News Release Details

Sun Communities, Inc. Reports 2021 Second Quarter Results

Jul 26, 2021
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NEWS RELEASE

July 26, 2021

Sun Communities, Inc. Reports 2021 Second Quarter Results

Southfield, MI, July 26, 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 second quarter results for 2021.

Financial Results for the Quarter and Six Months Ended June 30, 2021

For the quarter ended June 30, 2021, total revenues increased $300.6 million, or 99.1 percent, to approximately $603.9 million compared to $303.3 million for the same period in 2020. Net income attributable to common stockholders increased $51.9 million or 88.0 percent, to approximately $110.8 million, or $0.98 per diluted common share, compared to net income attributable to common stockholders of $58.9 million, or $0.61 per diluted common share, for the same period in 2020.

For the six months ended June 30, 2021, total revenues increased $432.3 million, or 70.5 percent, to $1.0 billion compared to approximately $613.6 million for the same period in 2020. Net income attributable to common stockholders increased $92.7 million or 216.5 percent, to approximately $135.6 million, or $1.22 per diluted common share, compared to net income attributable to common stockholders of $42.8 million, or $0.45 per diluted common share, for the same period in 2020.

Non-GAAP Financial Measures and Portfolio Performance

  • Core Funds from Operations ("Core FFO")(1) for the quarter ended June 30, 2021, was $1.80 per diluted share and OP unit ("Share") as compared to $1.12 in the corresponding period in 2020, a 60.7 percent increase.

  • Same Community(2) Net Operating Income ("NOI")(1) increased by 21.6 percent for the quarter ended June 30, 2021, as compared to the corresponding period in 2020.

  • Home Sales Volume increased 89.5 percent to 1,158 homes for the quarter ended June 30, 2021, as compared to 611 homes in the same period in 2020.

  • Acquisitions totaled $719.4 million during and subsequent to the quarter ended June 30, 2021, including 10 MH communities, two RV resorts and six marinas.

Gary Shiffman, Chief Executive Officer stated, "Sun's ongoing strong momentum continued through the second quarter, as we saw robust performance across RV, Manufactured Housing and Marinas. Our RV business is demonstrating the growing appeal of an RV vacation for consumers, marinas are in the midst of an active boating season and our results continue to track ahead of our underwriting, and in our manufactured housing business, we are benefiting from sustained demand for affordable housing. Furthermore, our RV forward bookings have continued to accelerate and we are pleased to again increase our guidance for the year."

Mr. Shiffman continued, "We have remained active in terms of new site deliveries and have more than 9,400 sites available for development, representing an attractive source of growth and value creation over time. We also deployed over $719 million in acquisitions, including six marinas as we begin to realize the meaningful consolidation opportunity we have in the marina industry. To support this ongoing growth, we are pleased to have received investment grade ratings and completed our inaugural unsecured bond issuance as we issued $600 million in senior unsecured notes. This additional financing option provides Sun enhanced financial flexibility to efficiently match fund our investment activities as we continue to realize compelling growth opportunities across all of our businesses."

OPERATING HIGHLIGHTS

Portfolio Occupancy

Total MH and annual RV occupancy was 97.4 percent at June 30, 2021, compared to 97.3 percent at June 30, 2020, an increase of 10 basis points.

During the quarter ended June 30, 2021, MH and annual RV revenue producing sites increased by 583 sites, as compared to an increase of 851 revenue producing sites during the quarter ended June 30, 2020.

During the six months ended June 30, 2021, MH and annual RV revenue producing sites increased by 1,097 sites, as compared to an increase of 1,151 revenue producing sites during the six months ended June 30, 2020.

Same Community(2) Results

For the 405 MH and RV properties owned and operated by the Company since January 1, 2020, the following table reflects the NOI(1) percentage increases, in total and by segment, for the quarter and six months ended June 30, 2021:

  Quarter Ended June 30, 2021
  Total Same Community   MH   RV
Revenue 22.5  %   6.9  %   64.4  %
Expense 24.7  %   11.8  %   41.9  %
NOI 21.6  %   5.4  %   85.1  %


  Six Months Ended June 30, 2021
  Total Same Community   MH   RV
Revenue 12.8  %   6.0  %   30.2  %
Expense 15.2  %   8.7  %   24.2  %
NOI 11.8  %   5.1  %   34.8  %

Same Community adjusted occupancy(3) increased to 98.8 percent at June 30, 2021 from 97.2 percent at June 30, 2020.

Home Sales

During the quarter ended June 30, 2021, the Company sold 1,158 homes as compared to 611 homes in the same period in 2020, an increase of 89.5 percent. The Company sold 227 and 140 new homes for the quarters ended June 30, 2021 and 2020, respectively, an increase of 62.1 percent. Pre-owned home sales were 931 in the second quarter 2021 as compared to 471 in the same period in 2020, an increase of 97.7 percent.

During the six months ended June 30, 2021, the Company sold 1,993 homes as compared to 1,374 homes in the same period in 2020, an increase of 45.1 percent. The Company sold 376 and 259 new homes for the six months ended June 30, 2021 and 2020, respectively, an increase of 45.2 percent. Pre-owned home sales were 1,617 in the six months ended June 30, 2021 as compared to 1,115 in the same period in 2020, an increase of 45.0 percent.

Marina Results

Marina NOI was $62.8 million and $94.2 million for the quarter and six months ended June 30, 2021, respectively. Refer to page 15 for additional information regarding the marina portfolio operating results.

PORTFOLIO ACTIVITY

Acquisitions and Dispositions

During and subsequent to the quarter ended June 30, 2021, the Company acquired the following communities, resorts and marinas:

Property Name   Property Type   Sites,
Wet Slips and
Dry Storage Spaces		   Development Sites   State / Province   Total
Purchase Price
(in millions)		   Month Acquired
ThemeWorld RV Resort   RV   148      —      FL   $ 25.0      April
Sylvan Glen Estates(a)   MH   476      —      MI   24.0      April
Shelter Island Boatyard   Marina   55      N/A   CA   10.0      May
Lauderdale Marine Center   Marina   202      N/A   FL   340.2      May
Apponaug Harbor(b)   Marina   378      N/A   RI   6.6      June
Cabrillo Isle(c)   Marina   483      N/A   CA   46.9      June
Marathon Marina   Marina   147      N/A   FL   19.1      June
Subtotal       1,889      —          471.8       
                         
Acquisitions subsequent to quarter end                
Allen Harbor   Marina   165      N/A   RI   4.0      July
Cisco Grove Campground & RV   RV   18      407      CA   6.6      July
Four Leaf Portfolio(d)   MH   2,714      171      MI / IN   215.0      July
Harborage Yacht Club   Marina   300      N/A   FL   22.0      July
Subtotal       3,197      578          247.6       
                         
Total acquisitions       5,086      578          $ 719.4       

(a) In conjunction with the acquisition, the Company issued 240,000 Series J preferred OP units.

(b) Combined with an existing adjacent marina.

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

(d) Contains nine MH communities.

During and subsequent to the six months ended June 30, 2021 the Company acquired 28 properties totaling 7,666 sites, wet slips and dry storage spaces, and 578 sites for development for a total purchase price of $853.4 million.

