Sun Communities, Inc. Aktie

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Sun Communities Third 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; Bob Garechana, Chief Financial Officer; and Aaron Weiss, Executive Vice President and Chief Investment Officer. [Operator Instructions] 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 and thank you for joining us to discuss our third quarter 2026 results and our outlook for the remainder of the year. We delivered another strong quarter. Core FFO per share was $2.35, $0.02 above the high end of our guidance. This marks the third consecutive quarter of exceeding our expectations this year, reflecting the consistency of execution we are seeing across the organization.

Earlier this month marked my 1-year anniversary at Sun, and I want to take a few minutes this morning to step back and reflect on the year. When I joined Sun, I knew I was joining a company with a rich history, exceptional communities and a strong culture. What I did not fully appreciate was the depth of talent across the organization and in genuine pride of ownership within our communities. At year-end that initial conviction has only deepened. In September, we completed the sale of our U.K. business, marking the culmination of a multiyear simplification effort.

Today, Sun is a focused pure-play North American manufactured housing and RV company in resilient supply constrained sectors with a strong balance sheet and a significant financial flexibility. Earlier in the year, we established 3 strategic priorities, allocating capital with discipline, optimizing our operating platform and investing in our people, technology and operating capabilities. Let me share how we have delivered against each. First, allocating capital with discipline. We have been delivered in deploying capital, guided by a consistent set of principles, maintaining a strong and flexible balance sheet, returning capital to shareholders and investing in high-quality MH and RV communities where we can drive attractive long-term returns.

With the roughly $1 billion of U.K. proceeds, we returned capital to approximately $544 million of share repurchases year-to-date, paid down nearly $450 million of debt and continue to pursue internal and external growth opportunities. We have continued with our proactive approach to portfolio management. During the third quarter, we sold 3 RV communities in Fort Myers, Florida, for $127 million, realizing compelling value. We remain selective on acquisitions and are pleased with our purchase of 2 manufactured housing communities in the Pacific Northwest that closed earlier this month. Second, optimizing the operating platform. Our teams are collaborating more effectively using better data to make decisions and becoming more disciplined in how we allocate time and resources. You can see it in the results. Manufactured housing continues to deliver strong same-property growth on very high occupancy.

Our annual RV communities continue to grow and transient RV results are stabilized. As John will discuss, our 2027 rental rate increases are coming in above 2026 levels for both MH and annual RV. Third, investing in our people, technology and operating capabilities. We have strengthened and broadened the skills of our leadership team, and we continue to build on our foundation with investments in technology and data to improve operating efficiency, revenue management, pricing and procurement. A key addition to the team is Bob Garechana, who joined us as Chief Financial Officer in September. Bob brings more than 2 decades of REIT experience, including roughly a decade as CFO of a large residential, and we are glad to have you.

I also want to thank Fernando Castro-Caratini, for his many contributions to Sun over his 10 years with the company, including his leadership as CFO in his partnership in ensuring a seamless transition. We wish him the best in his next chapter. I'm pleased with our progress over the past year, and I am encouraged by our outlook. Sun is a more focused company with a clear path to long-term value creation. We are strategically positioned around the themes that define our business: housing affordability, attainable vacationing and demographic tailwinds behind both. The entire team is focused on consistent execution quarter after quarter, year after year. None of this happens without our people who turn properties into communities. I want to thank every one of our team members for their dedication, discipline and focus on serving our residents and guests.

With that, I'll turn the call over to John and Bob to discuss our operating results and financials in more detail.

Thank you, Charles. I could not be more pleased with how the team executed this quarter. In the third quarter, our same-property MH and RV NOI increased 3.6%, with strong performance from manufactured housing and occupancy of approximately 98%. In manufactured housing, same-property NOI increased 6.9% for the quarter driven by a 5.8% revenue growth and a 2.8% increase in expenses. As Charles mentioned, the demographic tailwinds behind our business are something we see on the ground every day.

Manufactured housing is part of the solution for housing affordability and demand for our communities remains very strong. That demand is illustrated at the top of the funnel with traffic to our MH website in the third quarter, up approximately 50% versus last year, which translates to over 20 applications on average we receive for every available site. The work we are doing to optimize our operating platform, including how we market our communities and convert that demand is showing up in our occupancy and rental rate growth while continuing to execute solid expense discipline. We expect our 2027 full year rental rate increases for MH to average approximately 5.4%. Through the end of September, about half of our MH residents have received their 2027 rent increase notices.

Turning to RV. Same-property NOI decreased 1.3% for the quarter. Revenue was in line with our expectations, supported by resilient annual demand and transient performance consistent with our outlook. Annual RV continues to provide a durable base of recurring revenue with same property annual RV revenue up 2.4% for the quarter. Our work optimizing the RV platform is producing results, enhanced revenue management and the real-time data we now have on booking patterns and market trends are enabling us to be more disciplined in how we price and manage our RV portfolio.

We have also improved the guest journey with technology initiatives that have expanded our booking channels, enhanced digital self-service and helped drive approximately 40% improvement in response rates. We also continue to see strong demand and retention across our annual RV portfolio. For 2027, annual RV rental rates are being set with estimated annual average increases of approximately 4.4%. We are performing at a high level, and I want to take a moment to thank our entire team for the discipline and dedication they bring to achieving our goals and positioning us for continued success. Their commitment to service and operational excellence enables us to deliver these strong results. We are long-term stewards of our communities, and we remain committed to investing in them while preserving quality attainable housing options for residents.

I'll turn the call over to Bob to discuss our financial results and updated guidance. Bob?

Thank you, John, and good morning, everyone. Before getting into the numbers, I want to take a moment to see how glad I am to be here. I want to thank the entire Sun team for an incredibly warm and generous welcome. In my first couple of months, I've had the opportunity to visit a number of our manufactured housing and RV communities. The consistent theme is our high-quality affordable communities but even more so, our great people who are passionate, dedicated and focused on serving our residents and guests. Having spent my career in residential real estate, I would tell you that the fundamentals supporting our business and the opportunities ahead for Sun are compelling, and I'm very excited to be here.

Now to the numbers. This morning, I'll walk through our third quarter results, our capital deployment and balance sheet and our updated 2026 guidance. I'll then finish with a few items to keep in mind as you think about 2027. Starting with the quarter, Core FFO per share of $2.35 exceeded the high end of the guidance range by $0.02, driven primarily by higher same-property NOI in manufactured housing, as John discussed, as well as higher interest income and a lower share count from our share repurchases.

Turning to capital deployment. In September, we closed on the sale of our U.K. business with net proceeds of approximately $1 billion and completed the disposition of 3 RV properties and Fort Myers for $127 million. We've deployed those proceeds in line with the priorities Charles just outlined. First, via share repurchases mentioned earlier by reducing debt including the repayment of approximately $267 million of mortgage loans during the quarter and nearly $450 million year-to-date and through the highly selective acquisitions completed after quarter end. We expect to deploy the remaining cash against similar priorities subject to market conditions. This leaves our balance sheet very well positioned. As of September 30, Sun's debt balance was approximately $3.8 billion with a weighted average interest rate of 3.3% and a weighted average maturity of 7.1 years. We have ample liquidity, no floating rate debt and no meaningful debt maturities until 2028.

Now let's pivot to our updated 2026 guidance. As we have disclosed, our prior core FFO guidance assumed a full year contribution from the U.K. Now that it is sold, we have updated our guidance to remove the U.K. business after the September 22 closing date. As a result, the change in our range is not an apples-to-apples comparison to the prior range, and I'll walk through the bridge in a moment. On same property, we are raising our manufactured housing NOI growth guidance, reflecting continued outperformance in the business. For RV, we are narrowing our growth range, primarily reflecting higher-than-expected expense growth from property-specific utility costs. Taken together, we are raising our combined MHRD same-property NOI growth guidance.

On core FFO, our updated full year guidance range of $6.97 to $7.05 per share. The change in our range is primarily driven by the fall. First, the U.K. sale reduces core FFO, reflecting the loss of contribution from the closing date through year-end. Second, the increase in our same-property NOI expectations I already described as additive as is the net impact of interest income and interest expense. Third, share repurchases and new acquisitions are additive as well. Finally, the Fort Myers sale reduces core FFO as we will no longer recognize the business interruption income related to Hurricane Ian that was previously included in our original guidance. As a reminder, our guidance reflects acquisitions, dispositions and capital markets activity completed through October 26. Consistent with our prior practice, it does not assume future acquisitions or dispositions, additional share repurchases or other capital allocation activity beyond that date.

Looking ahead, while we will provide full year 2027 guidance with our fourth quarter results in February, there are a few items worth highlighting now as you begin to think about the next year. First, our core business. Our 2027 average rent increases at approximately 5.4% for manufactured housing and 4.4% for annual RV are both above last year's levels, provide a solid foundation for organic growth and we will continue to focus on optimization identifying opportunities to drive NOI and FFO growth across the platform. Second, 2027 will reflect our first full year without the U.K. business compared to roughly 9 months of contribution in 2026. We have partially offset those earnings through the share repurchases and debt reduction funded with the proceeds.

Third, Fort Myers. These communities were not in our same-property pool, so same property results are not affected. However, as I mentioned, they contributed approximately $10 million of business interruption income in 2026 and in our broker and other income line, which, along with their NOI, will not recur in 2027 given the sale. The redeployment of the sales proceeds only partially offsets this lost income. And finally, our Sungenia manufactured housing development joint venture in Australia that was entered into in 2018, while a small part of our business has contributed to FFO through income from nonconsolidated affiliates, primarily through home sales. With 3 of the JVs, 4 communities now largely filled, we expect fewer home sales in 2027 and the joint venture's contribution will therefore be lower. We look forward to sharing our full year 2027 outlook in February.

With that, I'll turn the call back to Charles for a few closing remarks.

Thank you, Bob. We have simplified the business, strengthened our foundation and are generating real momentum. Our focus is clear, finish 2026 strong and position Sun for long-term growth and value creation for all of our stakeholders. Thank you for your continued support of Sun.

Operator, please open the line for questions.

[Operator Instructions] The first question is from Jamie Feldman from Wells Fargo.

I appreciate the commentary on what took down the RV outlook on property-specific utility costs. Can you just talk like bigger picture about what's going on in the RV business and maybe more on the revenue side, but also on the expense side, just to get a sense of like, is it bottoming? How should we be thinking about what it looks like now, what it's going to look like next year? Just some bigger picture thoughts on the line items and driving it and the -- just kind of the outlook.

Jamie, it's John. I appreciate the question. I think the first thing I'll share is, we're really pleased with the execution through 2026 thus far. On the RV annual side, we got ahead of renewals, like I've talked about before, improved retention earlier in the cycle. We achieved close to 150 net conversions over the last 6 months. On the transit side, we feel good. We're encouraged by what we're seeing. Demand trends are stable, pacing is solidly within our expectations. And as you know, we have well located, high-quality resorts and service-oriented team that provides great experience for our guests.

I think backing up a little bit, I've operated communities and resorts on for nearly 25 years. And during that time, we've continually refined our approach to maximize operational performance while delivering compelling value proposition to our residents and guests, for example, and you know this, I mean, it started in 2020, we proactively implemented our successful conversion approach, ultimately converting over 8,000 sites to annual improving the consistency of earnings and durable cash flows across the RV portfolio. Following that, record conversion activity and supported by the strong base of annual sites that we have now and focus in 2026 shift toward maximizing performance across each communities. We are leveraging technology, data analytics and enhanced operating discipline to drive greater accountability, transparency and more consistent results. So our focus will remain on site optimization, enhancing revenue management and controlling expenses.

I think our scale, experience and growing use of real-time data provides deeper visibility into those booking patterns we have. Customer behavior, market trends, and that enables fast and more informed decision-making across the portfolio. So I think I said a little bit differently, we really, over the last several years, employed a deliberate strategy to convert to annual and built that solid base and revenue optimization. And what we're doing now is unlocking that as we balance between the site mix across the portfolio. So like I said, pacing is solid within our expectations and trends are stable. So -- yes.

You expect the inflection next year?

Yes. I think it's -- Jamie, I think it's same as I said before, I think that the question that comes up often is are we stabilizing, I think is what you're asking. And I like where we sit right now. I like what we see, and we'll obviously get a little bit more into it when we get to our guidance for next year.

The next question is from Michael Goldsmith from UBS.

The MH guidance moves higher and materially higher, I guess, from 6.1% to 6 -- 6.1% to 6.9% before to 6.9% to 7.2%. So I think you just mentioned that it was an outperformance. So what's driving that? And that was also pretty materially higher than the preliminary rent growth that you provided at the beginning of this year. So given that the preliminary rent growth for '27 is higher, like should we expect kind of similar highest numbers going forward in the MH business?

Michael, it's Bob. I'll start, and John may augment as we go through. As it relates to the guidance change related to 2026 in MH, we had great quarter. We've got a great year-to-date performance. A lot of the driver of that was some on revenue on some other income items, but also largely on the expense line item. So we reduced our expense expectations in driving the NOI improvement. A lot of that came from real estate taxes specifically as it relates to Q4. As you think about kind of revenue growth in the aggregate and into 2027, the rental rate guidance that we gave is really solid. It's 40 basis points above where we were last year, which is amazing. It is one, albeit large input in total revenue, but there are other factors that helped drive revenue in the aggregate. So it is one input, but there are other levers not dissimilar to other residential spaces around occupancy, other income, the rental program, et cetera, that will lead to overall outcomes. And when we give you 2027 guidance for same property in February, we'll give you more color around those other areas.

The next question is from Brad Heffern from RBC Capital Markets.

Yes. So you obviously sold some RV assets in the quarter. You acquired some MH assets as well. Should we expect going forward that you would try and scale down the RV business in favor of the MH business? Or is that just sort of random transaction activity and doesn't necessarily represent a strategy?

Brad, it's Charles. Look, we're always going to be far fully kind of opportunistic as we think about the overall portfolio. And I would look at this as more of a one-off. We saw an opportunity it made sense to try to create compelling value. We had a history with that site. And so we saw the opportunity and we took it. And you'll see us just be thoughtful on more one-off and broader kind of approach that you had in the first part of your question.

Okay. Got it. And then, Bob, you talked about a lot of moving pieces for '27 from U.K. sale to repurchases to the loss of the BI, Australia understand like you're not going to give guidance at this point, but can you talk in broad terms about should we expect growth in 2027? It's just a lot of moving pieces to try and figure out how it shakes out.

Yes. I mean we're not going to give guidance yet. I think it's a little bit too early to talk about the overall proposition. The good news is that our core business is very durable and growing really well. And I think that big headline, which is the -- you heard from on the rental revenue or the rental rate growth that John gave and the 40 basis points incremental that we saw. You've seen the team execute really well as it relates to expense management, other and other items. So the core business is growing very positively. There is some noise just with the portfolio transformation, and we're trying to be very clear and credible and transparent with you to provide you with that detail. But the great thing, and I'm very appreciative of it being new in the seat, is just how wonderful the core business is here and what a great setup that is as we go into '27.

The next question is from Steve Sakwa from Evercore ISI.

I was just curious, how did you go about sort of thinking about rent increases for '27? Was that kind of an inflation adjusted kind of cola factor I guess, what decisions go into that rent increase?

Steve, it's John. Thanks. Great question. Frankly, our approach to setting rents is balanced and thoughtful what we like to say. It's led to long-term durable growth for decades. Our expected increase of 5.4% on the MH side is, like we said earlier, above the 2026 level. and in line with the spread CPI we've historically achieved. We set rents community by community. It's not a single formula index. We consider a multitude of factors, including occupancy, retention, resident satisfaction, demand for our product and value our communities provide local regional markets and the corresponding comp set. Each one is a factor, not the factor. So it's really -- it's about appropriately balancing our revenue strategy between occupancy and rate, while continuing to reinvest in our communities, ensuring our residents are satisfied, so that they continue to be advocates of and a sales force for Sun, that's why our residents stay with us on average 10 years or longer and why our cash flows have generated consistent NOI growth over multiple decades.

The next question is from Eric Wolfe from Citi.

It's Nick Joseph here for Eric. Just going back to the acquisitions. I was hoping you could walk through the rationale for them versus other uses of the capital, including obviously, the buybacks that you've been doing what's the billing cap rate on those deals? And then what's the return to some just getting the low-cost preferred and financing structure of that?

Eric (sic) [ Nick ], Charles here. I'll start on just kind of the broader capital allocation priorities, then I'll hand it over to Aaron to go into some of the details. As we talked about all year, we look at capital allocation through the lens of maximizing long-term shareholder value. We'll continue to be awful, discipline, opportunistic. And our actions so far this year I believe, demonstrate that discipline. Year-to-date, we've been active with buybacks $544 million and pay down of debt of about $450 million. And we still have meaningful capacity allowing for future flexibility. That's the great news.

And so to your question, if there are buckets out there, here's how we're thinking about those buckets, if you will. Again, we've demonstrated this on the share buyback. Right now, we've leaned in. We talked about that over our last kind of investor meetings, and that's kind of topped list. It underscores the conviction that we have in our underlying business, and we have plenty of capacity. The other buckets that we are looking at are kind of growth CapEx, investing back in our business, expansions, we'll be thoughtful and more targeted on that side of the business, and we can get into that. But those are opportunities that I think roll off long term and allow us to get into that kind of reinvesting in the business, if you will.

And then you asked specifically between buybacks and acquisitions, acquisitions are going to continue to be selective. We're always evaluating. You'll see that we're in the market. We want to know what's out there. But we're going to be targeted and selective on what we do and discerning, if you will. In the last -- on the list right now, which we're just given kind of low priorities debt payback. Given we have a healthy balance sheet, we're well balanced and no maturities or the maturities addressed through '28, that's lower down on the list. All of that is to say we're constantly keeping our eye on the market. We're going to be opportunistic, thoughtful and we're going to weigh our options against our leverage levels. So those are the high level, and then I'll turn it over to Aaron for the other part of your question. .

It's Aaron, great question. Just following on what Charles was saying, once we identify the strategic opportunities. We move forward to the extent the math works, we're able to structure attractive deals. In the Pacific Northwest, specifically, we went into 2025 with 3 communities, with the benefit of an acquisition we made in '25 and then these acquisitions, we now have a 1,600 site area where we can operate them efficiently with John's existing team with minimal incremental staffing to deliver outsized returns over time. We believe these communities will deliver outsized growth and deliver yield on cost improvement, which is consistent with what we shared with the market a bit earlier.

The going-in yields on these were the low to mid-4s. And again, we do expect that to grow. We shared the market earlier, we're seeing over 50 basis points of yield on cost improvement on an annual basis for the acquisitions we closed on in 2025. In terms of the structure of the transaction, historically, Sun has a long track record structuring deals, compelling for private institutional sellers to deferred tax. Those can include low current yields as well as high conversion premiums, which ultimately the cap rate -- effective cap rate to us and lowers our cost of capital for the transaction. So we will effectively use those going forward as we have this past and that could like the opportunity set despite the low cap rate environment we continue to see in the space.

Really just on that point, low cap rate environment. Are you seeing any movements in cap rates just broadly in the transaction market, given the changes to the debt financing?

Aaron, again, it's a great question. We obviously are active in the market. We are not yet seeing a material move in underlying valuation expectations from sellers. What you are starting to see is probably lower volume as there becomes a bid-ask discovery period through this higher rate environment. So given the sector we're in and what you've heard from Charles and John and Bob earlier, it is a highly compelling, ultimately, one of the most attractive, if not the most attractive residential asset class. So we continue to see valuations in that range. We'll continue to monitor the market, leverage our balance sheet, leverage our occasion and structure to potentially effectuate some transactions to the extent they are compelling and again, we'll weigh them against our other capital allocation options.

The next question is from Jana Galan from Bank of America.

