Sun Communities Inc
NYSE:SUI
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
111.32
147.58
|
| Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Sun Communities Inc
You don't have any saved screeners yet
Greetings. Thank you for joining us today for Sun Communities Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will begin after the formal presentation. Please note that 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 third quarter 2021 results. Strong third quarter is a continuation of the momentum we have historically demonstrated, which reflects both the stability and the growth potential of a platform we have established. This includes organic growth, expansions and developments and acquisitions. The combination of these elements allowed us to deliver 31.9% growth in core FFO per share during the third quarter and exceeded the high end of our guidance.
This beat, along with a positive outlook for the remainder of the year once again, led us to raise our core 2021 FFO guidance by $0.16 at the midpoint for a range of $6.44 to $6.50 per share and are expected the same community NOI growth for the full-year at 70 basis points for a range of 10.9% to 11.1%.
For the quarter, same community NOI grew 12.4% over last year, driven by our favorable strategic positioning to capture the sustained demand in RVs. In our RV segment, same community NOI increased by 30.6% for the quarter as transient RV continued to deliver exceptionally strong results. Our RV Resort business is benefiting from people seeking outdoor experiences at Sun RV resorts coming from both existing and new customers.
RVing is establishing itself as the vacation choice for many travelers, and we have positioned the Sun to capture this demand at scale. We are continuing to see momentum in forward bookings for transient as well as annual site conversions. Furthermore, the opening of the Canadian border in November is expected to accelerate that momentum in the first quarter of next year as we welcome back our Canadian Snowbird residents and guests. The stability of our manufactured housing portfolio continues to show the need for attainable housing as evidenced by our home sales volume and applications to live in a Sun community.
Manufactured home sales were another bright spot in the quarter. The total home sales volume up nearly 64% from the prior year and brokered home sales up over 15% for the quarter compared to the third quarter of 2020. Our core pillars of delivering superior customer service, maintaining high quality communities and offering an attainable housing option continue to create strong demand to live in a Sun community.
In our Marina segment, we are pleased that results continue to track ahead of our underwriting. Our NOI increases this quarter [indiscernible] primarily from the continued demand for wet slips and dry storage needs for our members. Forward demand for dry storage and wet slip rental is ahead of where they were at this time last year in large part through our best-in-class marina network, locations and services.
We have also remained active in growing and improving our portfolio. In the third quarter and through the date of this earnings call, we added 22 properties across our three segments deploying over $500 million of capital and adding over 7,400 sites.
Our recently acquired Four Leaf Portfolio of nine manufactured housing communities in the Midwest comprises over 2,500 high quality sites with expansion growth opportunities and ample room to fill existing vacancies. On the marina side, our acquisitions of Puerto del Rey in Puerto Rico, the largest marina in the Caribbean continues to strengthen our irreplaceable network of marina assets. Puerto del Rey now allows for a Safe Harbor member to remain within the network while traveling from the Northeast all the way down to the Caribbean.
Our acquisition teams remain extremely active and we are enthusiastic about the opportunities we are seeing across each of Sun's business segments. Furthermore, we have a proven track record of maximizing value from our acquisitions as we integrate them on to the Sun platform. This includes adding value through our operational platform, proprietary technologies, the scale of our marketing and booking platforms, including Campspot and potential repositioning of acquired properties.
As the leading industry consolidator, we believe our cycle tested ability to create value through acquisitions will continue to result in attractive accretive growth. This activity is supported by the ongoing proactive focus and maintaining financial flexibility. Additionally, we are continually evaluating our portfolio for assets which no longer fit with our long-term strategic and growth objectives. To that end, in the third quarter, we completed the disposition of six assets for a total sales price of $162 million, representing a blended cap rate of low 4s, which further demonstrates the value of Sun's portfolio.
We have a deep bench of incredibly talented team members, a well-positioned balance sheet, and a healthy pipeline of internal and external growth opportunities and we remain optimistic in our ability to deliver on each of our performance objectives.
I'll now turn the call over to John to discuss our operational performance. John?
Thank you, Gary. Sun delivered a strong third quarter across the Board outperforming our previous expectations. Our results reflect the combination of the stability of our best-in-class portfolio, as well as the contributions from our growth initiatives across all three of our business segments.
