News Release Details

Sun Communities, Inc. Reports 2020 Second Quarter Results

Jul 22, 2020
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NEWS RELEASE

July 22, 2020

Sun Communities, Inc. Reports 2020 Second Quarter Results

Southfield, Michigan, July 22, 2020 (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 second quarter results for 2020.

Financial Results for the Quarter and Six Months Ended June 30, 2020 

For the quarter ended June 30, 2020, total revenues decreased $9.2 million, or 2.9 percent, to $303.3 million compared to $312.4 million for the same period in 2019. Net income attributable to common stockholders was $58.9 million, or $0.61 per diluted common share, for the quarter ended June 30, 2020, as compared to net income attributable to common stockholders of $40.4 million, or $0.46 per diluted common share, for the same period in 2019.

For the six months ended June 30, 2020, total revenues increased $13.8 million, or 2.3 percent, to $613.6 million compared to $599.8 million for the same period in 2019. Net income attributable to common stockholders was $42.8 million, or $0.45 per diluted common share, for the six months ended June 30, 2020, as compared to net income attributable to common stockholders of $74.7 million, or $0.86 per diluted common share, for the same period in 2019.

Non-GAAP Financial Measures and Portfolio Performance

  • Core Funds from Operations (“Core FFO”)(1) for the quarter ended June 30, 2020, was $1.12 per diluted share and OP unit (“Share”) as compared to $1.18 in the corresponding period in 2019.
     
  • Same Community(2) Net Operating Income (“NOI”)(1) increased by 1.4 percent for the quarter ended June 30, 2020, as compared to the corresponding period in 2019, including the impact of $0.9 million of direct COVID-19 related expense.
     
  • Revenue Producing Sites increased by 851 sites for the quarter ended June 30, 2020, bringing total portfolio occupancy to 97.3 percent.
     
  • MH rent collections for the second quarter were approximately 97.0 percent, in line with the corresponding period in 2019. MH rent collections as of July 21st are approximately 96.0 percent.
     
  • Annual RV rent collections for the second quarter were approximately 98.0 percent, in line with the corresponding period in 2019.

Gary Shiffman, Chief Executive Officer of Sun Communities stated, “We are pleased to report, despite the ongoing uncertainty, all of our communities and resorts are open. In the second quarter, our portfolio performed better than our expectations as expense containment efforts helped to mitigate the impact of the pandemic. Furthermore, we achieved total portfolio occupancy of 97.3 percent, adding 851 revenue producing sites during the second quarter, a 27.4 percent increase year over year. Portions of our portfolio were restricted from opening early in the second quarter, but we are now seeing significant gains in demand for our RV resorts with forward reservations trending near or ahead of initial budget.”

Mr. Shiffman continued, “We remain focused on the health and safety of our residents, guests and team members as we navigate the COVID-19 virus. We are well positioned in the current environment and over the long term given our high-quality locations, affordable home price point and our alignment with the growing demand for the RV lifestyle.”


OPERATING HIGHLIGHTS

Portfolio Occupancy

Total portfolio occupancy was 97.3 percent at June 30, 2020, compared to 96.6 percent at June 30, 2019. During the quarter ended June 30, 2020, revenue producing sites increased by 851 sites, as compared to 668 revenue producing sites gained during the second quarter of 2019, a 27.4 percent increase.

During the six months ended June 30, 2020, revenue producing sites increased by 1,151 sites, as compared to an increase of 1,239 revenue producing sites during the six months ended June 30, 2019.


Same Community(2) Results

For the 367 communities owned and operated by the Company since January 1, 2019, NOI(1) for the quarter ended June 30, 2020 increased 1.4 percent over the same period in 2019, resulting from a 1.8 percent decrease in revenues and an 8.0 percent decrease in operating expenses. Adjusted to remove the impact of $0.9 million of direct COVID-19 related expense, Same Community NOI(1) growth was 2.0 percent. Same Community occupancy(3) increased to 98.7 percent at June 30, 2020 from 96.8 percent at June 30, 2019.

For the six months ended June 30, 2020, NOI(1) increased 4.0 percent over the same period in 2019, as a result of a 1.6 percent increase in revenues and a 3.4 percent decrease in operating expenses. Adjusted to remove the impact of $0.9 million of direct COVID-19 related expense, Same Community NOI(1) growth was 4.4 percent.


Home Sales

During the quarter ended June 30, 2020, the Company sold 611 homes as compared to 927 homes sold during the same period in 2019. The Company sold 140 and 139 new homes for the quarters ended June 30, 2020 and 2019, respectively. Rental home sales, which are included in total home sales, were 122 and 332 for the quarters ended June 30, 2020 and 2019, respectively.

During the six months ended June 30, 2020, 1,374 homes were sold as compared to 1,725 for the same period in
2019. Rental home sales, which are included in total home sales, were 356 and 542 for the six months ended June 30, 2020 and 2019, respectively.

Rent Collections

For the second quarter of 2020, MH and annual RV rent collections approximated 97.0 percent and 98.0 percent, respectively, after adjusting for the impact of hardship deferrals and prepaid rent balances. These collection percentages are in line with the second quarter of 2019.


PORTFOLIO ACTIVITY

Acquisitions and Dispositions

During and subsequent to the quarter ended June 30, 2020, the Company acquired the following communities:

Community Name   Type   Sites     State   Total Purchase Price (in millions)   Month Acquired
Forest Springs (a)   MH   372        CA   $ 56.5      May
Crown Villa   RV   123        OR   $ 16.8      June
Flamingo Village   RV   421        FL   $ 34.0      July

(a)   In conjunction with the acquisition, the Company issued Series F preferred Operating Partnership (“OP”) units and Common OP units. As of June 30, 2020, 90,000 Series F preferred OP units and 82,420 common OP units, specific to this acquisition, were outstanding.

Year to date, the Company has acquired five communities totaling 1,445 sites for a total purchase price of $132.3 million.

