News Release Details

Southfield, Michigan, Oct. 23, 2019 (GLOBE NEWSWIRE) --  Sun Communities, Inc. (NYSE: SUI) (the “Company”), a real estate investment trust (“REIT”) that owns and operates, or has an interest in, manufactured housing (“MH”) and recreational vehicle (“RV”) communities, today reported its third quarter results for 2019.

Financial Results for the Quarter and Nine Months Ended September 30, 2019

For the quarter ended September 30, 2019, total revenues increased $39.0 million, or 12.1 percent, to $362.4 million compared to $323.4 million for the same period in 2018. Net income attributable to common stockholders was $57.0 million, or $0.63 per diluted common share, for the quarter ended September 30, 2019, as compared to net income attributable to common stockholders of $46.1 million, or $0.56 per diluted common share, for the same period in 2018.

For the nine months ended September 30, 2019, total revenues increased $109.4 million, or 12.8 percent, to $962.2 million compared to $852.8 million for the same period in 2018. Net income attributable to common stockholders was $131.7 million, or $1.50 per diluted common share, for the nine months ended September 30, 2019, as compared to net income attributable to common stockholders of $96.5 million, or $1.19 per diluted common share, for the same period in 2018.

Non-GAAP Financial Measures and Portfolio Performance

• Core Funds from Operations (“Core FFO”)⁽¹⁾ for the quarter ended September 30, 2019, was $1.46 per diluted share and OP unit (“Share”) as compared to $1.35 in the prior year, an increase of 8.1 percent.
   
• Same Community⁽²⁾ Net Operating Income (“NOI”)⁽¹⁾ increased by 7.2 percent for the quarter ended September 30, 2019, as compared to the same period in 2018.
   
• Same Community⁽²⁾ Occupancy increased by 210 basis points to 98.3 percent, as compared to 96.2 percent at September 30, 2018.
   
• Revenue Producing Sites increased by 766 sites for the quarter ended September 30, 2019, bringing total portfolio occupancy to 96.7 percent.

Gary Shiffman, Chief Executive Officer of Sun Communities stated, “During the third quarter, we continued our consistent track record of delivering strong organic growth, as portfolio-wide occupancy gains along with tight cost controls contributed to 7.2 percent same community NOI growth. These results were further enhanced by the solid performance at our recent acquisitions. Despite a competitive acquisition environment, Sun has completed over $444.0 million of transactions year to date which will strengthen our growth over time.  We believe that our ability to address sellers’ needs for flexible exit and monetization strategies will continue to be a competitive advantage in our pursuit of accretive acquisitions.”

OPERATING HIGHLIGHTS

Portfolio Occupancy

Total portfolio occupancy was 96.7 percent at September 30, 2019, compared to 96.1 percent at September 30, 2018.

During the quarter ended September 30, 2019, revenue producing sites increased by 766 sites, as compared to 628 revenue producing sites gained during the third quarter of 2018, a 22.0 percent increase.

During the nine months ended September 30, 2019, revenue producing sites increased by 2,005 sites, as compared to an increase of 1,878 revenue producing sites during the nine months ended September 30, 2018, a 6.8 percent increase.

Same Community⁽²⁾ Results

For the 345 communities owned and operated by the Company since January 1, 2018, NOI⁽¹⁾ for the quarter ended September 30, 2019, increased 7.2 percent over the same period in 2018, as a result of a 6.1 percent increase in revenues, and 3.9 percent increase in operating expenses. Same Community occupancy⁽³⁾ increased to 98.3 percent at September 30, 2019 from 96.2 percent at September 30, 2018.

For the nine months ended September 30, 2019, NOI⁽¹⁾ increased 7.2 percent over the same period in 2018, as a result of a 6.2 percent increase in revenues, and a 3.9 percent increase in operating expenses.

Home Sales

During the quarter ended September 30, 2019, the Company sold 906 homes as compared to 971 homes sold during the same period in 2018.  New home sales volume increased 14.4 percent to 167 new home sales for the quarter ended September 30, 2019, as compared to 146 homes in the same period in 2018. Rental home sales, which are included in total home sales, were 317 in 2019, as compared to 316 sold during 2018.

During the nine months ended September 30, 2019, 2,631 homes were sold compared to 2,751 for the same period in 2018. New home sales volume increased 11.7 percent to 431 new home sales for the nine months ended September 30, 2019, as compared to 386 homes during the same period in 2018.  Rental home sales, which are included in total home sales, were 859 in 2019, an increase of 4.1 percent over the 825 sold during 2018.

PORTFOLIO ACTIVITY

Acquisitions

During the quarter ended September 30, 2019, the Company acquired the following communities:

Community Name		Type		Sites				Expansion Sites			State		Total Purchase Price (in millions)				Month Acquired
Glen Ellis		RV		244				40			NH		$	6.0			September
Leisure Point Resort		MH / RV		502		(1)		—			DE		$	44.5			September
Chincoteague Island		RV		—				—			VA		$	19.5			August
Reunion Lake		RV		202				69			LA		$	23.5			July

⁽¹⁾ Contains 201 MH sites and 301 RV sites.

For the nine months ended September 30, 2019, the Company acquired 14 communities, totaling 5,058 sites, for a total purchase price of $444.2 million.

Pending Transaction - Jensen Portfolio

On August 22, 2019, the Company entered into an agreement to acquire a 31-community manufactured housing portfolio (the “Jensen Portfolio”) for $343.6 million. The Jensen Portfolio has 5,230 operating sites and 466 additional sites available for development. The 31 communities are located in eight states across the eastern United States.  The purchase price will be paid through a combination of $274.8 million shares of common stock and cash consideration. We expect to acquire the Jensen Portfolio no later than October 31, 2019. However, the closing is subject to the satisfaction of customary closing conditions, including obtaining certain third party consents. If these conditions are not satisfied or waived, or if the merger agreement is otherwise terminated in accordance with its terms, then the acquisition will not be consummated.

Construction Activity

During the quarter ended September 30, 2019, the Company completed the construction of 485 sites at the following ground-up developments:

Community Name		Type		State		Completed Construction Sites			Remaining Construction Sites (1)
Carolina Pines		RV		SC		105			460
Jellystone Golden Valley		RV		NC		113			202
River Run Ranch		RV		CO		215			929
Smith Creek Crossing		MH		CO		52			258

⁽¹⁾ Remaining sites are approximate and may be adjusted as final construction is completed.

