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Sun Communities Inc (NYSE:SUI)
Q1 2020 Earnings Call
Apr 23, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

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 are 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 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 could cause actual results to differ materially from expectations include the effects of the COVID-19 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 revise 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 Karen Dearing, 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.

Gary A. Shiffman -- Chairman and Chief Executive Officer

Thank you operator. Good morning and thank you for joining us today as we discuss our first quarter results and provide an update on Sun's preparedness to navigate the COVID-19 pandemic. Since our fourth quarter call in mid-February, the environment has been dramatically challenged by a worldwide public health crisis. And before we begin, we wish to convey our sincere wishes for everyone's health and safety. We started the first quarter of 2020 ahead of expectations reporting FFO per share of a $1.22, $0.01 ahead of the high end of guidance. While everyone is focused in how the pandemic will affect our performance over the coming weeks and 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 million of unrestricted cash as of quarter end and a trailing net debt-to-EBITDA ratio of 5.6 times. We want to commend 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 part to stem the spread of coronavirus by adopting work from home practices at our main office and wherever possible at our communities. At our properties, we closed amenities where residents and guests gather and implemented recommended sanitation and hygiene protocols.

While prioritizing health and safety by adhering to social distancing parameters, we are striving to provide Sun's trademark customer service. 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 brought on by the pandemic. However, we can adjust certain controllable operating expenses, modify our capital deployment plans and manage our liquidity. On the expense side, Sun's Directors and Executive Officers have set the tone by electing to forego their compensation for at least the second quarter. 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 in 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 of costs associated with providing each furloughed team members uninterrupted healthcare benefits. We have implemented a rent forbearance program for residents financially impacted by the virus. We have elected to apply and to 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 at 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 it prudent to temporarily reduce or suspend certain capital spend on 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 in the industry in which we operate are 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 a great financial crisis in 2008, the underlying business model at Sun and the demand for affordable housing, which Sun provides resulted in significant growth in the five 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 at an average of two to three hours safely in their own vehicles without the need to get on a plane, stay in a hotel or congregate in 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. They meet daily to ensure that residents, guests and Sun team members are receiving compassion and unparalleled service during these times. A mandatory local shelter in place mandates and are literally writing the playbook on how to navigate this fluid situation. There is no precedence for what the world or 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 RV communities.

John and Karen will now provide additional operational and financial updates. John?Thank you, Gary. I'll start with a recap on the strong performance and metrics in the first quarter 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're tracking strongly ahead of expectations for the quarter and delivered excellent Same Community growth even after absorbing disruptions from the onset of Shelter in Place ordinances in mid to late March. Our total portfolio ended the first quarter 96.7% occupied, improving 30 basis points over last year and 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 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 affects of COVID-19 related social distancing orders in March. In the first quarter, we saw Same Community occupancy increase to 98.4% from 96.6% in the first quarter of 2019. Even as social distancing began to impact traffic at our properties, home sales were quite strong with sales of 763 homes of which 119 were new homes and 234 were rental home conversions. A core strength with Sun's operations team is the continual emphasis on refining our contingency planning and emergency preparedness in disaster recovery protocols, which 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 in assessing how best to balance compliance with health-related orders in the delivery of essential services to our residents and guests, which dictated 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 to 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 onsite offices remain available for essential services. We have also stepped up our communications and virtual servicing options for current and prospective residents. We have adopted a financial hardship program to provide forbearance under certain terms to residents impacted financially by the pandemic and temporarily suspend evictions, late fees and rental rate increases.

For residents to 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 $1.9 million for each of the two months and it includes resident own homes on sites and our Manufactured Housing rental units. Now, I'll provide some details related to the current core that will help frame our best estimate of financial expectation with regard to the actions just described and the impact of the pandemic. We are very pleased with April rent recollections. In our Manufactured 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 represent 45% of total applications compared to only 19% in April the prior year. Our technology platform has the capability to capture online applications and still prospective residents 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 guests has made significant investments in personalizing their sites by building decks, indoor, outdoor rooms and porches and installing landscaping, 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 Sun's Transient RV guests enjoy the convenience and safety of driving in their own vehicle to a vacation destination they're familiar with and comfortable at. Based on many years of operating experience and engagement with our Transient guests, we believe they're likely to return to our resorts once shelter in place and nonessential travel restrictions are lifted. Historically, over 50% of our Transient RV guests return to the same resort each year providing a predictable and steady income stream. 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 but 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 for May and 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, resorts that are not currently open and the fact Memorial Day weekend is included in this quarter, our best estimate for the second quarter includes a reduction of $10 million of Transient revenue from our original budget expectations. In addition to this forecasted reduction of 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 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 home ownership 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 second quarter as a result of the pandemic. Karen?

