Sun Communities, Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Community's second quarter 2020 earnings conference call. At this time, management would like to inform you that certain statements made during this conference 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 and others detailed in yesterday's press release and from time to time in the company's periodic filings within the SEC. The company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of the release. Having said this, I'd like to introduce management with us today, Gary Shiffman, Chairman and Chief Executive Officer, John McLaren, President and Chief Operating Officer, and Karen Deering, Chief Financial Officer. After the remarks, there will be an opportunity to ask a question. I'll now turn the call over to Gary Shiffman, Chairman and Chief Executive Officer. Mr. Shiffman, please go ahead.

Thank you, Operator. Good morning, and thank you for joining us today as we discuss our second quarter results. and provide an update on how SUN is navigating the impact of COVID-19. We hope that everyone is staying healthy and managing through this challenging time. The intensity of the pandemic across the country continues to evolve and the environment has been challenging, but I'm happy to report that all of our manufactured housing and RV properties are open for business and performing. We have worked hard to keep our residents, guests and team members safe. From a customer service perspective, we remain focused on delivering the signature service that Sun's residents and guests have come to expect across the portfolio. We are pleased with our results for the second quarter in light of the challenges presented by the virus. The team's skilled execution of our operating and financial plans has served to mitigate the impact on our business. For the second quarter, we realized a net FFO impact of approximately $10.8 million below our original budget, which is better than our initial expectation of $15 to $18 million provided during our first quarter release. Factors driving our performance? included strong manufactured housing revenues, rental program results, and expense savings and personnel costs and variable operating expenses, primarily due to RV resorts that were not open. Offsets to positive contributors in the quarter were largely due to the COVID-related restrictions on our transient RV business. Despite obstacles related to the virus, our reported core FFO per share was $1.12 for the second quarter. In addition, some communities generated positive same-community NOI growth of 1.4%. Adjusting for $900,000 of direct COVID-19-related expenses, NOI growth would have been 2%. As of June 30, 2020, all of our manufactured housing communities and RV resorts are open with varying degrees of occupancy limitations and certain of our amenities to comply with public health guidelines set by state and local governments. Over 80% of our furloughed team members have returned to work and base compensation for main office team members, executive officers, and the board has been restored to prior levels. From an operational perspective, we are seeing the resilience of Sun's unique platform in action. Total portfolio occupancy in the second quarter rose 70 basis points year-over-year as we added 851 revenue-producing sites, a 27% increase over last year. We also completed the construction of almost 500 vacant expansion, redevelopment, and ground-up development sites. As the country has reopened, we've experienced steady, incremental improvement in our reservation pace for July and August. Moreover, our forward bookings for September and October have surpassed pre-pandemic budgeted expectations. While the potential for local and state mandates could impact this trend, we believe this improved reservation pace reflects pent-up demand and our ability to offer a vacation option that is perceived to be both safer and easier to control as compared to other alternatives. RV travel is the preferred mode for families to get away this summer. Expected strong sales growth in June and beyond Limited only by the amount of available inventory supports this thesis as discussed by major RV manufacturers like Winnebago and Thor Industries. Articles on the RV lifestyle are trending in the New York Times and Wall Street Journal among many other national and local media outlets. While we remain optimistic on forward booking trends, we must be cognizant of the current situation related to COVID-19 and how it might affect travel in the months ahead. The underlying strength of our business in the midst of this pandemic gave us the confidence to raise $633 million of equity in May. This raise allows us to act on a very active deal pipeline and resume growth capital expenditure projects such as site expansions and ground up developments. While we do not know the duration of the pandemic and its ultimate financial impact on Sun's business, we do know that Sun is in a position of strength operationally due to the high quality of our portfolio and the nature of our offerings as well as financially due to the strength of our balance sheet. It has been a challenging year thus far, and I commend each and every one of our team members for going above and beyond during these past few months. Their commitment to executing on SUN's core principles has been exemplary. John will now discuss our operating results in more detail.

