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Sun Communities Inc
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Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Sun Communities Second Quarter 2022 Earnings Conference Call.
At this time, management would like me to inform you that certain statements made during this call, which are not historical facts, may be deemed forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved.
Factors and risks that cause actual results to differ materially from expectations are detailed in yesterday's press release and from time-to-time in the company's periodic filings with the SEC. The company undertakes no obligation to advise or update any forward-looking statements to reflect events or circumstances after the date of this release.
Having said that, I would like to introduce management with us today. Gary Shiffman, Chairman and Chief Executive Officer; John McLaren, President and Chief Operating Officer; and Fernando Castro-Caratini, Chief Financial Officer. After their remarks, there will be an opportunity to ask questions. [Operator Instructions] As a reminder, this call is being recorded.
I'll now turn the call over to Gary Shiffman, Chairman and Chief Executive Officer. Mr. Shiffman, you may begin.
Good morning, and thank you for joining us as we discuss our second quarter 2022 results and provide an update on our full year guidance. We are pleased to share that our portfolio has continued to deliver strong performance, as we feel the ongoing demand for attainable housing and affordable outdoor vacationing options.
Highly recurring and dependable revenues across our portfolio are evident in the strong results we have consistently delivered throughout all economic cycles. The combination of these drivers led to Sun achieving core FFO of $2.02 per diluted share in the second quarter. On a constant currency basis, core FFO per diluted share was $2.04, which represents a 13% increase from the prior year. We continue to experience high demand for our Manufactured Housing communities and RV resorts.
In the second quarter, we grew our revenue producing sites by 950, representing record quarterly growth. Over 85% of this increase came from converting transient RV customers at annual leases. We are pleased that when transient RV guests discover the experience and value proposition of an RV vacation at a Sun outdoors resort, they choose to make it a longer-term vacationing option. The first half of 2022, we have converted over 1,400 transient guests to annual leases, which is about three quarters of the record number of conversions achieved during all of 2021.
Our proactive approach to converting transient guests longer-term annual residents has been a consistent strategy that as we build Sun's portfolios through selectively acquiring best-in-class resorts, has resulted in even greater revenue stickiness and higher NOI per site. Our same-property Manufactured Housing and RV portfolio demonstrates continued solid gains.
In the second quarter Manufactured Housing and RV same property NOI grew 3.6% over 2021, driven by a 4.8% revenue increase offset by a 7.3% expense increase. Within our Marina segment, same property NOI grew 7.1% for the quarter, driven by a 6.1% increase in revenues from slip storage income, offset by a 3.4% increase in expenses.
Looking forward to the next several quarters, the current operating environment of high inflation and economic uncertainty presents challenges for all businesses. After nearly 40 years in the business, I personally have seen and experienced the cycle tested nature of the demand for attainable housing and affordable vacationing, which when combined with our best-in-class assets, produces steady cash flow growth and reliable bottom line performance.
We have a decade's long track record of growing our business and cash flows with operating, acquiring and expanding Manufactured Housing communities, dating back to 1975 and RV communities dating back to 1996. Specific to RV, I would highlight that we have three competitive advantages and continuing to garner transient RV revenues. Namely, our proprietary reservation technology including Campspot, the quality and locations of our resorts and an unmatched team that provide a best in the industry customer experience.
Among our Manufactured Housing and RV properties, also important to note that in over 90% of our Manufactured Housing portfolio, we were able to increase annual rents by CPI or greater. As a result, we can pass through rent increases annually to mitigate the impact of inflation.
In the Marina portfolio, we expect our locations to perform well during uncertain economic times, given the higher average household incomes of our members to continuous and growing need for both storage and the compelling fundamentals and the demand side for marinas is an existing base of approximately 12 million registered, both within the U.S., supply of only 900,000 to 1 million wet slips. Additionally, the overall supply of marinas continues to decline, as developers acquire and repurpose them into waterfront, residential and other commercial uses.
As of June 30, our Safe Harbor Marinas, represent a network of 130 marinas that provide the highest quality, essential wet slip and dry storage facilities, members required. In turn, this generates recurring revenue as the average Safe Harbor Marina member stays for approximately seven years to eight years. The common fundamentals among Manufactured Housing, RV and marinas are the scarcity locations, demand that far outpaces supply and the absolute barriers to entry. This leads to resiliency of our revenues across our portfolio as evidenced by our strong performance to date.
