Q2 2025 Sun Communities Inc Earnings Call

Operator: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Sun Communities' second quarter 2025 earnings conference call. At this time, management would like 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 Priority 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 today's press release and from time to time in the company's periodic filings with the SEC. The company undertakes no obligations to advise or update any forward-looking statements to reflect events or circumstances after the date of this release.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Sun Communities' second quarter 2025 earnings conference call. At this time, management would like 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 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 today's press release and from time to time in the company's periodic filings with the SEC. The company undertakes no obligations to advise or update any forward-looking statements to reflect.

Operator: Having said that, I'd like to introduce management with us today: Gary Shiffman, Chairman and Chief Executive Officer; John McLaren, President; Fernando Castro-Cartini, Chief Financial Officer; and Aaron Weiss, Executive Vice President of Corporate Strategy and Business Development. After their 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 yourself to one question so that everyone who would like to participate has ample opportunity. As a reminder, this conference is being recorded. I'll now turn the call over to Gary Shiffman, Chairman and Chief Executive Officer. Mr. Shiffman, you may begin.

Events or circumstances after the date of this release.

Having said that, I'd like to introduce the management team with us today: Gary Shiffman, Chairman and Chief Executive Officer; John McLaren, President; Fernando Castro, Chief Financial Officer; and Aaron Weiss.

I expected the 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 yourself to one question, so that everyone who would like to participate has ample opportunity. As a reminder, this conference is being recorded.

Gary Shiffman: Good afternoon, and thank you for joining us to review Sun Communities' second quarter 2025 results and updated full-year outlook. This was a pivotal quarter for Sun as we completed the previously announced sale of Safe Harbor Marinas and repositioned Sun as a pure play owner and operator of manufactured housing and RV communities. I am pleased with our financial results and operational performance as we execute on our strategy to deliver consistent, reliable earnings growth. We have taken deliberate steps to streamline operations, unlock meaningful financial flexibility, and enhance shareholder value. During the quarter, we paid down approximately $3.3 billion of debt, inclusive of prepayment costs, materially improving our balance sheet position, and since closing on the Safe Harbor transaction, we returned over $830 million to shareholders through a special cash distribution and share repurchases. Additionally, we increased our regular annual distribution rate by over 10%.

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

Good afternoon, and thank you for joining us to review Sun Communities Inc.'s second quarter 2025 results and updated full-year outlook.

This is a pivotal quarter for Sun as we completed the previously announced sales of Safe Harbor Marinas.

I'm repositioned, son, as a pure play owner and operator of manufacturer, the housing and RV communities.

I am pleased with our financial results and operational performance as we execute on our strategy to deliver consistent, reliable earnings growth. We have taken deliberate steps to streamline operations, lack meaningful financial flexibility, and enhance shareholder value.

During the quarter, we paid down approximately $3.3 billion of debt, inclusive of prepayment costs.

Materially improving our balance sheet position, and since closing on a safe harbor transaction, we returned over $830 million to shareholders through a special cash distribution and share repurchases.

Additionally, we increased our regular annual distribution rate by over 10%.

Gary Shiffman: We have also made significant headway identifying acquisition opportunities using 1031 proceeds. We are evaluating opportunities to acquire manufactured housing properties in strong markets with attractive supply-demand dynamics. We continue to make progress on the delayed consent properties related to the Safe Harbor transaction. In May and June, we successfully closed on six of these properties and are working through final government approvals for the remaining nine. Turning to our operational performance, we are pleased with the strength of our manufactured housing and annual RV businesses. Sun reported core FFO per share of $1.76 for the quarter, exceeding the high end of guidance. Total North American Same Property NOI grew 4.9% in the second quarter, driven primarily by the continued growth and stability of our manufactured housing portfolio, as well as the benefit of our ongoing cost savings initiatives and greater efficiency at the expense level.

31 proceeds.

We are evaluating opportunities to acquire manufactured housing properties in strong markets with attractive supply and demand dynamics.

We continue to make progress on the delayed consent properties related to the Safe Harbor transaction.

In May and June, we successfully closed on 6 of these properties and are working through final government approvals for the remaining 9.

Learning to our operational performance.

We are pleased with the strength of our manufactured housing and annual RV businesses.

Some reported core FFO per share of $1.76 for the quarter, exceeding the high end of guidance.

Total North American same-property NOI grew 4.9% in the second quarter.

Driven primarily by the continued growth and stability of our manufactured housing portfolio.

As well as the benefit of ongoing cost-saving initiatives and greater efficiency of the expense level.

Gary Shiffman: We believe this demonstrates the resilience of our core business and the strength of our portfolio. As announced last week, Charles Young has been appointed as Sun Communities' next Chief Executive Officer and Board Member, following a thorough search process. Charles is a seasoned and highly respected leader with over 25 years of experience across real estate operations, investment, and strategy. He most recently served as President of Invitation Homes and brings with him a strong track record of driving growth, operational excellence, and team development. We're incredibly excited to welcome Charles to Sun, and he will be officially joining on October 1st. The board and I are confident that his leadership, vision, and deep understanding of the real estate industry will build on the foundation we created and guide Sun through its next phase of growth and value creation.

We believe this demonstrates the resilience of our core business and the strength of our portfolio.

As announced last week, Charles Young has been appointed as Sun Communities' next Chief Executive Officer and Board Member.

Following a thorough search process.

Charles is a seasoned and highly respected leader with over 25 years of experience across real estate operations, investment, and strategy.

He most recently served as President of Invitation Homes and brings with him a strong track record of driving growth, operational excellence, and team development.

For incredibly excited to welcome Charles, the son, and he will be officially joining on October 1st.

Gary Shiffman: I will be stepping into the role of non-executive chairman of the board. This provides for a smooth transition that allows me to continue supporting the company and our exceptional team. It has been an honor and privilege to serve as CEO of Sun for over 40 years, and I could not be prouder of what we've accomplished. It's been an incredible journey in growing Sun from a 31 community portfolio at our initial public offering to where we are today with more than 500 communities. I'm incredibly pleased that this change is happening at a time when the company is well-positioned to build on our strong foundation and continue to create value for all of our stakeholders. I'd like to close by expressing my sincere appreciation to the entire Sun team.

The board and I are confident that his leadership vision and deep understanding of the real estate industry will build on the foundation we created and guide Son through its next phase of growth and value creation.

I will be stepping into the role of non-executive Chairman of the Board.

This provides for a smooth transition that allows me to continue supporting the company and our exceptional team.

It has been an honor and privilege to serve a CEO's son for over 40 years, and I could not be prouder of what we've accomplished.

It's been an incredible journey growing from a 31-community portfolio at our initial public offering.

To where we are today with more than 500 communities.

I'm incredibly pleased that this change is happening at a time when the company is well positioned to build on our strong foundation.

And continue to create value for all of our stakeholders.

Gary Shiffman: Their hard work and dedication made these results possible and continue to reinforce Sun's strong position in the market. With that, I'll turn the call over to John and Fernando to walk through the quarter's results and our updated guidance in more detail. John?

I'd like to close by expressing my sincere appreciation to the entire Sun team.

Their hard work and dedication made these results possible and continue to reinforce a strong position in the market.

