News Release Details

Sun Communities, Inc. Reports 2020 Fourth Quarter Results and 2021 Guidance

Feb 17, 2021
PDF Version


Southfield, MI, Feb. 17, 2021 (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”) communities, recreational vehicle (“RV”) resorts and marinas, (collectively, the “properties”), today reported its fourth quarter results for 2020.

Financial Results for the Quarter and Year Ended December 31, 2020 

For the quarter ended December 31, 2020, total revenues increased $82.4 million, or 27.3 percent, to approximately $384.3 million compared to $301.8 million for the same period in 2019. Net income attributable to common stockholders was approximately $7.6 million, or $0.07 per diluted common share, for the quarter ended December 31, 2020.

For the year ended December 31, 2020, total revenues increased $134.3 million, or 10.6 percent, to approximately $1.4 billion compared to $1.3 billion for the same period in 2019. Net income attributable to common stockholders was $131.6 million, or $1.34 per diluted common share, for the year ended December 31, 2020.

Non-GAAP Financial Measures and Portfolio Performance

  • Core Funds from Operations (“Core FFO”)(1) for the quarter ended December 31, 2020, was $1.16 per diluted share and OP unit (“Share”) as compared to $1.10 in the corresponding period in 2019, a 5.5 percent increase. Core FFO(1) for the year ended December 31, 2020, was $5.09 per Share as compared to $4.92 in the prior year, an increase of 3.5 percent.
     
  • Same Community(2) Net Operating Income (“NOI”)(1) increased by 2.1 percent and 4.0 percent for the quarter and year ended December 31, 2020, respectively, as compared to the corresponding periods in 2019.
     
  • Acquired approximately $3.0 billion of operating properties including the $2.1 billion acquisition of Safe Harbor Marinas in 2020.
     
  • MH and Annual RV Revenue Producing Sites increased by 578 sites in the fourth quarter and 2,505 sites during the year ended December 31, 2020, bringing total portfolio occupancy to 97.3 percent.
     
  • MH and Annual RV Rent Collections for the fourth quarter were over 96.0 percent and 97.0 percent, respectively.

Gary Shiffman, Chief Executive Officer stated, “As we reflect on the events of 2020, we are pleased with our performance and the demonstrated resilience and stability of our business and operating platform, particularly in light of the challenging environment. We generated 4.0 percent same community NOI growth, delivered 3.5 percent year over year Core FFO(1) per Share growth, deployed $3.0 billion into accretive acquisitions and raised approximately $1.9 billion in two equity offerings with strong investor demand. We are well positioned to continue delivering industry leading growth and have a new business line that broadens our opportunity set with the addition of Safe Harbor Marinas.”

Mr. Shiffman continued, “The dedication and perseverance of our team to create value for our shareholders continues to be a key factor in our success.”


OPERATING HIGHLIGHTS

Portfolio Occupancy

Total MH and annual RV occupancy was 97.3 percent at December 31, 2020, compared to 96.4 percent at December 31, 2019, an increase of 90 basis points.

During the quarter ended December 31, 2020, MH and annual RV revenue producing sites increased by 578 sites, bringing full year 2020 revenue producing site gains to 2,505 sites.


Same Community(2) Results

For the 367 MH and RV properties owned and operated by the Company since January 1, 2019, NOI(1) for the quarter ended December 31, 2020 increased 2.1 percent over the same period in 2019, resulting from a 5.7 percent increase in revenues and a 13.6 percent increase in expenses. Adjusted to remove the impact of $0.3 million of direct COVID-19 related health and safety expense, Same Community NOI(1) growth was 2.4 percent for the quarter ended December 31, 2020. Payroll, utilities and supplies and repair costs were elevated during the quarter primarily due to the extended season of the Company’s northern RV resorts. Same Community occupancy(3) increased to 98.8 percent at December 31, 2020 from 97.0 percent at December 31, 2019.

For the year ended December 31, 2020, NOI(1) increased 4.0 percent over the same period in 2019, resulting from a 3.6 percent increase in revenues and a 3.0 percent increase in expenses. Adjusted to remove the impact of $2.4 million of direct COVID-19 related health and safety expense, Same Community NOI(1) growth was 4.4 percent for the year ended December 31, 2020.


Home Sales

During the quarter ended December 31, 2020, the Company sold 782 homes as compared to 808 homes in the same period in 2019. The Company sold 156 and 140 new homes for the quarters ended December 31, 2020 and 2019, respectively, an increase of 11.4 percent. Pre-owned home sales were 626 in the fourth quarter 2020 as compared to 668 in the same period in 2019. Rental home sales, which are included in total pre-owned home sales, were 269 and 281 for the quarters ended December 31, 2020 and 2019, respectively.

During the year ended December 31, 2020, the Company sold 2,866 homes as compared to 3,439 homes sold during 2019. The Company sold 570 and 571 new homes during the years ended December 31, 2020 and 2019, respectively. Pre-owned home sales were 2,296 during the year ended December 31, 2020, as compared to 2,868 during 2019. Rental home sales, which are included in total pre-owned home sales, were 850 and 1,140 for the years ended December 31, 2020 and 2019, respectively.

Rent Collections

For the fourth quarter of 2020, MH and annual RV rent collections were over 96.0 percent and 97.0 percent, respectively, after adjusting for the impact of COVID-19 related hardship deferrals and prepaid rent balances.

January 2021 rent collections were 97.0 percent for MH and 97.0 percent for annual RV.


PORTFOLIO ACTIVITY

Acquisitions

During and subsequent to the quarter ended December 31, 2020, the Company acquired the following communities and resorts:

Property Name   Property Type   Sites   State   Total Purchase Price (in millions)   Month Acquired
Gig Harbor   RV   115      WA   $ 15.3      November
Maine MH Portfolio(a)   MH   1,083      ME   $ 81.3      November
Mouse Mountain   MH / RV   304      FL   $ 15.5      December
Lakeview Mobile Estates   MH   296      CA   $ 23.8      December
Shenandoah Acres   RV   522      VA   $ 17.0      December
Jellystone at Barton Lake   RV   555      IN   $ 24.0      December
Kittatinny Portfolio(b)   RV   527      NY & PA   $ 16.3      December
Association Island KOA   RV   294      NY   $ 15.0      January
Blue Water   RV   177      UT   $ 9.0      February
Tranquility MHC   MH   25      FL   $ 1.3      February
        3,898          $ 218.5       

(a) Includes six MH communities.

(b) Includes two RV resorts.

During and subsequent to the quarter ended December 31, 2020, the Company acquired the following marinas:

Property Name   Wet Slips & Dry Storage Spaces   State   Total Purchase Price (in millions)   Month Acquired
Safe Harbor Marinas(a)   37,305      Various   $ 2,016.4      October
Hideaway Bay(b)   628      GA   $ 32.9      November
Anacapa Isle(b)   453      CA   $ 13.9      December
Annapolis   184      MD   $ 31.0      December
Wickford   60      RI   $ 3.5      December
Rybovich Portfolio(c)   78      FL   $ 368.8      December
Rockland   173      ME   $ 16.0      December
Islamorada and Angler House(d)   251      FL   $ 18.0      February
    39,132          $ 2,500.5       

(a) Includes 99 owned marinas located in 22 states. In conjunction with the acquisition, the Company issued Series H preferred OP units. As of December 31, 2020, 581,407 Series H preferred OP units were outstanding.

