Sun Communities Inc Q2 FY2025 Earnings Call

Good afternoon, everyone, and thank you for joining us. Welcome to Sun Communities' Second Quarter 2025 Earnings Conference Call. Management would like to remind you that some statements made during this call that are not historical facts may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Although the company believes these forward-looking statements are based on reasonable assumptions, it cannot guarantee that its expectations will be met. Various factors and risks could lead to actual results differing significantly from those expectations, as detailed in today's press release and in the company's periodic filings with the SEC. The company is not obligated to update any forward-looking statements to reflect events or circumstances after this release. With that, I would like to introduce our management team present today: Gary Shiffman, Chairman and Chief Executive Officer; John McLaren, President; Fernando Castro-Caratini, Chief Financial Officer; and Aaron Weiss, Executive Vice President of Corporate Strategy and Business Development. This conference is being recorded. I will now hand the call over to Gary Shiffman, Chairman and Chief Executive Officer. Gary, you may begin.

Good afternoon, and thank you for joining us to review Sun Communities' second quarter 2025 results and updated full year outlook. This was a pivotal quarter for Sun as we completed the previously announced sale of Safe Harbor Marinas and repositioned Sun as a pure-play owner and operator of manufactured housing and RV communities. I am pleased with our financial results and operational performance as we execute on our strategy to deliver consistent, reliable earnings growth. We have taken deliberate steps to streamline operations, unlock meaningful financial flexibility, and enhance shareholder value. During the quarter, we paid down approximately $3.3 billion of debt, inclusive of prepayment costs, materially improving our balance sheet position. And since closing on the Safe Harbor transaction, we returned over $830 million to shareholders through a special cash distribution and share repurchases. Additionally, we increased our regular annual distribution rate by over 10%. We have also made significant headway identifying acquisition opportunities using 1031 proceeds. We are evaluating opportunities to acquire manufactured housing properties in strong markets with attractive supply-demand dynamics. We continue to make progress on the delayed consent properties related to the Safe Harbor transaction. In May and June, we successfully closed on 6 of these properties and are working through final government approvals for the remaining 9. Turning to our operational performance. We are pleased with the strength of our manufactured housing and annual RV businesses. Sun reported core FFO per share of $1.76 for the quarter, exceeding the high end of guidance. Total North American same-property NOI grew 4.9% in the second quarter, driven primarily by the continued growth and stability of our manufactured housing portfolio as well as the benefit of our ongoing cost savings initiatives and greater efficiency at the expense level. We believe this demonstrates the resilience of our core business and the strength of our portfolio. As announced last week, Charles Young has been appointed as Sun Communities' next Chief Executive Officer and Board member, following a thorough search process. Charles is a seasoned and highly respected leader with over 25 years of experience across real estate operations, investment, and strategy. He most recently served as President of Invitation Homes and brings with him a strong track record of driving growth, operational excellence, and team development. We're incredibly excited to welcome Charles to Sun, and he will be officially joining on October 1. The Board and I are confident that his leadership, vision, and deep understanding of the real estate industry will build on the foundation we created and guide Sun through its next phase of growth and value creation. I will be stepping into the role of Non-Executive Chairman of the Board. This provides for a smooth transition that allows me to continue supporting the company and our exceptional team. It has been an honor and privilege to serve as CEO of Sun for over 40 years, and I could not be prouder of what we've accomplished. It's been an incredible journey in growing Sun from a 31 community portfolio at our initial public offering to where we are today with more than 500 communities. I'm incredibly pleased that this change is happening at a time when the company is well positioned to build on our strong foundation and continue to create value for all of our stakeholders. I'd like to close by expressing my sincere appreciation to the entire Sun team. Their hard work and dedication made these results possible and continues to reinforce Sun's strong position in the market. With that, I'll turn the call over to John and Fernando to walk through the quarter's results and our updated guidance in more detail. John?