Subsequent to the quarter ended June 30, 2021, the Company sold two MH communities located in Indiana and Missouri for $67.5 million. The assets and liabilities associated with the transaction were classified as held for sale on the Consolidated Balance Sheets as of June 30, 2021.

Construction Activity

During the quarter ended June 30, 2021, the Company completed the construction of over 100 sites in two ground-up developments and over 120 expansion sites in two MH communities and one RV resort.

Year to date June 30, 2021, the Company completed the construction of over 350 sites in three ground-up development and over 230 expansion sites in three MH communities and one RV resort.

BALANCE SHEET, CAPITAL MARKETS ACTIVITY AND OTHER ITEMS

Debt

As of June 30, 2021, the Company had approximately $4.3 billion in debt outstanding. The weighted average interest rate was 3.5 percent and the weighted average maturity was 10.4 years. At June 30, 2021, the Company's net debt to trailing twelve month Recurring EBITDA(1) ratio was 5.1 times. The Company had $103.5 million of unrestricted cash on hand.

Senior Unsecured Notes

On June 14, 2021, the Company received investment grade ratings of BBB and Baa3 with a stable outlook from S&P Global and Moody's, respectively.

On June 28, 2021, Sun Communities Operating Limited Partnership ("SCOLP"), the Company's operating partnership, issued $600.0 million of senior unsecured notes with an interest rate of 2.7 percent and a ten-year term, due 2031. The net proceeds from the offering were $592.4 million, after deducting underwriters' discount and estimated offering expenses.

Credit Agreement

On June 14, 2021, SCOLP, as borrower, and the Company, as guarantor, entered into a new credit agreement with certain lenders. The new credit agreement combines and replaces SCOLP's $750.0 million credit facility which was scheduled to mature May 21, 2023, and the $1.8 billion credit facility of the Company's marina subsidiary, Safe Harbor Marinas, LLC (the "Safe Harbor Facility") which was scheduled to mature on October 11, 2024. The Safe Harbor Facility was terminated in connection with the execution of the new credit agreement and all amounts due and outstanding were repaid on or prior to the date of the New Credit Agreement. The Company recognized a loss on extinguishment of debt in its Consolidated Statement of Operations related to the termination of these prior credit facilities of $0.2 million and $7.9 million, respectively.

Pursuant to the New Credit Agreement, SCOLP may borrow up to $2.0 billion under a revolving loan (the "New Credit Facility") to fund the business of SCOLP and all its subsidiaries. The New Credit Facility has a four-year term ending June 14, 2025. Subject to the satisfaction of certain conditions, the term may be extended for two additional six-month periods, and additional borrowings not to exceed $1.0 billion is permitted. However, the maturity date with respect to $500.0 million of available borrowing under the New Credit Facility is October 11, 2024, which may not be extended. The New Credit Facility bears interest at a floating rate based on the Adjusted Eurocurrency Rate or Australian Bank Bill Swap Bid Rate (BBSY), plus a margin which can range from 0.725 percent to 1.400 percent. As of June 30, 2021, the margin based on our credit ratings was 0.850 percent on the New Credit Facility. The Company had $190.3 million of borrowings on the New Credit Facility as of June 30, 2021.
Equity Transactions

Public Equity Offering

In May and June 2021, the Company completed the physical settlement of the remaining 4,050,000 shares offered under the forward sale agreement pursuant to the Company's March 2021 equity offering of 8,050,000 shares. Net proceeds of $539.7 million after deducting expenses related to the offering, were used to acquire assets and pay down the Safe Harbor Facility.

At the Market Offering Sales Agreements

In June 2021, the Company entered into an At the Market Offering (ATM) Sales Agreement (the "Sales Agreement") with certain sales agents, forward sellers, pursuant to which the Company may sell, from time to time, up to an aggregate gross sales price of $500.0 million of its common stock. No shares were sold during the quarter ending June 30, 2021 under the ATM program. Upon entering into the Sales Agreement, the Company simultaneously terminated its previous ATM sales agreement entered into in July 2017.

2021 GUIDANCE

The Company is providing revised or initial 2021 guidance for the following metrics:

      Previous Range   Revised Range    
      FY 2021E   FY 2021E   3Q 2021E
Basic earnings per share     $1.68 - $1.84   $2.24 - $2.36   $0.90 - $0.96
Core FFO(1) per fully diluted Share     $5.92 - $6.08   $6.25 - $6.37   $2.00 - $2.06
               
  1Q21   2Q21   3Q21   4Q21
Seasonality of Core FFO(1) per fully diluted Share 20.0 %   28.5 %   32.1 %   19.4 %

Seasonality of Core FFO(1) per fully diluted Share is based off of the midpoint of full year guidance.

      Previous Range   Revised Range    
      FY 2021E   FY 2021E   3Q 2021E
Same Community NOI(1) growth     7.5% - 8.5%   9.9% - 10.7%   11.2% - 12.0%

Guidance estimates include acquisitions completed through the date of this release and exclude any prospective acquisitions or capital markets activity.

The estimates and assumptions presented above represent a range of possible outcomes and may differ materially from actual results. The estimates and assumptions are forward looking based on the Company's current assessment of economic and market conditions, as well as other risks outlined below under the caption "Cautionary Statement Regarding Forward-Looking Statements."

EARNINGS CONFERENCE CALL

A conference call to discuss second quarter results will be held on Tuesday, July 27, 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 August 10, 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 13720116. 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, 2021, owned, operated, or had an interest in a portfolio of 569 developed MH, RV and marina properties comprising over 153,300 developed sites and nearly 41,300 wet slips and dry storage spaces 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, 2020 and in 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 and its senior unsecured notes;
  • 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 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 statements.

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
RBC Capital Markets   Brad Heffern   (512) 708-6311   brad.heffern@rbccm.com
UBS   Michael Goldsmith   (212) 713-2951   michael.goldsmith@ubs.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, 2021)

 


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

 


  Quarter Ended
  6/30/2021   3/31/2021   12/31/2020   9/30/2020   6/30/2020
Financial Information                  
Total revenues $ 603,863      $ 442,015      $ 384,265      $ 400,514      $ 303,266   
Net income $ 120,849      $ 27,941      $ 9,818      $ 89,756      $ 63,355   
Net income attributable to Sun Communities Inc. common stockholders $ 110,770      $ 24,782      $ 7,586      $ 81,204      $ 58,910   
Basic earnings per share* $ 0.98      $ 0.23      $ 0.07      $ 0.83      $ 0.61   
Diluted earnings per share* $ 0.98      $ 0.23      $ 0.07      $ 0.83      $ 0.61   
                   
Cash distributions declared per common share* $ 0.83      $ 0.83      $ 0.79      $ 0.79      $ 0.79   
                   
Recurring EBITDA(1) $ 268,225      $ 190,830      $ 168,527      $ 199,321      $ 148,650   
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4)
 $ 198,017      $ 135,925      $ 110,849      $ 165,209      $ 118,092   
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4)
 $ 209,620      $ 141,036      $ 124,872      $ 162,624      $ 110,325   
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted* $ 1.70      $ 1.22      $ 1.03      $ 1.63      $ 1.20   
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted* $ 1.80      $ 1.26      $ 1.16      $ 1.60      $ 1.12   
                   