(b) Acquired in connection with Safe Harbor Marinas acquisition. Transfer of the marinas was contingent on receiving third party consents.

(c) Includes two marinas. In conjunction with the acquisition, the Company issued Series I preferred OP units. As of December 31, 2020, 922,000 Series I preferred OP units were outstanding.

(d) Includes two marinas.

During the year ended December 31, 2020, the Company acquired 24 MH communities and RV resorts with 6,919 sites and 106 marinas with over 38,800 wet slips and dry rack storage spaces for a total purchase price of approximately $3.0 billion.

Construction Activity

During the quarter ended December 31, 2020, the Company completed the construction of nearly 50 sites in two ground-up developments and one redevelopment property, and over 120 expansion sites in one RV resort and one MH community. Full-year ground-up and redevelopment site deliveries were over 1,000 sites in five properties and over 300 total expansion sites in eight properties.


BALANCE SHEET, CAPITAL MARKETS ACTIVITY AND OTHER ITEMS

Debt Transactions

As of December 31, 2020, the Company had approximately $4.8 billion of debt outstanding. The weighted average interest rate was 3.4 percent and the weighted average maturity was 9.4 years. The Company had $83.0 million of unrestricted cash on hand. At December 31, 2020, the Company’s net debt to trailing twelve-month Recurring EBITDA(1) ratio was 6.9 times, which includes all of Safe Harbor’s debt, but only two months of its EBITDA contribution.

During the quarter ended December 31, 2020, as previously disclosed, the Company entered into a new $260.0 million term loan secured by 11 MH and RV properties. The loan has a 12-year maturity and a fixed interest rate of 2.64 percent.

Equity Transactions

During the quarter ended December 31, 2020, as previously disclosed, the Company closed an underwritten registered public offering of 9,200,000 shares of common stock. Proceeds from the offering were $1.2 billion after deducting expenses related to the offering. The Company used the net proceeds of the offering to fund the cash portion of the acquisition of Safe Harbor and for working capital and general corporate purposes.

2021 Distributions

The Company’s Board of Directors has approved setting the 2021 annual distribution rate at $3.32 per common share, an increase of $0.16, or 5.1 percent, over the current $3.16 per common share for 2020. This increase will begin with the first quarter distribution to be paid in April 2021. While the Board of Directors has adopted the new annual distribution policy, the amount of each quarterly distribution on the Company's common stock will be subject to approval by the Board of Directors.

New Director

On February 11, 2020 the Board of Directors increased the size of the board from seven to eight directors and appointed Tonya Allen to the Company’s Board of Directors as an independent director. Ms. Allen brings an expert perspective on sustainability and social issues, an important focus for the Company.


2021 GUIDANCE

The estimates and assumptions presented below represent a range of possible outcomes and may differ materially from actual results. These estimates include contributions from all acquisitions through the date of this release and exclude prospective acquisitions and capital markets activity. 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 Cautionary Statement Regarding Forward-Looking Statements.

Notes to 2021 guidance:

  • Includes contributions from recently completed acquisitions
    • $218.5 million of MH community and RV resort acquisitions in the fourth quarter 2020 and subsequent to year end
    • $437.3 million of marina acquisitions subsequent to the closing of the Safe Harbor transaction on October 30, 2020
  • Includes a lower transient RV revenue estimate of $8.0 - $10.0 million in the first quarter 2021 due to the extension of the Canadian border closure order and the California travel restrictions imposed through early February, 2021

Earnings and Core FFO(1)

  Net Income
Weighted average common shares outstanding (in millions) 106.9
First quarter 2021, basic earnings per share $0.08 - $0.12
Full year 2021, basic earnings per share $1.66 - $1.82


  Core FFO(1)
Weighted average common shares outstanding, fully diluted (in millions)(i) 112.7
First quarter 2021, Core FFO(1) per Share $1.13 - $1.17
Full year 2021, Core FFO(1) per Share $5.79 - $5.95

(i) Certain securities that are dilutive to the computation of Core FFO(1) per fully diluted share in the table above have been excluded from the computation of net income per fully diluted share, as inclusion of these securities would have been anti-dilutive to net income per fully diluted share.

    1Q21   2Q21   3Q21   4Q21
Seasonality of Core FFO(1)   19.6  %   26.2  %   32.8  %   21.4  %

Total MH and RV Portfolio

Number of properties: 446

    2020 Actual
(in millions)		   2021E
Change %
Income from real property   $ 1,002.4      10.9% - 11.4%
Total property operating expenses   367.3      13.7% - 14.4%
Net operating income   $ 635.1      8.8% - 10.1%


    1Q21   2Q21   3Q21   4Q21
Seasonality of total MH and RV portfolio NOI   22.6  %   25.0  %   28.6  %   23.8  %


    2021E
MH weighted average monthly rental rate increase   3.2  %
RV weighted average monthly rental rate increase   4.3  %
Blended weighted average monthly rental rate increase   3.4  %
     
Increase in revenue producing sites   2,150 - 2,350
     
New home sales volume   550 - 650
Pre-owned home sales volume   2,400 - 2,600
     
Newly built ground-up and expansion sites   1,200 - 1,600

General and Administrative Expenses

    2021E
General and administrative expenses   $163.7 - $167.3

General and administrative expenses include the impact of the Company’s entry into the marina asset class. The marina portfolio is operated as an independent wholly-owned subsidiary retaining its own senior management, property management and back office operations. As significant growth potential through the consolidation of the highly fragmented marina industry is anticipated, costs associated with scaling to effectively operate a larger portfolio are required. As a general practice, marina acquisitions are underwritten with an expected incremental general and administrative cost of 3.0 percent of revenues.

Same Community(2) Portfolio

Number of MH and RV properties: 407

Same community NOI(1) growth is expected to be between 5.6 percent and 6.6 percent for full year 2021.

Marinas

NOI(1) inclusive of the contribution from service and ancillary operations is expected to be $163.0 million - $169.0 million.

    1Q21   2Q21   3Q21   4Q21
Seasonality of marina NOI(1)   18.0 %   29.0 %   28.6 %   24.4 %



EARNINGS CONFERENCE CALL

A conference call to discuss fourth quarter operating results will be held on Thursday, February 18, 2021 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 March 4, 2021 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 13713712. 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 December 31, 2020, owned, operated, or had an interest in a portfolio of 552 developed MH, RV and marina properties comprising over 188,000 developed sites in 39 states and Ontario, Canada.