Thank you, Gary. We could not be more excited and proud of what our team delivered this quarter. We are executing to plan as we hold ourselves accountable with transparent performance rankings and the results are clear. We are growing top line, managing operating expenses efficiently, and delivering consistent high-quality results across the organization. In our North American same-property portfolio, we reported 4.9% NOI growth for the quarter, demonstrating a disciplined balance between revenue growth and a focus on expense management, driven primarily by our manufactured housing segment, which had an outstanding quarter. Same-property manufactured housing NOI increased 7.7% and our same-property MH occupancy was up 60 basis points from the prior year to 97.6%, reinforcing the ongoing demand to live in a Sun community. As it relates to RV, we remain within our 2025 guidance range. For the second quarter, same-property RV NOI declined 1.1%, driven by a 0.9% revenue increase offset by a 3.1% expense increase. Importantly, we've been able to mitigate some of the transient softness through growth in annual RV and by continuing to flex expenses. In the U.K., we are seeing strong results. Same-property NOI in our U.K. portfolio increased 10.2% for the quarter with revenue up 9.5%, driven by strong demand across our communities as well as higher transient revenue. Expenses were up 8.8% as a result of the budgeted national minimum wage increase, but that was partially mitigated by cost savings initiatives. Park Holidays team continues to perform at a very high level. They have done a tremendous job shifting the revenue mix from home sales to recurring real property income, strengthening the long-term profile of our U.K. business. The unmatched quality of our U.K. portfolio and operating team allow Park Holidays to command its outsized market share and underlies our confidence in continued momentum. As we look at 2025, I truly believe we are performing as well as we ever have as a team in achieving some of the best organic growth I have seen in my long career here at Sun with a focus on driving top line growth while maintaining expense efficiency. Most importantly, we have the results to prove it. I want to sincerely thank all of our team members for their tireless effort, hard work, and dedication. These operating results do not happen by accident. They occur through the disciplined execution by team members who care about delivering for our residents, guests, and shareholders. I will turn the call over to Fernando to walk through our financial results and updated 2025 guidance in more detail. Fernando?

Thank you, John. For the second quarter, Sun reported core FFO per share of $1.76, exceeding the high end of our guidance range. This strong result was primarily driven by the outperformance in our manufactured housing and U.K. segments, supported by continued rent growth and stable occupancy. As previously mentioned, we closed on the sale of Safe Harbor Marinas on April 30, meaningfully simplifying our platform and creating significant financial flexibility for Sun. Following the initial $5.25 billion Safe Harbor closing, we subsequently closed on 6 delayed consent subsidiaries, totaling approximately $137 million. The cash proceeds from those sales have been deployed to support a combination of debt reduction, including $3.3 billion of debt that has been repaid, shareholder distributions, and reinvestment into our core portfolio. Turning to our balance sheet. As of June 30, Sun's total debt balance stood at $4.3 billion with a weighted average interest rate of 3.4% and a weighted average maturity of 7.6 years. Our net debt to trailing 12-month recurring EBITDA ratio was 2.9x at quarter end. Importantly, we have 0 floating rate debt outstanding. In addition to our debt reduction, we deployed capital through share repurchases under our $1 billion authorized stock buyback program. During and subsequent to quarter end, we repurchased approximately 2.4 million shares for a total of $300 million. We believe this opportunistic repurchasing enhances long-term shareholder value while maintaining balance sheet strength. We also returned capital to shareholders through a one-time cash distribution of $4 per share during the second quarter, equating to $521 million in total shareholder distributions. With respect to 1031 proceeds from a Safe Harbor transaction, we initially allocated nearly $1 billion into 1031 exchange accounts. As of today, we have identified potential acquisitions totaling approximately $565 million, which allowed us to release $431 million into unrestricted cash accounts in mid-June. We are pleased to have received 2 credit rating upgrades this quarter. S&P Global raised Sun's rating to BBB+ from BBB and Moody's upgraded us to Baa2 from Baa3. Both agencies cite our deleveraging progress, balance sheet strength, and focus on core operations as key drivers for the upgrades. During the quarter, we acquired the titles to 22 properties in the U.K. that were previously controlled via ground leases for approximately $199 million, inclusive of taxes and fees. This transaction creates financial and strategic flexibility, eliminates material lease obligations, and is expected to be accretive to core FFO on an annual basis. Turning to our full year 2025 guidance. We are raising our FFO per share range to $6.51 to $6.67, a $0.06 or just over 90 basis point increase at the midpoint, reflecting our second-quarter outperformance. We have increased North American same-property NOI growth guidance to 4.7% at the midpoint, an increase of 40 basis points. Manufactured housing same-property NOI is now expected to grow 7.5% at the midpoint, reflecting continued strong performance. RV same-property guidance is being maintained at down 1.5% at the midpoint as our outlook for the remainder of the year is consistent with expectations set during our first quarter earnings call in May. U.K. same-property NOI guidance has been raised to 2.3% at the midpoint, a 40 basis point increase, driven by strong second-quarter results. We have also updated guidance to reflect changes in interest income and interest expense from the debt paydown, stock buybacks, and the purchase of the 22 U.K. properties previously subject to ground leases. For additional details regarding our full year guidance, please see our supplemental disclosures. As a reminder, our guidance includes acquisitions, dispositions, and capital markets activity through July 30 and the effect of the completion of the sale of the remaining Safe Harbor delayed consent subsidiaries, but it does not include the impact of additional prospective acquisitions, dispositions, or capital markets activities, which may be included in research analyst estimates. I would now like to turn the call back to Gary for closing remarks.

