Breaking Down Sun Communities, Inc. (SUI) Financial Health: Key Insights for Investors

You need to know if Sun Communities, Inc. (SUI) can keep up its momentum after that huge asset sale, and the short answer is yes, they defintely can. The market is pricing in stability, but the numbers suggest a clear operational acceleration, especially in their core manufactured housing (MH) and recreational vehicle (RV) segments. Management recently raised their full-year 2025 core Funds From Operations (FFO) per share guidance to a range of $6.59 to $6.67, reflecting a disciplined focus following the approximately $5.5 billion Safe Harbor marinas disposition. Plus, the North American same-property Net Operating Income (NOI) growth is now projected at a strong 5.1% at the midpoint, and occupancy across their MH and annual RV sites hit an impressive 99.2% as of Q3 2025, showing they are capturing rent and minimizing vacancy risk. That high occupancy is a huge tailwind. This isn't just a REIT riding a wave; it's a focused operator delivering on a pure-play strategy, and you need to understand what that means for your investment horizon.

Revenue Analysis

You need to know where Sun Communities, Inc. (SUI) is actually making its money, especially after a major strategic shift. The direct takeaway is that SUI's revenue engine is now overwhelmingly focused on residential rental income, specifically Manufactured Housing (MH), and the total trailing twelve-month (TTM) revenue as of Q3 2025 hit approximately $3.266 Billion, reflecting a substantial 32.09% year-over-year growth.

The core of Sun Communities, Inc.'s revenue comes from real property rental income-essentially, collecting rent from their residents and guests. This is a Real Estate Investment Trust (REIT) at its most basic. As of the third quarter of 2025 year-to-date (YTD), the Manufactured Housing (MH) segment alone accounted for about 68% of the total rental revenues, making it the defintely dominant revenue stream. This is a stable, high-occupancy business model.

Here's the quick math on the revenue segments, which shows where the operational strength is concentrated:

• Manufactured Housing (MH): Rental revenue from long-term residents. This is the bedrock.
• Recreational Vehicle (RV): Rental revenue from annual and transient RV sites.
• United Kingdom (UK): Rental revenue from their properties across the pond.
• Home Sales and Ancillary Services: Revenue from the sale of new and pre-owned manufactured homes, plus adjacent services like utilities and retail, which make up roughly 10% of total revenue.

What this estimate hides is the massive strategic change that happened in 2025. The company completed the sale of the Safe Harbor Marinas business subsequent to the first quarter of 2025, which means they are now a 'pure-play' MH and RV operator. The reported 32.09% TTM revenue growth is impressive, but it's crucial to remember that the prior-year comparison included the now-discontinued Marina operations, which impacts the year-over-year growth rate. Anyway, the focus is now clear: affordable residential and recreational rentals.

The strength of the underlying business is best seen in the Same-Property Net Operating Income (NOI) growth-a clean measure of how well the existing properties are performing. The full-year 2025 guidance, updated after Q3, shows a clear divergence in segment performance:

The MH segment is the clear growth driver, expected to deliver a robust 7.8% same-property NOI growth at the midpoint for 2025, reflecting strong rental rate increases and high occupancy. To be fair, the RV segment is lagging with a projected 1% decline in same-property NOI for the year, largely due to a strategic shift to convert lower-revenue transient sites into higher-revenue annual RV sites. That short-term revenue dip is a long-term value play. For a deeper look at who is betting on this MH/RV strategy, you should check out Exploring Sun Communities, Inc. (SUI) Investor Profile: Who's Buying and Why?

Profitability Metrics

You want to know if Sun Communities, Inc. (SUI) is making money and how efficiently. The direct takeaway is that while the company's headline net profit looks massive due to a one-time event, its core operating profitability is thin and lags the industry average, which is a key risk to monitor.

For the trailing twelve months (TTM) ending in late 2025, Sun Communities, Inc. reported total revenue of roughly $3.24 billion. The Gross Profit for this period was approximately $1.53 billion, translating to a Gross Profit Margin of about 47.2%. That's a strong margin, telling you the core property operations-rent collection and direct expenses-are very healthy. But the real story is what happens after overhead.