Subsequent to the quarter ended June 30, 2020, the Company sold a MH community located in Great Falls, Montana, containing 226 sites, for $13.0 million. The assets and liabilities associated with the transaction were classified as held for sale on the Consolidated Balance Sheets as of June 30, 2020.

Construction Activity

During the quarter ended June 30, 2020, the Company completed the construction of nearly 180 expansion sites in five communities and nearly 320 sites in three ground-up developments and one redevelopment community.


BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

During the quarter, the Company repaid four term loans totaling $52.7 million collateralized by six properties. These loans had a weighted average interest rate of 5.98 percent and were set to mature in 2021.

As of June 30, 2020, the Company had $3.4 billion of debt outstanding. The weighted average interest rate was 3.86 percent and the weighted average maturity was 11.6 years. The Company had $373.5 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve-month Recurring EBITDA(1) ratio was 4.8 times.

Equity Transactions

During the quarter ended June 30, 2020, the Company closed an underwritten registered public offering of 4,968,000 shares of common stock. Proceeds from the offering were $633.1 million after deducting expenses related to the offering. The Company used a portion of the net proceeds of the offering to repay borrowings outstanding under its senior credit facility. The Company intends to use the proceeds of this offering to fund acquisitions, working capital needs and for general corporate purposes.


COVID-19 FINANCIAL IMPACT

Given the uncertainty surrounding the impact from the COVID-19 pandemic on its operations, the Company has withdrawn full year 2020 operational and financial guidance previously provided on February 19, 2020.

For the second quarter of 2020, the Company had a net reduction of $10.8 million from its original budget as compared to its estimated net reduction of $15.0 million to $18.0 million.

The Company’s third quarter is typically the largest contributor to earnings due to seasonality. The Company’s original budget for the third quarter of 2020 was approximately 31.0 percent of FFO(1) for the year. The Company has estimated a net reduction of $12.0 million to $15.0 million from its original budget for the third quarter of 2020. This range includes an expected $9.5 million of impact to income from real property across manufactured housing, annual RV and transient RV, and a reduction of $2.5 million and $2.0 million in net contribution from ancillary services and home sales, respectively.


EARNINGS CONFERENCE CALL

A conference call to discuss second quarter operating results will be held on Thursday, July 23, 2020 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 August 6, 2020 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 13704750. 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 June 30, 2020, owned, operated, or had an interest in a portfolio of 426 communities comprising nearly 143,000 developed sites in 33 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 the effects of the COVID-19 pandemic and related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations; 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 for the year ended December 31, 2019 and in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

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
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 June 30, 2020)

 



Financial and Operating Highlights

(amounts in thousands, except for *)

 
  Quarter Ended
  6/30/2020   3/31/2020   12/31/2019   9/30/2019   6/30/2019
Financial Information                  
Total revenues $ 303,266      $ 310,302        $ 301,819      $ 362,443      $ 312,445   
Net income / (loss) $ 63,355      $ (15,478 )     $ 30,685      $ 64,451      $ 45,116   
Net Income / (loss) attributable to Sun Communities Inc. common stockholders $ 58,910      $ (16,086 )     $ 28,547      $ 57,002      $ 40,385   
Basic earnings / (loss) per share* $ 0.61      $ (0.17 )     $ 0.31      $ 0.63      $ 0.46   
Diluted earnings / (loss) per share* $ 0.61      $ (0.17 )     $ 0.31      $ 0.63      $ 0.46   
                   
Cash distributions declared per common share* $ 0.79      $ 0.79        $ 0.75      $ 0.75      $ 0.75   
                   
Recurring EBITDA (1) $ 148,650      $ 156,552        $ 144,738      $ 179,953      $ 151,502   
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (4) $ 118,092      $ 95,046        $ 105,533      $ 119,496      $ 108,112   
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (4) $ 110,325      $ 117,267        $ 104,534      $ 137,369      $ 108,002   
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (4) per share - fully diluted* $ 1.20      $ 0.98        $ 1.11      $ 1.27      $ 1.18   
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (4) per share - fully diluted* $ 1.12      $ 1.22        $ 1.10      $ 1.46      $ 1.18   
                   
Balance Sheet                  
Total assets $ 8,348,659      $ 8,209,047        $ 7,802,060      $ 7,397,854      $ 7,222,084   
Total debt $ 3,390,771      $ 3,926,494        $ 3,434,402      $ 3,271,341      $ 3,107,775   
Total liabilities $ 3,845,308      $ 4,346,127        $ 3,848,104      $ 3,720,983      $ 3,542,188   
  Quarter Ended
  6/30/2020   3/31/2020   12/31/2019   9/30/2019   6/30/2019
Operating Information*                  
Communities 426      424        422      389      382   
                   
Manufactured home sites 94,232      93,834        93,821      88,024      87,555   
Annual RV sites 26,240      26,148        26,056      25,756      25,009   
Transient RV sites 22,360      21,880        21,416      20,882      20,585   
Total sites 142,832      141,862        141,293      134,662      133,149   
                   
MH occupancy 96.5  %   95.8    %   95.5  %   95.7  %   95.7  %
RV occupancy 100.0  %   100.0    %   100.0  %   100.0  %   100.0  %
Total blended MH and RV occupancy 97.3  %   96.7    %   96.4  %   96.7  %   96.6  %
                   
New home sales 140      119        140      167      139   
Pre-owned home sales 471      644        668      739      788   
Total home sales 611      763        808      906      927   
  Quarter Ended
  6/30/2020   3/31/2020   12/31/2019   9/30/2019   6/30/2019
Net Leased Sites (5)                  
MH net leased sites 759      287        437      296      410   
RV net leased sites 92      13        232      470      258   
Total net leased sites 851      300        669      766      668   



Consolidated Balance Sheets
(amounts in thousands)

