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Sun Communities Inc
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Greetings. Thank you for joining us today for Sun Communities First Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.
I would now like to turn the conference over to your host, Gary Shiffman, Chairman and Chief Executive Officer. Thank you. You may begin.
Good morning and thank you for joining us as we discuss our first quarter 2021 results. We're very pleased with the performance of all of our business lines as 2021 is off to a very strong start. In the first quarter, we delivered core FFO per share of $1.26, which exceeded the high end of our guidance of $1.17. Due to this outperformance and strong visibility into our second and third quarter transient RV bookings, we are raising our 2021 core FFO per share annual guidance range by $0.13 to $5.92 to $6.08 and our expected same community NOI growth for the full year by 190 basis points to a range of 7.5% to 8.5%.
The momentum we experienced in our RV resorts in 2020 has only accelerated this year as the country continues to reopen. For the quarter, same community NOI growth was 2.7% over last year, despite the continued Canadian border closure and the California stay-at-home order which dictated the closure of our California resorts through early February. We achieved total portfolio occupancy of 97.3%, a 60 basis point improvement over the first quarter of 2020 by selling 514 revenue-producing sites. We also delivered approximately 350 ground-up and expansion sites in the first quarter, which include the grand opening of our premier 250 site Sun Outdoors San Diego Bay Resort.
Since the beginning of the year, we have deployed $183 million into acquisitions, comprised of two manufactured housing communities, six RV resorts, and four marinas. Our team continues to find ways to add irreplaceable assets to our portfolio that serve to reinforce the high quality of our brand, enhance our offerings to our guests and foster continued growth of our revenues and earnings over time. In our manufactured housing business, our operations are benefiting from sustained strength and fundamentals and demand for affordable housing, evidenced by new, pre-owned, and brokered home sales. Furthermore, applications to live in a Sun community remain at record high levels, up 21% over this time last year.
Our RV business, while impacted by the closures and the travel restrictions associated with the pandemic during the quarter, is showing resilience with forward bookings well ahead of both 2020 and 2019. As we emerge from the pandemic and as the percentage of the vaccinated population rises, we anticipate our best-in-class resorts to remain a preferred vacationing option. Our assertion is supported by the RV Industry Association stating record-year unit sale expectations for 2021 as well as our strong advance bookings for the second and third quarters. A broader segment of the population rediscovered the outdoors during 2020 and we are seeing that interest carry forward. In an environment impacted by COVID, RV provides travelers with an incremental level of safety and control. Moreover, we believe that increased demand is being driven by the continued desire of consumers to get back to a degree of normalcy, resuming vacation and leisure travel after last year's travel restrictions.
In our marina business, results continue to track ahead of our underwriting and the team is preparing for an active boating season. According to multiple industry sources, boat sales have increased in demand year-over-year. With our expanded presence in this sought-after and scarce asset class, we are well-positioned to benefit from the increased demand for slips and moorings.
We are relying on our four core investment strategies to support long-term resilience and the growth of our platform, further solidifying our position of delivering industry-leading results. An important part of these core strategies includes expansion and ground-up development. We wanted to highlight the recent opening of Sun Outdoors San Diego Bay first announced nearly four years ago. It is now open for guests and we are pleased to continue to realize meaningful accretion from our capital deployment activities. In early March, we executed a $1.1 billion equity raise to secure capital to fund our growing acquisition pipeline and other opportunities. We will match fund these growth initiatives with this equity.
Key contributors to the success of our franchise are our ongoing efforts with regard to our environment and its sustainability, our social ecosystem and careful attention to governance. With that said, we wanted to provide some important updates with regard to our ESG initiatives. This month, we launched a new partnership with the National Park Foundation in support of the foundation's outdoor exploration program. Sun RV resorts has committed to contribute toward the National Park Foundation's mission to connect this and future generations with the social, mental and physical health benefits of national parks and outdoor discovery.