John Mclaren: Thank you, Gary. We could not be more excited and proud of what our team delivered this quarter. We are executing to plan as we hold ourselves accountable with transparent performance rankings, and the results are clear. We are growing top-line, managing operating expenses efficiently, and delivering consistent, high-quality results across the organization. In our North American Same Property portfolio, we reported 4.9% NOI growth for the quarter, demonstrated a disciplined balance between revenue growth and a focus on expense management, driven primarily by our manufactured housing segment, which had an outstanding quarter. Same Property Manufactured Housing NOI increased 7.7%, and our Same Property MH occupancy was up 60 basis points from the prior year to 97.6%, reinforcing the ongoing demand to live in a Sun community. As it relates to RV, we remain within our 2025 guidance range.

With that, I'll turn the call over to John and Fernando to walk through the quarter's results and our updated guidance in more detail. John?

Thank you, Gary. We could not be more excited and proud of what our team delivered this quarter.

We are executing the plan. As we hold ourselves accountable with transparent performance rankings, the results are clear.

We are growing top line, managing operating expenses efficiently, and delivering consistent, high-quality results across the organization.

In our North American same-property portfolio, we reported 4.9% NOI growth for the quarter, demonstrating a disciplined balance between revenue growth and a focus on expense management. This was driven primarily by our manufactured housing segment, which had an outstanding quarter.

Same property: manufactured housing NOI increased 7.7%, and our same property MH occupancy was up 60 basis points from the prior year to 97.6%, reinforcing the ongoing demand to live in a Sun community.

John Mclaren: For the second quarter, Same Property RV NOI declined 1.1%, driven by a 0.9% revenue increase, off by a 3.1% expense increase. Importantly, we've been able to mitigate some of the transient softness through growth in annual RV and by continuing to flex expenses. In the UK, we are seeing strong results. Same Property NOI in our UK portfolio increased 10.2% for the quarter, with revenue up 9.5%, driven by strong demand across our communities as well as higher transient revenue. Expenses were up 8.8% as a result of the budgeted national minimum wage increase, but that was partially mitigated by cost savings initiatives. Park Holidays' team continues to perform at a very high level. They have done a tremendous job shifting the revenue mix from home sales to recurring real property income, strengthening the long-term profile of our UK business.

As it relates to RV, we remain within our 2025 guidance range. For the second quarter, same property RV and AI declined by 1.1%, driven by a 0.9% revenue increase, offset by a 3.1% expense increase.

Importantly, we've been able to mitigate some of the transient softness through growth and annual RV by continuing to flex expenses.

Increased 10.2% for the quarter, with revenue up 9.5%, driven by strong demand across our communities, as well as higher transient revenue.

Expenses were up 8.8% as a result of the budgeted national minimum wage increase, but that was partially mitigated by cost-savings initiatives.

Our quality team continues to perform at a very high level.

They have done a tremendous job, shifting the revenue mix from home sales to recurring real property income.

John Mclaren: The unmatched quality of our UK portfolio and operating team allow Park Holidays to command its outsized market share and underlie our confidence and continued momentum. As we look at 2025, I truly believe we are performing as well as we ever have as a team in achieving some of the best organic growth I have seen in my long career here at Sun, with a focus on driving top-line growth while maintaining expense efficiently. Most importantly, we have the results to prove it. I want to sincerely thank all of our team members for their tireless effort, hard work, and dedication. These operating results do not happen by accident. They occur through the disciplined execution by team members who care about delivering for our residents, guests, and shareholders. I will turn the call over to Fernando to walk through our financial results and updated 2025 guidance in more detail.

Strengthening the long-term profile of our UK business.

The unmatched quality of our UK portfolio and operating team allowed Park Holidays to command its outside market share and underlies our confidence and continued momentum.

As we look at 2025, I truly believe we are performing as well as we ever have as a team and achieving some of the best organic growth I have seen in my long career here at Sun, with a focus on driving topline growth while maintaining expense discipline.

Most importantly, we have the results to prove it.

I want to sincerely thank all of our team members for their tireless effort, hard work, and dedication. These operating results do not happen by accident.

They occur through the disciplined execution by team members who care about delivery for our residents, guests, and shareholders.

John Mclaren: Fernando?

Aaron Weiss: Thank you, John. For the second quarter, Sun reported core FFO per share of $1.76, exceeding the high end of our guidance range. This strong result was primarily driven by the outperformance in our manufactured housing and UK segment, supported by continued rent growth and stable occupancy. As previously mentioned, we closed on the sale of Safe Harbor Marinas on April 30th, meaningfully simplifying our platform and creating significant financial flexibility for Sun. Following the initial $5.25 billion Safe Harbor closing, we subsequently closed on six delayed consent subsidiaries, totaling approximately $137 million. The cash proceeds from those sales have been deployed to support a combination of debt reduction, including $3.3 billion of debt that has been repaid, shareholder distributions, and reinvestment into our core portfolio. Turning to our balance sheet.

I will turn the call over to Fernando to walk through our financial results, updated 2025 guidance, and more detail. Fernando.

Thank you, John.

For the second quarter, Sun Communities Inc. reported core FFO per share of $1.76, exceeding the high end of our guidance range.

This strong result was primarily driven by the outperformance in our manufactured housing and UK segments.

Supported by continued rent growth and stable occupancy.

As previously mentioned, we closed on the sale of Safe Harbor Marinas on April 30, meaningfully simplifying our platform and creating significant financial flexibility for us.

Following the initial 5.

And a quarter billion dollars. Safe Harbor closing, we subsequently closed on six subsidiaries totaling approximately $137 million.

The cash proceeds from those sales have been deployed to support a combination of debt reduction, including $3.3 billion of debt that has been repaid, shareholder distributions, and reinvestment into our core portfolio.

Aaron Weiss: As of June 30th, Sun's total debt balance stood at $4.3 billion, with a weighted average interest rate of 3.4% and a weighted average maturity of 7.6 years. Our net debt to trailing 12-month recurring EBITDA ratio was 2.9 times at quarter end. Importantly, we have zero floating rate debt outstanding. In addition to our debt reduction, we deployed capital through share repurchases under our $1 billion authorized stock buyback program. During and subsequent to quarter end, we repurchased approximately 2.4 million shares for a total of $300 million. We believe this opportunistic repurchasing enhances long-term shareholder value while maintaining balance sheet strength. We also returned capital to shareholders through a one-time cash distribution of $4 per share during the second quarter, equating to $521 million in total shareholder distributions. With respect to 1031 proceeds from a Safe Harbor transaction, we initially allocated nearly $1 billion into 1031 exchange accounts.

Turning to our balance sheet, as of June 30th, Sun's total debt balance stood at $4.3 billion, with a weighted average interest rate of 3.4% and a weighted average maturity of 7.6 years. Our net debt to trailing 12-month recurring EBITDA ratio was 2.9 times. Importantly, at quarter end, we have zero floating rate debt outstanding.

In addition to our debt reduction, we deployed capital through share repurchases under our $1 billion authorized stock buyback program.

During and subsequent to quarter-end, we repurchased approximately 2.4 million shares for a total of $300 million.

We believe this opportunistic repurchasing enhances long-term shareholder value while maintaining balance sheet strength.

We also return capital to shareholders through a one-time cash distribution of $4 per share during the second quarter, equating to $521 million in total shareholder distributions.