    (Unaudited)    
    June 30, 2020   December 31, 2019
Assets        
 
Land   $ 1,433,272        $ 1,414,279     
Land improvements and buildings   6,826,741        6,595,272     
Rental homes and improvements   652,177        627,175     
Furniture, fixtures and equipment   312,139        282,874     
Investment property   9,224,329        8,919,600     
Accumulated depreciation   (1,826,810 )     (1,686,980 )  
Investment property, net   7,397,519        7,232,620     
Cash, cash equivalents and restricted cash   389,214        34,830     
Marketable securities   100,564        94,727     
Inventory of manufactured homes   58,744        62,061     
Notes and other receivables, net   180,391        157,926     
Other assets, net   222,227        219,896     
Total Assets   $ 8,348,659        $ 7,802,060     
Liabilities        
Mortgage loans payable   $ 3,205,507        $ 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 (6)   115,352        183,898     
Distributions payable   79,549        71,704     
Advanced reservation deposits and rent   169,931        133,420     
Accrued expenses and accounts payable   124,324        127,289     
Other liabilities   80,733        81,289     
Total Liabilities   3,845,308        3,848,104     
Commitments and contingencies        
Series D preferred OP units   50,171        50,913     
Series F preferred OP units   8,948        —     
Equity Interests - NG Sun LLC and NG Sun Whitewater LLC   24,863        27,091     
Stockholders' Equity        
Common stock   983        932     
Additional paid-in capital   5,847,598        5,213,264     
Accumulated other comprehensive loss   (4,475 )     (1,331 )  
Distributions in excess of accumulated earnings   (1,496,542 )     (1,393,141 )  
Total Sun Communities, Inc. stockholders' equity   4,347,564        3,819,724     
Noncontrolling interests        
Common and preferred OP units   61,555        47,686     
Consolidated variable interest entities   10,250        8,542     
Total noncontrolling interests   71,805        56,228     
Total Stockholders' Equity   4,419,369        3,875,952     
Total Liabilities, Temporary Equity and Stockholders' Equity   $ 8,348,659        $ 7,802,060     



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

 
  Three Months Ended   Six Months Ended
  June 30, 2020   June 30, 2019   Change   % Change   June 30, 2020   June 30, 2019   Change   % Change
Revenues                              
Income from real property (excluding transient revenue) $ 210,445        $ 195,503        $ 14,942        7.6    %   $ 422,975        $ 386,068        $ 36,907        9.6    %
Transient revenue 21,039        28,141        (7,102 )     (25.2 ) %   46,294        52,659        (6,365 )     (12.1 ) %
Revenue from home sales 38,530        47,242        (8,712 )     (18.4 ) %   79,117        86,860        (7,743 )     (8.9 ) %
Rental home revenue 14,968        14,412        556        3.9    %   30,440        28,383        2,057        7.2    %
Ancillary revenue 12,375        19,720        (7,345 )     (37.2 ) %   22,570        29,898        (7,328 )     (24.5 ) %
Interest income 2,635        4,919        (2,284 )     (46.4 ) %   4,985        9,719        (4,734 )     (48.7 ) %
Brokerage commissions and other revenues, net 3,274        2,508        766        30.5    %   7,187        6,188        999        16.1    %
Total Revenues 303,266        312,445        (9,179 )     (2.9 ) %   613,568        599,775        13,793        2.3    %
Expenses                              
Property operating and maintenance 65,204        65,888        (684 )     (1.0 ) %   129,261        123,797        5,464        4.4    %
Real estate taxes 17,723        15,726        1,997        12.7    %   34,899        31,056        3,843        12.4    %
Cost of home sales 29,181        34,435        (5,254 )     (15.3 ) %   59,213        63,712        (4,499 )     (7.1 ) %
Rental home operating and maintenance 4,685        5,177        (492 )     (9.5 ) %   10,179        10,009        170        1.7    %
Ancillary expenses 8,226        12,480        (4,254 )     (34.1 ) %   15,708        19,581        (3,873 )     (19.8 ) %
Home selling expenses 2,864        3,626        (762 )     (21.0 ) %   6,856        6,950        (94 )     (1.4 ) %
General and administrative expenses 26,733        23,697        3,036        12.8    %   52,250        45,584        6,666        14.6    %
Catastrophic weather-related charges, net (566 )     179        (745 )     N/M   40        961        (921 )     (95.8 ) %
Depreciation and amortization 87,265        76,153        11,112        14.6    %   170,954        152,709        18,245        11.9    %
Loss on extinguishment of debt 1,930        70        1,860        N/M   5,209        723        4,486        N/M
Interest expense 31,428        33,661        (2,233 )     (6.6 ) %   63,844        67,675        (3,831 )     (5.7 ) %
Interest on mandatorily redeemable preferred OP units / equity 1,042        1,181        (139 )     (11.8 ) %   2,083        2,275        (192 )     (8.4 ) %
Total Expenses 275,715        272,273        3,442        1.3    %   550,496        525,032        25,464        4.8    %
Income Before Other Items 27,551        40,172        (12,621 )     (31.4 ) %   63,072        74,743        (11,671 )     (15.6 ) %
Gain / (loss) on remeasurement of marketable securities 24,519        3,620        20,899        N/M   (4,128 )     3,887        (8,015 )     N/M
Gain / (loss) on foreign currency translation 10,374        1,116        9,258        N/M   (7,105 )     3,081        (10,186 )     N/M
Other expense, net (7) (552 )     (95 )     (457 )     N/M   (854 )     (162 )     (692 )     N/M
Gain / (loss) on remeasurement of notes receivable 246        —        246        N/A   (1,866 )     —        (1,866 )     N/A
Income from nonconsolidated affiliates 92        479        (387 )     (80.8 ) %   144        867        (723 )     (83.4 ) %
Gain / (loss) on remeasurement of investment in nonconsolidated affiliates 1,132        —        1,132        N/A   (1,059 )     —        (1,059 )     N/A
Current tax expense (119 )     (272 )     153        (56.3 ) %   (569 )     (486 )     (83 )     17.1    %
Deferred tax benefit 112        96        16        16.7    %   242        313        (71 )     (22.7 ) %
Net Income 63,355        45,116        18,239        40.4    %   47,877        82,243        (34,366 )     (41.8 ) %
Less: Preferred return to preferred OP units / equity 1,584        1,718        (134 )     (7.8 ) %   3,154        3,041        113        3.7    %
Less: Income attributable to noncontrolling interests 2,861        2,585        276        10.7    %   1,899        3,626        (1,727 )     (47.6 ) %
Net Income Attributable to Sun Communities, Inc. 58,910        40,813        18,097        44.3    %   42,824        75,576        (32,752 )     (43.3 ) %
Less: Preferred stock distribution —        428        (428 )     (100.0 ) %   —        860        (860 )     (100.0 ) %
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 58,910        $ 40,385        $ 18,525        45.9    %   $ 42,824        $ 74,716        $ (31,892 )     (42.7 ) %
                               