With respect to our commitment to diversity, equity, and inclusion, Sun has engaged with a consultancy team with 30 years of experience in the field of equality and justice. This group has deep expertise in the importance of breaking through unconscious bias and social injustices in the workplace. Together, we are assessing the current state of inclusion, diversity, equity, and accessibility at Sun, and developing an organization wide strategy to create positive change.
Before handing the call over to John and Karen, I wanted to point out that we have enhanced our financial disclosures. With the addition of Safe Harbor, we took the opportunity to provide better insight into the primary drivers of our business. Karen will walk you through the changes we have implemented after John shares details about our operational performance.
I will now turn the call over to John. John?
Thank you, Gary. Sun delivered a strong first quarter across the board, setting the stage for a solid year. Our results reflect the combination of the stability of our manufactured housing business line and our same community portfolio, as well as the incremental benefits of our growth initiatives across MH, RV, and marina business lines. For the first quarter, combined same community NOI increased 2.7%. The growth in NOI was driven by a 3.5% revenue gain, supported by a 1.9% increase in occupancy to 98.8% and a 3.5 weighted average rent increase. This was offset by a 5.5% expense increase.
As part of our revised disclosures we are now providing same community NOI for our manufactured housing and RV businesses. Same community manufactured housing NOI increased by 4.9% from 2020 and same community RV NOI declined by 4%. RV revenues were impacted by the Canadian border closure during the first quarter, which affected our snowboard season in the California shelter-inplace order that ran through early February. Combined these two events had a $6 million impact on our transient RV same community revenue as compared to our previously communicated estimate of $8 million to $10 million.
With respect to RV revenue, we anticipate a significant rebound in the second and third quarters. RV resorts are beneficiaries of the reopening trade and we are fully participating. Our second quarter transient forecast is already ahead of our original budget by over 20% and trending 57% higher than 2019, which we believe to be a better comparable given COVID related disruptions in 2020. Likewise, our third quarter transient RV forecast is currently ahead of the original budget by approximately 5%, and this trending ahead of 2019 by almost 40%.
In addition, we have a great deal of visibility into our reservations the rest of the year through Campspot, our proprietary RV reservation and revenue management software. Today digital reservations comprise over 60% of our total reservations for our same community portfolio as compared to 60%, just two years ago.
Moving on to total MH and RV portfolio, in the first quarter we gained 514 revenue producing sites as compared to 300 in the first quarter of 2020, bringing our total portfolio occupancy to 97.3% from 96.7% a year ago. Of our revenue producing site gains over 380 transient RV sites were converted to annual leases with the balance being added in our manufactured housing expansion communities. A key component of our four core growth initiatives is the development of ground-up and expansion sites.
In the first quarter we delivered approximately 350 sites, 250 of which in the ground-up development in San Diego and 100 were an MH expansion sites at Sunset Ridge in Texas. These complete expansion and ground-up development sites will contribute to RPS gains in 2021 and beyond, as they fill up and stabilize. As of the end of the quarter, we have approximately 9,700 zone and entitled sites in our portfolio that once built will contribute to growth in the coming years. Home sales in the quarter were particularly strong. We sold 835 homes, an increase of 9.4% versus the first quarter of 2020, of these 149 where new home sales, up over 25% and 686 were pre-owned home sales, up 6.5% as compared to the same period last year, respectively.
Average home prices for both new and pre-owned homes rose 17.6% and 9.8% respectively underscoring the overall geographic market mix, as well as sustained demand for our product and the strong desire to live in a Sun Communities. Brokered home sales throughout Sun's portfolio saw 36% increase year-over-year as the resale market continues to show strength. Average brokered home prices in our communities increased by over 20% as compared to the first quarter of 2020. We believe that a vibrant resell market for homes in our communities demonstrates the benefits of the consistent reinvestment in our properties, creating equity value for our homeowners and increasing the overall value of our portfolio.
