Good afternoon, ladies and gentlemen, and thank you for being here. Welcome to the Sun Communities Second Quarter 2023 Earnings Conference Call. Management has asked me to remind you that some statements made during this call, which are not based on historical facts, may be considered forward-looking statements according to the Private Securities Litigation Reform Act of 1995. While the company believes that the expectations reflected in these statements are based on reasonable assumptions, it cannot guarantee that those expectations will be met. Factors and risks that could lead to actual results differing significantly from expectations are outlined in yesterday’s press release and in the company’s periodic filings with the SEC. The company does not have an obligation to advise or update any forward-looking statements to reflect events or circumstances occurring after the date of this release. With that, I would like to introduce our management team here today, Gary Shiffman, Chairman, President, and Chief Executive Officer, and Fernando Castro-Caratini, Chief Financial Officer. Please note that this call is being recorded. I will now hand the call over to Gary Shiffman, Chairman, President, and Chief Executive Officer. Mr. Shiffman, you may begin.

Good afternoon, and thank you for joining our call to discuss second quarter results and our updated 2023 guidance. We are pleased to share Sun’s continued strong operating results. Core FFO per share of $1.96 for the quarter was in line with guidance, supported by strong 6.3% year-over-year growth in same-property NOI and 3.4% growth in recurring EBITDA. Our properties share the compelling fundamentals of resilient demand and low to shrinking supply, which when combined with the unparalleled customer service our teams deliver, historically generate high durable cash flow streams throughout economic cycles. Same-property NOI growth in the quarter exceeded the high end of guidance by 150 basis points and was driven by solid revenue growth and the successful implementation of ongoing expense management. In manufactured housing, same-property NOI grew 5.7% compared to 2022, driven by strong rental rate growth and bolstered by occupancy gains. In RVs, same-property NOI growth of 3.2% reflected our continued focus on converting transient guests into annual residents, which increases our stream of stable revenue and improved operational efficiencies. At the end of the quarter, same-property adjusted occupancy for our combined MH and RV locations was 98.7%, a year-over-year increase of 170 basis points and reflects the resilience of demand for our properties. Additionally, across our total portfolio, we gained over 1,000 new revenue-producing sites during the quarter, which represents 9.4% growth compared to last year and brings total gains for the year to nearly 1,850 sites. Same-property Marina NOI grew 11.9% compared to the prior year, exceeding our expectations. The outperformance was fueled by robust demand for wet slips and dry storage from boaters who increasingly discovered the convenient unmatched locations and premium amenities offered throughout our best-in-class network of Marinas. On a trailing 12-month basis, our same-property portfolio generates 91% of total real property NOI and is a powerful engine for EBITDA and cash flow growth. We intend to remain internally focused on optimizing our embedded portfolio growth. By reinvesting in our properties and providing the highest level of customer service, we preserve and increase value for the residents, guests, and members, and help ensure predictable long-term revenue growth. Portfolio optimization includes completing select property expansions and in the case of Marinas, stock reconfigurations to enhance property returns and to scale property operations. In the second quarter, we delivered over 100 expansion sites across 3 communities. In May, we published our 2022 ESG report, highlighting our significant achievements, including the expansion of our GHG inventory to cover Marinas and the UK and our Board’s commitment to achieving net-zero emissions. These and other important initiatives reinforce our dedication to being responsible stewards of all resources toward a shared goal of improving the communities in which we live, work, and serve. I would like to thank all Sun team members who have been instrumental in our accomplishments in the first half of the year. As we progress through the second half of 2023, I look forward to realizing even greater achievements that will further enhance Sun’s platform and the value we deliver to all of our stakeholders. I will now turn the call over to Fernando to discuss our results in more detail. Fernando?