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


CAUTIONARY STATEMENT REGARDING 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. For this purpose, any statements contained in this press release that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as “forecasts,” “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,” “plans,” “predicts,” “potential,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,” “will,” “designed to,” “foreseeable future,” “believe,” “believes,” “scheduled,” “guidance”, “target” and similar expressions are intended to identify forward-looking statements, although not all forward looking statements contain these words. 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, both general and specific to the matters discussed in or incorporated herein, some of which are beyond the Company’s control. These risks, uncertainties and other factors may cause the Company’s actual results to be materially different from any future results expressed or implied by such forward-looking statements. In addition to the risks disclosed under “Risk Factors” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and September 30, 2020, and the Company’s other filings with the Securities and Exchange Commission from time to time, such risks, uncertainties and other factors include but are not limited to:

  • outbreaks of disease, including the COVID-19 pandemic, and related stay at home orders, quarantine policies and restrictions on travel, trade and business operations;
  • changes in general economic conditions, the real estate industry and the markets in which the Company operates;
  • difficulties in the Company’s ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;
  • the Company’s liquidity and refinancing demands;
  • the Company’s ability to obtain or refinance maturing debt;
  • the Company’s ability to maintain compliance with covenants contained in its debt facilities;
  • availability of capital;
  • changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian and Australian dollars;
  • the Company’s ability to maintain rental rates and occupancy levels;
  • the Company’s ability to maintain effective internal control over financial reporting and disclosure controls and procedures;
  • increases in interest rates and operating costs, including insurance premiums and real property taxes;
  • risks related to natural disasters such as hurricanes, earthquakes, floods, and wildfires;
  • general volatility of the capital markets and the market price of shares of the Company’s capital stock;
  • the Company’s ability to maintain its status as a REIT;
  • changes in real estate and zoning laws and regulations;
  • legislative or regulatory changes, including changes to laws governing the taxation of REITs;
  • litigation, judgments or settlements;
  • competitive market forces;
  • the ability of purchasers of manufactured homes and boats to obtain financing; and
  • the level of repossessions by manufactured home and boat lenders.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements included in this press release, whether as a result of new information, future events, changes in its expectations or otherwise, except as required by law.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by these cautionary statement.


Investor Information                                                           

 


RESEARCH COVERAGE            
             
Firm   Analyst   Phone   Email
Bank of America Merrill Lynch   Joshua Dennerlein   (646) 855-1681   joshua.dennerlein@baml.com
Berenberg Capital Markets   Keegan Carl   (646) 949-9052   keegan.carl@berenberg-us.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
Robert W. Baird & Co.   Wesley Golladay   (216) 737-7510   wgolladay@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 December 31, 2020)

 



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

 


  Quarter Ended
  12/31/2020   9/30/2020   6/30/2020   3/31/2020   12/31/2019
Financial Information                  
Total revenues $ 384,265      $ 400,514      $ 303,266      $ 310,302        $ 301,819   
Net income / (loss) $ 9,818      $ 89,756      $ 63,355      $ (15,478 )     $ 30,685   
Net income / (loss) attributable to Sun Communities Inc. common stockholders $ 7,586      $ 81,204      $ 58,910      $ (16,086 )     $ 28,547   
Basic earnings / (loss) per share* $ 0.07      $ 0.83      $ 0.61      $ (0.17 )     $ 0.31   
Diluted earnings / (loss) per share* $ 0.07      $ 0.83      $ 0.61      $ (0.17 )     $ 0.31   
                   
Cash distributions declared per common share* $ 0.79      $ 0.79      $ 0.79      $ 0.79        $ 0.75   
                   
Recurring EBITDA(1) $ 168,527      $ 199,321      $ 148,650      $ 156,552        $ 144,738   
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4)

 $ 110,849      $ 165,209      $ 118,092      $ 95,046        $ 105,533   
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4)

 $ 124,872      $ 162,624      $ 110,325      $ 117,267        $ 104,534   
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted* $ 1.03      $ 1.63      $ 1.20      $ 0.98        $ 1.11   
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted* $ 1.16      $ 1.60      $ 1.12      $ 1.22        $ 1.10   
                   
Balance Sheet                  
Total assets $ 11,206,586      $ 8,335,717      $ 8,348,659      $ 8,209,047        $ 7,802,060   
Total debt $ 4,757,076      $ 3,340,613      $ 3,390,771      $ 3,926,494        $ 3,434,402   
Total liabilities $ 5,314,879      $ 3,791,922      $ 3,845,308      $ 4,346,127        $ 3,848,104   


  Quarter Ended
  12/31/2020   9/30/2020   6/30/2020   3/31/2020   12/31/2019
Operating Information*                  
Properties 552      432      426      424      422   
                   
Manufactured home sites 96,688      95,209      94,232      93,834      93,821   
Annual RV sites 27,564      26,817      26,240      26,148      26,056   
Transient RV sites 25,043      23,728      22,360      21,880      21,416   
Total sites 149,295      145,754      142,832      141,862      141,293   
                   
Wet slips and dry storage spaces 38,881      N/A   N/A   N/A   N/A
                   
MH occupancy 96.6  %   96.4  %   96.5  %   95.8  %   95.5  %
RV annual occupancy 100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
Total blended MH and annual RV occupancy 97.3  %   97.2  %   97.3  %   96.7  %   96.4  %
                   
New home sales 156      155      140      119      140   
Pre-owned home sales 626      555      471      644      668   
Total home sales 782      710      611      763      808   


  Quarter Ended
  12/31/2020   9/30/2020   6/30/2020   3/31/2020   12/31/2019
Net Leased Sites(5)                  
MH net leased sites 247      349      759      287      437   
RV net leased sites 331      427      92      13      232   
Total net leased sites 578      776      851      300      669   



Consolidated Balance Sheets
(amounts in thousands)

 


    December 31, 2020   December 31, 2019
Assets        
Land   $ 2,119,364        $ 1,414,279     
Land improvements and buildings   8,480,597        6,595,272     
Rental homes and improvements   637,603        627,175     
Furniture, fixtures and equipment   447,039        282,874     
Investment property   11,684,603        8,919,600     
Accumulated depreciation   (1,968,812 )     (1,686,980 )  
Investment property, net   9,715,791        7,232,620     
Cash, cash equivalents and restricted cash   98,294        34,830     
Marketable securities   124,726        94,727     
Inventory of manufactured homes   46,643        62,061     
Notes and other receivables, net   221,650        157,926     
Goodwill   428,833        —     
Other intangible assets, net   305,611        66,948     
Other assets, net   265,038        152,948     
Total Assets   $ 11,206,586        $ 7,802,060     
Liabilities        
Mortgage loans payable   $ 3,444,967        $ 3,180,592     
Preferred Equity - Sun NG Resorts - mandatorily redeemable   35,249        35,249     
Preferred OP units - mandatorily redeemable   34,663        34,663     
Lines of credit and other debt(6)   1,242,197        183,898     
Distributions payable   86,988        71,704     
Advanced reservation deposits and rent   187,730        133,420     
Accrued expenses and accounts payable   148,435        127,289     
Other liabilities   134,650        81,289     
Total Liabilities   5,314,879        3,848,104     
Commitments and contingencies        
Series D preferred OP units   49,600        50,913     
Series F preferred OP units   8,871        —     
Series G preferred OP units   25,074        —     
Series H preferred OP units   57,833        —     
Series I preferred OP units   94,532        —     
Other redeemable noncontrolling interests   28,469        27,091     
Stockholders' Equity        
Common stock   1,076        932     
Additional paid-in capital   7,087,658        5,213,264     
Accumulated other comprehensive loss   3,178        (1,331 )  
Distributions in excess of accumulated earnings   (1,566,636 )     (1,393,141 )  
Total Sun Communities, Inc. stockholders' equity   5,525,276        3,819,724     
Noncontrolling interests        
Common and preferred OP units   85,968        47,686     
Consolidated variable interest entities   16,084        8,542     
Total noncontrolling interests   102,052        56,228     
Total Stockholders' Equity   5,627,328        3,875,952     
Total Liabilities, Temporary Equity and Stockholders' Equity   $ 11,206,586        $ 7,802,060     



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

 


