Why Sun Communities Stock Burned So Brightly Today

Key Points

• Investors liked what they saw about the REIT's second quarter.

• They were surely quite pleased about its raised FFO guidance.

• 10 stocks we like better than Sun Communities ›

Investors were very warm to Sun Communities (NYSE: SUI) on Thursday. After the veteran real estate investment trust (REIT) published an estimates-trouncing quarter following Wednesday's market close, they piled into the stock to boost it to an over 6% price gain on the day. This crushed the S&P 500 index, which fell to close marginally lower by 0.1%.

Sunny skies in the second quarter

For its second quarter, Sun Communities' revenue rose by almost 5% year over year to hit $623.5 million. Thanks to a more than $1.4 billion gain on the sale of its Safe Harbor Marinas superyacht and marina servicing business to an affiliate of financial services giant Blackstone, the REIT's net income was a bit above $1.3 billion ($10.02 per share) against the year-ago profit of $58 million.

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Image source: Getty Images.

Core, or non-GAAP (adjusted), funds from operations (FFO), considered a truer metric of a REIT's profitability, actually fell across that one-year stretch. In the second quarter it dipped to slightly under $232 million ($1.36 per share) versus the same period of 2024's $240 million.

Sun Communities said that, with the Safe Harbor sale, it is repositioning itself as a pure-play landlord of manufactured housing and recreational vehicle (RV) communities. This shift will be overseen by incoming CEO Charles Young, who was tapped to succeed the long-serving Gary Shiffman beginning this October.

Guidance adjustments

Sun Communities also raised its core guidance, which was surely a factor behind the very bullish investor reaction to the earnings release. Management now believes the line item will amount to $6.51 to $6.67 for the entirety of 2025, up from the previous guidance range of $6.43 to $6.63.

On the flip side, the company reduced its annual per-share earnings guidance, forecasting it will net a profit of $11.34 to $11.50. That's below the preceding range of $12.62 to $12.82.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Blackstone. The Motley Fool recommends Sun Communities. The Motley Fool has a disclosure policy.