Sun Communities Closes Acquisition - Analyst Blog

By Zacks | November 26, 2012 AAA

Sun Communities, Inc. (SUI), a real estate investment trust (REIT), has recently closed the acquisition of four manufactured housing communities comprised of 1,996  manufactured housing sites for $71.1 million. The properties were purchased from an unnamed seller.

Additionally, Sun Communities offered $15.0 million of mezzanine financing subordinated to $45.9 million of third-party senior debt to acquire two other properties. These would include manufactured housing communities comprising 1,598 manufacturing sites. The company will be handling the managerial operations of these two communities.

The strategic move by the company is aimed to enhance the quality of its overall portfolio. Sun Communities has occupancy of above 90% in most of its markets and with the above transaction it further expects rental and occupancy growth going forward. These acquisitions are also expected to be accretive to the company. By the end of 2013, the company plans to construct over 1,500 expansion sites, primarily in Texas and Colorado.

Earlier in the third quarter of 2012, Sun Communities acquired a recreational vehicle (RV) community of 260 sites titled Blazing Star in San Antonio, Texas, for $7.1 million. This transaction was funded through $4.1 million of assumed debt and $3.0 million of cash.

Headquartered in Southfield, Michigan, Sun Communities owns, operates, and develops manufactured housing communities in the midwestern, southern, and southeastern United States. Presently the company operates a portfolio of 171 communities totaling approximately 61,300 developed sites.

Sun Communities currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We have a long-term Neutral recommendation on the stock. One of its competitors, Equity lifestyle Properties, Inc (ELS) holds a Zacks # 2 Rank, which translates into a short term Buy rating.

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