Weighted average common shares outstanding - basic 95,859        87,130        8,729        10.0    %   94,134        86,325        7,809        9.0    %
Weighted average common shares outstanding - diluted 96,165        87,564        8,601        9.8    %   94,525        86,770        7,755        8.9    %
                               
Basic earnings per share $ 0.61        $ 0.46        $ 0.15        32.6    %   $ 0.45        $ 0.86        $ (0.41 )     (47.7 ) %
Diluted earnings per share $ 0.61        $ 0.46        $ 0.15        32.6    %   $ 0.45        $ 0.86        $ (0.41 )     (47.7 ) %

  N/M = Percentage change is not meaningful


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

 


Outstanding Securities - As of  June 30, 2020
                   
  Number of Units/Shares Outstanding   Conversion Rate*   If Converted   Issuance Price per unit*   Annual Distribution Rate*
Non-convertible Securities                  
Common shares 98,274   N/A   N/A   N/A   $3.16^
                   
Convertible Securities                  
Series A-1 preferred OP units 300   2.4390   732   $ 100   6.0 %
Series A-3 preferred OP units 40   1.8605   75   $ 100   4.5 %
Series C preferred OP units 310   1.1100   345   $ 100   4.5 %
Series D preferred OP units 489   0.8000   391   $ 100   3.8 %
Series E preferred OP units 90   0.6897   62   $ 100   5.25 %
Series F preferred OP units 90   0.6250   56   $ 100   3.0 %
Common OP units 2,477   1.0000   2,477   N/A   Mirrors common shares distributions
^ Annual distribution is based on the last quarterly distribution annualized.


Capitalization - As of June 30, 2020            
             
Equity   Shares   Share Price*   Total
Common shares   98,274      $ 135.68      $ 13,333,816   
Common OP units   2,477      $ 135.68      336,079   
Subtotal   100,751          $ 13,669,895   
             
Series A-1 preferred OP units   732      $ 135.68      $ 99,318   
Series A-3 preferred OP units   75      $ 135.68      10,176   
Series C preferred OP units   345      $ 135.68      46,810   
Series D preferred OP units   391      $ 135.68      53,051   
Series E preferred OP units   62      $ 135.68      8,412   
Series F preferred OP units   56      $ 135.68      7,598   
Total diluted shares outstanding   102,412          $ 13,895,260   
             
Debt            
Mortgage loans payable           $ 3,205,507   
Preferred Equity - Sun NG Resorts - mandatorily redeemable           35,249   
Preferred OP units - mandatorily redeemable           34,663   
Lines of credit (6)           115,352   
Total debt           $ 3,390,771   
             
Total Capitalization           $ 17,286,031   


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   Six Months Ended
  June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
Net Income Attributable To Sun Communities, Inc. Common Stockholders $ 58,910        $ 40,385        $ 42,824        $ 74,716     
Adjustments              
Depreciation and amortization 87,296        76,294        171,048        153,006     
Depreciation on nonconsolidated affiliates 19        —        19        —     
(Gain) / loss on remeasurement of marketable securities (24,519 )     (3,620 )     4,128        (3,887 )  
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates (1,132 )     —        1,059        —     
(Gain) / loss on remeasurement of notes receivable (246 )     —        1,866        —     
Income attributable to noncontrolling interests 1,942        2,158        1,646        2,881     
Preferred return to preferred OP units —        537        1,000        1,064     
Preferred distribution to Series A-4 preferred stock —        428        —        860     
Gain on disposition of assets, net (4,178 )     (8,070 )     (9,740 )     (13,749 )  
FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4) $ 118,092        $ 108,112        $ 213,850        $ 214,891     
Adjustments              
Other acquisition related costs (8) 504        366        889        526     
Loss on extinguishment of debt 1,930        70        5,209        723     
Catastrophic weather-related charges, net (567 )     194        39        976     
Loss of earnings - catastrophic weather related (9) —        377        300        377     
(Gain) / loss on foreign currency translation (10,374 )     (1,116 )     7,105        (3,081 )  
Other expense, net (7) 552        95        854        162     
Other adjustments (a) 188        (96 )     58        (313 )  
Core FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4) $ 110,325        $ 108,002        $ 228,304        $ 214,261     
               
Weighted average common shares outstanding - basic 95,859        87,130        94,134        86,325     
Add              
Common OP units 2,448        2,487        2,430        2,605     
Common stock issuable upon conversion of stock options 1        1        1        1     
Restricted stock 305        433        390        444     
Common stock issuable upon conversion of Series A-3 preferred OP units —        75        75        75     
Common stock issuable upon conversion of Series A-1 preferred OP units —        793        740        798     
Common stock issuable upon conversion of Series A-4 preferred stock —        467        —        467     
Weighted Average Common Shares Outstanding - Fully Diluted 98,613        91,386        97,770        90,715     
               
FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4) Per Share - Fully Diluted $ 1.20        $ 1.18        $ 2.19        $ 2.37     
               
Core FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4) Per Share - Fully Diluted $ 1.12        $ 1.18        $ 2.34        $ 2.36     

(a) Adjustments include deferred compensation amortization upon retirement and deferred tax benefits.