During the quarter ended September 30, 2019, the Company completed the construction of 177 expansion sites in three communities. Year to date, the Company has completed the construction of 365 expansion sites in 10 communities. The Company expects to complete the construction of an additional 800 to 1,000 expansion sites by year end.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Series A-4 Preferred Stock and Series A-4 Preferred OP Units Conversion

The Company intends to convert 1,051,501 shares of Series A-4 preferred stock and 405,656 Series A-4 preferred OP units issued by the Operating Partnership into its common stock and common OP units. Each share of Series A-4 preferred stock is convertible into approximately 0.4444 shares of common stock and each Series A-4 preferred OP unit is convertible into approximately 0.4444 common OP units. The Company has the right under its charter and the Operating Partnership’s partnership agreement to convert these securities, if at any time after November 26, 2019, the volume weighted average of the daily volume weighted average price of a share of its common stock on the New York Stock Exchange is equal to or greater than $64.97 for at least 20 trading days in a period of 30 consecutive trading days (the “Pricing Target”). On October 17, 2019, the Company’s Board of Directors approved the conversion of all of the Series A-4 preferred stock and Series A-4 preferred OP units into common stock and common OP units, respectively, provided that the Pricing Target is satisfied on November 27, 2019. If the Pricing target is satisfied, the conversion is expected to occur on December 13, 2019.

Debt Transactions

As of September 30, 2019, the Company had $3.3 billion of debt outstanding. The weighted average interest rate was 4.3 percent and the weighted average maturity was 9.8 years. The Company had $26.2 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month Recurring EBITDA⁽¹⁾ ratio was 5.3 times.

During the quarter ended September 30, 2019, the Company completed a $250.0 million ten-year term loan transaction which carries an interest rate of 2.925 percent.  Concurrently, the Company repaid a $134.0 million term loan which was due to mature in May 2023.

GUIDANCE 2019

The Company is revising its 2019 guidance for the following metrics:

		Previous Range  FY 2019E		Revised Range FY 2019E		4Q 2019E
Net Income per fully diluted share		$1.81 - $1.87		$1.77 - $1.81		$0.28 - $0.32
Core FFO (1) per fully diluted share		$4.84 - $4.90		$4.86 - $4.90		$1.04 - $1.08

Same Community⁽²⁾ Portfolio
Number of communities: 345

	2019E Change %
Income from real property	6.0% - 6.2%
Total property operating expenses	4.1% - 4.5%
Net operating income (1)	6.8% - 7.2%

Guidance estimates include the 31-community Jensen Portfolio acquisition, which is expected to close by October 31, 2019, and exclude any other prospective acquisitions and capital markets activity.

Core FFO⁽¹⁾ per Share estimates assume certain gain and loss items that management considers unrelated to the operational and financial performance of our core business will be adjusted from FFO⁽¹⁾. The estimates and assumptions presented above represent a range of possible outcomes and may differ materially from actual results. The estimates and assumptions are forward looking based on the Company’s current assessment of economic and market conditions, as well as other risks outlined below under the caption “Forward-Looking Statements.”

EARNINGS CONFERENCE CALL

A conference call to discuss third quarter operating results will be held on Thursday, October 24, 2019 at 11:00 A.M. (ET). To participate, call toll-free 877-407-9039. Callers outside the U.S. or Canada can access the call at 201-689-8470. A replay will be available following the call through November 7, 2019 and can be accessed toll-free by calling 844-512-2921 or 412-317-6671. The Conference ID number for the call and the replay is 13694212. The conference call will be available live on Sun Communities’ website located at www.suncommunities.com. The replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of September 30, 2019, owned, operated, or had an interest in a portfolio of 389 communities comprising over 134,000 developed sites in 32 states and Ontario, Canada.

For more information about Sun Communities, Inc., please visit www.suncommunities.com.

CONTACT

Please address all inquiries to our investor relations department at our website www.suncommunities.com, by phone to (248) 208-2500, by email to investorrelations@suncommunities.com or by mail to Sun Communities, Inc. Attn: Investor Relations, 27777 Franklin Road, Ste. 200, Southfield, MI 48034.

Forward-Looking Statements

This press release contains various “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the Company intends that such forward-looking statements will be subject to the safe harbors created thereby. Forward-looking statements can be identified by words such as “will,” “may,” “could,” “expect,” “anticipate,” “believes,” “intends,” “should,” “plans,” “estimates,” “approximate,” “guidance,” and similar expressions in this press release that predict or indicate future events and trends and that do not report historical matters.

These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, some of which are beyond the Company’s control. These risks, uncertainties, and other factors may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, the performance of recent acquisitions, the ability to integrate future acquisitions smoothly and efficiently, changes in market rates of interest, changes in foreign currency exchange rates, the ability of manufactured home buyers to obtain financing and the level of repossessions by manufactured home lenders. Further details of potential risks that may affect the Company are described in its periodic reports filed with the U.S. Securities and Exchange Commission, including in the “Risk Factors” section of the Company’s Annual Report on Form 10-K.

The forward-looking statements contained in this press release speak only as of the date hereof and the Company expressly disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in the Company’s assumptions, expectations of future events, or trends.

Investor Information                                                            

RESEARCH COVERAGE
Firm		Analyst		Phone		Email
Bank of America Merrill Lynch		Joshua Dennerlein		(646) 855-1681		joshua.dennerlein@baml.com
BMO Capital Markets		John Kim		(212) 885-4115		johnp.kim@bmo.com
Citi Research		Michael Bilerman		(212) 816-1383		michael.bilerman@citi.com
		Nicholas Joseph		(212) 816-1909		nicholas.joseph@citi.com
Evercore ISI		Steve Sakwa		(212) 446-9462		steve.sakwa@evercoreisi.com
		Samir Khanal		(212) 888-3796		samir.khanal@evercoreisi.com
Green Street Advisors		John Pawlowski		(949) 640-8780		jpawlowski@greenstreetadvisors.com
RBC Capital Markets		Wes Golladay		(440) 715-2650		wes.golladay@rbccm.com
Robert W. Baird & Co.		Drew Babin		(610) 238-6634		dbabin@rwbaird.com
Wells Fargo		Todd Stender		(562) 637-1371		todd.stender@wellsfargo.com
INQUIRIES
Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media, or any prospective investor. Please address all inquiries to our Investor Relations department.
At Our Website		www.suncommunities.com
By Email		investorrelations@suncommunities.com
By Phone		(248) 208-2500

Portfolio Overview                                                                           
(As of September 30, 2019)

Balance Sheets                                                                                                                                              
(amounts in thousands)

		(Unaudited)
		September 30, 2019				December 31, 2018
Assets
Land		$	1,311,103			$	1,201,945
Land improvements and buildings		6,200,895				5,586,250
Rental homes and improvements		614,002				571,661
Furniture, fixtures and equipment		251,363				201,090
Investment property		8,377,363				7,560,946
Accumulated depreciation		(1,619,924		)		(1,442,630		)
Investment property, net		6,757,439				6,118,316
Cash and cash equivalents		26,198				50,311
Marketable securities		64,818				49,037
Inventory of manufactured homes		55,234				49,199
Notes and other receivables, net		174,934				160,077
Collateralized receivables, net (4)		93,054				106,924
Other assets, net		226,177				176,162
Total Assets		$	7,397,854			$	6,710,026
Liabilities
Mortgage loans payable		$	2,967,128			$	2,815,957
Secured borrowings on collateralized receivables (4)		93,669				107,731
Preferred Equity - Sun NG Resorts - mandatorily redeemable		35,249				35,277
Preferred OP units - mandatorily redeemable		34,663				37,338
Lines of credit (5)		140,632				128,000
Distributions payable		69,726				63,249
Advanced reservation deposits and rent		137,797				133,698
Other liabilities		242,119				157,862
Total Liabilities		3,720,983				3,479,112
Commitments and contingencies
Series A-4 preferred stock		31,402				31,739
Series A-4 preferred OP units		9,540				9,877
Series D preferred OP units		51,248				—
Equity Interests - NG Sun LLC and NG Whitewater		27,461				21,976
Stockholders' Equity
Common stock		907				864
Additional paid-in capital		4,854,958				4,398,949
Accumulated other comprehensive loss		(2,825		)		(4,504		)
Distributions in excess of accumulated earnings		(1,353,214		)		(1,288,486		)
Total Sun Communities, Inc. stockholders' equity		3,499,826				3,106,823
Noncontrolling interests
Common and preferred OP units		49,540				53,354
Consolidated variable interest entities		7,854				7,145
Total noncontrolling interests		57,394				60,499
Total Stockholders' Equity		3,557,220				3,167,322
Total Liabilities, Temporary Equity and Stockholders' Equity		$	7,397,854			$	6,710,026