We also achieved strong external growth during the second quarter and through the date of this call, we closed on $1.8 billion of assets, consisting of four Manufactured Housing communities, three marinas and 52 holiday parks, including the 40 property Park Holiday's portfolio in the UK. The remainder of the year, Sun's focus will be on integrating these assets into our portfolio and recognizing the accretive value of these acquisitions of being highly selective in pursuing additional opportunities.
Our development platform continues to be a compelling growth driver and a unique differentiator for Sun. During the second quarter, we acquired two newly developed Manufactured Housing properties in Arizona and Texas. Combined, they include nearly 450 fully developed sites ready for occupancy with an additional 600 expansion sites to be completed in the future. These developments give Sun the added attainable housing presence in highly attractive locations. High quality Manufactured Home in a Sun community is a very desirable way for people to achieve their dream of owning a home.
Turning to our UK portfolio, the opportunities are very similar to the Sun Manufactured Housing business, including stickiness of revenues, attractive growth through expansions and developments and similar supply and demand dynamics. The combination of the Park Holidays and the Park Leisure portfolios, we have a highly desirable footprint with 75% of our target customers within a 90-mile drive, one of our communities. The Park Holiday's portfolio has an expansion pipeline of over 1,500 sites, in addition to approximately 700 newly developed and completed sites. Over the past 15 years, the Park Holidays team has shown their ability to create value for their stakeholders.
Last and certainly not least, we released our latest ESG report during the quarter that highlights the significant progress we made in 2021. We increased our performance data and began laying the foundation for establishing improvement targets for key ESG measures. We are especially pleased and in its recently released ESG report, NAREIT recognized back-to-school program, which offers free tutoring for dependents of Sun team members.
Sun is very well positioned to continue to create value through organic growth, expansions, new developments and select acquisitions. We are grateful for the entire team's ongoing dedications throughout integrations and look forward to building upon the deep operating experiences and strength of the team members to continue delivering attractive risk-adjusted returns for our stakeholders.
I will now turn the call over to John and Fernando to speak to our results in detail. John?
Thank you, Gary. Our second quarter and year-to-date performance in 2022 reflects the consistently strong operational results and contributions throughout the entire portfolio. Our same-property MH and RV NOI increased 3.6% for the quarter, driven by a 4.8% increase in revenues and offset by a 7.3% increase in property operating expenses.
Our MH communities performed well with a 4.4% increase in revenue compared to the second quarter of 2021. Our annual RV revenue increased 12.1% driven by the high volume of transient annual conversions, which contributed revenue uplift on site in the range of 40% to 60% in the first year.
For the three months ended June 30, same-property transient RV revenue increased 60 basis points even as we had 1,500 fewer sites due to our success of conversions to annuals. Weighted average rental rate increase was 4.5% for the quarter and occupancy increased by 170 basis points.
Marina same-property NOI increased by 7.1% for the second quarter and 5% for the six months ended June 30, 2022. Our boat slip storage annual revenue increased 7.1% for the quarter compared to the same time last year, reflecting the positive supply and demand dynamics that Gary spoke to you earlier.
We acquired two Manufactured Housing developments this quarter. Spanish Trails, an age-restricted community located in Casa Grande, Arizona and Pine Acre Trails an all-age community in Conroe, Texas. These two newly developed locations provide Sun with an immediate opportunity to supply our quality, value-oriented solutions to municipalities in need of attainable housing.
Within the quarter, Sun sold over 975 new and pre-owned homes in our communities. The average new home selling price increased 7.2% for the three months ended June 30 to $164,000 with the margin approaching 20%. Additionally, in our brokered home sales, we are pleased to report a 37% increase in sales prices year-over-year demonstrating the enduring value of living in a Sun Communities.
Our MH and RV total portfolio occupancy reached 97.2% as of June 30. Year-to-date, we have received approximately 29,000 applications to live in a Sun Community as demand for our communities remains robust. As Sun continues to execute on development expansion deliveries during and subsequent to quarter end, we purchased three land parcels for $10.7 million located in Colorado, Utah, and Nevada. These three entitled land parcels will provide Sun with future opportunities for greenfield development and expansion of over 650 sites in areas of high demand and needed supply.