Thank you, Gary. During the second quarter, core FFO of $1.96 per share was in line with guidance. Real property revenue growth as well as efficiencies in property and corporate level expenses drove the quarter’s performance, partially offset by higher interest expense. Our same-property results were solid as demand for our properties remained strong. Total same-property NOI grew 6.3% in the quarter as compared to 2022, which outperformed the high end of our guidance by 150 basis points. Total same-property revenues grew 6.2% and exceeded property operating expense growth of 6%. The lower expense growth was broad-based with moderate year-over-year growth realized in payroll, utilities, real estate taxes, and other expenses. Same-property manufactured housing NOI increased 5.7% during the quarter, exceeding internal expectations. Our performance was driven by strong occupancy gains bolstered by a rental rate increase of 5.7% and lower-than-expected expense growth, especially in payroll investments. In RV, same-property NOI for the quarter increased by 3.2%. We achieved strong 8.6% growth in weighted average annual rents over the prior year and operating expense efficiencies that resulted in modest 4.1% expense growth over the prior year. These partially offset a 6.1% reduction in growth in transient RV revenue. Our RV communities delivered solid results during the July 4 holiday weekend. Same-property RV transient revenue increased by 8.4% compared to 2022 even as we had 5.7% fewer transient sites available. July 4 fell on a Tuesday this year, whereas last year it fell on a Monday. Adjusting for just the Friday to Monday period, same-property RV transient revenue still increased by 2.7%. While we continue to see strong holiday and weekend demand during mid-week periods, transient RV revenue growth continues to moderate from recent record levels. Strategically, we remain focused on increasing our stable annual property revenues through increased transient to annual site conversions. In addition to increasing the percent of revenues derived from annual residents, conversions result in higher NOI margins over time by decreasing the higher level of variable expenses associated with transient guests. During the second quarter, we converted over 750 transient sites across our total RV portfolio, bringing first-half conversions to nearly 1,300 sites. Since the start of 2020, we have converted over 6,000 transient sites to annual and we intend to continue driving transient to annual site conversions to optimize long-term returns. In the second quarter, Marina same-property NOI increased 11.9%. This outperformance was driven by a 9.2% increase in revenue from stronger demand overall and lower expense growth of 3.4% that significantly surpassed our internal expectations for mid-single-digit expense growth. Lower expense growth was most significant in Marina payroll and benefits, utilities, and supply and repair. In terms of home sales, we were in line with our expectations in North America and are on track to achieve our guidance. Continued demand is demonstrated by an average price for new homes of $210,000 and higher margins. In the UK, economic headwinds continue to impact vacation home sales. Home sale NOI margins, while 5.7% below prior year margins, were in line with our expectations. The approximately 840 homes sold in the second quarter were 8% below our expectations. Inflation in the UK has remained higher for longer than anticipated, and in late June, the Bank of England implemented an unexpected 50 basis point increase in its base interest rate. We have seen the time home purchasers take to buy a vacation home continue to lengthen, and the margins on those home sales remain under pressure. Our experienced UK team continues to successfully navigate this challenging market environment with a focus on optimizing volume and margins while these conditions persist. On the real property side, we are seeing higher retention rates for Park Holiday homeowners, which leads to higher average resident tenure approaching 8 years. We remain enthusiastic about the growth opportunity in this segment of the business. As of June 30, 2023, our $7.6 billion in debt outstanding has interest at a weighted average rate of 4% and had weighted average years to maturity of 7.1 years. Our trailing 12-month leverage ratio was 6.2x. Based on our operating cash flow expectations for the remainder of the year and potential capital recycling opportunities, we anticipate deleveraging towards our long-term leverage target. As detailed in our supplemental, we are revising our full year guidance range for core FFO per share downward by 2.2% to a revised range of $7.09 to $7.23 and established guidance for the third quarter. Our revised guidance is primarily reflective of lower expected home sales in the UK and higher interest expense expected in the second half of the year, predominantly from the flexible variable rate sterling-denominated debt that funded our UK business. Since our last guidance update in April, short-term interest rates have increased meaningfully. We are evaluating opportunities to refinance and pay down floating rate debt over the second half of the year. We expect continued strong same-property performance and are increasing our total same-property NOI growth for the year to a range of 5.3% to 6.1%. The 20 basis point increase at the midpoint is driven by outperformance in manufactured housing and Marinas moderated by revised expectations for same-property RV. We also expect additional G&A savings over the second half of the year. Our revised same-property NOI growth ranges for the year are 5.2% to 5.8% for manufactured housing, representing a 50 basis point increase at the midpoint, 3.4% to 4.6% for RV, representing a 100 basis point decrease at the midpoint. The largest driver for the decrease is revised growth expectations for transient RV revenue, which is now forecasted to be a 3.9% decline for the full year, 8% to 9% from Marina, representing a 110 basis point increase at the midpoint. For our UK operations, we are lowering our full year forecast for home sales NOI to a range of $65.7 million to $75.4 million. The revised range represents a $10.2 million decrease to prior guidance at the midpoint and assumes we sell between 2,800 to 2,900 homes for the full year, an approximate 11% decrease in volume from April expectations. For additional details regarding our updated full year guidance, please see our supplemental disclosures. As a reminder, our guidance includes acquisitions and dispositions and capital markets activity through July 26 and the effect of a property disposition under contract that is expected to close during the third quarter. Our guidance does not include the impact of prospective acquisitions, dispositions or capital markets activities, which may be included in research analyst estimates. This concludes our prepared remarks. We will now open the call up for questions.