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

 
  Three Months Ended   Six Months Ended
  June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 58,910        $ 40,385        $ 42,824        $ 74,716     
Adjustments              
Depreciation and amortization 87,265        76,153        170,954        152,709     
Loss on extinguishment of debt 1,930        70        5,209        723     
Interest expense 31,428        33,661        63,844        67,675     
Interest on mandatorily redeemable preferred OP units / equity 1,042        1,181        2,083        2,275     
Current tax expense 119        272        569        486     
Deferred tax benefit (112 )     (96 )     (242 )     (313 )  
Income from nonconsolidated affiliates (92 )     (479 )     (144 )     (867 )  
Less: Gain on dispositions of assets, net (4,178 )     (8,070 )     (9,740 )     (13,749 )  
EBITDAre (1) $ 176,312        $ 143,077        $ 275,357        $ 283,655     
Adjustments              
Catastrophic weather related charges, net (566 )     179        40        961     
(Gain) / loss on remeasurement of marketable securities (24,519 )     (3,620 )     4,128        (3,887 )  
(Gain) / loss on foreign currency translation (10,374 )     (1,116 )     7,105        (3,081 )  
Other expense, net (7) 552        95        854        162     
(Gain) / loss on remeasurement of notes receivable (246 )     —        1,866        —     
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates (1,132 )     —        1,059        —     
Preferred return to preferred OP units / equity 1,584        1,718        3,154        3,041     
Income attributable to noncontrolling interests 2,861        2,585        1,899        3,626     
Preferred stock distribution —        428        —        860     
Plus: Gain on dispositions of assets, net 4,178        8,070        9,740        13,749     
Recurring EBITDA (1) $ 148,650        $ 151,416        $ 305,202        $ 299,086     



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

 
  Three Months Ended   Six Months Ended
  June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 58,910        $ 40,385        $ 42,824        $ 74,716     
Interest income (2,635 )     (4,919 )     (4,985 )     (9,719 )  
Brokerage commissions and other revenues, net (3,274 )     (2,508 )     (7,187 )     (6,188 )  
Home selling expenses 2,864        3,626        6,856        6,950     
General and administrative expenses 26,733        23,697        52,250        45,584     
Catastrophic weather-related charges, net (566 )     179        40        961     
Depreciation and amortization 87,265        76,153        170,954        152,709     
Loss on extinguishment of debt 1,930        70        5,209        723     
Interest expense 31,428        33,661        63,844        67,675     
Interest on mandatorily redeemable preferred OP units / equity 1,042        1,181        2,083        2,275     
Gain / (loss) on remeasurement of marketable securities (24,519 )     (3,620 )     4,128        (3,887 )  
(Gain) / loss on foreign currency translation (10,374 )     (1,116 )     7,105        (3,081 )  
Other expense, net (7) 552        95        854        162     
(Gain) / loss on remeasurement of notes receivable (246 )     —        1,866        —     
Income from nonconsolidated affiliates (92 )     (479 )     (144 )     (867 )  
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates (1,132 )     —        1,059        —     
Current tax expense 119        272        569        486     
Deferred tax benefit (112 )     (96 )     (242 )     (313 )  
Preferred return to preferred OP units / equity 1,584        1,718        3,154        3,041     
Income attributable to noncontrolling interests 2,861        2,585        1,899        3,626     
Preferred stock distribution —        428        —        860     
NOI (1) / Gross Profit $ 172,338        $ 171,312        $ 352,136        $ 335,713     


  Three Months Ended   Six Months Ended
  June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
Real Property NOI (1) $ 148,557        $ 142,030        $ 305,109        $ 283,874     
Home Sales NOI (1) / Gross Profit 9,349        12,807        19,904        23,148     
Rental Program NOI (1) 28,874        26,413        56,859        52,430     
Ancillary NOI (1) / Gross Profit 4,149        7,240        6,862        10,317     
Site rent from Rental Program (included in Real Property NOI) (1) (10) (18,591 )     (17,178 )     (36,598 )     (34,056 )  
NOI (1) / Gross Profit $ 172,338        $ 171,312        $ 352,136        $ 335,713     



Non-GAAP and Other Financial Measures


Debt Analysis
(amounts in thousands)

 
  Quarter Ended  
  6/30/2020   3/31/2020   12/31/2019   9/30/2019   6/30/2019  
Debt Outstanding                    
Mortgage loans payable $ 3,205,507      $ 3,273,808      $ 3,180,592      $ 2,967,128      $ 2,863,485     
Secured borrowings on collateralized receivables (11) —      —      —      93,669      98,299     
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 (6) 115,352      582,774      183,898      140,632      76,079     
Total debt $ 3,390,771      $ 3,926,494      $ 3,434,402      $ 3,271,341      $ 3,107,775     
                     
% Fixed / Floating                    
Fixed 96.6  %   85.2  %   94.7  %   95.7  %   97.6  %  
Floating 3.4  %   14.8  %   5.3  %   4.3  %   2.4  %  
Total 100.0  %   100.0  %   100.0  %   100.0  %   100.0  %  
                     
Weighted Average Interest Rates                    
Mortgage loans payable 3.88  %   3.91  %   4.05  %   4.13  %   4.24  %  
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  %   6.50  %   6.50  %   6.50  %  
Lines of credit (6) 2.03  %   1.85  %   2.71  %   3.23  %   3.34  %  
Average before secured borrowings (11) 3.86  %   3.64  %   4.03  %   4.14  %   4.27  %  
Secured borrowings on collateralized receivables (11) —  %   —  %   —  %   9.92  %   9.93  %  
Total average 3.86  %   3.64  %   4.03  %   4.30  %   4.44  %  
                     
