Sun Communities, Inc Q2 2026 Earnings Call

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Communities second quarter 2026 earnings conference call. The press release and supplemental financial information can be found on the investor relations section of the company's website. 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 meaning of the Private Securities Litigation Reform Act of 1995. During today's call, management may discuss certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable to GAAP measures are included in the press release and supplemental financial information. Although 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 call. Having said that, I would like to introduce management with us today. Charles Young, Chief Executive Officer, John McLaren, President and Chief Operating Officer, Fernando Castro-Caratini, Chief Financial Officer, and Aaron Weiss, Executive Vice President and Chief Investment Officer. 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 yourselves to one question so everyone who would like to participate has ample opportunity. As a reminder, this call is being recorded.

I'll now turn the call over to Charles Young, Chief Executive Officer. Mr. Young, you may begin.

Good morning. Thank you for joining us to discuss our second quarter 2026 earnings and outlook for the rest of the year. We are very pleased with our performance this quarter, achieving results above the high end of our guidance while executing on our strategic priorities. We delivered Core FFO per share of $1.84, surpassing the high end of our guidance range, driven by sustained strength in our manufactured housing portfolio and the resilience of our RV portfolio and disciplined expense management throughout the organization. Based on our first half performance and continued confidence in the business, we are raising our outlook for the core business. These results, coupled with continued demand driven by long-term housing affordability trends, reinforce our confidence in our strategy and the compelling opportunities ahead. The fundamentals in our business remain strong across both manufactured housing and RV.

MH fulfills a critical need for attainable housing, offering residents an attractive value proposition, while limited new supply drives durable demand and long-term community value. Our RV platform offers a compelling value-oriented outdoor lifestyle for short and long-term guests, supported by healthy demand and a limited supply of premier destinations. Across MH and RV, these attractive industry fundamentals, combined with the quality of Sun's portfolio, support high occupancy levels, resilient demand, and durable cash flow generation across our platform. In May, we announced the sale of our U.K. business, an important milestone that further simplifies our portfolio and sharpens our focus on our core manufactured housing and RV platform. The transaction remains on track to close by the end of the year, subject to customary closing conditions and regulatory approvals. Our positive performance remains anchored around the three core strategic priorities we introduced at the beginning of the year.

Our first strategic priority is disciplined capital allocation. We focus on the highest return opportunities across organic growth, external investments, portfolio and community optimization, and shareholder returns to maximize long-term value creation. Our renewed $1 billion buyback program underscores our conviction in the underlying value of our company and our commitment to disciplined capital allocation while maintaining strategic and financial flexibility. Our second strategic priority is optimizing our operating platform. Our strong operating performance reflects the benefit of the initiatives implemented over the past year as we simplify processes, enhance transparency, and improve productivity. These efforts strengthen our day-to-day operations, enhancing the experience we provide to our residents, guests, and team while creating a stronger foundation for sustainable long-term growth. Our third strategic priority is investing in our people, technology, and operating capabilities.

We are improving Sun by investing in leadership, technology, and the capabilities that will support our long-term growth strategy. Last month, we were excited to welcome our new General Counsel, Ileana McAlary. At the same time, we continue to invest in technology and automation initiatives aimed at improving productivity, increasing data visibility, and enabling more informed decision-making across the enterprise. We believe these investments in our people and platform will drive greater operating efficiency while enhancing the resident and guest experience. Looking ahead, we believe the actions we have taken to simplify our portfolio, strengthen our balance sheet, and invest in our people and systems positions us well to deliver consistent long-term growth and increase shareholder value. Furthermore, I'd like to comment on the 21st Century Road to Housing Act, which was recently signed into law.

We are encouraged by Sun's positioning to help be part of the solution to the country's housing affordability need. The law includes several provisions specific to manufactured housing that we view as constructive for our industry. Among other things, the law preserves investment in the sector, gives manufacturers more design flexibility, and encourages state and local governments to open their door to more MH homes. While it will take time for these changes to play out, we see them as a positive step for affordable housing. I want to thank our team members for their continued dedication and commitment. Their hard work and execution continue to differentiate Sun, and these results are a direct reflection of the outstanding work taking place across our organization and in our communities every day.

With that, I'll turn the call over to John McLaren and Fernando Castro-Caratini to discuss our operating results and financials in more detail.

