Investor Relations

News Release

Sun Communities, Inc. Reports 2021 Third Quarter Results

Southfield, MI, Oct. 25, 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 third quarter results for 2021.

Financial Results for the Quarter and Nine Months Ended September 30, 2021

For the quarter ended September 30, 2021, total revenues increased $283.8 million, or 70.9 percent, to approximately $684.3 million compared to $400.5 million for the same period in 2020. Net income attributable to common stockholders increased $150.6 million, or 185.4 percent, to approximately $231.8 million, or $2.00 per diluted common share, compared to net income attributable to common stockholders of $81.2 million, or $0.83 per diluted common share, for the same period in 2020.

For the nine months ended September 30, 2021, total revenues increased $716.1 million, or 70.6 percent, to $1.7 billion compared to approximately $1.0 billion for the same period in 2020. Net income attributable to common stockholders increased $243.3 million, or 196.2 percent, to approximately $367.3 million, or $3.27 per diluted common share, compared to net income attributable to common stockholders of $124.0 million, or $1.29 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 September 30, 2021, was $2.11 per diluted share and OP unit ("Share") as compared to $1.60 in the corresponding period in 2020, a 31.9 percent increase.

  • Same Community(2) Net Operating Income ("NOI")(1) increased by 12.4 percent for the quarter ended September 30, 2021, as compared to the corresponding period in 2020.

  • Home Sales Volume increased 63.7 percent to 1,162 homes for the quarter ended September 30, 2021, as compared to 710 homes in the same period in 2020.

  • Acquisitions totaled $500.8 million during and subsequent to the quarter ended September 30, 2021, including 9 MH communities, 7 RV resorts and 6 marinas.

Gary Shiffman, Chief Executive Officer stated, "We are pleased with our third quarter results which highlight successful execution across all of our growth strategies. The RV segment continues to deliver strong results producing same community NOI growth of nearly 31 percent in the quarter, as we benefit from the demand for outdoor experiences coming from existing and new Sun customers. As the leading industry consolidator, we have completed $1.1 billion of acquisitions year-to-date, and believe our cycle tested ability to create value through acquisitions will continue to result in accretive growth. We have remained active in the capital markets to support this growth including completing our second bond offering of the year. Our talented team will continue to execute on opportunities across operations, acquisitions, expansions and ground-up developments, providing us with a confident outlook."

OPERATING HIGHLIGHTS

Portfolio Occupancy

Total MH and annual RV occupancy was 97.4 percent at September 30, 2021 as compared to 97.2 percent at September 30, 2020, an increase of 20 basis points.

During the quarter ended September 30, 2021, MH and annual RV revenue producing sites increased by 576 sites as compared to an increase of 776 sites during the quarter ended September 30, 2020.

During the nine months ended September 30, 2021, MH and annual RV revenue producing sites increased by 1,673 sites as compared to an increase of 1,927 sites during the nine months ended September 30, 2020.

Same Community(2) Results

For the 403 MH and RV properties owned and operated by the Company since January 1, 2020, the following table reflects the percentage increases, in total and by segment, for the quarter and nine months ended September 30, 2021:

  Quarter Ended September 30, 2021
  Total Same Community   MH   RV
Revenue 12.8  %   5.2  %   24.2  %
Expense 13.7  %   12.7  %   14.8  %
NOI 12.4  %   2.6  %   30.6  %


  Nine Months Ended September 30, 2021
  Total Same Community   MH   RV
Revenue 12.9  %   5.8  %   27.4  %
Expense 14.6  %   10.2  %   20.0  %
NOI 12.1  %   4.3  %   32.8  %

Same Community adjusted occupancy(3) increased to 98.9 percent at September 30, 2021 from 97.4 percent at September 30, 2020, an increase of 150 basis points.

Home Sales

The following table reflects the home sales volume increases for the quarter and nine months ended September 30, 2021:

  Quarter Ended   Nine Months Ended
  September 30, 2021   September 30, 2020   Change   % Change   September 30, 2021   September 30, 2020   Change   % Change
New home sales volume 207      155      52      33.5  %   583      414      169      40.8  %
Pre-owned home sales volume 955      555      400      72.1  %   2,572      1,670      902      54.0  %
Total home sales volume 1,162      710      452      63.7  %   3,155      2,084      1,071      51.4  %

Marina Results

Marina NOI was $64.5 million and $158.7 million for the quarter and nine months ended September 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 September 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
Allen Harbor   Marina   165      —      RI   $ 4.0      July
Cisco Grove Campground & RV   RV   18      407      CA   6.6      July
Four Leaf Portfolio(a)   MH   2,545      340      MI / IN   215.0      July
Harborage Yacht Club   Marina   300      —      FL   22.0      July
Zeman Portfolio(b)   RV   686      —      IL / NJ   15.2      July
Southern Leisure Resort   RV   496      —      FL   17.8      August
Sunroad Marina   Marina   617      —      CA   84.4      August
Lazy Lakes RV   RV   99      —      FL   9.8      August
Puerto del Rey   Marina   1,450      —      Puerto Rico   92.3      September
Stingray Point   Marina   219      —      VA   2.9      September
Detroit River   Marina   440      —      MI   8.8      September
Jetstream RV Resort   RV   202      —      TX   17.5      September
Subtotal       7,237      747          496.3       
                         
Acquisitions subsequent to quarter end                
Beaver Brook Campground   RV   204      150      ME   4.5      October
Subtotal       204      150          4.5       
                         
Total acquisitions       7,441      897          $ 500.8       

(a) Includes nine MH communities.

(b) Includes two RV communities.

During and subsequent to the nine months ended September 30, 2021, the Company acquired 38 properties totaling 11,910 sites, wet slips and dry storage spaces and 897 sites for expansion for a total purchase price of $1.1 billion.

During the quarter ended September 30, 2021, the Company acquired three land parcels, which are located in Ft. Collins and Ft. Lupton, Colorado and Leighton, Michigan, approved for the development of over 500 MH sites, for total consideration of $7.7 million.

During the quarter ended September 30, 2021, the Company sold six MH communities located in Arizona, Illinois, Indiana and Missouri for $162.1 million.

Construction Activity

During the quarter ended September 30, 2021, the Company completed the construction of over 230 sites in two ground-up developments and over 90 expansion sites in two RV resorts.

During the nine months ended September 30, 2021, the Company completed the construction of over 580 sites in four ground-up developments and over 320 expansion sites in three MH communities and three RV resorts.

BALANCE SHEET, CAPITAL MARKETS ACTIVITY AND OTHER ITEMS

Debt

As of September 30, 2021, the Company had approximately $4.7 billion in debt outstanding. The weighted average interest rate was 3.3 percent and the weighted average maturity was 9.6 years. At September 30, 2021, the Company's net debt to trailing twelve month Recurring EBITDA(1) ratio was 4.9 times. The Company had $71.6 million of unrestricted cash on hand.