Balance Sheet                  
Total assets $ 12,040,990      $ 11,454,209      $ 11,206,586      $ 8,335,717      $ 8,348,659   
Total debt $ 4,311,175      $ 4,417,935      $ 4,757,076      $ 3,340,613      $ 3,390,771   
Total liabilities $ 5,099,563      $ 5,101,512      $ 5,314,879      $ 3,791,922      $ 3,845,308   


  Quarter Ended
  6/30/2021   3/31/2021   12/31/2020   9/30/2020   6/30/2020
Operating Information*                  
Properties 569   562   552   432   426
                   
Manufactured home sites 97,448   96,876   96,688   95,209   94,232
Annual RV sites 28,807   28,441   27,564   26,817   26,240
Transient RV sites 27,032   26,295   25,043   23,728   22,360
Total sites 153,287   151,612   149,295   145,754   142,832
Marina wet slips and dry storage spaces 41,275   38,753   38,152   N/A   N/A
                   
MH occupancy 96.7  %   96.5  %   96.6  %   96.4  %   96.5  %
Annual RV occupancy 100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
Blended MH and annual RV occupancy 97.4  %   97.3  %   97.3  %   97.2  %   97.3  %
                   
New home sales 227   149   156   155   140
Pre-owned home sales 931   686   626   555   471
Total home sales 1,158   835   782   710   611


  Quarter Ended
  6/30/2021   3/31/2021   12/31/2020   9/30/2020   6/30/2020
Revenue Producing Site Gains(5)                  
MH net leased sites 226   127   247      349   759
RV net leased sites 357   387   331      427   92
Total net leased sites 583   514   578      776   851

Consolidated Balance Sheets
(amounts in thousands)

 


    June 30, 2021   December 31, 2020
Assets        
Land   $ 2,412,629        $ 2,119,364     
Land improvements and buildings   8,995,041        8,480,597     
Rental homes and improvements   622,397        637,603     
Furniture, fixtures and equipment   529,549        447,039     
Investment property   12,559,616        11,684,603     
Accumulated depreciation   (2,165,564 )     (1,968,812 )  
Investment property, net   10,394,052        9,715,791     
Cash, cash equivalents and restricted cash   119,612        92,641     
Marketable securities   153,049        124,726     
Inventory of manufactured homes   43,686        46,643     
Notes and other receivables, net   262,333        221,650     
Goodwill   448,317        428,833     
Other intangible assets, net   295,663        305,611     
Other assets, net   324,278        270,691     
Total Assets   $ 12,040,990        $ 11,206,586     
Liabilities        
Secured debt   $ 3,457,734        $ 3,489,983     
Unsecured debt   853,441        1,267,093     
Distributions payable   98,429        86,988     
Advanced reservation deposits and rent   290,913        187,730     
Accrued expenses and accounts payable   214,200        148,435     
Other liabilities   184,846        134,650     
Total Liabilities   5,099,563        5,314,879     
Commitments and contingencies        
Temporary equity   285,603        264,379     
Stockholders' Equity        
Common stock   1,159        1,076     
Additional paid-in capital   8,163,095        7,087,658     
Accumulated other comprehensive income   5,197        3,178     
Distributions in excess of accumulated earnings   (1,614,243 )     (1,566,636 )  
Total Sun Communities, Inc. stockholders' equity   6,555,208        5,525,276     
Noncontrolling interests        
Common and preferred OP units   82,865        85,968     
Consolidated variable interest entities   17,751        16,084     
Total noncontrolling interests   100,616        102,052     
Total Stockholders' Equity   6,655,824        5,627,328     
Total Liabilities, Temporary Equity and Stockholders' Equity   $ 12,040,990        $ 11,206,586     

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, 2021   June 30, 2020   Change   % Change   June 30, 2021   June 30, 2020   Change   % Change
Revenues                              
Real property (excluding transient) $ 328,907        $ 225,413        $ 103,494        45.9    %   $ 626,984        $ 453,415        $ 173,569        38.3    %
Real property - transient 76,998        25,714        51,284        199.4    %   109,534        56,061        53,473        95.4    %
Home sales 81,848        38,530        43,318        112.4    %   134,047        79,117        54,930        69.4    %
Service, retail, dining and entertainment 106,452        7,700        98,752        N/M   157,064        12,803        144,261        N/M
Interest 2,719        2,635        84        3.2    %   5,350        4,985        365        7.3    %
Brokerage commissions and other, net 6,939        3,274        3,665        111.9    %   12,899        7,187        5,712        79.5    %
Total Revenues 603,863        303,266        300,597        99.1    %   1,045,878        613,568        432,310        70.5    %
Expenses                              
Property operating and maintenance 129,961        70,804        59,157        83.6    %   233,514        140,638        92,876        66.0    %
Real estate tax 23,202        17,723        5,479        30.9    %   45,610        34,899        10,711        30.7    %
Home costs and selling 58,763        32,051        26,712        83.3    %   100,353        66,090        34,263        51.8    %
Service, retail, dining and entertainment 78,585        7,242        71,343        N/M   124,016        13,924        110,092        N/M
General and administrative 45,127        26,527        18,600        70.1    %   83,330        51,876        31,454        60.6    %
Catastrophic event-related charges, net 355        (566 )     921        162.7    %   2,769        40        2,729        N/M
Business combination, net (201 )     —        (201 )     N/A   1,031        —        1,031        N/A
Depreciation and amortization 126,423        87,265        39,158        44.9    %   249,727        170,954        78,773        46.1    %
Loss on extinguishment of debt 8,108        1,930        6,178        320.1    %   8,108        5,209        2,899        55.7    %
Interest 37,681        31,428        6,253        19.9    %   77,198        63,844        13,354        20.9    %
Interest on mandatorily redeemable preferred OP units / equity 1,041        1,042        (1 )     (0.1 ) %   2,077        2,083        (6 )     (0.3 ) %
Total Expenses 509,045        275,446        233,599        84.8    %   927,733        549,557        378,176        68.8    %
Income Before Other Items 94,818        27,820        66,998        240.8    %   118,145        64,011        54,134        84.6    %
Gain / (loss) on remeasurement of marketable securities 27,494        24,519        2,975        12.1    %   31,155        (4,128 )     35,283        N/M
Gain / (loss) on foreign currency translation (264 )     10,374        (10,638 )     (102.5 ) %   (239 )     (7,105 )     6,866        (96.6 ) %
Other expense, net(6) (660 )     (821 )     161        19.6    %   (1,759 )     (1,793 )     34        (1.9 ) %
Gain / (loss) on remeasurement of notes receivable 93        246        (153 )     (62.2 ) %   469        (1,866 )     2,335        N/M
Income from nonconsolidated affiliates 794        92        702        N/M   1,965        144        1,821        N/M
Gain / (loss) on remeasurement of investment in nonconsolidated affiliates (115 )     1,132        (1,247 )     (110.2 ) %   (11 )     (1,059 )     1,048        (99.0 ) %
Current tax expense (1,245 )     (119 )     (1,126 )     N/M   (1,016 )     (569 )     (447 )     78.6    %
Deferred tax benefit / (expense) (66 )     112        (178 )     N/M   81        242        (161 )     (66.5 ) %
Net Income 120,849        63,355        57,494        90.7    %   148,790        47,877        100,913        210.8    %
Less: Preferred return to preferred OP units / equity 3,035        1,584        1,451        91.6    %   5,899        3,154        2,745        87.0    %
Less: Income attributable to noncontrolling interests 7,044        2,861        4,183        146.2    %   7,339        1,899        5,440        286.5    %
Net Income Attributable to Sun Communities, Inc. $ 110,770        $ 58,910        $ 51,860        88.0    %   $ 135,552        $ 42,824        $ 92,728        216.5    %
                               