Thank you, Charles Young. Performance was driven by solid revenue growth, disciplined expense management, and the execution of the operational initiatives implemented across the business over the past year. North American same-property MH and RV NOI increased 6%, exceeding our guidance range, with contributions from revenue growth and expense discipline. Within that, manufactured housing same-property NOI increased 8.8%, exceeding our expectations. Revenue increased 6.2%, primarily driven by site rent growth, while disciplined management of controllable expenses contributed to the outperformance. Demand across our manufactured housing communities remains exceptionally strong. Occupancy remained above 98%, supported by favorable industry fundamentals and the value proposition our high-quality communities provide to our residents. Within our RV portfolio, same-property NOI was in line with guidance. Annual demand remained resilient, and transient trends have been consistent with our expectations.

As discussed last quarter, we manage our RV platform with a balanced and deliberate approach using demand, pricing, and inventory data to optimize the bottom-line performance of our communities. The initiatives we implemented earlier this year are delivering results, providing greater visibility into demand, and enabling more informed decision-making throughout the season. On the annual side, demand remains stable and continues to provide a durable base of recurring revenue. On the transient side, pacing has improved as the season has progressed, and we're encouraged by the direction of the business. The third quarter represents the greatest period of RV contribution annually, and while we remain appropriately measured, we are also optimistic of the underlying trends we are seeing. Our focus extends beyond near-term revenue performance to improving the customer journey across the RV platform.

During the quarter, we completed the deployment of technology and systems that provide better enterprise-wide booking visibility. This gives our teams a clearer view of customer interactions, improves how bookings are routed and secured, and helps deliver a more consistent experience from the initial inquiry through a guest stay. This exemplifies our deliberate approach with a focus on accountability combined with investments we have discussed are translating into better execution. It also creates a scalable foundation to build on as we continue optimizing our platform and enhancing the experience we provide our residents and guests. I want to thank our team for their continued dedication and execution. Their commitment to delivering exceptional service while operating our business efficiently was instrumental in delivering another strong quarter. With that, I'll turn the call over to Fernando Castro-Caratini to discuss our financial results and updated guidance.

Thank you, John. Our second quarter results reflect another period of strong operational execution, with Core FFO per share of $1.84, exceeding the high end of our guidance range by $0.05 per share. The outperformance was primarily driven by the strength in our manufactured housing portfolio, supported by disciplined expense management across the business. Our RV portfolio performed in line with guidance. From a capital allocation perspective, we again demonstrated our disciplined approach to deploying capital. During and subsequent to the second quarter, we repurchased approximately $200 million of our common stock. Year-to-date, we have repurchased approximately $260 million of our common stock and have bought back approximately 6.5 million shares, or $800 million since initiating our share repurchase program last year, representing approximately 5.1% of our common shares outstanding at the time the program began.

As of today, approximately $800 million is still available under our current share repurchase authorization. We remain a disciplined capital allocator, balancing strategic investments, portfolio optimization, and return of capital while maintaining a strong and flexible balance sheet. Our balance sheet provided meaningful financial flexibility. As of June 30th, Sun's debt balance was approximately $4.1 billion, with a weighted average interest rate of 3.3%, a weighted average maturity of 6.9 years, and a net debt to trailing 12-month recurring EBITDA ratio of 3.9 times. We believe our financial position provides the flexibility to continue executing our strategic priorities while creating long-term value for shareholders. As part of our continued focus on capital allocation and growing our unsecured capacity, during the quarter, we repaid $178 million of mortgage loans using cash on the balance sheet.

Subsequent to quarter end, we repaid an additional $258 million via draw on our revolving credit facility. Looking ahead, we have $56 million of mortgage maturities remaining in 2026, which we will repay in the fourth quarter. We expect to pay any outstanding balance on our line of credit using proceeds from the sale of a U.K. business. Turning to guidance. As detailed in yesterday's press release, we are raising our same property NOI guidance for 2026 to reflect continued operating performance momentum and our strong second quarter results. We are increasing our same property NOI outlook. At the midpoint, combined North America MH and RV same property NOI is now expected to increase by 4.9%, up 20 basis points from our prior guidance, with manufactured housing increasing to 6.5% and RV increasing to 1% growth.

This increase reflects the outperformance of our core business, driven by continued strength in MH, improving RV operating trends, and disciplined expense management. The 702 updated Core FFO per share guidance midpoint assumes a full year contribution from our U.K. operations. While we expect to close the sale in the second half of the year, the company's guidance does not give effect to the completion of the sale, nor does it reflect any impacts from the sale, including timing and potential uses of proceeds. Our supplemental disclosure provides the expected full year U.K. Core FFO contribution of approximately $86 million at the midpoint, together with monthly FFO contribution from the U.K. embedded in our 2026 Core FFO guidance range for the remainder of the year. Consistent with the US GAAP, the U.K. portfolio is now classified as held for sale and is reported as discontinued operations within our financial statements.

