Sun Communities, Inc.

Greetings. Thank you for joining us today for Sun Community's fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow after the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now like to turn the conference over to your host, Gary Shiffman, Chairman and Chief Executive Officer. Thank you. You may begin.

Good morning, and thank you for joining us as we discuss our fourth quarter and full year 2020 results, as well as our 2021 guidance. We hope that you and your families are in good health as we continue to navigate the challenges of the pandemic. We are very pleased with the resilience of our portfolio and the commitment and humanity of our team members during this most difficult time. The stable growth we delivered in the environment further demonstrates the strength of manufactured housing and RV resorts through economic cycles. It also underscores our rationale for meaningfully expanding our platform with the acquisition of Safe Harbor Marinas, a business that exhibits similar stability and growth characteristics. For the year, Sun generated core FFO per share growth of 3.5%, same community NOI growth of 4%, added over 2,500 revenue-producing sites and achieved total portfolio occupancy of 97.3%, a 90 basis point improvement over 2019. To drive additional future growth, we acquired almost $3 billion of properties in 2020. Over $600 million of our acquisitions took place in the fourth quarter after the closing of the Safe Harbor transaction. Total acquisitions for the year included 24 manufactured housing communities and RV resorts with over 6,900 sites and 106 marinas with nearly 39,000 wet slips and dry storage spaces. Additionally, post-year end, through the date of this call, we have closed acquisitions totaling over $43 million, including one manufactured housing community, two RV resorts, and two marinas. We are actively pursuing opportunities in each of our segments. Our extensive experience, track record, and industry relationships have helped continue to facilitate successful MH and RV transactions. On the marina side, since the closing of the Safe Harbor transaction, we have added seven additional marinas, inclusive of the world-class Rybovich Superyacht marinas in West Palm Beach and Riviera Beach, Florida. The Rybovich team is joining Safe Harbor, and we expect them to drive incremental growth across the entire marina portfolio, given the specialized nature of Superyacht marina operations. As we reflect on the events of 2020 and look optimistically to the future, we are encouraged by the fundamentals of our business. The demand for high quality affordable housing and vacationing is as strong as ever. Even with the various shelter in place restrictions throughout 2020 and into 2021, Applications to live in a Sun community remain at an all-time high as we received almost 50,000 applications in 2020 and sold nearly 2,900 homes. Our RV resort performance remains strong as travelers who wanted an increased level of control and safety chose our resorts for some much-needed respite. we believe that RVing attracted a large number of first-timers, as indicated by a 6% year-over-year growth in RV shipments, including an almost 50% increase in RV shipments for the month of December. We anticipate that many of those first-timers are likely to be repeat customers in the years ahead. We see numerous similarities with respect to marinas, as a wide portion of the population became first-time boat owners as well. According to industry sources, there was a 35% increase in the number of purchases by first-time boat buyers in 2020. In short, we expect there will be sustained demand across each of our business lines. As we look to operational initiatives for 2021, Sun is positioned to continue to execute on our four core investment strategies. The first is reinvestment in our properties to ensure sustained demand and to maintain the high quality of our assets. Second is the pursuit of accretive acquisitions of operating manufactured housing communities, RV resorts, and marinas. Our acquisition pipeline is as full as it has ever been. sellers continue to see the benefits of a transaction with Sun given the certainty of execution, tax deferment strategies, and the knowledge that Sun will improve and continue managing these assets to the highest possible standards. Our third investment strategy is the construction of expansion sites. And last is the construction of greenfield developments. Together, these four strategies support the long-term sustainability of delivering industry-leading growth. As our company has grown significantly, we have decided to expand the size of our board and recently announced the appointment of Tanya Allen as an independent director. Tanya brings a wealth of experience and expertise in the fields of education and economic development and will be a tremendous asset to our team. We welcome Tanya and look forward to having her expert perspective on sustainability and social issues as part of our board initiative and leadership moving forward. Our success would not be possible without the dedication and commitment of our team members. who continually placed the highest priority on the health and safety of our residents and guests. Through the many challenges this past year, our team consistently rose to the occasion and worked tirelessly to produce these positive results. I would like to extend a heartfelt thank you to the entire team as I am very proud of what we have been able to accomplish together. I will now turn the call over to John and Karen to discuss the results in further detail.