Here's the quick math on core profitability versus the headline number:

• Gross Profit Margin: 47.2% (Strong property-level economics).
• Operating Margin (2024): 10.40% (High overhead costs erode gross profit).
• Net Profit Margin (TTM): 31.2% (Distorted by an extraordinary gain).

The TTM Net Income of $1.01 billion and the resulting 31.2% Net Profit Margin is defintely eye-catching, but it's not from core operations. This massive spike is almost entirely due to the non-recurring gain on the sale of Safe Harbor Marinas completed in the second quarter of 2025. What this estimate hides is the core business performance: the net loss from continuing operations for the nine months ended September 30, 2025, was actually $119.0 million. That's the number that matters for long-term investors.

Operational Efficiency and Industry Comparison

The significant drop from the 47.2% Gross Profit Margin to the 10.40% Operating Margin (based on 2024 figures) highlights a challenge in operational efficiency, specifically in managing selling, general, and administrative (SG&A) expenses. The gap is too wide. This suggests high corporate overhead or other non-property-level operating costs are eating up nearly 37 percentage points of revenue.

Looking at the trend, the company has been working to improve its operating efficiency, which is a positive sign. The Operating Margin climbed from 7.11% in 2023 to 10.40% in 2024. Still, when you compare this to the broader Real Estate Investment Trust (REIT) sector, Sun Communities, Inc. has room to improve. The average Operating Margin (TTM) for the REIT industry is around 29.13%. Sun Communities, Inc. is operating at less than half that level, which puts pressure on its ability to cover interest and taxes without asset sales.

To understand the company's long-term strategic focus and how management plans to close this margin gap, you should review their core principles, which you can find here: Mission Statement, Vision, & Core Values of Sun Communities, Inc. (SUI).

Here is a quick look at the core margin comparison:

The clear action here is to watch the Q4 2025 and 2026 reports closely for a sustained upward trend in the Operating Margin, now that the Marina portfolio sale is complete and the company is a pure-play manufactured housing and RV operator. If that margin doesn't start climbing toward the industry average, the core business is simply not generating enough profit from its revenue base.

Debt vs. Equity Structure

You want to know how Sun Communities, Inc. (SUI) is funding its growth, and the short answer is they just completed a major deleveraging move. The company has successfully shifted its capital structure, using proceeds from a large asset sale to pay down significant debt and strengthen the balance sheet, which is defintely a positive signal for investors.

As of the third quarter of 2025, Sun Communities, Inc.'s total debt stood at approximately $4.3 billion, with long-term debt accounting for the vast majority at $4.272 billion. The weighted average interest rate on this debt is a favorable 3.4%, with a long weighted average maturity of 7.4 years. Importantly, the company has managed to maintain zero floating rate debt outstanding, which insulates them from rising interest rate risk.

Leverage and Industry Benchmarks

The key metric here is the debt-to-equity ratio (D/E), which tells you how much debt a company is using to finance its assets relative to the value of its shareholders' equity. Sun Communities, Inc.'s D/E ratio as of Q3 2025 is approximately 0.58. For a capital-intensive business like a Real Estate Investment Trust (REIT), this is a healthy, manageable figure.

Here's the quick math on their leverage compared to the sector:

• Sun Communities, Inc. Debt Ratio: 32% (Debt-to-Total-Capitalization)
• Manufactured Housing Peer Debt Ratio: 20%
• Total REIT Industry Debt-to-Market Assets: 32.5% (Q1 2025 average)

While their leverage is slightly higher than some peers, it's right in line with the broader REIT industry average, and the quality of the debt-fixed-rate and long-term-mitigates the risk. They are not overleveraged.

Recent Deleveraging and Credit Strength

The company's recent capital actions have been aggressive and strategic. Following the sale of its Safe Harbor Marinas business, Sun Communities, Inc. paid down approximately $3.3 billion of debt, which significantly improved its balance sheet. This deleveraging earned them credit rating upgrades in Q2 2025: S&P Global raised the rating to 'BBB+' from 'BBB' and Moody's upgraded them to 'Baa2' from 'Baa3'. That's a clear vote of confidence from the rating agencies.