  Three Months Ended   Year Ended
  December 31, 2020   December 31, 2019   Change   % Change   December 31, 2020   December 31, 2019   Change   % Change
Revenues                              
Income from real property (excluding transient revenue) $ 249,065        $ 205,131        $ 43,934        21.4    %   $ 895,945        $ 793,403        $ 102,542        12.9    %
Transient revenue 27,929        19,886        8,043        40.4    %   134,691        121,504        13,187        10.9    %
Revenue from home sales 48,920        45,271        3,649        8.1    %   175,699        181,936        (6,237 )     (3.4 ) %
Rental home revenue 16,035        14,745        1,290        8.7    %   62,646        57,572        5,074        8.8    %
Ancillary revenue 35,644        10,481        25,163        240.1    %   102,017        77,638        24,379        31.4    %
Interest income 2,510        3,368        (858 )     (25.5 ) %   10,119        17,857        (7,738 )     (43.3 ) %
Brokerage commissions and other revenues, net 4,162        2,937        1,225        41.7    %   17,230        14,127        3,103        22.0    %
Total Revenues 384,265        301,819        82,446        27.3    %   1,398,347        1,264,037        134,310        10.6    %
Expenses                              
Property operating and maintenance 88,889        63,486        25,403        40.0    %   308,797        266,378        42,419        15.9    %
Real estate taxes 20,265        15,425        4,840        31.4    %   72,606        61,880        10,726        17.3    %
Cost of home sales 36,434        34,327        2,107        6.1    %   131,884        134,357        (2,473 )     (1.8 ) %
Rental home operating and maintenance 6,058        5,542        516        9.3    %   22,186        21,995        191        0.9    %
Ancillary expenses 27,671        9,099        18,572        204.1    %   63,402        47,432        15,970        33.7    %
Home selling expenses 4,626        3,768        858        22.8    %   15,134        14,690        444        3.0    %
General and administrative expenses 31,795        25,434        6,361        25.0    %   111,288        93,964        17,324        18.4    %
Catastrophic weather-related charges, net 831        435        396        91.0    %   885        1,737        (852 )     (49.1 ) %
Business combination expense 23,008        —        23,008        N/A   23,008        —        23,008        N/A
Depreciation and amortization 117,423        98,826        18,597        18.8    %   376,876        328,067        48,809        14.9    %
Loss on extinguishment of debt —        3,027        (3,027 )     N/A   5,209        16,505        (11,296 )     (68.4 ) %
Interest expense 35,013        33,259        1,754        5.3    %   129,071        133,153        (4,082 )     (3.1 ) %
Interest on mandatorily redeemable preferred OP units / equity 1,047        1,207        (160 )     (13.3 ) %   4,177        4,698        (521 )     (11.1 ) %
Total Expenses 393,060        293,835        99,225        33.8    %   1,264,523        1,124,856        139,667        12.4    %
Income / (Loss) Before Other Items (8,795 )     7,984        (16,779 )     (210.2 ) %   133,824        139,181        (5,357 )     (3.8 ) %
Gain on remeasurement of marketable securities 8,765        17,692        (8,927 )     (50.5 ) %   6,129        34,240        (28,111 )     (82.1 ) %
Gain on foreign currency translation 10,480        4,522        5,958        131.8    %   8,039        4,557        3,482        76.4    %
Gain on disposition of property —        —        —        N/A   5,595        —        5,595        N/A
Other income / (expense), net(7) (390 )     424        (814 )     (192.0 ) %   (3,768 )     (1,100 )     (2,668 )     242.5    %
Loss on remeasurement of notes receivable (964 )     —        (964 )     N/A   (3,275 )     —        (3,275 )     N/A
Income / (loss) from nonconsolidated affiliates 392        (6 )     398        N/M   1,740        1,374        366        26.6    %
Loss on remeasurement of investment in nonconsolidated affiliates (103 )     —        (103 )     N/A   (1,608 )     —        (1,608 )     N/A
Current tax expense (328 )     (189 )     (139 )     73.5    %   (790 )     (1,095 )     305        (27.9 ) %
Deferred tax benefit 761        258        503        195.0    %   1,565        222        1,343        605.0    %
Net Income 9,818        30,685        (20,867 )     (68.0 ) %   147,451        177,379        (29,928 )     (16.9 ) %
Less: Preferred return to preferred OP units / equity 2,136        1,418        718        50.6    %   6,935        6,058        877        14.5    %
Less: Income attributable to noncontrolling interests 96        720        (624 )     (86.7 ) %   8,902        9,768        (866 )     (8.9 ) %
Net Income Attributable to Sun Communities, Inc. 7,586        28,547        (20,961 )     (73.4 ) %   131,614        161,553        (29,939 )     (18.5 ) %
Less: Preferred stock distribution —        —        —        N/A   —        1,288        (1,288 )     N/A
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 7,586        $ 28,547        $ (20,961 )     (73.4 ) %   $ 131,614        $ 160,265        $ (28,651 )     (17.9 ) %
                               
Weighted average common shares outstanding - basic 104,275        91,342        12,933        14.2    %   97,521        88,460        9,061        10.2    %
Weighted average common shares outstanding - diluted 104,744        91,893        12,851        14.0    %   97,522        88,915        8,607        9.7    %
                               
Basic earnings per share $ 0.07        $ 0.31        $ (0.24 )     (77.4 ) %   $ 1.34        $ 1.80        $ (0.46 )     (25.6 ) %
Diluted earnings per share $ 0.07        $ 0.31        $ (0.24 )     (77.4 ) %   $ 1.34        $ 1.80        $ (0.46 )     (25.6 ) %

N/M = Percentage change is not meaningful.


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

 


Outstanding Securities - As of December 31, 2020
                   
  Number of Units / Shares Outstanding   Conversion Rate*   If Converted(1)   Issuance Price Per Unit*   Annual Distribution Rate*
Non-convertible Securities                  
Common shares 107,626   N/A   N/A   N/A   $3.16^
                   
Convertible Securities                  
Common OP units 2,607   1.0000   2,607   N/A   Mirrors common shares distributions
                   
Series A-1 preferred OP units 295   2.4390   719   $ 100   6.00 %
Series A-3 preferred OP units 40   1.8605   75   $ 100   4.50 %
Series C preferred OP units 306   1.1100   340   $ 100   4.50 %
Series D preferred OP units 489   0.8000   391   $ 100   3.80 %
Series E preferred OP units 90   0.6897   62   $ 100   5.25 %
Series F preferred OP units 90   0.6250   56   $ 100   3.00 %
Series G preferred OP units 241   0.6452   155   $ 100   3.20 %
Series H preferred OP units 581   0.6098   355   $ 100   3.00 %
Series I preferred OP units 922   0.6098   562   $ 100   3.00 %

 ^ Annual distribution is based on the last quarterly distribution annualized.

(1)  Calculation may yield minor differences due to fractional shares paid in cash to the stockholder at conversion.