Accordingly, both the current and prior year periods have been recast to conform with this presentation, providing comparability across all reported periods. All other key operating assumptions in our guidance remain substantially unchanged. Additional details regarding our outlook and the underlying assumptions can be found in our supplemental disclosures. As always, our guidance reflects acquisitions, dispositions, and capital markets activity completed through July 27th. Consistent with our prior practice, it does not assume future acquisitions or dispositions, additional share repurchases, or other capital allocation activity beyond that date. With that, I'll turn the call back to Charles for a few closing remarks.

Thank you, Fernando. Before opening the line for questions, I'd like to thank all of our team members, including the Park Holidays team, for their dedication and outstanding execution. Their efforts delivered another strong quarter while further strengthening the foundation for Sun's long-term success. With that, we look forward to your questions. Operator? Thank you. We will now be conducting a question and answer session.

If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment please, while we poll for questions. Our first question comes from the line of Jana Galan with Bank of America. Please proceed with your question.

Thank you. Congratulations on a great quarter. A question for John on the transient RV performance in 2Q. Can you maybe talk about the positives and negatives relative to expectations and maybe same for July as well?

Sure. Hi, Jana. I appreciate the question. Overall, I'd say, the team is very pleased with our execution, not just in the second quarter, but through the first half of 2026 on the RV side. Starting out getting ahead of renewals and improved retention earlier in the cycle, then achieving close to 100 net conversions in the second quarter. On the transient side, we feel good or encouraged by what we're seeing. Demand trends, as I said in the prepared remarks, are stable and pacing is solidly within our expectations. I thought I'd touch on just, I have a history of close to 25 years here at Sun and have been around the RV business that entire time. We have continually refined our approach to maximize operational performance while delivering a compelling value proposition to our residents and guests.

As you recall, starting in 2020, we proactively implemented our successful transient to annual conversion approach, ultimately converting over 8,000 sites from transient to annual, improving the consistency of earnings and the durability of cash flows in the portfolio. Following that record conversion activity and supported by the strong base of annual sites that we have. Our focus in 2026, as I shared before, shifted towards maximizing performance across each community. We are leveraging technology, data analytics, enhanced operating discipline to drive greater accountability, transparency, and more consistent results. Our focus remains on optimizing the transient to annual site mix, enhancing revenue management, and controlling expenses. I think our scale, experience, and the growing use of real-time data provides deeper visibility into booking patterns, customer behavior, market trends, enabling faster, more informed decisions made across the portfolio.

While significant opportunity remains ahead, we're really encouraged by the progress we're making. We believe these initiatives will position us well for long-term growth. I think what you're seeing is really this coming to fruition. You've heard us talking for the last couple of years about data, about technology, about execution, all these things, and you're seeing it appear in our results. Speaking to the latter, to the third quarter and the latter half of the year, I'll just reiterate again, we like the trends, we like the demand, we like the pacing, and the best part is we're executing better than we have before.

Thank you. If possible, to ask one more, if there's any update you could provide on the acquisition pipeline.

Hi, Sarah. Good question. The acquisition pipeline remains robust. We continue to assess opportunities. As shown through our uses of capital in the second quarter, we do remain incredibly disciplined and thoughtful in our acquisition approach. We're really focused on adding high-quality communities in markets with strong supply-demand dynamics. We also want to make sure we acquire assets in locations synergistic to our existing footprint that leverage the business that John oversees with the operational team and are accretive to our long-term growth and value of the portfolio. We've talked previously about initial yields in the market for institutional grade, MH being in the low to mid 4% yields, and that's what we continue to see. The transactional market remains very active, but we remain incredibly disciplined and thoughtful in our approach.

Great. Thank you. Thank you.

Our next question comes from the line of Jamie Feldman with Wells Fargo. Please proceed with your question.

Great. Thanks for taking the question. I guess just following up on capital allocation and investments. We get a lot of questions just on how aggressive you would be on the acquisition. Maybe just to follow up to Jana's question. Can you talk about some of the things you- Hey, Jamie, it's Charles.

We're having a hard time hearing you. You cut off more color on kind of where your head is in terms of how much risk you're willing to take and how low of an initial yield you're willing to take.

Jamie, I don't know if you can hear us or the operator. We missed half the question.

Oh, I'm sorry about that. It was a follow-up question on the capital allocation piece. We get a lot of questions on just how low of a yield Sun would be willing to take on investment. Can you just talk us through some of the things you've passed on, and also give us your thoughts on IRRs versus going in yields and how you think about share buybacks on an IRR versus acquisitions on an IRR?