Statements of Operations - Quarter to Date and Year to Date Comparison
(amounts in thousands, except per share amounts) (Unaudited)

	Three Months Ended															Nine Months Ended
	September 30, 2019				September 30, 2018				Change				% Change			September 30, 2019				September 30, 2018				Change				% Change
Revenues
Income from real property (excluding transient revenue)	$	202,205			$	184,414			$	17,791			9.6	%		$	588,272			$	536,704			$	51,568			9.6	%
Transient revenue	54,218				45,193				9,025				20.0	%		111,029				88,784				22,245				25.1	%
Revenue from home sales	49,805				46,131				3,674				8.0	%		136,665				122,248				14,417				11.8	%
Rental home revenue	14,444				13,589				855				6.3	%		42,827				39,957				2,870				7.2	%
Ancillary revenue	31,999				27,608				4,391				15.9	%		57,746				46,207				11,539				25.0	%
Interest income	4,770				5,256				(486		)		(9.2	)%		14,489				15,849				(1,360		)		(8.6	)%
Brokerage commissions and other revenues, net	5,002				1,222				3,780				309.3	%		11,190				3,073				8,117				264.1	%
Total Revenues	362,443				323,413				39,030				12.1	%		962,218				852,822				109,396				12.8	%
Expenses
Property operating and maintenance	79,095				71,656				7,439				10.4	%		202,892				181,977				20,915				11.5	%
Real estate taxes	15,399				14,533				866				6.0	%		46,455				42,445				4,010				9.4	%
Cost of home sales	36,318				33,692				2,626				7.8	%		100,030				91,195				8,835				9.7	%
Rental home operating and maintenance	6,008				6,236				(228		)		(3.7	)%		15,887				16,778				(891		)		(5.3	)%
Ancillary expenses	18,707				15,361				3,346				21.8	%		38,288				28,985				9,303				32.1	%
Home selling expenses	3,988				4,043				(55		)		(1.4	)%		10,938				11,319				(381		)		(3.4	)%
General and administrative expenses	22,975				19,763				3,212				16.3	%		68,559				60,972				7,587				12.4	%
Catastrophic weather related charges, net	341				173				168				97.1	%		1,302				(1,987		)		3,289				(165.5	)%
Depreciation and amortization	76,532				71,982				4,550				6.3	%		229,241				206,192				23,049				11.2	%
Loss on extinguishment of debt	12,755				528				12,227				2,315.7	%		13,478				1,255				12,223				973.9	%
Interest expense	32,219				33,932				(1,713		)		(5.0	)%		99,894				98,321				1,573				1.6	%
Interest on mandatorily redeemable preferred OP units / equity	1,216				1,142				74				6.5	%		3,491				2,551				940				36.8	%
Total Expenses	305,553				273,041				32,512				11.9	%		830,455				740,003				90,452				12.2	%
Income Before Other Items	56,890				50,372				6,518				12.9	%		131,763				112,819				18,944				16.8	%
Remeasurement of marketable securities	12,661				—				12,661				N/A			16,548				—				16,548				N/A
Other income / (expense), net (6)	(4,408		)		1,231				(5,639		)		(458.1	)%		(1,489		)		(3,214		)		1,725				(53.7	)%
Income from nonconsolidated affiliates	77				126				(49		)		(38.9	)%		814				59				755				1,279.7	%
Current tax expense	(420		)		(213		)		(207		)		97.2	%		(906		)		(612		)		(294		)		48.0	%
Deferred tax benefit / (expense)	(349		)		199				(548		)		(275.4	)%		(36		)		434				(470		)		(108.3	)%
Net Income	64,451				51,715				12,736				24.6	%		146,694				109,486				37,208				34.0	%
Less: Preferred return to preferred OP units / equity	(1,599		)		(1,152		)		447				38.8	%		(4,640		)		(3,335		)		1,305				39.1	%
Less: Amounts attributable to noncontrolling interests	(5,422		)		(4,071		)		1,351				33.2	%		(9,048		)		(8,392		)		656				7.8	%
Net Income attributable to Sun Communities, Inc.	57,430				46,492				10,938				23.5	%		133,006				97,759				35,247				36.1	%
Less: Preferred stock distribution	(428		)		(432		)		(4		)		(0.9	)%		(1,288		)		(1,305		)		(17		)		(1.3	)%
Net Income attributable to Sun Communities, Inc. common stockholders	$	57,002			$	46,060			$	10,942			23.8	%		$	131,718			$	96,454			$	35,264			36.6	%
Weighted average common shares outstanding - basic	89,847				81,599				8,248				10.1	%		87,499				80,022				7,477				9.3	%
Weighted average common shares outstanding - diluted	90,332				82,081				8,251				10.1	%		87,931				80,024				7,907				9.9	%
Basic earnings per share	$	0.63			$	0.56			$	0.07			12.5	%		$	1.49			$	1.19			$	0.30			25.2	%
Diluted earnings per share	$	0.63			$	0.56			$	0.07			12.5	%		$	1.50			$	1.19			$	0.31			26.1	%

Outstanding Securities and Capitalization 
(amounts in thousands except for *)

Outstanding Securities - As of September 30, 2019
	Number of Units/Shares Outstanding		Conversion Rate*		If Converted		Issuance Price per unit*			Annual Distribution Rate*
Non-convertible securities
Common shares	90,683		N/A		N/A		N/A			$3.00^
Convertible securities
Series A-1 preferred OP units	316		2.4390		771		$	100		6.0	%
Series A-3 preferred OP units	40		1.8605		75		$	100		4.5	%
Series A-4 preferred OP units	406		0.4444		180		$	25		6.5	%
Series C preferred OP units	310		1.1100		345		$	100		4.5	%
Series D preferred OP units	489		0.8000		391		$	100		3.8	%
Common OP units	2,282		1.0000		2,282		N/A			Mirrors common shares distributions
Series A-4 preferred stock	1,052		0.4444		468		$	25		6.5	%
^ Annual distribution is based on the last quarterly distribution annualized.