Debt Ratios                    
Net Debt / Recurring EBITDA (1) (TTM) 4.8      5.6      5.5      5.3      5.2     
Net Debt / Enterprise Value 17.8  %   22.6  %   19.0  %   18.7  %   20.2  %  
Net Debt / Gross Assets 29.7  %   35.6  %   36.0  %   36.0  %   35.1  %  
                     
Coverage Ratios                    
Recurring EBITDA (1) (TTM) / Interest 4.5   4.5   4.4   4.4   4.2  
Recurring EBITDA (1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution 4.4   4.3   4.2   4.2   4.0  


Maturities / Principal Amortization Next Five Years 2020   2021   2022   2023   2024
Mortgage loans payable                  
Maturities $ —      $ —      $ 82,155      $ 185,618      $ 315,330   
Principal amortization 28,842      59,615      61,326      60,604      57,082   
Preferred Equity - Sun NG Resorts - mandatorily redeemable —      —      35,249      —      —   
Preferred OP units - mandatorily redeemable —      —      —      —      27,373   
Lines of credit (6) 3,006      11,440      10,000      90,906      —   
Total $ 31,848      $ 71,055      $ 188,730      $ 337,128      $ 399,785   
                   
Weighted average rate of maturities —  %   —  %   4.46  %   4.08  %   4.47  %



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

 
  Three Months Ended   Six Months Ended
  June 30, 2020   June 30, 2019   Change   % Change   June 30, 2020   June 30, 2019   Change   % Change
Financial Information                              
Income from real property (12) $ 204,478      $ 208,214      $ (3,736 )     (1.8 ) %   $ 419,150      $ 412,352      $ 6,798        1.6    %
                               
Property operating expenses                              
Payroll and benefits 17,981      21,232      (3,251 )     (15.3 ) %   36,793      39,656      (2,863 )     (7.2 ) %
Legal, taxes, and insurance 2,427      2,272      155        6.8    %   5,315      4,611      704        15.3    %
Utilities (12) 13,476      14,512      (1,036 )     (7.1 ) %   28,586      30,232      (1,646 )     (5.4 ) %
Supplies and repair (13) 8,188      9,325      (1,137 )     (12.2 ) %   14,317      15,627      (1,310 )     (8.4 ) %
Other (a) 6,276      7,262      (986 )     (13.6 ) %   11,843      12,667      (824 )     (6.5 ) %
Real estate taxes 16,076      15,436      640        4.1    %   32,040      30,596      1,444        4.7    %
Property operating expenses 64,424      70,039      (5,615 )     (8.0 ) %   128,894      133,389      (4,495 )     (3.4 ) %
Real Property NOI (1) $ 140,054      $ 138,175      $ 1,879        1.4    %   $ 290,256      $ 278,963      $ 11,293        4.0    %

(a) Includes COVID-19 personal protective equipment expense of $910.

  As of        
  June 30, 2020   June 30, 2019   Change   % Change
Other Information              
Number of properties 367      367      -    
               
MH occupancy (3) 96.9  %            
RV occupancy (3) 100.0  %            
MH & RV blended occupancy (3) 97.6  %            
               
Adjusted MH occupancy (3) 98.4  %            
Adjusted RV occupancy (3) 100.0  %            
Adjusted MH & RV blended occupancy (3) 98.7  %   96.8  %   1.9  %    
               
Monthly base rent per site - MH $ 593      $ 570      $ 23      3.9% (15)
Monthly base rent per site - RV (14) $ 499      $ 472      $ 27      5.8% (15)
Monthly base rent per site - Total (14) $ 571      $ 547      $ 24      4.3% (15)



Home Sales Summary           
(amounts in thousands except for *)

 
  Three Months Ended   Six Months Ended
  June 30, 2020   June 30, 2019   Change   % Change   June 30, 2020   June 30, 2019   Change   % Change
Financial Information                              
New homes                              
New home sales $ 19,206      $ 16,704      $ 2,502        15.0    %   $ 34,802      $ 32,085      $ 2,717        8.5    %
New home cost of sales 15,707      14,833      874        5.9    %   28,317      27,979      338        1.2    %
NOI (1) / Gross Profit  – new homes 3,499      1,871      1,628        87.0    %   6,485      4,106      2,379        57.9    %
Gross margin % – new homes 18.2  %   11.2  %   7.0    %       18.6  %   12.8  %   5.8    %    
Average selling price – new homes* $ 137,186      $ 120,173      $ 17,013        14.2    %   $ 134,371      $ 121,534      $ 12,837        10.6    %
                               
Pre-owned homes                              
Pre-owned home sales $ 19,324      $ 30,538      $ (11,214 )     (36.7 ) %   $ 44,315      $ 54,775      $ (10,460 )     (19.1 ) %
Pre-owned home cost of sales 13,474      19,602      (6,128 )     (31.3 ) %   30,896      35,733      (4,837 )     (13.5 ) %
NOI (1) / Gross Profit – pre-owned homes 5,850      10,936      (5,086 )     (46.5 ) %   13,419      19,042      (5,623 )     (29.5 ) %
Gross margin % – pre-owned homes 30.3  %   35.8  %   (5.5 ) %       30.3  %   34.8  %   (4.5 ) %    
Average selling price – pre-owned homes* $ 41,028      $ 38,754      $ 2,274        5.9    %   $ 39,744      $ 37,491      $ 2,253        6.0    %
                               
Total home sales                              
Revenue from home sales $ 38,530      $ 47,242      $ (8,712 )     (18.4 ) %   $ 79,117      $ 86,860      $ (7,743 )     (8.9 ) %
Cost of home sales 29,181      34,435      (5,254 )     (15.3 ) %   59,213      63,712      (4,499 )     (7.1 ) %
NOI (1) / Gross Profit – home sales $ 9,349      $ 12,807      $ (3,458 )     (27.0 ) %   $ 19,904      $ 23,148      $ (3,244 )     (14.0 ) %
                               