Jamie, it's Aaron. I'll start and perhaps Charles Young can jump in after. It's a good question. I think we continue to be active in thinking through the market more broadly. We think we have a good sense with the general backdrop in the M&A market. We reengaged in the market in early and mid 2025 after the closing of Safe Harbor. As you know, we've also been a seller into the market, approximately $200 million last year and a few more this year. More broadly and stepping back, we're thoughtful holistically about our portfolio. We consider assets we want to own long-term that can be accretive to the long-term growth and value of our portfolio. We assess and acquire assets in markets that make sense, where we believe our operational expertise creates long-term synergies, and we focus on driving long-term yield accretion.

While we look at initial yields, we are focused on the long-term growth of that yield, and we risk adjust it against, as you indicated, our ability to acquire shares in the open market, our ability to drive growth in the acquired assets, and I think most importantly, drive growth in our existing portfolio through thoughtful capital allocation across people, teams, and technology. We look at deals in markets across the U.S. I would say we do not focus on deals in jurisdictions with which we don't operate in today or assets that we believe may require capital in excess of our return targets. We're going to remain judicious and thoughtful.

We have proven the ability to acquire assets that are accretive, but in the last 3-6 months, we've been more muted in what we've transacted upon, but we will remain active and thoughtful in the market and weigh those opportunities against repurchasing our shares or investing in our people and systems.

Jamie, I'll just zoom out a little bit. Aaron Weiss answered the question well, look, we have the financial flexibility to pursue multiple avenues of value creation given our balance sheet liquidity where we stand. You've seen in how we demonstrated over the last two months that we believe that buying our shares at current attractive investments are at this level is reflected in our actions. That being said, we continue to evaluate acquisition opportunities where we believe they generate attractive long-term returns and further enhances the quality of our portfolio. We're really being balanced and disciplined. What's great is we have the flexibility to look at all avenues, including investing in our people, technology, and infrastructure. We will continue to be balanced and thoughtful and disciplined around how we allocate capital.

Okay. Thank you for that. I guess, Charles, as a follow-up, pretty soon we'll be talking about your one-year anniversary. Can you just talk about, at this point, what surprised you the most to the upside, the downside, as you think about the next six months, 12 months, what are the key areas we should continue to expect some change?

I appreciate the question. You're rounding up. I'm at nine, 10 months, but we're getting towards the anniversary. It's been great. The team is fantastic. You've heard me talk about all the stuff, the culture fundamentals of the business. Affordability is a huge need in America right now, and Sun sits at the intersection of being a solution for some of the challenges around affordability. I could go a lot of different directions, but I'll highlight a couple of things. One, we're executing at a very high level across the business. I still think we have meaningful opportunity to continue to improve.

Second, the work that we've done around simplifying the company, demonstrated with the sale of the marinas as well as the announcement of the UK, which is allowing us to sharpen our pencil and focus in on our opportunities that are ahead, the strategic opportunities that I've spoken about and we'll continue to focus on, that I talked about in the opening remarks. We just spend a minute on it on the disciplined capital allocation. Our ability to invest in our people, our systems and processes, technology, while having the flexibility to be opportunistic. I think what you're going to see is more of that. We're going to continue to focus on the business, running it well, executing well, looking for opportunities to grow, and making smart decisions with the allocation of that capital.

I do think as we continue to do the work, we'll share more in the future, but right now, I like how we're going. We're executing well. We've been putting up some good quarters this year. We continue to focus on executing for the second half of the year.

Thank you. Our next question comes from the line of Eric Wolfe with Citi. Please proceed with your question.

Hey, good morning. Last quarter, your annual RV growth, I think, produced something like 6.5% same-store revenue growth. This quarter, it was 3.8%. Just curious what explains that quarter-over-quarter difference and what you're expecting in the back half of the year from the annual RV side.

Yes. Hey, Eric. It's John. Yes, I think that all speaks to what we've been sharing about the optimization of the portfolio as a whole and how the revenue gets balanced across RV. We've learned from the experiences that we've had and the conversions that we did, especially that record time, that frankly, I think we went a little bit too far, okay, with some of that at certain properties at certain times of the year. That's where I'm talking about the team's done a better job of balancing that out between the two revenue lines and ultimately having a better revenue mix in RV.

Okay, it was less conversions, I guess, that resulted in decelerating growth rate, and that was an active choice because of the profitability.

That's correct. In Q1, we actually did increase our conversion, our net conversions, by close to 100 in the second quarter.

Got it. Okay. Thank you.

Thank you. Our next question comes from the line of Brad Heffern with RBC. Please proceed with your question.

