue to pay that down. That is our immediate use of proceeds.

Speaker Change: for any capital recycling opportunities or free cash flow is the pay down of short-term borrowings on our credit facility.

Speaker Change: Thank you.

Operator: Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to Gary for any further closing comments.

Unknown Executive: We reach in of our question and answer session.

Gary Schiffman: I'd like to turn the floor back over to Gary for any further closing comments. Well, we thank everybody for their participation, and we do look forward to sharing with you third quarter results.

Speaker Change: Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over to Gary for any further closing comments.

Gary Shiffman: Well, we thank everybody for their participation, and we do look forward to sharing with you the third quarter results.

Gary Shiffman: Well, we thank everybody for their participation and we do look forward to sharing with you third quarter results.

Unknown Executive: Thank you. This does include today's teleconferencing. We just connect you line up this time and have a wonderful day. We thank you for your participation.

Operator: Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker Change: Thank you.

Speaker Change: Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.