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Form 8-K Earnings Release Q4 2014


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8‑K


CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934


Date of Report: February 24, 2015
(Date of earliest event reported)

SUN COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)

Maryland
 
1-12616
 
38-2730780
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)

27777 Franklin Rd.
 
 
Suite 200
 
 
Southfield, Michigan
 
48034
(Address of Principal Executive Offices)
 
(Zip Code)


(248) 208-2500
(Registrant’s telephone number, including area code)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02
Results of Operations and Financial Condition

On February 24, 2015, Sun Communities, Inc. (the “Company”) issued a press release, furnished as Exhibit 99.1 and incorporated herein by reference, announcing its financial results for the period ended December 31, 2014, and certain other information.

The Company will hold an investor conference call and webcast at 11:00 a.m. EST on February 24, 2015 to disclose and discuss the financial results for the period ended December 31, 2014.

The information contained in this Current Report on Form 8-K, including the exhibit attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended.


Item 9.01
Financial Statements and Exhibits
(d)
Exhibits.
99.1
Press release issued February 24, 2015





SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
SUN COMMUNITIES, INC.

Dated: February 24, 2015
 
By:
/s/ Karen J. Dearing
 
 
 
Karen J. Dearing, Executive Vice President,
Chief Financial Officer, Secretary and Treasurer





EXHIBIT INDEX

Exhibit No.
 
Description
99.1
 
Press release issued February 24, 2015
 
 
 
    



Exhibit 99.1 Press Release 2014.12.31


    


NEWS RELEASE
February 24, 2015

Sun Communities, Inc. Reports 2014 Fourth Quarter Results and 2015 Guidance

Southfield, MI, February 24, 2015 - Sun Communities, Inc. (NYSE: SUI) (the “Company”), a real estate investment trust (“REIT”) that owns and operates manufactured housing and recreational vehicle communities, today reported its fourth quarter results.

Highlights: Three Months Ended December 31, 2014

•
Funds from operations ("FFO")(1) excluding transaction costs was $0.69 per diluted share and OP unit ("Share") for the three months ended December 31, 2014.

•
Same site Net Operating Income (“NOI”)(2) increased by 6.2 percent as compared to the three months ended December 31, 2013.

•
Revenue producing sites increased by 475 sites bringing total portfolio occupancy to 92.6 percent.

•
Home sales increased 11.3 percent as compared to the fourth quarter of 2013.

•
Completed the purchase of the first phase of the American Land Lease ("ALL") 59 community portfolio acquisition in November 2014 and the second phase on January 6, 2015, for approximately $1.33 billion.

“The last half of 2014 was spent planning for and executing the on-boarding of the American Land Lease portfolio. The transition was executed swiftly and we are encouraged by the early contribution the properties are making to our expanded portfolio,” said Gary A. Shiffman, Chairman and CEO. “With our core portfolio continuing to produce strong results, we believe we have successfully created an enhanced platform that is positioned to provide both short term and long term future growth,” Shiffman added.
Funds from Operations ("FFO")(1) 

FFO(1) excluding certain items was $35.2 million and $30.7 million, or $0.69 and $0.78 per Share, for the three months ended December 31, 2014 and 2013, respectively. For the twelve months ended December 31, 2014 and 2013, FFO(1) excluding certain items was $148.4 million and $121.5 million, or $3.37 and $3.22 per Share, respectively.

Net Income/(Loss) Attributable to Common Stockholders

Net loss attributable to common stockholders for the fourth quarter of 2014 was $(13.1) million, or $(0.28) per diluted common share, as compared to net income of $0.1 million, for the fourth quarter of 2013.

Net income attributable to common stockholders for the year ended December 31, 2014 was $22.4 million, or $0.54 per diluted common share, as compared to net income of $10.6 million, or $0.31 per diluted common share, for the year ended December 31, 2013.



Sun Communities, Inc. 4th Quarter 2014                                 Page 2

Community Occupancy

Total portfolio occupancy increased to 92.6 percent at December 31, 2014 from 89.7 percent at December 31, 2013. During the fourth quarter of 2014, revenue producing sites increased by 475 sites as compared to 573 revenue producing sites gained in the fourth quarter of 2013.

During the year ended December 31, 2014, revenue producing sites increased by 1,890 sites as compared to an increase of 1,885 sites during the year ended December 31, 2013.