For the third quarter, combined same community manufactured housing and RV NOI increased 12.4% from the third quarter 2020. The growth in NOI was driven by a 12.8% revenue gain supported by a 150 basis point increase in occupancy to 98.9% and a 3.7% weighted average rental rate increase. Our expenses were up 13.7% from the prior year.
Same community manufactured housing NOI increased by 2.6% from 2020 and same community RV NOI increased by 30.6%. Annual RV growth was 50.2% for the quarter as a result of a 5% rental rate increase and the effect of over 1,500 conversions to annual leases over the trailing 12 months. RV transient revenues were up 29% compared to last year. This is on top of the 5% transient growth we experienced in the third quarter of 2020 over 2019 when we began to see the benefits of travelers who were seeking drive-to vacation options and took advantage of our resorts and desirable destinations.
When we issued second quarter results in late July, we shared the transient RV revenue for the second half of the year was 15.2% ahead of the original budget. Today and accounting for the third quarter’s actual contribution, it has accelerated to 18.3% ahead of original budget. As of this earnings call, our fourth quarter transient RV revenue is 19.6% ahead of the original budget.
The increased levels of consumer engagement discussed last quarter have continued. Year-to-date RV website traffic is up 10% compared to last year and 120% compared to 2019 and we have seen our social media following and interaction continue to grow with more than 1.4 million followers on the three major platforms, Instagram, Facebook and TikTok.
Our best salespeople have always been our residents and guests and their reach to spread the word has been meaningfully amplified through our social media engagement. We have also continued to sign up members to our pilots and RV Resorts loyalty program. And while it's still in its early days, initial interest and feedback have been very positive.
In short, we believe we are seeing strong evidence of two important trends. First, that many travelers are learning up and trying out an RV vacation, and second, once travelers have discovered their sunnier side through an RV vacation, it becomes part of their future vacation considerations. Additionally, Sun has simplified the reservation process with our Campspot platform, which in turn enhances the demand for RV vacation at Sun RV Resorts.
With respect to our total MH and RV portfolio, we continue to pursue our strategy of filling existing vacancy and creating additional revenue producing opportunities through expansion and conversions. In the third quarter, we gained 576 revenue producing sites. Of our revenue producing site gains over 430 were transient RV sites converted to annual leases with the balance being added to our manufactured housing expansion communities.
We have now converted almost 1,200 transient RV sites to annual leases year-to-date, which exceeds any prior full-year figure and demonstrates the successful execution of this internal growth lever. The RV site conversions resulted in an average 50% increase in site revenues during the first year of conversion with an additional benefit of transient site [indiscernible] rates.
Moving on to new construction. In the third quarter, we delivered over 320 new sites, approximately 70% of which were Greenfield ground-up developments and the remainder were expansions to existing communities. One of the ground-up developments delivered this quarter was the next phase of Smith Creek Crossing, a manufactured housing community in Granby, Colorado. The first phase of 82 sites has been filling up rapidly since opening a year ago, and we anticipate this next phase to continue to see the high demand for attainable housing in the area.
MH home sales in the third quarter were also strong. Total sales volume was up 64% year-over-year as we sold more than 1,100 homes in the quarter. These results are clear reflection of the value proposition that a Sun manufactured housing community offers the healthy demand for these homes and the home value that is maintained in our communities. Applications to live in a Sun community are up 13.2% year-to-date, and we anticipate we will continue to see strength in our manufactured housing business, given the tight housing market and the demand for quality attainable housing.
Turning to the Marina business. We ended the quarter with 120 properties comprising nearly 45,000 wet slips and dry storage spaces, which includes the acquisition of six properties for approximately $250 million completed in the third quarter. Same marina rental revenue growth for the portfolio of 75 properties owned and operated by Safe Harbor since the start of 2019 was 17.8% for the nine months of 2021 over 2019. This is a CAGR increase in rental revenue of 9.9% for the quarter and 8.5% year-to-date through the end of September 2021.
Better-than-expected performance for the Marina portfolio continues to come from demand for wet slips and dry storage spaces. We have also witnessed higher margins on the service business with Lauderdale Marine Center and Riva, which being the leading contributors to this outperformance. Great service creates stronger slip rental demand and higher member retention.
In summary, Sun's growth engines continued to deliver strong results. Our internal levers are driven by the fundamentals of Sun's operating platform and by expansion site deliveries. Our total MH portfolio stands at approximately 97% occupancy, providing us with more than 200 basis points of occupancy upside as well as additional growth potential by adding further expansion sites over time. In the RV business, robust transient demand continues, and we also anticipate continued momentum and conversions of transient annual leases each year.