Moving on to safe harbor; during the quarter the Marina portfolio contributed over $31.4 million to total NOI. The Marinas are performing ahead of our underwriting and the team continues to source acquisitions in irreplaceable locations, which for the first quarter include two Marinas on Islamorada and the Florida Keys, and two Marinas on Martha's Vineyard. We are optimistic about the underlying trends we are observing across all of our business lines with the vaccination rate increasing across the country we are anticipating accelerated growth in our RV and Marina businesses. We are well-positioned to see follow-through of this quarter's outperformance and look forward to sharing our progress with you in the coming quarters.
Karen will now discuss our financial results in more detail. Karen?
Thanks, John.
For the first quarter Sun reported core FFO per share of $1.26, 3.3% above the prior year and $0.09 ahead of the top end of our first quarter guidance range. During and subsequent to quarter end, we acquired $183 million of operating properties comprised of two manufactured home communities, six RV resorts and four Marinas. To support our growth activities we completed a $1.1 billion equity raise representing approximately 8 million shares of our common stock.
To date we have settled 4 million shares receiving $538 million in net proceeds, which was used to pay down borrowings on our credit facility. We expect to settle the remaining 4 million shares no later than March 2022. We ended the first quarter with $4.4 billion of debt outstanding at a 3.4% weighted average rate and a weighted average maturity of 9.5 years. As of March 31st, we had $105 million of unrestricted cash on hand and a net debt to trailing 12 months recurring EBITDA ratio of 6.1 times.
On a pro forma basis including the estimated full year EBITDA contribution from safe harbor and other acquisitions, our net that the trailing 12-month recurring EBITDA ratio is in the low-five times. As a result of our out-performance during the quarter, we are raising our core FFO expectations for full year 2021 to a range of $5.92 to $6.08 per share. We expect core FFO for the second quarter to be in the range of $1.57 to $1.63 per share. We are also revising full year same community NOI growth guidance to a range of 7.5% to 8.5%. As a reminder, our guidance includes acquisitions through the date of this call, but does not include the impact of prospective acquisitions or capital markets activities, which may be included in research analyst estimate.
As Gary mentioned earlier, we enhanced our financial disclosures this quarter. The addition of the Marina portfolio gave us the opportunity to re-envision how we report key aspects of our business. To provide more insight into each of our business lines we now have a same community schedule, which details performance by our MH and RV portfolio separately. Additionally, our same community revenues now include rental home program revenue and vacation rental home revenues, so the entire payment for these rentals is now included in real property revenue.
Same community property operating expense now includes the related costs for these rental home programs. We are also netting all utility income against utility expense, which provides a better view on what Sun's direct utility costs are since the majority of these costs are passed through to our customers. We have retained our legacy disclosures for a rental program and have added a new page on the Marina portfolio. Please see the 2021 summary of reporting changes document, which is contained in the investor relations section of our website for additional information and an illustration of these changes.
This completes our prepared remarks. We will now open up the call for questions. Operator?
Thank you. [Operator Instructions] Our first question comes from the line of Nick Joseph with Citigroup. Please proceed with your question.
Thank you. Gary, how does the current acquisition pipeline look, and where are you seeing the best opportunities?
Good morning, Nick. As we've shared recently that current pipeline across manufactured housing, RV and marinas has never been as full as it is right now. I think that we're seeing a little bit more outreach than we even expected with some of the discussion about change in capital gains and things like that moving forward by the current administration, with obviously uncertainty as to where that's going. But we do believe that we match fund – match funded the right amount of capital to be able to go out and utilize that capital in the relatively near-term based on the pipeline throughout all three aspects of our business.
Thanks. I know guidance doesn't assume any acquisitions or funding, but as you think about funding that pipeline, do you use your line and then settle the equity toward the end, or do you plan to settle the equity as you go in terms of the acquisition volume?