Capitalization - As of September 30, 2019
Equity		Shares			Share Price*				Total
Common shares		90,683			$	148.45			$	13,461,891
Common OP units		2,282			$	148.45			338,763
Subtotal		92,965							$	13,800,654
Series A-1 preferred OP units		771			$	148.45			$	114,455
Series A-3 preferred OP units		75			$	148.45			11,134
Series A-4 preferred OP units		180			$	148.45			26,721
Series C preferred OP units		345			$	148.45			51,215
Series D preferred OP units		391			$	148.45			58,044
Total diluted shares outstanding		94,727							$	14,062,223
Debt
Mortgage loans payable									$	2,967,128
Secured borrowings on collateralized receivables (4)									93,669
Preferred Equity - Sun NG Resorts - mandatorily redeemable									35,249
Preferred OP units - mandatorily redeemable									34,663
Lines of credit (5)									140,632
Total debt									$	3,271,341
Preferred
Series A-4 preferred stock		1,052			$	25.00			$	26,300
Total Capitalization									$	17,359,864

Reconciliations to Non-GAAP Financial Measures

Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to FFO
(amounts in thousands except for per share data)

	Three Months Ended								Nine Months Ended
	September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
Net income attributable to Sun Communities, Inc. common stockholders	$	57,002			$	46,060			$	131,718			$	96,454
Adjustments
Depreciation and amortization	76,692				72,269				229,698				206,892
Remeasurement of marketable securities	(12,661		)		—				(16,548		)		—
Amounts attributable to noncontrolling interests	4,839				4,311				7,720				7,724
Preferred return to preferred OP units	530				549				1,594				1,654
Preferred distribution to Series A-4 preferred stock	428				432				1,288				1,305
Gain on disposition of assets, net	(7,334		)		(6,603		)		(21,083		)		(16,977		)
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)	$	119,496			$	117,018			$	334,387			$	297,052
Adjustments
Other acquisition related costs (8)	375				345				902				781
Loss on extinguishment of debt	12,755				528				13,478				1,255
Catastrophic weather related charges, net	363				173				1,339				(1,987		)
Loss of earnings - catastrophic weather related (9)	(377		)		325				—				975
Other (income) / expense (6)	4,408				(1,231		)		1,489				3,214
Ground lease intangible write-off	—				—				—				817
Deferred tax (benefit) / expense	349				(199		)		36				(434		)
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)	$	137,369			$	116,959			$	351,631			$	301,673
Weighted average common shares outstanding - basic	89,847				81,599				87,499				80,022
Add
Common stock issuable upon conversion of stock options	1				2				1				2
Restricted stock	484				480				431				633
Common OP units	2,284				2,731				2,498				2,735
Common stock issuable upon conversion of Series A-4 preferred stock	467				472				467				472
Common stock issuable upon conversion of Series A-3 preferred OP units	75				75				75				75
Common stock issuable upon conversion of Series A-1 preferred OP units	780				813				792				825
Common stock issuable upon conversion of Aspen preferred OP units	—				448				—				—
Weighted average common shares outstanding - fully diluted	93,938				86,620				91,763				84,764
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted	$	1.27			$	1.35			$	3.64			$	3.50
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted	$	1.46			$	1.35			$	3.83			$	3.56

Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to Recurring EBITDA
(amounts in thousands)

	Three Months Ended								Nine Months Ended
	September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
Net Income attributable to Sun Communities, Inc. common stockholders	$	57,002			$	46,060			$	131,718			$	96,454
Adjustments
Depreciation and amortization	76,532				71,982				229,241				206,192
Loss on extinguishment of debt	12,755				528				13,478				1,255
Interest expense	33,435				35,074				103,385				100,872
Current tax expense	420				213				906				612
Deferred tax (benefit) / expense	349				(199		)		36				(434		)
Income from nonconsolidated affiliates	(77		)		(126		)		(814		)		(59		)
Less: Gain on dispositions of assets, net	(7,334		)		(6,603		)		(21,083		)		(16,977		)
EBITDAre (1)	$	173,082			$	146,929			$	456,867			$	387,915
Adjustments
Catastrophic weather related charges, net	341				173				1,302				(1,987		)
Remeasurement of marketable securities	(12,661		)		—				(16,548		)		—
Other (income) / expense, net (6)	4,408				(1,231		)		1,489				3,214
Preferred return to preferred OP units / equity	1,599				1,152				4,640				3,335
Amounts attributable to noncontrolling interests	5,422				4,071				9,048				8,392
Preferred stock distribution	428				432				1,288				1,305
Plus: Gain on dispositions of assets, net	7,334				6,603				21,083				16,977
Recurring EBITDA (1)	$	179,953			$	158,129			$	479,169			$	419,151

Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to NOI
(amounts in thousands)

	Three Months Ended								Nine Months Ended
	September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
Net Income attributable to Sun Communities, Inc. common stockholders	$	57,002			$	46,060			$	131,718			$	96,454
Other revenues	(9,772		)		(6,478		)		(25,679		)		(18,922		)
Home selling expenses	3,988				4,043				10,938				11,319
General and administrative expenses	22,975				19,763				68,559				60,972
Catastrophic weather related charges, net	341				173				1,302				(1,987		)
Depreciation and amortization	76,532				71,982				229,241				206,192
Loss on extinguishment of debt	12,755				528				13,478				1,255
Interest expense	33,435				35,074				103,385				100,872
Remeasurement of marketable securities	(12,661		)		—				(16,548		)		—
Other (income) / expense, net (6)	4,408				(1,231		)		1,489				3,214
Income from nonconsolidated affiliates	(77		)		(126		)		(814		)		(59		)
Current tax expense	420				213				906				612
Deferred tax (benefit) / expense	349				(199		)		36				(434		)
Preferred return to preferred OP units / equity	1,599				1,152				4,640				3,335
Amounts attributable to noncontrolling interests	5,422				4,071				9,048				8,392
Preferred stock distribution	428				432				1,288				1,305
NOI (1) / Gross Profit	$	197,144			$	175,457			$	532,987			$	472,520

	Three Months Ended								Nine Months Ended
	September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
Real Property NOI (1)	$	161,929			$	143,418			$	449,954			$	401,066
Home Sales NOI (1) / Gross Profit	13,487				12,439				36,635				31,053
Rental Program NOI (1)	25,706				23,750				78,266				72,424
Ancillary NOI (1) / Gross Profit	13,292				12,247				19,458				17,222
Site rent from Rental Program (included in Real Property NOI) (1) (10)	(17,270		)		(16,397		)		(51,326		)		(49,245		)
NOI (1) / Gross Profit	$	197,144			$	175,457			$	532,987			$	472,520

Non-GAAP and Other Financial Measures

Financial and Operating Highlights                                                                                                           
(amounts in thousands, except for *)