Weighted average common shares outstanding - basic 112,082        95,859        16,223        16.9    %   110,007        94,134        15,873        16.9    %
Weighted average common shares outstanding - diluted 112,082        95,860        16,222        16.9    %   112,593        94,525        18,068        19.1    %
                               
Basic earnings per share $ 0.98        $ 0.61        $ 0.37        60.7    %   $ 1.22        $ 0.45        $ 0.77        171.1    %
Diluted earnings per share $ 0.98        $ 0.61        $ 0.37        60.7    %   $ 1.22        $ 0.45        $ 0.77        171.1    %

N/M = Percentage change is not meaningful.

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

 


Outstanding Securities - As of June 30, 2021
                   
  Number of Units / Shares Outstanding   Conversion Rate*   If Converted(1)   Issuance Price Per Unit*   Annual Distribution Rate*
Non-convertible Securities                  
Common shares 115,889   N/A   N/A   N/A   $3.32^
                   
Convertible Securities                  
Common OP units 2,569   1.0000   2,569   N/A   Mirrors common shares distributions
                   
Series A-1 preferred OP units 288   2.4390   703   $ 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   5.00 %
Series D preferred OP units 489   0.8000   391   $ 100   4.00 %
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 %
Series J preferred OP units 240   0.6061   145   $ 100   2.85 %

^ 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 June 30, 2021            
             
Equity   Shares   Share Price*   Total
Common shares   115,889      $ 171.40      $ 19,863,375   
Common OP units   2,569      $ 171.40      440,327   
Subtotal   118,458          $ 20,303,702   
             
Preferred OP units as converted   2,844      $ 171.40      487,462   
Total diluted shares outstanding   121,302          $ 20,791,164   
             
Debt            
Secured debt           $ 3,457,734   
Unsecured debt           853,441   
Total debt           $ 4,311,175   
             
Total Capitalization           $ 25,102,339   

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, 2021   June 30, 2020   June 30, 2021   June 30, 2020
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 110,770        $ 58,910        $ 135,552        $ 42,824     
Adjustments              
Depreciation and amortization 126,227        87,296        249,303        171,048     
Depreciation on nonconsolidated affiliates 31        19        61        19     
(Gain) / loss on remeasurement of marketable securities (27,494 )     (24,519 )     (31,155 )     4,128     
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates 115        (1,132 )     11        1,059     
(Gain) / loss on remeasurement of notes receivable (93 )     (246 )     (469 )     1,866     
Income attributable to noncontrolling interests 5,033        1,942        4,886        1,646     
Preferred return to preferred OP units 478        —        958        1,000     
Interest expense on Aspen preferred OP units 514        —        1,028        —     
Gain on disposition of assets, net (17,564 )     (4,178 )     (25,719 )     (9,740 )  
FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities(1)(4) $ 198,017        $ 118,092        $ 334,456        $ 213,850     
               
Adjustments              
Business combination expense and other acquisition related costs(7) 2,284        504        4,237        889     
Loss on extinguishment of debt 8,108        1,930        8,108        5,209     
Catastrophic event-related charges, net 364        (567 )     2,778        39     
Loss of earnings - catastrophic event-related —        —        200        300     
(Gain) / loss on foreign currency translation 264        (10,374 )     239        7,105     
Other expense, net 517        552        1,233        854     
Deferred tax (benefits) / expenses 66        188        (81 )     58     
Core FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities(1)(4) $ 209,620        $ 110,325        $ 351,170        $ 228,304     
               
Weighted average common shares outstanding - basic 112,082        95,859        110,007        94,134     
Add              
Common stock issuable upon conversion of stock options —        1        —        1     
Restricted stock 580        305        372        390     
Common OP units 2,577        2,448        2,586        2,430     
Common stock issuable upon conversion of certain preferred OP units 1,174        —        1,180        815     
Weighted Average Common Shares Outstanding - Fully Diluted 116,413        98,613        114,145        97,770     
               
FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities(1)(4) Per Share - Fully Diluted $ 1.70        $ 1.20        $ 2.93        $ 2.19     
               
Core FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities(1)(4) Per Share - Fully Diluted $ 1.80        $ 1.12        $ 3.08        $ 2.34     

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, 2021   June 30, 2020   June 30, 2021   June 30, 2020
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 110,770        $ 58,910        $ 135,552        $ 42,824     
Interest income (2,719 )     (2,635 )     (5,350 )     (4,985 )  
Brokerage commissions and other revenues, net (6,939 )     (3,274 )     (12,899 )     (7,187 )  
General and administrative expense 45,127        26,527        83,330        51,876     
Catastrophic event-related charges, net 355        (566 )     2,769        40     
Business combination expense, net (201 )     —        1,031        —     
Depreciation and amortization 126,423        87,265        249,727        170,954     
Loss on extinguishment of debt 8,108        1,930        8,108        5,209     
Interest expense 37,681        31,428        77,198        63,844     
Interest on mandatorily redeemable preferred OP units / equity 1,041        1,042        2,077        2,083     
(Gain) / loss on remeasurement of marketable securities (27,494 )     (24,519 )     (31,155 )     4,128     
(Gain) / loss on foreign currency translation 264        (10,374 )     239        7,105     
Other expense, net(6) 660        821        1,759        1,793     
(Gain) / loss on remeasurement of notes receivable (93 )     (246 )     (469 )     1,866     
Income from nonconsolidated affiliates (794 )     (92 )     (1,965 )     (144 )  
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates 115        (1,132 )     11        1,059     
Current tax expense 1,245        119        1,016        569     
Deferred tax (benefit) / expense 66        (112 )     (81 )     (242 )  
Preferred return to preferred OP units / equity 3,035        1,584        5,899        3,154     
Income attributable to noncontrolling interests 7,044        2,861        7,339        1,899     
NOI(1) $ 303,694        $ 169,537        $ 524,136        $ 345,845     


  Three Months Ended   Six Months Ended
  June 30, 2021   June 30, 2020   June 30, 2021   June 30, 2020
Real Property NOI(1) $ 252,742      $ 162,600      $ 457,394      $ 333,939     
Home Sales NOI(1) 23,085      6,479      33,694      13,027     
Service, retail, dining and entertainment NOI(1) 27,867      458      33,048      (1,121 )  
NOI(1) $ 303,694      $ 169,537      $ 524,136      $ 345,845     