Well, as I conclude my final earnings call as CEO after 4 decades with this remarkable company, I want to express my deepest gratitude to the extraordinary people who have made this journey possible. To our dedicated team members, past and present, your tireless efforts and unwavering commitment to our residents, guests, and one another have contributed to a company and a culture that we can all be truly proud of. To our valued shareholders and all of our stakeholders, thank you for your trust, patience, and belief in our vision throughout the years. Your support has enabled us to invest in people and properties, weather difficult periods, and emerge stronger. I'm filled with immense pride in what we've accomplished together and maintain tremendous optimism for the future. While my role is evolving, my commitment to this company and all of you remains. Thank you for allowing me the privilege of leading this incredible organization. We have an exceptional team, a strong foundation, and a bright future ahead. I look forward to supporting Charles and all of you as we continue to build on Sun's legacy together. Operator, we can now turn it over for questions and answers.

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

Congrats, Gary, as you transition into the new role. My first question, I guess I wanted to talk a little bit about what Fernando talked about, which is, I guess, the releasing of some of the funds into kind of unrestricted cash and just kind of your expectations about 1031 acquisition volume. And are there any kind of tax issues or tax considerations for basically not doing 1031s? And are there other special dividends that may need to be made because of that?

Steve, to address your first question, there will be no expected negative tax consequences from releasing funds from the 1031. We had initially set aside about $1 billion for potential 1031 transactions, although we knew it was unlikely we would fully utilize that amount. Currently, we've identified around $565 million in potential acquisitions, which allows us to release $431 million into unrestricted cash. According to 1031 guidelines, we must close on any identified assets by the end of October. While we are still looking for opportunities, we are not obligated to proceed with transactions that do not fit our strategy. We are also actively considering other strategies to maximize the value of these funds as we continue to evaluate both tax implications and strategic objectives for the rest of the year.

Okay. And then maybe a question for John. I guess the transient RV business seems to be better or less bad than I think we had expected. So maybe just talk about some of the trends that you're seeing on that transient RV business and maybe some of the steps you've taken to kind of enhance the business or keep it from going down more than maybe people expected.

Sure. Steve, great question. I think I want to start with saying that when we look at our business, we look at the entire business, and our focus is on bottom line results. I mean, overall, we beat Q1. We just beat and raised Q2. So I'm thrilled, okay, with how we're performing. But specific transient RV, as you know, we took a proactive approach in revising guidance after Q1, reflecting on the current environment, those trends remain in line, just like we've shared. And as you know, a large component of our transient revenue headwinds actually is created by our success in converting transient sites into annual sites. And despite near-term volatility we faced, our transient RV business generates solid revenue and margins continues to play a vital role by creating a pipeline for more annual conversions. And so the ways that we're addressing these things head on is like we've shared, with continuing to flex operating expenses within RV and continuing to build upon as we have adding more annual RV sites to the mix that we have in our portfolio. And so we do things here and there in various parts of the portfolio where we see an opportunity to be laser-focused on a specific opportunity for conversion or things that we can do to enhance revenue and obviously, the flex on expenses, but it's pretty surgical the way that we look at it.

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

Congratulations on a great quarter, and congratulations to Gary. Just following up on that, I was curious if you could talk a little bit and explain how the renewals for the annual memberships work? And are they kind of spread out through the year? Or do they hit in a particular quarter?

Jana, it's John. Good question, thank you for that. There are certain times of the year, particularly early on, where we see a higher volume of our annual renewals in regions like Florida and Arizona, which we've mentioned before. However, as the year progresses, the renewals occur more evenly, especially as we enter the summer annual season in the northern areas.

