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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: February 23, 2017
(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 23, 2017, 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, 2016, and certain other information.

The Company will hold an investor conference call and webcast at 11:00 a.m. ET on February 23, 2017 to disclose and discuss the financial results for the period ended December 31, 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 February 23, 2017






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 23, 2017
 
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 23, 2017
 
 
 



Exhibit


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Table of Contents                    
    

            
Summary - Earnings Press Release
i - vi
 
 
Investor Information
 
 
Portfolio Overview
 
 
Financial Information
 
Balance Sheets
Statements of Operations
4 - 6
Outstanding Securities
Reconciliations to Non-GAAP Financial Measures
Reconciliation of Net (Loss) Income to Funds from Operations
Reconciliation of Recurring EBITDA to Net (Loss) Income
Reconciliation of Net Operating Income to Net (Loss) Income
Non-GAAP and Other Financial Measures
Financial Highlights
Debt Analysis
 
 
Selected Financial Information
 
Statement of Operations – Same Community
Rental Program Summary
Home Sales Summary
Acquisitions Summary
 
 
Other Information
 
Property Summary
19 - 20
Capital Improvements, Development, and Acquisitions
Operating Statistics for Manufactured Homes and Annual/Seasonal RV’s
Footnotes and Definitions
23 - 25
 
 



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NEWS RELEASE
February 23, 2017

Sun Communities, Inc. Reports 2016 Fourth Quarter Results

Southfield, Michigan, February 23, 2017 – Sun Communities, Inc. (NYSE: SUI) (the "Company"), a real estate investment trust ("REIT") that owns and operates, or has an interest in, manufactured housing ("MH") and recreational vehicle ("RV") communities, today reported its fourth quarter results.

Financial Results for the Quarter and Year Ended December 31, 2016

For the quarter ended December 31, 2016, total revenues increased $50.4 million, or 30.0 percent, to $218.6 million compared to $168.2 million for the same period in 2015. Net loss attributable to Common Stockholders was $1.6 million, or $0.02 per diluted common share, as compared to net income attributable to Common Stockholders of $89.4 million, or $1.56 per diluted common share, for the same period in 2015.

For the year ended December 31, 2016, total revenues increased $159.1 million, or 23.6 percent, to $833.8 million compared to $674.7 million for the same period in 2015. Net income attributable to Common Stockholders for the year ended December 31, 2016 was $17.4 million, or $0.26 per diluted common share, as compared to $137.3 million, or $2.52 per diluted common share, for the same period in 2015.

Non-GAAP Financial Measures and Portfolio Performance

•
For the quarter ended December 31, 2016, Funds from Operations ("FFO")(1) excluding certain items was $0.91 per diluted share and OP unit ("Share") as compared to $0.81 in the prior year, an increase of 12.3 percent.

•
For the year ended December 31, 2016, FFO(1) excluding certain items was $3.79 per Share as compared to $3.63 in the prior year, an increase of 4.4 percent.

•
Home sales increased by 27.8 percent as compared to the year ended December 31, 2015.

•
Revenue producing sites increased by 301 sites for the quarter bringing total portfolio occupancy to 96.2 percent, up 120 basis points from year end 2015.  

•
For the quarter, same community Net Operating Income ("NOI")(1) increased by 9.1 percent as compared to the three months ended December 31, 2015.

“Sun’s most recent results demonstrate the ongoing power of our platform.  We achieved industry leading internal growth,  increased or maintained occupancy for the 20th consecutive quarter and sold a record number of homes into our communities, while integrating our largest acquisition to date,” said Gary A. Shiffman, Chairman and Chief Executive Officer.  “As we proceed through 2017, we are keenly focused on continuing to deliver exceptional results to our shareholders.  Along with continuing to drive NOI growth from our core portfolio, we anticipate the most meaningful opportunities will come from value-add assets that we can reposition to deliver superior returns over the long term.   Sun is well positioned to continue our track record of value creation.”


i

OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy increased to 96.2 percent at December 31, 2016 from 95.0 percent at December 31, 2015. During the fourth quarter of 2016, revenue producing sites increased by 301 sites, as compared to 548 revenue producing sites gained in the fourth quarter of 2015.

Revenue producing sites gained during the year ended December 31, 2016 were 1,686 as compared to 1,905 revenue producing sites gained for the same period in 2015.