Aaron Weiss: As of today, we have identified potential acquisitions totaling approximately $565 million, which allowed us to release $431 million into unrestricted cash accounts in mid-June. We are pleased to have received two credit rating upgrades this quarter. S&P Global raised Sun's rating to BBB+ from BBB, and Moody's upgraded us to BA2 from BA3. Both agencies cite our deleveraging progress, balance sheet strength, and focus on core operations as key drivers for the upgrades. During the quarter, we acquired the titles to 22 properties in the UK that were previously controlled via ground leases for approximately $199 million, inclusive of taxes and fees. This transaction creates financial and strategic flexibility, eliminates material lease obligations, and is expected to be accretive to core FFO on an annual basis.

With respect to 1031 proceeds from a safe harbor transaction, we initially allocated nearly $1 billion into 1031 exchange accounts. As of today, we have identified potential acquisitions totaling approximately $565 billion, which allowed us to release $431 million into unrestricted cash accounts in mid-June.

We are pleased to have received two credit rating upgrades this quarter. S&P Global raised our rating to Triple B plus from Triple B, and Moody's upgraded us to Ba2 from Baa3.

Both agencies cite our deleveraging progress, balance sheet strength, and focus on core operations as key drivers for the upgrades.

During the quarter, we acquired the titles to 22 properties in the UK that were previously controlled via ground leases for approximately $199 million, inclusive of taxes and fees.

Aaron Weiss: Turning to our full-year 2025 guidance, we are raising our FFO per share range to $6.51 to $6.67, a 6 cent or just over 90 basis point increase at the midpoint, reflecting our second quarter outperformance. We have increased North American Same Property NOI growth guidance to 4.7% at the midpoint, an increase of 40 basis points. Manufactured Housing Same Property NOI is now expected to grow 7.5% at the midpoint, reflecting continued strong performance. RV Same Property guidance is being maintained at down 1.5% at the midpoint, as our outlook for the remainder of the year is consistent with expectations set during our first quarter earnings call in May. UK Same Property NOI guidance has been raised to 2.3% at the midpoint, a 40 basis point increase, driven by strong second quarter results.

This transaction creates financial and strategic flexibility, eliminates material lease obligations, and is expected to be accretive to core operations on an annual basis.

Learning to our full year 2025 guidance, we are raising our FFO per share range to $6.51 to $6.67.

Submit point reflecting our second quarter outperformance.

We have increased North American same-property NOI growth guidance to 4.7% at the midpoint, an increase of 40 basis points.

Manufactured housing. Same property on OI is now expected to grow 7.5% at the midpoint, reflecting continued strong performance.

RV. Same property, guidance as being maintained at down 1 and a half percent at the midpoint as our outlook for the remainder of the year is consistent with expectations set through our during. Our first quarter earnings, call in May

UK, same property. NOI guidance has been raised to 2.3% at the midpoint, a 40 basis point increase driven by strong second quarter results.

Aaron Weiss: We have also updated guidance to reflect changes in interest income and interest expense from the debt paydown, stock buybacks, and the purchase of the 22 UK properties previously subject to ground leases. For additional details regarding our full-year guidance, please see our supplemental disclosures. As a reminder, our guidance includes acquisitions, dispositions, and capital markets activity through July 30th and the effect of the completion of the sale of the remaining Safe Harbor delayed consent subsidiaries, but it does not include the impact of additional prospective acquisitions, dispositions, or capital markets activities, which may be included in research analyst estimates. I would now like to turn the call back to Gary for closing remarks.

We have also updated guidance to reflect changes in interest income and interest expense from the debt pay down, stock buybacks, and the purchase of the 22 UK properties previously subject to ground leases.

For additional details regarding our full year guidance, please see our supplemental disclosures. As a reminder, our guidance includes acquisitions, dispositions, and capital markets activity through July 30th, and the effect of the completion of the sale of the remaining Safe Harbor delayed consent subsidiaries. However, it does not include the impact of additional prospective acquisitions, dispositions, or capital markets activities, which may be included in research analyst estimates. I would now like to turn the call back to Gary for closing remarks.

Gary Shiffman: Well, as I conclude my final earnings call as CEO after four decades with this remarkable company, I want to express my deepest gratitude to the extraordinary people who have made this journey possible. To our dedicated team members, past and present, your tireless efforts and unwavering commitment to our residents, guests, and one another have contributed to a company and a culture that we can all be truly proud of. To our valued shareholders and all of our stakeholders, thank you for your trust, patience, and belief in our vision throughout the years. Your support has enabled us to invest in people and properties, weather difficult periods, and emerge stronger. I'm filled with immense pride in what we've accomplished together and maintain tremendous optimism for the future. While my role is evolving, my commitment to this company and all of you remains.

Well, as I conclude, my final earnings call as CEO after four decades with this remarkable company.

I want to express my deepest gratitude to the extraordinary people who have made this journey possible.

To our dedicated team members, past and present, your tireless efforts and unwavering commitment to our residents, guests, and one another have contributed to a company and a culture that we can all be truly proud of.

To our valued shareholders and all of our stakeholders, thank you for your trust, patience, and belief in our vision throughout the years.

Your support has enabled us to invest in people and properties during difficult periods and emerge stronger.

And filled with immense pride in what we've accomplished together, I maintain tremendous optimism for the future.

Gary Shiffman: Thank you for allowing me the privilege of leading this incredible organization. We have an exceptional team, a strong foundation, and a bright future ahead. I look forward to supporting Charles and all of you as we continue to build on Sun's legacy together. Operator, we can now turn it over for questions and answers.

While my role is evolving, my commitment to this company and all of you remains.

Thank you for allowing me the privilege of leading this incredible organization.

We have an exceptional team, a strong foundation, and a bright future ahead.

I look forward to supporting Charles and all of you as we continue to build on Sun's legacy together.

Operator, we can now turn it over for questions and answers.

Operator: Thank you. We'll now be conducting a Q&A session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Steve Sacqua with Evercore ISI. Please proceed.

Thank you. You'll now be conducting a Q&A session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

1 moment, please, while we pull for questions.

Steve Sakwa: Yes, thanks. Good afternoon and congrats, Gary, as you transition into the new role. My first question, I guess I wanted to talk a little bit about what Fernando talked about, which is, I guess, the releasing of some of the funds into kind of unrestricted cash and just kind of your expectations about 1031 acquisition volume. And are there any kind of tax issues or tax considerations for basically not doing 1031s? And you know, are there other special dividends that may need to be made because of that?

Thank you. Our first question comes from the line of Steve Saka with Evercore. Isi, please proceed.

Uh, yes, thanks. Good afternoon and, uh, congrats, Gary, as you, uh, transition into the new role.

Um,

Uh, my first question, I guess I wanted to, uh, talk a little bit about what Fernando talked about, which is, um, I guess the releasing of some of the funds into kind of unrestricted cash and just kind of your expectations about acquisition volume and, and are there any kind of tax issues or tax considerations for 10:31?

Recently, not doing 1031s, and you know, are there other special dividends that may need to be made because of that?

Aaron Weiss: I'd say to answer the first question, the last question first, no expected adverse tax impact from releasing funds out of the 1031. But we initially allocated about a billion dollars in potential 1031 transactions, recognizing that fully deploying that amount was unlikely. We've identified approximately $565 million of potential acquisitions, which allowed us to release the $431 million into unrestricted cash. Under 1031 guidelines, we'll need to close on any identified assets by the end of October. And while we continue pursuing opportunities, we are under no obligation to complete transactions that don't align with our strategy. We're also actively evaluating other strategies to maximize the value of these proceeds as we continue to assess both tax and strategic considerations for the remainder of the year.

