Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Communities First Quarter 2020 Earnings Conference Call. At this time, management would like to inform you that certain statements made during this conference call, which Not historical facts may be deemed forward looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in the forward looking statements are based on reasonable assumptions, the company can provide no assurance that Its expectations will be achieved. Factors and risks that could cause actual results to differ materially from expectations include the effects of the COVID-nineteen pandemic and other details 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 of Chief Executive Officer John McLaurin, President and Chief Operating Officer and Karen Gearing, Chief Financial Officer. After their remarks, there will be an opportunity to ask questions. I'll now turn the call over to Gary Shiffman, Chairman and Chief Executive Officer.
Mr. Shiffman, you may begin.
Thank you, operator. Good morning and thank you for joining us today as we discuss our Q1 results and provide an update on Sun's preparedness to navigate the COVID-nineteen pandemic. Since our Q4 call in mid February, the environment has been dramatically challenged And before we begin, we wish to convey our sincere wishes for everyone's health and safety. We started the Q1 of 2020 ahead of expectations, Reporting FFO per share of $1.22 1 dollars ahead of the high end of guidance. While everyone is focused on how the pandemic will affect our performance Over the coming weeks months, it's important to note that we entered the year from a position of strength and because of the underlying fundamentals of Providing affordable housing and vacationing options, we expect to sustain a relative position of strength as we navigate through the pandemic.
We began 2020 with total portfolio occupancy of 96.7%, are well positioned from a balance sheet perspective With approximately $380,000,000 of unrestricted cash as of quarter end and a trailing net And recognize our team and acknowledge the incredible job they have done stepping up and responding during this challenging time. Our team acted swiftly to ensure that Sun was doing its best to stem the spread of coronavirus by adopting work from home At our main office and wherever possible at our communities. At our properties, we closed the menus where residents and guests gather And implemented recommended sanitation and hygiene protocols. While prioritizing health and safety by adhering to Given current shelter in place and social distancing orders, we do not know nor are we in control of the duration of the current changes in operating conditions However, we can adjust certain controllable operating expenses, modify our capital deployment plans and manage our liquidity. On the expense side, SUNS' directors and executive officers have set the tone by electing to forego their compensation The balance of our main office team members have also taken salary reductions and recognizing that we are all in this together.
Additionally, we have placed a number of our team members on furlough Due to the closing of our amenities and the temporary reduction of transactions, the company will continue to pay both its share and the team members' share Our cost associated with providing each Furlough team members uninterrupted healthcare benefits. We have implemented We have a forbearance program for residents financially impacted by the virus. We have elected to apply and Provide the necessary information related to their hardship in order to qualify for the program. Approximately 2.9% of our manufactured Housing residents, inclusive of our rental home program, have applied and been approved. Requests from our annual RV guests have been minimal.
In our manufactured housing portfolio, we have collected 98% of our rents as of April 22, Which is on par with last month and prior year. In our RV portfolio, Approximately 55%
of our RV sites are leased annual sites.
For annual RV rents currently due, Collections are 92% relative to the percent collected at the same time last year. Of the remaining 45% of RV sites, which are transient, we are experiencing an impact from the pandemic With delayed resort openings and canceled reservations, John will provide additional detail. Given limited visibility on the return to normal operating conditions and the duration of the current situation, We are suspending our 2020 financial and operating guidance. We have also determined that Poon to temporarily reduce or suspend Certainly, capital spend and expansions and ground up developments, and we continue to evaluate acquisitions with measured caution. John and Karen will provide further details on the unavoidable financial impact associated with the pandemic.
However, we believe that even in
the times of uncertainty or disruption, Sun's portfolio and the industry in which we operate I'm well suited to withstand the impacts of a recession. Sun provides a high quality affordable housing option That has historically demonstrated stability and resilience during a downturn and a stronger earlier bounce back To recovery as the macro economy improved. While different circumstances caused the great financial crisis in 2,008, The underlying business model at Sun and the demand for affordable housing, which Sun provides, resulted in significant growth In the 5 years after the GFC, we anticipate that our RV Resort business will demonstrate a similar pattern As it provides similar affordability in a market with proven strong demand and limited supply. Our RV resorts provide an affordable vacation option where guests can travel an average of 2 to 3 hours safely in their own vehicles without the need to get on a plane, stay in a hotel or condominium a public space. For now, the pandemic has galvanized our operations team to stay ahead of the situation and steer us in the right direction.