	Quarter Ended
	9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Financial Information
Total revenues	$	362,443			$	312,445			$	287,330			$	274,004			$	323,538
Net income	$	64,451			$	45,116			$	37,127			$	10,672			$	51,715
Net Income attributable to Sun Communities Inc.	$	57,002			$	40,385			$	34,331			$	9,039			$	46,060
Basic earnings per share*	$	0.63			$	0.46			$	0.40			$	0.11			$	0.56
Diluted earnings per share*	$	0.63			$	0.46			$	0.40			$	0.11			$	0.56
Cash distributions declared per common share*	$	0.75			$	0.75			$	0.75			$	0.71			$	0.71
Recurring EBITDA (1)	$	179,953			$	151,502			$	147,714			$	133,335			$	158,129
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)	$	119,496			$	108,112			$	106,779			$	88,562			$	117,018
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)	$	137,369			$	108,002			$	106,259			$	92,695			$	116,959
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted*	$	1.27			$	1.18			$	1.19			$	0.98			$	1.35
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted*	$	1.46			$	1.18			$	1.18			$	1.03			$	1.35
Balance Sheet
Total assets	$	7,397,854			$	7,222,084			$	7,098,662			$	6,710,026			$	6,653,726
Total debt	$	3,271,341			$	3,107,775			$	3,448,117			$	3,124,303			$	3,004,929
Total liabilities	$	3,720,983			$	3,542,188			$	3,846,325			$	3,479,112			$	3,367,285

	Quarter Ended
	9/30/2019			6/30/2019			3/31/2019			12/31/2018			9/30/2018
Operating Information*
Communities	389			382			379			371			370
Manufactured home sites	88,024			87,555			87,425			84,428			84,033
Annual RV sites	25,756			25,009			24,750			24,535			24,109
Transient RV sites	20,882			20,585			20,173			19,491			19,432
Total sites	134,662			133,149			132,348			128,454			127,574
MH occupancy	95.7	%		95.7	%		95.4	%		95.0	%		94.9	%
RV occupancy	100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Total blended MH and RV occupancy	96.7	%		96.6	%		96.4	%		96.1	%		96.1	%
New home sales	167			139			125			140			146
Pre-owned home sales	739			788			673			738			825
Total home sales	906			927			798			878			971

	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019
Net Lease Sites (24)
MH net lease sites	296			1,104
RV net lease sites	470			901
Total net leased sites	766			2,005

Debt Analysis
(amounts in thousands)

	Quarter Ended
	9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Debt Outstanding
Mortgage loans payable	$	2,967,128			$	2,863,485			$	2,879,017			$	2,815,957			$	2,819,225
Secured borrowings on collateralized receivables (4)	93,669				98,299				102,676				107,731				113,089
Preferred Equity - Sun NG Resorts - mandatorily redeemable	35,249				35,249				35,249				35,277				35,277
Preferred OP units - mandatorily redeemable	34,663				34,663				34,663				37,338				37,338
Lines of credit (5)	140,632				76,079				396,512				128,000				—
Total debt	$	3,271,341			$	3,107,775			$	3,448,117			$	3,124,303			$	3,004,929
% Fixed / Floating
Fixed	95.7		%		97.6		%		88.5		%		95.9		%		100.0		%
Floating	4.3		%		2.4		%		11.5		%		4.1		%		—		%
Total	100.0		%		100.0		%		100.0		%		100.0		%		100.0		%
Weighted Average Interest Rates
Mortgage loans payable	4.13		%		4.24		%		4.24		%		4.22		%		4.23		%
Preferred Equity - Sun NG Resorts - mandatorily redeemable	6.00		%		6.00		%		6.00		%		6.00		%		6.00		%
Preferred OP units - mandatorily redeemable	6.50		%		6.50		%		6.50		%		6.61		%		6.61		%
Lines of credit (5)	3.23		%		3.34		%		3.73		%		3.77		%		—		%
Average before Secured borrowings (4)	4.14		%		4.27		%		4.22		%		4.25		%		4.28		%
Secured borrowings on collateralized receivables (4)	9.92		%		9.93		%		9.94		%		9.94		%		9.95		%
Total average	4.30		%		4.44		%		4.39		%		4.45		%		4.40		%
Debt Ratios
Net Debt / Recurring EBITDA (1) (TTM)	5.3				5.2				6.0				5.6				5.4
Net Debt / Enterprise Value	18.7		%		20.2		%		24.1		%		25.2		%		24.1		%
Net Debt / Gross Assets	36.0		%		35.1		%		39.8		%		37.7		%		35.9		%
Coverage Ratios
Recurring EBITDA (1) (TTM) / Interest	4.4				4.2				4.1				4.0				3.9
Recurring EBITDA (1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution	4.2				4.0				3.9				3.9				3.8

Maturities / Principal Amortization Next Five Years	Remaining 2019				2020				2021				2022				2023
Mortgage loans payable
Maturities	$	—			$	58,078			$	270,680			$	82,155			$	185,618
Principal amortization	14,185				56,702				55,804				53,726				52,693
Secured borrowings on collateralized receivables (4)	1,220				5,166				5,553				5,747				5,756
Preferred Equity - Sun NG Resorts - mandatorily redeemable	—				—				—				35,249				—
Lines of credit (5)	—				3,632				—				—				137,000
Total	$	15,405			$	123,578			$	332,037			$	176,877			$	381,067
Weighted average rate of maturities	—		%		5.92		%		5.53		%		4.46		%		4.08		%

Real Property Operations – Same Community⁽²⁾                                                     
(amounts in thousands except for Other Information)

	Three Months Ended															Nine Months Ended
	September 30, 2019				September 30, 2018				Change				% Change			September 30, 2019				September 30, 2018				Change				% Change
Financial Information
Income from real property(11)	$	214,452			$	202,133			$	12,319			6.1	%		$	609,841			$	574,491			$	35,350			6.2	%
Property operating expenses
Payroll and benefits	20,418				19,244				1,174				6.1	%		55,512				52,387				3,125				6.0	%
Legal, taxes, and insurance	2,589				2,600				(11		)		(0.4	)%		6,911				7,118				(207		)		(2.9	)%
Utilities (11)	17,382				16,958				424				2.5	%		45,060				44,746				314				0.7	%
Supplies and repair (12)	9,492				8,575				917				10.7	%		23,683				21,473				2,210				10.3	%
Other	5,670				6,013				(343		)		(5.7	)%		15,536				16,103				(567		)		(3.5	)%
Real estate taxes	14,607				14,110				497				3.5	%		44,093				41,772				2,321				5.6	%
Property operating expenses	70,158				67,500				2,658				3.9	%		190,795				183,599				7,196				3.9	%
Real Property NOI(1)	$	144,294			$	134,633			$	9,661			7.2	%		$	419,046			$	390,892			$	28,154			7.2	%

	As of
	September 30, 2019				September 30, 2018				Change				% Change
Other Information
Number of properties	345
MH occupancy (3)	97.8		%
RV occupancy (3)	100.0		%
MH & RV blended occupancy (3)	98.3		%		96.2		%		2.1		%
Monthly base rent per site - MH	$	573			$	551			$	22			4.2	%	(14)
Monthly base rent per site - RV (13)	$	475			$	448			$	27			6.1	%	(14)
Monthly base rent per site - Total (13)	$	551			$	527			$	24			4.5	%	(14)