I see, to answer the first question, the last question first. No, uh, no expected, um, adverse tax uh,

Tax impact from releasing funds out of 1031, but we initially allocated about $1 billion for...

Under 1031 guidelines, we will need to close on any identified assets by the end of October. While we continue pursuing opportunities, we are under no obligation to complete transactions that don't align with our strategy.

We're also actively evaluating other strategies to maximize the value of these proceeds as we continue to assess both tax and strategic considerations for the remainder of the year.

Steve Sakwa: Okay, thanks. And then maybe a question for John. I guess, you know, the transient RV business seemed to be, you know, better or less bad than I think we had expected. So maybe just talk about some of the trends that you're seeing on that transient RV business and maybe some of the steps you've taken to kind of enhance the business or, you know, keep it from going down more than, you know, maybe people expected.

Gary Shiffman: Sure. Hey, Steve, great question. You know, I think I want to start with saying that, you know, when we look at our business, we look at the entire business and our focus is on bottom line results. I mean, overall, we beat Q1. We just beat and raised Q2. So I'm thrilled, okay, with how we're performing. But specific to transient RV, as you know, we took a proactive approach in revising guidance after Q1. You know, reflecting on the current environment, those trends remain in line, just like we shared. And as you know, a large component of our transient revenue headwinds actually is created by our success in converting transient sites and annual sites. And despite, you know, near-term volatility we face, our transient RV business generates solid revenue and margins that continue to play a vital role by creating, you know, pipelines for more annual conversions.

Okay, thanks. And then maybe a question for for John. Um, I guess, you know, the transient RV business seemed to be, uh, you know, better or less bad than I, I think we had expected. So, maybe just talk about some of the trends that you're seeing on that transient RV business and and maybe some of the steps you've taken to kind of enhance the business or, or, uh, you know, keep it from from going down, more than, uh, you know, maybe people expected.

Sure. Hey, Steve. Uh, great question. You know, I think I want to start with saying that.

You know, when we look at our business, we consider the entire business, and our focus is on bottom-line results. I mean, overall, we beat Q1, and we just beat and raised Q2. So I'm thrilled, okay, with how we're performing, but specifically transitioning RV.

You know, we took a proactive approach in revising guidance after Q1, reflecting on the current environment. Those trends remain in line, just like we shared. And as you know, a large component of our transient revenue headwinds was actually created by our success in converting transient sites into annual sites.

Gary Shiffman: And so the ways that we're addressing these things head-on is, like we've shared, with continuing to flex operating expenses within RV and continuing to build upon, as we have, adding more annual RV sites to the mix that we have in our portfolio. And so, you know, we do things here and there in various parts of the portfolio where we see an opportunity to be, you know, laser-focused on a specific opportunity for a conversion or things that we can do to enhance, you know, revenue, you know, and obviously the flex on expenses. But it's pretty surgical the way that we look at it.

Despite, you know, near-term volatility, we faced our transient RV business generating solid revenue and markets. It continues to play a vital role by creating, you know, a pipeline for more annual conversions. And so, the ways that we're addressing these things head-on is, like we've shared, we continue to flex operating expenses within RV and continue to build upon, as we are adding more annual RV sites to the mix that we have in our portfolio. And so, you know, we do things here and there in various parts of the portfolio where we see an opportunity to be, you know, laser-focused on a specific opportunity for conversion or things that we can do to enhance, you know, revenue. Um, you know, and obviously the flex on expenses. But it's pretty surgical the way that we look at it.

Operator: Thank you. Our next question comes from the line of Janet Gallen with Bank of America. Please proceed.

Thank you. Our next question comes from the line of Janet Gallon with Bank of America. Please proceed.

Jana Galan: Thank you. And congratulations on a great quarter and congratulations to Gary. Just following up on that, I was curious if you could talk a little bit and explain how the renewals for the annual memberships work and are they kind of spread out through the year or do they hit in a particular quarter?

Thank you, and congratulations on a great quarter. Congratulations to Gary. Um, just following up on that, I was curious if you could talk a little bit and explain how the renewals for the annual memberships work. Are they kind of spread out through the year, or do they hit in a particular quarter?

Gary Shiffman: Hi, Yana. John, good question. Appreciate it. It's, you know, there are some periods of the year, like in the early part of the year, where we had more of our annual renewals in Florida and in Arizona and places like that that we've talked about earlier this year. But then it's pretty pro rata as the year goes on as we step into like the summer annual season that we have up north.

Hi Jana. It's John. Good question; I appreciate it. Um, it's, you know, there are some periods of the year, like the early part of the year, where we had more of our annual renewals.

In Florida and Arizona, and places like that that we've talked about earlier this year, but then it's pretty crowded as the year goes on as we step into, like, the summer annual season that we have up north.

Jana Galan: Thank you. And then on the MH occupancy gains, just curious if you could talk a little bit about the outlook for the second half of the year for MH home sales. And it looks like rental homes picked up a little bit, but just curious how you're thinking about those two components.

Thank you. And then, um, the MH occupancy gains. Um, just curious if you could talk a little bit about the outlook for the second half of the year for MH home sales. It looks like rental homes picked up a little bit, but uh, just curious how you're thinking about those two components.

Gary Shiffman: Yeah, I think on the US home sales side, I mean, one thing John and I would tell you is that, you know, we're really focused more than anything on real property income and home sales expectations that we have, not just for the back half of the year, but what we've seen in the first half of the year are really a product of, you know, running at close to 98% occupancy and having a very low resident turnover, which obviously leads to stability of long-term cash flows and the rent. And, you know, so I think what you would see in the back half of the year is something similar to what we've experienced in the first half.

Yeah, I think on the U.S. home sales side, I mean, one of the things, John, I would tell you is that.

You know, we're really focused more on anything on real property income and home sales, expectations. That we have not just for the back half of the year. But what we've seen in the first half of the year are really a product of, you know, running a close to 98% occupancy and having very low resident turnover, which obviously leads to stability of long-term cash flows in the rent. And uh,

You know, I think that what you would see in the back half of the year is something similar to what we've experienced in the first half.

Operator: Thank you. Our next question comes from the line of Eric Wolf with Citibank. Please proceed.

Thank you.

Our next question comes from the line of Eric Wolf with City Bank. Please proceed.

Michael Goldsmith: Hey, thanks. For the UK ground lease purchases, can you just talk us through the economics on that and what you meant by increasing your strategic flexibility?

Hey, thanks. Um, for the UK ground lease purchases, can you just talk us through the economics on that and what you meant by increasing your strategic flexibility?

Aaron Weiss: Sure. Hey, Eric. So the transaction creates flexibility across the portfolio in the UK by converting leasehold interests into freehold ownership. We gain full control and eliminate future rent escalations, which improves long-term economics for these properties and for the portfolio overall. The ground lease repurchases, which totaled nearly $200 million, blend to about a four and a quarter yield going in.

which totaled nearly $200 million, blending to about a 4.25 yield, uh, going in.

Michael Goldsmith: Got it. So four and a quarter yield. So it's accretive relative to call it the 3.75% on cash. Is that what you mean by accretive?

Okay, so 4 and a quarter. Yep. So it's a creative relative to call it the 3.75% on cash. Is that what you mean by creative?

