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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: November 1, 2016
(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 November 1, 2016, 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 September 30, 2016, and certain other information.

The Company will hold an investor conference call and webcast at 11:00 a.m. ET on November 1, 2016 to disclose and discuss the financial results for the period ended September 30, 2016.

The information contained in this Item 2.02, including Exhibit 99.1, 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
Exhibit No.
Description
99.1
Press release dated November 1, 2016





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: November 1, 2016
 
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 November 1, 2016
 
 
 



Exhibit

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Table of Contents                    
    

            
Summary - Earnings Press Release
i - v
 
 
Investor Information
 
 
Portfolio Overview
 
 
Financial Information
 
Balance Sheets
Statements of Operations
Outstanding Securities
Reconciliations to Non-GAAP Financial Measures
Reconciliation of Net Income to Funds from Operations
Reconciliation of Recurring EBITDA to Net Income
Reconciliation of Net Operating Income to Net Income
Non-GAAP and Other Financial Measures
Financial Highlights
Debt Analysis
 
 
Selected Financial Information
 
Statement of Operations – Same Community and Percentage Growth
Rental Program Summary
Home Sales Summary
Acquisitions Summary
 
 
Other Information
 
Property Summary
17 - 18
Capital Improvements, Development, and Acquisitions
Operating Statistics for Manufactured Homes and Annual/Seasonal RV’s
Footnotes and Definitions
21 - 23
 
 



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NEWS RELEASE
November 1, 2016

Sun Communities, Inc. Reports 2016 Third Quarter Results

Southfield, Michigan, November 1, 2016 - Sun Communities, Inc. (NYSE: SUI) (the "Company"), a real estate investment trust ("REIT") that owns and operates manufactured housing ("MH") and recreational vehicle ("RV") communities, today reported its third quarter results.

Financial Results for the Quarter and Nine Months Ended September 30, 2016

For the quarter ended September 30, 2016, total revenues increased $64.3 million, or 34.7 percent, to $249.7 million compared to $185.4 million for the same period in 2015. Net income available for Common Stockholders was $18.9 million, or $0.27 per diluted common share, as compared to $28.8 million, or $0.53 per diluted common share, for the same period in 2015.

For the nine months ended September 30, 2016, total revenues increased $108.6 million, or 21.4 percent, to $615.1 million compared to $506.5 million for the same period in 2015. Net income available for Common Stockholders for the nine months ended September 30, 2016 was $19.0 million, or $0.30 per diluted common share, as compared to $47.9 million, or $0.90 per diluted common share, for the same period in 2015.

“Our strong third quarter results demonstrate the consistent growth profile of our portfolio. With home sales solidly ahead of last year in both the third quarter and year to date, the ongoing demand for manufactured housing in our high quality communities is clearly evident,” said Gary A. Shiffman, Chairman and CEO. “I am pleased with the integration of the Carefree assets, which are performing ahead of expectations, as we employ our experience and expertise as a consolidator in this space. With both site expansion opportunities, and selective acquisitions such as the four communities purchased during and subsequent to the quarter, we continue to be well-positioned to drive ongoing growth across our platform.”

Non-GAAP Financial Measures and Portfolio Performance

•
For the quarter ended September 30, 2016, Funds from Operations (“FFO”)(1) excluding certain items was $1.13 per diluted share and OP unit ("Share") for the three months ended September 30, 2016, as compared to $1.05 in the prior year, an increase of 7.6 percent.

•
Home sales increased by 43.0 percent as compared to the third quarter of 2015.

•
Revenue producing sites increased by 292 sites for the quarter bringing total portfolio occupancy to 96.2 percent, up 250 basis points from the third quarter of 2015.  

•
For the quarter, same community Net Operating Income ("NOI")(1) increased by 6.0 percent as compared to the three months ended September 30, 2015.



i

OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy increased to 96.2 percent at September 30, 2016 from 93.7 percent at September 30, 2015. During the third quarter of 2016, revenue producing sites increased by 292 sites, as compared to 358 revenue producing sites gained in the third quarter of 2015.

Revenue producing sites gained during the nine months ended September 30, 2016 were 1,385 as compared to 1,357 revenue producing sites gained during the nine months ended September 30, 2015.

Same Community Results

For the 219 communities owned throughout 2016 and 2015, third quarter 2016 total revenues increased 5.9 percent and total expenses increased 5.6 percent, resulting in an increase in NOI(1) of 6.0 percent over the third quarter of 2015.  Same community occupancy increased to 96.4 percent at September 30, 2016 from 94.2 percent at September 30, 2015.

For the nine months ended September 30, 2016, total revenues increased 6.0 percent and total expenses increased 5.1 percent, resulting in an increase in NOI(1) of 6.4 percent over the nine months ended September 30, 2015.

Home Sales

Total home sales were 895 for the third quarter as compared to 626 homes sold during the third quarter of 2015, a 43.0 percent increase.

During the nine months ended September 30, 2016, the Company sold 2,410 homes as compared to the 1,745 homes sold during the same period ending 2015, resulting in an additional 665 homes sold during 2016, or a 38.1 percent increase.

Rental homes sales, which are included in total home sales, were 286 and 223 for the three months ended and 858 and 611 for the nine months ended September 30, 2016 and 2015, respectively.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

For the quarter ended September 30, 2016, the Company closed on $139.0 million of debt with a weighted average interest rate of 3.84 percent and maturities ranging between seven and ten years. Subsequent to quarter end, the Company completed a $58.5 million secured borrowing that bears interest at a fixed rate of 3.33 percent and has a seven-year term. During the quarter, the Company also repaid three mortgage loans totaling $62.1 million.

As of September 30, 2016, the Company had approximately $3.1 billion of debt outstanding. The weighted average interest rate was 4.56 percent and the weighted average maturity was 8.6 years. The Company had $69.8 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month EBITDA(1)(7) ratio was 7.7 times.

ii


Equity Transactions

In September 2016, the Company completed an underwritten registered public equity offering of 3,737,500 shares at a net price of $75.89 per share for proceeds of $283.6 million. The Company used the proceeds of the offering to repay borrowings outstanding under the Company's revolving line of credit.

During the quarter the Company sold 620,828 shares of common stock through its At the Market equity sales program at a weighted average price of $76.81 per share. Net proceeds from the sales were $47.1 million.

PORTFOLIO ACTIVITY

Acquisitions (2) 

During the quarter and also subsequent to September 30, 2016, the Company acquired four communities for total consideration of $41.0 million. The communities, located in Colorado, Michigan, New York, and Virginia, contain 964 RV sites and have expansion potential of approximately 400 sites.

These resorts are located in high demand destination locations and will undergo repositioning or expansion activities to fully realize the inherent value in the zoned and entitled land that was previously under-managed or under-utilized. 

GUIDANCE 2016

The Company expects FFO(1) per Share excluding certain items for fourth quarter 2016 to be in the range of $0.89 to $0.91 per Share.  This revised range includes a $0.03 to $0.04 per Share impact from the third quarter equity offerings, partially offset by a higher expected contribution from the Carefree portfolio. Guidance also includes expenses related to Hurricane Matthew as an adjustment to FFO(1) excluding certain items.