Senior Unsecured Notes

Subsequent to the quarter ended September 30, 2021, Sun Communities Operating Limited Partnership ("SCOLP"), the Company's operating partnership, issued $450.0 million of senior unsecured notes with an interest rate of 2.3 percent and a seven-year term, due November 1, 2028 (the "2028 Notes"), and $150.0 million of senior unsecured notes with an interest rate of 2.7 percent, with a 10-year term, due July 15, 2031 (the "2031 Notes"). The 2031 Notes are additional notes of the same series as the $600.0 million aggregate principal amount of 2.7 percent Senior Notes which are due July 15, 2031 that SCOLP issued on June 28, 2021. The net proceeds from the offering were approximately $595.5 million after deducting underwriters' discounts and estimated offering expenses.

Equity Transaction

At the Market Offering

In September 2021, the Company completed the sale of 107,400 forward shares of common stock for $21.4 million under the terms of its At the Market Offering Sales Agreement. The average price before underwriting discounts and commissions was $199.42 per share. The Company expects to settle the forward shares by September 2022.

2021 GUIDANCE

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

      Previous Range   Revised Range    
      FY 2021E   FY 2021E   4Q 2021E
Basic earnings per share     $2.24 - $2.36   $3.42 - $3.48   $0.15 - $0.21
Core FFO(1) per fully diluted Share     $6.25 - $6.37   $6.44 - $6.50   $1.24 - $1.30

Basic earnings per share and Core FFO(1) per fully diluted share and calculated independently for each quarter; as a result, the sum of the quarters may differ from the annual calculation. Full year 2021 guidance is based on the annual calculation.

      Previous Range   Revised Range    
      FY 2021E   FY 2021E   4Q 2021E
Same Community NOI(1) growth     9.9% - 10.7%   10.9% - 11.1%   7.2% - 8.0%

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 third quarter results will be held on Tuesday, October 26, 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 November 9, 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 13722742. The conference call will be available live on Sun Communities' website located at www.suncommunities.com. The replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of September 30, 2021, owned, operated, or had an interest in a portfolio of 584 developed MH, RV and marina properties comprising nearly 155,900 developed sites and nearly 44,900 wet slips and dry storage spaces in 38 states, Canada and Puerto Rico.

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, droughts and wildfires;
  • general volatility of the capital markets and the market price of shares of the Company's capital stock;
  • the Company's ability to maintain its status as a REIT;
  • changes in real estate and zoning laws and regulations;
  • legislative or regulatory changes, including changes to laws governing the taxation of REITs;
  • litigation, judgments or settlements;
  • competitive market forces;
  • the ability of purchasers of manufactured homes and boats to obtain financing; and
  • the level of repossessions by manufactured home and boat lenders.

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

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

Investor Information

 


RESEARCH COVERAGE            
             
Firm   Analyst   Phone   Email
Bank of America Merrill Lynch   Joshua Dennerlein   (646) 855-1681   joshua.dennerlein@baml.com
Barclays   Anthony Powell   (212) 526-8768   anthony.powell@barclays.com
    Allison Gelman   (212) 526-3367   allison.gelman@barclays.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
             
             
INQUIRIES            
             
Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media or any prospective investor. Please address all inquiries to our Investor Relations department.
             
At Our Website   www.suncommunities.com        
             
By Email   investorrelations@suncommunities.com    
             
By Phone   (248) 208-2500        

Portfolio Overview
(As of September 30, 2021)

 


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

 


  Quarter Ended
  9/30/2021   6/30/2021   3/31/2021   12/31/2020   9/30/2020
Financial Information                  
Total revenues $ 684,294      $ 603,863      $ 442,015      $ 384,265      $ 400,514   
Net income $ 250,161      $ 120,849      $ 27,941      $ 9,818      $ 89,756   
Net income attributable to Sun Communities Inc. common stockholders $ 231,770      $ 110,770      $ 24,782      $ 7,586      $ 81,204   
Basic earnings per share* $ 2.00      $ 0.98      $ 0.23      $ 0.07      $ 0.83   
Diluted earnings per share* $ 2.00      $ 0.98      $ 0.23      $ 0.07      $ 0.83   
                   
Cash distributions declared per common share* $ 0.83      $ 0.83      $ 0.83      $ 0.79      $ 0.79   
                   
Recurring EBITDA(1) $ 314,499      $ 268,225      $ 190,830      $ 168,527      $ 199,321   
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4)
$ 223,069      $ 198,017      $ 135,925      $ 110,849      $ 165,209   
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4)
$ 244,535      $ 209,620      $ 141,036      $ 124,872      $ 162,624   
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted* $ 1.92      $ 1.70      $ 1.22      $ 1.03      $ 1.63   
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted* $ 2.11      $ 1.80      $ 1.26      $ 1.16      $ 1.60   
                   
Balance Sheet                  
Total assets $ 12,583,296      $ 12,040,990      $ 11,454,209      $ 11,206,586      $ 8,335,717   
Total debt $ 4,689,437      $ 4,311,175      $ 4,417,935      $ 4,757,076      $ 3,340,613   
Total liabilities $ 5,488,469      $ 5,099,563      $ 5,101,512      $ 5,314,879      $ 3,791,922   


  Quarter Ended
  9/30/2021   6/30/2021   3/31/2021   12/31/2020   9/30/2020
Operating Information*                  
Properties 584   569   562   552   432
                   
Manufactured home sites 98,301   97,448   96,876   96,688   95,209
Annual RV sites 29,640   28,807   28,441   27,564   26,817
Transient RV sites 27,922   27,032   26,295   25,043   23,728
Total sites 155,863   153,287   151,612   149,295   145,754
Marina wet slips and dry storage spaces 44,859   41,275   38,753   38,152   N/A
                   
MH occupancy 96.6  %   96.7  %   96.5  %   96.6  %   96.4  %
Annual RV occupancy 100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
Blended MH and annual RV occupancy 97.4  %   97.4  %   97.3  %   97.3  %   97.2  %
                   
New home sales volume 207   227   149   156   155
Pre-owned home sales volume 955   931   686   626   555
Total home sales volume 1,162   1,158   835   782   710


  Quarter Ended
  9/30/2021   6/30/2021   3/31/2021   12/31/2020   9/30/2020
Revenue Producing Site Net Gains(5)                  
MH net leased sites 144   226   127      247   349
RV net leased sites 432   357   387      331   427
Total net leased sites 576   583   514      578   776

Consolidated Balance Sheets
(amounts in thousands)

 