Aaron Weiss: Yes.

Yes.

Michael Goldsmith: And then the second question, maybe I missed this in your, you know, the answer to Steve's question, but you know, there was a really big turnaround in the transient. I guess I'm trying to understand how much of it is like execution on the operating side, things that have you actively changed to either better market it or operate it versus, you know, is it better weather or just market conditions? Because it went from like negative 20% to negative negative 6. It feels like a pretty big change in growth. So trying to understand how sustainable that improvement is and sort of what you've started, like how you're trying to even third quarter thus far.

And then, second question. Maybe I missed this and, um...

your um you know the answer to the the Steve's question but you know there was a really big turnaround in the transient um I guess I'm trying to understand how much of it is

Execution, on the operating side, things that if you've actively changed to either better market it or operate it versus, you know, it's a better weather or just market conditions, because it went from like negative 20% to negative 6%. It feels like a pretty big change in growth. So trying to understand how sustainable that improvement is can sort of what you've started, like, how you're trending in Q3 thus far.

Aaron Weiss: Eric, the the first quarter decline in revenue of just over 20% is really due to seasonality and the transient sites that are open during and active during that period of time. We forecasted and budgeted a quarter-over-quarter improvement because the majority of our transient-focused assets are open during the summer months, and that's why you're seeing that that improvement. I'll remind everyone, over the course of the full year, we are projecting at the midpoint of our RV guidance a decline of just over 9% for transient RV revenue.

Eric the the first quarter decline in revenue of just over 20% is really due to seasonality and the transient sites that are open during and active during that period of time we uh forecasted and budgeted a a quarter over quarter Improvement because the majority of our transient focused assets are open during the summer months and that's why you're seeing uh that uh that Improvement.

I'll remind everyone over the course of the full year. Uh, we are projecting at the midpoint of, uh, of our our RV guidance. A decline of just over 9% for transient, uh, RV Revenue.

Operator: Thank you. Our next question comes from the line of Michael Goldsmith with UBS. Please proceed.

Thank you. Our next question comes from the line of Michael Goldsmith with UBS. Please proceed.

Michael Goldsmith: Good afternoon. Thanks a lot for taking my question. Can we get an update on the restructuring process from the perspective of the expense savings? John, I know you've been all over this, but can we get an update on the progress that was made in the last quarter and where are the future opportunities from this? Thank you.

Good afternoon. Thanks a lot for taking my question. Uh, can we get an update on the restructuring process, from from the perspective of the expense savings John I know you've been all over this. Um, but can can we get an update on on the progress that was made in the last quarter and then where are the future opportunities from this? Thank you.

Gary Shiffman: Sure, Michael. Great question. So I'm going to start again by saying that we are really focused on the entire business. You know, balance between expense discipline and top-line growth, which I've been saying since I returned, is leading to the bottom-line results that we're enjoying today. And you know, overall, beating guidance Q1 was great for the team, beating and raising Q2. So we're thrilled. Okay. And I expect it to continue. Specific to the plan that we talked about walking into the year, you know, within the first half, we've expanded that savings, I would say, beyond 17 million, which much of which lies in payroll utilities as well as, you know, meaningful standardization and expansion and adoption of the procurement platform that I've talked about before, which encompasses many different supplier and other expenses related to property operations.

Sure, Michael, a great question. So...

I'm going to start again by saying that we are really focused on the entire business.

You know, a balance between expense discipline and topline growth, which I've been saying since I returned, is leading to the bottom-line results that we're enjoying today.

And you know, overall beating guidance for Q1 was great for the team. Beat and raise for Q2, so we're thrilled. Okay? And I expect it to continue specific to the plan that we talked about walking into the year.

Gary Shiffman: So we're doing, you know, exactly what we said we'd be doing on expenses, and we'll continue that work, growing additional savings in the second half of 2025. You know, just to give you a little bit of an example, you know, we had one particular large supplier that we're working with where, you know, we went underwent in the second quarter an extensive product standardization project, renegotiated unit pricing for those products, applied an overall discount to those products, and as well as will benefit later from additional annual rebate for those products. So it's the work has been extensive, but I can't emphasize enough, you know, the the amount of focus and effort that's being placed on the top line as well, okay, which is what's growing the company.

Um, you know, within the first half we've expanded that savings, I would say Beyond 17 million which much of which lies in payroll utilities as well as you know, meaningful standardization and expansion. Adoption of the procurement platform that I've talked about before which encompasses many different supply and repair and other expenses related to property operations. So we're doing, you know exactly what we said. We'd be doing on expenses and we'll continue that work growing additional savings in the second half of 2025 you know. Just to give you a little bit of an example. You know, we had 1 particular, large supplier that we're working with where, you know, we went underwent in the second quarter and extensive product standardization project, renegotiate unit pricing for those products, um, applied and overall discount to those products and as well as will benefit later from additional annual rebate for those products. So it's the work has been extensive, but I I can't emphasize enough, you know the the the amount of focus and effort.

Gary Shiffman: And so we will stay very focused on all of it, and particularly, you know, MH performance through retention, occupancy gains, rate gains, revenue growth, and all the things that I've talked about before with our collections, which has led to bad debt savings. There's just a laundry list of things that I'm really proud of that the team's accomplishing this year.

Effort that's being placed on the top line as well, okay? Which is what's growing the company. And so we will stay very focused on all of it, and particularly, you know, MH performance through retention, occupancy, gains rate, gains revenue growth, and all the things that I've talked about before. With our collections, it's just led to bad debt savings. It's just the laundry list of...

Things that I'm really proud of that the team's accomplishing this year.

Steve Sakwa: Thank you very much. Good luck in the back half, and congratulations, Gary, on a legendary run.

Gary Shiffman: Thank you, Michael.

Thank you very much. Good luck in the back half, and congratulations, Gary, on a legendary run.

Thank you, Michael.

Operator: Thank you. Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed.

Thank you. Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed.

Aaron Weiss: Thank you, and congrats, Gary, on your tenure and ending on a high note. I wanted to ask a follow-up to Yana's question on the MH occupancy. It looks like rental homes is now 12% of total MH sites, and I was wondering if you're embracing the rental home business more.

Thank you, and congrats, Gary, on your tenure and ending on a high note.

John Mclaren: Hey, John. This is John, and thanks for the question. The answer to that is yes. Okay, so those are all future homeowners in our community.

Hey John, uh, this is John, and thanks for the question. Um, the answer to that is yes.

Okay, because those are all future homeowners in our community.

Aaron Weiss: So how far, how much higher do you think that could go, and how much was that a contributor to your occupancy growth this quarter?

How far, how much higher do you conduct a go? And how much was that a contributor to your occupancy growth this quarter?

John Mclaren: I think it's going to be, you know, the sort of thing that will ebb and flow like it has over the course of my career. I mean, we've had times where we've been, you know, up in the 16% range. We've had times where we've been in the 9% range. Okay, so we're going to utilize it in the best strategic way possible to maximize growth within the portfolio.

Yeah, I think it's going to be, you know, the sort of thing that will ebb and flow, like it has over the course of my career. I mean, we've had times where we've been, you know, up in the 16% range, and we've had times where we've been in the 9% range, okay? So we're going to utilize it in the best strategic way possible to maximize growth within the portfolio.

Operator: Thank you. Our next question comes from the line of Brad Hefner with RBC Capital Markets. Please proceed.