We expect to build on our successful track record of delivering and filling expansion sites. We have an inventory of 7,500 expansion sites, portion of which we intend to strategically deliver each year targeting 10% to 14% unlevered IRRs. In addition, our external growth pipeline is robust across all three businesses with opportunities to continue to consolidate each industry as well as pursuing selective ground-up developments. We are pleased with our performance year-to-date, and we expect to continue delivering on our objectives.
Karen will now discuss our financial results in more detail. Karen?
Thanks, John. For the third quarter, Sun reported core FFO per share of $2.11, 31.9% above the prior year and $0.05 ahead of the top-end of our third quarter guidance range. Outperformance was achieved across annual and transient RV and marinas. During and subsequent to the quarter end, we acquired approximately $500 million of operating properties, bringing our year-to-date total to $1.1 billion, adding 38 properties, totaling nearly 12,000 sites. To support our operations and grow expectations, we have been active in enhancing our balance sheet and in capital markets activity, which provide the capacity and flexibility to pursue our ongoing growth pipeline.
Last quarter, we received investment grade ratings, which provides us with an additional attractive source of financing. Subsequent to the end of the third quarter, we issued $600 million of senior unsecured notes and our second bond offering of the year across seven and 10-year maturities. Additionally, we utilized our ATM program and completed the sale of 21.4 million of forward shares of common stock. We ended the second quarter with $4.7 billion of debt outstanding at a 3.3% weighted average rate and a weighted average maturity of 9.6 years.
As of September 30, we had $72 million of unrestricted cash on hand and a net debt to trailing 12-month recurring EBITDA ratio of 4.9x. We are raising our full-year 2021 core FFO guidance to a range of $6.44 to $6.50 per share, a $0.16 increase at the midpoint from our prior range. The increase includes our outperformance in the third quarter with the remainder due to contributions from recent acquisitions and increased expectations across each of our businesses.
We expect core FFO for the fourth quarter to be in the range of $1.24 to $1.30 per share. We are also increasing full-year same community NOI growth guidance to a range of 10.9% to 11.1%, up 70 basis points from the previous midpoint of guidance of 10.3%. The fourth quarter same community NOI growth guidance is 7.2% to 8%. 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 maybe included in research analyst estimates.
This completes our prepared remarks. We will now open the call for questions. Operator?
Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Nick Joseph with Citi. Please proceed with your question.
Thank you. I was hoping you could provide some more commentary around the marina performance versus underwriting, so for a full-year 2021, what's contemplated in updated guidance versus your initial expectations for Safe Harbor?
Overall, the marina portfolio has been outperforming our initial underwriting. Annual and transient boat slip and storage rents have been outperforming, service NOIs have been outperforming. I think there's a little offset for utility expenses and some payroll and incentive costs in the marina portfolio. But our guidance into the end of the year does include some amount of outperformance and certainly the impact of the acquisitions that the marina – that we've done in the marina portfolio.
Thanks. Can you quantify the outperformance?
I think we have broken out. Hey, I think John…
You might guys move closer to the microphone. It's very hard to hear you.
Yes, sure. We are having a little bit of audio difficulties on Sun's end today. So I apologize for those as we got started at the beginning of the meeting. Can you hear me okay now?
Yes, a little bit better. You must be on a boat at Safe Harbor.
I wish I could tell you I was floating up and down on the waves. But we are here in Southfield, Michigan, doing what we always do. I think we don't have it broken up out. You could follow up and discuss a little bit more with Karen. But the best thing that we can point to is that we're getting those strong third quarter results as compared to 2019 of 9.9% growth in CAGR and year-to-date 8.5%. And as Karen indicated, the demand for wet slips and dry slips similar to RV with boat sales increasing, especially the large boat sales year-over-year at the highest level from what I understand that they've been. Just more and more demand and at the end of this month, we'll mark the 12-month, one-year period of times since we closed on the transaction with Safe Harbor.
As we've indicated, it is outperforming our initial underwriting, but we're also very pleased that the acquisitions once put on the Safe Harbor operating platform have been outperforming or underwriting there as well. So we do experience in the marina side exactly what we're experiencing in MH and RV and have been for the last 20 plus years. Once put on a very professional best-in-class platform as they have at Safe Harbor, we are extracting greater returns than initially underwritten. So same kind of outperformance.