Same Site Results

For the 163 communities owned throughout 2014 and 2013, fourth quarter 2014 total revenues increased 6.6 percent and total expenses increased 7.6 percent, resulting in an increase in NOI(2) of 6.2 percent over the fourth quarter of 2013. Same site occupancy increased to 93.2 percent at December 31, 2014 from 91.5 percent at December 31, 2013.

For the year ended December 31, 2014, total revenues increased 6.6 percent and total expenses increased 4.1 percent, resulting in an increase in NOI(2) of 7.7 percent over the year ended December 31, 2013.

Home Sales

During the fourth quarter of 2014, 552 homes were sold as compared to 496 homes sold during the fourth quarter of 2013. Rental home sales, which are included in total home sales, were 237 and 235 for the fourth quarters of 2014 and 2013, respectively.

During the year ended December 31, 2014, 1,966 homes were sold compared to 1,929 homes sold during the year ended December 31, 2013. For the 113 new homes and 1,853 pre-owned homes sold during the year, the average selling price was $83,750 and $24,010, respectively. Rental home sales, which are included in total home sales, were 799 and 924 for the year ended December 31, 2014 and 2013, respectively.

Acquisitions

As previously announced, the Company completed the acquisition of the 59 ALL communities (and the associated manufactured homes and notes receivable) in two closings; one on November 26, 2014 and one on January 6, 2015. The aggregate consideration was $1.33 billion, consisting of assumed and new debt of $731.6 million, $161.3 million in cash, the issuance of $262.1 million in a combination of the Company's common stock and common OP units of the Company’s subsidiary Sun Communities Operating Limited Partnership (“SCOLP”), and the issuance of $175.0 million in a combination of the Company's newly-created 6.50% Series A-4 Cumulative Convertible Preferred Stock and SCOLP’s Series A-4 preferred OP units.

Concurrent with the transaction one of the selling entities purchased 150,000 shares of the Company’s common stock and 200,000 Series A-4 Preferred OP Units of SCOLP, for an aggregate purchase price of $12.5 million.

On December 19, 2014, the Company purchased Oak Creek manufactured housing community in Coarsegold, California at a purchase price of $15.8 million, consisting of the assumption of $9.9 million of debt and $5.9 million in cash. The community contains 198 sites.


Sun Communities, Inc. 4th Quarter 2014                                 Page 3

During the fourth quarter of 2014 the Company announced that it entered into agreements with a group of related selling entities (“Berger”) to acquire a portfolio of seven manufactured housing communities, including associated manufactured homes and certain intangibles. After acquisition the communities will be operated as six communities. The communities are located in the Orlando, Florida area, are comprised of approximately 3,150 manufactured housing sites (approximately 60% are in age-restricted communities) and are 96% occupied. In addition to the developed sites, there are approximately 380 potential expansion sites in the communities. Total consideration for the acquisition is approximately $257.6 million, including the assumption of approximately $157.5 million of debt. The balance of the consideration will be paid in a combination of up to approximately $41.8 million in cash, common OP Units of SCOLP (at an issuance price of $61 per unit) and newly-created Series C preferred OP units in SCOLP (at an issuance price of $100 per unit).

The transaction is subject to the Company’s satisfaction with its due diligence investigation and customary closing conditions, including consent of the existing lenders and is expected to close in the second quarter of 2015.

Dispositions

On January 14, 2015, the Company completed the sale of one manufactured home community located in Indiana for proceeds of $18.0 million.

The Company continues to actively evaluate the portfolio for potential future dispositions in 2015, seeking to redeploy capital to geographic locations providing greater future returns to our stockholders.

Debt Transactions

During the quarter, in addition to the debt transactions related to the ALL acquisition, the Company entered into a fifteen year loan agreement under which it borrowed $74.0 million at a blended fixed interest rate of 3.65%. The loan is collateralized by one recreational vehicle community which was unencumbered and one manufactured home community whose previous debt was extinguished in the third quarter of 2014.

Equity Transaction

Between December 23, 2014 and January 8, 2015 the Company sold 500,000 shares of its common stock through its at the market sales program at a weighted average price of $63.46 per share. Net proceeds from the transactions were $31.3 million.

2015 Guidance

The Company anticipates 2015 FFO(1) per Share will be in the range of $3.53 to 3.63 per Share.
 
Revenues and expenses contain a component of seasonality; therefore, FFO(1) per Share is not earned evenly throughout the year. The Company expects estimated FFO(1) to be earned, 24%, 23% , 28% and 25% in the first, second, third and fourth quarters, respectively.

FFO(1) guidance for the first quarter of 2015 is $0.84-$0.86 per Share.