Aaron Weiss: Yeah. Hi everyone. Thanks. Equity Lifestyles talked about some increased turnover and vacancy in their annual RV business. Is that something that you've seen as well?

Thank you. Our next question comes from the line of Brad Hefner with RBC Capital Markets. Please proceed.

Yeah, hi everyone. Thanks. Um, Equity Lifestyle talked about some increased turnover and vacancy in their annual RV business. Is that something that you've seen as well?

John Mclaren: No, we grew ours in the quarter.

No, we grew ours in the quarter.

Aaron Weiss: Okay. Easy enough. And then on the Canadian customers, have you seen an impact? I know sometimes they can be more concentrated in the winter months, but I assume you have some cross-border travelers during the summer as well.

John Mclaren: Yeah, good question, Brad. You know, yes, we talked about earlier in the year with some of the impact in Florida. We did see, and I think I've shared on various conferences and that sort of thing where, you know, we saw some impact in Maine, places like that that were closer to Canada in the summer months. And that's, frankly, some of the work that the team has been doing to try and fill those vacancies with domestic customers, which has led to us, you know, being well within what we put out there in terms of guidance for transient RV.

Okay, easy enough. Um, and then on the Canadian customers, have you seen an impact? I know sometimes they can be more concentrated in the winter months, but I assume you have some cross-border travelers during the summer as well.

Yeah, good question, Brad. Um, you know, yes we talked about earlier in the year with some of the impact of Florida and we did see, and I think I've shared on various conferences and, and that sort of thing where, you know, we saw some some, um, impact in Maine places like that, that were closer to Canada summer once. And that's frankly some of the work that the team has been doing to try and fill those vacancies with uh, domestic customers, which has led to us, you know, being well, within what we put out there in terms of guidance, for transiting our business

Operator: Thank you. Our next question comes from the line of Jamie Feldman with Wells Fargo. Please proceed.

Thank you.

Question.

On the line of Jamie Feldman with Wells Fargo, please proceed.

Steve Sakwa: Great. Thanks for taking my question. Congratulations on all the progress on restructuring the company and management changes. I guess on that topic, can you talk more about the decision to hire Charles Young? Obviously, you had an extensive search, lots of candidates. You know, what is it about Charles that you think is a good fit? And then how should we think about how he fits into the role in terms of, you know, what everyone else will be doing as he gets here, what he brings to the table, and maybe also delineate just, Gary, what you think your role will be and everyone else on the team's role with such firepower coming in?

Great. Uh, thanks for taking my question. Uh, congratulations on all the progress on restructuring the company.

Management changes. On that topic, can you talk more about the decision to have Harold hire Charles Young?

Gary Shiffman: Sure. I'll start it out and then open it up to anyone else. But we were really excited to announce the appointment of Charles Young as Sun's next CEO. His effective starting date will be October 1st. The board reviewed a very wide list of candidates and, as indicated, ran a very thorough process. So this was a very important decision for this company, and we feel very comfortable with where it landed and are very happy to welcome Charles aboard. I think that in Charles, what we saw is over 25 years of leadership experience specific to real estate operations, development, and investment management.

Uh, obviously you had an extensive search. Lots of candidates, you know. What is it about Charles that you think is a good fit? And then how should we think about how he fits into the role in terms of, you know, what everyone else will be doing? As he gets here, what he brings to the table and, um, maybe also delineate just Gary what you think your role will be and everyone else on the team's role with such firepower coming in.

Sure, I'll start it out and then open up. Uh,

Um, anyone else? But, uh, we were really excited to announce the appointment of Charles Young as Sun's next CEO. His effective starting date will be October 1st.

um,

The board reviewed a very wide list of candidates and has indicated it ran a very thorough process.

So, uh, this was a very important decision for this company, and we feel very comfortable with where it landed.

And very happy to welcome Charles aboard.

I think that, um, in Charles, what we saw is over 25 years of leadership experience.

Gary Shiffman: And his track record, including in the residential read asset class where he's lining up his current role as president at Invitation Homes, we felt it made him really uniquely suited and qualified to come over and lead Sun through what we view as its next phase of growth. In sharing all the strategic progress that we made and positioning the company to be pure image RV moving forward, I think it's a great opportunity for Charles to bring in his experience and continue to grow the company out into the future. My anticipated role is to support Charles' success.

Specific to real estate, operations development, and investment management.

And his track record, including the residential real asset class where he's lining up his current role as President at Invitation Homes, made him uniquely suited and qualified to come over and lead Sun through what we view as its next phase of growth.

In sharing all the strategic progress that we made and positioning the company to be a pure image RV moving forward, I think it's a great opportunity for Charles to bring in his experience.

Gary Shiffman: I think that Charles in his interview with the succession committee, the board, and eventually time that I and others have had with him indicated an excitement to be able to have access to myself based on the 40 years of experience in the industry in both building the company, but in understanding the manufactured housing and RV industry itself. So my goal will be to support him, and he has expressed interest, as I said, in being able to access and gain the benefit of that experience and that knowledge so he can put it to work in the way he sees fit with an existing team that's looking forward to him coming on board. And I'll stop there and, you know, see if you have anything else to add, John, about how the team's thinking about this.

Um, and uh, we will continue to grow the company out in the future. Uh, my anticipated role is to support uh, Charles's success.

I think that, um, Charles, uh, in, uh, his interview, uh, with the, um, succession committee, the board, and eventually time that I and others have had with them, um, indicated, uh, an excitement to be able to have access to myself based on the 40 years of experience in the industry. Um,

Um, my goal will be to support him, and he has expressed interest, as I said, in being able to access.

And, uh, um, gain, uh, the benefit of that experience and that knowledge so he can put it to work in the way he sees fit with an existing team that's looking forward to him coming on board.

And, uh, I'll stop there and

John Mclaren: Yeah, I think one of the things that truly makes Sun a great company is the diversity of experience our team members bring to the table. And in that vein, I think to have someone as accomplished as Charles join our team with his extensive SFR and beyond background serves to enhance what we do both strategically and tactically. I've experienced that myself. I haven't left Sun for a short while in '05, went to multifamily, and I was able to bring back, you know, some invaluable skills and most certainly play a role in our success after I'd returned. So I'm very excited about bringing that, you know, another side to real estate into our strategy here at Sun.

You know, uh, see if you have anything else to add on about how the team's thinking about things.

Yeah, I think one of the things that truly makes Sun Communities a great company is the diverse experience our team members bring to the table. In that vein,

I think they're having someone as accomplished as Charles join our team with this extensive SFR and beyond background.

To enhance what we do, both strategically and tactically.

I've experienced that myself, and I haven't left my son for a short while. In '05, with the multi-family, I was able to bring back.

You know some invaluable skills and most certainly play a role in our success after I had returned. So I'm very excited about bringing that, you know, another side to real estate into our strategy here at Sun.

Aaron Weiss: Okay. Thank you for the color. And good luck with it.

Okay, thank you for the color.

good luck with

Gary Shiffman: Thank you.

Operator: Thank you. Our next question comes from the line of Jason Wayne with Barclays. Please proceed.

Thank you.

Thank you.

Our next question, Council, on the line of Jason Wayne with Barkley's, please proceed.

