Sun Communities, Inc., a real estate investment trust that owns and operates, or has an interest in, manufactured housing (MH)and recreational vehicle (RV)communities and marinas, reported its third-quarter results for 2024 on Wednesday (Nov. 6), according to a press release.
For the quarter ended Sept. 30, net income attributable to common shareholders was $288.7 million, or $2.31 per diluted share, compared to net income attributable to common shareholders of $120.1 million, or $0.97 per diluted share for the same period in 2023.
For the nine months ended Sept. 30, net income attributable to common shareholders was $313.4 million, or $2.51 per diluted share, compared to a net loss attributable to common shareholders of $132.4 million, or $1.07 per diluted share for the same period in 2023.
In addition, Sun Communities announced the planned retirement of its CEO, Gary Shiffman, following over 40 years of service to the company, according to a press release.
Shiffman has informed the Board of his intention to retire in 2025. The Board of Directors has a committee in place, led by independent Board members Jeff Blau, CEO of Related Companies, and Tonya Allen, president of the McKnight Foundation, to conduct a comprehensive search process to identify a new CEO.
Shiffman intends to remain on the Board of Directors.
“As part of our comprehensive succession plan, Gary’s retirement will result in a refreshed perspective to take the Company forward and build upon his transformative vision,” said Clunet Lewis, Sun Communities’ Lead Independent Director. “Under Gary’s leadership, the Company went public in 1993 with an initial market capitalization of approximately $115 million as a small, manufactured housing REIT with 31 communities, and has evolved into the leading owner and operator of Manufactured Housing, Recreational Vehicle communities, and Marinas with over 650 properties in the United States, Canada and the United Kingdom. We look forward to working with Gary to implement a seamless CEO transition.”
Along with Shiffman’s planned retirement, Sun Communities also announced a comprehensive restructuring effort to more effectively align the company’s cost structure and deliver sustainable earnings growth. The company is proactively addressing its challenges and is implementing a plan to unlock the value and earnings potential of the company. The company has been considering and studying many of these cost-saving initiatives throughout this year and is now accelerating their implementation and expanding the scope of the restructuring.
The cost reduction measures include better operating expense management and the implementation of identified efficiencies and savings to the company’s cost base heading into 2025 to position the business for long-term growth. It is expected that these will be achieved primarily through initiatives such as restructuring the company’s operational infrastructure, streamlining and optimizing information technology, implementing more effective asset management, payroll savings and other targeted cost-cutting.
The company has identified and intends to realize annualized G&A and operating expense savings of between $15 million and $20 million on a run-rate basis from the restructuring.
John McLaren is returning to the company full-time as president to oversee the restructuring and the execution of these initiatives. McLaren has been with the company for 22 years and was COO for 14 years through mid-2022. During his time as COO, John oversaw the acquisition and integration of approximately 350 MH and RV communities and brought a performance-driven approach with a focus on bottom-line operational results.
“Progress has been made this year in advancing our strategic initiatives including selling non-strategic assets, reducing debt, and increasing the revenue contribution from annual real property income,” said Gary Shiffman, chairman and CEO. “However, more can and will be done. These proposed changes have been planned for throughout the year and we are accelerating the implementation in the context of our disappointing third quarter performance. We are redoubling our efforts on all fronts, focusing on variable and fixed costs, capital recycling, and debt reduction, with the aim of establishing a sustainable and efficient cost structure and growth trajectory given the continued strong rental rate increases we anticipate in 2025.”
To read the full financial performance report, click here.
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