Yeah. Thanks. Morning, everybody. Post the Safe Harbor sale, leverage has been quite low. You paid off more mortgages post the quarter, and then you have the U.K. proceeds coming in. I'm wondering if you expect to do another debt offering at some point, and if you would consider using debt to conduct further repurchases and maybe add some leverage back, or if we should expect that leverage is likely to remain at these low levels.

Brad, we've stated publicly that our leverage target is somewhere between three and a half to four and a half times. We are close to the midpoint today. Once the U.K. transaction closes, we will be near the low end of that range. At this time, given current pricing levels, we're not currently contemplating an offering, but we'll continue to be thoughtful as it relates to how we manage the balance sheet, where ultimate leverage will go once we get the proceeds from the U.K. sale. It'll be a work in progress.

Okay, thanks. I'll stick to one.

Thank you. Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question.

Good morning. Thanks a lot for taking my question. Looks like the RV base rent growth decelerated sequentially into the second quarter. Can you just talk a little bit about what that is? Are you seeing some of the impact from the slower transient RV trends impacting the annual RV rate growth? Thanks. Hey, Michael. There was some sequential deceleration on a quarter-by-quarter basis on the RV side.

It points to the balance and mix of annual across the portfolio, given our more annual-focused properties and our more transient-focused properties. Really, we're looking at the portfolio as a whole as it relates to the ultimate contribution from the portfolio itself with those properties that are more transient-focused versus those that we're looking to continue to convert over to annual.

Got it. Thanks for that, Fernando. Just as a follow-up, you highlighted the new housing legislation as a positive step for manufactured housing. Where do you see the greatest opportunity for Sun specifically? Is it higher home sales, expansion of existing communities into greenfield development, or easier zoning approvals? How soon could you start to see some of those benefits start to flow through? Thanks. Hi Michael, it's Charles.

I'll start high level. Then I'll let John kind of weigh in on some of the specifics. Look, the Road to Housing Act reinforces, I think, the recognition that the U.S. continues to have significant affordable housing shortage. Broadly, I know your question is about Sun specifically. Manufactured housing is uniquely positioned to help address that need by providing the high-quality, attainable homeownership opportunities for a broad range of customers. We see that throughout our communities. Long term, we think that the bill or the law that just passed is beneficial. Highlights, I'll let John get into the specifics, it's around the removes the permanent chassis requirement. I'll let John speak to that. Encourages state and local zoning, accommodation of HUD code homes. I think long term, that's where we see the opportunity.

In the short term, we'll have to see how it plays out. I would just, from a high level, we need to continue to reinforce and reduce the need to reduce the barriers to development and support long-term growth of MH communities. Right now, we know the demand is there. We see it. It shows up in the lack of supply that's currently out there, and it's in our underlying demand for our product. Ultimately, we would like to provide more of this. I think it will take time. I think the essence of the bill in terms of its intent is in the right direction. We're going to have to see how that plays out over time. John, if you want to speak to some of the specifics.

Hey, Michael. I think the chassis removal part of the law actually presents some really interesting opportunities specific to Sun, okay. We've got a 30-year history in development. We know that side of the business. It creates some optionality. It could create some more affordability in terms of what the manufacturers build. That could be helpful in terms of the spec levels that you have in homes because, and where I kind of cross that with development is, having been in so many of those meetings, public meetings and so forth, what they're interested in seeing is what the neighborhood's going to look like, okay. The chassis removal presents new opportunities, added spec, and affordable value for people and for municipalities seeking to serve their affordable housing needs.

I think it's like Charles said, it's going to take some time, okay, for this to sort of develop. We have the experience and the relationships and everything to help progress that, which is what we'd hope we'd do because we sit right in the affordable housing space.

Thank you. Our next question comes from the line of Stephen Sakwa with Evercore ISI. Please proceed with your question.

Thanks. Good morning. Charles, I was just wondering if you could provide an update on the CFO search. As you think about kind of the C-suite, and you mentioned the new GC, do you feel like the team is largely in place that you see kind of moving forward?

Thanks, Steve. In terms of the CFO search, it's progressing very well. We're pleased with how the process is advancing. As I've said before, our focus remains on identifying the right long-term leader for the role, and we're taking a thoughtful, disciplined approach. We're moving with urgency, but ensuring we have the right long-term partner. In the meantime, Fernando and the entire finance team have done a tremendous job providing financial leadership and continuing to deliver excellent execution and strong financial results throughout this transition. Bottom line, we have strong continuity within our overall finance organization. We'll provide an update when we have something appropriate to share, but it's progressing well. The overall team, really excited to have Ileana on the team. The team is rounding out.