Capitalization - As of December 31, 2020            
             
Equity   Shares   Share Price*   Total
Common shares   107,626      $ 151.95      $ 16,353,771   
Common OP units   2,607      $ 151.95      396,134   
Subtotal   110,233          $ 16,749,905   
             
Preferred OP units as converted   2,715      $ 151.95      $ 412,544   
Total diluted shares outstanding   112,948          17,162,449   
             
Debt            
Mortgage loans payable           $ 3,444,967   
Preferred Equity - Sun NG Resorts - mandatorily redeemable           35,249   
Preferred OP units - mandatorily redeemable           34,663   
Lines of credit and other debt(6)           1,242,197   
Total debt           $ 4,757,076   
             
Total Capitalization           $ 21,919,525   


Reconciliations to Non-GAAP Financial Measures


Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to FFO(1) 
(amounts in thousands except for per share data)

 


  Three Months Ended   Year Ended
  December 31, 2020   December 31, 2019   December 31, 2020   December 31, 2019
Net Income Attributable To Sun Communities, Inc. Common Stockholders $ 7,586        $ 28,547        $ 131,614        $ 160,265     
Adjustments              
Depreciation and amortization 117,354        98,950        376,897        328,646     
Depreciation on nonconsolidated affiliates 38        —        66        —     
Gain on remeasurement of marketable securities (8,765 )     (17,692 )     (6,129 )     (34,240 )  
Loss on remeasurement of investment in nonconsolidated affiliates 103        —        1,608        —     
Loss on remeasurement of notes receivable 964        —        3,275        —     
Income attributable to noncontrolling interests 4        482        7,881        8,474     
Preferred return to preferred OP units 494        519        2,231        2,610     
Preferred distribution to Series A-4 preferred stock —        —        —        1,288     
Gain on disposition of properties —        —        (5,595 )     —     
Gain on disposition of assets, net (6,929 )     (5,273 )     (22,180 )     (26,356 )  
FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities(1)(4)

 $ 110,849        $ 105,533        $ 489,668        $ 440,687     
Adjustments              
Business combination expense 23,008        —        23,008        —     
Other acquisition related costs(8) 1,035        244        2,326        1,146     
Loss on extinguishment of debt —        3,027        5,209        16,505     
Catastrophic weather-related charges, net 831        398        885        1,737     
Gain on foreign currency translation (10,480 )     (4,522 )     (8,039 )     (4,557 )  
Other (income) / expense, net(7) 390        (424 )     3,768        1,100     
Other adjustments(a) (761 )     278        (1,265 )     314     
Core FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities(1)(4) $ 124,872        $ 104,534        $ 515,560        $ 456,932     
               
Weighted average common shares outstanding - basic 104,275        91,342        97,521        88,460     
Add              
Common stock issuable upon conversion of stock options 1        1        1        1     
Restricted stock 468        550        455        454     
Common OP units 2,496        2,300        2,458        2,448     
Common stock issuable upon conversion of certain preferred OP units 798        1,270        907        1,454     
Weighted Average Common Shares Outstanding - Fully Diluted 108,038        95,463        101,342        92,817     
               
FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities(1)(4) Per Share - Fully Diluted

 $ 1.03        $ 1.11        $ 4.83        $ 4.75     
               
Core FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities(1)(4) Per Share - Fully Diluted

 $ 1.16        $ 1.10        $ 5.09        $ 4.92     

(a)   Adjustments include deferred compensation amortization upon retirement and deferred tax (benefit) / expense.


Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to Recurring EBITDA(1)
(amounts in thousands)

 


  Three Months Ended   Year Ended
  December 31, 2020   December 31, 2019   December 31, 2020   December 31, 2019
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 7,586        $ 28,547        $ 131,614        $ 160,265     
Adjustments              
Depreciation and amortization 117,423        98,826        376,876        328,067     
Loss on extinguishment of debt —        3,027        5,209        16,505     
Interest expense 35,013        33,259        129,071        133,153     
Interest on mandatorily redeemable preferred OP units / equity 1,047        1,207        4,177        4,698     
Current tax expense 328        189        790        1,095     
Deferred tax benefit (761 )     (258 )     (1,565 )     (222 )  
(Income) / loss from nonconsolidated affiliates (392 )     6        (1,740 )     (1,374 )  
Less: Gain on dispositions of assets, net (6,929 )     (5,273 )     (22,180 )     (26,356 )  
Less: Gain on disposition of properties —        —        (5,595 )     —     
EBITDAre(1) $ 153,315        $ 159,530        $ 616,657        $ 615,831     
Adjustments              
Catastrophic weather related charges, net 831        435        885        1,737     
Business combination expense 23,008        —        23,008        —     
Gain on remeasurement of marketable securities (8,765 )     (17,692 )     (6,129 )     (34,240 )  
Gain on foreign currency translation (10,480 )     (4,522 )     (8,039 )     (4,557 )  
Other (income) / expense, net(6) 390        (424 )     3,768        1,100     
Loss on remeasurement of notes receivable 964        —        3,275        —     
Loss on remeasurement of investment in nonconsolidated affiliates 103        —        1,608        —     
Preferred return to preferred OP units / equity 2,136        1,418        6,935        6,058     
Income attributable to noncontrolling interests 96        720        8,902        9,768     
Preferred stock distribution —        —        —        1,288     
Plus: Gain on dispositions of assets, net 6,929        5,273        22,180        26,356     
Recurring EBITDA(1) $ 168,527        $ 144,738        $ 673,050        $ 623,341     



Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to NOI(1)
(amounts in thousands)

 


  Three Months Ended   Year Ended
  December 31, 2020   December 31, 2019   December 31, 2020   December 31, 2019
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 7,586        $ 28,547        $ 131,614        $ 160,265     
Interest income (2,510 )     (3,368 )     (10,119 )     (17,857 )  
Brokerage commissions and other revenues, net (4,162 )     (2,937 )     (17,230 )     (14,127 )  
Home selling expenses 4,626        3,768        15,134        14,690     
General and administrative expenses 31,795        25,434        111,288        93,964     
Catastrophic weather-related charges, net 831        435        885        1,737     
Business combination expense 23,008        —        23,008        —     
Depreciation and amortization 117,423        98,826        376,876        328,067     
Loss on extinguishment of debt —        3,027        5,209        16,505     
Interest expense 35,013        33,259        129,071        133,153     
Interest on mandatorily redeemable preferred OP units / equity 1,047        1,207        4,177        4,698     
Gain on remeasurement of marketable securities (8,765 )     (17,692 )     (6,129 )     (34,240 )  
Gain on foreign currency translation (10,480 )     (4,522 )     (8,039 )     (4,557 )  
Gain on disposition of property —        —        (5,595 )     —     
Other (income) / expense, net(7) 390        (424 )     3,768        1,100     
Loss on remeasurement of notes receivable 964        —        3,275        —     
Loss / (income) from nonconsolidated affiliates (392 )     6        (1,740 )     (1,374 )  
Loss on remeasurement of investment in nonconsolidated affiliates 103        —        1,608        —     
Current tax expense 328        189        790        1,095     
Deferred tax benefit (761 )     (258 )     (1,565 )     (222 )  
Preferred return to preferred OP units / equity 2,136        1,418        6,935        6,058     
Income attributable to noncontrolling interests 96        720        8,902        9,768     
Preferred stock distribution —        —        —        1,288     
NOI(1) / Gross Profit $ 198,276        $ 167,635        $ 772,123        $ 700,011     


