Sun Communities (NYSE:SUI) reported third-quarter Core FFO of $2.35 per share, exceeding the high end of its guidance range by $0.02, as strong manufactured housing results, interest income and a lower share count supported results. Chief Executive Officer Charles Young said the company has exceeded its expectations in each of the first three quarters of 2026.
The company also completed the sale of its U.K. business in September, receiving approximately $1 billion in net proceeds and concluding a multiyear effort to simplify its operations. Sun is now focused exclusively on North American manufactured housing and RV communities.
Portfolio Actions and Capital Allocation
Young said Sun has used the U.K. sale proceeds to repurchase shares, reduce debt and pursue selective growth opportunities. Year to date, the company has repurchased approximately $544 million of stock and paid down nearly $450 million of debt.
During the third quarter, Sun sold three RV communities in Fort Myers, Florida, for $127 million. The company also acquired two manufactured housing communities in the Pacific Northwest after the quarter ended. Young characterized the RV sales as a one-off portfolio-management opportunity rather than an indication that Sun intends to reduce its RV exposure in favor of manufactured housing.
Chief Investment Officer Aaron Weiss said the Pacific Northwest acquisitions expanded Sun’s presence in an area where it now has approximately 1,600 sites. The properties were acquired at going-in yields in the low-to-mid 4% range, with the company expecting yield-on-cost improvements over time. Weiss said Sun has seen more than 50 basis points of annual yield-on-cost improvement for acquisitions completed in 2025.
As of Sept. 30, Sun had approximately $3.8 billion of debt, a weighted-average interest rate of 3.3% and a weighted-average maturity of 7.1 years, according to Chief Financial Officer Bob Garechana. The company had no floating-rate debt and no meaningful maturities until 2028. Garechana said Sun held more than $600 million in cash at the end of the third quarter.
Manufactured Housing Drives Same-Property Growth
Same-property net operating income across Sun’s manufactured housing and RV portfolio increased 3.6% during the quarter. Manufactured housing same-property NOI rose 6.9%, supported by 5.8% revenue growth and a 2.8% increase in expenses. Occupancy in the manufactured housing portfolio was approximately 98%.
President and Chief Operating Officer John McLaren said traffic to the company’s manufactured housing website increased about 50% year over year during the quarter. Sun received more than 20 applications on average for every available site, he said.
Sun raised its manufactured housing NOI growth outlook for 2026, with Garechana attributing the improvement to revenue and other income as well as reduced expense expectations, particularly related to real estate taxes in the fourth quarter. The company’s updated full-year Core FFO guidance is $6.97 to $7.05 per share, reflecting the removal of U.K. earnings after the Sept. 22 sale.
For 2027, Sun expects average manufactured housing rental rate increases of approximately 5.4%. About half of manufactured housing residents had received their 2027 rent-increase notices as of the end of September. McLaren said rent-setting is conducted community by community and considers occupancy, retention, resident satisfaction, local markets, demand and comparable properties.
The company said rental homes represented more than 13% of occupied manufactured housing sites, compared with about 9% in 2022. Young said the rental program has historically been used to lease up communities and reduce economic downtime, with the company often seeking to convert renters to homeowners over time. He said management will review further optimization of the program for 2027.
RV Performance and Outlook
RV same-property NOI declined 1.3% in the third quarter. Annual RV revenue increased 2.4%, while the company narrowed its RV growth outlook primarily because of higher-than-expected, property-specific utility costs.
McLaren said annual RV demand and retention remained strong, and Sun added nearly 150 net annual conversions over the previous six months. He said transient RV demand trends were stable and booking pacing was within the company’s expectations.
Sun expects 2027 annual RV rental rate increases to average approximately 4.4%. McLaren said the company is using revenue management tools, booking data and technology investments to optimize site mix, pricing and expenses. He said digital initiatives have also contributed to an approximately 40% improvement in response rates.
Items Affecting 2027 Comparisons
Garechana said Sun will provide full-year 2027 guidance with fourth-quarter results in February. He highlighted several factors that will affect comparisons, including a full year without the U.K. business, which contributed for roughly nine months in 2026.
The Fort Myers properties also generated approximately $10 million of business interruption income in 2026, which will not recur after their sale, along with the properties’ NOI. In addition, Sun expects lower contributions from its Sungenia manufactured housing development joint venture in Australia because three of the venture’s four communities are largely filled, reducing expected home sales.
Young said the company’s priorities remain disciplined capital allocation, operating-platform optimization, and investments in people, technology and operating capabilities. “Sun is a more focused company with a clear path to long-term value creation,” he said.
About Sun Communities (NYSE:SUI)
Sun Communities, Inc (NYSE:SUI) is a real estate investment trust that owns, operates and develops manufactured housing communities, recreational vehicle (RV) resorts and marinas. The company provides residential sites for manufactured homes, seasonal and long-term RV accommodations, and marina facilities that include boat slips and related storage services.
Sun Communities also offers vacation accommodations and amenities such as swimming pools, clubhouses, recreational facilities and community services.