    September 30, 2021   December 31, 2020
Assets        
Land   $ 2,457,236        $ 2,119,364     
Land improvements and buildings   9,469,247        8,480,597     
Rental homes and improvements   591,367        637,603     
Furniture, fixtures and equipment   590,829        447,039     
Investment property   13,108,679        11,684,603     
Accumulated depreciation   (2,232,243 )     (1,968,812 )  
Investment property, net   10,876,436        9,715,791     
Cash, cash equivalents and restricted cash   85,619        92,641     
Marketable securities   160,321        124,726     
Inventory of manufactured homes   43,708        46,643     
Notes and other receivables, net   256,924        221,650     
Goodwill   461,609        428,833     
Other intangible assets, net   297,625        305,611     
Other assets, net   401,054        270,691     
Total Assets   $ 12,583,296        $ 11,206,586     
Liabilities        
Secured debt   $ 3,403,436        $ 3,489,983     
Unsecured debt   1,286,001        1,267,093     
Distributions payable   98,453        86,988     
Advanced reservation deposits and rent   223,471        187,730     
Accrued expenses and accounts payable   232,590        148,435     
Other liabilities   244,518        134,650     
Total Liabilities   5,488,469        5,314,879     
Commitments and contingencies        
Temporary equity   292,394        264,379     
Stockholders' Equity        
Common stock   1,160        1,076     
Additional paid-in capital   8,170,322        7,087,658     
Accumulated other comprehensive income   1,752        3,178     
Distributions in excess of accumulated earnings   (1,475,634 )     (1,566,636 )  
Total Sun Communities, Inc. stockholders' equity   6,697,600        5,525,276     
Noncontrolling interests        
Common and preferred OP units   85,756        85,968     
Consolidated entities   19,077        16,084     
Total noncontrolling interests   104,833        102,052     
Total Stockholders' Equity   6,802,433        5,627,328     
Total Liabilities, Temporary Equity and Stockholders' Equity   $ 12,583,296        $ 11,206,586     

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

 


  Three Months Ended   Nine Months Ended
  September 30, 2021   September 30, 2020   Change   % Change   September 30, 2021   September 30, 2020   Change   % Change
Revenues                              
Real property (excluding transient) $ 352,553        $ 240,076        $ 112,477        46.9    %   $ 979,537        $ 693,491        $ 286,046        41.2    %
Real property - transient 126,072        80,412        45,660        56.8    %   235,606        136,473        99,133        72.6    %
Home sales 81,099        47,662        33,437        70.2    %   215,146        126,779        88,367        69.7    %
Service, retail, dining and entertainment 113,039        23,859        89,180        373.8    %   270,103        36,662        233,441        636.7    %
Interest 2,690        2,624        66        2.5    %   8,040        7,609        431        5.7    %
Brokerage commissions and other, net 8,841        5,881        2,960        50.3    %   21,740        13,068        8,672        66.4    %
Total Revenues 684,294        400,514        283,780        70.9    %   1,730,172        1,014,082        716,090        70.6    %
Expenses                              
Property operating and maintenance 158,095        98,775        59,320        60.1    %   391,609        239,413        152,196        63.6    %
Real estate tax 24,751        17,442        7,309        41.9    %   70,361        52,341        18,020        34.4    %
Home costs and selling 56,567        39,899        16,668        41.8    %   156,920        105,989        50,931        48.1    %
Service, retail, dining and entertainment 87,106        17,615        69,491        394.5    %   211,122        31,539        179,583        569.4    %
General and administrative 43,276        26,834        16,442        61.3    %   126,606        78,710        47,896        60.9    %
Catastrophic event-related charges, net 328        14        314        N/M   3,097        54        3,043        N/M
Business combination —        —        —        N/A   1,031        —        1,031        N/A
Depreciation and amortization 127,091        88,499        38,592        43.6    %   378,068        259,453        118,615        45.7    %
Loss on extinguishment of debt —        —        —        N/A   8,108        5,209        2,899        55.7    %
Interest 39,026        30,214        8,812        29.2    %   116,224        94,058        22,166        23.6    %
Interest on mandatorily redeemable preferred OP units / equity 1,047        1,047        —        —    %   3,124        3,130        (6 )     (0.2 ) %
Total Expenses 537,287        320,339        216,948        67.7    %   1,466,270        869,896        596,374        68.6    %
Income Before Other Items 147,007        80,175        66,832        83.4    %   263,902        144,186        119,716        83.0    %
Gain / (loss) on remeasurement of marketable securities 12,072        1,492        10,580        709.1    %   43,227        (2,636 )     45,863        N/M
Gain / (loss) on foreign currency translation (7,028 )     5,023        (12,051 )     (239.9 ) %   (7,107 )     (2,496 )     (4,611 )     184.7    %
Gain on dispositions of properties 108,104        5,595        102,509        N/M   108,104        5,595        102,509        N/M
Other expense, net(6) (9,372 )     (3,511 )     (5,861 )     (166.9 ) %   (10,041 )     (4,890 )     (5,151 )     105.3    %
Gain / (loss) on remeasurement of notes receivable 92        (445 )     537        (120.7 ) %   561        (2,311 )     2,872        (124.3 ) %
Income from nonconsolidated affiliates 962        1,204        (242 )     (20.1 ) %   2,927        1,348        1,579        117.1    %
Loss on remeasurement of investment in nonconsolidated affiliates (119 )     (446 )     327        (73.3 ) %   (130 )     (1,505 )     1,375        (91.4 ) %
Current tax benefit / (expense) (402 )     107        (509 )     (475.7 ) %   (1,418 )     (462 )     (956 )     206.9    %
Deferred tax benefit / (expense) (1,155 )     562        (1,717 )     (305.5 ) %   (1,074 )     804        (1,878 )     (233.6 ) %
Net Income 250,161        89,756        160,405        178.7    %   398,951        137,633        261,318        189.9    %
Less: Preferred return to preferred OP units / equity interests 3,101        1,645        1,456        88.5    %   9,000        4,799        4,201        87.5    %
Less: Income attributable to noncontrolling interests 15,290        6,907        8,383        121.4    %   22,629        8,806        13,823        157.0    %
Net Income Attributable to Sun Communities, Inc. $ 231,770        $ 81,204        $ 150,566        185.4    %   $ 367,322        $ 124,028        $ 243,294        196.2    %
                               
Weighted average common shares outstanding - basic 115,136        97,542        17,594        18.0    %   111,717        95,270        16,447        17.3    %
Weighted average common shares outstanding - diluted 118,072        97,549        20,523        21.0    %   114,291        95,273        19,018        20.0    %
                               
Basic earnings per share $ 2.00        $ 0.83        $ 1.17        141.0    %   $ 3.27        $ 1.29        $ 1.98        153.5    %
Diluted earnings per share $ 2.00        $ 0.83        $ 1.17        141.0    %   $ 3.27        $ 1.29        $ 1.98        153.5    %

N/M = Percentage change is not meaningful.