Statistical Information                              
New home sales volume* 140      139      1        0.7    %   259      264      (5 )     (1.9 ) %
Pre-owned home sales volume* 471      788      (317 )     (40.2 ) %   1,115      1,461      (346 )     (23.7 ) %
Total home sales volume * 611      927      (316 )     (34.1 ) %   1,374      1,725      (351 )     (20.3 ) %

               


Rental Program Summary    
(amounts in thousands except for *)

 
  Three Months Ended   Six Months Ended
  June 30, 2020   June 30, 2019   Change   % Change   June 30, 2020   June 30, 2019   Change   % Change
Financial Information                              
Revenues                              
Rental home revenue $ 14,968      $ 14,412      $ 556        3.9    %   $ 30,440      $ 28,383      $ 2,057        7.2    %
Site rent from Rental Program (1) (10) 18,591      17,178      1,413        8.2    %   36,598      34,056      2,542        7.5    %
Rental Program revenue 33,559      31,590      1,969        6.2    %   67,038      62,439      4,599        7.4    %
                               
Expenses                              
Repairs and refurbishment 2,256      2,889      (633 )     (21.9 ) %   5,209      5,237      (28 )     (0.5 ) %
Taxes and insurance 2,006      1,827      179        9.8    %   4,019      3,691      328        8.9    %
Other 423      461      (38 )     (8.2 ) %   951      1,081      (130 )     (12.0 ) %
Rental Program operating and maintenance 4,685      5,177      (492 )     (9.5 ) %   10,179      10,009      170        1.7    %
Rental Program NOI (1) $ 28,874      $ 26,413      $ 2,461        9.3    %   $ 56,859      $ 52,430      $ 4,429        8.4    %
                               
Other Information                              
Number of sold rental homes* 122      332      (210 )     (63.3 ) %   356      542      (186 )     (34.3 ) %
Number of occupied rentals, end of period*   11,785      11,230      555        4.9    %
Investment in occupied rental homes, end of period   $ 621,327      $ 561,219      $ 60,108        10.7    %
Weighted average monthly rental rate, end of period*   $ 1,018      $ 975      $ 43        4.4    %



Acquisitions and Other Summary (16)
(amounts in thousands except for statistical data)

 
    Three Months Ended   Six Months Ended
    June 30, 2020   June 30, 2020
Financial Information        
Revenues        
Income from real property   $ 17,649      $ 31,797   
         
Property and operating expenses        
Payroll and benefits   2,742      5,260   
Legal, taxes & insurance   232      524   
Utilities   1,700      3,399   
Supplies and repairs   1,386      2,287   
Other   1,439      2,615   
Real estate taxes   1,647      2,859   
Property operating expenses   9,146      16,944   
Net operating income (NOI) (1)   $ 8,503      $ 14,853   
         
         
Other Information       June 30, 2020
Number of properties       59   
Occupied sites       8,198   
Developed sites       8,820   
Occupancy %       92.9  %
Transient sites       3,620   

               


Property Summary                    
(includes MH and Annual RVs)
                     
COMMUNITIES   6/30/2020   3/31/2020   12/31/2019   9/30/2019   6/30/2019
FLORIDA                    
Communities   125      125      125      125      125   
Developed sites (17)   39,241      39,380      39,230      39,067      38,879   
Occupied (17)   38,453      38,526      38,346      38,155      37,944   
Occupancy % (17)   98.0  %   97.8  %   97.7  %   97.7  %   97.6  %
Sites for development   1,427      1,527      1,527      1,633      1,638   
MICHIGAN                    
Communities   72      72      72      72      72   
Developed sites (17)   27,901      27,883      27,905      27,906      27,891   
Occupied (17)   27,191      26,863      26,785      26,677      26,591   
Occupancy % (17)   97.5  %   96.3  %   96.0  %   95.6  %   95.3  %
Sites for development   1,182      1,115      1,115      1,115      1,115   
TEXAS                     
Communities   23      23      23      23      23   
Developed sites (17)   7,641      7,627      7,615      7,098      6,997   
Occupied (17)   7,289      7,076      7,006      6,834      6,683   
Occupancy % (17)   95.4  %   92.8  %   92.0  %   96.3  %   95.5  %
Sites for development   565      555      555      1,086      1,100   
CALIFORNIA                    
Communities   32      31      31      31      31   
Developed sites (17)   6,364      5,986      5,981      5,963      5,946   
Occupied (17)   6,272      5,948      5,941      5,917      5,896   
Occupancy % (17)   98.6  %   99.4  %   99.3  %   99.2  %   99.2  %
Sites for development   264      302      302      302      56   
ARIZONA                    
Communities   13      13      13      13      13   
Developed sites (17)   4,259      4,268      4,263      4,239      4,235   
Occupied (17)   3,932      3,923      3,892      3,852      3,842   
Occupancy % (17)   92.3  %   91.9  %   91.3  %   90.9  %   90.7  %
Sites for development   —      —      —      —      —   
ONTARIO, CANADA                    
Communities   15      15      15      15      15   
Developed sites (17)   3,980      3,977      4,031      4,022      3,929   
Occupied (17)   3,980      3,977      4,031      4,022      3,929   
Occupancy % (17)   100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
Sites for development   1,593      1,608      1,611      1,675      1,675   
INDIANA                    
Communities   11      11      11      11      11   
Developed sites (17)   3,087      3,087      3,087      3,089      3,089   
Occupied (17)   2,961      2,914      2,900      2,870      2,849   
Occupancy % (17)   95.9  %   94.4  %   93.9  %   92.9  %   92.2  %
Sites for development   277      277      277      277      277   
OHIO                     
Communities   9      9      9      9      9   
Developed sites (17)   2,778      2,768      2,770      2,770      2,770   
Occupied (17)   2,736      2,702      2,716      2,703      2,705   
Occupancy % (17)   98.5  %   97.6  %   98.1  %   97.6  %   97.7  %
Sites for development   22      59      59      59      59   
                     