Thanks. And then what's your appetite for additional marina international expansion, and can you talk through the strategic rationale of any additional acquisitions there?
Yes. Nick, I think we've shared it on our calls before. We will be looking at a few points of international marina acquisitions. The benefit and in part a lot of what we're seeing with the outperformance relates to the strategic footprint and networking that the Safe Harbor management team has been able to design. I talked about it in my remarks. You can start in Maine today, even a little north of Maine being a Safe Harbor marina and travel all the way down to the Caribbean staying in the network.
Now what we'd like to do is be able to keep that network Trans-Atlantic, if you will, and we will look for a couple of points where our larger vessels in particular who had to one side of the ocean for half of the year, and the other side of the Atlantic for the other half of the year and stay in the Safe Harbor network. So nothing to share on that yet, but we are working diligently to find a couple of points at Trans-Atlantic.
Thank you.
Our next question comes from Keegan Carl with Berenberg. Please proceed with your question.
Hey, guys. Thanks for taking the questions. First, just a little bit more color on the same community RV NOI growth. I guess how much of it was a function of volume versus pricing? And then on the labor side of things, do you think your NOI was actually improved by the current labor shortage?
Yes. This is John. So in the quarter, we saw about a 15 – a little bit over 15% increase on the rate side and about 8% increase in occupancy. So that's kind of the splits for that. What was the second question? I'm sorry, I missed that.
Yes. On labor, so do you guys think it actually was a tailwind for NOI growth just given there's a current labor shortage and you probably have less people working than anticipated?
No. I mean, we just like everybody else, we had a little bit of shortage, particularly at the beginning of the season with our seasonal help that we have at the communities, but nothing much significant.
Okay.
I think one of the things that we discussed on our last call with regard to that, any savings we might have had from the shortage of people was really eroded by how we took up our wages at that level. And when you increase them to attract new personnel, you've also got to raise your existing personnel up to those new higher wages. And that was started to be incorporated first and second quarter and actually is in our guidance through the end of the year, and we expect to incorporated into 2022.
Got it. And then on marinas. Can you give us a little additional color on the reconfiguration of certain assets? What are the typical costs associated with this and how long does it take to transform? What goes into determining what specific locations are best for it? And as it's completed, how much revenue uplift do you anticipate on it removing smaller slips, adding larger ones?
Is that specifically to marinas or is that to all of our platforms?
Yes. Specifically to marinas.
It's Gary. And well, I don't have those specific numbers for you. I can share that we look to get low double-digit 12%, 13%, 14% returns on the capital invested for that type of repositioning. Average length of time to combine the docks and perhaps make them more efficient for the larger boats is approximately 12 months. That can be longer if permitting slows things down, certainly can be in the COVID environment. But it is a big part of the long-term plan just as it is in the MH and RV world will not only reconfigure MH and RV sites, but oftentimes if the zoning and entitlement is there, well it's great to ground just to the beginning and build the community up all over again. That's not the case with marinas, it's mostly just reconfiguring the slip sizes.
Great. Thanks for your time.
Our next question comes from Joshua Dennerlein with Bank of America. Please proceed with your question.
Yes. Good morning, everyone. Hope everyone's doing well. I saw that the number of rental homes over the quarter dropped, it seem to drop a fair bit. Was that driven by the asset sales you did or just higher conversions throughout the quarter?
Hi, Josh. You picked both of the reasons. So you're seeing the impact of the dispositions of those six properties. Within them, there was about 625 rental homes, and on a year-over-year basis, we converted about 200 more rental homes to owner-occupied, and so both of those things are impacting the rental program.
Okay. Awesome. And then curious on the marina front, any new initiatives on that side of the business for 2022. I know this year, you launched Regatta in August in Newport. Is there a possibility to kind of expand that to other markets? And then also I'd love to hear just an update on how that went.
Just missed the beginning of it with regard to marina new initiatives was – what was the beginning of the question?
Yes. Just curious on if there are any new initiatives on the marina front for 2022?