The Company anticipates full year same community NOI(1) growth of 6.7 percent to 6.9 percent. This revised outlook reflects transient RV revenues which were impacted by weather in a few communities in the third quarter, along with higher real estate tax assessments on a year to date basis.

Estimates of FFO(1) per Share excluding certain items assume certain non-core items are adjusted from
FFO(1).  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 "Forward-Looking Statements."


iii


EARNINGS CONFERENCE CALL

A conference call to discuss third quarter operating results will be held on Tuesday, November 1, 2016 at 11:00 A.M. (ET). To participate, call toll-free 877-407-4018. Callers outside the U.S. or Canada can access the call at 201-689-8471. A replay will be available following the call through November 15, 2016 and can be accessed toll-free by calling 877-870-5176 or by calling 858-384-5517. The Conference ID number for the call and the replay is 13646698. 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, as of September 30, 2016, owned or had an interest in a portfolio of 339 communities comprising approximately 117,000 developed sites in 29 states and Ontario.

For more information about Sun Communities, Inc., please visit the 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.


iv


Forward-Looking Statements

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

These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control. These risks, uncertainties, and other factors may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, the performance of recent acquisitions, the ability to integrate future acquisitions smoothly and efficiently, changes in market rates of interest, 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 the Company's 2015 Annual Report on Form 10-K, the Company's Quarterly Report on Form 10-Q for the Quarter ended September 30, 2016, 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.


v

Investor Information                        

RESEARCH COVERAGE
 
 
 
 
 
 
 
BMO Capital Markets
 
Paul Adornato
 
 
 
(212) 885-4170
 
 
 
paul.adornato@bmo.com
 
 
 
 
 
Citi Research
 
Michael Bilerman/Nicholas Joseph
 
 
 
(212) 816-1383
 
 
 
michael.bilerman@citi.com
 
 
 
nicholas.joseph@citi.com
 
 
 
 
 
Evercore ISI
 
Steve Sakwa
 
 
 
(212) 446-9462
 
 
 
steve.sakwa@evercoreisi.com
 
 
 
 
 
 
 
Gwen Clark
 
 
 
(212) 446-5611
 
 
 
gwen.clark@evercoreisi.com
 
 
 
 
 
Green Street Advisors
 
Dave Bragg
 
 
 
(949) 640-9780
 
 
 
dbragg@greenst.com
 
 
 
 
 
Robert W. Baird & Co.
 
Drew Babin
 
 
 
(215) 553-7816
 
 
 
dbabin@rwbaird.com
 
 
 
 
 
Wells Fargo
 
Todd Stender
 
 
 
(212) 214-8067
 
 
 
todd.stender@wellsfargo.com
 
 
 
 
 
 
 
 
INQUIRIES
 
 
 
 
 
 
 
Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media, or
any prospective investor. Please address all inquiries to our investor relations department.
 
 
 
 
 
At Our Website
 
www.suncommunities.com
 
 
 
 
 
By Email
 
investorrelations@suncommunities.com
 
 
 
 
 
By Phone
 
(248) 208-2500

3rd Quarter 2016 Supplemental Information     1               Sun Communities, Inc.

Portfolio Overview                                
(As of September 30, 2016)


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3rd Quarter 2016 Supplemental Information     2               Sun Communities, Inc.

Balance Sheets                                                
(amounts in thousands)
 
 
Quarter Ended
 
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
ASSETS:
 
 
 
 
 
 
 
 
 
 
Land
 
$
1,072,964

 
$
458,349

 
$
456,380

 
$
451,340

 
$
457,279

Land improvements and buildings
 
4,682,920

 
5,294,663

 
3,586,969

 
3,535,909

 
3,604,444

Rental homes and improvements
 
485,340

 
477,875

 
469,217

 
460,480

 
478,764

Furniture, fixtures and equipment
 
125,603

 
107,123

 
104,855

 
102,746

 
98,567

Land held for future development
 
23,497

 
23,497

 
23,047

 
23,047

 
23,659

Investment property
 
6,390,324

 
6,361,507

 
4,640,468

 
4,573,522

 
4,662,713

Accumulated depreciation
 
(977,486
)
 
(928,882
)
 
(889,941
)
 
(852,407
)
 
(879,184
)
Investment property, net
 
5,412,838

 
5,432,625

 
3,750,527

 
3,721,115

 
3,783,529

Cash and cash equivalents
 
69,829

 
31,441

 
410,408

 
45,086

 
23,917

Inventory of manufactured homes
 
24,147

 
29,044

 
16,636

 
14,828

 
15,263

Notes and other receivables, net
 
87,856

 
76,466

 
54,124

 
47,972

 
49,201

Collateralized receivables, net (3)
 
143,888

 
144,017

 
142,944

 
139,768

 
138,241

Other assets, net
 
166,148

 
109,598

 
188,247

 
213,030

 
95,728

Total assets, net
 
$
5,904,706

 
$
5,823,191

 
$
4,562,886

 
$
4,181,799

 
$
4,105,879

LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Mortgage loans payable
 
$
2,854,831

 
$
2,792,021

 
$
2,114,818

 
$
2,125,267

 
$
2,197,359

Secured borrowings (3)
 
144,522

 
144,684

 
143,664

 
140,440

 
138,887

Preferred OP units - mandatorily redeemable
 
45,903

 
45,903

 
45,903

 
45,903

 
45,903

Lines of credit
 
57,737

 
357,721

 
58,065

 
24,687

 
166,677

Distributions payable
 
51,100

 
47,992

 
45,351

 
41,265

 
38,819

Other liabilities
 
275,650

 
257,423

 
184,102

 
184,859

 
190,284

Total liabilities
 
3,429,743

 
3,645,744

 
2,591,903

 
2,562,421

 
2,777,929

Series A-4 Preferred Stock
 
50,227

 
50,227

 
61,732

 
61,732

 
68,633

Series A-4 preferred OP units
 
19,906

 
20,266

 
20,762

 
21,065

 
20,982

STOCKHOLDERS' EQUITY:
 
 
 
 
 
 
 
 
 
 
Series A Preferred Stock
 
34

 
34

 
34

 
34

 
34

Common stock
 
730

 
686

 
646

 
584

 
545

Additional paid-in capital
 
3,313,905

 
2,980,382

 
2,706,657

 
2,319,314

 
2,079,139

Accumulated other comprehensive (loss) income
 
(4,876
)
 
1

 
—

 
—

 
—

Distributions in excess of accumulated earnings
 
(975,511
)
 
(947,988
)
 
(896,896
)
 
(864,122
)
 
(916,961
)
       Total SUI stockholders' equity
 
2,334,282

 
2,033,115

 
1,810,441

 
1,455,810

 
1,162,757

Noncontrolling interests:
 
 
 
 
 
 
 
 
 
 
Common and preferred OP units
 
73,284

 
76,166

 
80,018

 
82,538

 
76,914

Consolidated variable interest entities
 
(2,736
)
 
(2,327
)
 
(1,970
)
 
(1,767
)
 
(1,336
)
Total noncontrolling interest
 
70,548

 
73,839

 
78,048

 
80,771

 
75,578

Total stockholders' equity
 
2,404,830

 
2,106,954

 
1,888,489

 
1,536,581

 
1,238,335

Total liabilities & stockholders' equity
 
$
5,904,706

 
$
5,823,191

 
$
4,562,886

 
$
4,181,799

 
$
4,105,879



3rd Quarter 2016 Supplemental Information     3               Sun Communities, Inc.