There are parts of the organization that working with the rest of the team that are filling in, that are just allowing us to run even faster. We have a long runway of what we can do to try to continue to evolve the company, and I like where we are, given that we're less than a year in. The progress this team has made over the last couple of years has been outstanding. We'll update you soon, we hope.

Thank you. That's it. Thank you.

Thank you. Thank you. Our next question comes from the line of John Kim from BMO Capital Markets. Please proceed with your question.

Thank you. I had a two-part question on same-store revenue. On the MH side, you had 6.4%, and that compares to your rate growth of 5% with occupancy relatively flat year-over-year. I was wondering what drove that outperformance that you've achieved so far this year. My second part was on your overall real property same-store revenue guidance, which you maintained this quarter at 4.25 midpoint, and that compares to 4.8% that you've done year-to-date, which would imply a pretty meaningful slowdown in the second half of the year to 3.7%. I was wondering, how realistic is that big of a slowdown in the back half of the year?

Sure. Thank you, John. I'll address your second question first. Any moderation over the full year and into the third quarter is simply a revenue mix change, given that the third quarter is the largest contributor from an RV Transient revenue perspective with 46%-47% of the revenue contribution for the year coming from transient.

That's the difference in total revenue growth for the portfolio. As it relates to the MH portfolio and that revenue growth, some of that is coming from our success in managing our rental program on the MH side, other fees. Majority coming from the rental program as far as anything higher than the rental rate that we've disclosed.

Great. Thank you. Thank you.

Our next question comes from the line of Haendel St. Juste with Mizuho Securities. Please proceed with your question.

Hey there. Good morning. Thanks for taking the question. A two-parter. First part is, I guess, related to the updated FFO guide. You beat by a sizable amount last quarter. I think you beat by $0.09, raised by $0.04. You beat by $0.08 this past quarter, raised by $0.05. So that's $0.17 of beats, but only $0.09 of raises. So seems like you got a couple extra pennies, $0.08 or so in your pocket. So maybe help me square that. Is that primarily the drag that you're expecting from the U.K. portfolio sale in the back half of the year? Or is there something else we're perhaps not seeing or appreciating in the second half? Thank you. I know we're very pleased with our second quarter and overall first half performance, and are encouraged by the momentum we're seeing across both MH and RV businesses heading into the back half of the year.

Importantly, we increased our same property NOI growth expectations, reflecting the continued strength of the portfolio and confidence in our operating trends. We'll stay focused on execution, but we feel good about the trajectory of the business and our ability to continue delivering this strong operating performance that we've been able to demonstrate. Not just over the first half of the year, but going back into 2025 for MH and RV portfolio.

Okay. Fair enough. Appreciate that. Second piece, you lowered the G&A forecast as part of the updated guide. I'm curious what's an annualized G&A run rate for you look like post the U.K. portfolio sale. Thanks. I wouldn't say we lowered guidance from a G&A perspective.

We're expecting at the midpoint a contribution of about $172 million from G&A for the core portfolio. The lowering is really removing the U.K. from total G&A. That $39 million-$40 million is now in the net contribution of $86 million in discontinued operations guidance.

Okay. Appreciate that. Thank you.

Thank you. Our next question comes from the line of Jason Wayne with Barclays. Please proceed with your question.

Hi. Thanks for the question. Just on expenses, they came in better than expected in the second quarter. Looks like especially in payroll. Can you just give some color on where you capture those savings, and what's your expectations for RV and MH expense growth in the third quarter?

Yeah. Thanks, Jason. This is John. Appreciate the question. Notable improvements we had in expense took place in the quarter, as you said, related to payroll, but also utilities and taxes. I think a lot of this is the product of line of sight, okay, that we have in terms of within the portfolio. We've obviously gotten more efficient on the MH side in terms of procurement and things like that have allowed us to improve our costs and everything sort of surrounding how we service the properties themselves, whether it's from payroll perspective or utility perspective. Obviously something that we've always been good at from the optimization side and the RV side is looking at a property-by-property basis what the mix is between revenue and expense and rightsizing that in the form of flex, which we'll continue to do.

We've sharpened our execution greatly over the last couple of years that's enabled these things to happen.

Thanks. Just one on updated guidance. There's some higher income from unconsolidated JVs. Just wondering if that increase is expected to be recurring or if it's mostly related to the properties that were sold in June.

The higher income is related to performance of our Sungenia JV. That's leading to the higher expected figure.

Thank you. Our next question comes from the line of Adam Kramer with Morgan Stanley. Please proceed with your question.

Hey, thanks. Just wanted to ask about capital allocation maybe a little bit differently. When you look at sort of the buybacks that were done in the quarter, was that just sort of excess cash flow from the quarter, or should we think about any of that as being sort of a pull forward or pre-funding of sort of U.K. sale proceeds?