On our last call, we discussed commencing construction on five Manufactured Housing project located in Colorado, Florida, Texas and California. Construction is advancing as anticipated and we expect to have two communities open their first phases by the end of this year.
Forward bookings for the total RV portfolio owned and operated by Sun are slightly ahead of last year's record pace, although, they have moderated compared to our prior expectations. Continued growth is supported by an additional base of new customers who experienced an RV vacation for the first time last year.
Similar to our strong performance over the Memorial Day weekend, during 4th of July holiday, same-property transient revenue increased by 9.4% compared to 2021 and was driven by a 17.3% increase in average daily rates. We are pleased with our continued performance and are grateful for our team members who continue to go the extra mile each day.
I will now turn the call over to Fernando to discuss our financial results in more detail. Fernando?
Thank you, John. For the second quarter, Sun reported core FFO per diluted share on a constant currency basis of $2.04, which is 13% above the prior year and exceeded the high end of our quarterly guidance range by $0.03. The outperformance was driven by better than forecasted results from the total Marina portfolio and home sales contribution given increased sales price and margin for the quarter. These positive variances at the property level offset higher real estate taxes, interest expense and lower than expected transient RV revenues.
As of June 30, Sun had $6.9 billion of debt outstanding, equating to a net debt to trailing 12-month recurring EBITDA ratio of 6.3 times. Our total debt carries a weighted average interest rate of 3.4% and has a weighted average maturity of 7.9 years. Excluding our bank revolving credit and term loan facilities, the remaining $5.2 billion of debt has a weighted average interest rate of 3.5% and weighted average maturity of 9.6 years.
During and subsequent to quarter end, we settled forward agreements on approximately 6.2 million shares that netted $1.1 billion of proceeds, used to pay down borrowings on our credit facility. We had previously disclosed approximately 5.2 million shares settled in connection with the Park Holidays acquisition in early April. The remaining 1 million shares were settled to fund additional acquisition activity. Additionally, earlier this month, we swapped GBP400 million of our funded GBP875 million term loan from variable rate to a fixed interest rate of 3.67% through 2025.
Pro forma for the $1.8 billion of acquisitions and capital markets activity completed during and subsequent to the quarter, our net debt to EBITDA leverage ratio is inside our stated target range of 5.5 times. We have also reduced our variable rate debt exposure to 16% today as part of our active capital management strategy. Due to the addition of our manufactured housing portfolio in the UK, we will now provide an guide to core FFO on a constant currency basis.
Like other REITs with non-U.S. dollar currency exposure, our constant currency adjustments eliminate the non-cash fluctuations and reporting that are due to foreign currency exchange rate movements relative to the U.S. dollar, thereby enabling investors to compare fundamental performance across time periods. We continue to see strong year-over-year growth across the platform after a great 2021 for Sun.
As summarized in the press release issued yesterday, we are increasing the low end of full year guidance for constant currency FFO per share by $0.02 to a revised range of $7.22 to $7.32 per share. The $7.27 midpoint of our new range is $0.01 higher than last quarter and represents 11.7% growth over 2021 results. We are establishing third quarter 2022 constant currency core FFO per share guidance in the range of $2.56 to $2.61.
At the same-property level, we are moderating our growth expectations slightly for Manufactured Housing and RV by 50 basis points to 6.4% at the midpoint of a 6% to 6.8% range. The modestly lower growth accounts for higher real estate tax assessments in Texas, one of our larger MH markets and current transient RV revenue expectations for the remainder of the year. Third quarter same-property MH and RV NOI growth is expected to be 6.8% at the midpoint of guidance.
For Marina same-property, we are slightly adjusting the NOI growth range for the year by 30 basis points to 6.4% at the midpoint of 6% to 6.8% range. Third quarter same-property Marina NOI growth is expected to be 8.3% at the midpoint of guidance. As a reminder, our guidance includes acquisitions and capital markets activity through July 25, but does not include the impact of prospective acquisitions or capital markets activities, which may be included in research analyst estimates.
This concludes our prepared remarks. We will now open the call for questions. Operator?