Aaron Weiss: Hi. Thanks for the question. Just on the impairment charges recorded in the quarter, could you walk through the change in strategic plan for the North America properties and were the UK development write-downs related to the ground leases at all? Thank you for the question. The write-downs in the UK were not related to the ground lease acquisitions. We actually recorded a gain of about $26 million related to the ground lease repurchase. But you mentioned it, strategic shift. We are not, as an organization, we are not developing new greenfield projects, not just in the UK, but in the US. And that is what is leading to the impairment charges given the strategic shift for these assets. Got it. And then, yeah, there's been some reports that some of your peers in the UK are looking to sell holiday parks.

Hi, thanks for the question. Um, just on the, uh, impairment charges recorded in the quarter. Um, could you walk through the change in strategic plan for the North America properties? And, uh, where the UK development write-down is related to the ground leases at all.

Thank you for the question. The breakdowns in the UK were not related to the ground lease Acquisitions. We actually recorded a game of uh, about 26 million related to the ground lease, uh, the ground lease repurchase. Uh, but

And you you mentioned it strategic shift. We are not as an organization. We are not uh developing new Greenfield projects uh not just in the UK but in the US and that is uh what is leading to the to the impairment charges, given the Strategic shift, um, for these assets.

Aaron Weiss: So following the ground lease transactions, is there any plan to sell UK ops?

Got it. And then, um, yeah, there have been some reports that some of your peers in the UK are looking to sell holiday parks. So, following the ground lease transactions, is there any plan to sell UK operations?

Gary Shiffman: Yeah, I think what we've shared with shareholders, stakeholders before is that we are really taking the view that during a tough market and backdrop in the UK, the best thing that we can do at this time is support what we believe is an excellent operating team headed by Jeff Sills, Chris, Richard, some of the best operators that are in the industry, and very, very focused on our strategy of increasing real property income and reducing dependence on the margin of the home sales. We've been very, very successful in accomplishing that, really pleased with how we're growing the real property income and creating value, if you will, in accomplishing that strategy. So for right now, we will continue moving forward in that direction, and any future opportunity that we look at will benefit from the value that we're creating right now.

Yeah, I think what we've shared, uh, with, uh,

Uh, shareholders and stakeholders, before is that, uh, um, we are really um,

Taking the view that, uh, during a tough,

um,

Market and backdrop in the UK. The best thing that we can do at this time is support what we believe is an excellent operating team.

headed by, uh,

Jeff sils. Chris Richard. Um, some of the best operators that are in the industry and uh, very very focused on our strategy of increasing real property income and reducing dependence on the uh margin of the home sales. We've been very, very successful in that really pleased with how we're growing the real property income and creating value if you will um in um accomplishing that strategy. So for right now we will continue uh, moving forward in that direction and any future opportunity.

Uh, that we look at will benefit from the value that we're creating right now.

Operator: Thank you. Our next question comes from the line of David Siegel with GreenStreet. Please proceed.

Thank you.

Steve Sakwa: Thank you, and congratulations, Gary, and congratulations, Charles. Can you talk about the decision to buy out the UK ground leases now versus when Park Holidays were acquired or at any point in the next century that remained on those leases?

Our next question comes from the line of David Seagull with Green Street. Please proceed.

Thank you, and congratulations, Gary, and congratulations, Charles. Can you talk about the decision to buy out the UK ground leases now versus when Park Holidays is required, or at any point in the next century that remains on those leases?

Aaron Weiss: Thank you, David. It was an opportunistic acquisition for these ground leases. We did not have to do it. But certainly, as we looked at our capital allocation strategies, this was one that created a lot of financial and strategic flexibility.

Michael Goldsmith: Great. Thank you. And as you think about.The

Operator: other potential uses of proceeds for the 400-plus million of capital that had been allocated to 1031 exchanges have now been released. What are the other potential places you could deploy that money?

Great. Thank you. And if you think about the other potential uses of proceeds for the $400 million of capital that have been allocated to 1031 exchanges, and it's now been released, what are the other potential places you could employ that money?

Fernando Castro-Caratini: Yeah. David Scary, I would suggest all the options remain available to us. I would suggest that the 1031 is just one form of many tax mitigation options that we have. We are comfortable with where we think we'll end up for the year. But outside of 1031, we continue to review a nice pipeline of high-quality manufactured housing communities. So within that, within the availability of our stock buyback program, we have optionality there. And to potentially even looking at opportunistically acquiring other of the land leases in the UK, there are a host of strategies that we're looking at. I hope we've demonstrated to our shareholders and stakeholders we've been very, very thoughtful in the use of proceeds. Our thinking through tax mitigation, and that's ongoing work we're doing, and it's work we look forward to sharing with you in the near future.

Yeah, uh, David's Carrie. I would suggest all the options, uh, remain available to us.

um,

uh, I would suggest that the 1031 is just 1 form of many tax medication options that we have, and we are comfortable with where we think we'll end up for the year. But outside of 1031, we can continue to review a nice pipeline of, uh, high quality, manufactured housing communities. Um, so, uh, um, within that within the available ability of our stock buyback program, we have optionality there and, uh, to, uh, potentially even looking at opportunistically acquiring other, uh,

Uh, of the land leases in the UK, there are, uh, hosts of strategies that we're looking at.

I hope we've demonstrated, uh, to our shareholders and stakeholders, we've been very, very thoughtful in the use of proceeds.

Our uh thinking through uh tax mitigation, and that's uh ongoing work we're doing and it's work. We look forward to sharing with you uh uh in the near future.

Operator: Thank you. Our next question comes from the line of Peter M. Roberts with Jeffries. Please proceed.

Thank you.

That comes from the line of Peter M. Roberts with Jeffrey's. Please proceed.

Operator: Yes. Thank you for the time, and thank you for taking the question. Just wondering on the 1031 acquisition opportunities you've identified, could you talk a little bit about economics and sort of your underwriting, what you're expecting in terms of going in yields for those?

Yes, thank you for the time, and thank you for taking the question. Just wondering, on the 1031 acquisition opportunities you've identified, could you talk a little bit about the economics and sort of your underwriting? What are you expecting in terms of going-in yields for those?

Fernando Castro-Caratini: Yeah. Sure, Peter. We've talked about going in yields of 4 to 5 cap rates. But the fact of the matter is for the higher quality communities that we do look at, they will fall into that lower end or tighter cap rate, if you will. But beyond that, it's first about the going in cap rate, but the yield that John and his team can generate in growth in each successive year. So we look for opportunities where there's high demand, low supply. And that's how we've really focused on things. There's been no shortage in the pipeline of opportunities. The fact of the matter is we are being very selective, and we are turning down more things than we're actually looking at. And we'll continue to do so.

Will fall into that lower end are tighter cap rate, if you will but.

Beyond that it's.

First about the going in cap rate, but the yield that John and his team can generate.

And growth.

And each successive year, so we look for opportunities, where there's high demand low supply.

And that's how we've really focused on things there's been no shortage in the pipeline.

<unk> opportunities.

The fact of the matter is we are being very selective and we are turning down more things and we're actually looking at.

And we will continue to do so and.

Fernando Castro-Caratini: And of course, balance the value to our shareholders of acquisition of manufactured housing communities as to other uses of capital.

Of course balance the value to our shareholders of acquisition of manufactured housing communities.

As to other uses of capital.

Operator: Thanks, Gary. That's helpful. And I guess in light of that, could you just talk about the share repurchase program and kind of how you view the attractiveness of that? Is it sort of, you know, there's a level at which the stock trades, and you won't do it, you know, above that? And I guess just how you think about the returns on that versus more acquisitions?