Following up on Steve's question on the MH rental increases next year. Can you talk if there's a spread between all-age communities and age-restricted rent increases? And then any details on kind of mark-to-market when bringing new residents into an MH community?

Jana, this is John. Thanks for the question. First off, I'll say our goal is to maintain high-quality occupied communities with satisfied residents leads to the durable cash flows I talk about and have generated consistent NOI growth over multiple decades. Is there a spread between all age and age restricted. Yes, there is. And from the mark-to-market perspective, when a home does turn over, we will, of course, take the opportunity to bring that site up to market based on demand. But our residents stay on average 10 years or longer. So turnover is very low, retention is very high. Once again, that means those opportunities don't come up often and don't move the overall number much. But like I said, we have a very durable business and our realized rent growth generally tracks in line with our initial increase. So we may see some modest increase above that as the year plays out.

The next question is from Jason Wayne from Barclays.

You mentioned you're looking at some targeted growth CapEx and maybe some expansion projects. So can you just give us some more color on where you're seeing opportunities there? And what kind of underwriting you'd target for expansion?

Yes, this is Charles. I'll start, and maybe we'll go to Aaron. I'll lean in on the growth CapEx really. This is part of my kind of our overall strategic priorities that I've outlined at the start of the year, which is around capital allocation, but also optimizing our operating platform, investing in our people and technology operating capabilities. And so that's really what I'm speaking to is where there are opportunities to invest in our platform and our people, our technology or our infrastructure. They're within our corporate environment or in our communities. And over time, we're going to underwrite those to certain hurdles that make sense. Some of them that ultimately enable our rent growth over time. But we believe these investments will improve operating efficiency, enhance the resident and guest experience and position the company for that long term earnings growth. And that's why it's kind of higher up on our priorities as more of a targeted piece. And it's community by community, sometimes it could be small, sometimes it could be large, but when you aggregate them, it really does make a difference across our communities. The hurdle rates, I don't Aaron, on going be want to go a little bit into that.

It's a great question. I think consistent with the commentary on the acquisition pipeline, we're very focused on opportunities and being really fun granular level as it relates to expansions, proven track record with John and the team over a long period of time. That said, we are focused on a couple of very specific opportunities returns in excess of our cost of capital, the expansion is lower risk, given that we already have a view as to how the asset is performing. The occupancy levels and the rates as it relates to some of the specific growth projects. They are very much asset level and they feed into the data and technology dialogue of strategy Charles outlined, including automated meter readers and things like that, which, again, not large nominal dollar numbers, but can deliver very meaningful opportunities and growth across the portfolio. So highly targeted, highly granular. And then our current structure and framework with 100% focus on MH and RV. We look forward to executing those into '27 and beyond.

The next question is from John Kim from BMO Capital Markets.

And Bob, good to hear from you on this call. I wanted to ask on annual and seasonal RVs. It slowed in terms of growth of 2.4%. And and that's decelerated from the last 2 quarters. I'm wondering if that's a seasonal impact at all or if you're seeing weaker pricing or retention? I know the sites went down a little bit as well. Just any commentary on how this performed and where you see it going forward?

John, it's John. I appreciate the question. I'll start with annual RV retention is very strong. And I like how we start out the year with our retention and I'm excited about the fact that we've grown it over the last 6 months by another 150 annuals that we have. So this is really -- this comes back to the focus that I mentioned earlier on optimization as sites okay, enhancing revenue management and controlling expenses. I think our scale experience, growing use of real-time data, providing deeper visibility into booking patterns and the customer behavior, all the things I talked about earlier. This is about looking at the RV portfolio in total, okay? And so that's why you've heard me say everybody has heard so many times over the years the best revenue-producing site you can gain the one you never lose. That's the same thing on the RV side. So the retention piece is solid. And because we have that base, it gives us the opportunity to really look at the portfolio again in total from an optimization of site mix perspective. That's what we're doing. That's what we'll continue to do.

The next question is from Adam Kramer from Morgan Stanley.

I want to ask about capital allocation and maybe frame it a little bit differently, which is I think you bought back $293 million or so of stock in 3Q, I think another $80 million or so subsequent to quarter end. So maybe keeping the numbers in mind and then thinking about the sort of $1 billion or so of U.K. sales proceeds, how much of that U.K. sales proceeds, how much of that $1 billion remains unallocated and could be used potentially for repurchase again, recognizing you may use it for repurchases or acquisitions or something else. But just trying to think about how much sort of the year-to-date quarter day repurchases already sort of have used that U.K. proceeds versus is coming from sort of a different bucket of different buckets?

Adam, it's Bob. I'll start and team may adjust. So cash is fungible at the end of the day. So there are different moving pieces. But as Charles mentioned, we've acquired year-to-date $540 million or so of stock. We use the line of credit in order to do so in advance of the U.K. sales. So we repaid the line of credit in the period with the proceeds from the U.K. And we have about $600 million of cash or a little bit more sitting on the balance sheet at the end of Q3 and that cash is available for our capital allocation priorities, which Charles outlined. So more than half of the proceeds have already been effectively deployed against share repurchases, which is part of our allocation component. .

The way I look at it from a transaction standpoint, to be honest with you, is the Fort Myers sale funded the acquisitions subsequent to quarter end. And so I think of that as a net transaction component, and we're still a net seller, even outside the U.K. So we are in a great spot from a balance sheet standpoint. We have effectively no maturities until 2028. We have a big cash position on the balance sheet, and you've heard about our capital deployment priorities from the team.

The next question is from Peter Abramowitz from Deutsche Bank.

Yes. Just kind of a high-level one. We've had a couple of months now since the ROAD to Housing Act pass. Just kind of wanted to get your latest thoughts and maybe hear how you're feeling about the change in legislation overall. Just any changes you're anticipating whether things that could affect how you run the company or changes to the industry overall. Just curious for your latest thoughts on that.

Yes. Great. Thanks, Peter. It's Charles. We've talked about this before, but overall, we see the Housing Act as a really positive sign, recognition that the manufactured housing is being seen as part of the solution, and we're uniquely positioned to address the need by providing high-quality, unsubsidized attainable housing broadly. The pieces that we're in the ROAD to Housing highlight the removal of chassis. It pushes energy into the states and cities to rethink manufactured housing. Many of those changes though, in terms of the -- just specifically need to be kind of worked through the manufacturers and then ultimately, kind of rulemaking that goes with it. So we don't see any immediate change other than a dialogue around manufactured housing as part of the answer to the affordable challenges.

And so as I think about -- we think about the business longer term. We think there are opportunities to continue to have dialogue about what can be done creatively with not having a chassis there, the flexibility that comes with innovation around how a house is designed and other pieces like that. But it's going to take time to kind of work through. And we're in those dialogues now. We're having meetings that trying to think through, can we be part of providing more supply and manufacture housing long term and what it might look like. So there's no immediate answer other than we're excited about the dialogue that's coming, and we're going to be saving all in the middle of those conversations trying to get more housing units to Americans, especially in the product that we help provide.

The next question is from John Pawlowski from Green Street.

I have a couple of questions on the -- questions around the growing share of rental homes in the MH portfolio. So rentals as a percentage of total occupied sites are up from call it, 9% in '22 to now north of 13%. Has there been an intentional shift to increase rentals or it's just more of a reflection of you're taking what the market gives you and inbound demand for mentors is a lot higher than owners right now.

John, this is Charles. I'll start and if John wants to fill in any gaps you can. This is not an intentional because the rental program, historically, it's on has been a tool to lease-up communities as we've had expansions or developments. And then the goal over time is to convert many of those renters into home ownership over time. It's been a smart tool. It's -- the core benefit is there's less economic downtime and which translates to higher occupancy. And as a tool, it supports stronger overall revenue growth. That said, we're at about 98% occupancy. And so we see ourselves as being a highly occupied, a healthy place to be, get pricing power and other things. that go with that. So I don't expect our occupancy to climb much further from here. The program has been flowed over years, and this is where John can speak to it. And we're always going to be looking to optimize the mix and performance, and the view of that this program has been a smart lever, but we're going to continue to evaluate it. And what I would say is, and people ask me, "Hey, you came from your background, how do you see things in Bob coming from multifamily?" Given our background, I see the rental program as a natural area for further optimization as we go into 2027. When we think about optimizing the portfolio. This is something that we'll continue to spend time thinking about. But right now, it's been a healthy tool that we've used to drive overall revenue growth.

When you say optimize Charles, should we assume rental sites are going to be -- are going to decline over the next couple of years, hold steady or increase further?

We'll come back for more. This will be the kind of work that we'll do. But the reality is we want that site producing revenue. And we have hundreds of communities that have different demand levers they're here or there, and we'll make sure that we're trying to put the right balance to that. So it has been flowed in the past, and it could ebb and flow. I'm not going to be able to tell you what we're looking at for '27. This is where I want Bob, to get some time. And as the team kind of me bringing my outside perspective, Bob as well, working with John and the rest of the team, we'll put our head on this and really think through what is our approach going into '27. Right now, we're using it to make sure we're driving top line revenue.

The next question is from Wes Golladay from Baird.

Can you talk about MH demand, your outlook for that. Revenue producing site growth has been more modest this year, but you also highlighted the accelerated rent growth and traffic is up. So is this a function of fewer expansions?

I think -- I mean, one of the things that -- Wes, it's John. One of the things I'd tell you is that, yes, I mean, Here's the bottom line. High occupancy means, high retention and ultimately durable cash flow, okay? This what it means. So as far as demand for MH, I mean, even today, we said it, I think, in the prepared remarks, we take applications for every site that we have available in the portfolio. And so what we see now, okay, we talked a lot about optimization across the portfolio, is we're focused on growing NOI and margins and occupancy is just one piece of the equation. We have very little turnover. As I mentioned, high retention. Our residents stay in average 10 years, which gives us a durable continuous revenue stream. I think unlocking our data, improving our tech, coupled with focus on the strategic pillars that we've talked about a number of times, has led to solid operating improvements in our core this year. is quicker inventory turn times, better expense performance, improved results from our procurement platform, higher renewal rates, higher conversion rates and all of our transaction file. So these are the things that we're going to be seeking to do as we always have as we optimize and grow margins.

Okay. And then one quick question on the assets that had BI this year. Are those largely stabilized right now?

Real quick, Wes, I think you had a question on the assets that have BI. The only assets that had the material amounts of BI are the Fort Myers assets that we sold. They were not stabilized. So -- and now that the assets are sold, there will no longer be any BI.

This concludes the question-and-answer session. I would like to hand the floor back over to Charles Young for closing comments.

Thank you for the questions. Look forward to seeing everyone soon. Take care. .

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

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 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. [Operator Instructions] 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 UK business, an important milestone that further simplifies our portfolio and sharpens our focus on our core Manufactured Housing and RV platform. This 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 new $1 billion buyback program underscores our conviction in underlying value of our company and our amendment 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 the part of the solution to the country's housing affordability need. The law includes several provisions specific to manufacture 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 the 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 housing.

I want to thank our team members for their continued dedication and commitment. Their hard work and execution continue to differentiate us, 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 and Fernando to discuss our operating results and financials in more detail.

Thank you, Charles. 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 [ segment ] growth while disciplined management of controllable expenses contributed to the out-performance. 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 [indiscernible] 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 are 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 clear 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 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 out-performance 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 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 30, 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 3.9x. 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 the UK 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 out-performance of our core business, driven by continued strength in MH improving RV operating trends and disciplined expense management. The [ $7.02 ] updated core FFO per share guidance midpoint assumes a full year contribution from our UK 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 UK core FFO contribution of approximately $86 million at the midpoint, together with monthly FFO contribution from the UK embedded in our 2026 core FFO guidance range for the remainder of the year. Consistent with U.S. GAAP, the UK 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 remains 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 '27. Consistent with our prior practice, it does not assume future acquisitions or dispositions, additional share repurchase 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?

[Operator Instructions] Our first question comes from the line of Jana Galan with Bank of America.

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?

Hi, Yana. 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, start now getting ahead of renewals and improved retention earlier in the cycle, and then achieving close to 100 net conversions in the second quarter. On the transient side, we feel good and encouraged by what we're seeing, demand trends, as I said in the prepared remarks, stable and facing it 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. And as you recall, start in 2020, we proactively implemented our successful transient annual conversion approach, ultimately converting over 8,000 sites to 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. So our focus remains on optimizing the transient annual site mix, enhancing revenue management and controlling expenses. I think our scale, experience through the growing use of real-time data provide deeper visibility into booking patterns, customer behavior, market trends, enabling faster, more informed decisions made across the portfolio. And 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.

And 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. And so speaking to the latter -- to the third quarter and the latter half of the year, I'll just reiterate again. I mean 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.

And if possible to ask one more, if there's any update you could provide on the acquisition pipeline?

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, but the transactional market remains very active, but we remain incredibly disciplined and thoughtful in our approach.

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

Great. I guess just following up on capital allocation investments. We get a lot of questions just on how aggressive you would be on the acquisition. So maybe just a follow-up to Jana's question. Can you talk about some of the things you [indiscernible].

Jamie, it's Charles. We're having a hard time hearing you. You cut out.

Color on kind of where your headed 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.

I'm sorry about that. I was just -- it was a follow-up question on the capital allocation piece. So we get a lot of questions on just how low of a yield some would be willing to take on investment. So 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 talk about share buybacks on an IRR versus acquisitions done on IRR.

Jamie, it's Aaron. I'll start and perhaps Charles 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 in mid-25 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. So more broadly, stepping back, we're thoughtful holistically about our portfolio, we consider assets we want to own longterm 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.

So while we look at initial yields, we are focused on the long-term growth of that yield. And we risk adjusted 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. So we look at deals and markets across the U.S. I would say we do not focus on deals and jurisdictions with which we don't operate in today or assets that we believe may require capital in excess of our return targets. So we're going to remain judicious and thoughtful. We have proven the ability to acquire assets that are accretive, but in the last 3 to 6 months, we've been more muted than what we've transacted upon, but we will remain active and thoughtful in the market and the way those opportunities against repurchasing our shares or investing in our people and systems.

Jamie, I'll just zoom out a little bit. Aaron answered the question well. But look, we have the financial flexibility to pursue multiple avenues of value creation given our balance sheet, liquidity, where we stand. You've seen and how we demonstrated over the last 2 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 it generates attractive long-term returns and further enhances the quality of our portfolio. And so we're really being balanced and disciplined. And what's great is we have the flexibility to look at all avenues, including investing in our people, technology and infrastructure. So we will continue to be balanced and thoughtful and disciplined around how we allocate capital.

Okay. And then I guess, Charles, as a follow-up, we're getting pretty soon we'll be talking about your 1-year anniversary. Can you just talk about, at this point, what surprised you the most, the upside, the downside, as you think about the next 6 months, 12 months, what are the key areas we should continue to expect some change?

I appreciate the question. You rounded up. I'm at 9, 10 months, but we're getting to our anniversary. It's been great. The team is fantastic. You've heard me talk about all 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. And I still think we have meaningful opportunity to continue to improve. [indiscernible] 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 focusing 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. And then 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, and we continue to focus on executing for the second half of the year.

Our next question comes from the line of Eric Wolfe with Citi.

Last quarter, your Annual RV growth, I think, produced something like 6.5% same-store revenue growth. This quarter, it was 3.8%. So I was 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. Eric, it's John. Yes, I mean, 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 in some times of the year. And so that's where I'm talking about the team has done a better job of balancing that out between the two revenue lines and ultimately having a better revenue mix in RV.

Okay. So it was less conversions, I guess, that resulted in accelerating growth rate, and that was a active choice because of the profitability?

Correct. In Q1, we actually did increase our conversion, our net conversion by close to 100 in the second quarter.

Our next question comes from the line of Brad Heffern with RBC.

Post the safe harbor sale leverage has been quite low. You paid off more mortgages post the quarter and then you have the UK 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 3.5x to 4.5x. We are close to the midpoint today. The -- once the UK transaction closes, we will be near the low end of that range. So 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 UK sale. And so it will be a work in progress.

Our next question comes from the line of Michael Goldsmith with UBS.

Look, the RV base rent growth decelerated sequentially in the second quarter. Can you just talk a little bit about what that is? And are you seeing some of the impact from the slower transient RV trends impacting the annual RV rate growth?

Michael, the -- there was some sequential deceleration on a quarter-by-quarter basis on the RV side, that points to the balance and mix of annual across the portfolio, given our more annual focused properties and our more transient-focused properties, but it 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 focus versus those that we're looking to continue to convert over to annual.

Got it. And just as a follow-up, you highlighted the new housing legislation is a positive step for Manufactured Housing. So where do you see the greatest opportunity for Sun specifically? Is it higher home sales, expansion of existing communities in the greenfield development or easier zoning approvals? And how soon could you start to see some of those benefits start to flow through?

Michael, it's Charles. I'll start high level, and then I'll let John kind of weigh in on some of the specifics. Look, The ROAD to Housing Act reinforces the, I think, the recognition that the U.S. continues to have significant housing, affordable housing shortage. Broadly, I know your question is about Sun specifically. manufacturer 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, and I'll let John get into the specifics. It's around the removes the permanent chassis requirement, and I'll let John speak to that. Encourages state and local zoning, accommodation of [indiscernible] 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 a lack of supply that's currently out there, and it's in our underlying demand for our product.

So ultimately, we would like to provide more of this. And I think it will take time. I think the 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?

Michael, I think the chassis removal part of the law is actually -- present some really interesting opportunities specific on, okay, which is we've got a 30-year history in development. So we're -- 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 is going to look like, okay? And so the chassis removal presents new opportunities added spec and affordable value for people and for municipalities seeking to serve their affordable housing needs.

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

Our next question comes from the line of Steve Sakwa with Evercore ISI.

Charles, I was just wondering if you could provide an update on the CFO search. And 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?

Yes. 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, 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. So we'll provide an update when we have something appropriate to share, but it's progressing well.

The overall team, really excited to have Iliana 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 progresses team has made over the last couple of years has been outstanding. So I'm excited about the opportunities that lie ahead as we continue to execute, and we'll update you soon, we hope.

Our next question comes from the line of John Kim from BMO Capital Markets.

I have 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. So I was wondering what drove that out-performance that you've achieved so far this year?

And then 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%. So I was wondering how realistic is that big of a slowdown in the back half of the year?

Sure. John. I'll address your second question first. Any moderation over the full year and into the third quarter, it's simply a revenue mix change given that the third quarter is the largest contributor from an RV transient revenue perspective with 46% to 47% of the revenue contribution for the year, coming from transient. So that is -- 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 and then other fees. But majority coming from the rental program as far as anything higher than the rental rate that we've disclosed.

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

Two parts. 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 to $0.17 a beat, only $0.09 of raises. So like you've got a couple of 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 UK portfolio sale in the back half of the year? Is there something else we're perhaps not seeing or appreciating in the second half?

No, 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 growth expectations, reflecting the continued strength of the portfolio and confidence in our operating trends. We'll stay focused on execution but we feel that 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 going back into 2025 for the MH, RV portfolio.

Okay. That's fair enough. I appreciate that. Second piece, you lowered the G&A for cash as part of the updated guide. I'm curious what annualized G&A run rate -- do you look like post the UK portfolio sale?

I wouldn't say we lowered 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 UK from total G&A. So that $39 million, $40 million is now in the net contribution of $86 million in discontinued operations guidance.

Our next question comes from the line of Jason Wayne with Barclays.

Thanks for the question. Just on expenses, it came in better than expected in the second quarter. It 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?

Yes. Thanks, Jason. This is John. I appreciate the question. Again, 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 our -- within the portfolio, we've obviously gotten more efficient on the MH side in terms of procurement and things like that, that have allowed us to improve our costs and everything sort of surrounding how we service the properties themselves, whether it's from a payroll perspective or utility perspective.