Yes. I think, I wouldn't reference any of them as new, I would say the continuation of just a very unique opportunity to roll up the best of the best. I mean, when you look at the quality of management and quality of the existing marinas, the focus is really membership and networks, so that we can keep all of the Safe Harbor members within the Safe Harbor network. So it's really about the geographic footprint. As I mentioned earlier, north to south, east to west. When we get into the inland lakes, the ability oftentimes to travel for one of the oceans from one of the inland lakes to the St. Lawrence Seaway things like that. So that network remains very, very important. The usage again – security is for Sun is opening up a lot of doors with regard to the longstanding relationships the Safe Harbor management team has with mom-and-pop owners for state planning and tax planning have not been able to sell even though they might like to. So I think that you'll continue to see a lot of the same, but we'll have the ability to be enormously selective and really acquire only the – what we refer to as the best of the best as we build out the platform going forward.
So we remain enormously excited about the opportunity here. Again, I touched on already, it's the same ability to be able to harness accelerated growth by acquiring a marina and putting it on the Safe Harbor platform, applying the management skills, the economies of scale, the technology. So a very, very exciting place. I'd also add what was really interesting to realize that even after almost $1 billion of acquisition since we've acquired Safe Harbor less than a year ago, percentage rental revenue today 18% to 19% is exactly where it was when we acquired the platform, and just indicates continued opportunity within the MH and RV platform as well. So we're one year out. We're really pleased of what we see.
Awesome. Thanks, Gary.
Our next question comes from Wes Golladay with Baird. Please proceed with your question.
Hey. Good morning, everyone. I just had a follow-up on the Safe Harbor and the marina acquisitions. At this point, how much of your targeted marina network do you have today?
It's great question, Wes. We also shared with the market when we acquired the Safe Harbor platform. We had a approach that said we would look to take percentage of rental revenues up to perhaps 24%, 25% of the entire portfolio. As I indicated, we're currently still at 18%, 19% with $1 billion of acquisitions. So we really have our bright opportunity. We've shared the cap rates being 200 to 300 basis points greater than MH and RV, in some cases more.
The great benefit of the network effect, the relationships from the founders, the builders and the patriarchs at Safe Harbor, the Brewer family is one we often refer to their networking effect. So we really do have a really bright future ahead of us with regard to potential acquisitions. So we really expect to be discipline. We're probably selectively acquiring above 20% of what's being reviewed, so really a lot of headroom to go moving forward.
Okay. And then I guess when we look at the footprint of Safe Harbor, it looks like the West Coast is where your lightest. Is that going to be a little bit harder to buildup?
I would suggest everything seems to be a little bit more expensive on the West Coast. So there's no doubt about that. But we carefully are focused on where the greatest growth out sales and slip demand is that will lead to the greatest value creation for our stakeholders. So we are working on the West Coast, but I would suggest very selectively, a lot more demand on the east side of the country right now than the west side.
Got it. And then if I can switch gears real quick to Campspot. Can you update us on how many third party sites are now affiliated with the application? And then what were bookings for the platform in the third quarter?
Yes. I can tell you, we've got – on the reservation side, we've got over a thousand folks that are using that system throughout the RV universe.
I don't think we have any more updated information at this time other than we're extraordinarily excited about what's taken place there. And the fact is that a new CEO has been put in place and we're really excited about the opportunity in front of us with Campspot.
Okay. Thanks everyone.
There's nothing like it out there in the RV world right now. So it's the first of its kind.
All right. Thanks.
Our next question is from John Pawlowski with Green Street. Please proceed with your question.
Thank you. John or Karen, could you provide a breakdown of the major expense line items that drove the 14% growth in the quarter, and just give us a sense for how long we should expect double-digit expense growth to continue?
Sure, John. I'll break it down between manufactured housing and RV. So MH expenses were higher notably in payroll, obviously due to the proactive wage increases that we discussed last quarter, the supply and repair expense. I believe the comparable period in 2020 was low. I don't think we’re up to full operations last quarter, so that growth would be higher. Finally, we had higher than expected real estate tax assessments. Florida TRIM notices came in and they – we had some significant assessment increases, Texas had some also. Although we're appealing a number of those assessments, the third quarter really reflects the cumulative nine months impact of those higher assessments. So that's MH.
RV variable expenses were up due to really the higher transient activity, things like supply and repair, vacation rental expense utilities that's really based on just the higher transient activity, and it also was impacted by the wage increase that we discussed. I think, as you think about what we are implying for fourth quarter, same community growth, I think you're looking at – with that 7.2% to 8% NOI growth, you're looking at revenues in the 7% to 7.8% in OpEx and maybe 6.7% to 7.5% range.