Thank you. We will now being our question-and-answer session. [Operator Instructions] Our first question comes from the line of Keegan Carl with Berenberg. Please proceed with your questions.
Hey, guys. Thanks for taking the question. Maybe first here on transient RV in the quarter, I know prior you disclosed the forward bookings were up 4% for same-property, are you guys seeing any trends that you see there, shorter length there is visibility into the booking window and then how do you think about guidance on this particular segment for the rest of the year?
Hi, Keegan. it's John. Good morning. Yeah. Our booking window for summertime stays in our RV resorts generally is between 15 (ph) to 60 days, is when we see the majority of our bookings and sort of -- it ticked up from day 60 to their stay to the 15th day, which is sort of the peak, when people come in and haven't seen a tremendous -- when a chart that out in comparison in terms of like, when bookings fall in haven't seen a whole lot difference between that in prior years.
And then Keegan to complement the second part of your question, as far as our expectations for the full year on RV transient revenue growth, we had previously stated a range of 12% at the midpoint, those expectations for the full year now are at about 6.4% with a third quarter growth on the transient side of about 4%.
Got it. Very helpful there. And then maybe just one more on Marina. I know I got its guidance as well, just maybe a little bit more color here, obviously, there is a 30 basis point cut, is it more expenses or demand deteriorations, any more color there would be helpful?
Hi, Keegan. It's Gary. I think that what we're seeing is just a great performance overall demand and rate continues to be exactly as we underwrote it. Guidance is slightly adjusted for some longer stays that resulted from more of the restricted COVID travel by the big boats. So as things opened up a little bit, the boats, as they normally do travel, started traveling a little bit more. So the modest adjustment that's in there is our standpoint as a result of that.
Great. Thanks for the time guys.
Our next question comes from the line of Wes Golladay with Robert W. Baird. Please proceed with your question.
Hey. Good morning, everyone. Want to go back to the pace for the third quarter for RV. I think you said it's going to be 4% in the third quarter, I just wanted to see what you're seeing on the ground. Are you seeing fewer visits, shorter stays or you're just converting too much -- too many sites to annual?
Yeah, Wes. Good morning. It's John. I think the way I'd answer that is that 2021 represents a year in our view where we enjoyed growth that was beyond anything we'd seen historically. And as we shared before recorded, record new guests sort of set the stage. To answer your question, the fact is, we're still enjoying those tailwinds and our overall RV performance thus far in 2022. Just few points of reference, since, the start of 2021, we've converted over 10% of our transient sites and annual leases, which again as I said in my remarks, there was a 40% to 60% revenue pickup in the year that they convert.
Of that Mr. Gary shared in the first half of 2022, we saw continued growth converting over 1,400 sites, which is over 75% ahead of our record-setting first year -- full year of thousand 2021 conversion results. So even with a 10% reduction transient set for the last 18 months, we still grew transient in RV revenue overall in the second quarter and outlook by Fernando said 4% in the third quarter having really great Memorial Day and 4th July holidays, as well as the expectation that we would grow approximately 6% -- I think Fernando said 6.4%.
I think the key there for the full year -- I think the key there, that number is actually slightly elevated against typical transient growth numbers that we have realized annually pre-COVID, but now with more conversion success and also in the face of 9% inflation, that we have today. So I think the transient is performing extremely well, it remains steady. And I think we continue to as we shared before build growth on a new base of customers we established last year.
Got it. And I want to go back to that comment about 12 million boaters and supply of 1 million slips. Do you have insight in the pent-up demand to become a member for -- the Safe Harbor platform and is there any markets that really stand out where there is a really big backlog?
I think all Markets stand out, the fact of the matter is that occupancy remains very, very high, because demand as I said is far greater than the wet slips that are available today. But if you want to follow up on anything specific related to anything, please reach out to Fernando, Stephanie, CRO (ph) of the company we can get you specific details with regard to individual demand and occupancy.
For most marinas during the high season, we have more demand than we can actually supply and they are at full occupancy and for those on the tour, there is examples of where occupancy is even above 100% where full time marina members move out and we can temporarily rent their sites with their permission. Again, well occupancy and any adjustment to guidance just really related to a little bit of the easing of COVID travel on the larger boats.
Great. Thanks everyone.