They also established a new $2.0 billion revolving credit facility that matures in January 2030, and as of September 30, 2025, it had zero borrowings outstanding. This gives them immense and cheap liquidity for future acquisitions or capital expenditures.

The balance between debt and equity is currently tilted toward equity funding, driven by the massive asset sale. The $5.25 billion in cash proceeds from the sale was used not only for debt reduction but also to return capital to shareholders via a $521.3 million special cash distribution and year-to-date share repurchases totaling over $500.3 million. This dual-action approach-shedding debt and rewarding equity holders-is a hallmark of a mature company optimizing its capital structure. You can learn more about their long-term direction in the Mission Statement, Vision, & Core Values of Sun Communities, Inc. (SUI).

The following table summarizes the key metrics illustrating their balance sheet health:

The bottom line is that Sun Communities, Inc. has used a major divestiture to reset its debt profile, moving from a more leveraged position to one with a significantly stronger, investment-grade balance sheet and ample dry powder.

Liquidity and Solvency

You need to know if Sun Communities, Inc. (SUI) has enough short-term cash to cover its bills, and the answer is a qualified yes, especially after a major asset sale. The company's liquidity position looks strong on paper, but the recent capital restructuring is the real story, fundamentally improving its long-term solvency (ability to meet long-term debt obligations).

Here's the quick math on their immediate cash position, using the most recent trailing twelve-month (TTM) data available closest to November 2025. Mission Statement, Vision, & Core Values of Sun Communities, Inc. (SUI).

Current and Quick Ratios

Sun Communities, Inc.'s liquidity ratios show a solid ability to cover short-term obligations, though they are higher than typical for a stabilized Real Estate Investment Trust (REIT). The Current Ratio sits at 4.45 and the Quick Ratio is 2.32 (as of the period ending November 2025 TTM).

• Current Ratio: At 4.45, this means SUI has $4.45 in current assets for every dollar of current liabilities. A ratio above 1.0 is good; this is excellent.
• Quick Ratio: The 2.32 ratio, which excludes less-liquid assets like inventory, is also very strong. It shows the company can easily pay off its immediate debts with its most liquid assets.

To be fair, these elevated ratios are a direct result of the massive cash inflow from the Safe Harbor Marinas sale, which temporarily inflated the current assets (cash) side of the balance sheet. A sudden spike like this is defintely a one-off event, not a sustainable operating trend.

Working Capital and Capital Allocation Trends

The working capital trend is dominated by a single, transformative event in 2025: the sale of the Safe Harbor Marinas business. This transaction closed in April 2025, bringing in substantial cash proceeds of approximately $5.25 billion.

This cash was immediately put to work to radically clean up the balance sheet, which is a major positive for long-term investors. The company used the proceeds to settle outstanding debt balances, including $1.6 billion under its senior credit facility and $740.0 million of secured mortgage debt. This strategic use of capital dramatically reduced overall leverage and improved solvency.

Cash Flow Statements Overview

The cash flow statement for the 2025 TTM period is a clear picture of this transformation, showing strong operating cash flow and a massive, positive spike in investing activities due to the asset sale.

The negative financing cash flow of $571.60 million is actually a sign of strength here. It shows SUI is using its cash to pay down debt and return capital to shareholders via a one-time special cash distribution of $4.00 per common share and stock repurchases, rather than constantly taking on new debt.

Liquidity Strengths and Risks

The primary strength is the post-sale balance sheet, which is now significantly de-leveraged. The Net Debt to trailing twelve-month Recurring EBITDA ratio dropped substantially, making the company much more resilient to economic downturns. This is the definition of improved solvency. The risk, however, is that the high liquidity ratios are not a function of core operations but a one-time event. Moving forward, the focus shifts to how effectively management can redeploy the remaining capital into its core Manufactured Housing (MH) and Recreational Vehicle (RV) portfolio to maintain strong operating cash flow growth.