Gentlemen, are you there? Hey, I just wanted to ask about the buybacks in the quarter, and if any of that was sort of a pre-funding or pre-usage of the proceeds from the U.K. sale.

Hey, Adam, this is Charles. I apologize. We lost you for the majority of your question. Gonna have to ask you to repeat it, please.

Yeah, sorry about that. Just wanted to ask about the buybacks in the quarter, if any of that was sort of a pre-funding, or maybe pre-usage, I don't know exactly what the right word would be, of sort of expected proceeds from the upcoming U.K. sale closing, or if we should sort of think about the buybacks as separate from that sort of $1 billion that are going to be coming in.

Yeah, I would look at it as kind of the holistic philosophy that we've been sharing around how we think about capital allocation, which is, again, pretty straightforward. We want to allocate capital where it generates the best long-term risk-adjusted returns for shareholders, while also maintaining the balance sheet. The approach that you saw over the last couple of months, is really just execution on that kind of balanced discipline. We've looked at where we were and the opportunity, the liquidity that we have, and we were able to repurchase $200 million of common stock. As a highlight, I know we said it in the opening remarks, but since inception of the repurchase program, we've repurchased approximately $800 million of our common stock, and we still have meaningful capacity for the future.

What I would take is our actions really underscore our conviction and underlying value of the business. As we think about the U.K. and the proceeds coming and the flexibility that we have, we're taking a balanced approach. We're going to invest, as we talked about, in our operating platform, our people, technology, and infrastructure. We believe these types of investments will improve our operating efficiency, enhance the resident and guest experience, and position us for the long term, kind of stronger long-term earnings growth. You've heard John talk about some of our expense management as we go. Some of this is leading towards that potential. On the outside growth, potential acquisition opportunities are out there. It's a competitive market. We're focused in on our core MH assets that we believe could be beneficial to the portfolio long term, and we're gonna stay disciplined in pursuing those investments.

This is kind of the ongoing approach. As the U.K. comes in, there's no predetermined allocation. We're just gonna be thoughtful and allocate as we think is appropriate for long-term growth.

Great, thanks. Maybe just quickly, maybe more general, philosophically almost, what do you guys think the market is missing about the stock, about the story, about the company right now? What would sort of be the emphasis for investors or for the broader market?

Look, I've been here less than a year. I've evaluated the overall company. We put out our strategic priorities. What I would want to make sure that the market is taking away is, we've been clear about what we want to do and how we want to execute. What I think is becoming evident over the last two, three quarters here is that we're doing exactly what we said we were gonna do. We're being thoughtful, we're being disciplined on the capital allocation side. I just went through that. I won't repeat it. We're executing at a high level. Thank you to the whole Sun team for all of that. We've simplified the company, in terms of being able to focus in on our core business that has the most durable growth. I think, the numbers, and we're gonna work hard to do that.

I'm encouraged by what we're accomplishing, while we still have a lot of flexibility and runway ahead. There are opportunities to continue to optimize on the business, we'll continue to share those in the future. I think we have a long runway ahead of us, the progress the team has made over the last couple of years has been outstanding. I'm more excited about the opportunities that lie ahead as we continue to execute and be really thoughtful around everything that we're doing in the business. I appreciate the question. I think there's a lot of opportunity and we'll continue to do what we say.

Thank you. Our next question comes from the line of Wesley Golladay with Baird. Please proceed with your question.

Hey, everyone. I just want to go back to the revenue-producing sites for the RV. I know you were going to shift the timing a little bit as you did the revenue management. Are you still expecting a big uptick in the second half?

Yeah. I would say my expectations, like I said earlier in the call, we had close to 100 net conversions in the second quarter. I would see us continuing to have growth in net conversions over the second half of the year, we're gonna be really thoughtful, West, in terms of what that looks like so we do strike the right revenue mix across transient and annual RV.

Okay. Thank you. Yeah. Thank you.

Our next question comes from the line of Peter Abramowitz with Deutsche Bank. Please proceed with your question.

Yeah, thank you for taking the question. Just noticed you had some property sales in the quarter. They were pretty small. Anything we should read into on those sales in terms of.

How you're thinking about your exposure in terms of MH versus RV, going forward post the U.K. sale? Are you kind of comfortable with where you're at? Or is that something you might look to change going forward?