Karen J. Dearing -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

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-19 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 $0.01 ahead at the top end of our previously provided guidance range for the quarter. We ended the first quarter with approximately $380 million of unrestricted cash on hand after we completed a 15-year, $230 million term loan at a rate of 3% that closed at the end of March. The properties for this new financing had been encumbered by a $99.6 million 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 four term loans totaling approximately $20 million that were set to mature this year.

We have no material debt maturities until 2023. We ended the quarter with $3.9 billion in debt outstanding with a weighted average interest rate of 3.64% and a weighted average maturity of 10.6 years. Our net debt-to-trailing 12-month recurring EBITDA ratio at March 31st was 5.6 times. We also have flexibility on our balance sheet to support our business operations. As of March 31st, we had $223 million of capacity on our revolving line of credit and have the ability to increase the size of our facility by $350 million to $1.1 billion. 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 of $240 million 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 savings throughout the company through salary reductions and furloughing certain team members. We have reviewed our general and administrative cost line items and reduced expenses where possible. From the operations perspective, we continue to maintain our properties at the highest level, but 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 second quarter is between $15 million to $18 million.

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 second 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 we have the financial flexibility to ensure our ability to operate in this unprecedented time. Thank you for joining us today. This concludes our prepared remarks. We would like to open the call now for questions.

Questions and Answers:

Operator

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from John Kim with BMO Capital. Please proceed with your question.

John Kim -- BMO Capital Markets -- Analyst

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 could be opened by Memorial Day?

John B. McLaren -- President and Chief Operating Officer

Hey, John. Thanks for the question. Yeah, it's -- I mean that is going to be sort of aligned with the government mandates and as things start to lift along the way. I think we said in our prepared remarks we expect that to sort of start happening in May. And I think, one of the important things with that John is the fact that we often talk about our playbook, and the decades refining that playbook and all of 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 three phase plan associated with reopening that will align with those government mandates that you -- that all you really have to do is drop in the open day and it guides to prepare our team leading to opening all the way through to normal operation status. And 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. But again, that's going to be more along the lines of whatever the governmental authorities allow us to do.

John Kim -- BMO Capital Markets -- Analyst

Does the $50 million to $80 million range, is that just a wide range of outcomes for how many of those open by Memorial Day just given it's -- that's a crucial date for you?

Gary A. Shiffman -- Chairman and Chief Executive Officer

Yeah, it's Gary. I think that we want to be cautious. We have been in touch with the counties, cities and municipalities who have asked us to extend our openings from generally April 1st with the anticipation that they would be opening up in sometime in May. We haven't heard otherwise. So as of right now, we do expect to get them all opened in the month of May. But that's of course going to be dependent on any change that we hear from the municipalities.

John Kim -- BMO Capital Markets -- Analyst

Okay. So once the RVs are open, is there anything you're going to do on your end to limit capacity just to -- I guess limit human interaction?

John B. McLaren -- President and Chief Operating Officer

Well, one of the interesting things about an RV resort 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 stocked social distancing signage for all entry points that we have within our communities as well as you've seen those before in conferences where they put the stickers down on the floor 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 is utilize our online express check in capabilities which allows guests to check in and pay early allowing them for a touch [Indecipherable] process as well. So it's -- 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. And I also think that, Gary and I both agree that many people are going to want to get out of their houses.

John Kim -- BMO Capital Markets -- Analyst

Final question is just on the -- your ability and confidence on demand for RVs just given the amount of near-term cancellations that you've received so far?

Gary A. Shiffman -- Chairman and Chief Executive Officer

Yeah, I think we all sort of feel the same way. We can't brush aside or make light of the financial impact especially to Transient RV from the current pandemic but we really have to look through to the value of the fundamental business proposition and the platform itself, which is John sort of indicated, we're providing an affordable and cost effective vacation experience in what really is a safe, self-contained RV and we're doing it to all various demographics. So we would expect really on the other side of this unfortunate circumstance that people that are looking for 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 glamping experience, really should be in high demand.