Our first question comes from Josh Dennerlein with Bank of America. Please go ahead with your question.

Yes. Hey, guys. Thanks for the time. So, I guess this is the second time in a row you’ve taken down UK home sale profits and I think that volumes as well. What’s to say this is the bottom? And can you kind of walk us through how you forecast or come up with that guidance range for the home sales and the profit?

Sure, Josh. Thanks. To really look at how we are thinking about the fact that we have had to re-guide before on the UK, I’d underscore that the home sales forecast has built really from the bottom up at the community level, taking into account all available sites to sell homes on, which include vacant sites, sites to be delivered from expansion activity and rental home higher fleet sites that we can convert to be able to sell homes and create an annual fee on. And this exercise is completed with a lot of oversight, but built up from the property level. Our revised range really incorporates current market conditions as we understand them. It doesn’t assume any major decline in inflation or interest rates in the UK for the remainder of the year. And we think even if we were to see them, the lag between those changes and improvements wouldn’t impact results for the balance of this year; certainly, they would into ‘24. So the high end of our range currently indicates what we believe is the most likely of outcomes, and the low end of our range really tends to catch that outcome further to what we would consider a worst-case scenario. As Fernando mentioned in his remarks, since we met at NAREIT, certainly, the conditions since then have changed in the UK: a much slower reduction in CPI, although there has been some modest reduction, but the Bank of England’s 50 basis point rate increase was unexpected, and it does have ramifications on the buyers of our vacation homes. So from the best insight that we can see, we feel that we have done a good job really thinking through what the scenario should be through 2023, and that’s how we adjusted guidance and came up with a range.

Okay. And then could you walk us through how most people finance or pay for their Park Holiday homes? And is there – do a lot of people use like a second lien on their primary home to pay for it?

Sure. So Josh, about 30% of our homeowners are purchasing with financing that would be akin to channel financing here in the U.S. The other 70% we see as cash. In some instances, they are right, using proceeds from refinancing their home, their primary home in order to purchase their vacation home. Certainly, rates are – refinancing rates are higher for primary homes. So, that’s going into the equation as far as lower volume expected of sales.

And the only thing that I would add that in the UK, the single-family residential, primarily home mortgages and the fixed rate for a shorter period of time here in the U.S., 3 to 5 years, so certainly, those potential vacation homebuyers are experiencing a reset to their mortgage rates, and that probably as they factor in line, we are seeing a slower conversion to buy homes from our potential customers. But the interesting thing I just would add is that the Park Holidays platform really continues to put a strong market through the changes in Brexit, the location of the units, the work of the properties, the work from home that’s taking place there. So there is still – when we talk about the real property activity, still high demand, high tourism, high usage and the high anecdotal interest remains in buying homes, but it’s definitely influenced by a slower sales because I think they are experiencing financial ramifications in the UK.

