Sun Communities Inc: Announces UK Assets Sale

Research evidence excerpt

Sun Communities Inc: Announces UK Assets Sale

UpdateMand a high single digit EBITDA multiple. Lastly, there was no gain on the sale so

there won't be tax/required special dividend considerations.

Unlikely to be a surprise to the market. This follows a recent unconfirmed media

report suggesting SUI was exploring the sale of its UK business (see here). Originally

purchased in late-'21 for ~$1.3bn, however, the report considered the sale price

would likely be below the purchase price. Since purchasing Park Holidays, there

have been challenges: SUI recorded aggregate non-cash goodwill impairment

charges of $369.9mn in 2023 and $180.8mn in 2024. Mgmt attributed the declines

in fair value to "uncertainty in the macroeconomic environment, exacerbated by

political changes in 4Q24," which drove declines in the business's fair value.

What's next? We think focus will shift to how management plans to use proceeds.

We think proceeds will not be used for debt repayment given the balance sheet is

currently under-levered relative to peers. Instead we would expect a combination of

share repurchases and acquisitions with mgmt focusing on core MH specifically. We

note however that core MH acquisition cap rates are tight, likely in the low-4%

range. Transaction follows last year's larger sale of the safe harbor marinas, with

proceeds used for debt repayment, share repurchases, and acquisitions.

Who is Aermont? Aermont is a European asset management group focused on real

estate and real estate related investment activities. Aermont was established in

2007 by Léon Bressler; it was previously associated with Perella Weinberg Partners,

becoming formally independent in July 2015. Its investments span major European

cities and across real estate asset classes (shopping centers, student housing,