Anecdotally, I've heard from at least a dozen people over the last two weeks or so looking to enquire on where to get an RV, of course, if we can get them a discount, if we can assist them. But as recent as 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 impact of social -- stay at home and travel bans are lifted.

John Kim -- BMO Capital Markets -- Analyst

Appreciate the color. Thank you.

Operator

Our next question comes from Nicholas Joseph with Citi. Please proceed with your question.

Nicholas Joseph -- Citi -- Analyst

Thanks. 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 and the age restricted MH portfolios and maybe within owned versus rental as well?

John B. McLaren -- President and Chief Operating Officer

Yeah. Nick this is John. I think the way I'd characterize is that with the April rent collections that the all age portfolio has showed its resilience. And I think it also benefits along with the rest of the portfolio 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. 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 age 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 is the component of the all age portfolio is a bit of a reminder that we've shared before that from a retiree standpoint, where you compare 55-plus versus all age, not every person who's 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 than 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 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 and the checks that are starting to arrive that I would hope that the experience for May rent collection would be similar to that of April.

Nicholas Joseph -- Citi -- Analyst

Thanks. And then anything on the rental program versus zoned in terms of different risk profiles going forward?

John B. McLaren -- President and Chief Operating Officer

No. I mean it's really -- it's pretty much -- it's about 50/50 as far as the utilization of the hardship program. So it was -- it's very similar in nature. I will tell you that an interesting thing that's happened during this terrible crisis has been that with the rental home program our applications in April are actually up versus where they were of April of last year.

Nicholas Joseph -- Citi -- Analyst

Thanks. And then just you mentioned the change to expansion and development spend. How does that impact the Australian JV or were those comments just for the U.S.?

John B. McLaren -- President and Chief Operating Officer

Well, speaking to the U.S., really I think one of the things on our expansion and 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're fortunate that we're always in a position thinking ahead and staying a year, year-and-a-half ahead of what the supply needs are for expansion sites. As we shared on other calls we had 2,100 sites built in '17 and 1,200 sites in '18, 1,200 in 2019. And so we've got a good supply of sites. So tapering it down for a bit really shouldn't have an impact.

Gary A. Shiffman -- Chairman and Chief Executive Officer

Yeah, and 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 versus 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, tendency for people who may be were going to move out of Sun's Communities to kind of postpone those moves and in the sort of opposite way in Australia they queue up what they refer to as their settlements in their home closings long in advance and that's dictated by a resident's home sale, primary home sale as they're 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 that as they sell their home they have a place to go. So if anything, there's been a little bit of an acceleration on those who have reservations and plan to move into the Ingenia community. So that's been a positive thing there.

Nicholas Joseph -- Citi -- Analyst

Thank you.

Operator

Our next question comes from Drew Babin with Baird. Please proceed with your question.

Drew Babin -- Robert W. Baird -- Analyst

Hey, good morning.

Gary A. Shiffman -- Chairman and Chief Executive Officer

Good morning, Drew.

Drew Babin -- Robert W. Baird -- Analyst

Quick question on just related to 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 be able to give a little more detail on kind of amenities 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?

John B. McLaren -- President and Chief Operating Officer

Yeah, I mean the -- sort of the natural sequence through with amenity openings is going to start with ones that are more social distancing promoting so we'll call it more 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 supply of infrared thermometers where we can check temperatures as our team comes in for the day and as well as when our guests check in, and those sorts of things and we're actually going to be providing wrist bands to everybody indicated they've been cleared. And again, just out of an abundance of caution that we do this in helping to build confidence for our guests coming back because they're excited to come back and they want to be there. And so, so that's sort of the sequencing of it. We've not to-date made any adjustments in terms of rate.

Drew Babin -- Robert W. Baird -- Analyst

Okay. 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 amid 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 kind of coming into the year, at 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?

John B. McLaren -- President and Chief Operating Officer

Yeah. 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 we 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 the 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 so, again it's going to line up more with -- without being able to tell 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 that we will remain engaged with those prospects and customers that when the time comes and we can sort of be at the pace we're used to being at then it's all really about the throughput that we do after that.

Drew Babin -- Robert W. Baird -- Analyst

Thanks John. And appreciate the transparency on the Transient reopening plans. It's very helpful. Thank you.

John B. McLaren -- President and Chief Operating Officer

Thank you.