Statements of Operations                            
(amounts in thousands, except per share amounts)
 
Three Months Ended
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
REVENUES:
 
 
 
 
 
 
 
 
 
Income from real property (excluding transient revenue)
$
158,020

 
$
129,117

 
$
119,084

 
$
117,604

 
$
119,784

Transient revenue
26,304

 
10,884

 
10,151

 
5,568

 
17,764

Revenue from home sales
31,211

 
26,039

 
24,737

 
25,169

 
18,991

Rental home revenue
12,031

 
11,957

 
11,708

 
11,756

 
11,856

Ancillary revenues
16,446

 
7,383

 
4,613

 
3,576

 
12,511

Interest
4,705

 
4,672

 
3,945

 
4,074

 
3,987

Brokerage commissions and other income, net
984

 
747

 
406

 
491

 
462

Total revenues
249,701

 
190,799

 
174,644

 
168,238

 
185,355

 
 
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
 
 
Property operating and maintenance
57,089

 
37,067

 
31,201

 
33,360

 
38,716

Real estate taxes
12,384

 
10,153

 
9,585

 
8,683

 
8,520

Cost of home sales
21,935

 
18,684

 
18,184

 
19,296

 
13,386

Rental home operating and maintenance
6,350

 
5,411

 
5,876

 
6,841

 
7,031

Ancillary expenses
8,539

 
5,201

 
3,508

 
3,888

 
6,936

Home selling expenses
3,553

 
2,858

 
2,278

 
2,079

 
1,910

General and administrative
16,575

 
16,543

 
13,792

 
10,511

 
12,670

Transaction costs
4,191

 
20,979

 
2,721

 
4,653

 
1,664

Depreciation and amortization
61,483

 
49,670

 
48,412

 
47,530

 
44,695

Interest
33,800

 
28,428

 
26,294

 
28,066

 
27,453

Interest on mandatorily redeemable preferred OP units
789

 
787

 
787

 
790

 
790

Total expenses
226,688

 
195,781

 
162,638

 
165,697

 
163,771

Income / (loss) before other items
23,013

 
(4,982
)
 
12,006

 
2,541

 
21,584

Gains on disposition of properties, net
—

 
—

 
—

 
98,430

 
18,190

Provision for income taxes
(283
)
 
(56
)
 
(228
)
 
71

 
(77
)
Income tax expense - reduction of deferred tax asset
—

 
—

 
—

 
(1,000
)
 
—

Income from affiliate transactions
500

 
—

 
—

 
—

 
—

Net income / loss
23,230

 
(5,038
)
 
11,778

 
100,042

 
39,697

Less: Preferred return to preferred OP units
(1,257
)
 
(1,263
)
 
(1,273
)
 
(1,281
)
 
(1,302
)
Less: Amounts attributable to noncontrolling interests
(879
)
 
695

 
(276
)
 
(6,922
)
 
(2,125
)
Less: Preferred stock distribution
(2,197
)
 
(2,197
)
 
(2,354
)
 
(2,440
)
 
(3,179
)
Less: Preferred stock redemption costs
—

 
—

 
—

 
—

 
(4,328
)
NET INCOME / (LOSS) ATTRIBUTABLE TO SUI
$
18,897


$
(7,803
)

$
7,875


$
89,399


$
28,763

Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
68,655

 
64,757

 
57,736

 
56,181

 
53,220

Diluted
69,069

 
64,757

 
58,126

 
57,639

 
53,665

Earnings (loss) per share:
 
 
 
 
 
 
 
 
 
Basic
$
0.27

 
$
(0.12
)
 
$
0.14

 
$
1.57

 
$
0.53

Diluted
$
0.27

 
$
(0.12
)
 
$
0.14

 
$
1.56

 
$
0.53

 
 
 
 
 
 
 
 
 
 



3rd Quarter 2016 Supplemental Information     4               Sun Communities, Inc.

Summary of Securities Outstanding as of September 30, 2016        
(units/stock/shares in thousands)
 
Number of Units/Stock/Shares Outstanding
 
Conversion Rate
 
If Converted
 
Issuance Price per unit
 
Annual Distribution Rate
Convertible Securities
 
 
 
 
 
 
 
 
 
Series A-1 preferred OP Units
376
 
2.43902
 
917
 
$100
 
6.0%
Series A-3 preferred OP Units
40
 
1.8605
 
74
 
$100
 
4.5%
Series A-4 preferred OP Units
743
 
0.444444
 
330
 
$25
 
6.5%
Series C preferred OP Units
333
 
1.11
 
370
 
$100
 
4.0%
Common OP Units
2,838
 
1.0
 
2,838
 
N/A
 
Mirrors the Common Share distributions
Series A-4 cumulative convertible Preferred Stock
1,682
 
0.444444
 
748
 
$25
 
6.5%
 
 
 
 
 
 
 
 
 
 
Non-Convertible Securities
 
 
 
 
 
 
 
 
 
Preferred Stock ( SUI-PrA)
3,400
 
N/A
 
N/A
 
$25
 
7.125%
 
 
 
 
 
 
 
 
 
 
Common Shares
73,027
 
N/A
 
N/A
 
N/A
 
$2.60*
* Annual distribution is based on the last quarter distribution annualized.


3rd Quarter 2016 Supplemental Information     5               Sun Communities, Inc.



















Reconciliations to Non-GAAP Financial Measures


3rd Quarter 2016 Supplemental Information     6               Sun Communities, Inc.

Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to Funds from Operations                            
(amounts in thousands except for per share data)
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Net income attributable to Sun Communities, Inc. common stockholders
$
18,897

 
$
28,763

 
$
18,969

 
$
47,926

Adjustments:
 

 
 

 
 

 
 

Preferred return to preferred OP units
616

 
—

 
1,858

 
—

Amounts attributable to noncontrolling interests
685

 
1,174

 
255

 
1,554

Preferred distribution to Series A-4 preferred stock
683

 
1,666

 
—

 
—

Depreciation and amortization
61,809

 
45,014

 
159,225

 
130,247

Gain on disposition of properties, net
—

 
(18,190
)
 
—

 
(26,946
)
Gain on disposition of assets, net
(4,667
)
 
(2,937
)
 
(12,226
)
 
(7,065
)
Funds from operations ("FFO") attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (5)

78,023

 
55,490

 
168,081

 
145,716

Adjustments:
 
 
 
 
 
 
 
Transaction costs
4,191

 
1,664

 
27,891

 
13,150

Other acquisition related costs (4)
1,467

 
—

 
1,467

 
—

Income from affiliate transactions
(500
)
 
—

 
(500
)
 
(7,500
)
Preferred stock redemption costs
—

 
4,328

 
—

 
4,328

Extinguishment of debt
—

 
—

 
—

 
2,800

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items (1) (5)

$
83,181

 
$
61,482

 
$
196,939

 
$
158,494

 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic:
68,655

 
53,220

 
63,716

 
52,855

Add:
 
 
 
 
 
 
 
Common stock issuable upon conversion of stock options
8

 
14

 
10

 
16

Restricted stock
406

 
431

 
437

 
400

Common stock issuable upon conversion of Series A-4 preferred stock
747

 
1,826

 
—

 
—

Common OP units
2,856

 
2,874

 
2,861

 
2,783

Common stock issuable upon conversion of Series A-1 preferred OP units
920

 
—

 
932

 
—

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

 
—

 
75

 
—

Weighted average common shares outstanding - fully diluted
73,667

 
58,365

 
68,031

 
56,054

 
 
 
 
 
 
 
 
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (5) per Share - fully diluted

$
1.06

 
$
0.95

 
$
2.47

 
$
2.60

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (5) per Share excluding certain items - fully diluted

$
1.13

 
$
1.05

 
$
2.89

 
$
2.83






3rd Quarter 2016 Supplemental Information     7               Sun Communities, Inc.