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, 2021   June 30, 2020   June 30, 2021   June 30, 2020
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 110,770        $ 58,910        $ 135,552        $ 42,824     
Adjustments              
Depreciation and amortization 126,423        87,265        249,727        170,954     
Loss on extinguishment of debt 8,108        1,930        8,108        5,209     
Interest expense 37,681        31,428        77,198        63,844     
Interest on mandatorily redeemable preferred OP units / equity 1,041        1,042        2,077        2,083     
Current tax expense 1,245        119        1,016        569     
Deferred tax (benefit) / expense 66        (112 )     (81 )     (242 )  
Income from nonconsolidated affiliates (794 )     (92 )     (1,965 )     (144 )  
Less: Gain on dispositions of assets, net (17,564 )     (4,178 )     (25,719 )     (9,740 )  
EBITDAre(1) $ 266,976        $ 176,312        $ 445,913        $ 275,357     
Adjustments              
Catastrophic event-related charges, net 355        (566 )     2,769        40     
Business combination expense (201 )     —        1,031        —     
(Gain) / loss on remeasurement of marketable securities (27,494 )     (24,519 )     (31,155 )     4,128     
(Gain) / loss on foreign currency translation 264        (10,374 )     239        7,105     
Other expense, net(6) 660        821        1,759        1,793     
(Gain) / loss on remeasurement of notes receivable (93 )     (246 )     (469 )     1,866     
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates 115        (1,132 )     11        1,059     
Preferred return to preferred OP units / equity 3,035        1,584        5,899        3,154     
Income attributable to noncontrolling interests 7,044        2,861        7,339        1,899     
Plus: Gain on dispositions of assets, net 17,564        4,178        25,719        9,740     
Recurring EBITDA(1) $ 268,225        $ 148,919        $ 459,055        $ 306,141     

Non-GAAP and Other Financial Measures

Debt Analysis
(amounts in thousands)

 


  Quarter Ended
  6/30/2021   3/31/2021   12/31/2020   9/30/2020   6/30/2020
Debt Outstanding                  
Mortgage term loans $ 3,418,097      $ 3,430,420      $ 3,444,967      $ 3,191,380      $ 3,205,507   
Collateralized term loan 39,637      42,510      45,016      47,546      50,006   
Total secured debt 3,457,734      3,472,930      3,489,983      3,238,926      3,255,513   
Senior unsecured notes 591,688      —      —      —      —   
Line of credit and other debt 191,841      875,093      1,197,181      31,775      65,346   
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   
Total unsecured debt 853,441      945,005      1,267,093      101,687      135,258   
Total debt $ 4,311,175      $ 4,417,935      $ 4,757,076      $ 3,340,613      $ 3,390,771   
                   
% Fixed / Floating                  
Fixed 94.7  %   79.3  %   74.0  %   97.6  %   96.6  %
Floating 5.3  %   20.7  %   26.0  %   2.4  %   3.4  %
Total 100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
                   
Weighted Average Interest Rates                  
Mortgage term loans 3.78  %   3.78  %   3.78  %   3.88  %   3.88  %
Collateralized term loan 1.30  %   1.29  %   1.31  %   1.31  %   1.31  %
Senior unsecured notes 2.70  %   —  %   —  %   —  %   —  %
Line of credit and other debt(8) 0.93  %   1.77  %   2.11  %   1.34  %   2.57  %
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  %   5.93  %
Total average 3.52  %   3.39  %   3.37  %   3.86  %   3.86  %
                   
Debt Ratios                  
Net Debt / Recurring EBITDA(1) (TTM) 5.1      6.1      6.9      5.0      4.8   
Net Debt / Enterprise Value 16.8  %   19.7  %   21.4  %   18.3  %   17.8  %
Net Debt / Gross Assets 29.6  %   31.8  %   35.5  %   31.6  %   29.7  %
                   
Coverage Ratios                  
Recurring EBITDA(1) (TTM) / Interest 5.6   5.0   4.9   4.8   4.5
Recurring EBITDA(1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution 5.5   4.8   4.8   4.6   4.4


Maturities / Principal Amortization Next Five Years 2021   2022   2023   2024   2025
Mortgage term loans                  
Maturities $ —      $ 82,155      $ 185,619      $ 315,330      $ 50,529   
Principal amortization 30,083      61,411      60,788      57,344      53,933   
Collateralized term loan 4,621      10,000      25,016      —      —   
Line of credit and other debt —      1,509      —      —      190,332   
Preferred Equity - Sun NG Resorts - mandatorily redeemable —      —      —      33,428      1,821   
Preferred OP units - mandatorily redeemable —      —      —      27,373      —   
Total $ 34,704      $ 155,075      $ 271,423      $ 433,475      $ 296,615   
                   
Weighted average rate of maturities —  %   4.46  %   4.08  %   4.47  %   4.04  %

Same Community(2)
(amounts in thousands)

 


                                               
  Three Months Ended
  Total Same Community   MH   RV
  June 30, 2021   June 30, 2020   Change   % Change   June 30, 2021   June 30, 2020   Change   % Change   June 30, 2021   June 30, 2020   Change   % Change
Financial Information                                              
Revenue                                              
Real property (excluding transient) $ 219,693      $ 205,449      $ 14,244      6.9  %   $ 174,158      $ 166,473      $ 7,685      4.6  %   $ 45,535      $ 38,976      $ 6,559      16.8  %
Real property - transient 51,481      21,510      29,971      139.3  %   362      173      189      109.2  %   51,119      21,337      29,782      139.6  %
Other 10,798      3,219      7,579      235.4  %   4,869      1,130      3,739      330.9  %   5,929      2,089      3,840      183.8  %
Total Operating 281,972      230,178      51,794      22.5  %   179,389      167,776      11,613      6.9  %   102,583      62,402      40,181      64.4  %
Expense                                              
Property Operating(9)(10) 87,459      70,159      17,300      24.7  %   44,984      40,226      4,758      11.8  %   42,475      29,933      12,542      41.9  %
Real Property NOI(1) $ 194,513      $ 160,019      $ 34,494      21.6  %   $ 134,405      $ 127,550      $ 6,855      5.4  %   $ 60,108      $ 32,469      $ 27,639      85.1  %


  Six Months Ended
  Total Same Community   MH   RV
  June 30, 2021   June 30, 2020   Change   % Change   June 30, 2021   June 30, 2020   Change   % Change   June 30, 2021   June 30, 2020   Change   % Change
Financial Information                                              
Revenue                                              
Real property (excluding Transient) $ 435,054      $ 410,667      $ 24,387      5.9  %   $ 346,900      $ 331,301      $ 15,599        4.7    %   $ 88,154      $ 79,366      $ 8,788      11.1  %
Real property - transient 76,883      49,869      27,014      54.2  %   962      1,101      (139 )     (12.6 ) %   75,921      48,768      27,153      55.7  %
Other 17,793      9,071      8,722      96.2  %   9,695      4,940      4,755        96.3    %   8,098      4,131      3,967      96.0  %
Total Operating 529,730      469,607      60,123      12.8  %   357,557      337,342      20,215        6.0    %   172,173      132,265      39,908      30.2  %
Expense                                              
Property Operating(9)(10) 159,973      138,879      21,094      15.2  %   87,989      80,911      7,078        8.7    %   71,984      57,968      14,016      24.2  %
Real Property NOI(1) $ 369,757      $ 330,728      $ 39,029      11.8  %   $ 269,568      $ 256,431      $ 13,137        5.1    %   $ 100,189      $ 74,297      $ 25,892      34.8  %

