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Msg  8760 of 8810  at  11/19/2019 11:34:42 AM  by

dar200


OT--SUI--OT

 SUI released new presentation slides a few days ago. Those not in because the price was too high should read it carefully, especially the parts about past performance, which everybody says is no guarantee of future performance.
 
SUI has become the 800 pound gorilla in the manufactured housing space which at its essence is renting improved land....about 140,000 lots worth.
 
The recent Jensen acquisition is of special note. Sun's operating vehicle is a partnership. As such it can offer owners of communities a "roll-up" where owners of a property can contribute it to Sun's partnership in exchange for partnership units (which are convertible to common stock) in a tax deferred transaction.  Income tax on what could be decades of inflation and unrealized gain is not paid until the units are converted to stock and sold. Held through death and the income tax exposure goes away at the possible cost of estate and inheritance taxes.
 
The Jensen family, about 60 of them, took 80% of the sales price in SUI units, priced at an average trading price just before the deal was signed. SUI stock = tax favored currency, a very big deal to a potential seller who wants liquidity but tax deferral.
 
SUI has now completed close to 800 million worth of acquisitions this year and has an excellent track record of increasing NOI in acquisitions. This will impact 2020 growth, along with the new ground-up developments coming online this year and next.
 
I think the San Diego deal is an under the radar sleeper. It is a public-private partnership to provide "affordable housing". If this succeeds, it is likely to generate many more municipalities with a problem shortage of low priced housing looking to SUI for a solution. Opposition to "trailer parks" crumbles. Ground-up permitting becomes faster and easier. The cap rates on existing communities are so low, Shiffman has said several times that ROI is higher with new builds.
 
I expect next April's dividend will be 80 cents, a 6.67% increase. Now that debt levels are at or below where SUI wants them, excess cash flow is going to expansion projects and new builds, which increases affo per share. If not, it goes to increasing dividends even more.
 
In sum, while past performance is no indicator of the future, I'm convinced that SUI is a safe, sleep well at night,  "get rich slowly"  investment for as far as I can foresee.
 
IMO, there is no bad entry point for at least a 10-yr hold.


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Msg # Subject Author Recs Date Posted
8762 Re: OT--SUI--OT dar200 0 11/19/2019 4:19:26 PM






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