Our next question comes from the line of Michael Bilerman with Citi. Please proceed with your question.
Thanks. It's Nick Joseph here with Michael. Maybe starting on Park Holidays. I recognize it's only been a handful of months, but you provided guidance for the third quarter and then this six months for the back half of this year, and I recognize that also includes some of the acquisitions, subsequent to the initial company acquisition. So I was wondering how the -- at least the initial properties acquired have performed relative to underwriting thus far?
Yeah. I'll start out and anyone can jump in. But we are certainly equal to or slightly exceeding. All of our underwriting performance remains very, very robust in the UK. The addition of the Park Leisure portfolio as I mentioned in our comments gives us an incredible footprint with really targeted resident within a 90-mile drive evolve coastal and inland properties. So the expectation is -- as we look out over the next 12 months will continue to integrate all of the acquisitions into work holidays operating system and we would expect continued growth to equal or exceed our underwriting. So very, very positive, what we're seeing there.
Nick, this is John. I'll just add on to that with the Park Leisure acquisition, those 11 properties really fits the sweet spot and the fact that those sites in those properties are 92% owner occupied. That was 400 expansion sites in front of it as well, so it's a really solid acquisition that we're excited about.
Thanks. And then I guess just more broadly on the acquisition pipeline, how is it looking today and are you seeing any changes to cap rates across the different asset classes that you invest in?
So, Nick, it's Gary. We continue to see opportunities across all three platforms. We do remain very disciplined with regard to our view on capital allocation. Generally, MH and RV remain in the 4 to 5 cap rate range with the highest quality Manufactured Housing still seeing transactions in the 3 cap rate range. Marinas remain in the 6 to 8 range for the quality that Safe Harbor and Sun are looking for.
On the UK side yields for everything we've done tax adjusted, they've been in the low to mid-7s. We haven't seen a lot of change as far as our outlook goes. We would expect the challenging financial markets and conditions out there could yield some very special opportunities and we'd like to think that we'd be in a position and prepared to take advantage of those opportunities as they move forward. So we'll continue to watch, but very disciplined look as to how we're thinking about external acquisitions at this time.
Thanks. Are any of those opportunities presenting themselves now or is that more of maybe potential future expectations?
I think it's more of a future expectation, there are couple of platforms in Australia that I never would have thought would have come to market that are coming to market right now with some of the bankers. And we are not involved in those processes at this time, but it's interesting to note that they came to market before I ever thought they would have.
Thank you.
Our next question comes from the line of Brad Heffern with RBC Capital Markets. Please proceed with your questions.
Yeah. Thanks. Looking at the Park Holiday's NOI split this quarter, about 65% of it was from home sales. Can you reconcile how that compares to the 37% of gross profit that you quoted with the deal? And maybe just walk through how the split changes quarter-by-quarter with seasonality?
Brad, the expectation at the touring season -- the heavy touring season for the Park Holiday's portfolio is during the third quarter and so there is an increased percentage of NOI contribution from real property during the third quarter. We can step through those percentages on a follow-up call. I don't have those figures in front of me.
Okay. Got it. And then on the currency exposure, is there a plan to hedge that in some way or maybe pursue a pound offering in order to neutralize some of that?
That's a great question. We -- to remind everyone, we are fully naturally hedged in the UK, where we paid for the transaction with borrowings on our multi-currency credit facility that includes Sterling. So any cash flow that is generated by the UK operations pays down any debt that's outstanding. We are not moving dollars back and forth to the U.S. So there is no realized gain or loss from translation. In time, if we would plan to be moving capital from the UK back into the U.S., we would look to put in cash flow hedges at that moment.
Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question.
Good morning. Thanks a lot for taking my question. My first question is on the impact of inflation per site growth in 2022 with elevated historically, but not necessarily at the level of inflation. When you said 2023 rent inflation levels will likely be higher than last year. There has been inflationary times in the past, can you help us think about how much you're able to pass along during elevated inflationary times? And just related to that, there has also been elevated expenses and your revenue isn't growing as fast of your expenses this year, so as we look forward, do you think that revenue can grow faster than expenses?