Same Community(2) (continued)

 


  As of        
  June 30, 2021   June 30, 2020   Change   % Change
Other Information              
Number of properties 405      405      —         
               
MH occupancy 97.4  %            
RV occupancy 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  %   97.2  %   1.6    %    
               
Sites available for development 7,246      7,553      (307 )      
               
Monthly base rent per site - MH $ 601      $ 583      $ 18        3.1%(12)
Monthly base rent per site - RV(11) $ 527      $ 504      $ 23        4.7%(12)
Monthly base rent per site - Total(11) $ 584      $ 565      $ 19        3.3%(12)

Marina Summary
(amounts in thousands except for statistical data)

 


         
    Three Months Ended   Six Months Ended
    June 30, 2021   June 30, 2021
Financial Information        
Revenues        
Real property (excluding transient)   $ 61,914      $ 108,020
Real property - transient   4,257      5,125
Other   3,671      5,319
Total Operating   69,842      118,464
Expenses        
Property Operating(a)   28,246      51,821
Real Property NOI   41,596      66,643
Service, retail, dining and entertainment        
Service, retail, dining and entertainment revenue   82,238      126,592
Service, retail, dining and entertainment expense   61,017      99,026
Service, Retail, Dining and Entertainment NOI   21,221      27,566
         
Marina NOI   $ 62,817      $ 94,209
         
Other Information - Marinas       June 30, 2021
Number of properties(b)       114
Total wet slips and dry storage       41,275

(a) Marina results net $3.7 million and $6.3 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the quarter and six months ended June 30, 2021.

(b) Marina properties comprised of eight properties acquired in 2021 and 106 properties acquired in 2020.

MH and RV Acquisitions and Other Summary(13)
(amounts in thousands except for statistical data)

 


         
    Three Months Ended   Six Months Ended
    June 30, 2021   June 30, 2021
Financial Information        
Revenues        
Real property (excluding transient)   $ 8,522   $ 15,820   
Real property - transient   21,259   27,525   
Other income   2,767   3,122   
Total Operating   32,548   46,467   
Expenses        
Property Operating(a)   15,915   25,475   
Real Property NOI   $ 16,633   $ 20,992   
         
Other Information - MH and RVs       June 30, 2021
Number of properties       50   
Occupied sites       5,474   
Developed sites       6,322   
Occupancy %       86.6  %
Transient sites       8,122   

(a) MH and RV Acquisitions and Other results net $1.1 million and $2.3 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the quarter and six months ended June 30, 2021.

Home Sales Summary
(amounts in thousands except for *)

 


                               
  Three Months Ended   Six Months Ended
  June 30, 2021   June 30, 2020   Change   % Change   June 30, 2021   June 30, 2020   Change   % Change
Financial Information                              
New Homes                              
New home sales $ 34,761      $ 19,206      $ 15,555      81.0  %   $ 57,733      $ 34,802      $ 22,931      65.9  %
New home cost of sales 28,269      15,707      12,562      80.0  %   46,943      28,317      18,626      65.8  %
Gross Profit – new homes 6,492      3,499      2,993      85.5  %   10,790      6,485      4,305      66.4  %
Gross margin % – new homes 18.7  %   18.2  %   0.5  %       18.7  %   18.6  %   0.1  %    
Average selling price – new homes* $ 153,132      $ 137,186      $ 15,946      11.6  %   $ 153,545      $ 134,371      $ 19,174      14.3  %
                               
Pre-owned Homes                              
Pre-owned home sales $ 47,087      $ 19,324      $ 27,763      143.7  %   $ 76,314      $ 44,315      $ 31,999      72.2  %
Pre-owned home cost of sales 25,945      13,474      12,471      92.6  %   44,529      30,896      13,633      44.1  %
Gross Profit – pre-owned homes 21,142      5,850      15,292      261.4  %   31,785      13,419      18,366      136.9  %
Gross margin % – pre-owned homes 44.9  %   30.3  %   14.6  %       41.7  %   30.3  %   11.4  %    
Average selling price – pre-owned homes* $ 50,577      $ 41,028      $ 9,549      23.3  %   $ 47,195      $ 39,744      $ 7,451      18.7  %
                               
Total Home Sales                              
Revenue from home sales $ 81,848      $ 38,530      $ 43,318      112.4  %   $ 134,047      $ 79,117      $ 54,930      69.4  %
Cost of home sales 54,214      29,181      25,033      85.8  %   91,472      59,213      32,259      54.5  %
Home selling expenses 4,549      2,870      1,679      58.5  %   8,881      6,877      2,004      29.1  %
Home Sales NOI(1) $ 23,085      $ 6,479      $ 16,606      256.3  %   $ 33,694      $ 13,027      $ 20,667      158.6  %
                               
Statistical Information                              
New home sales volume* 227      140      87      62.1  %   376      259      117      45.2  %
Pre-owned home sales volume* 931      471      460      97.7  %   1,617      1,115      502      45.0  %
Total home sales volume* 1,158      611      547      89.5  %   1,993      1,374      619      45.1  %

Rental Program Summary
(amounts in thousands except for *)

 


                               
  Three Months Ended   Six Months Ended
  June 30, 2021   June 30, 2020   Change   % Change   June 30, 2021   June 30, 2020   Change   % Change
Financial Information                              
Revenues                              
Home rent $ 17,060      $ 14,968      $ 2,092      14.0  %   $ 34,082      $ 30,436      $ 3,646        12.0    %
Site rent 18,649      18,591      58      0.3  %   37,766      36,598      1,168        3.2    %
Total 35,709      33,559      2,150      6.4  %   71,848      67,034      4,814        7.2    %
                               
Expenses                              
Rental Program operating and maintenance 4,561      4,425      136      3.1  %   9,785      9,248      537        5.8    %
Rental Program NOI(1) $ 31,148      $ 29,134      $ 2,014      6.9  %   $ 62,063      $ 57,786      $ 4,277        7.4    %
                               
Other Information                              
Number of sold rental homes* 281      122      159      130.3  %   492      356      136        38.2    %
Number of occupied rentals, end of period*                 10,951      11,785      (834 )     (7.1 ) %
Investment in occupied rental homes, end of period                 $ 601,798      $ 621,327      $ (19,529 )     (3.1 ) %
Weighted average monthly rental rate, end of period*                 $ 1,076      $ 1,018      $ 58        5.7    %

Rental Program NOI is included in Real Property NOI. Rental Program NOI is separately reviewed to assess the overall growth and performance of the Rental Program and its financial impact on the Company's operations.