Operator

Our next question comes from John Pawlowski with Green Street Advisors. Please proceed with your question.

John Pawlowski -- Green Street Advisors -- Analyst

Hey. Thanks for the time. Maybe just a clarification on the first question. It sounds like and correct me if I'm wrong, it sounds like the $10 million in Transient revenue impact assumes basically zero revenue comes in the door in April. And the vast majority of May revenue is still achievable. Is that fair?

Gary A. Shiffman -- Chairman and Chief Executive Officer

I would say it's somewhere in between there, yeah.

Karen J. Dearing -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

Yeah, it sort of ramps up to highest level in June obviously. But you're correct that there is a minimal amount of revenues expected in April and ramping up from then.

John Pawlowski -- Green Street Advisors -- Analyst

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 or is the cash collection 95% or is the cash collection actually 98%?

Gary A. Shiffman -- Chairman and Chief Executive Officer

98%.

John Pawlowski -- Green Street Advisors -- Analyst

Okay. Final one from me, so $15 million to $18 million of 2Q impact on NOI, $10 million of it coming from the Transient side. What kind of impact are you assuming on the MH portfolio in 2Q?

Karen J. Dearing -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

Okay. So John, we knew that providing that estimated impact -- impact to dollar amount was going to [Indecipherable] to be wanting some more details. We felt it was the right thing to do. And so we've done it. Our effort was to provide as much detail as we could. Therefore these are the things that we have included. Transient revenue reduction of $10 million, that makes up the majority of the range and the remaining $5 million to $8 million is split between home sales and brokerage, other and ancillary, annual revenues, and MH revenues. It's net of expense reductions.

John Pawlowski -- Green Street Advisors -- Analyst

Okay, understood. Are you assuming at this point that you see any diminution in occupancy on the MH portfolio?

Gary A. Shiffman -- Chairman and Chief Executive Officer

No.

John Pawlowski -- Green Street Advisors -- Analyst

All right. Sounds good. Thanks for the time.

Gary A. Shiffman -- Chairman and Chief Executive Officer

Thank you.

Operator

Our next question comes from Wes Golladay with RBC. Please proceed with your question.

Wes Golladay -- RBC Capital Markets -- Analyst

Hey. Good morning everyone. How was financing availability changing for home sales? Are you seeing any changes on that?

Gary A. Shiffman -- Chairman and Chief Executive Officer

No, I haven't.

John B. McLaren -- President and Chief Operating Officer

It hasn't been good before. It hasn't gotten any better. It hasn't gotten any worse.

Wes Golladay -- RBC Capital Markets -- Analyst

Fair enough. Will [Indecipherable] be doing any more on that -- on that front.

Gary A. Shiffman -- Chairman and Chief Executive Officer

I think that we actually have a subcommittee on our board of directors that is really focused on improving availability of home financing. They were on track to be able to work through probably the first Manufactured Housing loan securitization at the end of second quarter. I know John's worked very hard on it. Do we have any more color at this time?

John B. McLaren -- President and Chief Operating Officer

Not at this time. I'm just kind of.

Gary A. Shiffman -- Chairman and Chief Executive Officer

Yeah. So we will keep everybody posted but the home financing today is pretty much the same as it was two months ago.

Wes Golladay -- RBC Capital Markets -- Analyst

Got you. Okay, then looking at the CARES Act, the increased unemployment benefits that many of the tenants should receive, will you 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 expire in 2Q?

Gary A. Shiffman -- Chairman and Chief Executive Officer

Well that's -- it's a good question because that's precisely why we designed the program to include April and May because the thought process was with a 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, beginning the payments -- wire 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 that that will one, promote like I said earlier on this call, good May rent collections as well as put some things at ease for people as they're kind of putting things back together when the pandemic starts to hopefully taper down.

John B. McLaren -- President and Chief Operating Officer

The rent collections by quarter, does someone have those available, rent increases, renewals?

Karen J. Dearing -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

The, not the [Speech Overlap] I'm sorry what was the last part of your question Wes?

Wes Golladay -- RBC Capital Markets -- Analyst

Yeah. It was -- yeah, sorry, it was just the expirations like how many expired this quarter?

Karen J. Dearing -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

I don't have the detail of that number.

Wes Golladay -- RBC Capital Markets -- Analyst

No problem. And then maybe one last one. What is the typical booking window for Transient RV?