Same Community Results

For the 219 communities owned throughout 2016 and 2015, fourth quarter 2016 total revenues increased 6.2 percent and total expenses decreased 0.9 percent, resulting in an increase in NOI(1) of 9.1 percent over the fourth quarter of 2015.  Same community occupancy increased to 96.6 percent at December 31, 2016 from 94.7 percent at December 31, 2015.

For the year ended December 31, 2016, total revenues increased 6.1 percent and total expenses increased 3.7 percent, resulting in an increase in NOI(1) of 7.1 percent over the year ended December 31, 2015.

Home Sales

Total homes sales were 762 for the fourth quarter of 2016 as compared to 738 total homes sold during the same period in 2015.

During the year ended December 31, 2016, the Company sold 3,172 homes as compared to the 2,483 homes sold during the same period ending 2015, resulting in an additional 689 homes sold during 2016, or a 27.8 percent increase.

Rental homes sales, which are included in total home sales, were 231 and 297 for the three months ended and 1,089 and 908 for the year ended December 31, 2016 and 2015, respectively.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

During the quarter ended December 31, 2016, 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. The Company repaid mortgage loans totaling $79.1 million in the fourth quarter and $28.9 million subsequent to year end, substantially addressing all of its 2017 maturities.

As of December 31, 2016, the Company had approximately $3.1 billion of debt outstanding. The weighted average interest rate was 4.48 percent and the weighted average maturity was 8.5 years. The Company had $8.2 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month EBITDA(1) ratio was 7.5 times.


ii

Equity Transactions

During the fourth quarter of 2016 and in January 2017, the Company sold 300,000 shares of common stock through its At-the-Market equity sales program at a weighted average price of $76.43 per share. Net proceeds from the sales were $22.6 million.

PORTFOLIO ACTIVITY

Acquisitions (2) 

As noted in its third quarter earnings release, the Company acquired two communities shortly after September 30, 2016, for total consideration of $9.8 million. These communities, located in Colorado and New York, contain 495 RV sites and have expansion potential of approximately 350 sites.

Additionally, during the fourth quarter, the Company acquired a community adjacent to one of its existing communities in Florida, for consideration of $3.4 million. This community has 178 RV sites.

These communities 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 2017

The Company estimates full year 2017 FFO(1) per Share to be in the range of $4.16 to $4.24 per Share and the first quarter 2017 to be in the range of $1.06 to $1.08 per Share. Guidance does not include prospective acquisitions or capital markets activity.

Total Portfolio
Number of communities:
 
341
 
341
 
 
 
 
 
 
 
 
 
 
 
2017 Guidance
 
2016 Actual
 
 
 
 
(in Millions)
 
(in Millions)
 
% Change
  MH Revenues
 
$479.3 - $479.9
 
 
 
 
  RV Seasonal/Annual
 
109.0 - 109.5
 
 
 
 
  RV Transient
 
74.5 - 75.1
 
 
 
 
  Other Revenue
 
69.0 - 69.5
 
 
 
 
Income from real property
 
$731.8 - $734.0
 
$
620.9

 
17.9% - 18.2%
Real estate taxes
 
52.7 - 52.6
 
44.3

 
19.0% - 18.7%
Property operating and maintenance
 
208.0 - 205.6
 
173.3

 
20.0% - 18.6%
Total property operating expenses
 
$260.7 - $258.2
 
$
217.6

 
19.8% - 18.7%
Net operating income ("NOI")(1)
 
$471.1 - $475.8
 
$
403.3

 
16.8% - 18.0%

iii

 
 
2017 Guidance
 
2016 Actual
 
 
 
 
(in Millions, except share data)
 
(in Millions, except share data)
 
% Change
Rental program, net
 
$25.9 - $26.0
 
$
23.5

 
10.2% - 10.6%
Home sales gross profit
 
32.0 - 32.8
 
30.1

 
6.3% - 9.0%
Ancillary revenues, net
 
10.7 - 10.8
 
10.0

 
7.0% - 8.0%
Interest, brokerage commissions, and other revenues, net
 
24.4 - 24.5
 
21.2

 
15.1% - 15.6%
Home selling expenses
 
13.0 - 12.9
 
9.7

 
34.0% - 33.0%
General and administrative
 
72.7 - 72.0
 
64.1

 
13.4% - 12.3%
 
 
 
 
 
 
 
Weighted average common shares outstanding, fully diluted
 
 78.1
 
 
 