Home Sales Summary           
(amounts in thousands except for *)

	Three Months Ended															Nine Months Ended
	September 30, 2019				September 30, 2018				Change				% Change			September 30, 2019				September 30, 2018				Change				% Change
Financial Information
New homes
New home sales	$	19,775			$	16,433			$	3,342			20.3	%		$	51,860			$	42,978			$	8,882			20.7	%
New home cost of sales	16,761				14,278				2,483				17.4	%		44,740				37,187				7,553				20.3	%
NOI / Gross Profit (1)  – new homes	3,014				2,155				859				39.9	%		7,120				5,791				1,329				22.9	%
Gross margin % – new homes	15.2		%		13.1		%		2.1		%					13.7		%		13.5		%		0.2		%
Average selling price – new homes*	$	118,413			$	112,555			$	5,858			5.2	%		$	120,325			$	111,342			$	8,983			8.1	%
Pre-owned homes
Pre-owned home sales	$	30,030			$	29,698			$	332			1.1	%		$	84,805			$	79,270			$	5,535			7.0	%
Pre-owned home cost of sales	19,557				19,414				143				0.7	%		55,290				54,008				1,282				2.4	%
NOI / Gross Profit (1) – pre-owned homes	10,473				10,284				189				1.8	%		29,515				25,262				4,253				16.8	%
Gross margin % – pre-owned homes	34.9		%		34.6		%		0.3		%					34.8		%		31.9		%		2.9		%
Average selling price – pre-owned homes*	$	40,636			$	35,998			$	4,638			12.9	%		$	38,548			$	33,518			$	5,030			15.0	%
Total home sales
Revenue from home sales	49,805				46,131				3,674				8.0	%		136,665				122,248				14,417				11.8	%
Cost of home sales	36,318				33,692				2,626				7.8	%		100,030				91,195				8,835				9.7	%
NOI / Gross Profit (1) – home sales	$	13,487			$	12,439			$	1,048			8.4	%		$	36,635			$	31,053			$	5,582			18.0	%
Statistical Information
New home sales volume*	167				146				21				14.4	%		431				386				45				11.7	%
Pre-owned home sales volume*	739				825				(86		)		(10.4	)%		2,200				2,365				(165		)		(7.0	)%
Total home sales volume *	906				971				(65		)		(6.7	)%		2,631				2,751				(120		)		(4.4	)%

               

Rental Program Summary    
(amounts in thousands except for *)

	Three Months Ended															Nine Months Ended
	September 30, 2019				September 30, 2018				Change				% Change			September 30, 2019				September 30, 2018				Change				% Change
Financial Information
Revenues
Rental home revenue	$	14,444			$	13,589			$	855			6.3	%		$	42,827			$	39,957			$	2,870			7.2	%
Site rent from Rental Program (1) (10)	17,270				16,397				873				5.3	%		51,326				49,245				2,081				4.2	%
Rental Program revenue	31,714				29,986				1,728				5.8	%		94,153				89,202				4,951				5.6	%
Expenses
Repairs and refurbishment	3,644				2,818				826				29.3	%		8,751				7,339				1,412				19.2	%
Taxes and insurance	1,940				1,593				347				21.8	%		5,631				4,708				923				19.6	%
Other	424				1,825				(1,401		)		(76.8	)%		1,505				4,731				(3,226		)		(68.2	)%
Rental Program operating and maintenance	6,008				6,236				(228		)		(3.7	)%		15,887				16,778				(891		)		(5.3	)%
Rental Program NOI (1)	$	25,706			$	23,750			$	1,956			8.2	%		$	78,266			$	72,424			$	5,842			8.1	%
Other Information
Number of sold rental homes*	317				316				1				0.3	%		859				825				34				4.1	%
Number of occupied rentals, end of period*																11,170				10,913				257				2.4	%
Investment in occupied rental homes, end of period																$	570,053			$	517,321			$	52,732			10.2	%
Weighted average monthly rental rate, end of period*																$	987			$	940			$	47			5.0	%

Acquisitions and Other Summary ⁽¹⁵⁾
(amounts in thousands except for statistical data)

		Three Months Ended				Nine Months Ended
		September 30, 2019				September 30, 2019
Financial Information
Revenues
Income from real property		$	33,035			$	63,548
Property and operating expenses
Payroll and benefits		5,007				10,881
Legal, taxes & insurance		379				805
Utilities		3,066				6,490
Supplies and repairs		1,474				3,366
Other		4,682				8,736
Real estate taxes		792				2,362
Property operating expenses		15,400				32,640
Net operating income (NOI) (1)		$	17,635			$	30,908
						September 30, 2019
Other Information
Number of properties						44
Occupied sites						4,329
Developed sites						4,608
Occupancy %						93.9		%
Transient sites						6,515