Sun Communities, Inc. 4th Quarter 2014                                 Page 4

The Company's guidance is based on several key variables and assumptions, which are summarized below.

•
Rent Increase: The weighted average site rental increase for the total portfolio is expected to be 3.4%.

•
Occupancy: Revenue producing sites in the Company's total portfolio are expected to increase by approximately 2,100 sites, bringing total portfolio occupancy to 93.9%.

•
Recreational Vehicle Revenue: Revenue from the Company's recreational vehicle communities contains a component of transient revenue from guest stays that are other than a full year or full season. Transient revenue is expected to be approximately $34.1 million and is expected to be earned 25%, 18.8%, 43.2%, 13% in the first, second, third and fourth quarters, respectively.

•
Same Site Portfolio: The Company's same site property portfolio of 177 communities is expected to generate revenue growth of approximately 6.3% and operating expense growth of 2.6% resulting in NOI(2) growth of approximately 7.9%. Revenue producing sites are expected to increase by approximately 1,600 sites in our same site portfolio.
SAME SITE PORTFOLIO (177 communities)
 
2014
 
Forecasted
 
2015
(amounts in millions)
 
Actual
 
% Growth
 
Projected
REVENUES:
 
 
 
 
 
 
Revenue- annual and seasonal
 
$
272.2

 
6.5
%
 
$
289.9

Revenue- transient
 
21.5

 
6.0
%
 
22.8

Other property income
 
16.3

 
3.7
%
 
16.9

Income from real property*
 
310.0

 
6.3
%
 
329.6

 
 
 
 
 
 
 
PROPERTY OPERATING EXPENSES:
 
 
 
 
 
 
Real estate tax
 
22.5

 
4.4
%
 
23.5

Property operating and maintenance expense *
 
72.3

 
2.1
%
 
73.8

Total operating expense
 
94.8

 
2.6
%
 
97.3

 
 
 
 
 
 
 
NOI (2) from Real Property
 
$
215.2

 
7.9
%
 
$
232.3


* The foregoing table nets $20.9 million of utility revenue against the related utility expense in property operating and maintenance expense.














Sun Communities, Inc. 4th Quarter 2014                                 Page 5

•
Acquisition Portfolio: Information pertaining to the 73 properties excluded from the Company's same site portfolio is presented in the table below.

ACQUISITION PORTFOLIO (73 communities)
 
2015
(amounts in millions)
 
Projected
REVENUES:
 
 
Revenue- annual and seasonal
 
$
126.5

Revenue- transient
 
11.4

Utility and other property income
 
7.0

Income from real property
 
144.9

 
 
 
PROPERTY OPERATING EXPENSES:
 
 
Real estate tax
 
11.8

Property operating and maintenance
 
30.1

Total operating expense
 
41.9

 
 
 
NOI (2) from Real Property
 
$
103.0


•
Home Sales: the table below details our 2015 projected home sales.

HOME SALES
 
2015
(amounts in millions, except items with *)
 
Projected
 
 
 
Number of new home sales*
 
214

Average selling price*
 
$
83,359

Revenue from new home sales
 
17.8

Cost of new home sales
 
15.1

Gross profit/(NOI) (2)
 
$
2.7

 
 
 
Number of pre-owned home sales*
 
2,086

Average selling price*
 
$
24,139

Revenue from pre-owned home sales
 
50.3

Cost of pre-owned home sales
 
36.5

Gross profit/(NOI) (2)
 
$
13.8


The gain on sale of the rental homes, which is included in the table above and excluded from
FFO (1), is expected to approximate $7.5 million.

•
Other Income: Interest income, ancillary revenues, net, brokerage commissions and other income, net, is expected to approximate $23.0 million.






Sun Communities, Inc. 4th Quarter 2014                                 Page 6

•
Rental Home Program: Guidance assumes an increase of approximately 1,000 occupied rental units; approximately 72% of these additions are expected to be in communities acquired or expanded.

RENTAL PROGRAM
 
2014
 
Forecasted
 
2015
(amounts in millions)
 
Actual
 
% Growth
 
Projected
Rental home revenue
 
$
39.2

 
15.6
%
 
$
45.3

Rental home operating and maintenance
 
23.3

 
9.0
%
 
25.4

Rental Program NOI (2)
 
$
15.9

 
25.0
%
 
$
19.9


•
General and Administrative Expenses-real property: These expenses are estimated at $36.0 - $37.0 million.