Yes. I think that's on a case-by-case basis. But for the foreseeable future, I think we rely on our line for certainty, quick access and the ability to close. One of the things that Sun is known for in such an acquisitive period and part of the reason why we had so many pocket listings, if you will, that don't go to the market is the fact that through our process of underwriting due diligence is to get through the purchase agreements and to work through tax deferred structuring and then finally to a rapid close would lead me to believe we would be utilizing the credit facility on our first basis and then fund off the forward from there.
Thank you.
Our next question comes from the line of Keegan Carl with Berenberg. Please proceed with your question.
Hey, guys. Thanks for taking the questions. I think first, inflation is obviously a big talking point. So are you guys seeing any inflation on new development and expansion projects? And if that's the case, is that impacting your plans in any way for the year?
Maybe – this is John. Maybe a little bit, but no, it has had no impact on our plans for the year.
Anything on labor, especially in the marina business, just given the specialization required?
I think that one of the things that we did take a look at going into the budgeting process with the management team over at Safe Harbor is that we did allocate properly for minimum wage and pricing pressure on labor. So we feel pretty comfortable that all built into everything in the Safe Harbor budget, which we're very pleased that they were able to exceed this past quarter on strong growth drivers. There is no doubt on the material side for homebuilding, lumber, steel, other products have been under pricing pressure for over 12 to 18 months now.
So, we're seeing small incremental price increases on the homes being delivered for our manufactured housing communities. But I think they are smaller in nature than what site build is experiencing right now and perhaps might continue to give us at Sun Communities a little bit of an edge against increases in the site build housing and make the manufactured housing even more obtainable and affordable to many customers out there. So, it could be a positive trend for us.
Got it. And just one more quick one. What were the cap rates from your two marina transactions? And are you guys seeing any further cap rate compression in the space?
There is no doubt, there is continued competition in this space coming from private equity and even our public competitor who announced a small transaction this past quarter. But cap rates, for the time being it's a very unconsolidated industry, or governed by all the typical things of real estate, location, demand, sometimes quality of the ability to bolt-on to existing marinas in the Safe Harbor portfolio. So it's a range, and I would share that the manufactured housing and RV communities acquired since the beginning of the quarter, yes, probably average right around the 4.5% cap rate and the marinas have ranged 200 basis points to 250 basis points above that. So we continue to look for the marinas in the 6% to 9% cap rate range. And then, of course there's always exceptions when there is a very, very difficult replacement value set on a particular marina that might come down below that.
Alright. That's it for me. Thanks, guys.
Thank you.
Our next question comes from the line of Brad Heffern with RBC Capital Markets. Please proceed with your question.
Hey, good morning everyone. Thanks for taking the question. I appreciate the commentary that you had about the high level of advanced reservations that you've seen in the second quarter and the third quarter. I was noticing on the balance sheet that the category for advanced reservation deposits and rent is up really dramatically. So it was $188 million at the end of last year, its $280 million now. Is that reflective of the underlying strength? Are people reserving more in advance than they normally would be and that's driving that number higher? I'm just trying to get a feel of whether that large delta sort of represents the strength that you're seeing?
There is a bit of impact from Safe Harbor and the seasonality of their portfolio and when they do their advanced billings, so there is around about $26 million to $30 million, I think, it's from Safe Harbor in there and the rest of it, I think is just the seasonality of our advanced reservations and deposits on our RV portfolio. I'm sure there is some impact from advanced reservations in there that what we're seeing. But it's more about seasonality and Safe Harbor.
Okay, got it. Thanks for that. And then just talking about the guide. You all beat the original first quarter guide by $0.11 and the guide's up about $0.13. I'm just curious how much of the strength that you saw in the first quarter and that you're expecting for the second quarter is really being read into the full-year guide or if the portfolio continues to perform like it has, or like it did in the first quarter if you see more upside?