And then obviously, something that we've always been good at from the optimization side and the RV side, 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. So it's just we sharpened our execution greatly over the last couple of years. It's enabled these things to happen.

And then just one on updated guidance. So 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 Sun-Ingenia JV. That's leading to the higher expected figure.

Our next question comes from the line of Adam Kramer with Morgan Stanley.

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 prefunding of sort of U.K. sale proceeds? I just wanted to ask about the buybacks in the quarter? And if any of that was sort of a prefunding or pre usage of the proceeds from the U.K. sale?

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

Yes. Sorry about that. Just wanted to ask about the buybacks in the quarter. If any of that was sort of a prefunding or maybe pre usage, I don't know exactly what the right word would be sort of expected proceeds from the upcoming UK 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?

Yes. 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. So the approach that you saw over the last couple of months is really just execution on that kind of balanced discipline. We looked at kind of where we were and the opportunity, the liquidity that we have and we're able to repurchase $200 million of common stock.

As a highlight, I know we said it in the opening remarks, but since the exception of the repurchase program, we've repurchased approximately $800 million of our common stock, and we still have meaningful capacity for the future. So what I would take is our actions really underscore our conviction and underlying value of the business. And as we think about the UK and the proceeds coming and the flexibility we have, we're taking a balanced approach. So 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.

And then on the outside growth, potential acquisition opportunities are out there. It's a competitive market, but we're focused in on our core MH assets that we believe could be beneficial to the portfolio long term, and we're going to stay disciplined in pursuing those investments. So this is kind of the ongoing approach. And as the UK comes in, there's no pre-determined allocation. We're just going to be thoughtful and allocate as we think is appropriate for long-term growth.

Great. And then maybe just quickly, just maybe more general, philosophically almost, what do you guys think sort of the market is missing about the stock, about the story, not the company right now. And what would sort of be the emphasis for investors for the broader market?

Yes. Look, I've been here less than a year. I have evaluated the overall company. We put out our strategic priorities. We've -- 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. And what I think is becoming evident over the last 2, 3 quarters here is that we're doing exactly what we said we were going to 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 that. We've simplified the company in terms of being able to focus in on our core business that has the most durable growth.

And I think the [indiscernible] numbers, and we're going to 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. And so we'll continue to share those in the future. But I think we have a long runway ahead of us. And the progress the team has made over the last couple of years has been outstanding. And I'm more excited about the opportunity that lie ahead as we continue to execute and be really thoughtful around everything that we're doing in the business. So I appreciate the question. I think there's a lot of opportunity, and we'll continue to do what we say.

Our next question comes from the line of Wes Golladay with Baird.

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?

Yes. 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 continue to have growth in net conversions over the second half of the year, but we're going to be really thoughtful Wes, in terms of what that looks like. So we do strike the right revenue mix across Transient and Annual RV.

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

Yes. Just noticed you had some property sales in the quarter. They were pretty small. But 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 UK sale? Are you kind of comfortable with where you're at? Or is that something you might look to change going forward?

It's a great question. It's Aaron. I think the high level on the particular transactions, the optimization of our platform extends into active asset management and portfolio management. So those are 6 nonstrategic [indiscernible] assets. Those all require some capital for development and repositioning in addition to reducing our exposure in the RV space that also do sort of capital requirements to 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. And 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. But on an overall basis, we're very happy with the portfolio, and I think you're seeing that in the performance across the business.

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

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

David, it's John. Appreciate the question. Specific to home sales, I will tell you that we have seen some delays earlier this year, a new home closings, but we expect to pick up much of that over the course of the second half. Some of it is attributed to the fact that we've had -- we purchased fewer pre-owned homes in 2026. Frankly, because residents haven't wanted to sell. They want to stay there, but we've made up much of that ground on the broker side, by facilitating transactions between resident moving out and resident moving in, which still maintains a constant revenue stream when that happens.

I think it's important to note that the occupancy we were at, it's like the contribution that we have from home sales is not remotely as materials as it used to be years ago in terms of FFO. And so 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. So 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. And with regard to the Annual RV business, have you seen an increase in move-outs in 2Q relative to last year?

It's not bad. No. The answer is no. It's not so much the move out as it's been front end. But 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.

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

You gave some info on the property sales in terms of their potentially higher CapEx boat. And my question is 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?

Yes. 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 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 priority for being selective while maintaining a healthy pipeline of opportunities.

All right. That's helpful. And my last one is with more visibility into the transient business, thanks to some of the technological investments that Charles talked about in 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?

Yes. Jesse, I mean, we're seeing is embedded in the guidance that we've provided. This is really the bottom line. What I can tell you is as what we shared, which is that trends are solved, demand sold, the pacing 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, okay, in the customer journey, okay, 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 the highest level ever achieved by Sun and the inquiries that we're getting on the Transient RV side of the business.

And so what it's also doing is providing really good data intelligence that we can use to further enhance performance build top line, okay, out into the future. So 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.

We have reached the end of the question-and-answer session. And 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, and 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 lines.

Good morning, ladies and [ gentlemen ], and thank you for standing by. Welcome to the Sun Communities First Quarter 2026 Earnings Conference Call.

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. 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 release.

Having said that, I'd 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. [Operator Instructions] 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, and thank you for joining us to discuss our first quarter 2026 earnings and updated guidance. We are pleased with our performance this quarter, building on the strong momentum established in 2025. Our simplified platform, strengthened balance sheet, and clear positioning as a leading MH and RV operator continues to support our progress.

Across manufactured housing and RV, our communities benefit from their affordability and limited supply dynamics, which continue to support strong demand, high occupancy and stable recurring income. We entered the year from a position of strength and remain confident in the long-term opportunity ahead as Sun plays an important role in addressing broader affordability needs, with manufactured housing serving as a critical housing solution and RV offering flexible value-oriented options, which together reinforces the durability of our business.

Our momentum is clearly reflected in our first quarter performance, where we delivered core FFO per share of $1.40, exceeding the high end of our expectations and by raising our full year guidance range. By driving MH and RV outperformance, maximizing our core portfolio and leveraging our strong financial position, this quarter highlights the durability, consistency and underlying value proposition our platform delivers, while also reflecting execution on our 3 core pillar strategy.

First, disciplined capital allocation, where we continue to maintain a strong and flexible balance sheet while pursuing selective value-enhancing growth opportunities. We continue to execute our investment strategy, acquiring select assets that align with our portfolio and operating footprint. Over the past several quarters, we actively deployed capital into our core MH and RV platform, including the integration of over $450 million of acquisitions completed in late 2025, along with additional investments in the first quarter.

At the same time, we have remained committed to returning capital to shareholders, demonstrating both confidence in the business and a disciplined approach to capital allocation with over $1.5 billion returned to shareholders since the beginning of 2025, including continued share repurchases in the first quarter of 2026.

The second pillar, optimizing our operating platform was evident in the outperformance of our North American portfolio, where same-property MH and RV NOI increased 6.3%, well ahead of our expectations and performance in our U.K. segment was in line with plan. These results reflect continued progress in driving consistency, accountability and execution across the organization, building on our strong foundation. We are laser-focused on maximizing the performance of our core platform, where we see the most attractive long-term growth, margin expansion and capital allocation opportunities.

And third, targeted investment in our communities, infrastructure and digital capabilities, which continues to enhance the resident guest and team member experience while supporting more efficient data-driven decision-making across the platform. Importantly, these investments are focused on directly enhancing the resident value proposition, including the quality of our communities and the overall resident and guest experience.

Our greatest strength remains our culture and our people. I want to thank the team members for their continued dedication and for the role they play in driving our results.

I'll now turn the call over to John and Fernando to discuss our results in more detail. John?

Thank you, Charles. In the first quarter, our North American same-property MH and RV NOI increased 6.3% compared to the prior year, driven by a 5.9% increase in revenue, partially offset by a 5.2% increase in expenses. Same-property occupancy remained strong at over 98%, reflecting continued demand across our communities.

Within manufactured housing, same-property NOI increased 6.3% with revenues up 6.6%, primarily driven by site rent growth. Expense growth was consistent with our expectations, reflecting ongoing progress on payroll efficiencies and procurement initiatives. This outperformance demonstrates the continued execution of our operating strategy with a strong focus on disciplined expense management while driving sustainable top line growth. Building on the foundation we established last year, we are seeing the benefits of our operating discipline, accountability across the organization, and continued focus on service and execution at the property level.

Turning to our RV segment. Same property NOI also increased 6.3% for the quarter with revenues up 4.2% and expenses increasing by 2.3%. We entered the year with a strong focus on securing RV annual renewals earlier in the cycle, and the team has done an excellent job accelerating that pacing in the first quarter. This positions us well to enhance the annual and transient revenue mix as we move into peak season.

On the transient side, we are encouraged by what we're seeing. Demand trends are stable and pacing is ahead of where we were at this point last year. That said, it is early in the season, and the first quarter represents relatively small portion of transient's contribution to our full-year results. So while we are pleased to with transient's early 2026 performance and outlook, we remain appropriately measured in our expectations and we'll provide additional color as we progress through the second and third quarters. Consistent with our strategic pillar to optimize our operating platform, one key area of focus is to enhance data analytics and asset management to make better, more proactive decisions and optimize our portfolio and maximize performance across all segments of the business.

Turning to the U.K. We are very pleased with our team's performance this quarter and appreciate their continued focus on execution and operational excellence. Same-property NOI increased 1.6% with revenues up 5.3% and expenses in line with guidance. We are incredibly proud of the unmatched team we have across the organization whose continued dedication and execution drove strong performance throughout 2025 and the first quarter of 2026, and I want to thank everyone for their ongoing service, hard work and commitment to delivering for all of our stakeholders.

I'll now turn the call over to Fernando to walk through our financial results and 2026 guidance update. Fernando?

Thank you, John. As Charles highlighted, our FFO per share for the quarter came in at $1.40, exceeding the high end of our guidance range. The outperformance was primarily driven by the continued strength in our manufactured housing fundamentals complemented by better-than-expected performance in RV transient within our North America MH and RV segments. The first quarter represents a seasonally smaller portion of our full year earnings, primarily due to R&D contribution, and we remain thoughtful in how we translate this outperformance into our full year outlook.

From a capital allocation perspective, we continue to remain disciplined. During the quarter, we bought back approximately 0.5 million shares at an average price of $126 per share for a total of $60 million repurchased.

As of March 31, Sun's debt balance stood at $4.3 billion with a weighted average interest rate of 3.4% and a weighted average maturity of 6.8 years. Our net debt to trailing 12-month recurring EBITDA ratio was 3.7x, and we continue to maintain a strong and flexible balance sheet with $492 million of debt maturing in 2026.

Turning to guidance. As detailed in yesterday's release, we are raising our full year 2026 core FFO per share guidance range of $6.87 to $7.07 with the midpoint of $6.97, a $0.04 increase above the prior range, reflecting a strong start to the year and continued outperformance in our core manufactured housing business.

At the midpoint, within North America, we now expect full year same-property NOI growth of approximately 4.7%, with manufactured housing increasing to 6.2%, up from prior guidance while RV remains unchanged at 0.9% growth. Beyond MH, the incremental uplift to guidance is driven by modest improvements in interest income, lower expected interest expense and contributions from brokerage and other income streams. All other guidance assumptions and ranges remain unchanged. For additional details on our outlook and key assumptions, please refer to our supplemental disclosures.

Our guidance reflects completed acquisitions, dispositions and capital markets activity through April 27. It does not assume future acquisitions, additional share repurchases or other capital markets activity, which is often reflected in analyst estimates for the year.

With that, I'll turn the call back to Charles for closing remarks.

Thank you, Fernando. Before opening the line for questions, I want to highlight how encouraged we are by the momentum we are seeing across the business. This follows our solid 2025 results, and we are well positioned to sustain our strong performance moving through 2026.

We are very excited about the opportunity in front of us, supported by the strength of our platform, the quality of our team, the flexibility of our balance sheet and the favorable fundamentals across our business. We remain focused on our 3 core pillars of: disciplined capital allocation; optimization of our operating platform; and strategic investment, which together position us to deliver consistent, durable growth and long-term value for our stakeholders.

With that, we'll open the line for questions.

[Operator Instructions] Our first question today is coming from Eric Wolfe from Citi.

There were some news articles recently that suggested you might sell Park Holidays, including the $400 million of ground leases. You recently purchased at a pretty big discounts. Can you just comment on this at all? Were there any of those sort of numbers in that article were accurate at all? And just the go-forward strategy on the U.K?

Eric, this is Charles. Thanks for the question. We regularly review all parts of our business to ensure they're optimally positioned. We see that as just good capital discipline. And what I can tell you is U.K. business, high-quality business. I've talked about that before with a strong team, solid asset base, and it continues to perform in line with expectation.

Our near-term focus is to maximize value through execution, strengthening performance, driving growth where we can and maintaining cost control and flexibility. Park Holiday team is strong and performing well given the U.K. backdrop. So I'll leave it there.

Okay. And then if I look at your 10-K, it looks like there's about $2.4 billion in gross assets. I'm just trying to get a better sense for sort of what's included in that? Is there all of those properties that are listed there, managed by Park Holidays? Are some of them still under development and not generating much NOI, you have a sort of a miscellaneous category, which I think includes sort of the headquarters. Could you just talk through sort of what's in that $2.4 billion, how much of it isn't really generating much NOI? And then I guess just one last question I'll lay on there is if you were to try to borrow against these assets, do you have a sense for sort of how much you could borrow? And what rate you could get?

Eric, this is Fernando. The majority of that amount is the operating assets for Park Holidays. We do have some development land that came to us from a loan that we have made. But again, about $1.9 billion of that value is the operating assets.

And it's Aaron, regarding the financing opportunities and options as we talked about, part with your earlier question, we did acquire the ground leases at attractive yields, which gives us incremental strategic and financial flexibility. As of now, Park Holidays is financed against our corporate credit facility. And so to the extent we wanted to pursue additional financing options, we could, but we haven't focused on the financing alternatives for the business. We just wanted to maintain full strategic and financial flexibility.

Our next question is coming from Jamie Feldman from Wells Fargo.

I guess just a follow-up on Park Holidays. So it looks like you bought an asset in the U.K. during the quarter. I think a lot of people reacted to that thinking, that means, hey, why would you be buying something if you're eventually going to sell the platform. So how should we think about how that asset fits into the broader Park Holiday portfolio? And then just how should people be reacting to the view -- how people are reacting to that activity of buying even though a lot of people are expecting a sale here?

Great question. It's Aaron speaking. As we alluded to, we did acquire Kingfisher, which is an attractive park in the U.K. It's consistent with our strategy here, which is it's complementary to existing operating assets and efficient from an operational perspective and has some growth opportunities to the extent we want to invest. I think when you think about the aggregate investment we have overall in the U.K., it's pretty de minimis from an overall investment perspective, but it does enhance the growth opportunity there.

And we believe longer term, we'll continue to drive incremental value in the platform, which, as Charles alluded to earlier, it's the long-term focus. But I don't believe it affects any overall strategic planning or impact that in any way. To the extent we see other value-optimizing opportunities, we'll assess them and execute on them. We have, over the past couple of years, sold a couple single assets in the U.K. as well that did not meet our return on investment objective. So you'll continue to see us look to maximize the overall value of the business.

Okay. And then maybe a question for John. Just where are you on the expense savings focus? It seems like you had some success in the quarter, but how far are you through the process? I know it's continuous, but any kind of major leaps and bounds so far? Or do you think there's still a lot of wood to chop ahead?

Yes. It's a good question, Jamie. I appreciate it. It's just -- I mean, you kind of covered it. I mean, to put it bluntly, it's just part of the core of what we do. I mean expense discipline is a big piece of it. We are always and always will be looking for efficiencies that we can pick up in all the various expense categories, ways that we can do things better, more that we can move into our procurement platform, which continues to grow, okay? And those sorts of things. It just -- it's a fundamental thing, both on the expense discipline side as well as the focus as I've shared many times on top line and growing the company.

Next question today is coming from Brad Heffern from RBC Capital Markets.

On the FFO guidance, you beat more during the quarter than the overall guidance went up. So I was just wondering, was some of the beat timing related? Or why was the outperformance not read forward more?

Brad, as disclosed, we did increase our guidance by $0.04, a nearly 60 basis point increase at the midpoint for full year. As detailed on the call, from a contribution perspective, the first quarter is -- has a lower contribution related to the rest of the year. And so we want to remain thoughtful as it relates to the rest -- to the second and third quarters. As you know, relative contribution on the RV side is higher during the summer months. So we're being prudent with our guidance increase.

Okay. Got it. And then on G&A, it was a relatively high number on the income statement this quarter. I'm sure there was some noise in there from the CFO changes. But can you give what the comparable 1Q number is to guidance? And just talk about your overall comfort hitting that guide with the 1Q number in context.

Yes, happy to provide some color there. And as you mentioned, the majority of the add back activity in the quarter is related to executive leadership transitions that have been publicly disclosed and discussed. Specifically, this primarily reflects, Gary's transition after 40 years with the organization, which constitutes the majority of the amount in addition to costs associated with recent CFO and COO changes.

As you'd expect, these costs are largely concentrated in the first quarter, given the timing of those transitions. And importantly, these are nonrecurring in nature and not reflective of the ongoing cost structure to address your question as far as the 1Q comparable. That would be -- our 1Q G&A was about $61 million in the first quarter. That did include some Marina and the comparable would be $51 million for the first quarter of this year.

Our next question today is coming from Haendel St. Juste from Mizuho Securities.

My question is on the buybacks -- stock buybacks during the quarter. I guess I'm curious why not buy back more? You seem to buy back less than [ $5 million ] of the $60 million during the quarter, during the month of March. So was there any reason you paused in March? Anything holding you back? You have a lot of cash on the balance sheet, obviously. So curious kind of on the thought process. And then perhaps what does stock buybacks rank today in terms of capital allocation priorities?

Thanks, Haendel. It's Charles. Appreciate the question. From a broader, if you kind of zoom out, our objective on capital allocation is pretty straightforward. We want to allocate capital where it generates the best long-term risk-adjusted returns for stakeholders. And as you point out, we're in a very strong position here in '26 with a strengthened balance sheet, reduced leverage and real flexibility in terms of maturities and liquidity.

So as we think about our kind of tools in the tool kit, if you will, it's a kind of a balance of options of investing in our communities and our operating platform, which we're doing. It's pursuing thoughtful, disciplined, accretive, external growth opportunities that align with our strategy, which we've also done that in the first quarter, and we'll continue to look at that and as well as return capital to shareholders either through dividends or share buybacks, which we also did this quarter.

So I think going forward, to your question, we're going to be balanced. We're going to expect us to use our flexibility to stay balanced and use all those tools and be thoughtful about when and how, with the idea that we're going to evaluate and make the decision that is going to be best for shareholder value.

Much appreciated. Maybe some color incrementally on just the capital deployment opportunity beyond the buybacks, maybe on the transaction market, what you're seeing in terms of maybe availability, pricing ranges in the different size segments, MH, RV. Just curious what the market is looking like out there if you're sensing any incremental change in opportunity or pricing or just color more broadly on that side of the business?

It's Aaron. Great question. I think what you'll hear is consistent with what we've talked about over the last few quarters and the last couple of years. It remains challenging to acquire high-quality, attractive MH and annual RV communities. We felt really good about what we were able to achieve through the latter part of 2025 with about $450 million of acquisitions across 14 communities. We did acquire one more in the first quarter in our disclosure in Michigan.

I think we want to highlight we're very focused on assets that overlay nicely with our operational platform, with synergies, have nice geographic overlay with what we're looking to do. Our pipeline remains reasonably strong and consistent. It does appear that there probably will be a little more activity. It's been pretty muted over the last few years, but I don't think we're looking for a massive change in the outlook. I think we've talked before that MH opportunities tend to be found in the sort of low to mid-4% cap rate range and we want to underwrite those for, as Charles alluded to, attractive long-term risk-adjusted growth.