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

The following table reconciles Recurring EBITDA to consolidated net income:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
RECURRING EBITDA (1)
$
123,276

 
$
96,186

 
$
308,378

 
$
264,293

Interest
33,800

 
27,453

 
88,522

 
79,593

Interest on mandatorily redeemable preferred OP units
789

 
790

 
2,363

 
2,429

Depreciation and amortization
61,483

 
44,695

 
159,565

 
130,107

Extinguishment of debt
—

 
—

 
—

 
2,800

Transaction costs
4,191

 
1,664

 
27,891

 
13,150

Gains on disposition of properties, net
—

 
(18,190
)
 
—

 
(26,946
)
Provision for income tax
283

 
77

 
567

 
229

Income from affiliate transactions
(500
)
 
—

 
(500
)
 
(7,500
)
Net income
23,230

 
39,697

 
29,970

 
70,431

Less: Preferred return to preferred OP units
1,257

 
1,302

 
3,793

 
3,692

Less: Amounts attributable to noncontrolling interests
879

 
2,125

 
460

 
3,132

Net income attributable to Sun Communities, Inc.
21,094

 
36,270

 
25,717

 
63,607

Less: Preferred stock distributions
2,197

 
3,179

 
6,748

 
11,353

Less: Preferred stock redemption costs
—

 
4,328

 
—

 
4,328

Net income attributable to Sun Communities, Inc., common stockholders
$
18,897

 
$
28,763

 
$
18,969

 
$
47,926




3rd Quarter 2016 Supplemental Information     8               Sun Communities, Inc.

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

The following table reconciles net operating income to consolidated net income:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Real Property NOI
$
114,851

 
$
90,312

 
$
296,081

 
$
254,438

Rental Program NOI
21,213

 
20,587

 
64,223

 
62,805

Home Sales NOI/Gross profit
9,276

 
5,605

 
23,184

 
14,914

Ancillary NOI/Gross profit
7,907

 
5,575

 
11,194

 
7,325

Site rent from Rental Program (included in Real Property NOI) (6)
(15,532
)
 
(15,762
)
 
(46,164
)
 
(46,440
)
NOI/Gross profit
137,715

 
106,317

 
348,518

 
293,042

Adjustments to arrive at net income:
 
 
 
 
 
 
 
Other revenues
5,689

 
4,449

 
15,459

 
13,592

Home selling expenses
(3,553
)
 
(1,910
)
 
(8,689
)
 
(5,397
)
General and administrative
(16,575
)
 
(12,670
)
 
(46,910
)
 
(36,944
)
Transaction costs
(4,191
)
 
(1,664
)
 
(27,891
)
 
(13,150
)
Depreciation and amortization
(61,483
)
 
(44,695
)
 
(159,565
)
 
(130,107
)
Extinguishment of debt
—

 
—

 
—

 
(2,800
)
Interest expense
(34,589
)
 
(28,243
)
 
(90,885
)
 
(82,022
)
Gain on disposition of properties, net
—

 
18,190

 
—

 
26,946

Provision for state income taxes
(283
)
 
(77
)
 
(567
)
 
(229
)
Income from affiliate transactions
500

 
—

 
500

 
7,500

Net income
23,230

 
39,697

 
29,970

 
70,431

Less: Preferred return to preferred OP units
1,257

 
1,302

 
3,793

 
3,692

Less: Amounts attributable to noncontrolling interests
879

 
2,125

 
460

 
3,132

Net income attributable to Sun Communities, Inc.
21,094

 
36,270

 
25,717

 
63,607

Less: Preferred stock distributions
2,197

 
3,179

 
6,748

 
11,353

Less: Preferred stock redemption costs
—

 
4,328

 
—

 
4,328

Net income attributable to Sun Communities, Inc., common stockholders
$
18,897

 
$
28,763

 
$
18,969

 
$
47,926

 
 
 
 
 
 
 
 





3rd Quarter 2016 Supplemental Information     9               Sun Communities, Inc.






















Non-GAAP and Other Financial Measures

















3rd Quarter 2016 Supplemental Information     10               Sun Communities, Inc.

Financial Highlights                                                
(amounts in thousands, except per share data)
 
Quarter Ended
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
OPERATING INFORMATION
 
 
 
 
 
 
 
 
 
Total revenues
$
249,701

 
$
190,799

 
$
174,644

 
$
168,238

 
$
185,355

Net income (loss)
$
23,230

 
$
(5,038
)
 
$
11,778

 
$
100,042

 
$
39,697

Net income (loss) available for Common Stockholders
$
18,897

 
$
(7,803
)
 
$
7,875

 
$
89,399

 
$
28,763

Earnings (loss) per share basic
$
0.27

 
$
(0.12
)
 
$
0.14

 
$
1.57

 
$
0.53

Earnings (loss) per share diluted
$
0.27

 
$
(0.12
)
 
$
0.14

 
$
1.56

 
$
0.53

 
 
 
 
 
 
 
 
 
 
Recurring EBITDA (1)
$
123,276

 
$
94,882

 
$
90,220

 
$
83,580

 
$
96,186

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1) (5)
$
78,023

 
$
37,473

 
$
53,270

 
$
43,282

 
$
55,490

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items(1) (5)
$
83,181

 
$
58,452

 
$
55,991

 
$
48,935

 
$
61,482

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (5) per Share - fully diluted
$
1.06

 
$
0.54

 
$
0.86

 
$
0.72

 
$
0.95

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (5) per Share excluding certain items - fully diluted
$
1.13

 
$
0.85

 
$
0.90

 
$
0.81

 
$
1.05

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE SHEET
 
 
 
 
 
 
 
 
 
Total assets
$
5,904,706

 
$
5,823,191

 
$
4,562,886

 
$
4,181,799

 
$
4,105,879

Total debt
$
3,102,993

 
$
3,340,329

 
$
2,362,450

 
$
2,336,297

 
$
2,548,826

Total liabilities 
$
3,429,743

 
$
3,645,744

 
$
2,591,903

 
$
2,562,421

 
$
2,777,929




3rd Quarter 2016 Supplemental Information     11               Sun Communities, Inc.

