SOUTHFIELD, Mich., May 7 /PRNewswire-FirstCall/ -- Sun Communities, Inc. (NYSE: SUI) (the 'Company'), a real estate investment trust (REIT) that owns and operates manufactured housing communities, today reported first quarter results.
During the quarter ended March 31, 2009, total revenues increased to $65.3 million as compared to $64.8 million in the first quarter of 2008. Net income for the first quarter of 2009 was $0.9 million, or $0.05 per diluted common share, compared with a net loss of $(3.1) million, or $(0.17) per diluted common share, for the same period in 2008. FFO(1) was $16.3 million, or $0.79 per diluted share/OP Unit, in the first quarter of 2009 as compared to $11.0 million, or $0.54 per diluted share/OP Unit, in the first quarter of 2008. Included in net loss for the first quarter of 2008 is equity loss from affiliate of $4.8 million from Origen Financial, Inc. ('Origen'). FFO would have been $15.9 million, or $0.78 per diluted share/OP Unit, without this equity loss from affiliate.
For 136 communities owned throughout 2009 and 2008, total revenues increased 1.0 percent for the quarter ended March 31, 2009, and total expenses increased 2.9 percent, resulting in an increase in net operating income(2) of 0.3 percent, as compared to an increase in net operating income(2) of 1.8 percent for the same period in 2008. Same property occupancy in the manufactured housing sites was 82.2 percent at March 31, 2009, and 2008.
Manufactured housing and permanent RV revenue producing sites increased by 166 for the first quarter of 2009, compared to an increase of 22 sites during the first quarter of 2008. This represents a quarter over quarter increase of 144 sites for the three months ended March 31, 2009, when compared to the same period during 2008. The Company rented an additional 181 homes in the first quarter of 2009 bringing the total number of occupied rentals to 5,698 at March 31, 2009, as reflected in the accompanying table.
During the first quarter of 2009, the Company sold 248 new and pre-owned homes, compared to 227 during the first quarter of 2008. Rental home sales, included in total new and pre-owned home sales, totaled 168 for the three months ended March 31, 2009, compared to 136 during the same period in 2008, an increase of 24 percent.
'Business was solid in the first quarter with strong improvement in the credit profile of our residents both related to site rent, rental and financing collections. It was also a substantial positive that Michigan, Ohio, and Indiana led the recovery in net leased sites for the second consecutive quarter. With home sales also on pace for another year-on-year increase, overall performance is in line with our 2009 budget,' said Gary Shiffman, Chairman and CEO.
The Company is in the process of obtaining financing of $19.0 million which will be secured by three communities. The expected proceeds from the financing will be used to repay approximately $11.2 million of mortgage notes and the remainder will reduce balances under the Company's lines of credit.
'The financing, which we expect to close shortly, will take care of 2009 and 2010 debt maturity requirements providing us with more than a two-year window to focus on 2011 debt maturities and the renewal of our line of credit. We intend to actively pursue our liquidity plan to be in a strong position to refinance the 2011 maturity and renew the line of credit even if at lower levels,' added Shiffman.
The Company recently exercised its option to extend the due date of approximately $152 million of secured, variable rate borrowings to May 1, 2014. In connection with this extension, the lender increased the facility fee resulting in an increase of the effective interest rate on the borrowings, which could reduce 2009 FFO guidance by up to $0.07 per share. The Company does not believe that the lender had the right to increase the facility fee and has reserved all of its rights with respect to the increased fee. The Company is considering all of its available remedies to challenge the validity of the increased fee.
A conference call to discuss first quarter operating results will be held on May 7, 2009, at 11:00 A.M. EDT. To participate, call toll-free 877-407-9039. Callers outside the U.S. or Canada can access the call at 201-689-8470. A replay will be available following the call through May 21, 2009, and can be accessed by dialing 877-660-6853 from the U.S. or 201-612-7415 outside the U.S. or Canada. The account number for the replay is 3055 and the ID number is 320294. The conference call will be available live on Sun Communities website www.suncommunities.com. Replay will also be available on the website.
Sun Communities, Inc. is a real estate investment trust that currently owns and operates a portfolio of 136 communities comprising approximately 47,600 developed sites and approximately 6,100 sites suitable for development.
(1) Funds from operations ('FFO') is defined by the National Association of Real Estate Investment Trusts ('NAREIT') as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company's operating performance. Management generally considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains and losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not readily apparent from net income. Management believes that the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful.
Because FFO excludes significant economic components of net income including depreciation and amortization, FFO should be used as an adjunct to net income and not as an alternative to net income. The principal limitation of FFO is that it does not represent cash flow from operations as defined by GAAP and is a supplemental measure of performance that does not replace net income as a measure of performance or net cash provided by operating activities as a measure of liquidity.
