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SOUTHFIELD, MI - Sun Communities, Inc. (NYSE: SUI), a real estate investment trust specializing in manufactured housing (MH) and recreational vehicle (RV) communities, has entered into a definitive agreement to sell its Safe Harbor Marinas business to affiliates of Blackstone (NYSE:BX) Infrastructure. The all-cash transaction, valued at $5.65 billion, is set to refocus Sun Communities on its core MH and RV segments and enhance its financial leverage profile and flexibility. According to InvestingPro data, Sun Communities currently maintains a "GOOD" financial health score and appears undervalued based on its Fair Value analysis.
The sale price, subject to post-closing adjustments, is approximately 21 times the estimated 2024 Funds From Operations (FFO) of Safe Harbor. Sun Communities anticipates pre-tax proceeds of roughly $5.5 billion after transaction costs, which will be utilized for debt reduction, shareholder distributions, and reinvestment in the company’s core businesses. The company has demonstrated strong shareholder focus, maintaining dividend payments for 32 consecutive years with a current yield of 3%. InvestingPro subscribers can access detailed analysis of Sun Communities’ dividend history and growth potential, along with comprehensive financial metrics in the Pro Research Report.
Gary Shiffman, Chairman and CEO of Sun, expressed satisfaction with the transaction, noting the company’s improved leverage profile and sharpened focus on its core segments. He also acknowledged the Safe Harbor team’s contributions over their four-year partnership.
Jeff Blau, Chair of Sun’s Capital Allocation Committee, emphasized the transaction’s role in allowing Sun to concentrate on its core businesses, which are characterized by high margins and durable income streams. He also remarked on the substantial value realized from the investment in Safe Harbor.
Post-transaction, Sun’s North American MH and RV portfolio is expected to contribute around 90% of the company’s Net Operating Income (NOI), reinforcing its status as a pure-play MH and RV owner and operator. The deal is projected to reduce Sun’s net debt to trailing 12 months EBITDA to between 2.5x and 3.0x at closing, down from approximately 6.0x. This improvement in leverage metrics is significant for the company, which currently generates $1.23 billion in EBITDA and maintains a current ratio of 1.55, indicating healthy liquidity levels.
Additionally, the transaction is expected to yield a book gain of about $1.3 billion for Sun Communities. The company is exploring tax strategies to optimize efficiency for Sun and its shareholders regarding the gains from the sale.
The transaction is subject to customary closing conditions, with the initial closing anticipated in the second quarter of 2025. Some properties may be transferred and paid for in subsequent closings, pending certain third-party approvals.
Lazard (NYSE:LAZ) Frères & Co. is serving as Sun’s financial advisor, with Latham & Watkins LLP and Taft Stettinius & Hollister as legal advisors.
Sun Communities plans to discuss its fourth-quarter and year-end earnings results, as well as the transaction, in a conference call scheduled for Thursday, February 27, 2025. With a market capitalization of $16.4 billion and revenue of $3.19 billion in the last twelve months, Sun Communities remains a prominent player in the Residential REITs industry. Investors seeking detailed financial analysis and real-time updates can access comprehensive metrics through InvestingPro’s extensive research platform.
This news is based on a press release statement from Sun Communities, Inc.
In other recent news, Sun Communities Inc (NYSE:SUI). has announced significant updates to its corporate governance policies and board composition. The company has implemented a new indemnification agreement for its directors and officers, revised its Code of Ethics, and adopted a new Insider Trading Policy, effective February 13, 2025. These changes are part of Sun Communities’ efforts to enhance its governance framework and ensure compliance with relevant laws. Additionally, the company is preparing for changes to its Board of Directors, with Arthur A. Weiss set to retire by the end of 2024, Stephanie W. Bergeron not seeking re-election in 2025, and Clunet R. Lewis (JO:LEWJ) planning to retire by 2026. A search firm has been engaged to find new candidates for the board. These developments come as Sun Communities manages a portfolio of 659 properties across the United States, Canada, and the United Kingdom (TADAWUL:4280). The company’s recent filings with the Securities and Exchange Commission reflect its proactive approach to corporate governance and strategic planning. Investors and stakeholders are advised to consider these updates as part of their evaluation of the company.
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