Property Summary
(includes MH and Annual RVs)
COMMUNITIES		9/30/2019			6/30/2019			3/31/2019			12/31/2018			9/30/2018
FLORIDA
Communities		125			125			125			124			124
Developed sites (16)		39,067			38,879			38,878			37,874			37,879
Occupied (16)		38,155			37,944			37,932			36,868			36,822
Occupancy % (16)		97.7	%		97.6	%		97.6	%		97.3	%		97.2	%
Sites for development		1,633			1,638			1,685			1,684			1,494
MICHIGAN
Communities		72			72			72			70			70
Developed sites (16)		27,906			27,891			27,777			26,504			26,116
Occupied (16)		26,677			26,591			26,430			25,075			24,830
Occupancy % (16)		95.6	%		95.3	%		95.2	%		94.6	%		95.1	%
Sites for development		1,115			1,115			1,202			1,202			1,533
TEXAS
Communities		23			23			23			23			23
Developed sites (16)		7,098			6,997			6,953			6,922			6,905
Occupied (16)		6,834			6,683			6,529			6,428			6,301
Occupancy % (16)		96.3	%		95.5	%		93.9	%		92.9	%		91.3	%
Sites for development		1,086			1,100			1,107			1,121			907
CALIFORNIA
Communities		31			31			31			30			30
Developed sites (16)		5,963			5,946			5,949			5,941			5,932
Occupied (16)		5,917			5,896			5,902			5,897			5,881
Occupancy % (16)		99.2	%		99.2	%		99.2	%		99.3	%		99.1	%
Sites for development		302			56			56			56			59
ARIZONA
Communities		13			13			13			12			11
Developed sites (16)		4,239			4,235			4,238			3,836			3,826
Occupied (16)		3,852			3,842			3,830			3,545			3,515
Occupancy % (16)		90.9	%		90.7	%		90.4	%		92.4	%		91.9	%
Sites for development		—			—			—			—			—
ONTARIO, CANADA
Communities		15			15			15			15			15
Developed sites (16)		4,022			3,929			3,832			3,845			3,832
Occupied (16)		4,022			3,929			3,832			3,845			3,832
Occupancy % (16)		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Sites for development		1,675			1,675			1,675			1,682			1,662
INDIANA
Communities		11			11			11			11			11
Developed sites (16)		3,089			3,089			3,089			3,089			3,089
Occupied (16)		2,870			2,849			2,823			2,772			2,778
Occupancy % (16)		92.9	%		92.2	%		91.4	%		89.7	%		89.9	%
Sites for development		277			277			277			277			277
OHIO
Communities		9			9			9			9			9
Developed sites (16)		2,770			2,770			2,770			2,770			2,770
Occupied (16)		2,703			2,705			2,704			2,693			2,694
Occupancy % (16)		97.6	%		97.7	%		97.6	%		97.2	%		97.3	%
Sites for development		59			59			59			59			59
COLORADO
Communities		10			8			8			8			8
Developed sites (16)		2,423			2,335			2,335			2,335			2,335
Occupied (16)		2,325			2,323			2,323			2,320			2,313
Occupancy % (16)		96.0	%		99.5	%		99.5	%		99.4	%		99.1	%
Sites for development		1,973			2,129			2,129			2,129			2,129
OTHER STATES
Communities		80			75			72			69			69
Developed sites (16)		17,203			16,493			16,354			15,847			15,458
Occupied (16)		16,657			16,026			15,826			15,323			14,932
Occupancy % (16)		96.8	%		97.2	%		96.8	%		96.7	%		96.6	%
Sites for development		2,437			2,705			2,987			3,048			3,195
TOTAL - PORTFOLIO
Communities		389			382			379			371			370
Developed sites (16)		113,780			112,564			112,175			108,963			108,142
Occupied (16)		110,012			108,788			108,131			104,766			103,898
Occupancy % (16)		96.7	%	(17)	96.6	%		96.4	%		96.1	%		96.1	%
Sites for development (18)		10,557			10,754			11,177			11,258			11,315
% Communities age restricted		30.8	%		31.4	%		31.7	%		32.1	%		32.2	%
TRANSIENT RV PORTFOLIO SUMMARY
Location
Florida		5,506			5,693			5,650			5,917			5,786
California		1,970			1,985			1,975			1,765			1,774
Texas		1,642			1,693			1,717			1,752			1,758
Maryland		1,426			1,380			1,375			1,381			1,386
Arizona		1,421			1,424			1,421			1,423			1,057
Ontario, Canada		937			1,043			1,131			1,046			1,056
New York		924			935			929			925			910
New Jersey		868			875			906			884			893
Maine		821			848			857			572			578
Michigan		569			584			611			576			629
Utah		560			562			562			562			562
Indiana		519			519			519			519			519
Other states		3,719			3,044			2,520			2,169			2,524
Total transient RV sites		20,882			20,585			20,173			19,491			19,432

Capital Improvements, Development, and Acquisitions   
(amounts in thousands except for *)

	Recurring Capital Expenditures Average/Site*			Recurring Capital Expenditures (19)			Lot Modifications (20)			Acquisitions (21)			Expansion & Development (22)			Revenue Producing (23)
YTD 2019	$	192		$	16,922		$	22,163		$	497,123		$	203,940		$	8,159
2018	$	263		$	24,265		$	22,867		$	414,840		$	152,672		$	3,864
2017	$	214		$	14,166		$	18,049		$	204,375		$	88,331		$	1,990

Operating Statistics for MH and Annual RVs

LOCATIONS		Resident Move-outs			Net Leased Sites (24)			New Home Sales			Pre-owned Home Sales			Brokered  Re-sales
Florida		1,253			571			189			247			1,001
Michigan		401			365			49			1,056			135
Ontario, Canada		467			177			29			21			219
Texas		245			406			37			267			48
Arizona		62			43			32			9			125
Indiana		45			98			6			191			16
Ohio		71			10			—			106			8
California		63			20			22			6			55
Colorado		2			5			8			52			35
Other states		677			310			59			245			81
Nine Months Ended September 30, 2019		3,286			2,005			431			2,200			1,723

TOTAL FOR YEAR ENDED		Resident Move-outs			Net Leased Sites (24)			New Home Sales			Pre-owned Home Sales			Brokered  Re-sales
2018		3,435			2,600			526			3,103			2,147
2017		2,739			2,406			362			2,920			2,006

PERCENTAGE TRENDS		Resident Move-outs			Resident  Re-sales
2019 (TTM)		2.7	%		7.1	%
2018		2.4	%		7.2	%
2017		1.9	%		6.6	%

Footnotes and Definitions                                                                

(1)Investors in and analysts following the real estate industry utilize funds from operations (“FFO”), net operating income (“NOI”), and earnings before interest, tax, depreciation and amortization (“EBITDA”) as supplemental performance measures. The Company believes that FFO, NOI, and EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. Additionally, FFO, NOI, and EBITDA are commonly used in various ratios, pricing multiples, yields and returns and valuation calculations used to measure financial position, performance and value.

•   FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of generally accepted accounting principles (“GAAP”) depreciation and amortization of real estate assets. 

•   NOI provides a measure of rental operations that does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses. 

•   EBITDA provides a further measure to evaluate ability to incur and service debt and to fund dividends and other cash needs.

FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company’s operating performance. By excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared period-over-period, reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from GAAP net income (loss). Management believes the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. The Company also uses FFO excluding certain gain and loss items that management considers unrelated to the operational and financial performance of our core business (“Core FFO”). The Company believes that Core FFO provides enhanced comparability for investor evaluations of period-over-period results.

The Company believes that GAAP net income (loss) is the most directly comparable measure to FFO. The principal limitation of FFO is that it does not replace GAAP net income (loss) as a performance measure or GAAP cash flow from operations as a liquidity measure. Because FFO excludes significant economic components of GAAP net income (loss) including depreciation and amortization, FFO should be used as a supplement to GAAP net income (loss) and not as an alternative to it. Further, FFO is not intended as a measure of a REIT’s ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO is calculated in accordance with the Company’s interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that interpret the NAREIT definition differently.

NOI is derived from revenues minus property operating expenses and real estate taxes. NOI is a non-GAAP financial measure that the Company believes is helpful to investors as a supplemental measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key measure when evaluating performance and growth of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense and non-property specific expenses such as general and administrative expenses, all of which are significant costs. Therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.

The Company believes that GAAP net income (loss) is the most directly comparable measure to NOI. NOI should not be considered to be an alternative to GAAP net income (loss) as an indication of the Company’s financial performance or GAAP cash flow from operating activities as a measure of the Company’s liquidity; nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions. Because of the inclusion of items such as interest, depreciation, and amortization, the use of GAAP net income (loss) as a performance measure is limited as these items may not accurately reflect the actual change in market value of a property, in the case of depreciation and in the case of interest, may not necessarily be linked to the operating performance of a real estate asset, as it is often incurred at a parent company level and not at a property level.