Unparalleled service during these times. We monitor local shelter in place mandates I are literally waiting the playbook on how to navigate this COVID situation. There is no precedent for what the world or the sun is experiencing. We've had to make some extremely difficult but necessary decisions to ensure that Sun continues to be the nation's premier Owner operator of Manufactured Housing and Harvey Communities. John and Karen will now provide additional operational
Thank you, Gary. I'll start with a recap on the strong performance and metrics in the Q1, After which, I'll provide specific details regarding the impact of the pandemic on operations, financials and the actions we've taken. As Gary mentioned, we are tracking strongly ahead of expectations for the quarter and delivered excellent same community growth Even after observing disruptions from the onset of shelter in place ordinances in mid to late March,
our total portfolio ended the
first quarter 96.7 percent occupied, improving 30 basis points over Last year, we added 300 revenue producing sites even as shelter in place restrictions were put into effect. Our same community NOI increased 6.7% year over year driven by a 5.2% increase in same community revenues And a 1.8% increase in same community expenses. Same community manufactured housing revenue growth was 6.2%, Annual RV revenues grew by 9.6% and transient RV revenues decreased by 6%
as we felt the first effects
of COVID-nineteen related social distancing orders in March. In the Q1, We saw same community occupancy increase to 98.4% from 96.6% in the Q1 of 2019. Even as social distancing began to impact traffic at our properties, home sales Extron was sold with 763 Homes, All of its 119 were new homes and 234 were rental home conversions. A core strength of Sun's operations team is the continual emphasis on refining our contingency planning and emergency preparedness and disaster recovery protocols, We are in place to rapidly deal with various out of the ordinary circumstances. By late February, The team began deploying recommended protocols throughout the portfolio and assessing how best to balance compliance with health related orders And the delivery of essential services to our residents and guests which dictate a number of changes in the field.
The steps we implemented are aimed to help ensure the safety of our residents, guests and team members, assist our residents who are facing extreme financial challenges And we support our local communities wherever we can. In terms of health and safety, we seamlessly implemented work From home for all positions that can be remote, we enhanced our cleaning protocols, closed public amenities and discontinued social gatherings. Our on-site options remain available for essential services. We have also stepped up our communications and virtual servicing options We have adopted a financial hardship program to provide forbearance under certain terms to residents impacted financially by For residents that qualify for the financial hardship program, rent will be deferred through May and be payable in 12 equal installments beginning in July 2020. We estimate the deferred rent equates to $1,900,000 for each of the 2 months and it includes resident owned homes on sites And our manufactured housing rental units.
Now I'll provide some details related to the current quarter We'll help frame our best estimate of financial expectations with regard to the actions just described and the impact of the pandemic. We are very pleased with April rent collections. In our manufacturing housing portfolio, as Gary indicated earlier, We have collected 98% of our April rent to date. While we are experiencing lower traffic at the communities as would be expected with shelter in place mandates, We are still seeing demand for move ins and actually expect fewer move outs during this time.
For the month of April,
While our total application count is down approximately 13% on a year over year basis, web applications are up 111% and represented 45% of total applications compared to only 19% in April the prior year. Our technology platform has the capability to capture online applications and steer prospective residents to use Sun's Web Services. Our platform also has the capabilities to provide remote virtual home showings and tours, allowing us to nimbly adapt in the face of this evolving landscape. Now we would like to provide some perspective on our RV portfolio. Our portfolio consists of over 26,000 annual sites and Approximately 22,000 transient sites.
