Sun Communities Earnings: Same-Store Net Operating Income Growth of 6.7% Better Than Anticipated

Third-quarter results for Sun Communities were better than we anticipated, giving us confidence in our $173 fair value estimate for the no-moat company. Same-store occupancy increased 20 basis points year over year to 97.0%, slightly better than our estimate of 96.8% for the third quarter. Manufactured housing same-store revenue was up 7.4%, below our estimate of 10.0% growth, but recreational vehicle same-store revenue was up 2.2%, better than our estimate of a 0.2% decline, while marina same-store revenue was up 8.4%, in line with our estimate. Combined, total company same-store revenue was up 5.5%. Meanwhile, same-store operating expenses were only up 3.0% in the quarter, leading to same-store net operating income growth of 6.7%, which was better than our estimate of 4.8% growth in the quarter. As a result, Sun Communities reported core funds from operations of $2.57 per share in the third quarter, $0.15 better than our $2.42 estimate.