This week the largest mobile home park owner decided to become the largest marina owner...
…because, why not?
Sun Communities ($SUI) announced a $2.1 Billion acquisition of Safe Harbor Marinas.
Quick research thread below:
Too early to tell how accretive this will over the long-term, but our initial take is positive.
- Sun running out of large mhp portfolios to buy
- PE firms are pushing park cap rates to sub 4%
- Should return high 6% yield year one
(Sun’s dividend is only 2%)
Marina real estate has similar characteristics to existing mhp business:
1.high barriers (shrinking supply)
2.fragmented industry
3. low capital expenses
4.sticky tenants
(like land, water is pretty cheap to maintain)
Sun is an acquisition and machine. Since 2010 they have acquired and repositioned approximately $5.8 billion worth of mobile home and RV parks.
Their stock price went along for the ride:
They are not just deal junkies though.
They have operating talent. They consistently drive same store net operating income (NOI).
See our analysis below, which highlights the strength / resilience of the business model.
Same store revenues grow faster than expenses.
This is what operational leverage looks like / how you compound capital:
Risks:
- Extreme weather
- less recession resistant vs. mhps
Mitigates:
- diversified portfolio (101 marinas)
- customer crossover opportunities
- If anyone can pull this off, it’s Sun.
Caveat: Evergreen is long $SUI.
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