And then on the MH occupancy gains, just curious if you could talk a little bit about the outlook for the second half of the year for MH home sales. And it looks like rental homes picked up a little bit, but just curious how you're thinking about those 2 components.

Yes. I think on the U.S. home sales side, I mean, one thing, Jana, I would tell you is that we're really focused more than anything on real property income and home sales expectations that we have, not just for the back half of the year, but what we've seen in the first half of the year are really a product of running at close to 98% occupancy and having very low resident turnover, which obviously leads to stability of long-term cash flows and the rent. And so I think what you would see in the back half of the year is something similar to what we've experienced in the first half.

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

For the U.K. ground lease purchases, can you just talk us through the economics on that and what you meant by increasing your strategic flexibility?

Sure. Eric, so the transaction creates flexibility across the portfolio in the U.K. by converting leasehold interest into freehold ownership, we gain full control and eliminate future rent escalations, which improves long-term economics for these properties and for the portfolio overall. The ground lease repurchases, which totaled nearly $200 million blend to about a 4.25% yield going in.

So 4.25% yield. So it's accretive relative to, call it, the 3.75% on cash. Is that what you mean by accretive?

Yes.

I might have missed this in your response to Steve's question, but there was a significant improvement in the transient segment. I'm trying to figure out how much of this improvement comes from your operational changes, such as enhanced marketing or operational strategies, versus factors like improved weather or market conditions. The change from negative 20% to negative 6% seems substantial, and I'm interested in understanding how sustainable this improvement is and how you're performing in the third quarter so far.

Eric, the decline in revenue of just over 20% in the first quarter is primarily attributed to seasonality and the transient sites that are functioning during that time. We anticipated and planned for a quarter-over-quarter improvement because most of our transient-focused assets operate during the summer months, which accounts for the observed improvement. I want to remind everyone that for the entire year, we are projecting a decline of just over 9% for transient RV revenue at the midpoint of our RV guidance.

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

Can we get an update on the restructuring process from the perspective of the expense savings? John, I know you've been all over this, but can we get an update on the progress that was made in the last quarter? And then where are the future opportunities from this?

Sure, Michael. That's a great question. I want to emphasize that we are focused on the entire business, balancing expense discipline with top line growth. This approach has led to the positive bottom line results we are enjoying today. Overall, we exceeded our guidance, and Q1 was fantastic for the team. We are also raising expectations for Q2, which is exciting. I anticipate this progress will continue. In the first half of the year, we've exceeded $17 million in savings, much of which comes from payroll, utilities, and significant standardization along with the expansion of our procurement platform. This platform includes various supplier repairs and other property operation expenses. We are executing our expense strategy as planned and will aim for additional savings in the second half of 2025. For example, we worked with a large supplier to standardize products in the second quarter, renegotiated pricing, applied overall discounts, and set up a future rebate for those products. This effort has been extensive, but I must stress the strong focus on top line growth as well, which is essential for the company's expansion. We will maintain our attention on all areas, particularly improving performance through retention, occupancy gains, rate increases, revenue growth, and efficient collections, which have resulted in savings from bad debt. There are numerous achievements this year that I am very proud of that the team has accomplished.

Congratulations, Gary, on a legendary run.

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

Congrats, Gary, on your tenure and ending on a high note. I wanted to ask a follow-up to Jana's question on the MH occupancy. It looks like rental homes is now 12% of total MH sites. And I was wondering if you're embracing the rental home business more.

John, this is John. Thanks for the question. The answer to that is yes, because those are all future homeowners in our community.

So how much higher do you think that could go? And how much did that contribute to your occupancy growth this quarter?

Yes. I think it's going to be the sort of thing that will ebb and flow like it has over the course of my career. I mean we've had times where we've been up in the 16% range. We've had times where we've been in the 9% range, okay? So we're going to utilize it in the best strategic way possible to maximize growth within the portfolio.

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

Equity Lifestyle has talked about some increased turnover and vacancy in their annual RV business. Is that something that you've seen as well?

No, we grew ours in the quarter.

Okay. Easy enough. And then on the Canadian customers, have you seen an impact? I know sometimes they can be more concentrated in the winter months, but I assume you have some cross-border travelers during the summer as well.