The annual RV sites are located in resorts that are open year round as well as resorts that are open on a seasonal basis. The majority of our annual sites are either park models or sites where RVs are tied down and the guest has made significant investments We personalize in our sites by building decks, indoor outdoor rooms and porches and installing landscaping and hardscaping, Essentially making these very permanent in nature. These guests return year after year to what is typically their vacation home. On the transient side of our RV business, it has been our experience for more than 25 years that most of SUNS transient RV guests Enjoy the convenience and safety of driving in your own vehicle to a vacation destination they are familiar with and comfortable at. Based on many years of operating experience and engagement with our transient guests, we believe they are likely to return to our resorts When shelter in place and non essential travel restrictions are lifted.
Historically, over 50% of our Transit RV guests For the time being, however, we have received an increased number of reservation cancellations related to shelter in place directives. Additionally, we have 44 RV resorts that would have been open on or around April 1 that are being prohibited from opening by local authorities. As of now, we expect these resorts to open at various points in May as restrictions are lifted. Thus far from May June, guests are calling frequently inquiring about our opening date and taking a wait and see approach with regard to their planned vacations. Forecasting for what we know related to cancellations, bookings, results that are not currently open and in fact Memorial Day weekend is Our best estimate for the 2nd quarter includes a reduction of $10,000,000 of transient revenue From our original budget expectations, in addition to this Forecasted reduction in transient RV revenue just discussed.
Based on the current environment, there are a number of additional revenue sources that could be impacted temporarily. These include lower manufactured housing revenue due to rental increases being deferred and lower occupancy gains, Lower annual RV revenue related to fewer transient to annual site conversions and the associated rent pickup, Lower other and ancillary income due to various fees not being collected as a result of delayed resort openings And lower home sales and brokerage fees as a result of stay at home orders and travel restrictions. Despite the near term disruption to our operations, we are confident in the long term viability of our mission and business This model, which has stood the test of time throughout many of the most difficult economic times and downturns over the life of the industry. During those periods, this industry has been characterized by its steady predictable cash flow fueled by strong consumer demand for homeownership as well as the demand for affordable vacationing. I would now like to turn the call over to Karen to discuss our financial results, balance sheet and provide a summary of the potential impact to our Q2 as a result of the pandemic.
Karen?
Thank you, John. I will begin by reviewing our financial results followed by a discussion of our balance sheet As well as the estimated financial implications, the response to the COVID-nineteen pandemic has had on our business operations and of the actions we have taken to date. For the quarter ended March 31, 2020, we reported $1.22 per share in core funds from operations, A penny ahead of the top end of our previously provided guidance range for
the quarter.
We ended the Q1 with approximately $380,000,000 unrestricted cash on hand after we completed a 15 year $230,000,000 term loan at a rate of 3% That closed at the end of March. The properties for this new financing have been encumbered by a 99 point $6,000,000 term loan due to mature in 2021 with an interest rate of 5.84% That was paid off at the end of February. Additionally, we paid off 4 term loans totaling approximately $20,000,000 that were set to mature this year. We have no material debt maturities until 2023. We ended the quarter with $3,900,000,000 in debt outstanding With a weighted average interest rate of 3.64 percent and a weighted average maturity of 10.6 years, Our net debt to trailing 12 month recurring EBITDA ratio at March 31 was 5.6 times.
We also have flexibility on our balance sheet to support our business operations. As of March 31, we had $223,000,000 of capacity on our revolving line of credit and have the ability to increase the size of our facility by $350,000,000 to $1,100,000,000 Also, our significant unencumbered asset base comprised of 143 properties provides us with additional potential funding capacity. We took decisive measures to reduce our cash spend for the remainder of 2020. We have suspended non essential capital expenditures $240,000,000 including expansions, ground up developments, home purchases and other capital projects. From a corporate perspective, we've made compensation reductions at the Board and Executive Management level and implemented other compensation From the operations perspective, we continue to maintain our properties at the highest level, We may see a reduction in certain variable operating costs.
More broadly, when taking into consideration the disruptions to our business In both our manufactured housing and RV resort operations discussed earlier by John and including projected expense savings, The forecasted reduction to our original budget for the Q2 is between $15,000,000 to $18,000,000 As we said earlier, the pandemic is a fluid situation. As shelter in place and travel restrictions are lifted, We expect to see an improvement in our level of transient RV reservations and our 2nd quarter forecast. But for now, We've shared what we believe to be our best estimate based on the information we have today. In summary, We've taken a number of actions to support the company should the impact of the pandemic persist. We are confident that Thank you for joining us
Thank you. At this time, we will be conducting a question and answer session. One moment while we poll for our first question. Our first question comes from John Kim with BMO Capital. Please proceed with your question.