Our next question comes from the line of Brad Heffern with RBC Capital Markets. Please proceed with your question.

Yes. Thank you. Sticking with the UK home sales. Can you talk about what underlies the guidance for the rest of the year in terms of the ASPs and the margins compared to last year?

Sure. So Brad, our 2,800 to 2,900 home sales expectations for the full year have us having a margin of between $24,000 and $25,000 NOI margin. As you see – as you would see it reported for us. So we do have a moderation to margin expected on a year-to-date basis. We have been achieving about a $26,000 margin.

Okay. Got it. And then how do you think about what needs to happen for that business to recover? Is it just rates need to stabilize or go down? Does the UK economy need to improve? And how long do you think about that potentially taking?

Yes. I like to think we had a crystal ball. And if we go on our assumptions, we would have thought earlier we would start to see some improvement, but that hasn’t taken place. Clearly, when you look through Europe, the UK has the most challenged economy right now. I think the steps that have been taken by the Bank of England have begun to show some improvement in CPI, which was right around 10% a year ago. As recently as a little while ago, it would drop to 7.9%. So it still has a ways to go. But I think as we see that improvement, we would expect there would be a commensurate rate decrease in conjunction with that over time. So as we look out into 2024, we think that’s one we will begin to see the change in realization that we go back to more normalized sales.

Thank you.

Our next question comes from Keegan Carl with Wolfe Research. Please go ahead with your question.

Doing well. I'm curious about a few things: first, what you're observing on the safe harbor platform; second, how you're viewing underwriting in relation to the long-term perspective of the industry; and third, how marina performance influences your thoughts on long-term capital allocation moving forward?

Keegan, the first I would say 5 seconds of your question, 5 to 10 seconds of your question did not come through. Can you repeat, just start over.

Yes. So just focusing on the marina business because obviously, the outperformance is really impressive, and I think people should be focusing on that. So one, given what you’re seeing in the Safe Harbor platform, how is that trending versus your initial expectations? How are you thinking about the long-term underwriting of the space because of this? And then what does it mean from a capital allocation standpoint going forward?

I’ll start out, Keegan and just suggest that the Safe Harbor outperformance really was driven by strong demand for slip and dry storage rental across the entire board from small to medium, all the way to the superior. The peak season rate increases were passed through, and occupancy remained very strong. We’re seeing increased demand for slips across the board. And a lot of it, we really do attribute to the value of the Safe Harbor membership, which includes such things as an unmatched network of locations out there today to travel between best-in-class facilities and amenities for the members to use, and really best-in-class customer service that we talk about. And then the perks like passing on fuel at basically our cost, we noticed that fuel usage is up 13% year-over-year on a per-gallon basis. So some of the impact of R&D, which was a decision we made intentionally to sacrifice that margin, is really paying a reward in the more important slip rental. So we’re very, very pleased at how things are performing at Safe Harbor Marinas, and we’ve seen it in performance quarter after quarter. With regard to our long-term outlook, I think we have shared with you that capital allocation is fairly restricted at the company today. We’re very internally focused on using our capital in a very disciplined way within our portfolio, as marina are a great example. We have identified 27 opportunities to reconfigure marina slips. And when we invested reconfiguring the slips, we get about a 10% to 12% return on that investment. Of the 27 opportunities, seven reconfigurations have taken place, we are under construction right now, and about 10 others are in the permitting process, and three or four are still being worked on. So that’s where we will see capital allocation. If we are looking for external growth, it will be restricted to a really accretive opportunity in a situation like a Savannah marina, where strategically it has a lot of benefit to the network effect that we’re trying to achieve within the marinas. So I don’t know if you have anything to add. Hopefully, that addresses some questions.