  Three Months Ended   Year Ended
  December 31, 2020   December 31, 2019   December 31, 2020   December 31, 2019
Real Property NOI(1) $ 167,840        $ 146,106        $ 649,233        $ 586,649     
Home Sales NOI(1) / Gross Profit 12,486        10,944        43,815        47,579     
Rental Program NOI(1) 29,101        26,682        115,283        104,382     
Ancillary NOI(1) / Gross Profit 7,973        1,382        38,615        30,206     
Site rent from Rental Program (included in Real Property NOI)(1)(9) (19,124 )     (17,479 )     (74,823 )     (68,805 )  
NOI(1) / Gross Profit $ 198,276        $ 167,635        $ 772,123        $ 700,011     



Non-GAAP and Other Financial Measures


Debt Analysis 
(amounts in thousands)

 


  Quarter Ended
  12/31/2020   9/30/2020   6/30/2020   3/31/2020   12/31/2019
Debt Outstanding                  
Mortgage loans payable $ 3,444,967      $ 3,191,380      $ 3,205,507      $ 3,273,808      $ 3,180,592   
Preferred Equity - Sun NG Resorts - mandatorily redeemable 35,249      35,249      35,249      35,249      35,249   
Preferred OP units - mandatorily redeemable 34,663      34,663      34,663      34,663      34,663   
Lines of credit and other debt(6) 1,242,197      79,321      115,352      582,774      183,898   
Total debt $ 4,757,076      $ 3,340,613      $ 3,390,771      $ 3,926,494      $ 3,434,402   
                   
% Fixed / Floating                  
Fixed 74.0  %   97.6  %   96.6  %   85.2  %   94.7  %
Floating 26.0  %   2.4  %   3.4  %   14.8  %   5.3  %
Total 100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
                   
Weighted Average Interest Rates                  
Mortgage loans payable 3.78  %   3.88  %   3.88  %   3.91  %   4.05  %
Preferred Equity - Sun NG Resorts - mandatorily redeemable 6.00  %   6.00  %   6.00  %   6.00  %   6.00  %
Preferred OP units - mandatorily redeemable 5.93  %   5.93  %   5.93  %   5.93  %   6.50  %
Lines of credit and other debt(6) 2.08  %   1.32  %   2.03  %   1.85  %   2.71  %
Total average 3.37  %   3.86  %   3.86  %   3.64  %   4.03  %
                   
Debt Ratios                  
Net Debt / Recurring EBITDA(1) (TTM) 6.9      5.0      4.8      5.6      5.5   
Net Debt / Enterprise Value 21.4  %   18.3  %   17.8  %   22.6  %   19.0  %
Net Debt / Gross Assets 35.5  %   31.6  %   29.7  %   35.6  %   36.0  %
                   
Coverage Ratios                  
Recurring EBITDA(1) (TTM) / Interest 4.9   4.8   4.5   4.5   4.4
Recurring EBITDA(1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution 4.8   4.6   4.4   4.3   4.2


Maturities / Principal Amortization Next Five Years 2021   2022   2023   2024   2025
Mortgage loans payable                  
Maturities $ —      $ 82,155      $ 185,618      $ 315,330      $ 50,528   
Principal amortization 59,585      61,364      60,739      57,293      53,879   
Preferred Equity - Sun NG Resorts - mandatorily redeemable —      —      —      33,428      1,821   
Preferred OP units - mandatorily redeemable —      —      —      27,373      —   
Lines of credit and other debt(6) 10,000      14,794      65,403      1,152,000      —   
Total $ 69,585      $ 158,313      $ 311,760      $ 1,585,424      $ 106,228   
                   
Weighted average rate of maturities —  %   4.46  %   4.08  %   4.47  %   4.04  %



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

 


                               
  Three Months Ended   Year Ended
  December 31, 2020   December 31, 2019   Change   % Change   December 31, 2020   December 31, 2019   Change   % Change
Financial Information                              
Income from real property(10) $ 214,996      $ 203,422      $ 11,574      5.7  %   $ 876,981      $ 846,231      $ 30,750        3.6    %
                               
Property operating expenses                              
Payroll and benefits 21,440      19,472      1,968      10.1  %   81,897      82,727      (830 )     (1.0 ) %
Legal, taxes, and insurance 3,170      2,919      251      8.6  %   10,860      10,351      509        4.9    %
Utilities(10) 16,399      14,120      2,279      16.1  %   66,214      63,410      2,804        4.4    %
Supplies and repair(11) 8,393      6,926      1,467      21.2  %   33,616      33,153      463        1.4    %
Other(a) 6,309      5,462      847      15.5  %   27,916      26,738      1,178        4.4    %
Real estate taxes 15,786      14,039      1,747      12.4  %   63,706      59,649      4,057        6.8    %
Property operating expenses 71,497      62,938      8,559      13.6  %   284,209      276,028      8,181        3.0    %
Real Property NOI(1) $ 143,499      $ 140,484      $ 3,015      2.1  %   $ 592,772      $ 570,203      $ 22,569        4.0    %

(a) Includes COVID-19 personal protective equipment expense of $0.3 million and $2.4 million for the quarter and year ended December 31, 2020, respectively.

  As of        
  December 31, 2020   December 31, 2019   Change   % Change
Other Information              
Number of properties 367      367      —       
               
MH occupancy(3) 97.4  %            
RV occupancy(3) 100.0  %            
MH & RV blended occupancy(3) 98.0  %            
               
Adjusted MH occupancy(3) 98.5  %            
Adjusted RV occupancy(3) 100.0  %            
Adjusted MH & RV blended occupancy(3) 98.8  %   97.0  %   1.8  %    
               
Sites available for development 6,682      6,314      368       
               
Monthly base rent per site - MH $ 600      $ 580      $ 20      3.4%(13)
Monthly base rent per site - RV(12) $ 514      $ 488      $ 26      5.4%(13)
Monthly base rent per site - Total(12) $ 579      $ 558      $ 21      3.8%(13)



Home Sales Summary           
(amounts in thousands except for *)

 


                               
  Three Months Ended   Year Ended
  December 31, 2020   December 31, 2019   Change   % Change   December 31, 2020   December 31, 2019   Change   % Change
Financial Information                              
New Homes                              
New home sales $ 21,192      $ 19,900      $ 1,292        6.5    %   $ 79,728      $ 71,760      $ 7,968        11.1    %
New home cost of sales 17,922      16,817      1,105        6.6    %   65,533      61,557      3,976        6.5    %
NOI(1) / Gross Profit – new homes 3,270      3,083      187        6.1    %   14,195      10,203      3,992        39.1    %
Gross margin % – new homes 15.4  %   15.5  %   (0.1 ) %       17.8  %   14.2  %   3.6    %    
Average selling price – new homes* $ 135,846      $ 142,143      $ (6,297 )     (4.4 ) %   $ 139,874      $ 125,674      $ 14,200        11.3    %
                               
Pre-owned Homes                              
Pre-owned home sales $ 27,728      $ 25,371      $ 2,357        9.3    %   $ 95,971      $ 110,176      $ (14,205 )     (12.9 ) %
Pre-owned home cost of sales 18,512      17,510      1,002        5.7    %   66,351      72,800      (6,449 )     (8.9 ) %
NOI(1) / Gross Profit – pre-owned homes 9,216      7,861      1,355        17.2    %   29,620      37,376      (7,756 )     (20.8 ) %
Gross margin % – pre-owned homes 33.2  %   31.0  %   2.2    %       30.9  %   33.9  %   (3.0 ) %    
Average selling price – pre-owned homes* $ 44,294      $ 37,981      $ 6,313        16.6    %   $ 41,799      $ 38,416      $ 3,383        8.8    %
                               