That's a great question, Aaron. I think at a high level on the particular transactions, the optimization of our platform extends into active asset management and portfolio management. Those were six non-strategic RV assets. Those all required some capital for development and repositioning. In addition to reducing our exposure, in the RV space, they also reduced sort of capital requirements for those, and as you indicated, pretty immaterial to the overall portfolio, but a continuation of that plan. On an overall portfolio basis, we are incredibly comfortable with the mix between RV and MH, and within MH, with our geographic locations. We will continue to actively asset manage the business. To the extent there are assets that do not make sense long term from a strategic perspective, we'll continue to assess those and execute as we need to.

On an overall basis, we're very happy with the portfolio, and I think you're seeing that in the performance across the business.

All right. Appreciate it. Thank you.

Our next question comes from the line of David Segall with Green Street. Please proceed with your question.

Hi. Thank you. Can you talk about why you think home sales volume is down year-over-year? Is that at all related to the expansion of the rental program over the past year?

Yeah. Hey, David, it's John. Appreciate the question. Specific to home sales, I will tell you that we have seen some delays earlier this year in new home closings, but we expect to pick up much of that over the course of the second half. Some of it's attributed to the fact that we've purchased fewer pre-owned homes in 2026, frankly, because residents haven't wanted to sell. They want to stay there. We've made up much of that ground on the broker side, by facilitating transactions between residents, resident moving out, resident moving in, which still maintains a constant revenue stream when that happens. I think it's important to note that at the occupancy level we're at, it's like the contribution that we have from home sales is not remotely as material as it used to be years ago in terms of FFO.

The focus is, again, on optimization across the platform as a whole, inclusive of the rental program, okay? Which has been a great tool for multiple decades that we've had the program because it generates considerable traffic to our properties. That leads to not just rental home leasing transactions, but home sale transactions. These are the things that we're focused on, things like Charles talks about with our strategic pillars and being able to optimize all aspects of our business and having broadly the right mix in terms of revenue and ultimately NOI growth and margin growth in the portfolio.

Great. Thank you. With regard to the annual RV business, have you seen an increase in move-outs in 2Q relative to last year?

No, the answer is no. It's not so much the move-outs as it's been the front end. Again, some of that has been purposeful in terms of what we're allowing to come in as an annual and being thoughtful in our timing, the optimization mix again, that I've talked about, and making sure that we have the right sites that we want to have as annual sites within the portfolio on a community by community basis.

Great. Thank you. Thank you.

Our next question comes from the line of Jesse Lederman with Zelman & Associates. Please proceed with your question.

Hey, thanks for taking the question. You gave some info on the property sales in terms of their potentially higher CapEx load. My question's on CapEx. It looks like recurring CapEx for MH and RV was up to almost $19 million, up roughly $6 million year-over-year. Curious if you could talk a little bit more about that.

From a CapEx perspective, we continue to be disciplined and focused on projects that support long-term growth and attractive returns. Our priorities remain largely unchanged and include investments in our MH and RV operating platform, technology initiatives, and maintaining the quality of our communities and resorts. As we look to the balance of the year, we expect to continue deploying capital thoughtfully with a particular focus on projects where we have strong visibility into occupancy growth, NOI expansion, and resident and guest experience enhancements. Given the current environment and our broader capital allocation priorities, we're being selective, while maintaining a healthy pipeline of opportunities.

All right. That's helpful. Thank you. My last one is: with more visibility into the transient business, thanks to some of the technological investments that Charles talked about in the prepared remarks, can you provide any quantification, if possible, on what you've seen quarter to date from that segment and whether it's the future bookings pipeline quantity or how pricing is trending on those bookings? Thank you. Yeah, Jesse, I mean, what we're seeing is embedded in the guidance that we've provided is really the bottom line.

What I can tell you is what I've shared, which is that the trends are solid, demand's solid, the pacing's solid. We have enhanced that. You brought up technology. One of the bigger pieces that came to fruition over the course of this year, earlier this year, was the advancement we have in terms of our contact center and the customer journey? Which is to say that the 2026 impact of what we've done with the technology enhancements that we've made within that platform has put us in a position where we are executing and capturing at the highest level ever achieved by Sun on the inquiries that we're getting on the transient RV side of the business.

What it's also doing is providing really good data intelligence that we can use to further enhance performance, build top line out into the future. These are the things that are contributing to it. This is the reason why we made the adjustment upward in terms of guidance overall, and we expect to continue to grow that for It's a base that we can grow from.

Thank you. We have reached the end of the question and answer session, therefore, I will now turn the call back over to CEO Charles Young for closing comments.

Great. I want to thank everybody for joining us on the call today. I want to thank the collective Sun team, we look forward to sharing more results in the future.

Thank you for your participation in today's conference. This concludes today's conference call. You may now disconnect your line.