Well, thanks Michael for pointing out that I'm the oldest person in the room. So when we look at history, I'm going to end up here. Let's start with the latter or move to the former. I think we've shared with the market that about 40% to 50% of our rental increases in Manufactured Housing had to be noticed 90 days in advance of January 1, mostly in the Florida properties. But when we looked in August and September at our budgeting as we're doing right now, at that time, we didn't have that crystal ball to ever imagine inflation coming to this 9.1%. It was most recently reported in.
So we sat rental increases, I think roughly 4.2% for the year in MH and we have to live with those until the next rental increases are put in, which were beginning to budget right now. And to the beginning of your question in my long history of 40 plus years in Manufactured Housing and through recessionary periods and certainly through the GFC, we are able to pass through all inflationary expenses in the form of annual rental increases in our current portfolio, CPI or greater in 90% of our Manufactured Housing communities.
So we feel very comfortable that with the insight of where inflation is going in the benefits that we'll have over the next 60 days to watch it, we will be able to adjust our rental increases to match our expenses related to our cost. So this coming year 2023, we should see equal to or greater increase, okay, on our average rentals.
That's really helpful. Thanks a lot Gary. And then on the topic of G&A, the increases you've built the foundation to support the number of business lines. At this point, do you feel that you have the necessary infrastructure in place to support the growth of your three, four segments going forward? So said in other way, should SG&A growth moderate in the years ahead?
Yeah. It's a great question and it really ties into the rate question that we just spoke about. When we look at 2023, we recognize and hope our stakeholders do as well that we've established a tremendous platform. It will allow us to grow and create value in all the ways that we continue to share with the market the internal opportunities of growth and external. When we couple that with both historical performance and our ability to pass on inflationary costs in the form of rent, along with the G&A that really has grown substantially over the last three or four years, we would expect to be able to leverage that G&A. And as we look out forward, really our goal and budgeting is to be flat year-over-year G&A. So that coupled with the rental rate increases, the pass through inflation allow us to be very comfortable of how we're thinking lot of results going into 2023. So, scalability of G&A, I think is really at the forefront of what the company can deliver going forward.
Thank you for that. Good luck in the second half.
Our next question comes from the line of Samir Khanal with Evercore. Please proceed with your question.
Hi. Good morning, everybody. Hey, Gary, just in that last point about G&A, you said sort of flat -- keeping that flat next year, you're talking sort of on an absolute level or you're saying kind of in the G&A as a percent of revenue?
We're going to get as close as we can on an absolute basis, but I was talking about percent of revenue. But we're really targeting, as I said, leveraging everything, we've invested. You bring the Marina platform into public reporting position and same is true with the work being done on the UK. And as we also continue to reduce the transient sites from transient to annual at the pace we're going right now, we would expect there would be some G&A savings there as well.
Okay. Got it. And then Fernando, I guess this is more of a modeling question, but -- and you talked about conversions as well for transient to annual, and then that really picked up in the quarter. I guess how should we think about that pace of conversion sort of into back half of this year and into next year at this point?
As we look at our current inventory of about 28,600, 28,700 sites of transient RV sites, we would say that is a good 25% of those sites that are candidates for conversion over time. We have seen elevated conversions over the course of 2021 and certainly 2022, where we're already at 75% of last year's record figures and could expect ending 2022 with a higher conversion amount, but we still have a good runway for a number of years. And as we continue to expand our communities that does provide additional inventory for conversion over time
Okay. Got it. That's it from me. Thanks guys.
Thanks.
Our next question comes from the line of Joshua Dennerlein with Bank of America. Please proceed with your questions.
Yeah. Hi everyone. I had a -- I just -- I saw you had a comment in Page 10 of your press release, where you mentioned you reclassified certain revenues and expenses on the Marina side. Just curious on kind of more color and what exactly was changing there?
Sure, Josh. Thank you for the question. We've primarily reclassified certain expenses mainly utilities, payroll and credit card fees to most closely aligned with the revenue drivers for those expenses. This reclassification did not have any impact unexpected growth.
Okay. So it's overall, were they just not in that same-store number before, is that...
There was a reclassification between real property, real property revenues and expenses and service, retail, dining and entertainment revenues and expenses.
Okay. Maybe I'll follow up offline because I had one other question. So one of the -- one of the hot topics, I've been fielding from investors is that, you've added two new business segments Marinas and Park Holidays and there's not really that much publicly available data to see how they performed in recession. Can you maybe walk us through how you're thinking about the cyclicality of these business lines?