Yes. Good question, Brad. Yes, we talked about earlier in the year with some of the impact of Florida. And we did see, and I think I've shared on various conferences and that sort of thing where we saw some impact in Maine, places like that, that were closer to Canada in the summer months. And that's frankly, some of the work that the team has been doing to try and fill those vacancies with domestic customers, which has led to us being well within what we put out there in terms of guidance for transient RV.

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

Congratulations on all the progress on restructuring the company and management changes. I guess on that topic, can you talk more about the decision to hire Charles Young. Obviously, you had an extensive search, lots of candidates. What is it about Charles that you think is a good fit? And then how should we think about how he fits into the role in terms of what everyone else will be doing as he gets here, what he brings to the table and maybe also delineate just, Gary, what you think your role will be and everyone else on the team's role with such firepower coming in?

Sure. I'll start it out and then open it up to anyone else. But we were really excited to announce the appointment of Charles Young as Sun's next CEO. His effective starting date will be October 1. The Board reviewed a very wide list of candidates and as indicated, ran a very thorough process. So this was a very important decision for this company, and we feel very comfortable with where it landed and very happy to welcome Charles aboard. I think that in Charles, what we saw is over 25 years of leadership experience specific to real estate operations, development, and investment management and his track record, including in the residential REIT asset class where he's lining up his current role as President of Invitation Homes, we felt it made him really uniquely suited and qualified to come over and lead Sun through what we view as its next phase of growth, and sharing all the strategic progress that we made and positioning the company to be pure MH RV moving forward. I think it's a great opportunity for Charles to bring in his experience and continue to grow the company out in the future. My anticipated role is to support Charles' success. I think that Charles in his interview with the succession committee, the Board and eventually time that I and others have had with him indicated an excitement to be able to have access to myself based on the 40 years of experience in the industry in both building the company, but in understanding the manufactured housing and RV industry itself. So my goal will be to support him, and he has expressed interest, as I said, in being able to access and gain the benefit of that experience and that knowledge so he can put it to work in the way he sees fit with an existing team that's looking forward to him coming onboard. And I'll stop there and see if you have anything else to add, John, about how the team is thinking about things.

Yes. I think one of the things that truly makes Sun a great company is the diversity of experience our team members bring to the table. And in that vein, I think to having someone as accomplished as Charles join our team as this extensive SFR and beyond background serves to enhance what we do both strategically and tactically. I've experienced that myself, okay, having left Sun for a short while in '05, went to multifamily, and I was able to bring back some invaluable skills and most certainly played a role in our success after I returned. So I'm very excited about bringing that another side to real estate into our strategy here at Sun.

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

Just on the impairment charges recorded in the quarter, could you walk through the change in strategic plan for the North America properties? And were the U.K. development write-downs related to the ground leases at all?

Thank you for your question. The write-downs in the U.K. were not connected to the ground lease acquisitions. In fact, we recorded a gain of approximately $26 million from the ground lease repurchase. Regarding the strategic shift, our organization is not pursuing new greenfield projects, both in the U.K. and the U.S., which is contributing to the impairment charges associated with these assets.

Got it. And then, yes, there's been some reports that some of your peers in the U.K. are looking to sell Holiday Parks. So following the ground lease transactions, is there any plan to sell U.K. ops?

Yes. I think what we've shared with shareholders and stakeholders before is that we are really taking the view that during a tough market and backdrop in the U.K., the best thing that we can do at this time is support what we believe is an excellent operating team headed by Jeff Sills, Chris, Richard, some of the best operators that are in the industry and very, very focused on our strategy of increasing real property income and reducing dependence on the margin of the home sales. We've been very, very successful in accomplishing that. Really pleased with how we're growing the real property income and creating value, if you will, in accomplishing that strategy. So for right now, we will continue moving forward in that direction and any future opportunity that we look at will benefit from the value that we're creating right now.

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

Congratulations, Gary, and congratulations, Charles. Can you talk about the decision to buy out the U.K. ground leases now versus when Park Holidays were acquired or at any point in the next century that remained on those leases?

Thank you, David. It was an opportunistic acquisition for these ground leases. We did not have to do it. But certainly, as we looked at our capital allocation strategy, this was one that created a lot of financial and strategic flexibility.

Great. And as you think about the other potential uses of proceeds for the $400-plus million of capital that had been allocated to 1031 exchanges and has now been released. What are the other potential places you could deploy that money?

