Nov. 6, 2009 (PR Newswire) --
SOUTHFIELD, Mich., Nov. 6 /PRNewswire-FirstCall/ -- Sun Communities, Inc. (NYSE: SUI) (the "Company"), a real estate investment trust (REIT) that owns and operates manufactured housing communities, today reported third quarter results.
During the quarter ended September 30, 2009, total revenues increased to $63.4 million as compared to $61.3 million in the third quarter of 2008. Net loss for the third quarter of 2009 was $(2.0) million, or $(0.11) per diluted common share, compared with a net loss of $(5.5) million, or $(0.30) per diluted common share, for the same period in 2008. Funds from operations ("FFO")(1) increased to $12.5 million, or $0.60 per diluted share/OP Unit, in the third quarter of 2009 as compared to $11.3 million, or $0.55 per diluted share/OP Unit, in the third quarter of 2008.
Included in net loss for the third quarter of 2009 is equity loss from affiliate of $0.8 million from Origen Financial, Inc. ("Origen") and losses due to flood damage of $0.8 million. Included in net loss for the third quarter of 2008 is equity loss from Origen of $1.5 million. FFO(1) for the third quarter of 2009 and 2008, adjusted for these items, would have been $14.1 million, or $0.68 per diluted share/OP Unit, and $12.8 million, or $0.62 per diluted share/OP Unit, respectively. The aforementioned flood damage was sustained at one property near Atlanta, Georgia. The Company continues to work with its insurer to determine deductible amounts and covered damages.
For the nine months ended September 30, 2009, total revenues increased to $191.9 million, as compared to $188.0 million for the same period in 2008, excluding $3.3 million in revenues from gain on sales of vacant land. Net loss was $(3.4) million, or $(0.19) per diluted common share, as compared to $(16.0) million, or $(0.88) per diluted common share, for the nine months ended September 30, 2009 and 2008, respectively. FFO(1) increased to $41.3 million, or $1.99 per diluted share/OP Unit, for the nine months ended September 30, 2009, as compared to $27.1 million, or $1.32 per diluted share/OP Unit, for the same period in 2008.
Included in net loss for the nine months ended September 30, 2009 is equity loss from Origen of $1.2 million and losses due to flood damage of $0.8 million. Included in net loss for the nine months ended September 30, 2008 is equity loss from Origen of $14.1 million and severance charges of $0.9 million. FFO(1) for the nine months ended September 30, 2009 and 2008, adjusted for these items, would have been $43.3 million, or $2.08 per diluted share/OP Unit, and $42.1 million, or $2.05 per diluted share/OP Unit, respectively.
"Except for rain and reserves, we are happy with our third quarter results which allow us to affirm guidance for the year," said Gary A. Shiffman, Chairman and CEO. "Efforts to repair the flood damage at our property are occurring swiftly and we commend our staff for their quick response to help our displaced residents," said Shiffman. "While we battled rain, our affiliate, Origen, battled increasing mark to market loan loss reserves causing them to post a $4.3 million loss for the third quarter. Although reserves have increased, Origen continues to report positive cash flow results as the reserves have no impact on cash flow," Shiffman added.
For 136 communities owned throughout 2009 and 2008, total revenues increased 1.4 percent for the nine months ended September 30, 2009, and total expenses increased 3.3 percent, resulting in an increase in net operating income(2) of 0.6 percent. Same property occupancy in manufactured housing sites was 82.3 percent at September 30, 2009 compared to 82.2 percent at September 30, 2008.
For the nine months ended September 30, 2009 and 2008, manufactured housing and permanent recreational vehicle revenue producing sites increased by 243 and 88 sites, respectively, an increase of 155 sites period over period. Manufactured housing and permanent recreational vehicle revenue producing sites decreased by 46 for the third quarter of 2009, compared to a decrease of 37 sites during the third quarter of 2008. The Company rented an additional 232 homes in the first nine months of 2009 bringing the total number of occupied rentals to 5,749 at September 30, 2009.
During the third quarter of 2009, 293 new and pre-owned homes were sold, bringing the total of homes sold year to date to 811, an increase of 9.3 percent from the 742 homes sold during the first nine months of 2008. Rental home sales, included in total new and pre-owned home sales above, totaled 185 and 531 for the three and nine months ended September 30, 2009, as compared to 151 and 443 for the same periods in 2008.
"Gross margins on home sales are increasing year over year on new, pre-owned and rental home conversion sales. The increases are being seen in all areas of the country including the Midwest. While new and pre-owned sales provide for new revenue producing sites, rental home conversion sales allow us to recycle our capital by purchasing another home for use in our successful rental program," Shiffman said.
A conference call to discuss third quarter operating results will be held on November 6, 2009, at 11:00 A.M. EST. 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 November 20, 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 336106. 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 (REIT) that currently owns and operates a portfolio of 136 communities comprising approximately 47,600 developed sites.
(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. In addition, FFO is not intended as a measure of a REIT's ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO only provides investors with an additional performance measure. Other REITs may use different methods for calculating FFO and, accordingly, the Company's FFO may not be comparable to other REITs.
(2) Investors in and analysts following the real estate industry utilize net operating income ("NOI") as a supplemental performance measure. NOI is derived from revenues minus property operating expenses and real estate taxes.