I think for those of you on the investor tour recently in the UK. When we think about the UK Park Holidays business, it aligns right up with our Manufactured Housing business in particular our snowbirds. They are second homes, vacation homes for a qualified buyer that must own a single-family residential home. We have the 15-year period that current management -- a lot of current management has worked in building the portfolio and they've seen a very, very solid growth over the 15-year period of time including the GFC, where they also grew right through that period of time.
So we're thinking it pretty much in terms of how we would think of our Manufactured Housing portfolio, which we talked about being very resilient in tough economic times as a affordable housing and affordable vacationing. So the best comparative data we have is the performance over the last 15 years, their portfolio as compared to how MH has performed really for the last 30 plus years as a public company and 10 as a private company that I've been involved in it.
So to date, we're continuing to see that perform right to budget or as I said, slightly ahead of it. Additionally, with regard to marinas, we don't have same-property set to look at. We have the performance that we're starting to develop in the KPIs that we are going continue sharing with everybody. But our fundamental belief is that, it is a business that matches up to funds platform just because of the demand far outstripping supply factors that boats have been getting larger and larger. So it's not an option anymore like it used to be to trailer them into your backyard or your garage or something like that, especially with homeowners associations not permitting long-term stays.
And I think I mentioned in my remarks, that we actually do have a diminishing amount of marinas across the U.S. as we do see the real estate development take place on a very priced waterfront areas. So we would expect that marinas will continue to perform very, very resilient in this market. Boat owners love their boats and boating and there is a shortage of places to put them on the water. So we're expecting a resilient performance moving forward.
Our next question comes from the line of John Pawlowski with Green Street. Please proceed with your question.
Hey. Thanks for the time. Fernando, a question on the cost structure of the MH business. So you did MHs are up about 8.5%, they were up 8% last year. If a high inflation environment continues, is high single-digit expense growth for the MH portfolio a reasonable betting line?
Well, thank you for the question, John, I would say there are a number of items that would moderate the expected growth over the course of the second half of the year. The main contributor to that would be an easier comp in the second half of 2022 for payroll as we've shared with the market. And during July of 2021, we had increased the Sun minimum wage for all team members at the property level, and that led to much higher expense growth over the course of the last 12 months. That comp now rolls off and it's a more moderated growth in that step function increase.
The moderating that would be as shared in my remarks, we did receive real estate tax assessment in Texas that was higher than our expectations. As normal course of business, we can test that assessment and then to the extent that we are successful, we then reduce that tax hit. But would expect that expense growth for the MH portfolio to be lower than what you've seen over the course of the first half of the year.
Okay. And then a question on marina revenue between transient and non-transient. So I know transient is small, two-line items going into different directions in the quarter, excluding transient up 7.5% transient revenue is down 9.5%. So can you just understand, kind of the building behavior and the customer behavior around the docks [Technical Difficulty] and why transient is declining, while other revenues are still increasing by a pretty big clip?
I think, John, I would suggest some of that is the movement that's taking place with a bigger boats that have been occupying a lot of sites through COVID, as they haven't moved around and some of that is just being picked up as they move up by the transient. So you're seeing that because there is not a lot of percentage of sites -- slips available for transient, when the season started. And so it's a little bit of movement, we were able to slip in a little bit more transient growth.
And John, you mentioned, right, it's a, a very small number. It was -- you're talking about $4 million in the -- over the course of the quarter. So, the comparative growth number is larger, but we're talking about a small dollar amount.
Understood. Gary are you seeing any extensive activity flow through the marinas right now? Outside of that movement in the large ships from COVID issues?
We are not, John. I know that visiting some of the marinas recently, everybody is out there enjoying their boats, but it has obviously been putting up with a lot of hot weather. And we do not see any trends that would be different than the ordinary with regard to rental of slips. There is more demand than we can actually pick and the long-term membership.
All right. Thanks for the time.
Our next question comes from the line of Anthony Powell with Barclays. Please proceed with your question.
Hi. Good morning. Question on the Gurney's deal, you did in July in Montauk. It's a pretty sizable deal. Just wanted to differ a bit, if that does include the resort portion? And if you would consider maybe selling that to a hospitality owners, if that makes sense and maybe some more details around that will be great?