Yes. David, it's Gary. I would suggest all the options remain available to us. I would suggest that the 1031 is just one form of many tax mitigation options that we have, and we are comfortable with where we think we'll end up for the year. But outside of 1031, we continue to review a nice pipeline of high-quality manufactured housing communities. So within that, within the availability of our stock buyback program, we have optionality there. And through potentially even looking at opportunistically acquiring other of the land leases in the U.K., there are a host of strategies that we're looking at. I hope we've demonstrated to our shareholders and stakeholders. We've been very thoughtful in the use of proceeds, how we're thinking through tax mitigation, and that's ongoing work we're doing, and it's work we look forward to sharing with you in the near future.

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

Just wondering on the 1031 acquisition opportunities you've identified, could you talk a little bit about economics and sort of your underwriting, what you're expecting in terms of going in yields for those?

Yes, sure, Peter. We've talked about going-in yields of 4 to 5 cap rates. But the fact of the matter is for the higher quality communities that we do look at, they will fall into that lower end or tighter cap rate, if you will. But beyond that, it's first about the going-in cap rate, but the yield that John and his team can generate and growth in each successive year. So we look for opportunities where there's high demand, low supply, and that's how we've really focused on things. There's been no shortage in the pipeline of opportunities. The fact of the matter is we are being very selective, and we are turning down more things than we're actually looking at, and we'll continue to do so and, of course, balance the value to our shareholders of acquisition of manufactured housing communities as to other uses of capital.

Could you discuss the share repurchase program and your perspective on its attractiveness? Is there a specific stock price level above which you would refrain from repurchasing shares? Additionally, how do you evaluate the returns from this program compared to potential acquisitions?

Sure, Peter. The share buybacks is one tool in the toolkit for us from a capital allocation perspective, which includes strategic reinvestment into the current portfolio. It includes acquisitions, whether inside of the 1031 or outside of it and then the share repurchases.

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

And all the best to you, Gary, going forward. I wanted to ask, I guess, sort of in similar light around capital allocation. How do you guys view sort of development and expansion opportunity here and maybe compare and contrast that to the acquisition opportunity that you just talked about in sort of the 4% to 5% cap rate range?

Yes, I would like to address this. As Fernando mentioned, we are not pursuing any new greenfield developments at the moment and have nothing planned in that regard. However, we are assessing several projects for expansion that could provide the returns we seek in certain U.S. communities that are experiencing strong demand and occupancy. These projects align with our accretive return criteria. That sums up our current focus on development.

That's helpful. I think you may have hinted at this, but are there any future opportunities for ground lease termination repurchases in the Park Holiday portfolio, or is this the only one?

Small opportunity there, but still available. We have about just above 10 additional properties that are still subject to ground leases in the U.K.

Our next question comes from the line of Omotayo Okusanya with Deutsche Bank.

Gary, again, best of luck in the new role. I wanted to go back to Steve Sakwa's question just around the strong performance on the transient side. John, I know you kind of gave some commentary around kind of doing more on the annual side and things like that. But again, still very curious about just from a blocking and tackling perspective, can you provide some concrete steps that you may have taken just that resulted in the better results, just kind of given how much of a drag transient has been for the past couple of quarters? Like what really changed this quarter? And what did you do to change it?

I don't believe the situation is changing as much as it is enhancing our existing strategies in both a strategic and tactical sense. We are highly focused on retention and engaging with guests to encourage them to book additional stays. I've often mentioned that the most valuable revenue-generating site is the one we never lose. By taking a more defensive approach to our occupancy, we are able to achieve better net results. This focus is a reason we continue to see growth, even after three years of record conversions. It's really about the fundamentals, such as spending time at our properties and utilizing the data and technology available to us. One significant change is the improvement in our data compared to my time as COO, which guides our decisions more effectively than ever before. This allows us to concentrate our efforts more precisely on the properties we visit throughout the year.

There are no further questions at this time. I'd like to pass the call back over to Mr. Shiffman for any closing remarks.

Thank you, operator, and thank you for everyone who attended today. I couldn't be more pleased with the positioning of the company and the support of the existing team for Charles to step in and really be able to operate the incredible portfolio for future growth. Thank you, everybody.

Goodbye. This concludes today's teleconference. You may now disconnect your lines. Thank you for your participation.