Can I just follow-up just because Fernando called out capital recycling as an opportunity. Is it fair to assume you might sell some MH RV assets and recycle the capital into that higher cap rate, higher-return marina business? Is that the right way to think about it?

I think that as we look at our portfolio and evaluate, there is a bottom tier of assets to always force ranking. So we will look to selectively and strategically look to recycle out of some properties that maybe aren’t meeting the long-term growth profile that we’re looking for. And today, any immediate use of that capital would likely go towards deleveraging. But certainly, we will evaluate all opportunities in front of us.

Got it. Thanks a lot, back into queue.

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

Thanks. It’s actually Nick Joseph here with Eric. Gary, if I think about kind of really over the last 10 years, I think the company has really benefited from a stability of results. And if we go back to kind of the guidance questions earlier, definitely seems like things are a lot more volatile now. Obviously, part of that is probably the recent acquisitions. But at the end of the day, it’s missing guidance and calling into question kind of the forward guidance from here. So as you think about what do you think needs to change from the corporate side to forecast results more accurately? Are these just growing pains, I guess, with the UK and maybe some of the macro volatility that you cited? And ultimately, we get back to kind of how it was traditionally or is the range of outcomes just a bit broader given the new businesses?

I’ll give you some thoughts that I have, and Fernando certainly can share his thoughts. But we have shared with our stakeholders that complexity is something we’re working very hard to reduce, taking all the steps that we possibly can to get back to helping and assisting with the simplification in the modeling forward guidance. There is no doubt the headwinds we’re experiencing in the UK caused a lot of challenges with regard to guiding forward. And when we think about things, we use the best tools that we have at the time, whether it be the forward curve, whether it be meaning everything we can with regard to how we look at the economic challenges there. Obviously, we’ve had to re-guide, so that makes things difficult. But all in all, when we think about 91% of the entire contribution from real property is what we’re trying to guide to. We have a lot of work to do in the UK that we’re working on. On the marina side, we’ve worked very, very hard to be able to put together the same site Marina data so that we can measure going forward. And I know that Fernando was disclosing in supplemental has been working to simplify a lot of things and kind of present a lot of benefits that can help the modeling. And I don’t know if you have anything you want to add from there. So we are very, very attuned and aware of the complexity that has been created in large part through the acquisitions, both Marina and the UK recently. And as a company that’s been around 30 years plus in the public marketplace. We’ve listened to our stakeholders that we’re very, very focused on step-by-step reducing that complexity and making the modeling and the forward guiding as good as possible.

Thanks. Maybe just a follow-up on that. What can you do to reduce the complexity kind of in the near, medium, and longer-term, right? Is it selling the UK home sale business? Is it somehow restructuring it? How are you thinking about actually reducing that complexity?

Well, certainly, one piece of it is the fact that strategically, we have shared with the market that our long-term goal in the UK was to deemphasize contribution from the home sales margins and focus on the very, very stickiness of real property contribution like we do in the U.S., and that was a kind of a 5-year strategic plan. We’re slowly making progress out there. Ironically, as a percentage with home sales down, that real property side percentage is up, but we’re working on it over a long period of time. And I think that we’ve already increased the average stay in the UK to around 8 years. We’re expanding our licenses to stay in the UK properties from 20 years to 30 years. So we expect that 8 years to continue to grow and look more similar to the 15 years, if you will, in the North American manufactured housing. So deemphasizing the margins on home sales and really focusing on the real profit contribution, and we’ve taken similar steps on the Marina side to accomplish that as well as we convert some of the service and take a service over to rental income from third parties. All that, I think, as we look out over a period of time, will help to simplify things going forward.

Our next question comes from the line of Anthony Powell with Barclays. Please proceed with your question.