MH and RV Property Summary                
                     
                     
    6/30/2021   3/31/2021   12/31/2020   9/30/2020   6/30/2020
FLORIDA                    
Properties   129      128      128      127      125   
MH & Annual RV Developed sites(14)   40,171      40,011      39,803      39,517      39,241   
Occupied MH & Annual RV(14)   39,402      39,283      39,063      38,743      38,453   
MH & Annual RV Occupancy %(14)   98.1  %   98.2  %   98.1  %   98.0  %   98.0  %
Transient RV sites   5,895      5,823      6,011      5,993      5,547   
Sites for development   1,414      1,497      1,497      1,427      1,427   
MICHIGAN                    
Properties   75      74      74      74      72   
MH & Annual RV Developed sites(14)   29,600      29,092      29,086      29,086      27,901   
Occupied MH & Annual RV(14)   28,671      28,145      28,109      28,033      27,191   
MH & Annual RV Occupancy %(14)   96.9  %   96.7  %   96.6  %   96.4  %   97.5  %
Transient RV sites   509      541      546      546      572   
Sites for development   1,182      1,182      1,182      1,182      1,182   
CALIFORNIA                    
Properties   36      36      35      34      32   
MH & Annual RV Developed sites(14)   6,736      6,734      6,675      6,372      6,364   
Occupied MH & Annual RV(14)   6,613      6,609      6,602      6,290      6,272   
MH & Annual RV Occupancy %(14)   98.2  %   98.1  %   98.9  %   98.7  %   98.6  %
Transient RV sites   2,416      2,418      2,231      2,236      1,978   
Sites for development   127      127      373      373      264   
TEXAS                     
Properties   25      24      24      24      23   
MH & Annual RV Developed sites(14)   7,947      7,928      7,766      7,659      7,641   
Occupied MH & Annual RV(14)   7,731      7,671      7,572      7,427      7,289   
MH & Annual RV Occupancy %(14)   97.3  %   96.8  %   97.5  %   97.0  %   95.4  %
Transient RV sites   1,835      1,773      1,810      1,917      1,590   
Sites for development   1,194      1,275      1,378      1,378      565   
ONTARIO, CANADA                    
Properties   16      16      15      15      15   
MH & Annual RV Developed sites(14)   4,302      4,199      4,090      4,067      3,980   
Occupied MH & Annual RV(14)   4,302      4,199      4,090      4,067      3,980   
MH & Annual RV Occupancy %(14)   100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
Transient RV sites   870      964      966      920      1,007   
Sites for development   1,525      1,525      1,525      1,593      1,593   
CONNECTICUT                    
Properties   16      16      16      16      16   
MH & Annual RV Developed sites(14)   1,901      1,897      1,897      1,898      1,898   
Occupied MH & Annual RV(14)   1,757      1,746      1,739      1,736      1,735   
MH & Annual RV Occupancy %(14)   92.4  %   92.0  %   91.7  %   91.5  %   91.4  %
Transient RV sites   104      108      108      107      107   
Sites for development   —      —      —      —      —   
ARIZONA                    
Properties   14      14      14      13      13   
MH & Annual RV Developed sites(14)   4,401      4,391      4,323      4,274      4,259   
Occupied MH & Annual RV(14)   4,116      4,101      4,030      3,957      3,932   
MH & Annual RV Occupancy %(14)   93.5  %   93.4  %   93.2  %   92.6  %   92.3  %
Transient RV sites   1,260      1,270      1,337      1,386      1,401   
Sites for development   —      —      —      —      —   
                     
                     
MAINE                    
Properties   13      13      13      7      7   
MH & Annual RV Developed sites(14)   2,204      2,190      2,190      1,092      1,074   
Occupied MH & Annual RV(14)   2,127      2,119      2,121      1,089      1,069   
MH & Annual RV Occupancy %(14)   96.5  %   96.8  %   96.8  %   99.7  %   99.5  %
Transient RV sites   792      805      805      819      837   
Sites for development   30      30      30      30      30   
INDIANA                    
Properties   12      12      12      11      11   
MH & Annual RV Developed sites(14)   3,087      3,087      3,087      3,087      3,087   
Occupied MH & Annual RV(14)   2,970      2,961      2,950      2,957      2,961   
MH & Annual RV Occupancy %(14)   96.2  %   95.9  %   95.6  %   95.8  %   95.9  %
Transient RV sites   1,089      1,089      1,089      534      534   
Sites for development   277      277      277      277      277   
COLORADO                    
Properties   10      10      10      10      10   
MH & Annual RV Developed sites(14)   2,453      2,453      2,453      2,453      2,441   
Occupied MH & Annual RV(14)   2,420      2,395      2,380      2,365      2,327   
MH & Annual RV Occupancy %(14)   98.7  %   97.6  %   97.0  %   96.4  %   95.3  %
Transient RV sites   987      962      962      930      574   
Sites for development   1,225      1,250      1,250      1,282      1,566   
NEW HAMPSHIRE                    
Properties   10      10      10      10      10   
MH & Annual RV Developed sites(14)   1,777      1,776      1,777      1,833      1,827   
Occupied MH & Annual RV(14)   1,769      1,769      1,767      1,822      1,816   
MH & Annual RV Occupancy %(14)   99.5  %   99.6  %   99.4  %   99.4  %   99.4  %
Transient RV sites   602      456      460      404      410   
Sites for development   151      151      151      151      151   
NEW YORK                    
Properties   10      10      9      9      9   
MH & Annual RV Developed sites(14)   1,457      1,452      1,419      1,414      1,403   
Occupied MH & Annual RV(14)   1,428      1,415      1,380      1,371      1,358   
MH & Annual RV Occupancy %(14)   98.0  %   97.5  %   97.3  %   97.0  %   96.8  %
Transient RV sites   1,684      1,689      1,422      900      911   
Sites for development   371      371      371      371      371   
OHIO                     
Properties   9      9      9      9      9   
MH & Annual RV Developed sites(14)   2,797      2,797      2,790      2,790      2,778   
Occupied MH & Annual RV(14)   2,770      2,760      2,755      2,758      2,736   
MH & Annual RV Occupancy %(14)   99.0  %   98.7  %   98.7  %   98.9  %   98.5  %
Transient RV sites   128      128      135      135      147   
Sites for development   22      22      22      22      22   
OTHER STATES                    
Properties   80      80      77      73      74   
MH & Annual RV Developed sites(14)   17,422      17,310      16,896      16,484      16,578   
Occupied MH & Annual RV(14)   16,934      16,796      16,394      15,977      16,046   
MH & Annual RV Occupancy %(14)   97.2  %   97.0  %   97.0  %   96.9  %   96.8  %
Transient RV sites   8,861      8,269      7,161      6,901      6,745   
Sites for development   1,925      1,969      1,969      2,044      2,294   
                     
TOTAL - MH AND RV PORTFOLIO                    
Properties   455      452      446      432      426   
MH & Annual RV Developed sites(14)   126,255      125,317      124,252      122,026      120,472   
Occupied MH & Annual RV(14)   123,010      121,969      120,952      118,592      117,165   
MH & Annual RV Occupancy %(14)   97.4  % (15) 97.3  %   97.3  %   97.2  %   97.3  %
Transient RV sites   27,032      26,295      25,043      23,728      22,360   
Sites for development(16)   9,443      9,676      10,025      10,130      9,742   
% Communities age restricted   32.5  %   32.7  %   33.2  %   33.6  %   34.0  %


Marina Property Summary(a)            
             
             
    6/30/2021   03/31/2021   12/31/2020
FLORIDA            
Properties   18      16      14   
Total wet slips and dry storage spaces   4,186      3,837      3,585   
CONNECTICUT            
Properties   11      11      11   
Total wet slips and dry storage spaces   3,262      3,262      3,262   
RHODE ISLAND            
Properties   11      11      11   
Total wet slips and dry storage spaces   3,207      2,829      2,829   
MASSACHUSETTS            
Properties   9      9      7   
Total wet slips and dry storage spaces   2,650      2,650      2,223   
NEW YORK            
Properties   8      8      8   
Total wet slips and dry storage spaces   2,629      2,629      2,629   
MARYLAND            
Properties   8      8      8   
Total wet slips and dry storage spaces   2,110      2,110      2,110   
OTHER STATES            
Properties   49      47      47   
Total wet slips and dry storage spaces   23,231      22,693      22,693   
TOTAL - MARINA PORTFOLIO            
Properties   114      110      106   
Total wet slips and dry storage spaces   41,275      40,010      39,331   

(a) Total wet slips and dry storage spaces are adjusted each quarter based on site configuration and usability.

