This Top-Performing Investment's Big Splash Is Paying Off via a $1.3 Billion Windfall Profit
Sun Communities (NYSE: SUI) made a big splash during the pandemic. The real estate investment trust (REIT) expanded its niche property focus into the marina sector by acquiring Safe Harbor Marinas for about $2.1 billion. That deal gave it an expandable platform in the highly fragmented marina sector. The REIT is now cashing in on this investment. It has agreed to sell Safe Harbor Marinas to affiliates of Blackstone infrastructure for a whopping $5.65 billion in cash. That sale will lock in a $1.3 billion windfall profit for shareholders. It will also streamline Sun's focus and significantly enhance its already solid balance sheet. Sun Communities has agreed to sell 100% of its interest in Safe Harbor Marinas to affiliates of Blackstone. The $5.65 billion all-cash price represents a 21 times multiple on the funds from operations (FFO) the business produced last year -- a strong valuation. The company expects the sale to generate $5.5 billion of pre-tax proceeds after transaction costs, which it intends to use to strengthen its already solid investment-grade balance sheet. The sale will initially lower the company's leverage ratio from about 6 times to between 2.5 times and 3 times at closing, further enhancing its solid investment-grade balance sheet (BBB/Baa3 bond ratings). Continue reading
Sun Communities (NYSE: SUI) made a big splash during the pandemic. The real estate investment trust (REIT) expanded its niche property focus into the marina sector by acquiring Safe Harbor Marinas for about $2.1 billion. That deal gave it an expandable platform in the highly fragmented marina sector.
The REIT is now cashing in on this investment. It has agreed to sell Safe Harbor Marinas to affiliates of Blackstone infrastructure for a whopping $5.65 billion in cash. That sale will lock in a $1.3 billion windfall profit for shareholders. It will also streamline Sun's focus and significantly enhance its already solid balance sheet.
Sun Communities has agreed to sell 100% of its interest in Safe Harbor Marinas to affiliates of Blackstone. The $5.65 billion all-cash price represents a 21 times multiple on the funds from operations (FFO) the business produced last year -- a strong valuation. The company expects the sale to generate $5.5 billion of pre-tax proceeds after transaction costs, which it intends to use to strengthen its already solid investment-grade balance sheet. The sale will initially lower the company's leverage ratio from about 6 times to between 2.5 times and 3 times at closing, further enhancing its solid investment-grade balance sheet (BBB/Baa3 bond ratings).