Thanks, Gary that's helpful. And then I guess in light of that can you just talk about the share repurchase program and kind of how you view the.

Attractiveness of that is it sort of you know, there's a level at which the stock trades and you won't do it.

Above that and I guess, just how you think about the returns on that versus.

Versus more acquisitions.

Gary Shiffman: Sure, Peter. The share buybacks is one tool in the toolkit for us from a capital allocation perspective, which includes strategic reinvestment into the current portfolio. It includes acquisitions, whether inside of the 1031 or outside of it, and then the share repurchases.

Sure Peter the share buybacks as one tool in the toolkit for us from a capital allocation perspective, which includes.

Our strategic reinvestment into the current portfolio. It includes acquisitions, whether inside of the $2 31 or outside of it and then there's the share repurchases.

Operator: All right. Thank you.

Alright, thank you.

Operator: Thank you. Our next question comes from the line of Adam Kramer with Morgan Stanley. Please proceed.

Thank you. Our next question comes from the line of Adam Kramer with Morgan Stanley. Please proceed.

Operator: Hey, thanks for the time here, guys. And all the best to you, Gary, going forward. So I wanted to ask, I guess sort of in similar light around capital allocation, how do you guys view sort of development and expansion opportunity here? You know, and maybe compare and contrast that to the acquisition opportunity that you just talked about in sort of the 4 to 5 cap rate range.

Hey, Thanks for the time here guys.

All the best to you Gary going forwards.

I ask I guess sort of in a similar light around capital allocation. How do you guys have you sort of development and expansion opportunity here and maybe compare and contrast that to the to the acquisition opportunity that you just talked about it in sort of a four to five cap rate range.

Gary Shiffman: Yeah. I think I'll talk about it from a, like Fernando said, there's really, there's nothing we're doing from a greenfield development perspective, nothing in the pipeline. But we are currently evaluating a handful of expansion projects that achieve the returns that we want in the US and some US communities that are highly occupied with outstretched demand, I would say, that meet creative return hurdles. You know, so that's really the extent of what we're talking about on the development side right now.

Yes, I think I'll talk about it from a like Fernando said, there's really nothing we're doing from a greenfield development perspective, nothing in the pipeline, but we are currently evaluating a handful expansion projects.

Achieve the returns that we want in the U S and some U S communities that are highly occupied with outstretched demand I would say that meet accretive return hurdles.

That's really the extent of what we're talking about on the development side right now.

Operator: Okay. No, that's helpful. And then just I think you maybe alluded to this, but are there future potential ground lease termination repurchase opportunities in the Park All Day portfolio, or is this the kind of the sole one?

Okay. That's helpful.

And then just I think you maybe alluded to this but are there future petrol ground lease.

Termination repurchase opportunities and in the park all day portfolio or is this the kind of the sole one.

Small opportunity there, but that's still available we have about just about 10 additional properties that are still subject to ground leases in the U K.

Gary Shiffman: Small opportunity there, but still available. We have about just above 10 additional properties that are still subject to ground leases in the UK.

Operator: Thank you. Our next question comes from the line of Otomoio Ogusanwa with Deutsche Bank. Please proceed.

Thank you. Our next question comes from the line of <unk> Okusanya with Deutsche Bank. Please proceed.

John Mclaren: Hi. Yes. Good afternoon, everyone. Gary, again, best of luck in the new role. I wanted to go back to Steve Stockwell's question just around, you know, the strong performance on the transient side. John, I know you kind of gave some commentary around kind of doing more on the annual side and things like that. But again, still very curious about just from a blocking and tackling perspective, you know, if you can kind of just provide some, you know, some concrete steps that you may have taken just that resulted in the in the better results, just kind of given how much of a drag transient has been for the past couple of quarters. Like, what really changed this quarter, and what did you do to change it?

Hi, Yes, good afternoon, everyone I'm, Gary again best of luck in the new role I wanted to go back to from Farquhar question just around the strong performance on the transient side.

John I know you kind of give some commentary around kind of doing more on the anvil side and things like that but again, it's still very curious about just from a blocking and tackling for scrap.

And if you can kind of just provide some you know some concrete steps that you may have taken just that resulted in us.

And the better results just kind of give it how much of a drive trials has been soft for the past couple of quarters like what what really changed this quarter and what are you going to change.

Fernando Castro-Caratini: I don't know that it's really changing as much as it's enhancing what we already do from a strategic and I'll call it tactical perspective. I mean, we are hyper-focused on things like retention. Okay? It's about having engagement with guests that come to book another stay for the season and having those conversations. It's about, you know, everybody's heard me say over and over again on the conversion side, you know, the best revenue-producing site you can gain is the one you never lose. And so when you when you function that way and you're a little bit more, you know, we'll call it defensive in terms of your occupancy, it leads to great, you know, better net results. Okay? And which is why I think that we are still seeing, even coming off of, you know, three years of record growth and conversions growth this year. Okay?

I dunno really changing as much as us enhancing what we already do from a strategic and I'll call. It tactical perspective, I mean, we are hyper focused on things like retention okay.

It's about having engagement with guests that come to book another state for the season and having those conversations just about.

Everybody has heard me say over and over again on the conversion side due to the best revenue producing site. You can gain is the one you never lose them. So when you when you function that weigh in here a little bit more.

Call. It defensive in terms of your occupancy it leads to great better net result, okay, and which is why I think that we're still seeing even coming off of.

Three years of record growth and conversions growth. This year, Okay, and so you know, but it's things like that it's the fundamentals of what we do which is spending time at the properties and really taken that data and the technology, we have better.

Fernando Castro-Caratini: And so, you know, but it's things like that. It's the fundamentals of what we do, which is spending time at the properties and really, you know, taking the data and the technology we have to better, you know, maybe that's one of the bigger changes is, in fact, the data that we have in comparison to when I was COO before, you know, it helps guide us into where we go, why we go, when we go better than we've ever had. Okay? And so we can be, you know, more laser-focused on the time that we spent at which properties over the course of the year.

Maybe that's one of the bigger changes is in fact, the data that we have in comparison when I was CFO for <unk>.

Helps guide us into where we go why do we go when we go better than we've ever had and so we can be more laser focused on the time that we spent at which properties over the course of the year.

John Mclaren: Gotcha. Thank you.

Gotcha. Thank you.

Sure.

Operator: Thank you. There are no further questions at this time. I'd like to pass the call back over to Mr. Sniffman for any closing remarks.

Thank you there are no further questions at this time I'd like to pass the call back over to Mr. Fishman for any closing remarks.

Fernando Castro-Caratini: Thank you, operator, and thank you for everyone who attended today. I couldn't be more pleased with the positioning of the company and the support of the existing team for Charles to step in and really be able to operate the incredible portfolio for future growth. Thank you, everybody.

Thank you operator, and thank you for everyone who attended today I couldnt be more pleased.

With the.

The positioning of the company and the support of the.

The existing team for Charles to step in and really.

Being able to offer.

Right.

Portfolio.

For future growth.

Thank you everybody.

Operator: Goodbye. This concludes today's teleconference. You may now disconnect your lines. Thank you for your participation.

Goodbye.

This concludes today's teleconference. You may now disconnect your lines.

Thank you for your participation.

[music].

Okay.