•
General and Administrative Expenses-home sales and rental: These expenses are estimated at $13.0 -$13.5 million.

•
Expansions: The Company continues to expand communities that are near 95% occupied and which continue to exhibit strong demand. Guidance includes the expansion of 8 communities located in Texas, California, Ohio and Maryland which will add approximately 800 developed sites by year end. The expansions have an estimated fill rate of 6-8 sites per month.

•
Acquisitions: Guidance includes acquisitions completed through the date of this release, a $5.5 million MH acquisition and the Berger transaction as described above. No additional prospective acquisitions are included. The Company continues to evaluate additional acquisition opportunities. All transaction related costs are assumed to be added back in the calculation of FFO(1).

•
Dispositions: Guidance includes the effect of dispositions completed through the date of this release. No prospective dispositions are included.

•
Weighted Average Shares : Guidance assumes the following fully diluted weighted average shares.

ESTIMATED 2015 WEIGHTED AVERAGE SHARES ( in thousands)
Weighted average common shares outstanding:
52,723

Common stock issuable upon conversion of stock options
19

Restricted stock
383

Common OP Units
2,889

Common stock issuable upon conversion of Series A-1 preferred OP units
1,047

Common stock issuable upon conversion of Series A-3 preferred OP units
73

Weighted average common shares outstanding - fully diluted
57,134



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

Sun Communities, Inc. 4th Quarter 2014                                 Page 7

Earnings Conference Call

A conference call to discuss fourth quarter operating results will be held on Tuesday, February 24th, 2015 at 11:00 A.M. (EST). To participate, call toll-free 888-539-3696. Callers outside the U.S. or Canada can access the call at 719-325-2469. A replay will be available following the call through March 10, 2015, and can be accessed toll-free by calling 888-203-1112 or by calling 719-457-0820. The Conference ID number for the call and the replay is 8682902. The conference call will be available live on Sun Communities website www.suncommunities.com. Replay will also be available on the website.

Sun Communities, Inc. is a REIT that currently owns and operates a portfolio of 242 communities comprising approximately 88,900 developed sites.

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

Contact

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


Sun Communities, Inc. 4th Quarter 2014                                 Page 8

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

These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, some of which are beyond our control. These risks, uncertainties, and other factors may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, the performance of the recent acquisitions, the ability to integrate future acquisitions smoothly and efficiently, changes in market rates of interest, the ability of manufactured home buyers to obtain financing, the level of repossessions by manufactured home lenders and those risks and uncertainties referenced under the headings entitled “Risk Factors” contained in our 2013 Annual Report, and the Company’s other periodic filings with the Securities and Exchange Commission.

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


Sun Communities, Inc. 4th Quarter 2014                                 Page 9

(1) 
Funds from operations (“FFO”) is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as net income (loss) (computed in accordance with generally accepted accounting principles “GAAP”), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company's operating performance. Management generally considers FFO to be a useful measure for reviewing comparative operating and financial performance because, 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 year over year, reflects the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not readily apparent from net loss. Management believes that 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. FFO is computed in accordance with the Company's interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company.

Because FFO excludes significant economic components of net income (loss) including depreciation and amortization, FFO should be used as an adjunct to net income (loss) and not as an alternative to net income (loss). The principal limitation of FFO is that it does not represent cash flow from operations as defined by GAAP and is a supplemental measure of performance that does not replace net income (loss) as a measure of performance or net cash provided by operating activities as a measure of liquidity. In addition, 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 only provides investors with an additional performance measure.

(2) 
Investors in and analysts following the real estate industry utilize NOI as a supplemental performance measure. NOI is derived from revenues minus property operating expenses and real estate taxes. NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) 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. The Company believes that net income (loss) is the most directly comparable GAAP measurement to NOI. Net income (loss) includes interest and depreciation and amortization which often have no effect on the market value of a property and therefore limit its use as a performance measure. In addition, such expenses are often incurred at a parent company level and therefore are not necessarily linked to the performance of a real estate asset. The Company believes that NOI is helpful to investors as a 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 management tool 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, and therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.