Debt Analysis                                                    
(amounts in thousands)
 
Quarter Ended
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
DEBT OUTSTANDING
 
 
 
 
 
 
 
 
 
Lines of credit
$
57,737

 
$
357,721

 
$
58,065

 
$
24,687

 
$
166,677

Mortgage loans payable
2,854,831

 
2,792,021

 
2,114,818

 
2,125,267

 
2,197,359

Preferred OP units - mandatorily redeemable
45,903

 
45,903

 
45,903

 
45,903

 
45,903

Secured borrowing (3)
144,522

 
144,684

 
143,664

 
140,440

 
138,887

Total debt
$
3,102,993

 
$
3,340,329

 
$
2,362,450

 
$
2,336,297

 
$
2,548,826

 
 
 
 
 
 
 
 
 
 
% FIXED/FLOATING
 
 
 
 
 
 
 
 
 
Fixed
93.1%
 
84.5%
 
90.7%
 
92.0%
 
87.0%
Floating
6.9%
 
15.5%
 
9.3%
 
8.0%
 
13.0%
Total
100.0%
 
100.0%
 
100.0%
 
100.0%
 
100.0%
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE INTEREST RATES
 
 
 
 
 
 
 
 
 
Lines of credit
1.93%
 
1.89%
 
1.87%
 
1.62%
 
1.66%
Mortgage loans payable
4.30%
 
4.38%
 
4.67%
 
4.65%
 
4.69%
Preferred OP units - mandatorily redeemable
6.87%
 
6.87%
 
6.87%
 
6.87%
 
6.87%
Average before Secured borrowing
4.29%
 
4.13%
 
4.64%
 
4.66%
 
4.52%
Secured borrowing (3)
10.06%
 
10.09%
 
10.12%
 
10.17%
 
10.23%
Total average
4.56%
 
4.39%
 
4.98%
 
4.99%
 
4.83%
 
 
 
 
 
 
 
 
 
 
DEBT RATIOS
 
 
 
 
 
 
 
 
 
Net Debt/Recurring EBITDA (1) (7)
7.7
 
9.1
 
5.5
 
6.6
 
7.8
 
 
 
 
 
 
 
 
 
 
Net Debt/Enterprise Value
32.8%
 
36.6%
 
27.7%
 
34.0%
 
37.9%
 
 
 
 
 
 
 
 
 
 
Net Debt + Preferred Stock/Enterprise Value
34.2%
 
38.0%
 
29.7%
 
36.1%
 
40.1%
 
 
 
 
 
 
 
 
 
 
Net Debt/Gross Assets
44.1%
 
49.0%
 
35.8%
 
45.6%
 
50.7%
 
 
 
 
 
 
 
 
 
 
COVERAGE RATIOS
 
 
 
 
 
 
 
 
 
Recurring EBITDA/ Interest (1) (7)
3.1
 
3.1
 
3.0
 
3.1
 
3.1
 
 
 
 
 
 
 
 
 
 
Recurring EBITDA/ Interest + Pref.
Distributions + Pref. Stock Distribution (1) (7)
2.9
 
2.8
 
2.7
 
2.6
 
2.7
MATURITIES/PRINCIPAL AMORTIZATION NEXT FIVE YEARS
2016
 
2017
 
2018
 
2019
 
2020
Lines of credit
$
—

 
$
—

 
$
—

 
$
—

 
$
58,000

Mortgage loans payable:
 
 
 
 
 
 
 
 
 
Maturities
—

 
87,489

 
49,109

 
64,314

 
49,003

Weighted average rate of maturities
—
%
 
5.96
%
 
6.02
%
 
6.24
%
 
5.82
%
Principal amortization
11,399

 
53,144

 
53,353

 
54,035

 
63,650

Preferred OP units - mandatorily redeemable
3,670

 
7,570

 
—

 
—

 
—

Secured borrowing (3)
1,357

 
5,752

 
6,291

 
6,838

 
7,459

Total
$
16,426

 
$
153,955

 
$
108,753

 
$
125,187

 
$
178,112


3rd Quarter 2016 Supplemental Information     12               Sun Communities, Inc.

Statements of Operations – Same Community                        
(amounts in thousands except for percentages and other information)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
Change
 
% Change
 
2016
 
2015
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from real property
$
124,274

 
$
117,337

 
$
6,937

 
5.9
 %
 
$
353,083

 
$
332,978

 
$
20,105

 
6.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROPERTY OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and benefits
11,029

 
9,716

 
1,313

 
13.5
 %
 
29,879

 
27,521

 
2,358

 
8.6
 %
Legal, taxes & insurance
1,116

 
1,892

 
(776
)
 
(41.0
)%
 
4,174

 
5,221

 
(1,047
)
 
(20.1
)%
Utilities
7,954

 
7,564

 
390

 
5.2
 %
 
20,400

 
19,716

 
684

 
3.5
 %
Supplies and repair
5,352

 
5,270

(8) 
82

 
1.6
 %
 
12,733

 
12,503

(8) 
230

 
1.8
 %
Other
3,603

 
3,619

 
(16
)
 
(0.5
)%
 
9,662

 
9,490

 
172

 
1.8
 %
Real estate taxes
8,575

 
7,557

 
1,018

 
13.5
 %
 
26,303

 
23,683

 
2,620

 
11.1
 %
Property operating expenses
37,629

 
35,618

 
2,011

 
5.6
 %
 
103,151

 
98,134

 
5,017

 
5.1
 %
NET OPERATING INCOME (NOI)(1)
$
86,645

 
$
81,719

 
$
4,926

 
6.0
 %
 
$
249,932

 
$
234,844

 
$
15,088

 
6.4
 %

 
As of September 30,
 
2016
 
2015
 
Change
 
% Change
OTHER INFORMATION
 
 
 
 
 
 
 
Number of properties
219

 
219

 
—

 
 
 
 
 
 
 
 
 
 
Overall occupancy (9)
96.4
%
 
94.2
%
(10) 
2.2
%
 
 
 
 
 
 
 
 
 
 
Sites available for development
6,608

 
6,174

 
434

 
7.0
%
 
 
 
 
 
 
 
 
Monthly base rent per site - MH
$
495

 
$
478

 
$
17

 
3.5
%
Monthly base rent per site - RV (11)
$
432

 
$
417

 
$
15

 
3.6
%
Monthly base rent per site - Total
$
487

 
$
470

 
$
17

 
3.6
%

3rd Quarter 2016 Supplemental Information     13               Sun Communities, Inc.