Okay. And just in terms of what's going on right now in the labor market and your proactive stance in increasing wages and then repair and maintenance. Can you just help us bracket reasonable best and worst case scenarios for expense growth over next year? Just help us understand what kind of inning we're in on the labor side and the repair and maintenance and the pressure on expense growth?
Yes. That is kind of tough one to put – we don't really have any – we don't have guidance out for next year. So it's tough to give you specifics on that. I would think that with the wage increase that we did put in place that proactive wage increase, you see something that was pretty standard for wage increases. I think that – if you just think about expenses overall and potential inflation impacts since we already did wages, we've got, let's say, we're in the process of renewing our property insurance right now. So we'll have a better idea on pricing, very near-term. We already talked about real estate taxes and how dependent they are on assessments and we hope successful appeals. So that leads the supply and repair expenses that have that potential inflationary pressure no different than any other company, any operating business. And supply and repairs are about 12% to 13% of our OpEx. So I think that's as much color as I can provide you on something for next year.
Okay. Understand. But the payroll, the increases to payroll costs are those largely done now or should we expect another batch of large increases next year?
Well, because we put them in, in the third and fourth quarter, we expected the whole impact to be about $16 million. And so we would have anticipated $8 million that would hit next year.
For the total year.
Okay. Last one for me. John, could you just provide some color on how you're approaching the rental rate settings for MH renewal increases that you'll be sending out these next few months?
Sure. As you know, John, we take a very long-term approach virtually with everything we do. It's our continued reinvestment into the communities, as well as the predictability of our rent increases is a big part of the reason why our residents live in our communities an average of 14 years. And as you probably know, this really saves on the cost of turnover, which is not much in any given year. But it's really sort of a balancing act, as I might have shared before.
And I think it's important to remember that rate increase is just one of the growth levers that we have. Certainly occupancy growth is a big piece. As we've seen over the years, it’s important to maintain resident equity in their homes and improve it to that actually helps our home pricing and margins at the same time and see growth there. We are keenly focused on the social responsibility side of things with the rent increase, as we've shared before, especially, hopefully the later stages of COVID. But really it’s about consistency across all of our stakeholders and the kind of performance that we've had over the last 20 years in our NOI has been very consistent.
And so I think last year we finished out at about a 3.4% weighted average increase that we had. And I think I said in my remarks that we're at 3.7% for this year. So we're seeing that expand a bit. But once again, I'm not really in a position to really guide to anything in 2022 at this time. But I think you can see sort of the trajectory of where it's moving.
Okay. That helps. Thank you very much.
Our next question is from Anthony Powell with Barclays. Please proceed with your question.
Hi, good morning. You mentioned that you're making good progress in converting transient RV sites to annual and that's helping you on the pricing side on the transient RV spaces. How do you balance pricing versus getting more new customers interested in RVing and what's the optimal mix between annual and transient sites in any given RV community?
Yes. Good question. I think the way that to answer your question is first off, is back to what we've seen in the RV portfolio overall. I mean, all the performance indicators continue supporting that transient RV and RV overall is stronger than ever. There's a lot to unpack with that, vacations continue to be drawn to the outdoors even as air travels opened up over the course of this year. We look at internally just kind of going through the numbers again, we saw over 30% growth in transient RV NOI in the quarter, 50.2% RV annual revenue growth and those 1,500 conversions over the last 12 months that you're referring to.
And one of the drivers is that has been – we've had over 143,000 new customers that stayed on Sun RV resort in the first three quarters of 2021. Our web-based traffic is up another 10% from historical high from last year. And a lot of increase in guests that are younger ages 18 to 24 and the 25 to 34 buckets. And then everything we're doing on social media with 1.4 million followers across the three major platforms that are out there.
And so from the balance perspective, it's really going to be determined based on the function of a resort. And even within a resort, it's going to be the function of how much revenue is being derived by a single site within the resort. Certainly, if we're getting, let's just say $20,000 of revenue annually on a site that would have, if we converted it to an annual and it's getting 15, that's not a conversion that we would do. But in sites that are having lower revenue, we are converting those sites first, and it's really sort of that optimal mix, but it's really on a per community per resort basis versus then looking at something sort of overarching across the portfolio.