So we're seeing these more in one-off and small portfolio transactions. We remain very active in underwriting, and we do believe there will be opportunities to continue to add to our portfolio thoughtfully, and we remain very active in the market and we'll continue to provide that color and hopefully continue to add to the portfolio in a meaningful way over the course of '26.

Next question is coming from Jana Galan from Bank of America.

Congrats on the strong start to the year. Curious on your focus to enhance data analytics. Can you kind of share some early wins in the process and other areas where you are? And is there kind of more opportunity in the MH and RV annuals? Or is this really to kind of help kind of add visibility for booking windows and transient?

Yes, this is Charles. I'll start, and then if John wants to jump in, he can add some color. As we talked about, this is a focus in our 3 kind of core pillars around optimizing the portfolio and investing in our infrastructure and specifically around building a unified digital backbone. And as we look at that, and it's exciting to see how it's starting to show up in the first quarter. Again, it's early. A lot more to be done, a lot of year left. But I talked about this on the last call, with our ERP implementation a couple of years ago, we have more real-time access to data than we've ever had. And those benefits are starting to show. Like I said, it's early.

We're focused in on the customer journey where we're enhancing the system and centralizing some of the services that eventually will allow for better data and AI to help out. And taking all of this and building off that solid foundation is the investment and focus that we're making this year.

Long term, what we're really trying to get to is we have this kind of special position as being in the business for decades. And as we unlock that data and really focused in on the data architecture and infrastructure will allow us to continuously improve how we make capital allocation decisions in terms of dispositions and acquisitions, and it's a real opportunity to kind of build off the execution and the resident experience.

John, if you want to add anything specifically, but that's our focus for this year, and it's still early, a lot more to build off of that as we go.

Yes, Jana. Appreciate the question. It's -- and to give you sort of the operational perspective on it, a little bit more is that, I would say, as I've shared before, we have data like we've never had before, okay? And in what we're seeing actually start to take place here is I'd like to call it the intersection of data, discipline, accountability and performance transparency that ultimately is leading us to better conversion of our long and short-term prospect funnels across the board, okay? Those are the things that are happening. And we can unlock things in the customer journey, whether it's the visibility from prospects, ease in the booking process, the conversion of that funnel, those sorts of things.

I mean, specific to the RV side, if you look at our booking platform that we have, we literally have heat maps. I mean they're actually heat maps when you look at a property itself on the screen, and you can tell, an individual property show the individual site revenue and occupancy at any point in time. And that, actually, it will inform our revenue management practices, our focused marketing investments and our guest conversion strategy to maximize mix, margin and long-term value.

And then just a quick accounting question. The long-term lease termination losses that are an adjustment to core FFO, I know those are U.K. related, but can you kind of help explain what those are? And they were helping last year but hurting this year?

The lease termination charge relates to us acquiring long-term lease in the U.K. This is a noncash when acquired. Noncash accounting charge as it relates to the transaction itself. It has nothing to do with the operations of that asset or the portfolio.

The next question is coming from Michael Goldsmith from UBS.

I'm here with Ami Probandt. Can you talk about the acquisition opportunities in the U.K.? You stepped into the market this quarter. Is there competition from other buyers on individual properties or portfolios? And do you have a cap rate or EBITDA multiple on the property that you purchased?

Thanks. It's Aaron. Good question. I think we remain active in observation and underwriting of opportunities in the U.K. and the U.S. I think we're going to remain highly selective. As alluded to earlier, we did sell a couple of single assets over the last couple of years. This was a pretty unique opportunity to acquire an asset, as we mentioned earlier, by GBP 8 million, a little over $10 million. We view this as pretty one-off in terms of what we're looking to do.

There might be one or two other opportunities. We'll look at it underwrite. And the opportunity set exists, but we're going to be highly selective about what we're looking to do. We would suggest that the cap rates and yields we see in the U.K. are higher than what we talked about earlier related to U.S. MH and our underwriting targets in terms of returns are also higher. So we'll remain highly selective, and I would suggest that this opportunity was more one-off or -- in terms of our long-term strategy in the U.K.

And just as a follow-up, there's been some macro challenges in the U.K. as a no secret. Does that mean people are doing more domestic vacations or -- and so that should drive more transient demand there? Or is that kind of offset by the slower home sales? Just trying to kind of piece together those 2 moving pieces which may offset each other?

Yes, Michael, this is John. I mean, obviously, I mean, you said the macro has been challenging. That has had some effects in terms of home sale volumes. But what we've seen is that people are, to your point, vacationing locally and things like that. So we have seen positive trends on some of the short-term stays, which can ultimately lead to more home sales down the road. But I think the macro does continue to be a little bit challenging from that perspective. But once again, I think our team is doing extraordinarily well against that backdrop, as you've seen in the results as we put within our plan.

Our next question today is coming from Adam Kramer from Morgan Stanley.

I just wanted to ask about the revenue from real property for North America sort of guidance for the full year. It looks like that was raised. It looks like that stems from core MH. Just wanted to talk about sort of the drivers of that raise. And if you can maybe break down occupancy versus rates, sort of the assumptions today and if they differ from, I guess, from the prior assumption? And just overall, what changed in the guidance there?

Sure. Rate expectations remain unchanged with the guidance we provided back in October with MH guidance increase of about 5%. And RV at 4%. We were slightly higher than that for MH for the first quarter at 5.2%. And just below that on the RV side for 3.6%, but over the course of the year, that will -- that is expected to catch up given the cadence of the rental increases.

From an occupancy gain perspective, we are also modeling about a 1,200 site or occupancy gain from a site perspective. And that is split pretty evenly between manufactured housing and RV and other -- I mean other strengths that we saw in the first quarter from a revenue perspective would be fees related to the rental income, lower discounts that have been provided that for move-ins or for -- from an occupancy perspective.

Great. That's helpful. And then maybe just a similar question on the expense side, a little bit higher there, sort of guidance midpoint change. Maybe just break that down in terms of some of the different line items there? How they compare to the prior guidance? And I think your peers sort of talked about their insurance sort of renewal and the result there. So would love to hear sort of latest thoughts on the insurance market and what you guys are seeing there as well.

Sure. So expense growth was in line with our expectations for the first quarter. Higher growth items included supplies and repair given a colder, snowier winter in our portfolio as well as real estate taxes. We did have some offsets on the utilities front. Importantly, year-over-year expense growth expectations for our MH and RV portfolio, is expected to moderate for the rest of the year as we do guide to a mid-3% full year expense growth at the midpoint.

And this is Aaron. As it relates to the insurance question, we do have a full year renewals. So we renew at the end of December for the full year. So our insurance expectations were embedded in our full year guidance. So we don't have much new insight into the insurance market because we've had the same program in place since December. So our insurance expectations were embedded, and I think are consistent moving forward from a guidance perspective.

Next question today is coming from Steve Sakwa from Evercore ISI.

I just wanted to circle back on the home sales, in particular, maybe the U.K. and just see if you guys have tweaked the program? Are you changing the prospects of trying to drive sales. It was interesting to see the volume was actually up modestly while it was down in North America, pricing was actually up 6%. So have you guys made any major tweaks to that in order to drive occupancy in that market?

Yes. Steve, it's John. I appreciate the question. I mean I think it really just sort of falls in line with what we've talked about for a number of years in the U.K., which is we want to see more volume, okay, as opposed to the margin side, so we can drive more real property income and that shift of the revenue mix that has taken place over the course of the last several years in the U.K. So what you're seeing there is really illustrative of that strategy just continuing.

Okay. And maybe one for Charles. I just didn't know if you could provide an update on the CFO search. It's been a few months since Mark departed, I just wasn't sure kind of where you and the Board were in that process.

Yes. Thanks, Steve. Look, we're conducting a thorough but expedient process. It's a broad search. We've engaged a third party. We're going to be thoughtful about this. This is a critical leadership role for Sun, and I'm focused on ensuring we have the right long-term partner to support both the strategy and execution of the business going forward. And it's important we get it right. So we're moving with urgency, but we're not going to rush. To be clear, we have strong continuity within the finance organization, and we remain fully focused on execution. So the goal is to identify the right person expeditiously as possible, and we'll provide updates as the process evolves.

Next question is coming from Anthony Hau from Truist Securities.

I noticed that RV revenue-producing site net gain was down this quarter. Can you help us understand what's driving that? Whether it's demand driven or pricing related? And how are you thinking about offsetting that pressure going forward?

Yes. Anthony, it's John. Great question. It's timing, is what it is. This has been more due to our timing strategy for new RV annuals in 2026. Our performance for the quarter is in line with plan as a result of our focus on retention, which you've heard me talk about before and our pace on renewals is actually ahead of our Q1 expectations. It's sort of like we use our data, I think our team approached 2026 smartly with respect to the timing of conversions during peak season. Leading to higher revenue transient stays resulting in a better revenue mix between annual and transient in the quarter.

So we walked in the year really thoughtful in terms of the rent increases, our competitive positioning, targeted retention efforts. I think what you're seeing here is just these are the things that when you're looking at like a winter season for January through March, there's a right time to make these conversions. And so we've taken the data that we have to make that shift and expect to continue to expect to deliver what we said within guidance for RV conversions for 2026.

Next question is coming from Wes Golladay from Baird.

I want to stick with the annual RV. The rate is moderating, occupancy was up a little bit. But you're still producing pretty solid same-store revenue growth around 6.5% this quarter. What is driving that?

As detailed earlier, some of that additional income driving growth has been less -- fewer discounts provided and there are some additional fee income included in those numbers.

Okay. And just a quick follow-up on that. Will that be a similar tailwind for the rest of the year? Should we expect that to moderate?

There's potential, but we're being thoughtful around what we are expecting from the annual side of our portfolio for the remainder of the year.

The next question is coming from David Segall from Green Street.

Curious if you can you help us walk through the expected deceleration in North American NOI growth from 1Q to 2Q. Is that related to bringing back more discounts that you took away in the first quarter?

No, David. Actually, this is from a comp perspective. I think you'll recall for our RV portfolio, we had a 21% decline in transient RV revenue in the first quarter. So that was a better comp for us on a year-over-year basis for 1Q. As it relates to our guide for the second quarter, we're expecting just about 4% growth at the midpoint for MH and RV. It really is the components of that are about 6.5% growth for manufactured housing and about a 2% decline on the RV side. So again, it's more so comp on a year-over-year basis than a decel of discounts, for example.

Great. And then I'm curious what share of your annual G&A load is attributable to Park Holidays?

Our -- we estimate for Park Holidays, our G&A load is in the high $30 million contribution from a full year perspective.

The next question is coming from Peter Abramowitz from Deutsche Bank.

Yes. And I appreciate the comments there about the comps becoming more difficult into the second quarter and the rest of the year. I guess, just digging into the RV guide a little bit more. So in addition to the comps, could you talk about kind of the expected ramp in revenue growth in transient throughout the year? I think last quarter, you mentioned that you had embedded in the guide around negative 1.5% top line growth in transient revenues for the year. So has that changed at all? Or is that kind of still what you're expecting?

So our expectations are unchanged as it relates to our expected growth on the transient RV side. For the first quarter, we did a 1.7% decline year-over-year. Over the course of -- for the full year, our guidance at the midpoint is a 1.9% decline. We are for the second quarter, we're expecting about 3.7%. So a moderation in the second half is expected to hit that midpoint of 1.9% decline for the full year.

Okay. That's helpful. I appreciate that. And if I could ask one more. Just curious about your view in the housing bill that passed in the Senate in March and the proposed removal of the permanent chassis requirement for manufactured homes. I guess, can you help us think through how that could impact your communities in terms of the look and feel and then also potentially your capital allocation plans if the bill is passed as it's been proposed?

Yes, this is Charles. I'll start on the broader kind of, affordable housing bill, then I'll give it to John to speak specifically to the chassis provision. Broadly or kind of stepping back, hugely supportive of anything that supports attainable housing that's going to be constructive for housing policy.

So we're watching the situation closely, taking it seriously, working with our industry groups to watch these proposals. It seems like there's been a little bit of slowing on the momentum there. But if you step back before I give it to John, really what this is about is around housing affordability. And that said, the industry that we're in, manufactured housing is a part of the solution for housing affordability. When you look at that, our industry relative to other housing options, there's real value there. The last thing I'll note is that from a federal perspective, we get the intent, but much of this is local. And when you think about production of new housing, local dynamics are what matter most. And so we're paying attention to kind of how that plays out.

With that, I'll turn it over to John to get specifically into the chassis provision.

Yes. No. Thanks, Charles. I think that the chassis -- the removal, the chassis requirement creates some really interesting opportunities potentially, okay, both in the form of what cost, cost savings to Charles' point, about affordability and making the product be more affordable. But at the same time, being able to build houses that have a different spec level, okay, and those sorts of things that are more appealing to not just the consumers, but to the powers that be at the local level, okay, that ultimately provide the approvals for development that we may do someday. So we're obviously -- we think all of this is positive. We remain optimistic and encouraged by the progress with it. We'll have to see how it plays out though.

Your next question today is coming from John Kim from BMO Capital Markets.

I know there's been a couple of questions on this, but it's not really clear to me what you're doing with the U.K. I know you've been saying it's a high-quality business. It performs well, but you did market it for sale, and you bought an asset recently. Is the takeaway that all options are on the table and you're going to keep those options open? Or would you prefer to exit and focus in North America?

Yes. Look, I appreciate the question, John. Look, we are -- as I said at the beginning, we continually evaluate our portfolio to determine how best to create long-term shareholder value, as disciplined capital allocators, that's kind of what we do in all parts of our business, and the U.K. is no different. I'm not going to repeat it. It's a high-quality business, great team, executing well, and we're focused in on making sure that we're maximizing value by execution and strengthening performance and supporting the team the best we can.

Okay. And then just sticking to the U.K., you maintained guidance, both on same-store NOI and home sales, but occupancy on annuals did slip a bit this quarter. So I'm just, wondering how much visibility do you have on the seasonally more important second and third quarters at this point?

John, you were breaking up at the beginning. Can you just repeat that first part?

Sure. You just maintained your U.K. guidance, but you alluded to the kind of weak economy and the annual occupancy did slip in the U.K. this quarter. So I'm just wondering how much visibility do you have on the second and third quarters at this point?

The occupancy that comes from the contribution of new expansion sites that we build when the parks are closed over the course of the fourth quarter last year. So that really is the driver as far as a quarter-on-quarter occupancy decline.

Your next question is coming from Jason Wayne from Barclays.

Just in the Northeast, some sites shifted from annual to transient there. Just curious if that relates to the strategy of pulling forward RV renewals? And could you give any color on forward booking trends for the summer?

Yes. I can give you -- absolutely, Jason. Appreciate the question. I think what we're seeing and as I shared in my prepared remarks is, we're encouraged by current pacing and trends, okay? But to reiterate, it's still early in the year. As you know, the first quarter is relatively small compared to the other quarters. And so as a result, we remain measured in our outlook and we're not changing any expectations at this point. But RV is an affordable vacationing option. We'll continue to focus on our performance, optimize revenue and bottom line contribution, but we will provide more color as things progress.

Next question is from Jesse Lederman from Zelman & Associates.

I know obviously, municipality approval has been probably the largest headwind in terms of new community development. So there's bills in Texas and Kentucky slated to go into effect this year to kind of level the playing field a bit from a municipality approval perspective. So are you seeing or expecting anything or hearing anything from local municipalities in those states that may provide you with more potential expansion or development opportunities in Texas and Kentucky.

Yes. Jesse, I would probably -- that would pertain to us from the Texas perspective. But -- it's one of those things where there really does need to be meaningful work in the linkage between federal and local. We'll be optimistic about it, but we were pretty refined, okay, when we were doing a lot of development in the past with our process. I was at a lot of those meetings. I shared a lot of things with municipalities that frankly, to some degree, we had to educate them on what affordable housing means and help them with that.

But as I've often maybe even sort of joked before, the impact that they had was instead of taking 24 months to get entitlements, it might take 23 months. So it's like marginal improvement. This is why we are so interested in seeing what progresses in terms of how homes are built with the chassis removal requirement and what kind of impact that has on designs that locals might find more attractive and further unlock what you're talking about.

Awesome. Appreciate that. And one quick follow-up on the kind of guidance increase question from earlier. It does imply that 2Q to 4Q outlook was lowered by $0.08. And you did note a higher contribution from RV in the summer months. It sounds like also your expectations were maintained for kind of RV moving forward. So just trying to understand the conservatism, I suppose, in the guidance for the rest of the year.

We're remaining thoughtful about the relative contribution, as you can see in our guidance tables. RV specifically during the first quarter is only about 16% of the contribution for the full year. So we are working through that. John has shared his thoughts and what we're seeing from a pacing perspective for the remainder of the year, where we are pleased with the trends that we are seeing. But, yes, inherently, given that we raised guidance by less than the beat in the first quarter, there is some additional expenses or performance changes for the remainder of the year.

Our next question is coming from Eric Wolfe from Citi.

I actually was going to ask that same exact question. But maybe I'll follow up. You just said that there's going to be some performance changes for the rest of the year. Could you just talk about what that is and maybe why -- where you beat so much in the first quarter? Because there was obviously a large $0.12 beat and you are just raising by $0.04. So just trying to understand exactly what the offset is?

Yes. We'd be at the high end of our range by $0.08. So we increased our range by $0.04. So the remainder of the performance, we did outperform in manufactured housing. We had some small outperformance in RV. You saw the guidance increase for MH for the full year and RV guidance is remaining the same. So some of that outperformance is in the more seasonally higher contribution quarter.

Just to reiterate. Eric, this is John. I mean, from the RV perspective, I'll say it again, we're encouraged by what we're seeing on pacing and trends, okay? It is prudent for us to be measured in our outlook. As we come into the bigger months ahead of us, so that's a big contributor to what we're talking about.

We reached the end of our question-and-answer session. I'd like to turn the floor back over to Mr. Young for any further closing comments.

Yes. Thank you for joining us. I want to give a quick shout out to the Sun team for strong execution in the quarter. For all of you joining the call today, thank you. And look forward to talking to you again on the Q2 call.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Welcome to Citi's 2026 Global Property CEO Conference. I'm Nick Joseph here with Eric Wolfe with Citi Research. I'm pleased to have with us Sun Communities and CEO, Charles Young. [Operator Instructions]

Charles, we'll turn it over to you to introduce the team and company, provide any opening remarks, tell the audience the top reasons that investors should buy your stock today, and then we'll get into Q&A.

[Technical Difficulty]

Can you just press -- yes, it needs to be red.

Red is talk, alright...

Surprised me.

Threw me off on that one. All right. I'll start back over. Thank you, Eric and Nick. To my right, we have John McLaren, our President. Directly to my left is Aaron Weiss, our Head of Strategy and Business Development; and Fernando, who is our Chief Financial Officer.

I'll do our comments, and we'll jump into kind of overall, if that's okay. So good afternoon, and welcome, everyone. It's great to be here. I'm pleased to be at the conference, new in the seat. If those of you who listened to our last earnings call, 2025 was a transformational year for Sun. The sale of the Marinas marked an important milestone for the company. Frankly, it simplified our business. We had a chance to strengthen our balance sheet as seen by our net debt to current EBITDA, repositioned Sun, frankly, as a pure-play MH RV company.

Over the past year, with all of that, we've had a chance to reduce leverage, which resulted in credit upgrades from both Moody's and S&P, enhanced our financial and strategic flexibility and returned more than $1.5 billion of capital to our shareholders. And so I'm excited as we come into the year with that foundation, we're operating from a position of strength and couldn't be more excited about what's in front of us.