Thank you.
I was wondering, John, if you
could provide some more color on when you think the RV Campgrounds will be open as far as the 44 that are not open yet.
And how many of those 44 are going
to be opened by Memorial Day?
Hey, John. Thanks for the question. Yes, it's I mean, that is going to be sort of aligned with The government mandates and things start to lift along the way. I think we said in our prepared remarks, so we expect that to sort of Start happening in May. And I think one of the important things with that, John, is the fact We often talk about our playbook and the decades we're finding that playbook.
And all this Situation is just a different version of operating conditions pre, during, post natural disasters and hurricanes and things like that, that we deal with. And so As you might imagine, pretty much as soon as this all started to happen, we were preparing our plans for reopening at the same time. And through that, we've developed a 3 phase plan associated with reopening that will align with those government mandates that you All you really have to do is drop in the open date and it guides to prepare our team leading to opening all the way through normal operation status. So the plan itself includes proper sequencing of reopening the resorts and the amenities, starting with ones that provide better space for social distancing. So We're really looking forward to welcoming our guests back.
Again, that's going to be more along the lines of whatever the governmental authorities allow us to do.
All right. With the $50,000,000 to
$80,000,000 range, is that just A wide range of outcomes for how many of those open by Memorial Day, just given that's accretion day period?
That's good. I think that we want to be cautious. We have been in touch with the counties, cities and municipalities. We have asked us to extend our openings from generally April 1 with the anticipation They will be opening up in sometime in May. We haven't heard otherwise.
So As of right now, we do expect to get them all open within the month of May, but that's of course going to be dependent on any change that we hear from the municipalities.
Okay. So once the RVs are open, is there anything you're going to do on your end to limit capacity
The interesting things about Harvey Reserves as opposed to other hospitality options is there's sort of some of that built in spread Because everybody has their own site that they're on, which promotes all by itself social distancing, some of the things that we've done some examples of some things, John, that we've already Put into play to get ahead of that is we've actually already stopped social distancing signage for all entry points that we have within our communities As well as we've seen those before at conferences where they put the stickers down on the floors, and we can do that In the more highly trafficked areas to promote that as well. And I think one of the really key things that we're able to do They utilize our online express check-in capabilities, which allows guests to check-in and pay, really allowing them for a touchless arrival process as well. So there's a lot of that sort of thing that's happening. But I think by its very nature, an RV resort promotes a lot of social distancing right out of the gate. I also think that Gary and I both agree that many people are going to want to get out of their houses.
Final question is just on the your ability and confidence on demand for RVs, Just given the amount of near term cancellations that we've received so far.
I think we I'll sort of feel the same way. We can't brush aside or make light of the financial impact, especially the transient activity from the current pandemic. But We really have to look through to the value of the fundamental business proposition in the platform itself, which is John sort of indicated we're providing an affordable and cost effective vacation experience. And what really is a safe, Self contained IRV, and we're doing it to all various demographics. So we expect really on the other side of this unfortunate circumstance that People that are looking for a unique and desirable experience like RV offers to both individuals, retirees and families Spending time in our rustic camping resorts or one of our high end branding experience Really should be in high demand.
Anecdotally, I've heard from at least a dozen people over the last 2 weeks or so looking to inquire and where to get an RV, of course, if we can get them a discount, food from the system. Yesterday, one of our board members wanted to let me know that they bought an RV. They've actually left Michigan, and they are on their way first to Colorado, traveling out to California. So we really feel that the RV business could benefit Strongly from this unfortunate situation. And I think we'll see that rather rapidly when the
Appreciate the color. Thank you.
Our next question comes from Nicholas Joseph with Citi. Please proceed with your question.
Thanks. I appreciate the details on April MH collections, but I'm just curious as we go Forward over the next few months, if you expect any performance differential given different demand drivers between the All age in the age restricted MH portfolios and maybe within owned versus rental as well.