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

 


Outstanding Securities - As of September 30, 2021
                   
  Number of Units / Shares Outstanding   Conversion Rate*   If Converted(1)   Issuance Price Per Unit*   Annual Distribution Rate*
Non-convertible Securities                  
Common shares 115,959   N/A   N/A   N/A   $3.32^
                   
Convertible Securities                  
Common OP units 2,528   1.0000   2,528   N/A   Mirrors common shares distributions
                   
Series A-1 preferred OP units 275   2.4390   672   $ 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 September 30, 2021            
             
Equity   Shares   Share Price*   Total
Common shares   115,959      $ 185.10      $ 21,464,011   
Common OP units   2,528      $ 185.10      467,933   
Subtotal   118,487          $ 21,931,944   
             
Preferred OP units, as converted   2,813      $ 185.10      520,686   
Total diluted shares outstanding   121,300          $ 22,452,630   
             
Debt            
Secured debt           $ 3,403,436   
Unsecured debt           1,286,001   
Total debt           $ 4,689,437   
             
Total Capitalization           $ 27,142,067   

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   Nine Months Ended
  September 30, 2021   September 30, 2020   September 30, 2021   September 30, 2020
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 231,770        $ 81,204        $ 367,322        $ 124,028     
Adjustments              
Depreciation and amortization 126,814        88,495        377,367        259,543     
Depreciation on nonconsolidated affiliates 30              91        28     
(Gain) / loss on remeasurement of marketable securities (12,072 )     (1,492 )     (43,227 )     2,636     
Loss on remeasurement of investment in nonconsolidated affiliates 119        446        130        1,505     
(Gain) / loss on remeasurement of notes receivable (92 )     445        (561 )     2,311     
Income attributable to noncontrolling interests 4,616        6,196        13,678        7,725     
Preferred return to preferred OP units —        498        —        1,498     
Interest expense on Aspen preferred OP units 514        514        1,542        1,542     
Gain on dispositions of properties (108,104 )     (5,595 )     (108,104 )     (5,595 )  
Gain on dispositions of assets, net (20,526 )     (5,511 )     (46,245 )     (15,251 )  
FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities(1)(4) $ 223,069        $ 165,209        $ 561,993        $ 379,970     
               
Adjustments              
Business combination expense and other acquisition related costs(7) 2,477        402        6,714        1,291     
Loss on extinguishment of debt —        —        8,108        5,209     
Catastrophic event-related charges, net 318        15        3,096        54     
(Gain) / loss on earnings - catastrophic event-related 200        (300 )     400        —     
(Gain) / loss on foreign currency translation 7,028        (5,024 )     7,107        2,496     
Other adjustments, net(8) 11,443        2,322        11,505        2,819     
Core FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities(1)(4) $ 244,535        $ 162,624        $ 598,923        $ 391,839     
               
Weighted average common shares outstanding - basic 115,136        97,542        111,717        95,270     
Add              
Common shares dilutive effect from forward equity sale —              —           
Common stock issuable upon conversion of stock options —              —           
Restricted stock 438        390        414        395     
Common OP units —        2,476        2,574        2,445     
Common stock issuable upon conversion of certain preferred OP units 388        1,213        396        1,220     
Weighted Average Common Shares Outstanding - Fully Diluted 115,962        101,628        115,101        99,333     
               
FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities(1)(4) Per Share - Fully Diluted $ 1.92        $ 1.63        $ 4.88        $ 3.83     
               
Core FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities(1)(4) Per Share - Fully Diluted $ 2.11        $ 1.60        $ 5.20        $ 3.94     

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

 


  Three Months Ended   Nine Months Ended
  September 30, 2021   September 30, 2020   September 30, 2021   September 30, 2020
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 231,770        $ 81,204        $ 367,322        $ 124,028     
Interest income (2,690 )     (2,624 )     (8,040 )     (7,609 )  
Brokerage commissions and other revenues, net (8,841 )     (5,881 )     (21,740 )     (13,068 )  
General and administrative expense 43,276        26,834        126,606        78,710     
Catastrophic event-related charges, net 328        14        3,097        54     
Business combination expense —        —        1,031        —     
Depreciation and amortization 127,091        88,499        378,068        259,453     
Loss on extinguishment of debt —        —        8,108        5,209     
Interest expense 39,026        30,214        116,224        94,058     
Interest on mandatorily redeemable preferred OP units / equity 1,047        1,047        3,124        3,130     
(Gain) / loss on remeasurement of marketable securities (12,072 )     (1,492 )     (43,227 )     2,636     
(Gain) / loss on foreign currency translation 7,028        (5,023 )     7,107        2,496     
Gain on dispositions of properties (108,104 )     (5,595 )     (108,104 )     (5,595 )  
Other expense, net(6) 9,372        3,511        10,041        4,890     
(Gain) / loss on remeasurement of notes receivable (92 )     445        (561 )     2,311     
Income from nonconsolidated affiliates (962 )     (1,204 )     (2,927 )     (1,348 )  
Loss on remeasurement of investment in nonconsolidated affiliates 119        446        130        1,505     
Current tax (benefit) / expense 402        (107 )     1,418        462     
Deferred tax (benefit) / expense 1,155        (562 )     1,074        (804 )  
Preferred return to preferred OP units / equity interests 3,101        1,645        9,000        4,799     
Income attributable to noncontrolling interests 15,290        6,907        22,629        8,806     
NOI(1) $ 346,244        $ 218,278        $ 870,380        $ 564,123     


  Three Months Ended   Nine Months Ended
  September 30, 2021   September 30, 2020   September 30, 2021   September 30, 2020
Real Property NOI(1) $ 295,779      $ 204,271      $ 753,173      $ 538,210   
Home Sales NOI(1) 24,532      7,763      58,226      20,790   
Service, retail, dining and entertainment NOI(1) 25,933      6,244      58,981      5,123   
NOI(1) $ 346,244      $ 218,278      $ 870,380      $ 564,123   

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

 