Thanks. Good afternoon. A question on, I guess, normalization of various leisure adjacent businesses. It’s been a topic of a lot of calls over the past few days. Transient RV and Marina, you’re still seeing growth in transient RV, I guess, on holidays, not necessarily midweek. And then marina has been pretty strong. Do you see any risk of normalization impacting these revenues in the next few years as people will turn to maybe more older habits post-COVID?

Say, Anthony, I think we’re overall on the transient RV side, we’re seeing that normalization from record years over the last 2 to 3 years, given the bump over the second half of 2020 and into 2021. We continue to see a lot of demand for our properties. I think you see that with the record number of conversions that we have, having converted over 6,000 sites over the course of the last 3.5 years, which greatly outpaces what we were averaging on a per year basis prior to the pandemic. And so now we’re taking that transient guest and they are choosing to stay with us for call it, on average, about a 5-year period of time and on an annual basis, getting a predictable rental increase from our standpoint. On the Marina side, we’ve certainly seen very high demand on the transient side as well. In the first half of this year, I would say we’re not underwriting double-digit transient growth for that line item. But I’ll remind our stakeholders, the percentage of rental income coming from transient. On the Marina side, it is much smaller, it’s about 4% to 5% of total rental income. So we have seen outperformance on that line item, but are not underwriting double-digit growth for over the course of the mid to long-term.

Alright. Thank you.

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

Great. Thank you. So I appreciate all your commentary on Park Holidays and simplifying. But if you think about some of the other areas where you took down guidance, how do you create more visibility on that and simplify that. And then along the same lines, your credit line balance is up above $800 million. Can you talk about plans to either keep it there or refinance that to bring it back down?

Thanks, Jamie. On the – we modestly brought down expectations on the SRDE side. That is, as Gary mentioned earlier, we are looking to deemphasize that over time, especially on the marina side, as we convert the service business over to third parties paying us rent at the property level. So I think we will continue seeing that over time. And that ultimately will benefit real property NOI and rental income that we received, not just from our members, but then third parties that pay us rent to be at our properties to provide that service. As it relates to our line of credit, we have – we’ve mentioned over the course of the last couple of months, pursuing various strategic alternatives where – whether that’s capital recycling from operating assets that the immediate use of that capital would be to pay down debt. I think as you look towards the second half and into 2024, there will be a moderation in capital investments as well that we will convert more free cash flow towards deleveraging. But we are evaluating transactions in the capital markets as well in order to bring those balances down and de-lever towards our long-term target of being in the mid-5s.

Okay, thank you. And if I could just ask a follow-up on that. So the interest expense guidance reduction, is that because you used the credit line and didn’t expect to, or because rates are higher than you thought they would be? And if you did use it more than you expected, what was the reason for that?

Sure. On a forecast-to-forecast basis, I would say primarily would be expectations from the forward curve, where in general, ending the year rates for both SOFR and SONIA are up on average about 70, 75 basis points from our last forecast in – at the end of April.

Okay. So, it’s not balanced. It was really just forecast.

Yes.

Yes. Good afternoon. I guess, Gary, just on maybe switching gears a little bit on the MH side. Pricing is still strong on that end. I guess how do you think about rent increases in the next year with inflation moderating here? I mean more of a question kind of into the next 18 months. Thanks.

Yes. It’s a great question. Certainly, at overall 98.7% occupancy that makes annual, there will be the opportunity to continue to pass through all inflationary pressure. I would suggest that what we did last October in advance of providing guidance in February with fourth quarter and year-end results, we will again share with the market our forecast on rental rate increases across the board. But our expectation is that we will be able to pass through solid rental increases throughout the businesses, and we will share those with everybody in October.

Our next question comes from the line of John Pawlowski with Green Street. Please proceed with your question.

Hi. Thanks for the time. Fernando, I wanted to follow-up on the revolving credit facility question. I guess it’s been well over a year where you have leaned heavily on the revolver. So, why wasn’t that properly termed out long ago to more closely align the duration of the debt with your assets, and when specifically should we expect you to lock in longer-term financing?