Total Home Sales                              
Revenue from home sales $ 48,920      $ 45,271      $ 3,649        8.1    %   $ 175,699      $ 181,936      $ (6,237 )     (3.4 ) %
Cost of home sales 36,434      34,327      2,107        6.1    %   131,884      134,357      (2,473 )     (1.8 ) %
NOI(1) / Gross Profit – home sales $ 12,486      $ 10,944      $ 1,542        14.1    %   $ 43,815      $ 47,579      $ (3,764 )     (7.9 ) %
                               
Statistical Information                              
New home sales volume* 156      140      16        11.4    %   570      571      (1 )     (0.2 ) %
Pre-owned home sales volume* 626      668      (42 )     (6.3 ) %   2,296      2,868      (572 )     (19.9 ) %
Total home sales volume* 782      808      (26 )     (3.2 ) %   2,866      3,439      (573 )     (16.7 ) %



Rental Program Summary    
(amounts in thousands except for *)

 


                               
  Three Months Ended   Year Ended
  December 31, 2020   December 31, 2019   Change   % Change   December 31, 2020   December 31, 2019   Change   % Change
Financial Information                              
Revenues                              
Rental home revenue $ 16,035      $ 14,745      $ 1,290        8.7    %   $ 62,646      $ 57,572      $ 5,074        8.8    %
Site rent from Rental Program(1)(9) 19,124      17,479      1,645        9.4    %   74,823      68,805      6,018        8.7    %
Rental Program revenue 35,159      32,224      2,935        9.1    %   137,469      126,377      11,092        8.8    %
                               
Expenses                              
Repairs and refurbishment 3,263      3,273      (10 )     (0.3 ) %   11,886      12,591      (705 )     (5.6 ) %
Taxes and insurance 2,382      1,857      525        28.3    %   8,460      7,488      972        13.0    %
Other 413      412      1        0.2    %   1,840      1,916      (76 )     (4.0 ) %
Rental Program operating and maintenance 6,058      5,542      516        9.3    %   22,186      21,995      191        0.9    %
Rental Program NOI(1) $ 29,101      $ 26,682      $ 2,419        9.1    %   $ 115,283      $ 104,382      $ 10,901        10.4    %
                               
Other Information                              
Number of sold rental homes* 269      281      (12 )     (4.3 ) %   850      1,140      (290 )     (25.4 ) %
Number of occupied rentals, end of period*                 11,752      11,325      427        3.8    %
Investment in occupied rental homes, end of period                 $ 629,162      $ 584,771      $ 44,391        7.6    %
Weighted average monthly rental rate, end of period*                 $ 1,042      $ 997      $ 45        4.5    %



Acquisitions and Other Summary(14)
(amounts in thousands except for statistical data)

 


         
    Three Months Ended   Year Ended
    December 31, 2020   December 31, 2020
Financial Information        
Revenues        
Income from real property   $ 52,737      $ 115,994   
         
Property and Operating Expenses        
Payroll and benefits   9,791      19,348   
Legal, taxes & insurance   1,064      1,844   
Utilities   5,492      12,307   
Supplies and repairs   2,205      6,076   
Other   5,365      11,058   
Real estate taxes   4,479      8,900   
Property operating expenses   28,396      59,533   
Net operating income (NOI)(1)   $ 24,341      $ 56,461   
         
Other Information - MH and RVs       December 31, 2020
Number of properties       79   
Occupied sites       11,070   
Developed sites       12,118   
Occupancy %       91.4  %
Transient sites       6,942   


Other Information - Marinas       December 31, 2020
Number of properties       106
Wet slips       29,530
Dry storage       9,351
Total wet slips and dry storage       38,881



MH and RV Property Summary                
                     
                     
Properties   12/31/2020   9/30/2020   6/30/2020   3/31/2020   12/31/2019
FLORIDA                    
Properties   128      127      125      125      125   
Developed sites(15)   39,803      39,517      39,241      39,380      39,230   
Occupied(15)   39,063      38,743      38,453      38,526      38,346   
Occupancy %(15)   98.1  %   98.0  %   98.0  %   97.8  %   97.7  %
Sites for development   1,497      1,427      1,427      1,527      1,527   
MICHIGAN                    
Properties   74      74      72      72      72   
Developed sites(15)   29,086      29,086      27,901      27,883      27,905   
Occupied(15)   28,109      28,033      27,191      26,863      26,785   
Occupancy %(15)   96.6  %   96.4  %   97.5  %   96.3  %   96.0  %
Sites for development   1,182      1,182      1,182      1,115      1,115   
CALIFORNIA                    
Properties   35      34      32      31      31   
Developed sites(15)   6,675      6,372      6,364      5,986      5,981   
Occupied(15)   6,602      6,290      6,272      5,948      5,941   
Occupancy %(15)   98.9  %   98.7  %   98.6  %   99.4  %   99.3  %
Sites for development   373      373      264      302      302   
TEXAS                     
Properties   24      24      23      23      23   
Developed sites(15)   7,766      7,659      7,641      7,627      7,615   
Occupied(15)   7,572      7,427      7,289      7,076      7,006   
Occupancy %(15)   97.5  %   97.0  %   95.4  %   92.8  %   92.0  %
Sites for development   1,378      1,378      565      555      555   
ONTARIO, CANADA                    
Properties   15      15      15      15      15   
Developed sites(15)   4,090      4,067      3,980      3,977      4,031   
Occupied(15)   4,090      4,067      3,980      3,977      4,031   
Occupancy %(15)   100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
Sites for development   1,525      1,593      1,593      1,608      1,611   
ARIZONA                    
Properties   14      13      13      13      13   
Developed sites(15)   4,323      4,274      4,259      4,268      4,263   
Occupied(15)   4,030      3,957      3,932      3,923      3,892   
Occupancy %(15)   93.2  %   92.6  %   92.3  %   91.9  %   91.3  %
Sites for development   —      —      —      —      —   
INDIANA                    
Properties   12      11      11      11      11   
Developed sites(15)   3,087      3,087      3,087      3,087      3,087   
Occupied(15)   2,950      2,957      2,961      2,914      2,900   
Occupancy %(15)   95.6  %   95.8  %   95.9  %   94.4  %   93.9  %
Sites for development   277      277      277      277      277   
COLORADO                    
Properties   10      10      10      10      10   
Developed sites(14)   2,453      2,453      2,441      2,423      2,423   
Occupied(15)   2,380      2,365      2,327      2,318      2,322   
Occupancy %(15)   97.0  %   96.4  %   95.3  %   95.7  %   95.8  %
Sites for development   1,250      1,282      1,566      1,867      1,867   
                     
OHIO                     
Properties   9      9      9      9      9   
Developed sites(15)   2,790      2,790      2,778      2,768      2,770   
Occupied(15)   2,755      2,758      2,736      2,702      2,716   
Occupancy %(15)   98.7  %   98.9  %   98.5  %   97.6  %   98.1  %
Sites for development   22      22      22      59      59   
OTHER STATES                    
Properties   125      115      116      115      113   
Developed sites(15)   24,179      22,721      22,780      22,583      22,572   
Occupied(15)   23,401      21,995      22,024      21,749      21,678   
Occupancy %(15)   96.8  %   96.8  %   96.7  %   96.3  %   96.0  %
Sites for development   2,521      2,596      2,846      2,980      2,980   
TOTAL - MH AND ANNUAL RV PORTFOLIO                    
Properties   446      432      426      424      422   
Developed sites(15)   124,252      122,026      120,472      119,982      119,877   
Occupied(15)   120,952      118,592      117,165      115,996      115,617   
Occupancy %(15)   97.3  % (16) 97.2  %   97.3  %   96.7  %   96.4  %
Sites for development(17)   10,025      10,130      9,742      10,290      10,293   
% Communities age restricted   33.2  %   33.6  %   34.0  %   34.0  %   34.1  %
                     
