Sun Communities, Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Community's first quarter 2025 earnings conference call. At this time, management would like me to inform you that certain statements made during this call, which are not historical facts, may be deemed forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. The company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions. The company can provide no assurance that its expectations will be achieved. Factors and risks that could cause actual results to differ materially from expectations are detailed in today's press release and from time to time in the company's periodic filings with the SEC. The company undertakes no obligation to advise or update any forward-looking statements to reflect events or circumstances after the date of this release. Having said that, I would like to introduce the management with us today, Gary Shiffman, Chairman and Chief Executive Officer, John McLaren, President, Fernando Castro Caratini, Chief Financial Officer, and Alan Weiss, Executive Vice President of Corporate Strategy and Business Development. After their remarks, there will be an opportunity to ask questions. For those who would like to participate in the question and answer session, management asks that you limit yourself to one question so everyone would like to participate as ample opportunity. As a reminder, this call is being recorded. I will now turn the call over to Gary Shiffman, Chairman and Chief Executive Officer. Mr. Shiffman, you may begin.

Good morning, and thank you for joining us as we discuss first quarter 2025 results, the closing of the Safe Harbor Marina's transaction, and our updated guidance for the year. We are very pleased with our first quarter performance and to have announced the successful closing of the Safe Harbor Marina's transaction last week. The sale of Safe Harbor marks a major milestone and sends ongoing strategic repositioning toward a pure play, owner and operator of manufactured housing and recreational vehicle communities. We're equally encouraged by the continued execution of our broader simplification strategy as we streamline our operations and drive cost savings and revenue growth. These efforts are materializing and position us to deliver strong, resilient, and consistent growth going forward. The cash generated from the closing of Safe Harbor transactions enhances our financial flexibility and positions us for long-term growth. As part of our capital allocation plan, we executed on our debt reduction efforts and established a new long-term net debt to EBITDA target of 3.5 to 4.5 times. In addition to the Safe Harbor transaction year-to-date, We have sold six non-strategic MH and RV communities, generating total gross proceeds of approximately $124 million. While John and Fernanda will go into more detail, I want to reiterate our confidence in the strength of Sun's platform and the long-term opportunities we see across our MH and RV segments. The fundamentals driving demand remain intact. particularly around affordable housing with no changes to long-term supply constraints, which support our positive outlook. In conjunction with the sale of Safe Harbor, we have a repositioned balance sheet and have allocated approximately $1 billion into 1031 exchange accounts for potential tax efficient acquisitions. We are underwriting a number of high quality single assets and small portfolio manufactured housing opportunities that have been identified to a combination of our long-term industry relationships and inbound activity. In March, Sun announced that our board nominated Mark Dineen as an independent director candidate for election to our board of directors. Mark has over three decades of real estate experience and served in multiple executive roles at Duke Realty. We expect his experience and perspective to be a strong addition as we continue to execute on our strategy. The CEO search committee continues to be engaged and is advancing its work to secure the top candidate as my successor by year end. And on behalf of the Sun team, I want to thank the entire Safe Harbor and Blackstone teams for a smooth transaction process. We wish them continued success. As always, I also want to thank the Sun team for their continued focus on delivering strong results. I will now turn the call over to John and Fernando to discuss their results and financial performance in more detail. John?

Thank you, Gary. I am very pleased to discuss the results of our first quarter as we focus on delivering strong operational performance from our core MH&RB communities. We've streamlined our portfolio and have significantly enhanced our balance sheet flexibility. In front of us is an exciting chapter for Sun, one grounded in operational excellence and the realization of disciplined execution through consistent organic growth and selective expansions. Our North American St. Property portfolio delivered 4.6% NOI growth, driven by solid performance in manufactured housing and ongoing progress in expense management. Manufactured housing continues to show resilience, with same property NOI up 8.9% in the first quarter. Revenue grew 7.3%, supported by strong rental rate increases and a 150 basis point occupancy gain. Expenses were well managed, growing 2.8%, with notable savings in payroll, insurance, and legal. Occupancy remained strong at 97.5%, with average resident tenure of approximately 21 years, demonstrating the value our residents enjoy living in a Sun community. Within the RV segment, the annual side of the RV business continues to perform well, with revenue increasing 7.8% year over year, reflecting the benefits of our strategy to drive more stable recurring income. The decline in RV same property NOI of 9.1% is attributable to softness in the transient RV business, which remains under pressure from general macroeconomic uncertainty and reduced Canadian guests. Canadians account for roughly 4% of our annual base and 5% of our transient RV revenue. While transient revenue decline, transient guests play an important role in supporting our annual revenue growth across