Sun Communities, Inc. 4th Quarter 2014                                 Page 10

Consolidated Balance Sheets
(in thousands, except per share amounts)

 
 
 
 
 
December 31, 2014
 
December 31, 2013
ASSETS
 
 
 
Investment property, net (including $93,769 and $56,805 for consolidated variable interest entities at December 31, 2014 and 2013)
$
2,568,164

 
$
1,755,052

Cash and cash equivalents
83,459

 
4,753

Inventory of manufactured homes
8,860

 
5,810

Notes and other receivables, net
174,857

 
162,141

Other assets, net
102,352

 
67,148

TOTAL ASSETS
$
2,937,692

 
$
1,994,904

LIABILITIES
 
 
 
Debt (including $65,849 and $45,209 for consolidated variable interest entities at December 31, 2014 and 2013)
$
1,826,293

 
$
1,311,437

Lines of credit
5,794

 
181,383

Other liabilities
164,583

 
117,673

TOTAL LIABILITIES
$
1,996,670

 
$
1,610,493

Commitments and contingencies


 


STOCKHOLDERS’ EQUITY
 
 
 
Series A Preferred Stock, $0.01 par value. Authorized: 10,000 shares;
Issued and outstanding: 3,400 shares at December 31, 2014 and 2013
$
34

 
$
34

Series A-4 Preferred Stock, $0.01 par value. Authorized: 6,331 shares;
Issued and outstanding: 483 shares at December 31, 2014 and none at December 31, 2013
5

 
—

Common stock, $0.01 par value. Authorized: 90,000 shares;
Issued and outstanding: 48,573 shares at December 31, 2014 and 36,140 shares at December 31, 2013
486

 
361

Additional paid-in capital
1,754,759

 
1,141,590

Accumulated other comprehensive loss
—

 
(366
)
Distributions in excess of accumulated earnings
(864,019
)
 
(773,775
)
Total Sun Communities, Inc. stockholders' equity
891,265

 
367,844

Noncontrolling interests:
 

 
 

Series A-1 preferred OP units
42,910

 
45,548

Series A-3 preferred OP units
3,463

 
3,463

Series A-4 preferred OP units
18,852

 
—

Common OP units
(15,052
)
 
(31,907
)
Consolidated variable interest entities
(416
)
 
(537
)
Total noncontrolling interest
49,757

 
16,567

TOTAL STOCKHOLDERS’ EQUITY
941,022

 
384,411

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
2,937,692

 
$
1,994,904




Sun Communities, Inc. 4th Quarter 2014                                 Page 11

Consolidated Statements of Operations
(in thousands, except per share amounts)

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2014
 
2013
 
2014
 
2013
REVENUES
 
 
 
 
 
 
 
Income from real property
$
89,946

 
$
78,128

 
$
357,793

 
$
313,097

Revenue from home sales
15,105

 
14,652

 
53,954

 
54,852

Rental home revenue
10,249

 
8,717

 
39,213

 
32,500

Ancillary revenues, net
19

 
(226
)
 
5,217

 
1,151

Interest
4,037

 
3,486

 
14,462

 
13,073

Brokerage commissions and other income, net
316

 
200

 
1,036

 
549

Total revenues
119,672

 
104,957

 
471,675

 
415,222

COSTS AND EXPENSES
 
 
 
 
 
 
 
Property operating and maintenance
24,721

 
21,044

 
101,134

 
87,637

Real estate taxes
6,089

 
5,138

 
24,181

 
22,284

Cost of home sales
11,084

 
10,937

 
40,556

 
40,297

Rental home operating and maintenance
6,574

 
6,183

 
23,270

 
20,435

General and administrative - real property
8,592

 
6,855

 
31,769

 
25,941

General and administrative - home sales and rentals
2,921

 
2,439

 
10,853

 
9,913

Transaction costs
13,996

 
1,159

 
18,259

 
3,928

Depreciation and amortization
44,875

 
29,962

 
133,726

 
110,078

Asset impairment charge
—

 
—

 
837

 
—

Interest
19,622

 
18,451

 
73,771

 
73,339

Interest on mandatorily redeemable debt
793

 
808

 
3,210

 
3,238

Total expenses
139,267

 
102,976

 
461,566

 
397,090

Income before other gains (losses), income taxes and distributions from affiliate
(19,595
)
 
1,981

 
10,109

 
18,132

Gain on disposition of properties, net
3,138

 
—

 
17,654

 
—

Gain on settlement
4,452

 
—

 
4,452

 
—

Provision for state income taxes
(12
)
 
(48
)
 
(219
)
 
(234
)
Distributions from affiliate
—

 
700

 
1,200

 
2,250

Net income (loss)
(12,017
)
 
2,633

 
33,196

 
20,148

Less:  Preferred return to Series A-1 preferred OP units
657

 
689

 
2,654

 
2,598

Less:  Preferred return to Series A-3 preferred OP units
45

 
45

 
181

 
166

Less:  Preferred return to Series A-4 preferred OP units
100

 
—

 
100

 
—

Less:  Amounts attributable to noncontrolling interests
(1,341
)
 