I guess I would characterize the FFO raise, which I think is about $0.13 at the midpoint, that it reflects all the outperformance in Q1, plus additional expected outperformance in the transient RV business and if that – those offset – those increases are offset by the equity that we raised and have settled to date, which we will deploy into acquisitions as the year progresses.
Okay, thank you.
Our next question comes from the line of Wes Golladay with Robert W. Baird. Please proceed with your question.
Hey, good morning, everyone. I just want to look at the RV business. Are you seeing incremental strength on annual conversions right now?
Yes, [indiscernible] I mean, we had a great first quarter with 380 plus – I think 387 was the exact number of conversions that we had, which as we've shared before, usually we're in the range of about 1,100 in the year, and so that number is a little bit elevated. There is a little bit of seasonality to it, but I think the way that I'd characterize is that I see us – I see a lot of strength going into that for the rest of the year as well. It all kind of goes back to everything we've talked about over the last year with – I call it the rediscovery of the outdoors. We've taken so many new guests into our communities, they discover our communities and that's really aiding in the conversion as well. So – and this is a reminder, every time we make, we have a conversion that's a 40% to 60% revenue pickup that we get in that year each time we do that. So very positive and very excited about the results we've had thus far.
Got it and then maybe can you discuss Campspot? You mentioned 60% of bookings; I believe come from that website or application. And can you give me, I guess, context of what that was maybe last year? And is that just Sun Communities or is that open to everybody?
Great question. So Campspot was originally developed by our Northgate partners and it's jointly on the Sun and Northgate and it's, as I said in my remarks, it's a revenue management system coupled with its proprietary reservation system. And I think that the – the thing that's most interesting about it is each resort in our portfolio really represents a multi-faceted occupancy and rate equation, literally each and every day of the year and at the core of Campspot is a built-in algorithm the optimizes the rate occupancy equation in the most efficient way. So that's been some of the driving force behind aiding through 2020 and really brought us back as well as what's happening in 2021, it's been a big contributor. And if you go back to, I think, we said two years ago, our online reservation book; it was about 62% [ph] versus 60% it is today. So there are other users of Campspot through the OTA, but it's – certainly, our entire portfolio is on it now, just awesome.
That's being marketed across the country right now. So we're pretty excited to see how it performs for everybody.
Yes.
Yes. Got it and then, maybe just one on the development in San Diego. Is that going to deliver negative NOI this year or positive? And when will stabilization be? And when you do set a stabilized yield, does that include the benefit of selling homes?
Yes. So the resort Sun Outdoors San Diego Bay, that is an RV resort. It's got RV sites and vacation rentals. And typically on an RV ground-up development, we would see stabilization within a three-year period of time. And one of the benefits of the RV development is we can accept guests and we already are. In fact, I'm heading out there on Monday night for the official grand opening on the [indiscernible] that we've worked with for close to four years on and it will generate positive NOI in 2021.
Got it. Thank you.
Our next question comes from the line of John Pawlowski with Green Street Advisors. Please proceed with your question.
Thanks. I wanted to follow-up on the inflation conversation, but more on the demand side. John, the – as the price of other housing alternatives kind of skyrocketed in certain markets, are there any regions where you think you'd maybe second guess or pivot the typical 2% to 4% rent increase policy you've had? Is there – are there any markets where you'd push rents 5%, 6%, 7% in the coming years you think?
Well, for 20-plus years we've always, as you know, Todd, stated in that 2% to 4% range on average across the portfolio. But it's not to say that in certain markets where a higher rent increase can be achieved. We do. We always try to keep everything from – we are in the attainable, affordable housing business and we take a very long-term view on that within the portfolio because there are so many benefits that come with sort of having the rent increases at the right level, okay, inclusive of the kind of equity growth that we're seeing across our broker sales in our communities, which is real value to the customers, as well as real value to our portfolio overall. So to answer your question, some might be above that range and then we certainly would look to places, areas in the country that have more strength where that typically would happen.