Yes. Mick, this is John. I think the way I'd characterize is that The April rent collections at the All Age portfolio has showed its resilience. And I think it also The rest of the portfolio is sort of the proactive nature of our culture. One of the things that we've said As a company for a decade or longer has been the best revenue producing site you can gain is the one you never lose.
And I think everybody knows that Our average residency in our communities is 14 years. And there's a value proposition. There's a reason why people want to be there. From a rent collection standpoint, in April, rent collections for all aged communities is on par with last month. I mean, and so I think that that really kind of shows coming right into this when there was a lot of Uncertainty coming into this pandemic that, that value proposition that people see is realized.
The other thing I'd add as a component of the All Age Portfolio is a bit of a reminder that we shared before that from a retiree standpoint, when you compare 55 plus First is all age. Not every person who is over 55 wants to live in a retirement community. So we have a healthy component of Residents within our all age communities that are retirees, and so those folks are going to be less impacted by things like job loss And others. And so I think looking out
looking into May, I
would add that I think that our hardship program did what it was designed to do, and that takes the pressure off as well. And I would like to think that some of the things that our government has done to help promote what people's needs are With the stimulus plan, the checks that are starting to arrive that I would hope that the experience from May 1 collection will be similar to that
Thanks. And then anything on the rental program versus owned in terms of different risk profiles going forward?
No, I mean, it's really it's pretty much it's about fifty-fifty as far as the utilization of the hardship program. So it was Yes, it's very similar in nature. I will tell you that an interesting thing that's happened during this terrible crisis has been With the rent to home program, our applications in April are actually up versus where they were in April of last year.
Thanks. And then just you mentioned the change to expansion and development spend. How does that impact The Australian JV over those comments just for the U. S?
Well, speaking to the Really, I think one of the things on our expansion development spend has been the fact that and I think we might have shared This before as well. I apologize if I'm repeating myself. But we are we're fortunate that we're always in a position thinking ahead and staying a year, 1.5 years ahead of what the For expansion sites, as we shared on other calls, we had 2,100 sites built in 'seventeen, 1200 sites in 'eighteen, 1200 in 2019. And so we've got a good supply of sites. So tinkering it down for a bit really shouldn't have an impact.
Yes. It's Gary. John's remarks did reflect what's taking place in the U. S. With regard to Ingenia and Australia, it's a little bit of a different business proposition.
They've been a little bit Less impacted. I'd like to think maybe that social distancing of the size of the country This is the population allows them a little bit more natural barrier to what we're experiencing here in the U. S. But Demand has remained strong. There has been, as John said, Tenancy for people who maybe were going to move out of Sun's communities to kind of postpone those moves.
And in the So the opposite way in Australia, they queue up what they refer to as their settlements or their own closings long in advance. And that's dictated by the Reverence home sale, primary home sale is the downsizing. They look to downsize to release equity to be used in their retirement. So it's very, very important to them to understand and know As they sell their home, they have a place to go. So if anything, there's been a little bit of an acceleration.
Those reservations are planned to move into the Ingenia community. So that's been a positive thing there.
Thank you.
Our next question comes from Drew Babin with Baird. Please proceed with your question.
Hey, good morning. Good morning, Drew. Quick question on just related
to the transient reopenings. I know a lot of the rent Premium that you're able to command associated with just upgraded amenities, things like that at the properties. Can you give a
little more detail on kind
of Menonies might be available upon the opening, which amenities may kind of lag and whether as far as there are bookings or any clarity, Is that affecting pricing at all?
Yes. I mean, so the natural sequence, Drew, with amenity openings is going to Start with ones that are more social distancing promoting. So we'll call it more of the outdoor type stuff that we have out there where there can be less contact. I think some of the things that we're doing in terms of signage, one of the things that we're also doing, we're starting to secure a supply of Infrared thermometers where we can check temperatures as our team comes in for the day and as well as when our guests And those sorts of things, and we're actually going to be providing wristbands. Everybody indicated that they've been cleared.