TRANSIENT RV SITE SUMMARY                    
Location                    
Florida   6,011      5,993      5,547      5,311      5,465   
California   2,231      2,236      1,978      1,947      1,952   
Texas   1,810      1,917      1,590      1,612      1,623   
Maryland   1,515      1,515      1,515      1,488      1,488   
New York   1,422      900      911      916      923   
Arizona   1,337      1,386      1,401      1,392      1,397   
Indiana   1,089      534      534      534      534   
Ontario, Canada   966      920      1,007      1,009      939   
Colorado   962      930      574      291      291   
Maine   805      819      837      828      811   
New Jersey   813      828      857      875      864   
Virginia   737      564      598      630      324   
Other states   5,345      5,186      5,011      5,047      4,805   
Total Transient RV Sites   25,043      23,728      22,360      21,880      21,416   


Marina Property Summary    
     
     
MARINAS   12/31/2020
MICHIGAN    
Properties   5   
Total wet slips and dry storage spaces   4,468   
FLORIDA    
Properties   14   
Total wet slips and dry storage spaces   3,573   
CONNECTICUT    
Properties   11   
Total wet slips and dry storage spaces   3,254   
GEORGIA    
Properties   4   
Total wet slips and dry storage spaces   2,834   
RHODE ISLAND    
Properties   11   
Total wet slips and dry storage spaces   2,690   
NEW YORK    
Properties   8   
Total wet slips and dry storage spaces   2,620   
OTHER STATES    
Properties   53   
Total wet slips and dry storage spaces   19,442   
TOTAL - MARINA PORTFOLIO    
Properties   106   
Total wet slips and dry storage spaces   38,881   



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

 


   Recurring
Capital Expenditures
Average / Site*		 Recurring
Capital Expenditures(18)		  Lot
Modifications(19)		 Acquisitions(20)  Expansion
and
Development(21)		 Revenue Producing /Expense Reduction Projects(22) Marina Related
Capital Expenditures(a)
2020 $ 265    $ 31,398    $ 29,789    $ 3,099,547    $ 246,454    $ 23,683    $ 14,147   
2019 $ 345    $ 30,382    $ 31,135    $ 930,668    $ 281,808    $ 9,638    N/A
2018 $ 263    $ 24,265    $ 22,867    $ 414,840    $ 152,672    $ 3,864    N/A

 (a) Includes capital improvements at recently acquired marinas, recurring capital expenditures, revenue producing capital expenditures and expansion and development.


Operating Statistics for MH and Annual RVs

 


Locations   Resident Move-outs   Net Leased Sites(5)   New Home Sales   Pre-owned Home Sales   Brokered
Re-sales
Florida   2,303      410      164      209      1,251   
Michigan   422      601      43      1,148      159   
Ontario, Canada   677      59      37      21      424   
Texas   398      566      73      254      68   
Arizona   81      138      43      28      143   
Indiana   67      50      4      187      18   
Ohio   95      39      —      98      9   
California   116      47      29      15      94   
Colorado   22      58      33      26      48   
Other states   1,184      537      144      310      343   
Year Ended December 31, 2020   5,365      2,505      570      2,296      2,557   


Total For Year Ended   Resident Move-outs   Net Leased Sites(5)   New Home Sales   Pre-owned Home Sales   Brokered
Re-sales
2019   4,139      2,674      571      2,868      2,231   
2018   3,435      2,600      526      3,103      2,147   


Percentage Trends   Resident Move-outs   Resident
Re-sales
2020   3.3  %   6.9  %
2019   2.6  %   6.6  %
2018   2.4  %   7.2  %



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, real estate related impairments, and after adjustments for nonconsolidated 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 nonconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of nonconsolidated 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 2020 average exchange rates.

(3)   The Same Community occupancy percentage is 97.4 percent for MH, 100.0 percent for RV, and 98.0 percent for the blended MH and RV. The MH and RV blended occupancy is derived from 112,134 developed sites, of which 109,882 were occupied. The Same Community occupancy percentage for 2019 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. The adjusted Same Community occupancy percentage for 2020 is derived from 111,196 developed sites, of which 109,882 were occupied. The number of developed sites excludes RV transient sites and approximately 950 recently completed but vacant MH expansion sites.

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

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

(6)  Lines of credit and other debt includes the Company’s MH floor plan facility. The effective interest rate on the MH floor plan facility was 6.0 percent for the quarters ended December 31, September 30 and June 30, 2020, and 7.0 percent for the quarters ended March 31, 2020, and December 31, 2019. However, the Company pays no interest if the floor plan balance is repaid within 60 days.

(7)   Other expense, net was as follows (in thousands):

  Three Months Ended   Year Ended
  December 31, 2020   December 31, 2019   December 31, 2020   December 31, 2019
Foreign currency remeasurement gain / (loss) $ (318 )     $ (16 )     $ (373 )     $ (77 )  
Collateralized receivables derecognition gain —        587        —        587     
Contingent consideration value expense (72 )     (82 )     (2,962 )     (1,503 )  
Long term lease termination expense —        (65 )     (433 )     (107 )  
Other expense, net $ (390 )     $ 424        $ (3,768 )     $ (1,100 )  

(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)   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.

(10) Same Community results net $9.3 million and $8.7 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the three months ended December 31, 2020 and 2019, respectively. Same Community results net $37.7 million and $34.7 million of utility revenue against the related utility expense in property operating and maintenance expense for the years ended December 31, 2020 and 2019, respectively.

(11) Same Community supplies and repair expense excludes $0.1 million and $0.7 million for the three months and year ended December 31, 2019, 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.

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

(13) Calculated using actual results without rounding.

(14) Acquisitions and other is comprised of 130 properties acquired and three properties that the Company has an interest in, but does not operate in 2020, 42 properties acquired in 2019, one property being operated under a temporary use permit, three Florida Keys properties that require redevelopment as a result of damage sustained from Hurricane Irma in 2017, five recently opened ground-up developments, one property undergoing redevelopment, and other miscellaneous transactions and activity.

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

(16) As of December 31, 2020, total portfolio MH occupancy was 96.6 percent inclusive of the impact of over 1,200 recently constructed but vacant MH expansion sites, and annual RV occupancy was 100.0 percent.

(17) Total sites for development were comprised of 75.7 percent for expansion, 22.2 percent for greenfield development and 2.2 percent for redevelopment.

(18) MH recurring capital expenditures are necessary to maintain asset quality, including purchasing and replacing assets used to operate the communities. 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.

(19) MH 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.

(20) Capital expenditures related to acquisitions represent the purchase price of existing operating properties (including marinas) and land parcels to develop expansions or new properties. These costs for the year ended December 31, 2020 include $40.6 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, 2019 and 2018, these costs were $50.7 million and $94.6 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.

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

(22) MH 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.

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


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Sun Communities, Inc.