Valuation Analysis

You're looking to see if Sun Communities, Inc. (SUI) is a buy, a hold, or a sell right now, and the short answer is that the market is pricing it as a Moderate Buy, but its valuation multiples are giving off mixed signals that demand a closer look at its near-term earnings projections.

The stock is trading around the $125.50 mark as of November 2025, and over the last 52 weeks, the price change has been virtually flat, showing a slight decrease of only -0.01%, which suggests the market is waiting for a clear catalyst before making a big move. This sideways movement is defintely a classic sign of a REIT (Real Estate Investment Trust) in a high-interest-rate environment, where the cost of capital eats into acquisition-driven growth.

Key Valuation Multiples

When assessing a REIT like Sun Communities, Inc., we look beyond the standard Price-to-Earnings (P/E) ratio and focus heavily on Price-to-FFO (Funds From Operations). Here's the quick math on the 2025 fiscal year data:

• Price-to-FFO (P/FFO): At 21.29x, this is the most relevant multiple, and it sits within a reasonable range for a high-quality, high-growth REIT in the manufactured housing and RV sector.
• Price-to-Earnings (P/E): The trailing P/E is 15.78x, which looks cheap on paper, but the forward P/E jumps to 45.66x. This massive spread tells you analysts are projecting a significant dip in near-term GAAP earnings, likely due to non-cash items or transaction costs, so don't let the low trailing P/E fool you.
• Price-to-Book (P/B): The ratio stands at 2.22x. This is a solid premium over book value, which is typical for a company with high-quality, irreplaceable real estate assets like Sun Communities, Inc.'s portfolio of manufactured housing communities and RV resorts.
• Enterprise Value-to-EBITDA (EV/EBITDA): This multiple is currently 15.51x. For a capital-intensive real estate operation, this is not cheap, suggesting the market is already baking in continued strong operating cash flow growth.

Dividend Profile and Analyst Outlook

The income story remains compelling for Sun Communities, Inc. The company pays an annualized dividend of $4.16 per share, giving you a competitive dividend yield of about 3.5%. The payout ratio-the percentage of earnings distributed as dividends-is a comfortable 40.70%, which means the dividend is well-covered and has room to grow, unlike some peers.

The analyst community is generally positive, but not overly aggressive. The consensus rating is a Moderate Buy. The average 12-month price target is $137.92, which suggests an upside of around 10% from the current stock price. To be fair, this modest upside reflects the macroeconomic risks-like sustained higher interest rates-that are still weighing on the broader REIT sector.

To understand the forces driving this consensus, you should read Exploring Sun Communities, Inc. (SUI) Investor Profile: Who's Buying and Why?

Here's a snapshot of the key valuation metrics:

Risk Factors

You're looking at Sun Communities, Inc. (SUI) after a transformative year, but even with strong core performance, a seasoned analyst knows where to look for turbulence. The key takeaway is that while the company has dramatically de-risked its balance sheet with the Safe Harbor Marinas sale, external economic pressures and segment-specific headwinds remain the primary concerns for 2026 and beyond.

External and Financial Headwinds

The biggest external risk is the cost of doing business-specifically, interest rates and operating expenses. While Sun Communities, Inc. has done a masterful job of de-leveraging, reducing its total debt to $4.3 billion as of September 30, 2025, the broader environment still matters. They used the Safe Harbor Sale proceeds to settle approximately $1.6 billion in debt and redeem $950.0 million in unsecured senior notes, which is defintely a smart move. This action pushed the Net Debt to trailing twelve-month Recurring EBITDA ratio down to a much healthier 3.3 times in Q3 2025, from 5.9 times in Q1 2025. That's a significant financial buffer.

Still, rising property insurance premiums and real estate taxes are constant drags on Net Operating Income (NOI). Also, as a Real Estate Investment Trust (REIT), any legislative or regulatory changes to the taxation of REITs could instantly impact investor returns, so you need to watch Washington and state capitals closely.