Okay. Great, thanks. And then last one for me, Gary. Just in terms of the acquisition mix in recent years tilted considerably toward RV and not as active on the traditional MH side, is that more of an indication of just more RV volume hitting the market or is an indication where more times than not a traditional MH acquisition no longer pencils for you?
Yes, I think it's the former, definitely not the latter. The consolidation sequence in chronology is that manufactured housing became a prized asset way before RV resorts were really understood. So, as you may recall, there were four public companies. And now there are – actually five and now there are three, Sun, ELS and UMI. And I think that it's just a factor of the scarcity of available manufactured housing communities out there.
And then following that sequence, I'd like to give credit to the Sun team for really taking a deep dive into the RV business and understanding how it grew over the last 20 years, and then strategically determining that we were going to increase our RV Holdings in Sun's portfolio and in doing so, kind of looked at cap rates in RV very similar to manufactured housing because we determine the revenues, the NOI growth was just a steady and, in some case, a stronger than what we saw in manufactured housing.
So as we followed and pursued aggressively acquisitions in RVs, that asset class has begun to consolidate. And then as you follow that even further into marinas, as many of you are aware, there was recapitalization and restructuring at Sunteck, the second largest marina holder and another portfolio – small portfolio acquired by ELS. So while there is absolutely opportunity for Sun and MH, RV, marinas right now are beginning to garner interest by other investors.
And I anticipate we'll see some pressure on cap rates, but as I indicated earlier that we are able to buy them and acquire them in a 250 basis points and above spread to MH and RV. So, there is occasionally manufactured housing that we won't pursue to the levels that they're being acquired, but for the most part, what we're seeing and what we're acquiring isn't broadly marketed, it's just a phone call into our acquisitions department or personal relationship from someone on the team here reaching out.
Okay. Thank you for the time.
Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.
Thank you, and thanks for the increased disclosure. I was wondering on the increase in RV demand you're seeing this year, how much of that do you think is a temporary phenomenon and will receive potentially next year when people feel more comfortable flying and going increases?
Yes, good question, John. Definitely, COVID has been a part of that, but really, the prospects for both RV and marina growth have never been stronger. I think as I said a couple of times that the notable thing is just rediscovery that's happened is really – I mean we saw particularly in the fall, okay, which was the growth like we've never seen in the fall. And what we saw during that time, many, many of those guests rebook, okay, into other parts of the year as well.
The other thing that provides some strength with the two is that the vast majority of our visitors and our guests that come to our resorts are coming within a 90-mile radius. So naturally, it will be some moving back to other forms of travel on vacation. But we will retain many of the new guests because of the experience they had in 2020 and the point with the radius that we have for most of our guests to come to our communities that even if they do go back to other forms of travel, it's an easy and affordable vacation they can take, that's something they can do on the weekend, or we can add it on. So it's sort of it – it can be sort of an add-on even if they go back.
Yeah, John, I would add to John's remarks that I think what we're looking for is the incremental residual impact. So, we won't retain everybody, but I can share with you that we will retain a residual portion of the increased demand as a result of the experience out there that has been positive. So I think it bodes well for incremental growth on what we would naturally expect in the RV resort business.
And what do you think is the best leading indicator for that demand? Is it RV shipment, which has increased significantly this past month? I think historically, it hasn't really been a high correlation between shipments and your occupancy, but I'm just wondering what your thoughts were on this?
Okay. Well, you asked for it. So here it is. I think the best indicator is anecdotal indication of this individual myself and my family taking several COVID RV property inspections and vacations and what a great time we had. And that's pretty much echoed by even some people on this analyst call who have shared their experiences with us. But as we continue to do our exit surveys, we're just finding the enjoyment that John referenced as the leading indicator of why we think that it will be this residual increase post COVID to our business. And there are estimated to be around 11 million RVs registered today.