Rental Program Summary     
(amounts in thousands except for *)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
Change
 
% Change
 
2016
 
2015
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental home revenue
$
12,031

 
$
11,856

 
$
175

 
1.5
 %
 
$
35,696

 
$
34,480

 
$
1,216

 
3.5
 %
Site rent included in Income from real property
15,532

 
15,762

 
(230
)
 
(1.5
)%
 
46,164

 
46,440

 
(276
)
 
(0.6
)%
Rental Program revenue
27,563

 
27,618

 
(55
)
 
(0.2
)%
 
81,860

 
80,920

 
940

 
1.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions
551

 
855

 
(304
)
 
(35.6
)%
 
1,710

 
2,441

 
(731
)
 
(30.0
)%
Repairs and refurbishment
3,349

 
3,389

 
(40
)
 
(1.2
)%
 
9,288

 
8,127

 
1,161

 
14.3
 %
Taxes and insurance
1,446

 
1,645

 
(199
)
 
(12.1
)%
 
4,178

 
4,665

 
(487
)
 
(10.4
)%
Marketing and other
1,004

 
1,142

 
(138
)
 
(12.1
)%
 
2,461

 
2,882

 
(421
)
 
(14.6
)%
Rental Program operating and maintenance
6,350

 
7,031

 
(681
)
 
(9.7
)%
 
17,637

 
18,115


(478
)
 
(2.6
)%
NET OPERATING INCOME (NOI) (1)
$
21,213

 
$
20,587

 
$
626

 
3.0
 %
 
$
64,223

 
$
62,805

 
$
1,418

 
2.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupied rental home information as of September 30, 2016 and 2015:
 
 
 
 
 
 
Number of occupied rentals, end of period* 
 
 
 
 
 
 
 
 
10,797

 
11,443

 
(646
)
 
(5.6
)%
Investment in occupied rental homes, end of period
 
 
 
 
 
 
 
 
$
453,521

 
$
456,027

 
$
(2,506
)
 
(0.6
)%
Number of sold rental homes* 
 
 
 
 
 
 
 
 
858

 
611

 
247

 
40.4
 %
Weighted average monthly rental rate, end of period* 
 
 
 
 
 
 
 
 
$
879

 
$
843

 
$
36

 
4.3
 %


3rd Quarter 2016 Supplemental Information     14               Sun Communities, Inc.

Homes Sales Summary     
(amounts in thousands except for *)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
Change
 
% Change
 
2016
 
2015
 
Change
 
% Change
New home sales
$
9,391

 
$
4,469

 
$
4,922

 
110.1
%
 
$
20,472

 
$
14,890

 
$
5,582

 
37.5
%
Pre-owned home sales
21,820

 
14,522

 
7,298

 
50.3
%
 
61,515

 
39,669

 
21,846

 
55.1
%
Revenue from home sales
31,211

 
18,991

 
12,220

 
64.3
%
 
81,987

 
54,559

 
27,428

 
50.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New home cost of sales
7,896

 
3,739

 
4,157

 
111.2
%
 
17,513

 
12,348

 
5,165

 
41.8
%
Pre-owned home cost of sales
14,039

 
9,647

 
4,392

 
45.5
%
 
41,290

 
27,297

 
13,993

 
51.3
%
Cost of home sales
21,935

 
13,386

 
8,549

 
63.9
%
 
58,803

 
39,645

 
19,158

 
48.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI / Gross Profit (1)
$
9,276

 
$
5,605

 
$
3,671

 
65.5
%
 
$
23,184

 
$
14,914

 
$
8,270

 
55.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – new homes
$
1,495

 
$
730

 
$
765

 
104.8
%
 
$
2,959

 
$
2,542

 
$
417

 
16.4
%
Gross margin % – new homes
15.9
%
 
16.3
%
 
(0.4
)%
 
 
 
14.5
%
 
17.1
%
 
(2.6
)%
 
 
Average selling price - new homes*
$
90,298


$
74,483

 
$
15,815

 
21.2
%
 
$
89,397


$
77,958

 
$
11,439

 
14.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – pre-owned homes
$
7,781

 
$
4,875

 
$
2,906

 
59.6
%
 
$
20,225

 
$
12,372

 
$
7,853

 
63.5
%
Gross margin % – pre-owned homes
35.7
%
 
33.6
%
 
2.1
 %
 
 
 
32.9
%
 
31.2
%
 
1.7
 %
 
 
Average selling price - pre-owned homes*
$
27,585


$
25,657

 
$
1,928

 
7.5
%
 
$
28,205


$
25,527


$
2,678

 
10.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home sales volume:
 
 
 
 
 
 
 
 
New home sales*
104

 
60

 
44

 
73.3
%
 
229

 
191

 
38

 
19.9
%
Pre-owned home sales*
791

 
566

 
225

 
39.8
%
 
2,181

 
1,554

 
627

 
40.3
%
Total homes sold*
895

 
626

 
269

 
43.0
%
 
2,410

 
1,745

 
665

 
38.1
%
    

3rd Quarter 2016 Supplemental Information     15               Sun Communities, Inc.

Acquisitions Summary - Properties Acquired in 2015 and 2016     
(amounts in thousands except for statistical data)
 
Three Months Ended September 30, 2016
 
Nine Months Ended September 30, 2016
REVENUES:
 
 
 
Income from real property (excluding transient revenue)
$
58,609


$
82,283

Transient revenue
10,653


15,993

Revenue from home sales
9,644


14,018

Rental home revenue
276


475

Ancillary revenues
7,508


10,101

Total revenues
86,690

 
122,870

COSTS AND EXPENSES:
 
 
 
Property operating and maintenance
37,898


46,308

Real estate taxes
3,745


5,819

Cost of home sales
6,671


9,824

Rental home operating and maintenance
80


125

Ancillary expense
3,034


4,724

            Total expenses
51,428

 
66,800

 
 
 
 
NET OPERATING INCOME (NOI) (1)
$
35,262

 
$
56,070

 
 
 
 
 
 
 
As of September 30, 2016
Other information:
 
 
 
Number of properties
 
 
120

Occupied sites (12)
 
 
24,191

Developed sites (12)
 
 
24,982

Occupancy % (12)
 
 
96.8
%
Transient sites
 
 
8,907

Monthly base rent per site - MH
 
 
$
590

Monthly base rent per site - RV (11)
 
 
$
398

Monthly base rent per site - Total (11)
 
 
$
506

 
 
 
 
Home sales volume:
 
 
 
New homes sales
 
 
63

Pre-owned homes sales
 
 
190

 
 
 
 
Occupied rental home information:
 
 
 
Number of occupied rentals, end of period
 
 
291

Investment in occupied rental homes (in thousands)
 
 
$
7,582

Weighted average monthly rental rate
 
 
$
863



3rd Quarter 2016 Supplemental Information     16               Sun Communities, Inc.

Property Summary
 
 
 
 
 
 
 
 
 
 
 
(includes MH and Annual/Seasonal RV’s)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMMUNITIES
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
FLORIDA
 
 
 
 
 
 
 
 
 
 
 
Communities
 
121

 
121

 
61

 
61

 
62

 
Sites for development
 
1,259

 
1,259

 
823

 
823

 
823

 
Developed sites (12)
 
36,116

 
36,119

 
24,312

 
24,216

 
24,528

 
Occupied (12)
 
34,817

 
34,720

 
23,359

 
23,201

 
23,427

 
Occupancy % (12)
 
96.4
%
 
96.1
%
 
96.1
%
 
95.8
%
 
95.5
%
 
MICHIGAN
 
 
 
 
 
 
 
 
 
 
 
Communities
 
67

 
66

 
66

 
65

 
70

 
Sites for development
 
2,628

 
2,248

 
2,105

 
2,105

 
2,262

 
Developed sites (12)
 
24,388

 
24,387

 
24,363

 
23,966

 
24,657

 
Occupied (12)
 
23,218

 
23,198

 
23,079

 
22,677

 
23,179

 
Occupancy % (12)
 
95.2
%
 
95.1
%
 
94.7
%
 
94.6
%
 
94.0
%
 
TEXAS
 
 
 
 
 
 
 
 
 
 
 