John, you will see us over the course of the next couple of quarters look to extend our maturities, not just what’s in our line of credit, but what is coming due from a secured debt standpoint. So, that’s something that we are actively working towards. But as far as bringing balances down, it’s really evaluating the multiple strategic alternatives that we have in front of us as far as being able to execute on those transactions and bring balances down. But we have been – since our initial investment-grade rating in the summer of 2021, we have been very active in the bond market, having done about $2.2 billion of long-term debt between 7 years and 10 years of tenure. And our most recent transaction was back in January of this year, and that would be expected to continue over the course of the next couple of quarters.

Okay. And then another question on Park Holidays, at your Investor Day over there, we toured properties with four or five of senior leaders from Park Holidays. Have any senior leaders left since left or retired who is overseeing day-to-day operations from the Sun mothership here in the States?

Yes. John, generally, everybody is still there, and there is a really well-seasoned team looking to work on pulling every single lever as they have these challenging economic times. So, that group of talented people are still there, and we are very pleased with the other.

Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.

Good afternoon. I had a question on Ingenia. If I am not mistaken, your development joint venture had a 5-year initial term that would be up for renewal later this year. So, I was wondering what your appetite is to keep it going, or could this be a potential source of funds?

Great question. John, I think the fact is that technically, the Sun-Ingenia, as we call it, JV 5-year period of time is up at the end of November. We are always assessing our businesses, if you will, to remind everyone that Sun owns a 10% interest in Ingenia head stock. And we really have had a successful JV, which is performing. We are happy with the partnership relationship there, although there is no doubt, COVID and the pandemic kind of crept into the plants. The Sun-Ingenia JV now has four developments; two are in fill-up phase and they are filling up nicely. And the other two are just about to break ground. With the JV expiring, we will continue to review how we will think about moving forward. But one of the factors is that as these four developments are moving forward, we want to make sure that we have the best opportunity to maximize those results once they are filled up and stabilized. But we also are reviewing all optionality that relates to the capital recycling and the options that we can do to bring down some of our variable rate debts. So, we will continue to keep you advised as we think through how we are going to focus on the period of time where that does expire.

Okay. And if I could just follow-up on UK home sales. Just given the third quarter is the most crucial quarter of the year. Out of the number of homes that you had planned to sell for the third quarter, how many have already been sold or are currently in negotiations? And I was wondering how sensitive this is to mortgage rates. There was an article that came on the FT just a couple of hours ago of three of the largest UK lenders reducing mortgage rates. I’m wondering if that’s been factored in at all.

Yes. I would start to say that as I shared in the comments earlier, we are not sitting here anticipating the benefit of reduced mortgage rates or anything like that going forward; that would definitely be a positive, but we do think there will be a lag before we see the benefits of things like that. So, the underwriting that we talked about in the 2,600 to 2,900 unit range for the year is kind of our downside to our view in the market right now. And I don’t know, Fernando, do we have any information on how many sold in the third quarter?

John, we will provide updates on homes sold over the course of the quarter when we meet during investor presentations and any other potential updates. But we are, as you identified, heading into a busy period as the holidays do pick up in August, and we will be able to report back to the market over the course of the next couple of weeks.

Can I just squeeze in one more question? The seasonality had shifted a little bit, but you also provided more clarity or more disclosure on the seasonality of UK home sales. Is this a good run rate going forward or roughly maybe a third fold in each of the second and third quarters?

Yes. The seasonality shift we would say, due primarily to the changes in volume, but yes, this would be the best run rate to use from a seasonality standpoint.

And we have reached the end of the question-and-answer session. And I will now turn it back over to management for closing remarks.

So, we appreciate everyone joining us for our second quarter call, and we look forward to speaking on the third quarter and also sharing how we are viewing the implementation of rental increases going into 2024. Thank you, operator.

Thank you for your participation in today’s conference. This does conclude today’s – the company’s remarks. You may now disconnect your lines.