Thank you, Gary. Despite the challenges presented to our business by the pandemic, we are very pleased with our performance this quarter. A quick implementation of our emergency preparedness plan, cost containment efforts, and better than expected manufactured housing revenues mitigated the financial impact to our second quarter results. From a total portfolio perspective, we gained 851 revenue-producing sites, a 27% increase over the second quarter of 2019, boosting total occupancy to 97.3%. Moreover, the financial hardship program implemented for April-May rent is now in the 12-month installment repayment period and we are happy to report that over 17% of total deferred rent has already been collected and approximately 400 residents have paid their deferred rent in full. Our same community portfolio demonstrated resilience in the second quarter. N.O.I. grew by 1.4%, resulting from a 1.8% decline in revenues and an 8% decline in expenses due to delayed seasonal opening of a number of RV resorts and portfolio-wide measures taken at the property level to reduce variable expenses. Manufactured housing revenues increased by 6%, driven by a 3.9% weighted average rental rate increase year-over-year and occupancy gains over the last 12 months. Annual RV revenues increased by 3.2% and transient RV revenue declined by 37%, largely due to delayed openings at our resorts during the quarter as discussed previously. On the expense side, we experienced reductions across payroll and health benefits driven by furloughs and delayed seasonal hiring, utilities, and certain maintenance items given restricted access to most amenities. Variable expense savings realized in the second quarter are expected to be lower in the second half of the year as furloughed and seasonal team members return to work, and amenities that were not accessible in the second quarter due to state and local restrictions are returned to service. SAME community occupancy improved 190 basis points to 98.7%, reflecting almost 2,300 revenue-producing site gains over the last 12 months. Additionally, our rental program exhibited resilience with a 17% increase in applications to rent a home from SUN and an elevated rental home renewal rate of 68.2% in the quarter. Total applications were up almost 5% year-over-year. This demonstrates the continued strength of our platform and the demand to live in a SUN community. With regard to rent collection, net of hardship deferrals and prepaid balances Manufactured housing collections averaged 97% for the second quarter and are at 96% as of July 21st. These collection percentages are in line with 2019 figures as of the same dates. Additionally, over the second quarter, collections averaged approximately 98% for annual RV site rent, also in line with the second quarter of 2019. These strong collection figures across the portfolio are indicative of the resilience and predictability of our balanced portfolio of manufactured housing and RV communities. Moving on to home sales, in the second quarter we sold 611 homes as compared to 927 homes last year. Shelter-in-place restrictions and the inability to show homes physically contributed to the year-over-year decline. While pre-owned home sales were down, new home sales revenues grew 15% and our gross margin expanded by 7% in the quarter, driven by the sale of 140 new homes. Our average new home price increased 14% over last year to $137,000. We believe that our manufactured home price point and high-quality communities are likely to make Sun a preferred provider of affordable detached housing today and in the post-COVID economy. Our RV business, particularly our transient RV business, has shown steady improvement week after week as travel restrictions were lifted throughout the quarter. We have seen an acceleration in website visits, call volume, and reservations. For example, Memorial Day weekend transient RV revenues were down 39% as compared to last year, while transient RV revenues for the 4th of July weekend were down just 5.5% compared to last year. In addition, forward bookings for the month of September and October are trending greater than 10% growth over the same period last year. Gary referred to the strong projected RV sales figures and trending media coverage surrounding the growth and demand for the RV lifestyle over the past few months. We are bullish on RV vacationing and have seen the follow-through from our guests and our forward bookings. We believe that most other travel options, including air travel and cruises, could take longer to return to pre-COVID levels. Given the breadth and high quality of the resorts we own, we are well positioned to benefit from the increasing popularity of the RV lifestyle and vacation option. We offer an excellent product, and our resort performance during this challenging time reinforces the importance of this business to our overall platform. We are resolute in our view of the long-term viability of our mission and our business model. The pandemic has highlighted the importance of affordable housing and the desirability of competitively priced and safer vacation options for consumers. Sun in many ways has set the standard, and we remain at the forefront of providing a quality experience to fulfill this need. I would now like to turn the call over to Karen to discuss our financial results and balance sheet preparedness.