Our core manufactured housing and annual RV businesses continue to demonstrate durable fundamentals. We operate in sectors supported by strong demand, limited new supply and compelling affordable advantage relative to other -- housing sectors, if you will. Manufactured housing provides a high-quality living experience at a cost meaningfully below alternatives. And our RV communities, frankly, offer accessible short-term and long-term vacation options that resonate with today's consumer.

These segments generate recurring predictable rental income streams. Our MH and annual RV is highly occupied. We can get into those details if you want it. And we continue to see the benefit of the long-term resident engagement and retention across our asset class coming from where I came from, it's kind of great to see that low turnover that's in our portfolio.

To that point, I've had a chance over the last several months, opportunity to spend time with our communities in multiple states, meeting with team members, meeting with residents, and guests. And what stands out and strength of our portfolio and operations is the sense of community that you feel when you're in one of our communities.

So I encourage everybody to try to visit if you can. This is a compelling value proposition for our residents and guests. And as we look ahead, our strategy is focused and practical. It builds on what's worked, what this team has built before I showed up, and we're really focusing on sharpening our execution to drive long-term value.

As I talked about on the call, I see 3 core pillars that's guiding this approach. First is disciplined capital allocation that includes maintaining a strong flexible balance sheet while pursuing value-enhancing growth opportunities. Number two is continued optimization of our operating platform to drive greater consistency, accountability and efficiency across the organization. There's a great foundation laid as to how do we build upon that. And third is strategic investment in our communities, in our infrastructure and in our digital capabilities to enhance the resident and guest experience and enable faster, better data-driven decision-making going forward.

We believe this focused approach positions Sun to deliver steady earnings growth, margin expansion over time, supported by durable cash flow characteristics of our core business. We're pleased to be here today with you. As I said, we got the whole team here. I'll pause there and open it up for questions.

Perfect. Well, you touched on the 3 pillars that you're focused on. If you think about the company over the past few years, there's been a lot of change. So I guess how do you think about implementing more change from here? Obviously, there's -- you're seeing opportunities to do so, but how do you make sure that it is actually implemented in the right way so that there's not either missteps or kind of challenges that aren't foreseen right now, just given what we have seen with the rollout of the new ERP system or others. How do you think about the pace of change versus making sure it's done correctly?

No, it's a great question. The strength that I've seen spending my time here is the culture. And I want to make sure that we are preserving and building off that strength of the culture. There has been a lot of change. Much of it has been for the better in the last 1.5 years in terms of the simplification that I referred to.

In terms of ERP specifically, there were some challenges along the way, but ultimately, we have more access to data now than we've ever had. So with that, all that I said, the culture, the team, the systems, we want to build off of that and be thoughtful in terms of how we implement, how we build off of it.

When John gets a chance to speak, there's been a lot of focus since he came back to the company around fundamentals and execution. We're going to build off of that and continue to add elements and information that allows us to be thoughtful in our decision-making.

And part of what I -- why I didn't rush in here making a lot of different changes, doing my listening, learning, engaging is that so the organization can understand who I am, what my approach is, what my background is, how I think about it. They understand that I'm here to just win as a team. It's not about me, it's about all of us. It's about the we. And with that attitude in place, we got a lot of great things to do.

And the plan, the core pillars and the strategic priorities that I've rolled out to the organization so far this year have ultimately been putting a mirror back to the company. They've told me what we want to do, and they're looking for these things that we're implementing, and we'll be thoughtful about how we do that and conscious of the risks that come with it.

So maybe -- I apologize, I'm losing my voice a little bit, so bear with me. But you talked about rebuilding, I think, the sort of data architecture of the company. Can you just describe what that means in sort of more detail and sort of what the opportunity would be like? So what are you looking to accomplish on that? Because I think we hear these things and we kind of want to try to measure sort of tangible goals. What sort of tangible goals should we be looking toward over the next couple of years when you say things like, oh, we're going to rebuild the architecture. What is that going to do for the organization?

Yes. I think as we think about it -- this is not an overnight change, right? So I would say, hey, be patient as we think through building this infrastructure in this unified digital backbone, as I'm calling it. There are some things that we're doing this year, and I'll let John speak to that specifically that we think are going to have an impact specifically in our RV portfolio.

But the long-term approach is building off the foundation, as I spoke about with our ERP, what systems are we connecting to it, the data that we have, where does that data go? Is it clean data? Are we able to put some data scientists on top of it to look at it and make sure that we're running it through with the proper either finance look, asset management look, our operational look, marketing look to make sure that we are driving the right decision, being more effective and efficient with our decisions.

Again, it doesn't happen overnight. There are a couple of things that we're doing this year in terms of booking channels, in terms of our customer journey, in terms of the centralizing some of our contact center opportunity and putting new data on top of that, that, again, new systems on top of that, that, that data then gets put into a data lake and a database that ultimately gets to be mined and that we can look at it kind of cross-functionally to come up with the answers.

So not able today to put numbers on it. We'd look to try to do an investor presentation in the future. We can start to quantify some of that. But in the meantime, for the short term, there are some things that we're doing that I think are going to help enhance our guidance and where we're trying to go this year in terms of how effective we are. Do you want to jump in with any of this, John?

Sure. Yes, Eric, I think if you recall, last year, I spent when we were here, we talked about just getting back to our execution, something that everybody was very familiar with in terms of how Sun operated. And obviously, the ERP implementation that happened in 2024.

I think everybody probably know that after being on a different ERP system for 20 years, that's a heavy lift, to go through that process. And so really unlocking that 2025 sort of represented the first step of that. I talked a lot about transparency and ranking. All that came from data. Data and a look that we had that we hadn't had before, and making it visible to our team, so that we could focus on the things for 2025 that we felt like were most important and could move the needle the farthest, not just on the expense side, but on the top line side.

And so when we walk into 2026, we've talked about 2025 being really a setup for that. And so when you ask like what are some of the things you can do to make sure that you are successful in the movement forward that we have, some of the things that we're doing today, for example, Charles alluded to opening up to new booking channels that are specific to RV. This is something that happened later in 2025 that we haven't even realized the benefit from, in 2026. So we look to that to be something that's going to be meaningful, in so far as a step forward.

Additionally, we talked about digital booking enhancement. And that's really leveraging the tech, that we have in place with the ERP, the unified data lake that Charles is talking about and applying the nimble booking window that we have and aligning that with the revenue management capabilities that are well built at Sun. And so when you sort of bring those 2 things together and then on top of that, on the RV side specifically and you think about just the guest journey, if you will, okay, which is how does a guest -- a potential guest find us?

How is the process for them in their booking? What is the ease of that process? What is the experience on the ground, the things that I've shared with you before. And more importantly, how do you capitalize that in the form of a rebooking? How do you capitalize that in the form of an extension of an existing stay? How do you capitalize on that in terms of referral, and bringing people to the community.

And so the data is central to all of it. And one of the things that we have now, just like I was saying last year about things I had then that I hadn't had before, what I -- what we have now with the data is marketing folks like to talk in terms of clicks and likes and impressions and those sorts of things. And really, what matters is the transaction. And does it ultimately get from A to Z, with the result that you wanted.

And so we now can track all the different channels that we have and be able to align those in a more targeted approach rather than like the broad-based approach that we might have taken in the past in terms of the marketing spend. So we're more efficient with the spend that is delivering a better return on those dollars because we're being targeted in terms of our approach. So that's just some of the examples.

Yes. Short term, the revenue management optimization, just it's already a great system, but what more data can we add, especially on the RV side. I'd also say over time, as we build this, where are there efficiencies in the organization to be thoughtful based on what we're doing in terms of how we run the business, whether it's on the procurement side, utilities and otherwise, that can flow through to how we operate and efficiencies and the experience that we're creating for our residents. So this is an ongoing effort, and we're building a good foundation now. But each year, we're trying to build on that because that's the long-term benefit of focusing on this side of the business.

Got it. And then on the annual RV side, you mentioned on the call that what you're doing is working. You put out lower rates this year. I think you said that you were ahead in terms of acceptance of those renewals. Can you just talk about that? If possible, could you quantify it to say this is how far we are ahead of last year? Just trying to understand to what degree we might actually see occupancy build or some beneficial impact from being ahead of...

Yes. I think the way that I frame that, Eric, is, yes, like I said on the call, we focused our attention in much of 2025 on retention because it's obviously a lot simpler for us to have a customer or a guest stay at the property rather than having them leave and ultimately have to go through the bandwidth to refill that site with a new guest. So we are focused on that, which is why we had a tempered approach to our 4% rent increase on the annual RV side. We're very open about that. I think it was the right approach.

And it has led to being ahead of our renewal pace this time versus actually ever since we launched the process, we've been ahead. And what that really translates into is if you look sort of broader, we had good success in 2025 in terms of our net leasing of annual sites, which adding another 600 coming off of 3 straight record years that we had.

I think it's also led to -- I think what we've shared with everybody has been that we would guide to a similar sort of 600-ish range in net conversions for 2026. So all that makes me feel good in terms of where we sit today to achieving that. But I will add that I think one of the things that has sort of emerged in this process and thought about retention has been optimization across RV, which is to say, if you look at certain individual communities and you really look at the business from the ground up, there's a good question to ask of what sites should actually be converted versus not?

And so we've sort of graduated to that point now where because of our success, because of continued success, we can actually do that, differently than we could before. And so I've put out a number around 600. It could be plus or minus that, but it would be a result of optimization that might affect that outcome is what we believe.

On the transient side, it looks like you're calling for a little bit more stability this year. We've seen a number of sort of down years over the last couple of years. I guess what gives you the confidence that this year will be a little bit more stable? I know it's, I think, still down a little bit for your guidance, but I think that's sort of after conversions, correct me if I'm wrong. So either way, it's calling for a more stable year. So what gives you the confidence in that?

I can start. I think the main thing is just when you look out into our booking window and what we see, Eric, I mean, that's the straight answer in terms of what we see in the form of reservations going out into 2026. Obviously, you know the meat of the year usually is in the second and third quarters, and that will become clearer in the focus as we get closer to those quarters as well.

But I will share that you sort of characterize that it's been challenging on the RV transient side the last couple of years, it's true. 50-plus percent of that is a result of the great success that we had with the conversion program. So that's a big piece of that. And I also think that, frankly, COVID had a pretty big effect as you saw us spike in terms of transient revenue during the couple of year period of time.

If you really looked at that over a longer stretch of time, you would see a more steady growth curve. And that would be something you would expect. And so this is why I feel like besides what we're seeing in our data at this point in time and sort of like stretching out that curve with COVID, why I feel like that -- and the fact that we were 9% down on transient revenue last year, we're guiding to down 1.5%. I mean that's a clear signal in our guidance how we feel in terms of how things are stabilizing.

I'll just come over to top as I've had an opportunity to go visit many of our RV sites, more to see, again, just 5 months in. But if you step back and you look at the -- in the medium to short term, what I've seen is many of the strategic changes that the team has made, whether it's strategic dispositions of some of those assets, whether it's the conversion from transient to annual, we've gotten to a place where it feels pretty balanced and pretty healthy. And to John's point, it's more of an optimization effort going forward.

But as I look at it and have seen these assets, this is an unrivaled portfolio on the RV side. And this was -- if I'm going to anticipate a question what's been a surprise for me. I'm surprised to the upside of the quality and the energy that we have on many of these communities and the opportunity in front of us long term to really unlock the value that's here.

Yes, there was kind of a steady growth and a little bit of a pop during COVID and things have normalized. But I think we're -- the work that's been done is kind of set up this portfolio to have an opportunity to continue to have steady growth and ultimately, an opportunity with all that we're doing around asset management and data and the rest of it to kind of unlock it and create some value on that side of the business. So I'm excited about what's ahead. A lot of work to be done, more that I need to do, but there's a real opportunity in my mind.

Makes sense. Maybe if we turn to the U.K., I think on the call, you mentioned that you'd evaluate it like all other capital allocation decisions. Is there an active market to sell it today? Are you seeing a lot of assets trade in the U.K.? How about kind of from a portfolio perspective, what would you -- how would you characterize the acquisition market there?

Let me go high level, then I'm going to ask Aaron to weigh in on the market. Overall, again, I've had a chance to spend time with that team, get over and make sure I understand the business. Great asset, great operating platform, best-in-class team. It's a challenging macro. But ultimately, the best thing we can do is execute and support the team.

We've done some work with the ground leases that create operational flexibility and optionality as we evaluate the broader market. And so just so everybody hears from me, I'm always as a capital allocator looking at all sides of our business. RV, as we just talked about, U.K. being no different. We're spending time making sure that we are understanding what the options are. In the meantime, we're going to execute best we can. With that, to answer your question specifically on the market.

Good question to speak about the U.K. generally. We do have the best team in the market. They've been operating incredibly well through a very difficult backdrop. So hugely supportive of what they've been doing and again, continue to deliver results despite the backdrop that has been challenging from a transactional perspective, not dissimilar from the U.S. market. Things have been muted since we announced our acquisition in late '21 and closed in '22. So there haven't been a lot of large-scale institutional transactions broadly in this asset class in the U.K.

We've seen incremental transactional activity more on the single assets, more portfolio side. But there is institutional investment in the space broadly among sort of the large global private equity firms. So we would expect they'll continue to look at the space. But in the last few years, there just hasn't been that level of transactional activity. We think with a more benign market backdrop, we have seen, as I said, some more of the single assets, small portfolio deals transact.

We've been a seller of a few of those assets to that market, but we can't point to sort of broader institutional transactions, again, not dissimilar from the U.S. where it's been pretty muted over the last few years. But again, we're a public company. So we certainly hear from folks, and we'll engage in constructive dialogue alongside what Charles indicated vis-a-vis our bigger picture strategic capital allocation strategy.

I was going to say when you -- sorry go ahead, you...

No, no, I was trying to save your voice.

No, it's going to go in one of these sessions. I was just going to say, when you say that the ground lease is enhancing your flexibility, I mean, does that just effectively mean that there's just certain buyers out there that if you were to ever sell at some point, just wouldn't consider owning it if they didn't have control of the ground lease? Like what does it mean?

Good question regarding the ground leases. When we acquired the business, it came with in-place ground leases. They've been in our numbers since we acquired the business. We had a unique opportunity to acquire them. I think, frankly, as a real estate owner globally, you want to own freehold underneath your real estate.

And so we had a unique opportunity to do that. The team there was hugely supportive of it. There are some dynamics day-to-day in terms of having a landlord, information sharing, single asset sales, if you want to sell single assets, you need to work through substitution rights. So I think, first and foremost, it was an attractive use of capital. We had the financial flexibility, thanks to the safe harbor sale to effectuate that over the course of 2025.

Additionally, certainly having freehold investment in real estate could provide more flexibility from a bigger picture financing perspective where we had to finance something directly in the U.K. to the extent we wanted security or from a strategic perspective, for ourselves or however the business plays out in the future. So it was a pretty compelling opportunity set regardless of the larger strategic opportunities that may avail themselves, but we're really happy to be a primarily freehold owner. Post those deals, 90% to 95% of our NOI in the U.K. comes from assets we own freehold. So very compelling from a strategic and financial flexibility perspective.

And remind me, do you have any U.K. debt?

And remind me, do you have any U.K. debt or no?

Even U.K. debt, it's all at the corporate parent.

Just on the operating side in the U.K., when do you lap the tougher expense comps on the minimum wage increase?

I mean I can answer that from the operating expense perspective, the national minimum wage, the U.K. operates on an April fiscal year. There was a raise in April '25, which was incorporated. There is another one coming up in April 2026 for that fiscal year from April through the first quarter of 2027 that is incorporated into our OpEx guidance for 2026.

What was the '25 and '26 -- what are the '25 and '26 raises?

They depend on where you sit from a national minimum wage. They're pretty public, but there's an increase for full-time employees. There's also raises based on ages and what would primarily impact our U.K. business are the seasonal employees you'd see in the summer. So it varies depending on the employee and type of FTE or part-time employee.

Looks like we're getting a couple of questions here on the MH side. I'll try to ask them. I guess maybe just stepping back, I get a lot of questions on your all-age versus age-restricted portfolio. Would you say that 2 of them operate any differently from one another? I mean, is your all-age portfolio more exposed to like lower job growth and other things that are impacting the apartment market right now?

Or would you say that the fundamentals are very similar? And then we had a question from an investor sort of along the same lines, which is like your growth here has been great. But at what point is there going to be increased regulation if you're growing at 5% every single year?

Yes. I think to answer the first part of your question, I think that -- what we typically see in an all-age community is going to be the growth that we've had and typically as far as like rate increases as one of the pieces to it, we have seen typically between 100 and 150 bps ahead of inflation for a very, very long time. And I think that, that -- what it boils down to, Eric, is really the community itself, okay? Is it being cared for? Do we have the continual reinvestment? Do we have -- is the sort of equity, if you will, spread across everybody, okay? That's what makes it go because we've always described our business as a marathon versus a sprint.

And then when you think about it from an affordability standpoint, and we've shared this before, in tougher times, the way that we've described Sun overall is if this is a more -- my hands up here for anybody watching, if this is a more robust economy and below that is a more challenging economy, Sun sits in the middle of that and that band moves around us. So we may very well lose some people at the margin that move in with parents or family or something else.

But it's -- what we've seen, at least over the course of my 24 years with Sun has been in those tougher times, many more come in at the top of the funnel, okay? And they're getting pushed into our asset class. And so -- and I think because of the long-term approach, the reinvestment in everything we do, this is why we're so good at capturing those residents live in our communities. This is one of the reasons why you see the very high tenure that we have in our communities that we've had for years as well.

I'll just add and going back to -- I'll give it to you in a second, Fernando. Just going back to the regulatory question. I just want to highlight that as we think about that discussion, it's mostly around affordability and affordability for housing for Americans. And from Sun's perspective, we think we're part of the solution in support of affordable housing relative to other housing alternatives.

The other thing I'd keep in mind -- so to that point, we're making sure that we're keeping an eye on all regulations that are out there and making sure that people understand exactly what we do. And one of the things to highlight, as you talked about the rent growth number, that's just on our site rent. We have a unique model here relative to other housing classes where we ultimately -- the resident ultimately owns the home and they're paying rent in our community on that individual site. So it's a small part of their overall number.

And part of why we've always been thoughtful, if you go back over the 40 years that we've operated, it's been kind of a steady growth. There hasn't been a lot of up and down because there's a shared model of making sure that we are being thoughtful about what that number is. People stay with us for decades. They stay a long time. And that turnover is low because there's this kind of shared perspective.

I'm going to turn it to Fernando, who can talk a little bit around the equity value creation that happens.

And I think it's important to note, our residents have created significant value in the ownership of their homes in our communities. Over the course of the last 6 or 7 years, the home prices or the equity value has increased at a high single-digit CAGR for residents in our communities that own their homes. So that's a significant and very compelling reason for that home being and them owning a home in a Sun community versus a competitor.

Another question come in, just on the regulatory side and changes to the HUD code and what that ultimately could mean for manufactured housing broadly and if there's greater flexibility in home design and configuration potentially drive obsolescence for some of the older MH stock.

It's a great question. It's come up a few times. I think the chassis piece is really interesting. I think the manufacturers stand to benefit from that. And I think from our standpoint, we're watching it closely. We think that it's a net positive, Nick. In terms of like home design, we'll just say home design and affordability, at the same time, potentially because of how a house can be built, how it can be set up.

It will be -- it will be interesting to see what it means because we don't know yet in terms of transport and setup of the homes in the communities, whatever is required from a foundation perspective. But as we've shared before, from the regulatory front, sometimes there'll be talk or federal mandates that happen. The real linkage needs to happen between that and what actually happens locally.