And Jen, just out of an abundance of caution We do this and helping to build confidence for our guests coming back because they're excited to come back and they want to be there. And So that's sort of the sequencing of it. We have not to date made any adjustments in terms of rate.
Okay. I appreciate the color there. And just one follow-up for me, just on the pace of expansions and development deliveries. I know you mentioned that online traffic is up. Obviously, on-site traffic has been down amidst all of this.
Is there any kind of update on the pacing of the delivery of revenue producing sites throughout this year, whether it's sites that were put in place Coming into the year, the end of last year or ones that you may be planning on adding later this year, any update there as
we model it out? Yes. As far as the expansion site deliveries, again, I don't think that there's a lot of impact from an availability or supply standpoint. I mean, it really is from an application standpoint, as I shared in the remarks, the apps are down only 13% thus far. We've got excellent web based connectivity to be able to continue to collect applications And as well as do virtual showings and that sort of thing.
And frankly, I've seen a lot of great creativity out of our teams out in the field.
And Again, it's going to
line up more with without being able to tell you exactly what's going to happen, it's all going to line up with Kind of as these things start to ease up a little bit, but in the end, we are still building a pipeline We will remain engaged with those prospects and customers that when the time comes and we can So be it the pace we're used to being at, then it's all really about the throughput that we do after that. Thanks, John, and appreciate the transparency on the transient reopening plans. It's very helpful. Thank you. Thank you.
Our next question comes from John Pawlowski with Green Street Advisors. Please proceed with your question.
Thanks for the time. Maybe just a clarification on the first question. So it sounds like and correct me if I'm wrong, it sounds like the $10,000,000 in transient revenue impact assumes basically 0 revenue coming in during April And the vast majority of May revenue is still achievable. Is that fair?
I would say that it's somewhere in between. Yes. We have to ramp up to
our highest double in June, obviously, but You're correct. There's a minimal amount of revenues expected in April And we have the luck from there.
Okay. And then the 98% collections on the MH side in April, Is that a cash or GAAP basis? So, roughly 3% of the rents are deferred, is the cash Collection $95,000,000 or is the cash collection actually $98,000,000
$98,000,000
Okay. Final one for me. So
$15,000,000 to $18,000,000 of 2Q impact on NOI, dollars 10,000,000 of it coming from the transient side. What kind of impact are you assuming on the MH
Okay. So John, we knew that providing that estimated impact, impacted dollar amount We're going to ask you we just be wanting some more details. We felt that was the right thing to do, And so we've done it. Our effort is to provide as much detail as we could. Therefore, these are the things that we have included, a Transient revenue reduction of $10,000,000 that makes up the majority of the range and the remaining $5,000,000 to $8,000,000 is split Between home sales and brokerage, other and ancillary, annual revenues and MH revenues, It's net of expense reductions.
Okay. Understood. Are you assuming at this Do you see any diminution in occupancy on the MH portfolio? No.
Great. Sounds good. Thanks for the time.
Yes. Thank you. Our next question comes from Wes Goluby with RBC, please proceed with your question.
Hey, good morning, everyone. How is financing availability changing for home sales?
I think that we actually have a subcommittee on our Board of Directors that is really focused on And improving availability of own financing, they were on track to be able to work through Probably the 1st manufacturer housing loan securitization at the End of Q2, I know John's work very hard on it. Do we have any more color
at this time? Not at this time, I'm just kind of Yes.
So we will keep everybody posted, but the home financing today is pretty much The same as it was 2 months ago.
Got you. Okay. Then looking at the CARES Act, the increased unemployment benefits that many of the tenants We need to extend that hardship program beyond May
and hold off on rent increases. And then a
quick addition to that one
is how many leases in MH expired in
Well, that's it's a good question because that's precisely why we designed the program to include April May because the thought process was The hardship program that it was going to be very difficult for people to go out and find jobs in April. And so we wanted to kind of wrap it over both of those months. And as we talked about in our prepared remarks, begin the payments, lighter payments starting over a 12 month period of time in July. So I think that provides a lot of support
for our residents
that my hope would be We want to promote, like I said earlier on this call, good May rent collections as well as put some things at ease for people Mr. Connor putting things back together when the pandemic starts to hopefully The
rent collections by quarter, but someone else goes around, our rent increases. Do you have the The exploration. I'm sorry,
what was the last part of your
question, Ron? Yes, it was yes, sorry, it's just the exploration, like how we expire This quarter?