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

 


  Recurring Capital Expenditures Average / MH & RV Site* Recurring Capital Expenditures Average / Marina Site* Recurring Capital Expenditures - MH / RV(17) Recurring Capital Expenditures - Marina(17) Lot Modifications(18) Acquisitions(19) Expansion
and
Development(20)		 Growth Projects(21)
YTD 2021 $ 178    $ 149    $ 21,697    $ 5,909    $ 16,945    $ 692,344    $ 90,380    $ 36,357   
2020 $ 265    N/A $ 31,398    $ 2,074    $ 29,789    $ 3,105,296    $ 248,146    $ 28,315   
2019 $ 345    N/A $ 30,382    N/A $ 31,135    $ 930,668    $ 281,808    $ 9,638   

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   1,251      319      116      126      972   
Michigan   241      113      29      807      124   
Ontario, Canada   471      121      43      5      221   
Texas   177      159      44      213      39   
Arizona   60      86      15      23      132   
Indiana   34      20      5      147      9   
Ohio   58      15      1      59      9   
California   68      11      14      4      82   
Colorado   1      40      34      16      21   
Connecticut   19      18      20      2      25   
New York   87      24      6      1      7   
New Hampshire   —      2      4      —      22   
Maine   73      6      6      6      1   
Other states   702      163      39      208      110   
Six Months Ended June 30, 2021   3,242      1,097      376      1,617      1,774   


Total For Year Ended   Resident Move-outs   Net Leased Sites(5)   New Home Sales   Pre-owned Home Sales   Brokered
Re-sales
2020   5,365      2,505      570      2,296      2,557   
2019   4,139      2,674      571      2,868      2,231   


Percentage Trends   Resident Move-outs   Resident
Re-sales
2021 TTM   2.1  %   8.1  %
2020   3.3  %   6.9  %
2019   2.6  %   6.6  %

Footnotes and Definitions

 

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

  • FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of generally accepted accounting principles ("GAAP") depreciation and amortization of real estate assets.
  • NOI provides a measure of rental operations that does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses.
  • EBITDA provides a further measure to evaluate ability to incur and service debt and to fund dividends and other cash needs.

FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating property, plus real estate related depreciation and amortization, 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 2021 average exchange rates.

(3)   The MH and RV blended occupancy is derived from 119,933 developed sites, of which 117,536 were occupied. The adjusted MH and RV blended occupancy percentage for 2020 has been adjusted to reflect incremental period-over-period growth from newly rented expansion sites and the conversion of transient RV sites to annual RV sites. The adjusted MH and RV blended occupancy percentage for 2021 is derived from 118,907 developed sites, of which 117,536 were occupied. The number of developed sites excludes RV transient sites and over 1,000 recently completed but vacant MH expansion sites.

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

(5)   Revenue producing site gains do not include occupied sites acquired during that year.

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

  Three Months Ended   Six Months Ended
  June 30, 2021   June 30, 2020   June 30, 2021   June 30, 2020
Foreign currency remeasurement income / (loss) $ 181        $ (195 )     $ 159        $ (415 )  
Contingent consideration expense (72 )     (84 )     (143 )     (166 )  
Long term lease termination expense —        (273 )     —        (273 )  
GTSC repair reserve (144 )     (269 )     (525 )     (939 )  
Non-cash lease amortization expense (625 )     —        (1,250 )     —     
Other expenses, net $ (660 )     $ (821 )     $ (1,759 )     $ (1,793 )  

(7)   Other acquisition related 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. These costs also include nonrecurring integration expenses associated with a new acquisition.

(8)   Line of credit and other debt includes borrowings under the Company's $2.0 billion New Credit Facility and a $12.0 million MH floor plan facility. The effective interest rate on the MH floor plan facility was 7.0 percent for the quarters ended June 30 and March 31, 2021, and 6.0 percent for the quarters ended December 31, September 30 and June 30, 2020. However, the Company pays no interest if the floor plan balance is repaid within 60 days.

(9)   Same Community results net $16.8 million and $14.3 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the three months ended June 30, 2021 and 2020, respectively. Same Community results net $33.2 million and $29.1 million of utility revenue against the related utility expense in property operating and maintenance expense for the six months ended June 30, 2021 and 2020, respectively.

(10)   Same Community supplies and repair expense excludes $0.5 million and $0.9 million for the three and six months ended June 30, 2020, respectively, of expenses incurred for recently acquired properties to bring the properties up to the Company's operating standards, including items such as tree trimming and painting costs that do not meet the Company's capitalization policy.

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

(12)   Calculated using actual results without rounding.

(13)   MH and RV acquisitions and other is comprised of eight properties acquired and five properties that the Company has an interest in, but does not operate in 2021, 23 properties acquired in 2020, two Florida Keys properties that require redevelopment as a result of damage sustained from Hurricane Irma in 2017, seven recently opened ground-up developments, one property undergoing redevelopment, four properties previously classified as held for sale and other miscellaneous transactions and activity.

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

(15)   As of June 30, 2021, total portfolio MH occupancy was 96.7 percent inclusive of the impact of nearly 1,200 recently constructed but vacant MH expansion sites, and annual RV occupancy was 100.0 percent.

(16)   Total sites for development were comprised of approximately 77.9 percent for expansion, 19.8 percent for greenfield development and 2.3 percent for redevelopment.

(17)   Property recurring capital expenditures are necessary to maintain asset quality, including purchasing and replacing assets used to operate the communities, resorts and marinas. Recurring capital expenditures at our MH and RV properties 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. Recurring capital expenditures at our marinas include items such as: dredging, dock repairs and improvements, and equipment maintenance and upgrades. The minimum capitalized amount is five hundred dollars.

(18)   Lot modification capital expenditures are MH expenditures necessary to 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.

(19)   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 six months ended June 30, 2021 include $70.7 million of capital improvements identified during due diligence that are necessary to bring the communities, resorts and marinas to the Company's operating standards. For the years ended December 31, 2020 and 2019, these costs were $40.6 million and $50.7 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.

(20)   Expansion and development expenditures consist primarily of construction costs and costs necessary to complete home and RV site improvements, such as driveways, sidewalks and landscaping at our MH communities and RV resorts.

(21)   Growth projects consist of revenue generating or expense reducing activities at MH communities, RV resorts and marinas. This includes, but is not limited to, utility efficiency and renewable energy projects, site, slip or amenity upgrades such as the addition of a garage, shed or boat lift, and other special capital projects that substantiate an incremental rental increase.

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

Attachment


Sun Communities, Inc.