And so our hope this could be positive from that standpoint because Sun for One has worked very closely with the manufacturers in our space for many years to develop the types of homes that we have today. We have literally designed some of those ourselves with some of the manufacturers. And I think that the chassis piece maybe just helps that whole discussion at the local level because you can provide a product that is, we'll just say, more like what they're used to seeing from a residential perspective.

Maybe with the last 4 minutes here, talk about capital allocation. You're sitting on, I think, around $550 million of cash. That's after some uses. Like what would be ideal to be able to do with that? I think your stock -- let's just say your stock doesn't come back to the $125 range where you've typically been a buyer. What are you going to do with the cash? And then I guess, in a situation where you can't find good acquisitions or other opportunities, are you just going to pay off your mortgage debt that's maturing in the middle of the year?

Yes. We talked about it a bit on the earnings call. We're in a really flexible and a lot of options in front of us given the cash that we have on our balance sheet and our current debt levels. There's kind of 3 tools in the toolkit. One, we talked about in the 3 pillars that I discussed that we're going to first invest in our communities and a bit in our infrastructure to make sure that we're building an opportunity to hit this kind of perpetual long-term durable growth for our shareholders. So we're going to be thoughtful on that spend.

And there are opportunities in front of us, and we spent some time looking at those. The data piece that we talked about will help us drive like where we put that. So that's some of the benefit long term that we're talking about. The other piece is we are looking. We showed that last year, we bought almost $0.5 billion of core assets in our MH and annual RV communities. We bought 14 of these. We're going to continue to look. The team historically has done an amazing job of being able to source these. So we're continuing to look for accretive growth opportunities in the markets that make sense that are kind of tucked into our markets to create efficiencies.

And so that's definitely a big part of our toolkit. And as you mentioned, we'll be thoughtful around shareholder return, whether that's buying back shares at a compelling price that makes sense. And that's another tool that we use as we watch what's out there. And so we're in this, what I call, enviable position to be able to have some tools and some capital to be thoughtful about. And we will, long term, think about what we're trying to do on the debt side. I don't know if there's anything to add there, Fernando. But these are all the things that we're paying attention to as our capital allocation or use of cash that we have on the balance sheet.

And we do have a rapid fire in a minute, but I just want to quickly touch on how Sun is using or implementing AI, kind of where you're seeing the opportunity, where you're seeing the efficiencies and then how you're actually doing it? Is it buying? Is it building and partnering? How you're thinking about that?

Yes. So again, within Sun, I'm still getting my head around kind of where we are. I think there's more of a buy and partner at this stage, not as much of the build, although the tools, as you all know, are getting much more sophisticated and all of that is moving very fast. So some of the basics that most companies have are in our systems, and we're going to use that, whether it's in the marketing side and other parts of the business to make sure that we're pulling data out and being smart and being efficient with it.

Longer term, as we talk about this data architecture, I think that's where you start to use this more and more. That's where there could be some build. But at this point, it's more of a partner make sure that we have the infrastructure in place. And from there, we'll figure out what part do we buy on top of it, do ourselves, bring in data folks with data scientists to get on top. So it's going to be a balance. I can't give you percentages. But right now, it's about getting the data right and then utilizing the core opportunities that are out there that we can get off the shelf.

And then just on the rapid fire, same-store NOI growth for MH overall next year sector-wide in 2027?

There's only 2 of us.

Including the private sector.

Yes. For 2027, I say between 4% and 5%, NOI growth.

I guess this one there is only the 2 of you, but will there be more fewer of the same number of public companies next year?

Same.

Terrific. Thank you very much.

Thank you.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Communities Fourth Quarter and Year-End 2025 Earnings Conference Call. At this time, management would like for 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. 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 obligations to advise or update any forward-looking statements to reflect events or circumstances after the date of this release. Having said that, I would like to introduce management with us today: Charles Young, Chief Executive Officer; John McLaren, President; Fernando Castro-Caratini, Chief Financial Officer; and Aaron Weiss, Executive Vice President of Corporate Strategy and Business Development. [Operator Instructions] 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, and thank you for joining us today. I'm pleased to report our fourth quarter and full year 2025 results. We concluded the year with strong operational momentum, delivering Core FFO per share of $1.40 for the quarter and $6.68 for the full year, both above the high end of our guidance ranges. The strength of our performance and optimism in our outlook is grounded in the durable fundamentals of our sectors in which we operate. We provide attainable housing and affordable vacationing to our residents and guests in our manufactured housing and recreational vehicle communities.

Our operational model is anchored in high resident and guest engagement, which facilitates the recurring and predictable rental streams our properties generate. That stability reflects strong demand, limited new supply and the value proposition our communities provide as demonstrated by our same-property MH portfolio's 98.1% occupancy. Affordability is a core attribute of our business model. Manufactured housing offers a high-quality living environment at a cost significantly below traditional housing alternatives, while our RV communities provide accessible short- and long-term vacation stays that resonate with today's consumer.

After spending time at our MH and RV communities over the past few months, what stands out to me is the sense of community that we create, which I believe is a meaningful competitive advantage for our platform. In MH, our residents are members of active connected environments that foster long-term relationships and loyalty. In RV, our long-stay guests value the flexibility and lifestyle our properties offer using them as seasonal homes or year-round destinations. Our results this past year demonstrate these favorable dynamics. North American same-property NOI growth was 7.9% for the quarter and 5.7% for the full year, reflecting strong revenue growth and disciplined expense management.

From a capital allocation standpoint, 2025 was a year of meaningful positive change. Following the Safe Harbor sale, we significantly reduced leverage and enhanced our financial flexibility. We ended the year at 3.4x net debt to EBITDA, which provides substantial financial stability and a foundation for pursuing attractive accretive growth opportunities. Importantly, we returned over $1.5 billion of capital to shareholders in 2025. Building on that, as detailed in our recent press release, our Board approved an approximate 8% or $0.08 per share increase to our quarterly distribution rate.

This reflects our confidence in the consistency of cash flow our portfolio generates, our strong operating performance and the strength of our balance sheet. As we enter 2026, we are building on our strong foundation and taking a focused practical approach to long-term value creation. This is not a departure from what has worked, rather it builds upon and further refines Sun's strong in-place platform with an emphasis on sharpening execution, enhancing performance and strategically targeting capital investment. We remain confident in the strength and durability of our core manufactured housing and annual RV businesses.

These segments provide recurring, predictable cash flows, which we believe will continue to generate steady earnings growth and margin improvement over time. At the same time, we are focused on maximizing the performance of our RV platform to enhance growth and reduce volatility both within the segment and as an important feeder to growing annual RV. That work is centered on improving operational execution, leveraging better data and technology and driving greater discipline across the portfolio.

Our strategy embodies thoughtful and strategic evolution and involves continued focus on what has positioned Sun well while sharpening our focus on enhancing execution and driving sustainable long-term growth. There are 3 core pillars that support our strategy to drive long-term outperformance. First, thoughtful capital allocation, maintaining a strong and flexible balance sheet while delivering growth. With our best-in-class balance sheet, we will manage capital prudently while seeking to enhance growth. Second, continued optimization of our operating platform, driving greater consistency, accountability and efficiency across the organization.

And third, strategic investment in our communities. Our infrastructure and a unified digital backbone will enhance our resident and guest experience and enable better, faster and data-driven decision-making across the business. We have made meaningful progress over the past year, simplifying the business and strengthening the balance sheet, and we believe our strategy positions us to capitalize on the opportunities ahead in our core platform. We look forward to sharing more details and updates as we advance our strategic priorities and actions. I want to thank the entire Sun team for the warm welcome over the past few months. I'm proud to be a part of this organization and grateful for our team members' commitment to serving our residents and guests every day.

With that, I'll turn the call over to John and Fernando to discuss results in more detail. John?

Thank you, Charles. For our fourth quarter results, our team executed exceptionally well and our performance reflects that. Total North American same-property NOI increased 7.9% year-over-year, driven by a 5.9% revenue growth and 2% expense growth with blended occupancy over 99%. Within manufactured housing, same-property NOI increased 8.8%, driven primarily by exceptional MH performance and disciplined expense management. Revenue grew 7.3%, while operating expenses increased 3.2%, reflecting continued focus on balance, efficiency and cost control.

In RV, same-property NOI increased 5%, driven by 2.7% revenue growth and strong expense discipline with operating expenses up only 60 basis points. Revenue growth reflected higher RV contract rates with transient performance in line with our expectations. For the full year, North American same-property NOI increased 5.7%, driven by 4.5% revenue growth and partially offset by 2.2% increase in expenses. We exceeded our guidance in manufactured housing, delivering 8.9% same-property NOI growth for the year. In RV, same-property NOI declined 1.4%, which was within our guidance range.

Turning to the U.K. Fourth quarter same-property NOI declined approximately $500,000, reflecting ongoing macroeconomic pressures, including the national minimum wage increase. For the full year, U.K. same-property NOI increased 3.5%, supported by 5% revenue growth, driven by higher MH and transient income, partially offset by a 6.6% increase in operating expenses.

U.K. home sales volumes were down 4.9% compared to 2024's record levels. Across the organization, we remain focused on operational excellence, disciplined cost management and leveraging technology and data to enhance efficiency and the resident guest experience. Having been a part of Sun for nearly 24 years, I can tell you now is truly one of the most exciting times I've experienced as we carry the strong momentum we built in 2025 into 2026. Our 2025 performance reflects the dedication, skill and focus of our team throughout the portfolio. It is a privilege to be part of it, and I want to thank our team members for their continued commitment to service and operational excellence. As we enter 2026, we remain focused on consistent execution, driving steady revenue growth and maintaining expense discipline.

With that, I'll turn the call over to Fernando to walk through our financial results and 2026 guidance. Fernando?

Thank you, John. In the fourth quarter, Core FFO per share was $1.40, beating the high end of our guidance range by $0.01. For the full year, Core FFO per share was $6.68, also $0.01 above the high end of our guidance range. During 2025, we continued executing on our simplification strategy, selling over $200 million of nonstrategic assets and land parcels. We also deployed 1031 Exchange proceeds to acquire 14 manufactured housing and annual RV communities totaling $457 million, further enhancing the quality and growth profile of our portfolio.

We purchased the titles to 32 U.K. properties that were previously controlled through ground leases for approximately $387 million. As a result of the ground lease purchases, Sun now holds a freehold interest in nearly all our U.K. properties, further strengthening our long-term financial position and strategic flexibility. 2025 was a transformational year for our balance sheet. During the year, we repaid more than $3.3 billion of total debt. We ended 2025 with net debt to trailing 12-month recurring EBITDA of 3.4x, no floating rate exposure and a weighted average interest rate of 3.4% with a 7.1-year weighted average maturity.

Following these transactions, we now have a well-laddered debt maturity profile with $492 million maturing in 2026 and no maturities until 2028. As of December 31, 2025, we had $636 million of total cash on the balance sheet. In September, we closed on a new $2 billion 5-year credit facility undrawn at year-end, further enhancing our liquidity and overall financial flexibility. Importantly, we received 2 credit rating upgrades in 2025. S&P raised Sun to BBB+ and Moody's upgraded us to Baa2, reflecting the strength of our balance sheet and credit profile.

Turning to capital return. For the full year, we repurchased 4.3 million shares at an average price of $125.62 per share, representing approximately $539 million of repurchase activity. After year-end and through February 24, we repurchased an additional 456,000 shares totaling $57.3 million. These actions reflect a disciplined and balanced capital allocation framework, showcasing our strong financial position while returning capital to shareholders.

Turning to 2026 guidance. We are establishing full year Core FFO per share guidance at a midpoint of $6.93 with a range of $6.83 to $7.03. For the first quarter of 2026, we are guiding to $1.28 at the midpoint. At the midpoint, within North America, we expect full year same-property NOI growth of approximately 4.5%. Breaking that down further, Manufactured housing is expected to grow by 5.9% and RV is expected to grow by 0.9%. In the U.K., we expect approximately 2.2% same-property NOI growth for 2026. FFO from U.K. home sales is anticipated to be approximately $50 million at the midpoint for the year.

For additional details regarding our assumptions and the components of guidance, please refer to our supplemental disclosures. Our guidance reflects completed acquisitions, dispositions and capital markets activity through February 24. Of note, it does not assume future acquisitions, additional share repurchases or other capital markets activity, which is often reflected in analyst estimates for the year.

With that, I'll turn the call back to Charles for closing remarks.

I'd like to take a moment to reflect on what I've learned and where we are headed. These first few months, I have been focused on listening, learning and engaging deeply with our team members and our business. I have spent time across Michigan, Texas, Florida and South Carolina visiting our communities and meeting with team members on the ground. Those conversations have reinforced both the strength of Sun's culture and the opportunity ahead to further sharpen focus, strengthen execution and build for long-term growth.

I'm energized by what I've seen so far and excited about the next chapter as we turn insights into action and build on Sun's strong foundation together. For 2026, we are focused on 3 core pillars: disciplined capital allocation, executing consistently across our operations and investing in our core MH and RV platform. We look forward to keeping you updated on our progress. We will now open the line to questions.

[Operator Instructions] The first question comes from Steve Sakwa with Evercore ISI.

Charles or maybe John, could you maybe just talk a little bit about the data? And Charles, in your opening remarks, you talked a lot about how you're using data, you want to make better decisions. Are there concrete things that you can discuss with us that you've implemented? Or are there things that you're sort of currently working on that you expect to implement in '27?

Steve, it's Charles. I'll take it and maybe I'll throw it to John if he wants to add in a little bit more. As I said, I've had a chance to go deep within the organization out in the field and just want to take a moment and thank the organization for the warm welcome. Specifically to your question, I refer to it as our unified digital backbone. What I will be able to tell you is it's building off of the foundation that was put in place a couple of years ago with the NetSuite implementation. And as I watch that, that really became the beginning of our digital journey, if you will, which is a big piece of what I want to try to build on and encourage us to build on.

Today, if I talk to the team, members around the table here with me, we have more real-time data access to data than we've ever had. But there's more there as we really start to build out the platform, which is solid, but there's more from beginning to end that we can do. And so one of the things I will share that is a focus in my core pillars for this year is starting with the customer journey by enhancing the systems and centralizing some of the contact center work in terms of how we engage with the consumer.

And our guests, specifically, I think it will be a help on the RV site and eventually on the MH site. So that's one piece that I'll give you, but there's a lot more to be done. The bigger picture, as you think forward around where the world is going today with AI and otherwise, is to continue to build on this foundation, and it needs to be around the data architecture and infrastructure that allows us then to unlock that in the future.

Steve, I'll just add to that. One of the things I shared with everybody last year was just really the focus on the transparency within our sales and leasing funnels and applying that transparency because of the data that we have across -- with the implementation of our new ERP that we put in 2024, we can take that data and apply it across all different kinds of transactions now, okay, and have that transparency, be able to deliver to the team, be able to rank it with the team, okay? So we know better what we're doing at any moment in time. That's one application. Another one is going deeper into where the traffic comes from, okay, whereas the data, okay, and being able to link where it's coming from all the way to who actually converts to a transaction, okay? And being more targeted. It's like being more targeted versus broad in terms of the campaigns that we can develop around that. That's what's taking place right now.

The next question comes from Eric Wolfe with Citibank.

At December NA, Charles, you talked about slowing down buybacks, but then, of course, all the $57 million of buybacks year-to-date. Could you just talk about the approach to repurchases and capital allocation this year? What you're assuming in guidance as far as the use of that $630 million of cash as well?

Great. I'll start. Thanks for the question. I'll let Fernando comment on what's in our guidance. When it comes to capital allocation, our objective is straightforward. We want to allocate capital where it generates the best long-term risk-adjusted returns for shareholders. Where we are today as we enter 2026, and I joined at a really kind of special time in the company's history, the strength of our balance sheet, the reduced leverage that we have, we position ourselves with manageable maturities and significant liquidity. So there's a lot of flexibility. And so as I think about capital allocation for the year, we have a balanced toolkit as our approach.

One is, as I talked about in our core pillars, is investing in our communities and our operating platform. The ability to invest in our strength, as I just said, the core portfolio, the people and the systems is one kind of those toolkits. The other is pursuing thoughtful and disciplined accretive external growth opportunities that align with our strategy of MH and RV. And so we'll continue to look for opportunities there. And then as you're talking about with the share repurchases, there's returning capital to shareholders and using share repurchases thoughtfully when they represent compelling value. These are all parts of our toolkit. We're going to be balanced as we go through the year, use our flexibility to be prudent with that use, and we'll continuously evaluate what's going to add shareholder value. Fernando, you just want to give forward guidance in terms of what we have in there?

And so Eric, consistent with prior years, we don't -- we're not assuming capital markets deployment of the cash on hand or our operational cash flow that we generate over the course of this year. So you can assume that the over $600 million of cash on the balance sheet today is generating interest income as it is used for the business. Any acquisitions that we were -- that we would find and transact on or any share repurchases would be incremental to the baseline guidance we've provided.

And then just a follow-up, a quick follow-up. The $57 million of acquisitions that are in escrow, can you just talk about what those are, the initial yields on them and then the unlevered returns that you're targeting?

Yes. It's Aaron Weiss. Thanks for the question. In terms of what we have on the balance sheet as of year-end, we did talk about closing one acquisition in the January period at sort of the consistent yield range we've talked about previously in the mid-4% yield range. In terms of the remaining acquisitions, those are simply held on the balance sheet as 1031s, but have not yet been closed. So we'll continue to look to identify those and update the market as we see them, as Fernando indicated, to the extent that we don't ultimately close on those 1031 proceeds as occurred in 2025, that would simply move into our unrestricted cash balance.

Our next question comes from Brad Heffern from RBC Capital.

Charles, can you give any updated thoughts on the U.K. and how it fits into the portfolio?

Absolutely. I appreciate the question. Look, I've had a chance to spend some time with the U.K. team, get over there. And what I've observed is high-quality operation, best-in-class portfolio, strong assets and very talented and capable team. I'm impressed with our operational execution. That being said, they're performing well in a challenging U.K. macro. We all see that, and John can spend a little bit of time around some of the details and what the expense numbers have been in Q4.

And as I look at the business and as we just talked about as being disciplined capital allocators, we continue to evaluate our entire portfolio to determine how best to create long-term shareholder value, and U.K. is no different. We're going to continuously kind of evaluate. But right now, our near-term focus is on maximizing value through disciplined execution, strengthening performance and driving growth where we can and maintaining cost control and flexibility. So we'll continuously assess the U.K. in the context of our overall strategy and capital allocation priorities.

John, if you want to add anything?

I mean the only thing that I would add, Brad, is that I think we put out in our guidance that we put out a 4.1% rent increase in the U.K. That's running ahead of inflation in the U.K. I think 2025 represents a really good year of home sales that we had close to 95% of the prior record, okay, that we had the year before that. And when you look at sort of from a market share perspective, we got a team of people in the communities that we have and the locations that we have that are executing brilliantly, okay, in the face of it all. And so the only thing that sort of offsets that a little bit is like what Charles said with -- on the expense side, a lot of that is attributed to the national minimum wage, okay? And there's -- everybody is in that boat. And so it's really pleasing to us to see them execute through that despite it all.

Our next question comes from Wes Golladay with Baird.

How do you see the annual RV conversions this year? I think last year was just around 600. Can you give your view on 2026?

Wes, I appreciate the question. I think we're kind of looking at something similar to what we saw last year is what we track. Really pleased with how last year played out, and I'm really pleased, especially as I've shared before that I think the strategy that we took with respect to retention within our RV annual business really took hold. We're seeing that emerge in the form of the renewal rates that we have now in comparison to this time last year, where we're running ahead. So that's kind of how we look at it. It's going to be sort of similar to what we experienced last year.

And then can you give your view on the transient RV? How does the pace look?