  Three Months Ended   Nine Months Ended
  September 30, 2021   September 30, 2020   September 30, 2021   September 30, 2020
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 231,770        $ 81,204        $ 367,322        $ 124,028     
Adjustments              
Depreciation and amortization 127,091        88,499        378,068        259,453     
Loss on extinguishment of debt —        —        8,108        5,209     
Interest expense 39,026        30,214        116,224        94,058     
Interest on mandatorily redeemable preferred OP units / equity 1,047        1,047        3,124        3,130     
Current tax (benefit) / expense 402        (107 )     1,418        462     
Deferred tax (benefit) / expense 1,155        (562 )     1,074        (804 )  
Income from nonconsolidated affiliates (962 )     (1,204 )     (2,927 )     (1,348 )  
Less: Gain on dispositions of assets, net (20,526 )     (5,511 )     (46,245 )     (15,251 )  
Less: Gain on dispositions of properties (108,104 )     (5,595 )     (108,104 )     (5,595 )  
EBITDAre(1) $ 270,899        $ 187,985        $ 718,062        $ 463,342     
Adjustments              
Catastrophic event-related charges, net 328        14        3,097        54     
Business combination expense —        —        1,031        —     
(Gain) / loss on remeasurement of marketable securities (12,072 )     (1,492 )     (43,227 )     2,636     
(Gain) / loss on foreign currency translation 7,028        (5,023 )     7,107        2,496     
Other expense, net(6) 9,372        3,511        10,041        4,890     
(Gain) / loss on remeasurement of notes receivable (92 )     445        (561 )     2,311     
Loss on remeasurement of investment in nonconsolidated affiliates 119        446        130        1,505     
Preferred return to preferred OP units / equity interests 3,101        1,645        9,000        4,799     
Income attributable to noncontrolling interests 15,290        6,907        22,629        8,806     
Plus: Gain on dispositions of assets, net 20,526        5,511        46,245        15,251     
Recurring EBITDA(1) $ 314,499        $ 199,949        $ 773,554        $ 506,090     

Non-GAAP and Other Financial Measures

Debt Analysis
(amounts in thousands)

 


  Quarter Ended
  9/30/2021   6/30/2021   3/31/2021   12/31/2020   9/30/2020
Debt Outstanding                  
Secured debt $ 3,403,436      $ 3,457,734      $ 3,472,930      $ 3,489,983      $ 3,238,926   
Unsecured debt                  
Senior unsecured notes 591,252      591,688      —      —      —   
Line of credit and other debt(9) 624,837      191,841      875,093      1,197,181      31,775   
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 1,286,001      853,441      945,005      1,267,093      101,687   
Total debt $ 4,689,437      $ 4,311,175      $ 4,417,935      $ 4,757,076      $ 3,340,613   
                   
% Fixed / Floating                  
Fixed 86.7  %   94.7  %   79.3  %   74.0  %   97.6  %
Floating 13.3  %   5.3  %   20.7  %   26.0  %   2.4  %
Total 100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
                   
Weighted Average Interest Rates                  
Secured debt 3.78  %   3.75  %   3.75  %   3.75  %   3.84  %
Senior unsecured notes 2.70  %   2.70  %   —  %   —  %   —  %
Line of credit and other debt(9) 0.98  %   0.93  %   1.77  %   2.11  %   1.34  %
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 3.30  %   3.52  %   3.39  %   3.37  %   3.86  %
                   
Debt Ratios                  
Net Debt / Recurring EBITDA(1) (TTM) 4.9      5.1      6.1      6.9      5.0   
Net Debt / Enterprise Value 17.1  %   16.8  %   19.7  %   21.4  %   18.3  %
Net Debt / Gross Assets 31.2  %   29.6  %   31.8  %   35.5  %   31.6  %
                   
Coverage Ratios                  
Recurring EBITDA(1) (TTM) / Interest 6.1   5.6   5.0   4.9   4.8
Recurring EBITDA(1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution 6.0   5.5   4.8   4.8   4.6


Maturities / Principal Amortization Next Five Years 2021   2022   2023   2024   2025
Secured debt                  
Maturities $ —      $ 82,155      $ 185,619      $ 315,330      $ 50,529   
Principal amortization 15,194      61,411      60,788      57,344      53,933   
Line of credit and other debt(9) 331      10,000      10,000      10,000      594,506   
Preferred Equity - Sun NG Resorts - mandatorily redeemable —      —      —      33,428      1,821   
Preferred OP units - mandatorily redeemable —      —      —      27,373      —   
Total $ 15,525      $ 153,566      $ 256,407      $ 443,475      $ 700,789   
                   
Weighted average rate of maturities —  %   4.46  %   4.08  %   4.47  %   4.04  %

Same Community(2) Summary
(amounts in thousands)

 


                                               
  Three Months Ended
  Total Same Community   MH   RV
  September 30, 2021   September 30, 2020   Change   % Change   September 30, 2021   September 30, 2020   Change   % Change   September 30, 2021   September 30, 2020   Change   % Change
Financial Information                                              
Revenue                                              
Real property (excluding transient) $ 220,291      $ 207,407      $ 12,884      6.2  %   $ 173,979      $ 167,051      $ 6,928        4.1    %   $ 46,312      $ 40,356      $ 5,956      14.8  %
Real property - transient 87,049      67,408      19,641      29.1  %   238      242      (4 )     (1.7 ) %   86,811      67,166      19,645      29.2  %
Other 13,352      9,375      3,977      42.4  %   4,845      2,863      1,982        69.2    %   8,507      6,512      1,995      30.6  %
Total Operating 320,692      284,190      36,502      12.8  %   179,062      170,156      8,906        5.2    %   141,630      114,034      27,596      24.2  %
Expense                                              
Property Operating(10)(11) 102,413      90,048      12,365      13.7  %   49,567      43,996      5,571        12.7    %   52,846      46,052      6,794      14.8  %
Real Property NOI(1) $ 218,279      $ 194,142      $ 24,137      12.4  %   $ 129,495      $ 126,160      $ 3,335        2.6    %   $ 88,784      $ 67,982      $ 20,802      30.6  %


  Nine Months Ended
  Total Same Community   MH   RV
  September 30, 2021   September 30, 2020   Change   % Change   September 30, 2021   September 30, 2020   Change   % Change   September 30, 2021   September 30, 2020   Change   % Change
Financial Information                                              
Revenue                                              
Real property (excluding Transient) $ 652,978      $ 615,711      $ 37,267      6.1  %   $ 518,511      $ 495,989      $ 22,522        4.5    %   $ 134,467      $ 119,722      $ 14,745      12.3  %
Real property - transient 163,932      117,277      46,655      39.8  %   1,200      1,343      (143 )     (10.6 ) %   162,732      115,934      46,798      40.4  %
Other 31,077      18,424      12,653      68.7  %   14,472      7,778      6,694        86.1    %   16,605      10,646      5,959      56.0  %
Total Operating 847,987      751,412      96,575      12.9  %   534,183      505,110      29,073        5.8    %   313,804      246,302      67,502      27.4  %
Expense                                              
Property Operating(10)(11) 261,754      228,314      33,440      14.6  %   136,927      124,297      12,630        10.2    %   124,827      104,017      20,810      20.0  %
Real Property NOI(1) $ 586,233      $ 523,098      $ 63,135      12.1  %   $ 397,256      $ 380,813      $ 16,443        4.3    %   $ 188,977      $ 142,285      $ 46,692      32.8  %

Same Community(2) Summary (continued)

 


  As of        
  September 30, 2021   September 30, 2020   Change   % Change
Other Information              
Number of properties 403      403      —         
               