Operational and Segment-Specific Risks

The core business segments-Manufactured Housing (MH) and Recreational Vehicle (RV) communities-show a clear divergence in risk. The MH segment is a rock, delivering a robust 10.1% Same-Property NOI growth in Q3 2025, with occupancy holding steady at 98%. This stability is a huge competitive advantage.

The RV segment, however, is a persistent headwind. For the full year 2025, the company's guidance for RV same-property NOI is a 1% decline at the midpoint, reflecting a challenging environment where discretionary travel spending is softening. This is a classic operational risk: a strong core business masking weakness in a cyclical segment. To be fair, they are actively managing this.

• Convert transient RV sites to annual rentals.
• Increase penetration of rental homes to stabilize income.
• Focus on high-demand markets to mitigate regional risks.

This strategic shift toward long-term residents helps smooth out the volatility you see in the transient RV business. You can dive deeper into the ownership structure and institutional interest in Exploring Sun Communities, Inc. (SUI) Investor Profile: Who's Buying and Why?.

Strategic Risks and Mitigation

The company's growth strategy relies heavily on acquisitions and development, plus the effective use of capital from the Safe Harbor sale. They allocated approximately $1.0 billion into 1031 exchange escrow accounts to fund future MH and RV acquisitions. The risk here is execution: overpaying for assets or failing to integrate new communities efficiently.

The mitigation is disciplined capital allocation and share repurchases. Year-to-date through October 29, 2025, Sun Communities, Inc. repurchased 4.0 million shares for $500.3 million, which signals management's belief that the stock is undervalued and is a concrete way to return capital to shareholders while maintaining balance sheet flexibility. This buyback program is a smart move to enhance shareholder value.

Growth Opportunities

You're looking for where Sun Communities, Inc. (SUI) will find its next gear, and the answer is simple: a sharpened focus on its core business, backed by a fortified balance sheet. The company's recent strategic moves have simplified the investment thesis, making it a pure-play operator in two of real estate's most durable niches: manufactured housing (MH) and recreational vehicle (RV) communities. This shift maps a clear path for future growth, even with some near-term headwinds in the transient RV segment.

Honestly, the biggest driver is the $5.5 billion sale of the Safe Harbor Marinas business. This wasn't just a big transaction; it was a transformation. It allowed Sun Communities, Inc. to pay down approximately $3.3 billion of debt, which strengthened the balance sheet significantly and earned them credit rating upgrades from S&P Global to 'BBB+' and Moody's to Baa2. A low net debt to EBITDA ratio of 2.9x positions them well for future, accretive acquisitions.

Here's the quick math on what analysts are projecting for the 2025 fiscal year, reflecting this streamlined business model:

What this estimate hides is the segment-specific strength. Manufactured Housing (MH) is the powerhouse, delivering a 10.1% Net Operating Income (NOI) growth in Q3 2025, driven by near-full occupancy. The MH segment is defintely a growth engine because new supply is constrained by zoning, giving Sun Communities, Inc. pricing power in a market desperate for affordable housing.

The company's growth strategy isn't just about organic rent increases, though. They are actively managing their portfolio. In Q3 2025 alone, they acquired 14 communities for $457 million while simultaneously selling non-core assets for $118 million to optimize their holdings. Plus, they are returning capital to shareholders through a sizeable share repurchase program of over $500 million.

Their competitive advantages are clear and structural:

• Affordability Demand: They capitalize on the long-term need for affordable housing, which MH provides.
• High Occupancy: Blended occupancy for MH and RV communities is exceptionally high, at 99.2%.
• Recurring Revenue: Roughly 90% of their NOI comes from sticky, recurring rental income.
• Strategic Partnerships: The partnership with Hipcamp to list 100 Sun Outdoors RV resorts is a smart move to stabilize the transient RV segment.

The company is focused on operational excellence and disciplined capital allocation under new leadership, which is exactly what you want to see in a real estate investment trust (REIT) navigating a complex market. You can read more about the core business fundamentals in Breaking Down Sun Communities, Inc. (SUI) Financial Health: Key Insights for Investors.