303

 
1,752

 
718

Net income (loss) attributable to Sun Communities, Inc.
(11,478
)
 
1,596

 
28,509

 
16,666

Less: Preferred stock distributions
1,591

 
1,514

 
6,133

 
6,056

Net income (loss) attributable to Sun Communities, Inc. common stockholders
$
(13,069
)
 
$
82

 
$
22,376

 
$
10,610

Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
47,499

 
35,508

 
41,337

 
34,228

Diluted
47,499

 
35,676

 
41,805

 
34,410

Earnings (loss) per share:
 

 
 

 
 

 
 

Basic
$
(0.28
)
 
$
—

 
$
0.54

 
$
0.31

Diluted
$
(0.28
)
 
$
—

 
$
0.54

 
$
0.31

 
 
 
 
 
 
 
 
Distributions per common share:
$
0.65

 
$
0.63

 
$
2.60

 
$
2.52


Sun Communities, Inc. 4th Quarter 2014                                 Page 12

Reconciliation of Net Income (Loss) to FFO(1) 
(in thousands, except per share amounts)


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2014
 
2013
 
2014
 
2013
Net income (loss) attributable to Sun Communities, Inc. common stockholders
$
(13,070
)
 
$
82

 
$
22,376

 
$
10,610

Adjustments:
 

 
 

 
 

 
 

Preferred return to Series A-1 preferred OP units
657

 
705

 
—

 
2,598

Preferred return to Series A-3 preferred OP units
45

 
45

 
181

 
166

Preferred return to Series A-4 preferred OP units
—

 
—

 
100

 
—

Preferred distribution to Series A-4 Preferred Stock
76

 
—

 
76

 
—

Amounts attributable to noncontrolling interests
(1,308
)
 
325

 
1,086

 
718

Depreciation and amortization
44,482

 
30,157

 
134,252

 
111,083

Asset impairment charge
—

 
—

 
837

 
—

Gain on disposition of properties, net
(3,138
)
 
—

 
(17,654
)
 
—

Gain on disposition of assets, net
(2,043
)
 
(1,787
)
 
(6,705
)
 
(7,592
)
Funds from operations ("FFO") (1)
25,701

 
29,527

 
134,549

 
117,583

Adjustments:
 
 
 
 
 
 
 
Transaction costs
13,996

 
1,159

 
18,259

 
3,928

Gain on settlement
(4,452
)
 
—

 
(4,452
)
 
—

Funds from operations excluding certain items
$
35,245

 
$
30,686

 
$
148,356

 
$
121,511

 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
47,499

 
35,508

 
41,337

 
34,228

Add:
 
 
 
 
 
 
 
Common stock issuable upon conversion of stock options
15

 
12

 
16

 
15

Restricted stock
304

 
156

 
237

 
167

Common OP Units
2,250

 
2,069

 
2,114

 
2,069

Common stock issuable upon conversion of Series A-1 preferred OP units
1,060

 
1,111

 
—

 
1,111

Common stock issuable upon conversion of Series A-3 preferred OP units
75

 
75

 
75

 
67

Common stock issuable upon conversion of Series A-4 preferred OP units
—

 
—

 
28

 
—

Series A-4 Preferred Stock
215

 
—

 
215

 
—

Weighted average common shares outstanding - fully diluted
51,418

 
38,931

 
44,022

 
37,657

 
 
 
 
 
 
 
 
FFO(1) per Share - fully diluted
$
0.50

 
$
0.75

 
$
3.06

 
$
3.11

FFO(1) per Share excluding certain items - fully diluted
$
0.69

 
$
0.78

 
$
3.37

 
$
3.22




Sun Communities, Inc. 4th Quarter 2014                                 Page 13

Statement of Operations – Same Site
(in thousands except for Other Information)

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2014
 
2013
 
Change
 
% Change
 
2014
 
2013
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from real property
$
73,544

 
$
68,986

 
$
4,558

 
6.6
 %
 
$
291,720

 
$
273,574

 
$
18,146

 
6.6
 %
PROPERTY OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and benefits
5,623

 
5,367

 
256

 
4.8
 %
 
22,585

 
22,918

 
(333
)
 
(1.5
)%
Legal, taxes, & insurance
1,152

 
1,232

 
(80
)
 