MH occupancy 97.5  %            
RV occupancy 100.0  %            
MH & RV blended occupancy(3) 98.1  %            
               
Adjusted MH occupancy(3) 98.5  %            
Adjusted RV occupancy(3) 100.0  %            
Adjusted MH & RV blended occupancy(3) 98.9  %   97.4  %   1.5    %    
               
Sites available for development 7,092      7,453      (361 )      
               
Monthly base rent per site - MH $ 606      $ 586      $ 20        3.4%(13)
Monthly base rent per site - RV(12) $ 528      $ 503      $ 25        5.0%(13)
Monthly base rent per site - Total(12) $ 588      $ 567      $ 21        3.7%(13)

Marina Summary
(amounts in thousands except for statistical data)

 


         
    Three Months Ended   Nine Months Ended
    September 30, 2021   September 30, 2021
Financial Information        
Revenues        
Real property (excluding transient)   $ 72,888      $ 180,908
Real property - transient   6,251      11,376
Other   5,815      11,134
Total Operating   84,954      203,418
Expenses        
Property Operating(a)   33,995      85,816
Real Property NOI   50,959      117,602
Service, retail, dining and entertainment        
Revenue   74,110      200,702
Expense   60,606      159,632
NOI   13,504      41,070
         
Marina NOI   $ 64,463      $ 158,672
         
Other Information - Marinas       September 30, 2021
Number of properties(b)       120
Total wet slips and dry storage       44,859

(a) Marina results net $4.3 million and $10.5 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the quarter and nine months ended September 30, 2021.

(b) Marina properties consisted of 14 properties acquired in 2021 and 106 properties acquired in 2020.

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

 


         
    Three Months Ended   Nine Months Ended
    September 30, 2021   September 30, 2021
Financial Information        
Revenues        
Real property (excluding transient)   $ 11,060   $ 29,248   
Real property - transient   32,772   60,298   
Other   4,168   7,357   
Total Operating   48,000   96,903   
Expenses        
Property Operating(a)   21,459   47,565   
Real Property NOI   $ 26,541   $ 49,338   
         
Other Information - MH and RVs       September 30, 2021
Number of properties       61   
Occupied sites       7,312   
Developed sites       8,357   
Occupancy %       87.5  %
Transient sites       9,293   

(a) MH and RV Acquisitions and Other results net $1.7 million and $4.1 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the quarter and nine months ended September 30, 2021.

Home Sales Summary
(amounts in thousands except for *)

 


                               
  Three Months Ended   Nine Months Ended
  September 30, 2021   September 30, 2020   Change   % Change   September 30, 2021   September 30, 2020   Change   % Change
Financial Information                              
New Homes                              
New home sales $ 31,433      $ 23,734      $ 7,699        32.4    %   $ 89,166      $ 58,536      $ 30,630        52.3  %
New home cost of sales 25,856      19,294      6,562        34.0    %   72,799      47,611      25,188        52.9  %
Gross Profit – new homes 5,577      4,440      1,137        25.6    %   16,367      10,925      5,442        49.8  %
Gross margin % – new homes 17.7  %   18.7  %   (1.0 ) %       18.4  %   18.7  %   (0.3 ) %    
Average selling price – new homes* $ 151,850      $ 153,123      $ (1,273 )     (0.8 ) %   $ 152,943      $ 141,391      $ 11,552        8.2  %
                               
Pre-owned Homes                              
Pre-owned home sales $ 49,666      $ 23,928      $ 25,738        107.6    %   $ 125,980      $ 68,243      $ 57,737        84.6  %
Pre-owned home cost of sales 25,840      16,943      8,897        52.5    %   70,369      47,839      22,530        47.1  %
Gross Profit – pre-owned homes 23,826      6,985      16,841        241.1    %   55,611      20,404      35,207        172.5  %
Gross margin % – pre-owned homes 48.0  %   29.2  %   18.8    %       44.1  %   29.9  %   14.2    %    
Average selling price – pre-owned homes* $ 52,006      $ 43,114      $ 8,892        20.6    %   $ 48,981      $ 40,864      $ 8,117        19.9  %
                               
Total Home Sales                              
Revenue from home sales $ 81,099      $ 47,662      $ 33,437        70.2    %   $ 215,146      $ 126,779      $ 88,367        69.7  %
Cost of home sales 51,696      36,237      15,459        42.7    %   143,168      95,450      47,718        50.0  %
Home selling expenses 4,871      3,662      1,209        33.0    %   13,752      10,539      3,213        30.5  %
Home Sales NOI(1) $ 24,532      $ 7,763      $ 16,769        216.0    %   $ 58,226      $ 20,790      $ 37,436        180.1  %
                               
Statistical Information                              
New home sales volume* 207      155      52        33.5    %   583      414      169        40.8  %
Pre-owned home sales volume* 955      555      400        72.1    %   2,572      1,670      902        54.0  %
Total home sales volume* 1,162      710      452        63.7    %   3,155      2,084      1,071        51.4  %

Rental Program Summary
(amounts in thousands except for *)

 


                               
  Three Months Ended   Nine Months Ended
  September 30, 2021   September 30, 2020   Change   % Change   September 30, 2021   September 30, 2020   Change   % Change
Financial Information                              
Revenues                              
Home rent $ 16,369      $ 16,171      $ 198        1.2    %   $ 50,451      $ 46,607      $ 3,844        8.2    %
Site rent 17,584      19,101      (1,517 )     (7.9 ) %   55,350      55,699      (349 )     (0.6 ) %
Total 33,953      35,272      (1,319 )     (3.7 ) %   105,801      102,306      3,495        3.4    %
                               
Expenses                              
Rental Program operating and maintenance 5,547      5,328      219        4.1    %   15,332      14,576      756        5.2    %
Rental Program NOI(1) $ 28,406      $ 29,944      $ (1,538 )     (5.1 ) %   $ 90,469      $ 87,730      $ 2,739        3.1    %
                               
Other Information                              
Number of sold rental homes* 307      225      82        36.4    %   799      581      218        37.5    %
Number of occupied rentals, end of period*                 10,123      11,729      (1,606 )     (13.7 ) %
Investment in occupied rental homes, end of period                 $ 559,021      $ 625,922      $ (66,901 )     (10.7 ) %
Weighted average monthly rental rate, end of period*                 $ 1,114      $ 1,032      $ 82        7.9    %