It's good. It's pacing well. I think a little bit about 2025. As you know, our RV same-property NOI performance in the year finished within the guidance range. I do want to emphasize, as I always do, that we like to work on the entire business. So we're really focused on bottom line results. Specific to transient RV, I'll reiterate that some of what we experienced in 2025 is a direct result of the success we've had in the strategy of reducing the number of transient sites and converting them to annual guests.

And that really formed in the way what we did last year was demonstrated by a 9.8% annual RV growth number and the 600 network conversions you referenced. I think for 2026, we continue to see better signs of stability with improved booking trends in RV. We remain thoughtful and disciplined in our approach as demonstrated by our guidance, which I will tell you reflects what we're seeing in our pace at this point in time.

But to emphasize further, okay, some of the things that we're doing, which are really sort of seamless to what Charles has talked about with our core pillars. We have several target initiatives in RV, which include OTA expansions or, I should say, differently booking channel expansions, digital booking enhancements, data leveraging opportunities. Again, there's a lot to unpack there, and I look forward to having those conversations as the year progresses. But we think a lot of this really lines up for what we're seeing. And if you look at sort of how we track on RV in '24 versus '25 versus what we're putting out there in '26, you're starting to see that stabilization take hold.

The next question comes from Jamie Feldman with Wells Fargo.

Charles, I appreciate your comments to close the call about kind of where you are thinking through the company. Can you just -- maybe to give an update on just where you are in the process of settling in, just in terms of -- I think people expected maybe a noisier print for 4Q, but you pretty much took one impairment in the U.K. and everything else seems to be kind of humming along. So -- and then, of course, you had some management changes to start the year.

But would you say at this point, you're kind of settled in and this is the story going forward? I know the U.K., as you guys commented before, still watching it and seeing where the opportunity is long term. But would you say you're pretty much settled in at this point and not a lot to still review big picture? Or there's still a lot to work through as you're thinking about the future of the company?

Thanks for the question. It is a good question. I can't say that my work is done. It's continuing. I'm past my listening and learning tour, if you will. I can't -- I used to be accounted in days and then months, and I'm in now. And so I am settled. The team knows who I am. I can't say enough how special the culture here is at Sun and how welcoming and how I felt like I've just kind of slid right in. And you can see it from our results that we are working well together, but there is work to be done. And the core pillars, as I laid out, is where the opportunity is ahead.

So that's why I can't say I've set in, but we have work to do in terms of investing in our communities and our infrastructure in terms of optimizing the platform. That's where the work will be done and will continue to be done. So I'm busy, but I'm loving it. And I'm definitely kind of getting in the flow at this point and enjoying every minute of it. Again, I can go into more details. But at this point, what you're seeing right now, the team put up great numbers for the quarter. We have good guidance, and we're just going to execute for the rest of the year.

The simplification strategy that the team put in last year, I'm building off of that with this kind of core focus and laser focus in on the core. And that's what it's about, and that's what's going to get us to get into this -- the rhythm that everybody expects us to do given the nature of this business and the affordability and attainable experiences that we provide for our residents and guests.

The next question comes from Michael Goldsmith with UBS.

Questions on the RV guidance. Can you just kind of break down what the underlying expectations are for annual and transient? And then also maybe break down what needs to happen to get to the upper end or lower end of that range and also a little color about what's been going on -- what you've been noticing with the Canadian customer.

Thank you, Michael. I think John and I will tag team that question. But at the midpoint of our range, we do have a rental increase for our annual guests of 4%. As John mentioned earlier, we are expecting transient conversions to annual contracts agreements of about 600 over the course of the year. From a transient revenue growth perspective, at the midpoint of the range, we are expecting about a 1.5% decline in transient revenue year-over-year. This would compare to a 9% decline in '25 year-over-year over '24. So that points to, as John was mentioning, some stabilization as it relates to the transient side of the business.

But John, if you want to go into.

Yes. I'll start, Michael, with on the Canadian side, which as we shared before, we did experience that softness in Q1 and Q3 of last year with Canadian guests. The interesting thing about that is, I think last year, we shared that Canada represented about 5% of the RV business. That represents about 3.5% of our total RV transient annual business today. In other words, what we experienced last year with Canadian guests combined with some of the offsetting that we did with domestic guests, I think, frankly, has been mitigated to some degree versus what we had in 2025.

So it's really more about what I said a little bit earlier. So -- and you sort of alluded to it with the question like what are the strategies we can push, okay, on the RV site, which I talked about the work that we're doing on booking channels. We recently added 2 additional booking channels on the RV site literally towards the end of 2025, which should bear some fruit in 2026 and that strategies to push perspective. On the digital booking side, it's about contact or guest routing enhancements, ease in the booking process enhancements, which frankly dovetails into leveraging the tech like Charles is talking about to capitalize on a nimble booking window that aligns more seamlessly with our revenue management capabilities that we have today.

And then if you take a step further in the things that we do enhancing just the guest journey overall, enhanced and targeted placement, this is not about the old days, RV days of just broadly throwing things out there, but it's about being targeted and thoughtful in the approach and listening to the data and what it's telling us to do, okay, to pick where we want to place it. To help us find those guests, help in the easing of the booking process, the on-the-ground experience, the rebooking that happens because of a great on-the-ground experience and ultimately, the referrals that you get from that, similar to what I've said on the MH site, building the sales force on the RV site for Sun.

Our next question comes from Jana Galan with Bank of America.

Following up on the transaction market, given Sun has been very active in the past year. Can you provide some details just on product in the market, even if it's not in your buy box? And is there more or less volume today than last year in MH or RV and any significant differences in cap rates across regions or between age-restricted and all age?

Great question. It's Aaron talking. We did -- we were really fortunate to move through 2025 and execute on primarily MH and also some annual RV acquisitions. As we've long said, the cap rate ranges are kind of in that 4% to 5% range. We haven't seen a massive change across the years. This is a high-quality asset class. And so the higher-quality MH communities that are probably not transacting are still being asked at sort of sub-4 cap rates, their quality, the quality of the cash flows, the current sellers believe that, that's appropriately valued. We're targeting assets, again, in markets in which we operate.

So strategically for us, we want to buy portfolios or assets in markets where we have operating leverage, where we have an understanding of the market over the long term, and that's really where we have been focused to date. So what we're seeing is generally consistent with past. We do believe the transaction market is picking up. There is a little more constructive backdrop in the financing markets. Certainly, the lower rate environment today versus 12, 18 months ago is more conducive to transactional activity. But I would say generally consistent high-quality assets.

And most of what we're seeing continues to be in the single asset, small portfolio, local owner-operator type environment. And so we don't expect that to change. There are very few large portfolio owners to begin with. And while those happen episodically, we would say the market backdrop is constructive. And we're generally pleased with what we're seeing in our pipeline, but it is very consistent with what we executed in 2025.

The next question comes from Jason Wayne with Barclays.

Just looking at home sales volumes, they were down year-over-year in '25. Can you just walk through your home sales assumptions for this year and how that gets baked in the G&A?

Yes. I think -- Jason, thanks for the question. I think what you're seeing when you talk about the home sales for 2025 is, frankly, our focus is on real property income and home sales expectations is really a product of enjoying nearly 98% occupancy in the portfolio as well as very low resident turnover, which ultimately leads to stability of long-term cash flow from rent. So I think the contribution of home sales is not really as material to FFO as the other things that we are working on and the things that we're doing and I think volumes and margins for this year will be similar to what we experienced in 2025.

And then it looks like the ancillary NOI guidance changed a bit as well. Just wondering how much of that is due to Marinas coming out of the portfolio?

The guidance provided is ex-Marina as it relates to the contribution. So it would be contributions from our RV portfolio primarily and then also contributions from the U.K. platform.

The next question comes from John Kim with BMO Capital Markets.

I wanted to ask if you could provide some of the building blocks for the 7.2% same-store revenue growth that you achieved in MH in 2025. It looks like you had 5.2% rental growth. You had a little bit of an uplift from occupancy, but what really made the difference to get from there to 7.2%? And if you could provide the same building blocks for 2026 as far as MH same-store revenue?

John, they'll be pretty similar as our rental increase in 2025 was just above 5%. We had occupancy gains of about 600 on the MH site last year. And then as you can see in our supplemental, we did have some strong performance from the 10% of the business. Our rental program did drive additional growth to build to that 7%. As John has alluded to earlier, as we look into 2026, we have a rental increase backdrop of 5%, enjoying 98% occupancy in manufactured housing. We do still expect gains from an occupancy perspective in that 500 to 600 site range. And then there could be some additional revenue opportunity there. But the building blocks are very much similar over the course of both years.

The next call comes from David Segall with Green Street.

It looks like the rate of move-outs has been increasing over the last couple of years. I'm curious if you can provide some color on what's driving that and if you can bifurcate it between the MH portfolio and the annual RV portfolio.

Yes. Good question, David. Appreciate it. I think for 2025, the rate of move-out was mainly attributed to RV. But that was -- and a lot of that had to do with some of the Canadian impact that we've experienced in 2025. But again, this is precisely why we focused so much of our attention towards retention over the course of this year and replacing those move-outs with more domestic move-ins.

But -- and as I said earlier, I think it's paying off because we're seeing it in the form of the renewal rates that we're having now as well. One thing of note, typically in an MH property when we have a move-out, it's going to be a resident moving out versus a home that is moving out of the community. And so oftentimes, we have a part in that transaction in the form of being able to generate a commission from a brokered home sale, which would be a part of that process for that transaction as well.

And then can you just briefly talk about what is driving the higher expenses in the U.K. recently?

I think much of it's just been attributed to what's taken place nationally, especially the national minimum wage and really falling in more of the payroll line of things than anything else as a result of that, David. And that's consistent with expectations for 2026 as well. We do have elevated expense growth in our guidance range with the midpoint of 2.2% for NOI growth, but leading the way as it relates to that increase is the national minimum wage increase that will go into effect in April of this year.

The next question comes from Linda Tsai with Jefferies.

With year-end net debt to EBITDA at 3.4x, do you have a targeted range for leverage going forward?

Sure. We have -- we stated with the closing of the Safe Harbor transaction and all of the activity we had from a debt paydown perspective that our long-term leverage target will sit between 3.5 and 4.5x net debt to EBITDA. So to get to that midpoint, there's some releveraging to do.

Do you have a view on what it would look like by year-end?

From a guidance perspective, certainly, we don't include share buybacks or any additional acquisition activity. So we -- in the guide today, we would be ending the year pretty similar to how we've started.

Sorry, I'm just going to jump in. It goes back to my answer earlier on capital allocation and really being balanced in terms of our approach and the tools that we have in our toolkit in terms of external growth being -- finding accretive opportunities there and having the flexibility with share buybacks on top of the core pillars we talked about in terms of investing in our infrastructure, in our communities and in our internal systems.

Thank you. At this time, I would like to turn the call back to Mr. Young for closing comments.

Great. Thank you for the conversation. We appreciate everyone's interest, and we look forward to seeing everyone at the upcoming conferences.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Communities Third Quarter 2025 Earnings Conference Call.

At this time, management would like me to inform you that certain statements made during the call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 obligations to advise or update any forward-looking statements to reflect events or circumstances after the date of this release.

Having said that, I would like to introduce management with us today: Charles Young, Chief Executive Officer; John McLaren, President; Fernando Castro-Caratini, Chief Financial Officer; and Aaron Weiss, Executive Vice President of Corporate Strategy and Business Development. [Operator Instructions] 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 now begin.

Good afternoon, and thank you for joining us on today's third quarter earnings call. This is my first earnings call as Chief Executive Officer of Sun, and I want to start by saying how excited I am to be a part of this exceptional team. Since stepping into the role on October 1, I spent my first month listening, learning and engaging across the company. I have already visited a large number of our communities, and I look forward to continuing my tours.

My first few weeks reaffirmed what drove me to Sun, the strength of our teams, the scale of the platform, the quality of our communities and the opportunity in front of us. It is clear that Sun's success has been built on a strong foundation, underpinned by a deep commitment and dedication to our residents and guests. I'm thrilled to be joining at this pivotal moment in the company's journey, and I look forward to building on Sun's strong legacy. My near-term focus includes 3 key areas: one, deepening my understanding of the MH and RV business, ensuring I'm grounded in every aspect of our company's operations and culture; two, supporting our team as we deliver on our strategy and commitments; and three, assessing opportunities for disciplined long-term growth.

I am grateful for the warm welcome I have received from the Sun team. I look forward to working together to continue to drive excellence in all that we do for the benefit of our team members, residents, guests and our stakeholders.

With that, I'll turn the call over to John and Fernando to review our third quarter results and outlook in more detail. John?

Thank you, Charles. On behalf of the entire team, we are thrilled to welcome you to Sun Communities. Your deep understanding of and experience in the real estate industry and fresh perspectives have already been additive, which will help guide Sun through this next exciting chapter of growth and value creation.

Turning to our performance. I'm very pleased with our third quarter results. Sun reported core FFO per share of $2.28, exceeding the high end of our guidance range, driven by strong same-property performance in North America and the U.K. For the third quarter, within our North American same-property portfolio, NOI increased 5.4%, led by manufactured housing, which delivered 10.1% NOI growth and maintained a solid 98% occupancy. Through the end of September, 50% of our MH residents have received their 2026 rent increase notices, averaging approximately 5%, reflecting the continued strength and stability of our portfolio.

In our RV business, same-property annual RV revenue was up 8.1%. Transient RV revenue performed in line with expectations, declining by 7.8%, with roughly half of this decline due to our strategy of reducing transient sites as we continue to successfully convert transient guests into RV annuals. As I've shared before, the volume of RV transient annual conversions has returned to a more normalized growth pace following several record conversion years. RV same-property NOI declined 1.1%, and we remain focused on cost controls with same-property RV expenses down year-over-year.

For 2026, annual RV rental rates are being set with an estimated average annual increases of approximately 4%. In the U.K., same-property NOI grew 5.4%, supported by 4.8% revenue growth and 4% expense growth. While home sale volumes are lighter given broader macro challenges and when compared against recent record volumes, our team continues to maintain elevated market share by providing differentiated services and amenities at Park Holidays' high-quality communities. Our Park Holidays homeowners have received 2026 rent increase notices averaging approximately 4.1%. Our U.K. team continues to execute exceptionally well as they strategically shift the earnings mix toward recurring real property income while driving operational excellence.

I want to take a moment to thank our entire team for the discipline and dedication towards achieving our goals and continuing to position us for a strong future. Their commitment to operational excellence, including expense discipline and top line growth, resident and guest relations and accountability is what enabled us to deliver these great results.

With that, I will turn the call over to Fernando to review our financial results and updated 2025 guidance in more detail. Fernando?

Thank you, John. I will start with an update on capital deployment and our balance sheet. Following the initial safe harbor closing on April 30, we completed the disposition of the remaining 9 delayed consent properties for total proceeds of approximately $118 million, with the final closing taking place on August 29. In addition, during the third quarter, we sold a land parcel for $18 million. In October, we acquired 14 communities for approximately $457 million using 1031 exchange proceeds. These properties include 11 manufactured housing and 3 annual RV communities, all located in existing Sun markets, allowing us to leverage our teams, scale and infrastructure.

In the U.K., during and subsequent to the quarter, we purchased the titles to 7 properties previously held under long-term ground leases for approximately $124 million. Year-to-date, we have purchased 28 ground leases for approximately $324 million and agreed to purchase 5 additional ground leases for approximately $63 million with closing expected by the end of the first quarter of 2026. These transactions create meaningful financial and strategic flexibility and eliminate significant lease complexity. As of September 30, total debt stood at $4.3 billion with a weighted average interest rate of 3.4% and a weighted average maturity of 7.4 years.

Pro forma for the closed transactions and our common distribution in October, our net debt is approximately $3.7 billion, and our net debt to recurring EBITDA on a trailing 12-month basis is approximately 3.6x. Under our $1 billion authorized share repurchase program, we have repurchased approximately 4 million shares for $500 million year-to-date at an average price of $125.74 per share. We continue to view buybacks as a way to enhance long-term shareholder value while maintaining balance sheet flexibility.

Turning to our full year 2025 guidance. Based on our strong third quarter results and recent capital actions, we are raising our core FFO per share expectations by $0.04 at the midpoint to a range of $6.59 to $6.67, reflecting continued operational strength and disciplined execution of our strategic priorities. North American same-property NOI growth guidance has been increased to 5.1% at the midpoint, up 40 basis points from the prior quarter, driven by solid performance across both manufactured housing and RV segments.

Manufactured housing same-property NOI is now expected to grow by 7.8% at the midpoint, reflecting continued outperformance through the third quarter and steady demand across the portfolio. RV same-property NOI guidance has been raised to a 1% decline at the midpoint, supported by stable third quarter results and improving transient trends relative to prior expectations. U.K. same-property NOI guidance has been increased to approximately 4% at the midpoint, reflecting better-than-expected third quarter performance and continued real property strength in the Park Holidays platform.

For additional details regarding our full year guidance, please see our supplemental disclosures. Our guidance reflects all completed acquisitions, dispositions and capital markets activity through October 30. It does not include the impact of potential future transactions or capital markets activity, which may be reflected in research analyst estimates.

I will now turn the call back over to Charles for concluding thoughts. Charles?

Thank you, Fernando. The team delivered a strong performance in the third quarter, and we are encouraged by the positive momentum. I am incredibly excited to be at Sun, and I look forward to providing updates as we work together to drive consistent growth for years to come. We have concluded our prepared remarks, and we will now open the call for questions. Operator?

[Operator Instructions] Our first question is from Steve Sakwa with Evercore ISI.

Charles, I realize you've only been on the job 30 days, but I'm just curious kind of your initial observations and some of the positives and maybe challenges that you've seen? And are there some kind of low-hanging fruit items that maybe you've uncovered given your background at Invitation that you think you can implement at Sun over the next 6 to 12 months?

Great. Steve, thanks for the question. Hello to everyone. Let me start with how excited I am to join Sun's outstanding team. And Steve, I appreciate the question as I'm sure many have been thinking it or wanted to ask it. So congrats on getting it out there. As you mentioned, I've been here for all of a month. So please allow me to level set and give you a few of my early thoughts, clarify what I've done and where I want to focus in the near term.

Let me start with the quarter. As you can see from this quarter's performance, the team is executing at a high level. So well done to the leaders on the call with me here today and to the entire Sun team. It's great to join such a high-performing team. So my first priority really has been around how do I support the team to finish our commitments and finish the strong -- the year strong 2025. As I mentioned in my earlier remarks, my first 30 days have been on focusing and on engaging with the team and getting up to speed on all aspects of Sun's businesses.

Over the past several weeks, I've been on the road visiting our properties. I met with apartment leaders, spending time in the field with our team members. It's incredibly valuable for me to know our business up close and from the ground up. And I've been impressed by the strength of the team at all levels as you ask about what I'm seeing. The scale of the platform feels familiar, which is great to see and the quality and location of our communities really stands out to me, and I plan to build on all of these strengths. So it's been exciting to validate what originally drew me to Sun.

Looking forward, so as we look beyond my first 30 days and next 30 and beyond that, my long-term focus is on driving consistent and profitable growth that creates long-term value. And Steve, as you know me and others know me, my background is in residential housing. So operational excellence and resident and guest satisfaction will remain at the heart of everything we do. Internally, I'm a big believer in the value of culture, one that continues to reflect Sun's values while empowering our teams to deliver their best for our residents and guests.

And from a financial perspective, I plan to stay disciplined in how we allocate capital. Any future enhancements will be thoughtful, data-driven and focused on creating long-term value for our stakeholders. But as I think about it all, and let me end with this because I know it's kind of early in my time, what really stands out from my experience is that in today's world, affordable living and attainable experiences that Sun provides is needed now more than ever. The value proposition offered by our high-quality communities and team members is unparalleled. And what this quarter performance shows you with our 98% occupancy is that the demand for affordable housing has never been greater. So I'll end here. I'm generally excited to join Sun at such a pivotal time in the company's history and truly believe in the exceptional opportunity ahead of us.