(6.5
)%
 
4,630

 
4,390

 
240

 
5.5
 %
Utilities
3,669

 
3,697

 
(28
)
 
(0.8
)%
 
16,593

 
15,620

 
973

 
6.2
 %
Supplies and repair
2,913

 
2,378

 
535

 
22.5
 %
 
11,396

 
10,222

 
1,174

 
11.5
 %
Other
2,381

 
1,906

 
475

 
24.9
 %
 
8,354

 
7,610

 
744

 
9.8
 %
Real estate taxes
5,092

 
4,770

 
322

 
6.8
 %
 
21,418

 
20,876

 
542

 
2.6
 %
Property operating expenses
20,830

 
19,350

 
1,480

 
7.6
 %
 
84,976

 
81,636

 
3,340

 
4.1
 %
NET OPERATING INCOME ("NOI")(2)
$
52,714

 
$
49,636

 
$
3,078

 
6.2
 %
 
$
206,744

 
$
191,938

 
$
14,806

 
7.7
 %


 
As of December 31,
OTHER INFORMATION
2014
 
2013
 
Change
Number of properties
163

 
163

 
—

Developed sites
61,734

 
61,141

 
593

Occupied sites (3)
52,831

 
51,119

 
1,712

Occupancy % (3) (4)
93.2
%
 
91.5
%
 
1.7
%
Weighted average monthly rent per site - MH
$
461

 
$
446

 
$
15

Weighted average monthly rent per site - RV (5)
$
413

 
$
405

 
$
8

Weighted average monthly rent per site - Total
$
456

 
$
442

 
$
14

Sites available for development
5,823

 
6,339

 
(516
)
(3) 
Includes manufactured housing and annual/seasonal recreational vehicle sites, and excludes transient recreational vehicle sites, which are included in total developed sites.
(4) 
Occupancy % excludes recently completed but vacant expansion sites.
(5) 
Weighted average rent pertains to annual/seasonal RV sites and excludes transient RV sites.



Sun Communities, Inc. 4th Quarter 2014                                 Page 14

Rental Program Summary
(amounts in thousands except for *)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2014
 
2013
 
Change
 
% Change
 
2014
 
2013
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental home revenue
$
10,249

 
$
8,717

 
$
1,532

 
17.6
%
 
$
39,213

 
$
32,500

 
$
6,713

 
20.7
 %
Site rent included in Income from real property
14,130

 
12,301

 
1,829

 
14.9
%
 
54,289

 
46,416

 
7,873

 
17.0
 %
Rental Program revenue
24,379

 
21,018

 
3,361

 
16.0
%
 
93,502

 
78,916

 
14,586

 
18.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions
708

 
703

 
5

 
0.7
%
 
2,607

 
2,507

 
100

 
4.0
 %
Repairs and refurbishment
3,209

 
3,030

 
179

 
5.9
%
 
11,068

 
9,411

 
1,657

 
17.6
 %
Taxes and insurance
1,351

 
1,213

 
138

 
11.4
%
 
5,286

 
4,446

 
840

 
18.9
 %
Marketing and other
1,306

 
1,237

 
69

 
5.6
%
 
4,309

 
4,071

 
238

 
5.8
 %
Rental Program operating and maintenance
6,574

 
6,183

 
391

 
6.3
%
 
23,270

 
20,435


2,835

 
13.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET OPERATING INCOME ("NOI") (3)
$
17,805

 
$
14,835

 
$
2,970

 
20.0
%
 
$
70,232

 
$
58,481

 
$
11,751

 
20.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupied rental home information as of December 31, 2014 and 2013:
 
 
 
 
 
 
Number of occupied rentals, end of period* 
 
 
 
 
 
 
 
 
10,973

 
9,726

 
1,247

 
12.8
 %
Investment in occupied rental homes
 
 
 
 
 
 
 
 
$
429,605

 
$
355,789

 
$
73,816

 
20.7
 %
Number of sold rental homes* 
 
 
 
 
 
 
 
 
799

 
924

 
(125
)
 
(13.5
)%
Weighted average monthly rental rate* 
 
 
 
 
 
 
 
 
$
822

 
$
796

 
$
26

 
3.3
 %



Sun Communities, Inc. 4th Quarter 2014                                 Page 15

Homes Sales Summary
(amounts in thousands except for *)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2014
 
2013
 
Change
 
% Change
 
2014
 
2013
 
Change
 
% Change
New home sales
$
2,639

 
$
2,727

 
$
(88
)
 