Gary A. Shiffman -- Chairman and Chief Executive Officer

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 or it could be the day of.

Wes Golladay -- RBC Capital Markets -- Analyst

Okay thanks a lot.

Operator

Our next question comes from Joshua Dennerlein with Bank of America. Please proceed with your question.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Hey guys. Thanks for the question. Maybe just a follow-up on the last question. For MH rent increases did 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?

Gary A. Shiffman -- Chairman and Chief Executive Officer

Yeah. So the increases that are already out there are about 50% that's what happens in the first quarter. And so those are those are already out Josh. And then we have put a hold on further rent increases until things start to open up or ease up a little bit. And so I think when you look at this sort of overall, it could 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.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Okay. And that's all related to MH communities, or is that also with the RV communities for annuals?

Gary A. Shiffman -- Chairman and Chief Executive Officer

It's both.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Both, OK.

Gary A. Shiffman -- Chairman and Chief Executive Officer

Yeah.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Okay. And then if the pandemic goes on for longer and maybe if things can't 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 RV side, maybe like reducing their rent for the year, anything on that front?

Gary A. Shiffman -- Chairman and Chief Executive Officer

Yeah, 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 like 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 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 are there 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 provide additional transparency to you and to the market. But we do think that we really did take a very good hard look at our best estimates and that's what we put forward with the concept of what we know now.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Great. Thank you guys.

John B. McLaren -- President and Chief Operating Officer

Thank you.

Gary A. Shiffman -- Chairman and Chief Executive Officer

Thank you.

Operator

Our next question comes from Todd Stender with Wells Fargo. Please proceed with your question.

Todd Stender -- Wells Fargo Securities -- Analyst

Hi everyone. I hope you're all well.

Gary A. Shiffman -- Chairman and Chief Executive Officer

Thanks and you too.

Todd Stender -- Wells Fargo Securities -- Analyst

Thanks. So back to the hardship program, you guys were talking about April and May. Tenants then pick up payments in July. What about June? How does -- it seems like it jumped over June but maybe not?

John B. McLaren -- President and Chief Operating Officer

Yeah, so sort of like Gary said just a minute ago. I mean I think that we launched the program even 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 and 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 fits with the various models that are out there. And to provide some space between when things hopefully start to slow down and when people have to start making payments back. And so I would say as far as June is concerned Todd I mean, something that we will closely monitor as things evolve or emerge as we need to.

Gary A. Shiffman -- Chairman and Chief Executive Officer

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. 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 easiest on the residents.

Todd Stender -- Wells Fargo Securities -- Analyst

All right. I get it. Thank you. So April and May will begin being paid back in July but June will be just your standard June payment.

Gary A. Shiffman -- Chairman and Chief Executive Officer

That's right.

Todd Stender -- Wells Fargo Securities -- Analyst

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 at, start looking at our G&A estimate going forward.

Gary A. Shiffman -- Chairman and Chief Executive Officer

We don't really have numbers and.

Karen J. Dearing -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

I can add them up really quickly, in my head. They're just -- they just came out on the proxy Todd. I think you can add them up and take a quarter of that.

Todd Stender -- Wells Fargo Securities -- Analyst

Okay. So it's one quarter's worth for now.

Karen J. Dearing -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

Yeah.

Gary A. Shiffman -- Chairman and Chief Executive Officer

Yes.

Todd Stender -- Wells Fargo Securities -- Analyst

Okay.

Gary A. Shiffman -- Chairman and Chief Executive Officer

We're very pleased proactively. Our board of directors reached out to us very early on in this situation and wanted to do whatever they could and obviously from a distance and strategically they've done some. But they continue to do some but they were able to contribute financially in this way.

Todd Stender -- Wells Fargo Securities -- Analyst

Okay. Finally just for Karen, your line of credit balance ramped but also so did your cash balance. Have you spilled out how much you've have tapped just kind of sit on cash to preserve liquidity right now?

Karen J. Dearing -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

I'm sorry, I missed the last part, Todd.

Todd Stender -- Wells Fargo Securities -- Analyst

Well, tapping your line, how much is that, are you just sitting on cash just to preserve liquidity right now?

Karen J. Dearing -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

Yeah, so, yeah, you're right. We had $380 million of unrestricted cash on hand. We just finished the $230 million financing. We drew about $200 million 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 that balance less distributions I think we did about $70 million, $75 million in distributions puts us in a good position to have the flexibility we need at this point in time.