COLORADO                    
Communities   10      10      10      10      8   
Developed sites (16)   2,441      2,423      2,423      2,423      2,335   
Occupied (17)   2,327      2,318      2,322      2,325      2,323   
Occupancy % (17)   95.3  %   95.7  %   95.8  %   96.0  %   99.5  %
Sites for development   1,566      1,867      1,867      1,973      2,129   
OTHER STATES                    
Communities   116      115      113      80      75   
Developed sites (17)   22,780      22,583      22,572      17,203      16,493   
Occupied (17)   22,024      21,749      21,678      16,657      16,026   
Occupancy % (17)   96.7  %   96.3  %   96.0  %   96.8  %   97.2  %
Sites for development   2,846      2,980      2,980      2,437      2,705   
TOTAL - PORTFOLIO                    
Communities   426      424      422      389      382   
Developed sites (17)   120,472      119,982      119,877      113,780      112,564   
Occupied (17)   117,165      115,996      115,617      110,012      108,788   
Occupancy % (17)   97.3  % (18) 96.7  %   96.4  %   96.7  %   96.6  %
Sites for development (19)   9,742      10,290      10,293      10,557      10,754   
% Communities age restricted   34.0  %   34.0  %   34.1  %   30.8  %   31.4  %
                     
TRANSIENT RV PORTFOLIO SUMMARY                    
Location                    
Florida   5,547      5,311      5,465      5,506      5,693   
California   1,978      1,947      1,952      1,970      1,985   
Texas   1,590      1,612      1,623      1,642      1,693   
Maryland   1,515      1,488      1,488      1,426      1,380   
Arizona   1,401      1,392      1,397      1,421      1,424   
Ontario, Canada   1,007      1,009      939      937      1,043   
New York   911      916      923      924      935   
New Jersey   857      875      864      868      875   
Maine   837      828      811      821      848   
Utah   750      750      753      560      562   
Virginia   598      630      324      329      358   
Colorado   574      291      291      185      111   
Other states   4,795      4,831      4,586      4,293      3,678   
Total transient RV sites   22,360      21,880      21,416      20,882      20,585   



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

 


   Recurring
Capital Expenditures
Average / Site*		 Recurring
Capital Expenditures (20) 		  Lot
Modifications (21) 		 Acquisitions (22)   Expansion
and
Development (23) 		 Revenue Producing /Expense Reduction Projects (24)
YTD 2020 $ 77    $ 9,147    $ 14,177    $ 116,750    $ 127,126    $ 8,035   
2019 $ 345    $ 30,382    $ 31,135    $ 930,668    $ 281,808    $ 9,638   
2018 $ 263    $ 24,265    $ 22,867    $ 414,840    $ 152,672    $ 3,864   



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   1,193      107        85      97      601     
Michigan   284      406        17      525      66     
Ontario, Canada   591      (51 )     16      9      90     
Texas   194      283        32      142      26     
Arizona   48      40        22      13      62     
Indiana   43      61        4      100      7     
Ohio   72      20        —      42      5     
California   61      13        12      7      33     
Colorado   13      5        3      15      17     
Other states   879      267        68      165      130     
Six Months Ended June 30, 2020   3,378      1,151        259      1,115      1,037     


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 (TTM)   3.1  %   6.3  %
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, 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 actual exchange rates.

(3) The Same Community occupancy percentage is 96.9 percent for MH, 100.0 percent for RV, and 97.6 percent for the blended MH and RV. The MH and RV blended occupancy is derived from 111,652 developed sites, of which 108,967 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 110,362 developed sites, of which 108,967 were occupied. The number of developed sites excludes RV transient sites and approximately 1,300 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 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.

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

  Three Months Ended   Six Months Ended
  June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
Foreign currency remeasurement loss $ (195 )     $ (28 )     $ (415 )     $ (23 )  
Collateralized receivables derecognition gain —        1        —        —     
Contingent liability remeasurement loss (84 )     (42 )     (166 )     (97 )  
Long term lease termination expense (273 )     (26 )     (273 )     (42 )  
Other expense, net $ (552 )     $ (95 )     $ (854 )     $ (162 )  

(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 $0.3 million for the six months ended June 30, 2020 and $0.4 million for the three and six months ended June 30, 2019, respectively, for estimated loss of earnings in excess of the applicable business interruption deductible in relation to the Company’s Florida Keys communities that required redevelopment due to damages sustained from Hurricane Irma in September 2017. For the three months ended June 30, 2020, the adjustment of $0.3 million was offset by the reversal of the first quarter 2020 adjustment of $0.3 million for which payment was received and income recognized  during the current quarter in accordance with GAAP.

(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) 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. In November 2019, the Company derecognized the transferred financial assets and secured borrowing as legal isolation criteria to be accounted for as a true sale were satisfied pursuant to the terms of the purchase agreement.

(12) Same Community results net $9.4 million and $8.5 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the three months ended June 30, 2020 and 2019, respectively. Same Community results net $18.3 million and $16.9 million of utility revenue against the related utility expense in property operating and maintenance expense for the six months ended June 30, 2020 and 2019, respectively.

(13) Same Community supplies and repair expense excludes $0.3 million and $0.4 million for the three and six months ended June 30, 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.

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

(15) Calculated using actual results without rounding.

(16) Acquisitions and other is comprised of 4 properties acquired and 3 properties that the Company has an interest in, but does not operate in 2020, forty-two 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.

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

(18) As of June 30, 2020, total portfolio MH occupancy was 96.5 percent inclusive of the impact of approximately 1,600 recently constructed but vacant MH expansion sites, and annual RV occupancy was 100.0 percent.

(19) Total sites for development were comprised of approximately 78.2 percent for expansion, 18.0 percent for greenfield development and 3.8 percent for redevelopment.

(20) 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.

(21) 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.

(22) 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 six months ended June 30, 2020 include $19.8 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.

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

(24) 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.

Attachment


Source: Sun Communities, Inc.