Thank you, Gary. Our solid performance for the fourth quarter and full year 2020 demonstrated the resilience of our operations across manufactured housing, RV resorts, and marinas. We benefited from heightened demand for RV resorts in the second half of the year and the steadiness of manufactured housing through all of 2020. Our same community results reflect the stability of the platform as we work through the challenges of the pandemic. For the fourth quarter, same community NOI increased by 2.1%. Excluding direct COVID-19 related expenses of $300,000, our same community NOI growth would have been 2.4%. In the fourth quarter, same community NOI was driven by a 5.7% growth in revenues reflecting a 3.8% increase in weighted average monthly rent and a 180 basis point occupancy gain. Breaking it down further, manufactured housing revenues grew by 4.8%, annual RV grew by 1.9%, and transient RV grew by almost 18%. If it were not for the mandated closures of our resorts in California starting in December, as well as the continued Canadian travel restrictions, our fourth quarter transient RV results would have been even stronger. The good news is that travel restrictions were lifted in California at the beginning of February, and we have already begun to welcome our guests to these resorts. Expenses in the fourth quarter were elevated predominantly due to the costs associated with the pandemic, along with higher payroll, supply and repairs, and utilities at RV resorts that had extended seasons. For the full year, same community NOI increased 4%. Excluding $2.4 million of direct COVID-related expenses, same community NOI would have increased by 4.4%. This growth reflects a 3.6% revenue increase and a 3% increase in same community expenses. The revenue growth was primarily driven by a 4.5% increase in annual RV revenues and 5.6% growth from manufactured housing revenues. Same community transient RV revenues were down 5% for the year, reflecting the delayed opening of 44 of our seasonal resorts due to COVID-related travel restrictions in the late spring and early summer. Our RV transient business saw a meaningful rebound with same community transient RV revenues growing by 5% in the third quarter and 17.8% in the fourth quarter as compared to the same period of 2019. Our RV property performance will be affected in the first quarter by the California shelter-in-place order that ran through the early part of February. Additionally, the continued Canadian border closure has prevented some of our guests from returning to our southern resorts for the season. Combined, these two events are estimated to have an impact of $8 to $10 million to Transient RV revenues, which is reflected in our first quarter and annual 2021 guidance. Even as the impact of the pandemic persists, forward bookings for the second quarter are pacing meaningfully ahead with current on-the-books revenues 18% above this time last year. From a total portfolio perspective, we gained 578 revenue-producing sites for the fourth quarter, bringing our total for the year to over 2,500. The addition of these sites increased our total portfolio occupancy to 97.3% from 96.4% a year ago. Of our revenue-producing site gains for the year, 1,070, or roughly 43%, were in our manufactured housing expansion communities. For the year, 863 transient RV sites were converted to annual leases. The development of ground-up and expansion sites is a consistent growth driver for us. In 2020, we delivered over 1,300 vacant ground-up and expansion sites. These recently completed expansion and ground-up development sites will contribute to growth in 2021 and beyond as they fill up and stabilize. Additionally, we currently have over 10,000 zoned and entitled sites in our portfolio for expansion and ground-up developments, which, when developed, should contribute to our growth in future years. Moving on to home sales, we sold 782 homes for the quarter and 2,866 homes for the year. 850 of these home sales were conversions of renters to owners in 2020. We saw a new home gross profit expansion of 3.6% year over year, driven by strong margins in Colorado, Connecticut, and Ontario. For the year, average home sales prices rose for both new and pre-owned homes, by 11.3 and 8.8 percent, respectively. The new home sales and our ground-up and redevelopments in Colorado and Florida contributed to this increase. Brokered home sales throughout Sun's portfolio saw a 15 percent increase in total sales year-over-year, as the resale market was strong as ever. Average brokered home prices in our communities increased by over 21 percent in 2020. A healthy resale market is very important for our success as new and existing residents see the value of choosing to live in a Sun community, given the quality and level of ongoing reinvestment that goes into our properties. Sun has maintained strong rent collection rates throughout 2020. Total rent collection rates for manufactured housing communities and annual RVs for the quarter ended December 31st, 2020, where over 96% and 97% respectively after adjusting for the impact of COVID-19 related hardship deferrals and prepaid rent balances. January collections were over 97% for both manufactured housing and annual RV. Through February 16th, we have collected 95% for both our manufactured housing communities and for our annual RVs, which is consistent with prior year collections. With respect to Safe Harbor, we closed our acquisition on October 30th, 2020, The fourth quarter performance was solid, with a two-month NOI contribution of $17.9 million. COVID-related tailwinds, like the surge of new boat ownership, which Gary discussed, helped drive strong wet slip rental and on-land winter storage revenue. Given the ability to enjoy the outdoors in a safe and self-controlled environment, we anticipate marinas to be an important growth driver for the coming years. In closing, 2020 posed both numerous challenges and opportunities for SUN. We have grown as an organization and are stronger than ever. We are proud of our team members' dedication to our residents and guests and are grateful for their efforts in a truly challenging year. Karen will now discuss our financial results. Karen?