I don't have the detail
of that number. No problem. And then Maybe
one last one. What is a typical booking window for transient RV? It's a pretty wide range. I mean, it can be Anywhere from a year in advance and a lot of people that are booking before they even leave the resort from the year before could be the day of. Okay.
Thanks a lot. Yes.
Our next question comes From Joshua Dennerstone with Bank of America. Please proceed with your question.
Hey, guys. Thanks for the question.
Jim, just a follow-up on the last question. For MH rent increases, do
those all go through on January 1 or are they staggered throughout the year? And if so, have you considered maybe not pushing through any rent increase for people this year?
Yes. So the increases
that are out there are about 50% is what happens in the Q1. And so those are already out, Josh. And then we have put a hold on further rent increases until things start to And so I think when you look at this sort of overall, it's going to have about maybe a 50 basis point impact on the guided rent increase for 2020. That's our best estimate at this point in time.
Okay. And that's all related to MH Communities or is that also with RV Communities for annuals? It's both. Both.
Okay. Yes.
Okay. And then if the pandemic goes on for longer and Maybe if things can start opening up in May on the RV side, has there been any thought given to how you would respond as far as like If people can't access their sites on the RV side, maybe like reducing their rent for the year, anything on
that front?
Yes. I think it's something that we talk about and something that we're just going to have to watch And continue to see what does take place just
Again, across the
country, but we have been conservative in our thought process through the quarter, Slowly ramping up as we indicated earlier. We have deferred rental increases for the time being. We have eliminated all the fees related to late charges, various Other fees that we often do collect and try to be there for our residents. As John said, our residents They are long term, and so it will just be a work in process. If things continue on, we're going to have to be able to I'll provide additional transparency to you and to the market.
But we do think that we really did take a very good hard look at Best estimates and that's what we put forward with the concept to let me know now.
Great. Thank you, guys.
Thank you. Thank you. Our next
question comes from Todd Stender with Wells Fargo. Please proceed with your question.
Hi, everyone. I hope you're all well.
Thanks. So
back to the hardship program, you guys are talking about April May, Tenants then pick up payments in July. What about June? How does it seems like they jumped over June, but maybe not?
Yes. So like what Gary said just a minute ago, I mean, I think that we launched The programming before April rent was due trying to think ahead of it. And so we are thinking about that. But the thought process was just to cover April, May, based on the data that we had at the time that's out there to try and set up the program so it sort of With the various models that are out there and to provide some space between when things hopefully start to slow down When people have to start making payments back. And so I would say as far as June is concerned, Todd, I mean, it's something that we will closely monitor As things evolve or emerge as we need to.
So if they were to start making their first Rental payment in June, we didn't want to burden them with the forbearance payback. So that's why we delayed it an additional 30 days. Right. And that's also why we took the route of 12 equal payments to extend it over the longest period of time to make it Easy as kind of resonance.
All right. I get it. Thank you. So April May will begin Being paid back in July, but June will be just your standard June payment.
That's right, everyone. Got it. Thank you.
Appreciate that. And then foregoing base compensation for the Board and executives, Do you have any numbers around this just for us to look and start looking at our G and A estimate going forward?
If I had, they just came out with a proxy tied. I think you can add them up and take a quarter of that.
Okay. So, it's 1 quarter's worth for now
Yes.
We were very pleased collectively. Our Board of Directors reached out To us, very early on in this situation and wanted to do whatever they could Obviously, from a distance and strategically, they've done some, but they continue to do some, but they were able to I'll contribute financially in this way.
Okay.
Finally, just for Karen, your line of credit Balance ramped, but also so did your cash balance. Have you spelled out how much you've tapped to just kind of sit on cash to Preserve liquidity right now?
I'm sorry, I missed the last part,
Tom. Well, tapping your line,
how much of that are
you just sitting on cash
Just to
preserve liquidity right now.