There are new options to be able to ramp existing RVs on an Airbnb model out there, so just continue to see increase in the consumer or guest pool available for a very limited amount of RV resorts. And I always like to point out to that the RV resorts are generally about being able to have the utility hookups, sewer water electric as opposed to boondocking where you don't have those hookups and then the amenities and the features related to those RV resorts. So we just think that it's a very, very exciting time in the RV business to be part of its growth.
I would love to ask the same question on superyacht demand. Maybe I'll see that for a separate discussion.
I would like to tell you, I've been on the superyachts, but it hasn't happened yet. I was on electric boat, however, and it's quite fascinating to get a glimpse of what the future might be with regard to moving from fossil fuel in the boating business to some expanded research and development and actually offerings now in electronic – electric boats battery powered.
Separate topic, with all the acquisition activity you've had in the past few years, can you just remind us what percentage of institutional quality image communities and RV parks you currently on?
Yeah, it's Gary again, and unfortunately, there is not a national repository of information or indexes and the related items to manufactured housing communities as you're referencing them. I would suggest that the vast majority of institutional quality manufactured housing communities have been consolidated by the public companies and what we referenced the three or four other high-quality private companies that are out there today with the best-in-class portfolios. So, I would not be able to necessarily give you a percentage, but I've heard from our competitors that probably represents anywhere from 10% to 15% of overall manufactured housing and RV resorts and probably closer to 50% of what we would consider institutional quality.
Okay, that's helpful. And then my final question is on your rental home business, which had strong rental growth, but it's coming down its proportion of your real property revenue on a year-over-year basis. Do you have any views or updated views on potentially increasing this business, given the strength of the single-family rental market?
Yeah, absolutely. I mean our rental home program, as you know, has stood the test of time. It's an excellent tool to accelerate occupancy revenue growth. So, we will continue to use it as we share for expansions, new development and acquisitions for lease-up, ultimately, converting renters into homeowners. That would be the strategy though, John, okay to use it going forward and have and kind of align with the acquisitions and the development that we do along the way to move that forward faster.
Got it. Great. Thank you.
Our next question comes from the line of Joshua Dennerlein with Bank of America. Please proceed with your question.
Hey, Gary, John and Karen. Hope you're doing well. Just wanted to touch base on John's comments in the opening remarks about how Safe Harbor portfolios doing better than your underwriting. What's driving that? Is it like something on the revenue side, expense side or something else, just curious?
That's a great question, Josh. And what I would probably suggest what we've seen as we reviewed performance against budget is key first quarter drivers are revenue growth in Florida on the East Coast and in the southern portion of the portfolio. Again, strong demand, limited supply as we look what's really taking place in the portfolio. We're seeing rate growth pretty much in line with budget, but we're seeing increase in demand and occupancy, and most notably, what we're seeing is summer marina expectations that are a little bit ahead of where regions were last year.
So baked into our guidance or part of our guidance is expecting continued good solid growth in the marina business. So, it's no one thing, just demand. I think we talked about it a lot, escaping the monotony and challenges of the COVID environment, getting out into the fresh air, enjoying being on the boats, on the water, those types of things like we're seeing in the RV are very, very similar.
I hear you. I can't wait to get back out there.
We know you like your boat. Question is, do you like your marina?
I'll go and check out. I was at Safe Harbors for a few years, but this year, I could, just I was on the Vineyard. I tried getting into Prime, they won't let me in. That maybe next summer. That's it for me for questions.
Thanks, Josh.
Thanks, Josh.
Our next question comes from the line of Todd Stender with Wells Fargo. Please proceed with your question.
Hi, thanks. Just looking at new home sales, on average, they're exceeding $150,000. What's the highest price point that you see on new homes and what's the square footage on something like that?
Yes. So our highest price point is going to be in our Colorado, our new development, River Run in Colorado as well as what we're doing down in the [indiscernible]. And that's going to push above $300,000. But again, I think the important thing to note when you're talking about $300,000 on manufactured home, that is on a relative basis very affordable in the environment, which sits in the location where...