Sure. Safe Harbor had been working with a seller for many, many years on a relationship basis trying to acquire this Island Marina, which came with the resort, the marina. And so location is just an irreplaceable asset located in Montauk, which is really a high demand area for the over 10,000 existing regional Safe Harbor members to utilize. So it was acquired with the hotel same seller, so both were what was sold to Safe Harbor. And obviously the membership has already begun taking advantage of both the resort and the slips that are there.
They're really pleased with Sun's strength and a history of buying on an accretive basis and recognizing the long-term value creation opportunity achieved by growing yield and cap rates on an annual basis, which we'll do in the marina. And the resort is being operated by a third party, which is actually the sellers of Gurney Resort Management company. And we will definitely be looking at our options for opportunities with regard to that resort as we move forward.
Thanks. And then maybe one more on, I guess, the Texas Pine Acre Trails MH deal, that's -- I haven't seen a ton of MH deals in U.S. in a while. So you've seen a few here this quarter. Curious how that was underwritten given the development site you have there and how the interest was for that deal compared to some of the age-restricted deals you've done elsewhere?
I can speak to the interest and sort of how it came about. So I think I've shared before, we've spent the last six years really building the pipeline of sites. No pun intended, the road in front of us in terms of MH development. Today, we have about 30,000 sites in various stages of entitlement that are in our pipeline and as Gary said a number of times, I think that's a unique advantage that we have. As a part of that in the markets that we look at, we talk to a lot of people as we -- it takes a lot to get them into the pipeline and we came across these resellers who were already starting to -- they're already entitled to site and started developing that site and so we took over midway through.
And when we look at it fits the profile -- the investment profile of all of our development that we do, which we would expect that this is going to kick off a high single-digit IRR and in an area that has -- I will say a little bit elevated lease-up associated like we see in Texas. So it was obviously a very attractive development acquisition that we're excited about, especially the fact that we've got 400 plus sites that we could fill up rapid succession.
All right. Thank you.
Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.
Thank you. I had a question on your [Technical Difficulty] get into the second half of the year of a little bit over $81 million NOI. Where will that trend lead to on an EBITDA basis?
John, we provided guidance during the -- right after the first quarter of G&A for the Park Holidays platform at a midpoint of about $27 million for the -- from April to December on a -- on a non-constant currency basis, that figure would be expected to be a little bit less, call it $1 million or $2 less than $27 million.
Okay. I just wanted to know if there was any additional G&A through recent acquisitions or other deductions from NOI to EBITDA?
In there small, yeah. Small figure.
My second question is post quarter, you raised equity on a forward basis at a little bit over $172 per share. I was wondering, how you were able to accomplish that given the share price wasn't at those levels?
Sorry, I didn't hear the end of it John, about kind of question [Multiple Speakers]
Your share price didn’t -- you've raised above your share price effectively.
Yeah. I think that was just the timing of what was available in the market and we were just match funding to some of the acquisition activity that was going out there.
Okay. Thank you.
Our next question comes from the line of Anthony Hau with Truist. Please proceed with your question.
Hey, guys. Thanks for taking my question. Fernando, going back to the UK guidance, last quarter, the guidance only included Park Holiday and an implied roughly around $125 million of NOI, if you back out G&A from EBITDA. The current guidance includes Park Leisure as well and implies $125 million of NOI after adjusting for FX. It seems to me that you guys have a lower guidance even on a constant currency basis, am I missing something here?
Anthony, you're not. As you saw, we provided an update this morning, where we updated our expectations for this remaining six months of the year inclusive of Park Leisure and other acquisitions in the UK. That contribution at a midpoint would be -- for the next six months would be bringing in about $102.5 million to which you would add the $40.5 million that we've already realized over the course of the second quarter of the year, bringing NOI contribution to around $140 million.
Got you. And the recent heat wave in UK make any impact to the Holiday Parks at all?
No, it didn't. This is John. I talk to those guys every day.
That concludes our question-and-answer session. I'd like to hand the call back to management for closing remarks.
Thank you everybody and we look forward to speaking again on next quarter's results and feel free to follow up with any of your questions. 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.