the broader portfolio. The first quarter represents approximately 16% of total annual RV NOI. In the UK, total same property NOI saw a modest decrease of $600,000 compared to the prior year, primarily due to higher payroll as a result of increases in national minimum wage and higher real estate taxes. Revenue grew 0.2% supported by higher MH income and home sales volumes largely consistent with prior year with average sales prices approximately 8% higher year over year. We are pleased with our first quarter results and the notable progress we've made. In particular, we're encouraged by our performance, the enhanced revenue driving strategies we implemented, and ongoing activities we will roll out to deliver resilient earnings growth over time. We are focused on operational excellence, and I'm extremely excited about the opportunities ahead as we build on this momentum and further unlock the potential within our portfolio. I will now turn the call over to Fernando to discuss our financial results in more detail, as well as our updated 2025 guidance. Fernando? Thank you, John. As John and Gary noted, we believe we are at an important inflection point for some, not just operationally, but financially. We closed on substantially all of the $5.65 billion sale of Safe Harbor marinas on April 30th and have begun executing on a capital allocation plan that has meaningfully reshaped our balance sheet and financial profile. Let me start with our first quarter results. We delivered core FFO per share of $1.26, representing a 5.8% increase year over year. This performance was driven by a combination of solid operational execution and early benefits from our ongoing cost optimization efforts. Turning to our balance sheet, as of March 31st, Sun's debt balance stood at $7.4 billion, with a weighted average interest rate of 4.1% and a weighted average maturity of 5.9 years. Our net debt to trailing 12-month recurring EBITDA ratio was 5.9 times. Turning to capital allocation, as outlined in our press release last week, The capital allocation plan following the safe harbor transaction reflects a balanced tax efficient approach to optimize shareholder value through lower leverage, greater financial flexibility to drive sustainable cash flow growth, and a thoughtful capital return strategy. From the net proceeds of the initial closing, Sun has paid down or intends to repay approximately $3.3 billion of debt, inclusive of estimated prepayment costs. This includes The full repayment of approximately $1.6 billion under our senior credit facility, leaving us with a zero balance as of May 1st and no flowing rate debt outstanding. The payoff of approximately $740 million of secured mortgage debt with a weighted average interest rate of 5.3%, and the redemption of approximately $950 million of unsecured bonds, inclusive of estimated prepayment costs, scheduled to close on May 10th. bearing a weighted average coupon of 5.6%. The company intends to manage its balance sheet in a leveraged range of approximately 3.5 to 4.5 times on a long-term basis. Based on the initial debt paydowns, we expect to generate annualized interest expense savings of approximately $160 million and reduce the weighted average interest rate on Sun's outstanding indebtedness to approximately 3.5%. Our weighted average debt maturities have increased to nearly eight years. Post-transaction, the remaining cash on hand, inclusive of amounts held in 1031 accounts, is expected to initially earn an annualized interest rate of approximately 3.5% to 4%. Additional elements of our capital allocation plan include a one-time cash distribution of $4 per share to holders of record as of May 14, 2025, payable on May 22nd, A planned increase to our quarterly distribution by approximately 10.6% to $1.04 per common share and unit. This increase is expected to begin with the second quarter distribution that is anticipated to be paid during July 2025. And the adoption of a $1 billion stock repurchase program permitting future repurchases of our common shares. We continue to evaluate additional proceeds maximization strategies, which may evolve as we finalize tax and strategic implications over the remainder of the year. For these actions, our leverage has declined meaningfully. For full year 2025, we are establishing core FFO per share guidance in the range of $6.43 to $6.63. This reflects the execution and timing of the Safe Harbor marinas transaction, including the disposition of the delayed consent properties. Note that our original guidance issued in February was adjusted for full year contribution assumptions relating to Safe Harbor. This updated outlook assumes the full sale of all marina assets and does not include any potential future acquisitions, proceeds deployed for share repurchases, and any other non-ordinary core strategic actions or financial transaction. In terms of operational assumptions embedded in our updated guidance, we raised our manufactured housing SINC property NOI guidance by 60 basis points at the midpoint, reflecting strong first quarter results and continued top-line strength expectations. RV SINC property NOI expectations have been reduced to a range of down 3.5% to up driven by observed slower transient reservation pacing, reflecting a shift towards shorter booking windows. Overall, total North America Sink Property NOI is expected to grow 3.5% to 5.2%, with a midpoint of 4.4%. Our UK Sink Property NOI guidance remains unchanged, with a projected growth range of 90 basis points to 2.9%, and a midpoint of 1.9% growth. Ancillary NOI has been reduced by approximately $4 million at the midpoint, primarily due to lower-than-expected transient RV activity. For additional details regarding our full-year guidance, please see our supplemental disclosures. As a reminder, our guidance includes acquisitions and dispositions and capital markets activity through May 5th, but it does not include the impact of prospective acquisitions, dispositions, or capital markets activities, which may be included in research analyst estimates. I will now turn the call back to Gary for his closing remarks. Gary.