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                
                     
                     
    9/30/2021   6/30/2021   3/31/2021   12/31/2020   9/30/2020
FLORIDA                    
Properties   131      129      128      128      127   
MH & Annual RV Developed sites(15)   40,500      40,171      40,011      39,803      39,517   
Occupied MH & Annual RV(15)   39,747      39,402      39,283      39,063      38,743   
MH & Annual RV Occupancy %(15)   98.1  %   98.1  %   98.2  %   98.1  %   98.0  %
Transient RV sites   6,163      5,895      5,823      6,011      5,993   
Sites for development   1,414      1,414      1,497      1,497      1,427   
MICHIGAN                    
Properties   83      75      74      74      74   
MH & Annual RV Developed sites(15)   31,997      29,600      29,092      29,086      29,086   
Occupied MH & Annual RV(15)   30,782      28,671      28,145      28,109      28,033   
MH & Annual RV Occupancy %(15)   96.2  %   96.9  %   96.7  %   96.6  %   96.4  %
Transient RV sites   554      509      541      546      546   
Sites for development   1,481      1,182      1,182      1,182      1,182   
CALIFORNIA                    
Properties   37      36      36      35      34   
MH & Annual RV Developed sites(15)   6,760      6,736      6,734      6,675      6,372   
Occupied MH & Annual RV(15)   6,642      6,613      6,609      6,602      6,290   
MH & Annual RV Occupancy %(15)   98.3  %   98.2  %   98.1  %   98.9  %   98.7  %
Transient RV sites   2,410      2,416      2,418      2,231      2,236   
Sites for development   534      127      127      373      373   
TEXAS                     
Properties   26      25      24      24      24   
MH & Annual RV Developed sites(15)   8,004      7,947      7,928      7,766      7,659   
Occupied MH & Annual RV(15)   7,805      7,731      7,671      7,572      7,427   
MH & Annual RV Occupancy %(15)   97.5  %   97.3  %   96.8  %   97.5  %   97.0  %
Transient RV sites   2,131      1,835      1,773      1,810      1,917   
Sites for development   1,066      1,194      1,275      1,378      1,378   
ONTARIO, CANADA                    
Properties   16      16      16      15      15   
MH & Annual RV Developed sites(15)   4,361      4,302      4,199      4,090      4,067   
Occupied MH & Annual RV(15)   4,361      4,302      4,199      4,090      4,067   
MH & Annual RV Occupancy %(15)   100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
Transient RV sites   807      870      964      966      920   
Sites for development   1,525      1,525      1,525      1,525      1,593   
CONNECTICUT                    
Properties   16      16      16      16      16   
MH & Annual RV Developed sites(15)   1,901      1,901      1,897      1,897      1,898   
Occupied MH & Annual RV(15)   1,760      1,757      1,746      1,739      1,736   
MH & Annual RV Occupancy %(15)   92.6  %   92.4  %   92.0  %   91.7  %   91.5  %
Transient RV sites   104      104      108      108      107   
Sites for development   —      —      —      —      —   
MAINE                    
Properties   13      13      13      13       
MH & Annual RV Developed sites(15)   2,220      2,204      2,190      2,190      1,092   
Occupied MH & Annual RV(15)   2,136      2,127      2,119      2,121      1,089   
MH & Annual RV Occupancy %(15)   96.2  %   96.5  %   96.8  %   96.8  %   99.7  %
Transient RV sites   776      792      805      805      819   
Sites for development   30      30      30      30      30   
                     
                     
                     
ARIZONA                    
Properties   12      14      14      14      13   
MH & Annual RV Developed sites(15)   4,071      4,401      4,391      4,323      4,274   
Occupied MH & Annual RV(15)   3,853      4,116      4,101      4,030      3,957   
MH & Annual RV Occupancy %(15)   94.6  %   93.5  %   93.4  %   93.2  %   92.6  %
Transient RV sites   1,237      1,260      1,270      1,337      1,386   
Sites for development   —      —      —      —      —   
INDIANA                    
Properties   12      12      12      12      11   
MH & Annual RV Developed sites(15)   3,057      3,087      3,087      3,087      3,087   
Occupied MH & Annual RV(15)   2,963      2,970      2,961      2,950      2,957   
MH & Annual RV Occupancy %(15)   96.9  %   96.2  %   95.9  %   95.6  %   95.8  %
Transient RV sites   1,089      1,089      1,089      1,089      534   
Sites for development   204      277      277      277      277   
COLORADO                    
Properties   10      10      10      10      10   
MH & Annual RV Developed sites(15)   2,552      2,453      2,453      2,453      2,453   
Occupied MH & Annual RV(15)   2,431      2,420      2,395      2,380      2,365   
MH & Annual RV Occupancy %(15)   95.3  %   98.7  %   97.6  %   97.0  %   96.4  %
Transient RV sites   987      987      962      962      930   
Sites for development   1,629      1,225      1,250      1,250      1,282   
NEW HAMPSHIRE                    
Properties   10      10      10      10      10   
MH & Annual RV Developed sites(15)   1,777      1,777      1,776      1,777      1,833   
Occupied MH & Annual RV(15)   1,769      1,769      1,769      1,767      1,822   
MH & Annual RV Occupancy %(15)   99.5  %   99.5  %   99.6  %   99.4  %   99.4  %
Transient RV sites   602      602      456      460      404   
Sites for development   111      151      151      151      151   
NEW YORK                    
Properties   10      10      10           
MH & Annual RV Developed sites(15)   1,457      1,457      1,452      1,419      1,414   
Occupied MH & Annual RV(15)   1,432      1,428      1,415      1,380      1,371   
MH & Annual RV Occupancy %(15)   98.3  %   98.0  %   97.5  %   97.3  %   97.0  %
Transient RV sites   1,684      1,684      1,689      1,422      900   
Sites for development   371      371      371      371      371   
OHIO                     
Properties                    
MH & Annual RV Developed sites(15)   2,796      2,797      2,797      2,790      2,790   
Occupied MH & Annual RV(15)   2,753      2,770      2,760      2,755      2,758   
MH & Annual RV Occupancy %(15)   98.5  %   99.0  %   98.7  %   98.7  %   98.9  %
Transient RV sites   129      128      128      135      135   
Sites for development   22      22      22      22      22   
OTHER STATES                    
Properties   79      80      80      77      73   
MH & Annual RV Developed sites(15)   16,488      17,422      17,310      16,896      16,484   
Occupied MH & Annual RV(15)   16,178      16,934      16,796      16,394      15,977   
MH & Annual RV Occupancy %(15)   98.1  %   97.2  %   97.0  %   97.0  %   96.9  %
Transient RV sites   9,249      8,861      8,269      7,161      6,901   
Sites for development   1,925      1,925      1,969      1,969      2,044   
                     
TOTAL - MH AND RV PORTFOLIO                    
Properties   464      455      452      446      432   
MH & Annual RV Developed sites(15)   127,941      126,255      125,317      124,252      122,026   
Occupied MH & Annual RV(15)   124,612      123,010      121,969      120,952      118,592   
MH & Annual RV Occupancy %(15)   97.4  % (16) 97.4  %   97.3  %   97.3  %   97.2  %
Transient RV sites   27,922      27,032      26,295      25,043      23,728   
Sites for development(17)   10,312      9,443      9,676      10,025      10,130   
% Communities age restricted   32.3  %   32.5  %   32.7  %   33.2  %   33.6  %