Communities
 
21

 
21

 
17

 
16

 
19

 
Sites for development
 
1,455

 
1,347

 
1,347

 
1,347

 
1,599

 
Developed sites (12)
 
6,088

 
6,071

 
5,970

 
5,965

 
6,507

 
Occupied (12)
 
5,774

 
5,771

 
5,602

 
5,517

 
6,034

 
Occupancy % (12)
 
94.8
%
 
95.1
%
 
93.8
%
 
92.5
%
 
92.7
%
 
CALIFORNIA
 
 
 
 
 
 
 
 
 
 
 
Communities
 
22

 
22

 
3

 
3

 
3

 
Sites for development
 
332

 
332

 
332

 
332

 
332

 
Developed sites (12)
 
4,797

 
4,864

 
198

 
198

 
198

 
Occupied (12)
 
4,720

 
4,796

 
192

 
192

 
191

 
Occupancy % (12)
 
98.4
%
 
98.6
%
 
97.0
%
 
97.0
%
 
96.5
%
 
ARIZONA
 
 
 
 
 
 
 
 
 
 
 
Communities
 
11

 
11

 
10

 
10

 
11

 
Sites for development
 
358

 
358

 
393

 
393

 
393

 
Developed sites (12)
 
3,567

 
3,532

 
3,302

 
3,301

 
3,279

 
Occupied (12)
 
3,305

 
3,281

 
3,102

 
3,078

 
3,043

 
Occupancy % (12)
 
92.7
%
 
92.9
%
 
93.9
%
 
93.2
%
 
92.8
%
 
ONTARIO
 
 
 
 
 
 
 
 
 
 
 
Communities
 
15

 
15

 
—

 
—

 
—

 
Sites for development
 
2,029

 
2,029

 
—

 
—

 
—

 
Developed sites (12)
 
3,453

 
3,375

 
—

 
—

 
—

 
Occupied (12)
 
3,453

 
3,375

 
—

 
—

 
—

 
Occupancy % (12)
 
100.0
%
 
100.0
%
 
—
%
 
—
%
 
—
%
 
INDIANA
 
 
 
 
 
 
 
 
 
 
 
Communities
 
11

 
11

 
11

 
11

 
16

 
Sites for development
 
316

 
316

 
363

 
363

 
522

 
Developed sites (12)
 
2,900

 
2,900

 
2,900

 
2,900

 
4,913

 
Occupied (12)
 
2,712

 
2,700

 
2,674

 
2,628

 
3,865

 
Occupancy % (12)
 
93.5
%
 
93.1
%
 
92.2
%
 
90.6
%
 
78.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3rd Quarter 2016 Supplemental Information     17               Sun Communities, Inc.

Property Summary
 
 
 
 
 
 
 
 
 
 
 
(includes MH and Annual/Seasonal RV’s)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMMUNITIES
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
OHIO
 
 
 
 
 
 
 
 
 
 
 
Communities
 
9

 
9

 
9

 
9

 
9

 
Sites for development
 
—

 
—

 
—

 
—

 
—

 
Developed sites (12)
 
2,719

 
2,718

 
2,700

 
2,703

 
2,703

 
Occupied (12)
 
2,602

 
2,616

 
2,585

 
2,560

 
2,565

 
Occupancy % (12)
 
95.7
%
 
96.2
%
 
95.7
%
 
94.7
%
 
94.9
%
 
COLORADO
 
 
 
 
 
 
 
 
 
 
 
Communities
 
7

 
7

 
7

 
7

 
7

 
Sites for development
 
304

 
304

 
304

 
304

 
304

 
Developed sites (12)
 
2,335

 
2,335

 
2,335

 
2,335

 
2,335

 
Occupied (12)
 
2,323

 
2,320

 
2,319

 
2,315

 
2,289

 
Occupancy % (12)
 
99.5
%
 
99.4
%
 
99.3
%
 
99.1
%
 
98.0
%
 
OTHER STATES
 
 
 
 
 
 
 
 
 
 
 
Communities
 
55

 
54

 
49

 
49

 
54

 
Sites for development
 
1,823

 
1,728

 
1,514

 
1,514

 
1,514

 
Developed sites (12)
 
14,415

 
14,337

 
13,683

 
13,657

 
14,705

 
Occupied (12)
 
13,991

 
13,912

 
13,237

 
13,142

 
13,938

 
Occupancy % (12)
 
97.1
%
 
97.0
%
 
96.7
%
 
96.2
%
 
94.8
%
 
TOTAL - PORTFOLIO
 
 
 
 
 
 
 
 
 
 
 
Communities
 
339

 
337

 
233

 
231

 
251

 
% Community age restricted
 
33.3
%
 
33.5
%
 
26.2
%
 
26.4
%
 
25.9
%
 
Sites for development
 
10,504

 
9,921

 
7,181

 
7,181

 
7,749

 
Developed sites (12)
 
100,778

 
100,638

 
79,763

 
79,241

 
83,825

 
Occupied (12)
 
96,915

 
96,689

 
76,149

 
75,310

 
78,531

 
Occupancy % (12)
 
96.2
%
 
96.1
%
 
95.5
%
 
95.0
%
 
93.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
TRANSIENT RV PORTFOLIO SUMMARY
 
 
 
 
 
 
 
 
 
 
 
    Location
 
 
 
 
 
 
 
 
 
 
 
Florida
 
7,232

 
6,990

 
2,664

 
2,823

 
2,915

 
Michigan
 
203

 
126

 
150

 
160

 
165

 
Texas
 
1,446

 
1,455

 
799

 
414

 
864

 
California
 
478

 
518

 
296

 
296

 
296

 
Arizona
 
1,047

 
1,055

 
1,096

 
1,087

 
1,053

 
Ontario
 
1,485

 
1,657

 
—

 
—

 
—

 
Indiana
 
501

 
501

 
501

 
501

 
501

 
Ohio
 
194

 
195

 
213

 
210

 
237

 
Maine
 
556

 
571

 
575

 
604

 
605

 
New York
 
484

 
483

 
489

 
499

 
511

 
New Jersey
 
1,047

 
1,084

 
995

 
981

 
987

 
Other States
 
1,801

 
1,864

 
2,099

 
2,092

 
2,055

 
Total transient RV sites
 
16,474

 
16,499

 
9,877

 
9,667

 
10,189

 


3rd Quarter 2016 Supplemental Information     18               Sun Communities, Inc.



Capital Improvements, Development, and Acquisitions     
(amounts in thousands except for *)
 
Recurring
 
 
 
 
 
 
 
 
 
 
 
Capital
Recurring
 
 
 
 
 
 
 
 
 
Expenditures
Capital
Lot
 
 
Expansion &
Revenue
 
 
Average/Site*

Expenditures (13)
 
Modifications (14)
 
Acquisitions (15)
 
Development (16)
 
Producing (17)
2014
 
$
227

 
$
18,077

 
$
9,414

 
$
785,624

 
$
22,196

 
$
1,454

2015
 
$
230

 
$
20,344

 
$
13,961

 
$
1,214,482

 
$
28,660

 
$
4,497

YTD 2016
 
$
149

 
$
13,252

 
$
13,799

 
$
1,757,151

 
$
34,346

 
$
1,853



3rd Quarter 2016 Supplemental Information     19               Sun Communities, Inc.