Those price points – are buyers financing them? I guess, we're kind of used to seeing most of cash buyers, but maybe any comments regarding the increasing financing as these price points just edge higher?
Yeah, at those price points, Todd, it's generally a cash buyer that's coming in for those. Usually, 90% are cash, or they go to a local bank.
Got it. Okay. Maybe for Karen, just kind of switching to the balance sheet with debt to EBITDA right around 6 times, just for modeling purposes and looking at the forward equity, is it fair to assume a 1 million shares at a clip for the next four quarters, or is that feature call for all 4 million shares at once?
No, the feature doesn't call for all 4 million shares at once. And I think we'll draw on the line as Gary suggested initially for acquisitions, and then we will shortly thereafter match fund with the acquisition volume that we're doing.
And then so on a pro forma basis, do you have a debt to EBITDA, assuming the forward equity?
Without the forward equity, we are going to be at low 5 times. I think with the forward equity, we will be below.
Okay. And then on the debt side, just for modeling, what kind of debt are you looking at right now in any coupon or duration you could share?
We really have no maturities from a debt basis. We have been very, very active on refinancing debt. So, there's really nothing to refinance on the debt side from – for this year and little for next year. I would say, a typical 10-year money at 65% is in the 2.5% to 3.5% for the GSEs and life companies. Also we do take a look at – we do evaluate unsecured borrowing. At this time, with the Company's increased size and capital needs, look at that unsecured market makes more sense than what we've done in the past. So we are currently evaluating the unsecured market.
Got it. Last one, probably for John, the San Diego RV development. Are there more sites coming in addition to the 250 that were just completed?
Potentially. We are looking at another 90 sites that we can add to that, Todd.
Great, thank you.
Thank you.
Our next question comes from the line of Samir Khanal with Evercore. Please proceed with your question.
Yeah. Good morning, everyone. So I guess, John or Karen. When you look at the marina business, what's the right NOI margin to think about? When I just did the math here, I mean, it looked a bit light in the quarter. And again, I know it's possibly due to seasonality here, but just maybe going back, the last few years with Safe Harbor, what's been the trend for NOI margin for marinas?
So, Sameer, I think your comment regarding seasonality in Q4 – I mean, Q1 is accurate and typically you'd see all-in margins on the marina business, the high-30%s, still low-40%.
Okay, got it. And I guess, just remind me and if I missed this, I apologize, but did you update the marina guidance for NOI, $163 million to $169 million that you provided last quarter?
No, we did not update the marina guidance.
And if you're trending sort of in the high kind of in the $31 million, which your commentary sort of suggests that you're kind of trending higher on the marina side, is it fair to assume that you're tracking kind of ahead of that was $163 million to $169 million at this point?
I would say we're in line with our expectations, likely into the high-end and it has been – that outperformance has been included in our FFO guidance.
Got it. And my final question is on the expense side. I did not see a breakdown this quarter for the various line items. I mean, how are you trending on maybe operating expenses and how are you thinking about maybe for the remainder of the year for those line items?
Well, that's a tough one because of the COVID impact, right. So the comparatives for the prior year are – I'll use a sort of technical term, very wonky. So that expense increases you will see higher on that comparative basis. But for the quarter, what we saw was an increase. I mean, lower-than-expected expenses for utilities and also for advertising and I expect some of those advertising costs to shift into future quarters.
Okay, got it. All right. Thanks so much.
We have a follow-up question from the line of John Pawlowski with Green Street Advisors. Please proceed with your question.
Hi, thanks for taking the follow-up. Maybe, Karen, could you just break out the full-year NOI growth guidance in between revenue and expense?
Yeah, I don't – we haven't – we have not presented that previously, John. So I'm going to decline to respond.
All right. Take care.
There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.
Well, we thank you all for participating on the call and all of us are available for any follow-up and we look forward to getting together with everybody after second quarter is complete. Thank you, operator.
Thank you. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.