(3.2
)%
 
$
9,464

 
$
6,645

 
$
2,819

 
42.4
 %
Pre-owned home sales
12,466

 
11,925

 
541

 
4.5
 %
 
44,490

 
48,207

 
(3,717
)
 
(7.7
)%
Revenue from home sales
15,105

 
14,652

 
453

 
3.1
 %
 
53,954

 
54,852

 
(898
)
 
(1.6
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New home cost of sales
2,192

 
2,249

 
(57
)
 
(2.5
)%
 
7,977

 
5,557

 
2,420

 
43.5
 %
Pre-owned home cost of sales
8,892

 
8,688

 
204

 
2.3
 %
 
32,579

 
34,740

 
(2,161
)
 
(6.2
)%
Cost of home sales
11,084

 
10,937

 
147

 
1.3
 %
 
40,556

 
40,297

 
259

 
0.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI / Gross Profit (2)
$
4,021

 
$
3,715

 
$
306

 
8.2
 %
 
$
13,398

 
$
14,555

 
$
(1,157
)
 
(7.9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – new homes
$
447

 
$
478

 
$
(31
)
 
(6.5
)%
 
$
1,487

 
$
1,088

 
$
399

 
36.7
 %
Gross margin % – new homes
16.9
%
 
17.5
%
 
(0.6
)%
 


 
15.7
%
 
16.4
%
 
(0.7
)%
 


Average selling price - new homes*
$
79,984

 
$
85,195

 
$
(5,211
)
 
(6.1
)%
 
$
83,750

 
$
78,179

 
$
5,571

 
7.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – pre-owned homes
$
3,574

 
$
3,237

 
$
337

 
10.4
 %
 
$
11,911

 
$
13,467

 
$
(1,556
)
 
(11.6
)%
Gross margin % – pre-owned homes
28.7
%
 
27.1
%
 
1.6
 %
 


 
26.8
%
 
27.9
%
 
(1.1
)%
 


Average selling price - pre-owned homes*
$
24,030

 
$
25,674

 
$
(1,644
)
 
(6.4
)%
 
$
24,010

 
$
26,136

 
$
(2,126
)
 
(8.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home sales volume:
 
 
 
 
 
 
 
 
New home sales
33

 
32

 
1

 
3.1
 %
 
113

 
85

 
28

 
32.9
 %
Pre-owned home sales
519

 
464

 
55

 
11.9
 %
 
1,853

 
1,844

 
9

 
0.5
 %
Total homes sold
552

 
496

 
56

 
11.3
 %
 
1,966

 
1,929

 
37

 
1.9
 %


Sun Communities, Inc. 4th Quarter 2014                                 Page 16

Acquisition Summary - Properties Acquired in 2013 and 2014
(amounts in thousands except for statistical data)

 
Three Months Ended December 31, 2014
 
Year Ended December 31, 2014
REVENUES:
 
 
 
Income from real property
$
11,416

 
$
41,753

Revenue from home sales
773

 
1,168

Rental home revenue
404

 
765

Ancillary revenues, net
118

 
5,087

Total revenues
12,711

 
48,773

COSTS AND EXPENSES:
 
 
 
Property operating and maintenance
3,956

 
16,488

Real estate taxes
996

 
2,238

Cost of home sales
635

 
923

Rental home operating and maintenance
96

 
267

Total expenses
5,683

 
19,916

 
 
 
 
NET OPERATING INCOME ("NOI") (2)
$
7,028

 
$
28,857

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2014
Other information:
 
 
 
Number of properties
 
 
54

Developed sites
 
 
17,820

Occupied sites (3)
 
 
12,509

Occupancy % (3)
 
 
92.8
%
Weighted average monthly rent per site - MH
 
 
$
445

Weighted average monthly rent per site - RV (5)
 
 
$
349

Weighted average monthly rent per site - Total
 
 
$
422

 
 
 
 
Home sales volume :
 
 
 
Pre-owned homes
 
 
92

 
 
 
 
Occupied rental home information :
 
 
 
Number of occupied rentals, end of period
 
 
507

Investment in occupied rental homes (in thousands)
 
 
$
11,706

Weighted average monthly rental rate
 
 
$
852


(3) 
Includes manufactured housing and annual/seasonal recreational vehicle sites, and excludes transient recreational vehicle sites, which are included in total developed sites.
(5) 
Weighted average rent pertains to annual/seasonal RV sites and excludes transient RV sites.


Sun Communities, Inc. 4th Quarter 2014                                 Page 17