Marina Property Summary(a)                
                 
                 
    9/30/2021   06/30/2021   3/31/2021   12/31/2020
FLORIDA                
Properties   19      18      16      14   
Total wet slips and dry storage spaces   4,493      4,186      3,837      3,585   
RHODE ISLAND                
Properties   12      11      11      11   
Total wet slips and dry storage spaces   3,417      3,207      2,829      2,829   
CONNECTICUT                
Properties   11      11      11      11   
Total wet slips and dry storage spaces   3,278      3,262      3,262      3,262   
MASSACHUSETTS                
Properties                
Total wet slips and dry storage spaces   2,650      2,650      2,650      2,223   
NEW YORK                
Properties                
Total wet slips and dry storage spaces   2,630      2,629      2,629      2,629   
MARYLAND                
Properties                
Total wet slips and dry storage spaces   2,139      2,110      2,110      2,110   
OTHER STATES                
Properties   53      49      47      47   
Total wet slips and dry storage spaces   26,252      23,389      22,851      22,851   
TOTAL - MARINA PORTFOLIO                
Properties   120      114      110      106   
Total wet slips and dry storage spaces   44,859      41,433      40,168      39,489   

(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 *)

 


                       


    Nine Months Ended   Year Ended   Year Ended
    September 30, 2021   December 31, 2020   December 31, 2019
    MH / RV   Marina   MH / RV   Marina   MH / RV
Recurring Capital Expenditures Average / Site*   $ 258      $ 259      $ 265      N/A   $ 345   
Recurring Capital Expenditures(18)   $ 31,484      $ 10,292      $ 31,398      $ 2,074      $ 30,382   
Lot Modifications(19)   $ 20,274      N/A   $ 29,414      N/A   $ 22,837   
Acquisitions(20)(a)   $ 508,773      $ 711,366      $ 571,930      $ 2,533,741      $ 938,966   
Expansion and Development(21)   $ 135,758      $ 9,866      $ 248,146      $ —      $ 281,808   
Growth Projects(22)   $ 19,900      $ 37,771      $ 28,315      $ —      $ 9,638   

(a)  Acquisitions includes intangibles and goodwill included in purchase price.

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   1,851      572        153      177      1,415   
Michigan   327      154        43      1,334      196   
Ontario, Canada   526      180        93          420   
Texas   278      233        71      344      69   
Arizona   88      124        30      35      171   
Indiana   46      31            220      13   
Ohio   68      (2 )         109      15   
California   100      22        23          109   
Colorado       51        43      23      36   
Connecticut   26      21        29          44   
New York   90      25        10           
New Hampshire   —                —      37   
Maine   80      15        10           
Other states   837      245        66      298      176   
Nine Months Ended September 30, 2021   4,320      1,673        583      2,572      2,713   


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   2.9  %   8.3  %
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 for 2021 is derived from 119,584 developed sites, of which 117,300 were occupied. The adjusted MH and RV blended occupancy percentage is derived from 118,641 developed sites, of which 117,300 were occupied. The number of developed sites excludes RV transient sites and over 900 recently completed but vacant MH expansion sites.

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.

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

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

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

  Three Months Ended   Nine Months Ended
  September 30, 2021   September 30, 2020   September 30, 2021   September 30, 2020
Contingent consideration expense $ (9,196 )     $ (2,724 )     $ (9,339 )     $ (2,890 )  
Long term lease termination expense —        (160 )     —        (433 )  
Repair reserve on repossessed homes (176 )     (627 )     (702 )     (1,567 )  
Other expenses, net $ (9,372 )     $ (3,511 )     $ (10,041 )     $ (4,890 )  

(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)   Other adjustments, net was as follows (in thousands):

  Three Months Ended   Nine Months Ended
  September 30, 2021   September 30, 2020   September 30, 2021   September 30, 2020
Contingent consideration expense $ 9,196      $ 2,724        $ 9,339      $ 2,890     
Long term lease termination expense —      160        —      433     
Deferred tax (benefit) / expense 1,155      (562 )     1,074      (804 )  
RV rebranding non-recurring cost 1,092      —        1,092      —     
deferred compensation amortization upon retirement —      —        —      300     
Other adjustments, net $ 11,443      $ 2,322        $ 11,505      $ 2,819     

(9)   Line of credit and other debt includes borrowings under the Company's $2.0 billion credit facility, a $12.0 million MH floor plan facility, and a $35.3 million unsecured term loan which had been secured prior to July 1, 2021.

(10)   Same Community results net $19.1 million and $18.3 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the three months ended September 30, 2021 and 2020, respectively. Same Community results net $52.2 million and $47.3 million of utility revenue against the related utility expense in property operating and maintenance expense for the nine months ended September 30, 2021 and 2020, respectively.

(11)   Same Community supplies and repair expense excludes $0.4 million and $1.2 million for the three and nine months ended September 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.

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

(13)   Calculated using actual results without rounding.

(14)   MH and RV acquisitions and other is comprised of 21 properties acquired in 2021, one property acquired in which the Company has an interest in, but does not operate in 2021, 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, two properties undergoing redevelopment, and other miscellaneous transactions and activity.

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

(16)   As of September 30, 2021, total portfolio MH occupancy was 96.6 percent inclusive of the impact of nearly 1,200 recently constructed but vacant MH expansion sites, and annual RV occupancy was 100.0 percent.

(17)   Total sites for development were comprised of approximately 73.1 percent for expansion, 20.8 percent for greenfield development and 6.1 percent for redevelopment.

(18)   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.

(19)   Lot modification capital expenditures are incurred to modify the foundational structures required to set a new home after a previous home has been removed. These expenditures are necessary to create a revenue stream from a new site renter and often improve the quality of the community. Other lot modification expenditures include land improvements added to annual RV sites to aid in the conversion of transient RV guests to annual contracts.

(20)   Capital expenditures related to acquisitions represent the purchase price of existing operating properties (including marinas) and land parcels to develop expansions or new properties. These costs for the nine months ended September 30, 2021 include $54.3 million at our MH and RV properties and $69.9 million at our marina properties. Expenditures consist 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; lot modifications; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, often require 24 to 36 months after closing to complete.

(21)   Expansion and development expenditures consist primarily of construction costs such as roads, activities, and amenities, and costs necessary to complete home and RV site improvements, such as driveways, sidewalks and landscaping at our MH communities and RV resorts. Expenditures also include costs to rebuild after damage has been incurred at MH, RV or marina properties.

(22)   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.

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Source: Sun Communities, Inc.