Operating Statistics for Manufactured Homes and Annual/Seasonal RV’s    

 
Resident
Net Leased
New Home
Pre-owned
Brokered
MARKETS
Move-outs
Sites (18)
Sales
Home Sales
Re-sales
Michigan
 
326

 
251

 
6

 
986

 
112

Florida
 
232

 
494

 
119

 
229

 
653

Texas
 
106

 
162

 
9

 
290

 
39

Indiana
 
44

 
84

 
—

 
160

 
5

Ohio
 
80

 
42

 
1

 
85

 
4

Arizona
 
37

 
94

 
26

 
17

 
93

Colorado
 
8

 
8

 
15

 
158

 
32

Other states
 
346

 
250

 
53

 
256

 
350

YTD ended September 30, 2016
 
1,179

 
1,385

 
229

 
2,181

 
1,288


 
Resident
Net Leased
New Home
Pre-owned
Brokered
TOTAL FOR YEAR ENDED
Move-outs 
Sites (18)
Sales
Home Sales
Re-sales
2015
 
1,344

 
1,905

 
273

 
2,210

 
1,244

2014
 
1,504

 
1,890

 
113

 
1,853

 
618


 
Resident
 
Resident
 
PERCENTAGE TRENDS
Move-outs
 
Re-sales
 
YTD 2016
 
1.9
%
 
6.5
%
2015
 
2.0
%
 
5.9
%
2014
 
2.6
%
 
5.0
%

3rd Quarter 2016 Supplemental Information     20               Sun Communities, Inc.

Footnotes and Definitions                        
(1)
Investors in and analysts following the real estate industry utilize funds from operations (FFO), net operating income (NOI), and recurring earnings before interest, tax, depreciation and amortization (Recurring EBITDA) as supplemental performance measures. We believe FFO, NOI, and Recurring EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation/amortization of real estate assets. NOI provides a measure of rental operations and does not factor in depreciation/amortization and non-property specific expenses such as general and administrative expenses. Recurring EBITDA, a metric calculated as EBITDA exclusive of certain nonrecurring items, provides a further tool to evaluate ability to incur and service debt and to fund dividends and other cash needs. In addition, FFO, NOI, and Recurring EBITDA are commonly used in various ratios, pricing multiples/yields and returns and valuation calculations used to measure financial position, performance and value.

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 period over period, reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from net income (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. The Company also uses FFO excluding certain items, which excludes certain gain and loss items that management considers unrelated to the operational and financial performance of our core business. We believe that this provides investors with another financial measure of our operating performance that is more comparable when evaluating period over period results.

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 that, when combined with measures computed in accordance with GAAP such as net income (loss), cash flow from operating activities, investing activities and financing activities, provide investors with an indication of our ability to service debt and to fund acquisitions and other expenditures. Other REITs may use different methods for calculating FFO, accordingly, our FFO may not be comparable to other REITs.

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. Because of the inclusion of items such as interest, depreciation, and amortization, the use of 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. 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

3rd Quarter 2016 Supplemental Information     21               Sun Communities, Inc.

costs, therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.

EBITDA is defined as NOI plus other income, plus (minus) equity earnings (loss) from affiliates, minus general and administrative expenses. EBITDA includes EBITDA from discontinued operations. The Company believes that net income (loss) is the most directly comparable GAAP measurement to EBITDA.

FFO, NOI, and EBITDA do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the repayment of principal on debt and payment of dividends and distributions. FFO, NOI, and EBITDA should not be considered as alternatives to net income (loss) (calculated in accordance with GAAP) for purposes of evaluating our operating performance, or cash flows (calculated in accordance with GAAP) as a measure of liquidity. FFO, NOI, and EBITDA as calculated by us may not be comparable to similarly titled, but differently calculated, measures of other REITs or to the definition of FFO published by NAREIT.

(2) The consideration amounts presented with respect to acquired communities represent the economic transaction and do not contemplate the fair value purchase accounting required by GAAP.

(3) This is a transferred asset transaction which has been classified as collateralized receivables and the cash received from this transaction has been classified as a secured borrowing. The interest income and interest expense accrue at the same rate/amount.

(4) These costs represent the first year expenses incurred to bring 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 are expected to become more significant in connection with the size of our acquisitions, and are therefore included as an adjustment to FFO in the three and nine months ended September 30, 2016. The Company incurred $0.5 million and $1.7 million of these first year expenses in the three and nine month periods ended September 30, 2015, respectively, and had a similar adjustment been made, FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per share excluding certain items would have been $1.06 and $2.86 for the three and nine months ended September 30, 2015, respectively.

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

(6) The renter's monthly payment includes the site rent and an amount attributable to the leasing of the home. The site rent is reflected in Real Property NOI. For purposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the Rental Program, and to assess the overall growth and performance of the Rental Program and financial impact on our operations.

(7) The coverage ratios are calculated using the trailing 12 months for the period ended and have been adjusted to exclude: depreciation and amortization; income taxes; interest expense; transaction costs; extinguishment of debt; income from affiliate transactions; gain on dispositions; and gain on settlement. See Statement of Operations on page 4 for detailed amounts.

(8) Three and nine months ended September 30, 2015 excludes $0.5 million and $1.7 million of first year expenses for properties acquired in late 2014 and 2015 incurred to bring the properties up to Sun's operating standards. These costs did not meet the Company's capitalization policy.

(9) Includes manufactured housing (MH) and annual/seasonal recreational vehicle (RV) sites, and excludes transient RV sites and recently completed but vacant expansion sites.

(10) Occupancy reflects current year gains from expansion sites and the conversion of transient RV guests to annual/seasonal RV contracts as vacant in 2015.

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

(12) Includes MH and annual/seasonal RV sites, and excludes transient RV sites.

(13) Includes capital expenditures necessary to maintain asset quality, including purchasing and replacing assets used to operate the community. These capital expenditures include items such as: major road, driveway, and pool improvements; clubhouse

3rd Quarter 2016 Supplemental Information     22               Sun Communities, Inc.

renovations; adding or replacing street lights; playground equipment; signage; maintenance facilities; manager housing and property vehicles. The minimum capitalized amount is five hundred dollars.

(14) Includes capital expenditures which improve the asset quality of the community. These costs are incurred when an existing older home moves out, and the site is prepared for a new home, more often than not, a multi-sectional home. These activities which are mandated by strict manufacturer’s installation requirements and state building code include items such as new foundations, driveways, and utility upgrades.

(15) Acquisitions represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. Acquisitions also include deferred maintenance identified during due diligence and those capital improvements necessary to bring the community up to Sun’s standards. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, they sometimes require up to twelve months after closing to complete.

(16) Expansion and development costs consist primarily of construction costs and costs necessary to complete home site improvements.

(17)
Capital costs related to revenue generating activities, consisting primarily of garages, sheds, and sub-metering of water, sewer and electricity. Revenue generating attractions at our RV resorts are also included here and, occasionally, a special capital project requested by residents and accompanied by an extra rental increase will be classified as revenue producing.

(18) Net leased sites do not include occupied sites acquired in that year.




3rd Quarter 2016 Supplemental Information     23               Sun Communities, Inc.