Yes. So, yes, you're right. We had $380,000,000 unrestricted cash on hand. We just finished the $230,000,000 financing. We drew about $200,000,000 additionally on our line, And we haven't drawn subsequent to quarter end.
We feel like that is enough to meet our near term needs. We did our distribution in April. So we think that balance less distributions, I think
we get about $70,000,000 $75,000,000 in distributions
I'll put this in a good position to have the flexibility we need at this point in time.
Got it. Thank you.
Our next question comes from Sameer Kumar with Evercore. Please proceed with your question.
Yes. Good afternoon, guys. I guess for Gary for you, do
you have any early reads as to what the impact has gone to maybe Underwriting for new deals are kind of unlevered IRs, cap rates, and you've acquired a lot over the last few years. And on the other side of this, Could you
see the opportunity to maybe pick up any assets? I just want to
kind of get your initial thoughts here.
That's an excellent question. I would state the following that we have seen significant interest In 3 different areas, we're seeing several types of communities that Until recent events, we're not likely to be for sale. So that's been probably the biggest surprise. Properties that We have been for sale, but we're not priced appropriately. We're getting a lot of inbound traffic and Dialogue and discussions as to whether or not the things we want to look at right now.
And then properties that could have been acquired, but we didn't act on We weren't proactive to getting to them, they're starting to surface. So I think the overall Response is that we are seeing kind of a turned up interest in acquisition offerings. And as I said in my earlier remarks, we're taking a very cautious approach to those acquisitions. But I think that for the time being, we're seeing a More realistic approach to how sellers might be thinking about their valuations.
Okay. Thanks for that. Appreciate it. Yes.
Our next Question comes from John Can with BMO. Please proceed with the question.
Thanks. Just a follow-up on your suspension of rent increases in MH, what would be Catalyst to return back to your projected escalations. Would they be macroeconomic factors or metrics tied specifically within your portfolio?
Yes. As we've talked about this, I think, there are metrics specifically tied to our portfolio. So in March, along with the rest of the world, we have no idea how our residents when our residents will be paying April rent. We've gotten through April rent really pleasantly pleased. We've now got a look at May, assuming that we see continued strength of our residents and the desire to stay in the communities, We'll take it 1 month at a time.
And I think it will be a combination of what we see In the macro world as well as how we feel about the quality of what We're offering against other opportunities and being compassionate to our residents who have stepped by us and we want to continue sticking by us. So it's a fluid situation and just something that John and the ops team will have to present to management here and making the full decision as we Steph, we're really month by month. And the first thing we got to accomplish as we shared with everybody As you get our transient seasonal our transient business back and our seasonal communities open, I think Having that step behind us will be a positive thing on how we approach when or if we put in net loan increases.
Great. Thank you. Our
next question comes from Nicholas Joseph with Citi. Please proceed with your question.
Thanks. Just want to follow-up on, I guess, the transient and seasonal revenues. I appreciate the color for the Q2 expectations, but Just curious what the scope of revenue that's been received that could be potentially refunded if The properties open later than expected. Their disclosures
remain longer than expected. Thanks.
I think the concept of refunding has been anything that
We are expecting
and I think that if anything, we're going to approach that magnitude or Discussion, I think
it's also, Nick, important to note that the vast majority of on the seasonal or the annual side in these seasonal resorts, Those sites remain occupied 12 months of the year, like we shared in the script where It's either a park model or it's a tied down unit where they've done significant investment in their sites. And so Similar to MH, there's a very significant investment that's been made by them. So I think that a lot of frankly, they expect to pay the rent.
So it's not something we've been actually contemplating at this time.
Thanks.
At this time, I would like to turn the call back to management for closing comments.
I just want to wrap it up by thanking everybody for participating on this call. We shared and firmly believe that Sun is well positioned to navigate the COVID-nineteen pandemic. We provide highly desirable Experience in our communities and our resorts and we continue to have access to capital and are dedicated to see this through. As always, Karen, John, myself and others in the country will remain around to I'll follow-up with any questions that you have, and we look forward to updating you in the near future. Thank you, operator.
Thank you. This does conclude today's teleconference. You may disconnect your lines at this time and have a good day.