Todd Stender -- Wells Fargo Securities -- Analyst

Got it. Thank you.

Operator

Our next question comes from Samir Khanal with Evercore. Please proceed with your question.

Samir Khanal -- Evercore ISI -- Analyst

Yeah, good afternoon, guys. I guess for Gary for you, do you have any early read as to what the impact has done to maybe underwriting for new deals or kind of unlevered IRRs, cap rates? I mean, you've acquired a lot in the last few years. 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.

Gary A. Shiffman -- Chairman and Chief Executive Officer

Hi, Samir. Excellent question. I would state the following that we have seen significant interest in three different areas. We're seeing several types of communities that until recent events were not likely to be for sale. So, that's been probably the biggest surprise. Properties that were or have been for sale but were not priced appropriately. We're getting a lot of inbound traffic and entering in dialog and discussions as to whether or not those are things we want to look at right now. And then properties that could have been acquired, but we didn't act on or we weren't proactive to getting to them, they are 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.

Samir Khanal -- Evercore ISI -- Analyst

Okay. All right. Thanks for that. Appreciate it.

Operator

Our next question comes from John Kim with BMO. Please proceed with the question.

John Kim -- BMO Capital Markets -- Analyst

Thanks. Just a follow-up on your suspension of rent increases in MH. What would be the catalyst or catalysts to return back to your projected escalations? Would there be macroeconomic factors or metrics tied specifically within your portfolio?

Gary A. Shiffman -- Chairman and Chief Executive Officer

Yeah. I think as we've talked about this, I think they are metrics specifically tied to our portfolio sitting in March along with the rest of the world. We had no idea how our residents or when our residents would be paying April rent. We've gotten through April rent really pleasantly pleased. We've now got to look at May assuming that we see continued strength with our residents and the desire to stay in the communities. We'll take it one 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 stuck by us and who want to continue sticking by us. So it's a fluid situation and just something John and the ops team will have to present to management here and making a full decision as we step forward really month-by-month. And the first thing we'd like to accomplish as we've shared with everybody is to get our Transient seasonal -- our Transient business back in our seasonal communities open. I think having that step behind us will be a positive thing in how we approach when or if we put in rental increases.

John Kim -- BMO Capital Markets -- Analyst

Alright, thank you.

Operator

Our next question comes from Nicholas Joseph with Citi. Please proceed with the question.

Nicholas Joseph -- Citi -- Analyst

Thanks. Just want to follow-up on I guess the Transient and seasonal revenues. Appreciate the color for the second quarter expectations. But just curious what those scope of revenue that's been received that could be potentially refunded if the properties open later than expected and if closures [Phonetic] remain longer than expected? Thanks.

Gary A. Shiffman -- Chairman and Chief Executive Officer

I don't think the concept of refunding has been anything that we are expecting and I think that if anything were to approach that magnitude or discussion.

John B. McLaren -- President and Chief Operating Officer

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 parked model or it's a tied down unit where they've done significant investment in their sites. And so similar to MH, it'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.

Gary A. Shiffman -- Chairman and Chief Executive Officer

So it's not something we've been actually contemplating at this time.

Nicholas Joseph -- Citi -- Analyst

Thanks.

Operator

At this time I would like to turn the call back to management for closing comment.

Gary A. Shiffman -- Chairman and Chief Executive Officer

I just want to wrap it up by thanking everybody for participating on this call. We've shared and firmly believe that Sun is well positioned to navigate the COVID-19 pandemic. We provide a highly desirable experience at 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 company will remain around to follow-up with any questions that you have. And we look forward to updating you in the near future. Thank you operator.

Operator

[Operator Closing Remarks]

Duration: 56 minutes

Call participants:

Gary A. Shiffman -- Chairman and Chief Executive Officer

Karen J. Dearing -- Executive Vice President, Chief Financial Officer, Treasurer and Secretary

John B. McLaren -- President and Chief Operating Officer

John Kim -- BMO Capital Markets -- Analyst

Nicholas Joseph -- Citi -- Analyst

Drew Babin -- Robert W. Baird -- Analyst

John Pawlowski -- Green Street Advisors -- Analyst

Wes Golladay -- RBC Capital Markets -- Analyst

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Todd Stender -- Wells Fargo Securities -- Analyst

Samir Khanal -- Evercore ISI -- Analyst

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