EBITDA as defined by NAREIT (referred to as “EBITDAre”) is calculated as GAAP net income (loss), plus interest expense, plus income tax expense, plus depreciation and amortization, plus or minus losses or gains on the disposition of depreciated property (including losses or gains on change of control), plus impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates. EBITDAre is a non-GAAP financial measure that the Company uses to evaluate its ability to incur and service debt, fund dividends and other cash needs and cover fixed costs. Investors utilize EBITDAre as a supplemental measure to evaluate and compare investment quality and enterprise value of REITs. The Company also uses EBITDAre excluding certain gain and loss items that management considers unrelated to measurement of the Company’s performance on a basis that is independent of capital structure (“Recurring EBITDA”).

The Company believes that GAAP net income (loss) is the most directly comparable measure to EBITDAre. EBITDAre is not intended to be used as a measure of the Company’s cash generated by operations or its dividend-paying capacity, and should therefore not replace GAAP net income (loss) as an indication of the Company’s financial performance or GAAP cash flow from operating, investing and financing activities as measures of liquidity.

(2)  Same Community results reflect constant currency for comparative purposes. Canadian currency figures in the prior comparative period have been translated at 2019 actual exchange rates.

(3)  The Same Community occupancy percentage for 2019 is derived from 107,553 developed sites, of which 105,683 were occupied. The number of developed sites excludes RV transient sites and approximately 1,700 recently completed but vacant MH expansion sites. Without the adjustment for vacant expansion sites, the Same Community occupancy percentage is 95.9 percent for MH, 100.0 percent for RV, and 96.8 percent for the blended MH and RV. The MH and RV blended occupancy is derived from 109,172 developed sites, of which 105,683 were occupied. The Same Community occupancy percentage for 2018 has been adjusted to reflect incremental period-over-period growth from filled expansion sites and the conversion of transient RV sites to annual RV sites.

(4)  This is a transferred asset transaction which has been classified as collateralized receivables and the cash received from this transaction has been classified as a secured borrowing. The interest income and interest expense accrue at the same rate and amount.

(5)  Lines of credit includes the Company’s MH floor plan facility. The effective interest rate on the MH floor plan facility was 7.0 percent for all periods presented. However, the Company pays no interest if the floor plan balance is repaid within 60 days.

(6)   Other income / (expense), net was as follows (in thousands):

	Three Months Ended								Nine Months Ended
	September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
Foreign currency translation gain / (loss)	$	(3,121	)		$	1,547			$	(26	)		$	(2,640	)
Contingent liability remeasurement loss	(1,287		)		(97		)		(1,421		)		(285		)
Long term lease termination expense	—				(219		)		(42		)		(289		)
Other income / (expense), net	$	(4,408	)		$	1,231			$	(1,489	)		$	(3,214	)

(7)  The effect of certain anti-dilutive convertible securities is excluded from these items.

(8)   These costs represent the expenses incurred to bring recently acquired properties up to the Company’s operating standards, including items such as tree trimming and painting costs that do not meet the Company’s capitalization policy.

(9)   Core FFO⁽¹⁾ includes an adjustment of $(0.4) million and zero for the three and nine months ended September 30, 2019 and $0.3 million and $1.0 million for the three and nine months ended September 30, 2018 for estimated loss of earnings in excess of the applicable business interruption deductible in relation to our Florida Keys communities that require redevelopment due to damages sustained from Hurricane Irma in September 2017, as previously announced. Amounts recognized in 2018 were received in 2019.

(10) The renter’s monthly payment includes the site rent and an amount attributable to the home lease. The site rent is reflected in Real Property Operations’ segment revenue. For purposes of management analysis, site rent is included in Rental Program revenue to evaluate the incremental revenue gains associated with the Rental Program, and to assess the overall growth and performance of the Rental Program and financial impact on the Company’s operations.

(11) Same Community results net $8.9 million and $8.5 million of utility revenue against the related utility expense in property operating and maintenance expense for the quarter ended September 30, 2019 and 2018, respectively. Same Community results net $25.8 million and $24.5 million of utility revenue against the related utility expense in property operating and maintenance expense for the nine months ended September 30, 2019 and 2018, respectively. Additionally, the Company adopted ASC 842, the new leasing standard, as of January 1, 2019 which required the reclassification of bad debt expense from Property operating expense to Income from real property. To assist with comparability within Same Community results, bad debt expense has been reclassified to be shown as a reduction of Income from real property for all periods presented.

(12) Same Community supplies and repair expense excludes $0.3 million and $1.8 million for the three and nine months ended September 30, 2018, respectively, of expenses incurred for recently acquired properties to bring the properties up to the Company’s operating standards, including items such as tree trimming and painting costs that do not meet the Company’s capitalization policy.

(13) Monthly base rent per site pertains to annual RV sites and excludes transient RV sites.

(14) Calculated using actual results without rounding.

(15) Acquisitions and other is comprised of eleven properties acquired, one property being operated under a temporary use permit, and two properties that we have an interest in, but do not operate in 2019, twenty properties acquired in 2018, three Florida Keys properties that require redevelopment as a result of damage sustained from Hurricane Irma in 2017, five recently opened ground-up development properties, one property undergoing redevelopment, three properties that we have an interest in, but do not operate, and other miscellaneous transactions and activity.

(16) Includes MH and annual RV sites, and excludes transient RV sites, as applicable.

(17) As of September 30, 2019, total portfolio MH occupancy was 95.7 percent inclusive of the impact of approximately 1,700 recently constructed but vacant MH expansion sites, and annual RV occupancy was 100.0 percent.

(18) Total sites for development were comprised of approximately 74.2 percent for expansion, 19.8 percent for greenfield development and 6.0 percent for redevelopment.

(19) Recurring capital expenditures are necessary to maintain asset quality, including purchasing and replacing assets used to operate the community. These capital expenditures include items such as: major road, driveway, pool improvements; clubhouse renovations; adding or replacing street lights; playground equipment; signage; maintenance facilities; manager housing and property vehicles. The minimum capitalized amount is five hundred dollars.

(20) Lot modification capital expenditures improve the asset quality of the community. These costs are incurred when an existing older home moves out, and the site is prepared for a new home, more often than not, a multi-sectional home.  These activities, which are mandated by strict manufacturer’s installation requirements and state building code, include items such as new foundations, driveways, and utility upgrades.

(21) Capital expenditures related to acquisitions represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. These costs for the nine months ended September 30, 2019 include $36.6 million of capital improvements identified during due diligence that are necessary to bring the communities to the Company’s operating standards.  For the years ended December 31, 2018 and 2017, these costs were $94.6 million and $84.0 million, respectively. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, often require 24 to 36 months after closing to complete.

(22) Expansion and development expenditures consist primarily of construction costs and costs necessary to complete home site improvements, such as driveways, sidewalks and landscaping.

(23) Capital costs related to revenue generating activities consist primarily of garages, sheds, sub-metering of water, sewer and electricity. Revenue generating attractions at our RV resorts are also included here and, occasionally, a special capital project requested by residents and accompanied by an extra rental increase will be classified as revenue producing.

(24) Net leased sites do not include occupied sites acquired during that year.

        Certain financial information has been revised to reflect reclassifications in prior periods to conform to current period presentation.

Attachment

• 3rd Quarter Press Release and Supplemental Package

Source: Sun Communities, Inc.