Our next question is from Jamie Feldman with Wells Fargo.

Great. I appreciate the thoughtful response there, and congratulations on the new role. I guess as you're thinking about the strategy of the company, what are your thoughts on the U.K. or maybe for the broader group there, what are the latest thoughts on the U.K.? I know you've been buying up some of the ground leases. But is this still a long-term hold for the company? And I know the growth looks pretty good actually, but maybe just share your latest thoughts.

This is Charles. Why don't I jump in and just give you my initial kind of what I've done to date on that, and then I'll turn it over to Aaron to get into the ground leases. In my first 30 days, I've had a chance to engage with the Park Holidays team. And as I mentioned, I'm evaluating all aspects of our business, including the U.K. And I'm encouraged from what I've seen. The team's discipline, execution and focus stands out. Performance has been solid, and the team has executed on our strategy to grow recurring real property-based revenue. Again, I'm going to stay high level. I'll spend more time digging in.

Aaron, you can fill in a little bit on the ground lease approach.

Yes. Thanks, Charles. Year-to-date through October, we've now acquired 28 ground lease properties and have another 5 under contract, which will bring the total purchases to 33. All these transactions are accretive to our earnings, were completed at attractive yields. And as Charles, I think, alluded to, meaningful flexibility to manage the portfolio strategically over time. Most importantly, from a strategic and flexibility perspective, following all of these closings, 49 of our 53 U.K. communities will be owned on a freehold basis. To comment in a way that John and I have commented previously, consistent with what we have said in the past and in light of our continuing strong performance despite those headwinds, we have the best team in the business in the U.K. They are managing the best assets in the market and are focused on executing an operational plan to ensure as with our entire portfolio that we are optimizing our properties and maximizing value for our stakeholders.

Our next question is from Jana Galan with Bank of America.

Congrats and welcome, Charles. A question on the transaction market, given you've been very active this year in both the dispositions and acquisitions. If you can maybe talk to kind of pricing, what's out there and any kind of additional opportunities?

Appreciate the question. Thank you. We just want to highlight that the most important part of what we've announced from a transactional perspective is that we've been very disciplined and selective in deploying the capital. These are all high-quality assets. They definitely fit our long-term strategy. Leveraging the long-term industry relationships that we've had. We are seeing an increase in the transactional activity in the market, but the overall opportunity set of properties that meet that acquisition criteria is consistent with what we have seen historically. The transactions we've announced and the transactions we are seeing that meet our criteria are much more likely to be in the single asset or small portfolio opportunities.

We are looking thoughtfully and prudently at adding communities in our portfolio to the extent they meet those criteria. What we did see from the transactions we executed on was cap rates in the low 4% area. We would expect that to continue to be the area in which we would continue to transact. And as we noted in our release, we do have another $50 million of potential 1031 transactions in the pipeline. But beyond that, I would suggest that the overall environment is very consistent with what we've been seeing, though we are able to acquire these single assets or small portfolios, we will remain selective, and we aren't seeing significant large portfolios of assets that meet our underwriting criteria, but we'll continue to underwrite and look thoughtfully at these opportunities.

Our next question is from John Kim with BMO Capital Markets.

I wanted to ask about your transient RV performance, which was better than expected. Have you had an impact from the Canadian customer base this quarter? What is your engagement like with your customers there? And what are you seeing? And can you remind us about the seasonality of the Canadian transient RV customers? Do you have more in the summer or winter months?

Yes. Thanks, John. This is John. I'll respond to that. First, I appreciate what you said. I'd like to say again how pleased I am with -- when we talk about RV -- annual RV revenue being up 8% in the quarter. Our RV NOI overall is performing towards the higher end of the guidance range we provided. As you know, I think most people know that our Canadian guests represent less than 5% of total transient and 4% of our RV annual business. And as I've shared, we have experienced softness with Canadian customers coming down to Florida.

So back to your question about sort of seasonality. We addressed some of that back last winter as well as some of that slowness in the Northeast this summer. But I will tell you, we are -- we've been sort of hyper focused on the annual RV side on retention in 2025. I think you all have heard me talk about that before. And that has led to overall good net conversion results with converting a net almost 700, okay, so far this year as well as we've been focused on with some of the short-term Canadian softness that we've dealt with just more -- getting more domestic RVs to help fill that Canadian guest gap.

And then what we're seeing going out forward is a little bit stronger booking trends on the transient RV side, okay, over recent weeks as well as some really encouraging activity in terms of renewals of RV annuals coming into the next season. So it feels like the work that we're doing where we focused our attention over the course of 2025, and I can't emphasize enough, you can't just flip the switch and do well retention. It takes a year to build that up, okay, which is what we've done. So we've put in that work, which is why we're seeing the trends that we're seeing now. And so I'd like to say that we're a little more positive than we were at this point last year.

Given your exposure in Michigan and some of the Northeast states, do you have a pretty even seasonality pattern with your Canadian RV customers?

I mean it's going to be mostly like -- it's going to be mostly in the first quarter, and it's going to be -- and then some in the third quarter up in the Northeast, but it's not really Michigan. It's more like Maine and places like that.

Our next question is from Eric Wolfe with Citigroup.

I was just wondering if you could talk about how you came up with 4% annual RV increase for next year. If there's any reason why it's down from, say, 5.1% the previous year, if you're trying to prioritize occupancy or -- just trying to understand the strategy around that increase. And then also, at what point you have good sort of data on the acceptance of that? So meaning like by the time we get to the end of the fourth quarter or first quarter, do you generally know sort of what your annual RV revenue will be for the year?

Yes. Great question, Eric. Thanks for -- this is John again. Specific to RV, our rent increases are intentionally set to continue reinforcing what I was mentioning earlier on retention, okay? Excellent operational execution remains key in retention, ultimately net RV annual conversion, which means the experience that our guests have at the properties, frankly, is far more valuable than anything we can do from an external marketing perspective. This is why I'm so focused on retention.

You have heard me say before that the best revenue-producing site that we can gain is the one we never lose, okay? And as I shared, we believe the strategy is paying off, and we are, in fact, running ahead of last year's renewal pace for RV annuals. And this all kind of culminates, which is why we've been prudently tempered, as I would say it, with a 4% RV annual increase for 2026. I mean it is retention really remains one of the most valuable drivers for consistent long-term growth for us, particularly in the RV space.

Our next question is from Adam Kramer with Morgan Stanley.

Congrats, Charles, on the new role and looking forward to working together. I wanted to ask about just the drivers of the guidance raise for the U.K. business. And I recognize there's some moving parts there with the ground leases, but just maybe fundamentally, like what's happening with that business currently and sort of what's embedded in the new outlook versus the prior?

Sure, Adam. The increase in same-property growth for the U.K. portfolio on the real property side is really a reflection of outperformance coming in the third quarter, and that's leading to the almost 180 basis point increase at the midpoint for NOI growth for the year. We saw stronger transient growth in the quarter as well as success from an expense containment perspective across utilities and supplies and repair.

Great. And maybe if I could just sneak in a quick follow-up here. Just wondering about tax implications. I think you guys have bought about $580 million or so, and I think the gains from the safe harbor sale were to be in the $1.4 billion range. So just wondering maybe high level, is there a tax asset that can offset some of the liability here that you have from those gains?

[indiscernible] Thanks for the question. I think that was referring to the safe harbor potential tax liability. To follow on what we've talked about in the past when we announced the transaction and even prior to that, we started implementing a broad tax mitigation strategy. Some of those efforts were the 1031 exchange programs we've talked about. There was the May special distribution. And then throughout the year, beginning in early 2025 as well as through to now, we have been selling nonstrategic assets that have generated losses.

We also have the ability to use NOLs. We're continuing to use those strategies. We're continuing to follow through. And as we've talked about before, the tax implications are generally in the year for the year. So we will continue to work through those as we move towards year-end and provide an update as appropriate. We would suggest we are very happy with how we've proceeded over the course of the year, particularly since the initial closing at the end of April this year.

Our next question is from Michael Goldsmith with UBS.

Welcome, Charles. Sticking with the U.K., can we just talk a little bit about the U.K. home sales environment? I noticed NOI from U.K. home sales were down pretty materially in the third quarter, so year-over-year. So is there -- is that a reflection of the environment overall? Or is there some kind of individual events that are weighing on that?

Michael, it's John. Appreciate the question. Yes, I mean, as I've said in my prepared remarks, home sales in the U.K. are a little lighter than they were last year. But I have to emphasize, we are really pleased with the overall performance of the U.K. business. U.K. same-property NOI grew by 5.4% in the quarter. We raised our U.K. same-property NOI guidance for the balance of the year. Our team in the U.K. continues to execute exceptionally well. They've done a great job of strategically shifting the earnings mix towards stable recurring real property income while maintaining strong market share and pricing power despite what you're talking about is the challenging macro backdrop.

But I do think this is really a tribute to the high quality of the portfolio, the exceptional service that happens on the ground by the team and the skill, performance, mindset inherent in that group of people that are led by Jeff, Richard and Chris. I mean, as you know, 2024 was the highest volume year of home sales for Park Holidays. And while 2025 volumes will be lighter, okay, than they were, I think they remain solid in line with our overall operational strategy in the U.K. One of the things kind of looking forward, we did have, as I think Fernando kind of alluded to, a strong 2025 vacation season in the U.K., and that may ultimately contribute to the pipeline for future home sales going out.

Our next question is from Jason Wayne with Barclays.

Just you reported $630 million in 1031 escrow at the end of the third quarter, netting this month's deals against that would suggest around $175 million of remaining funds. So just wondering if you turned down any deals this month or what's causing the delta between that and the $50 million remaining today?

Yes. So originally, thanks for the question. When we announced it, we originally put $1 billion into 1031 exchange accounts. And then we ultimately, as part of second quarter earnings, reallocated approximately $430 million into unrestricted cash, which left about $565 million earmarked for acquisitions. As part of this closing, it was about $457 million, and we do have some residual capital allocated to 1031s. As naturally part of these transactions, you do tend to over allocate 1031 funds for maximum flexibility. So we did expect a slightly less amount of actual transactions, but we ultimately executed on about 80% of those proceeds.

In terms of our approach, I just want to reiterate, we're being incredibly disciplined and selective. The funnel we looked at over the course of 2025 was much larger than what we ultimately executed on, and we did not feel any pressure to move forward with any transactions that did not meet our long-term objectives. We have a lot of long-standing deep relationships across the industry throughout the organization, and we're able to leverage those, and we'll continue to leverage those to find these attractive communities on a one-off or small portfolio basis. So we're very happy with what we've landed on. And you can assume that for every deal we do announce and close, there were many transactions and communities we passed on because they did not meet our quality and underwriting criteria.

Our next question is from Wes Golladay with Baird.

I just have a quick question on your land parcel sales. I know in the past, you were looking to be more of a developer and you may have some more inventory. Just wonder if you can quantify how much land you have left to sell -- for potential sale.

Thank you for the question. I think overall, we will continue to look to maximize value of unproductive assets. We've been very aggressive in exiting nonstrategic assets over the past 18 months in excess of $600 million of operating assets as well as land parcels. We wanted to highlight that we will continue to do that even as we look to grow the portfolio with high-quality communities and assets that we may acquire in due course. There may be smaller transactions like the one Fernando alluded to in his opening remarks, about $18 million, but we do not have substantial land assets you should be looking for, for sale. To the extent we do have some additional land, it will likely be adjacent to existing assets and may provide some incremental growth through expansion in the future.

Our next question is from Brad Heffern with RBC Capital Markets.

Welcome, Charles. On the regulatory side, there's clearly been an increased emphasis from this administration on housing affordability. Obviously, that's the main selling point of manufactured housing. I know the main impediment historically to supply has been at the local level, but I'm wondering if there's anything you're tracking at the national level or that could potentially be helpful that might come out of this.

Brad, it's John. I appreciate the question. I mean to answer your question directly, the answer is no. I mean there isn't a lot that's really changed. I mean I think you know that we've been an active participant in anything related to affordable housing as it relates to government support. We'll continue to be an active part of that. But in the meantime, we are obviously very skilled, experienced in being able to work at the local level, and we have shared a lot at the local level through some of the things that we've done in the past that we can be -- well, I would just say we're always ready, okay, because we possess the skills, the experience and the know-how if something does get turned up, if you will, to help boost that and accelerate that process. But for right now, we'll just be prepared.

Our next question is from David Segall with Green Street.

You still have room to run on the buyback authorization, but it seems like you paused the buybacks in October. So I'm just curious how you're weighing -- utilizing the remaining runway on the authorization versus additional acquisitions.

Thank you, David. You can expect us to continue being prudent with -- from a capital allocation perspective. I'd love to remind everyone that since the Safe Harbor sale, we have paid down over $3 billion of debt, meaningfully reducing leverage and removing our floating rate debt exposure, returned over $1 billion of capital to shareholders via special distribution and share buybacks and an over 10% increase to Sun's common distribution, acquired over $450 million of high-quality assets, acquired ground leases in the U.K., significantly improving financial and strategic flexibility for that portfolio. So we'll continue weighing right, all options in front of us from a capital allocation perspective and be thoughtful as it relates to how that next dollar is allocated.

Great. And just with regard to expenses, can you talk about what's driving the cost savings? You talked about it for the U.K. business in particular, but I'm curious for more broadly.

Yes. Thanks, David. This is John. I think more broadly, speaking specifically to like COM expenses within the operations side, we have expanded what we said we're going to do. We're sort of towards the top end of that range and much of that has lie in payroll-related line items, various supply and repair categories, tech-related costs. But one of the bigger pieces is meaningful standardization, expansion and adoption of our procurement platform, which encompasses many different expense-related items centered on property operations.

And additionally, I would share that we continue to harness transparency and the power of our technology to drive additional operational efficiencies. So I'm really pleased with how it's going. We will continue to focus on additional expense savings, but we're also very focused on additional revenue growth opportunities, okay? And the results of which are reflected in what you're seeing today in terms of our results, not just for the quarter, but for the whole year and the performance we've had in 2025.

And some of that on the top line has come in the form of retention, occupancy gains, rate gains, revenue growth as well as the great job the team has been doing from a collections perspective, which has turned into overall savings within bad debt. So I mean, to really sum it up for you, David, it's fundamentals and execution. They are the focus and what you're seeing happen in real time. You're seeing this happen in real time to our overall bottom line results.

Our next question is from Tayo Okusanya with Deutsche Bank.

Charles, welcome aboard. The transient RV business, could you just talk a little bit about what trends you're seeing at this point, again, whether you're kind of at the point where we're kind of getting towards the demand normalization everyone is looking for or whether for whatever reason that hasn't come back and kind of what may be delaying the eventual demand normalization of that business?

Yes. This is John. I'll start. Great question. It's actually a question we've been asked pretty much all year long. And I think that the best way that I would answer that is, again, we're really happy with our RV same-property NOI performance being at the top end of that range, okay? We've done really well coming off of 3 record years of transient RV conversions and still growing them. On top of that, we've got 23,000 transient sites we can convert in the coming years if we want to, okay? And so when we think about -- I would tell you, what is normalization, what is stabilization, I would just say, well, what is it, okay? Because it's a balance between what we do from both an annual side and the transient RV side. And the goal is to maximize what we can do from an overall RV NOI. And I think what you're seeing happen and what I've shared earlier in the call has been, we are seeing improved trends, not just on the annual RV renewal side, but as well as our current pacing that we're seeing on the transient side. So it's a difficult question to answer. But I think what we're seeing right now is actually pretty positive.

And Tayo, if I could add, we are actually seeing an improvement from a forecast perspective for the full year for just transient RV revenue performance. When we last spoke in July, we were forecasting about a 9.25% decline in revenue. That has improved over the last 3, 4 months by about 30 basis points for full year performance. So we're actually seeing slight improving trends from that standpoint.

Our next question is from Steve Sakwa with Evercore ISI.

Just -- and I'm sorry to ask this on kind of the RV business. So I believe the RV business is down 2.8% year-to-date, but the forecast for the full year calls for down 1%, which was a 50 basis point improvement. So that implies a pretty big, I think, acceleration or improvement 4Q to 4Q. Can you just maybe speak to what's driving that, number one? And then secondly, I know you guys have a lot of cash sitting on the balance sheet that's not restricted. How do we just think about that use of cash kind of moving into '26?

So Steve, you're right as it relates to expectations for fourth quarter NOI growth for our same-property RV portfolio. The main driver of that will be -- or one of the drivers for that will be transient growth where we're expecting a smaller decline than what we have seen on a year-to-date basis. That would be the largest driver.

And Steve, on the second question on the capital allocation. Again, I'm going to stay high level because of the time that I've been here, but I've been digging in with the teams and my perspective has always been to take a disciplined approach that balances growth, operational needs and shareholder value. And what I've seen so far is the team has executed very effectively across all of those areas. It's been very disciplined. And I expect that balanced and disciplined approach to continue as I dig in and get a deeper understanding with the teams. And we'll continue to review that framework, work closely with the Board and evaluate all options for long-term shareholder value.

Our next question is from John Kim with BMO Capital Markets.

It's a followup. Charles, I wanted to know what you thought of the rental home business within the MH communities. Is that's something that could be built up within Sun?

Yes. Again, this is part of my deep dive into the business. I've obviously, with my background, I have been spending a lot of time with John and Bruce understanding that business and how it works. Obviously, I have history and perspective. It seems to be executing really well, and I'm asking some questions as to kind of where we go from there. I don't have much more to add at this point, but it is something that I am particularly interested in given my background. John, do you want to add anything or?

Yes. I would just -- I think you know this, John. I mean, I've been around that program since its inception here at Sun. And one of the things I think is super important, one of the biggest benefits that it brings to the company is a key traffic driver to our communities, okay? Because we have lots of prospects that come to the property, thinking they might want to rent it, ultimately end up purchasing a home and become a homeowner. So that in itself is an important part of that program. And like I said, it drives a lot of traffic to us. So it's something that we will continue to have as one of the tools that's going to drive growth across the portfolio.

And if I could just follow up on the U.K. ground lease acquisitions. It provides you with some earnings accretion and flexibility. Can you just comment on what that flexibility means? Is that on the financing of the asset? Is it flexibility in how you may spend capital to develop on the asset? Or just does it give you just more value when -- if and when you decide to sell some of these communities?

Thanks for the question. It's Aaron again. Yes, to all of those questions. I think fundamentally, we acquired the business with these in place. They were part of our original underwriting. And due to our capital position and the opportunity presented by the current landlords, we're able to acquire them, incredibly helpful for the team on the ground in terms of managing the portfolio and owning them on a freehold basis. And certainly, to the extent we continue to assess the portfolio, just as we've done in the U.S., we've considered certain single asset, noncore asset sales and things like that. We will continue to do that. It provides that flexibility and ultimately, just increases it strategically and certainly remove some incremental lease payments we were making overall. So it does check a lot of boxes, both for the team here as well as for the team in the U.K., simplifying and improving flexibility and strategic optionality.

Our next question is from Brad Heffern with RBC Capital Markets.

I may have missed this, but did you give the cap rate on the recent acquisitions? And also, can you give a rough yield, I guess, on the ground lease purchases?

Aaron, again, thanks for the question. We did comment and said we were acquiring in the low 4% cap rate area, which is consistent with what we've shared with the market over the last few months from an expectations perspective. And in terms of the ground leases in aggregate, roughly in the same range, slightly higher from a yield perspective, low to mid-4%.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Charles Young for any closing comments.

Thank you for joining our call today, and I appreciate the welcome messages from each of you. I look forward to seeing many of you in person at the upcoming conferences over the next few weeks. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.