Got it. And how do you replenish those loss transient sites once you convert them? Is there a way for you to do that?
Can you say that one more time?
Well, how do you replenish a transit site that converted, if you want to I guess continue to attract new customers into those sites – into the community. So if you convert one transit site into annual, do you then aim to, I guess, add a new transient site elsewhere in that community?
Yes. If it's possible, I mean, we look all over our portfolio and add expansions to our existing communities prevalent.
I don't think we look at it on a community-by-community basis, but more on a portfolio-wide basis. So two things happened. We look for transient opportunities in the acquisition pipeline where John and his team can convert as we've shared – when we do convert a transient to annual, the first year pickup in revenue is approximately 50% on that site. So acquisitions – team members will be guided when we want to focus on RV transient and when we want to shut it off from the acquisitions period of time. Right now, 1,500 sites for the first three quarters is the highest level of conversions that we've seen. So probably see us reduce naturally the amount of transient by the conversions. And then at that time, we would seek to acquire more property so we can have that conversion opportunity.
And then as John mentioned, the expansion, finding the ground adjacent or oftentimes being able to acquire RV communities that have expansion opportunity as we did this last quarter is what we'd focus on to replenish it.
Got it. Maybe one more for me. The home sales numbers have been very strong. Is this kind of a new run rate of home sales for you or can you grow further? And is there any kind of one-time bump in home sales given just all the increased demand due to COVID dislocation migration? Any color there would be great.
I think it's a run rate we can expect and maybe with a little bit more growth in front of it too. So I mean that's what we aim for each year. It's just some incremental pickup in terms of quant’s price and margin. And then really on the price and the margin side, it's really got a lot to do with all of it, frankly, is once again, it speaks to the high quality of the communities and the demand that's out there for affordable housing and that's what we offer. So I'd expect it to grow a little bit.
Yes. The only thing I'd add, Anthony, where we – one of the restrictors is vacancy. So we build expansion sites so that we can fill them up and sell homes. And then secondly, in our acquisition strategy, which we've shared over the last 15 plus years, being able to buy vacancy within an existing community is really very accretive for us. Four Leaf Portfolio that we closed on this quarter is a great example of that. We have the opportunity as a well capitalized and experienced manager to take the opportunity of those vacancies and accelerate the sales and the occupancy and enhance early growth in those properties. So those kinds of opportunities are really something we'd like to focus on.
And then I'd also just add, and properties that have a higher occupancy, we're seeing nice growth in our broker residents – resident resale transactions, and picking up sales to that vehicle as well.
Great. Thank you.
Our next question is from Michael Goldsmith with UBS. Please proceed with your question.
Good morning. Thanks a lot for taking my question. Acquisitions this quarter seem to be a little bit more tilted towards properties with development opportunities or land that can be developed. Is that a conscious effort or maybe a reflection of the returns you can get from development relative to matured properties?
Yes. Absolutely. I mean it’s – we like the combination of all of it. Acquiring operating assets are accretive that we can expand the yield on as well as ones like Gary was just talking about where those vacancy upside to pick up through occupancy gains. That is exactly in our wheelhouse and something that we've demonstrated for many years that we're very good at.
Do you think that becomes a bigger part of the growth algorithm going forward?
Yes.
That's helpful. And building off a prior question, as you have your conversations with communities for the upcoming year, you said – you kind of mentioned that rate growth had kind of accelerated from last year and it could look to pick up a little bit more. How does that breakout between all age communities and age restricted communities. And then separately, are these communities, are they asking for new or different amenities in a post COVID world?
Yes. I think, I mean, typically you're going to see – on average, you're going to see a higher increase in all age community than you do in age restricted community. As far as the addition of amenities as part of that process, that's something from a capital improvement standpoint. And again, the long-term perspective that we have is just a continual thing for us anyway. And it's not really a trade as much as – it's just what we do, okay, continue to keep the communities beautiful so that we can grow them with all the different levers that we have.
Got it. Thank you very much.
There are no further questions at this time. I would like to turn the floor back over to Gary Shiffman for closing remarks.
Well, I'll apologize for any audio difficulties today. We're certainly going to look into this new system we installed. We thank everybody for participating. This is a management team that is as excited as ever to be able to continue to grow the portfolio to meet the stakeholders’ expectations. And we look forward to reporting fourth quarter and year-end results. Thank you, everybody.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.