 
 
 
 
 
 
 
 
Q1 FFO(1) per Share
 
$1.06 - $1.08
 
 
 
 
2017 FFO(1) per Share
 
$4.16 - $4.24
 
 
 
 

Supplementary Information:
 
 
1Q17
 
2Q17
 
3Q17
 
4Q17
Seasonality of FFO(1)
 
25.5%
 
22.3%
 
28.3%
 
23.9%
 
 
2017
New home sales volume
 
470 - 485

Pre-owned home sales volume
 
3,000 - 3,100

Increase in revenue producing sites
 
2,600 - 2,800

Weighted average monthly rent increase
 
3.6
%
Gross profit from rental home sales included above (non-FFO) (in millions)
 
$15.6

Same Community Portfolio:
Number of communities
 
231
 
231
 
 
 
 
 
 
 
 
 
 
 
2017 Guidance
 
2016 Actual
 
 
 
 
(in Millions)
 
(in Millions)
 
% Change
  MH revenues
 
$401.9 - $402.4
 
 
 
 
  RV seasonal/annual
 
54.1 - 54.3
 
 
 
 
  RV transient
 
47.3 - 47.6
 
 
 
 
  Other revenue
 
28.7 - 28.9
 
 
 
 
Income from real property
 
$532.0 - $533.2
 
$
504.0

 
5.6% - 5.8%
Real estate taxes
 
39.1 - 39.0
 
36.8

 
6.3% - 6.0%
Property operating and maintenance
 
112.2 - 112.1
 
109.3

 
2.7% - 2.6%
Total property operating expenses
 
$151.3 - $151.1
 
$
146.1

 
3.6% - 3.4%
Net operating income ("NOI")(1)
 
$380.7 - $382.1
 
$
357.9

 
6.4% - 6.8%

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."

iv


EARNINGS CONFERENCE CALL

A conference call to discuss fourth quarter operating results will be held on Thursday, February 23, 2017 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 March 9, 2017 and can be accessed toll-free by calling 844-512-2921 or by calling 412-317-6671. The Conference ID number for the call and the replay is 13652683. 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 December 31, 2016, owned or had an interest in a portfolio of 341 communities comprising approximately 117,000 developed sites in 29 states and Ontario, Canada.

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. Attn: Investor Relations, 27777 Franklin Road, Ste. 200, Southfield, MI 48034.


v


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, changes in foreign currency exchange rates, the ability of manufactured home buyers to obtain financing and the level of repossessions by manufactured home lenders. Further details of potential risks that may affect the Company are described in our periodic reports filed with the U.S. Securities and Exchange Commission, including in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2016.

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.


vi

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
 
Ryan Burke
 
 
 
(949) 640-8780
 
 
 
rburke@greenstreetadvisors.com
 
 
 
 
 
Robert W. Baird & Co.
 
Drew Babin
 
 
 
(610) 238-6634
 
 
 
dbabin@rwbaird.com
 
 
 
 
 
Wells Fargo
 
Todd Stender
 
 
 
(562) 637-1371
 
 
 
todd.stender@wellsfargo.com
 
 
 
 
 
 
 
 
INQUIRIES
 
 
 
 
 
 
 
Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media, or
any prospective investor. Please address all inquiries to our Investor Relations department.
 
 
 
 
 
At Our Website
 
www.suncommunities.com
 
 
 
 
 
By Email
 
investorrelations@suncommunities.com
 
 
 
 
 
By Phone
 
(248) 208-2500

4th Quarter 2016 Supplemental Information     1          Sun Communities, Inc.

Portfolio Overview                                
(As of December 31, 2016)

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4th Quarter 2016 Supplemental Information     2          Sun Communities, Inc.

Balance Sheets                                                
(amounts in thousands)
 
 
Quarter Ended
 
 
12/31/2016
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
ASSETS:
 
 
 
 
 
 
 
 
 
 
Land
 
$
1,027,976

 
$
1,072,964

 
$
458,349

 
$
456,380

 
$
451,340

Land improvements and buildings
 
4,825,043

 
4,682,920

 
5,294,663

 
3,586,969

 
3,535,909

Rental homes and improvements
 
489,633

 
485,340

 
477,875

 
469,217

 
460,480

Furniture, fixtures and equipment
 
130,127

 
125,603

 
107,123

 
104,855

 
102,746

Land held for future development
 
23,560

 
23,497

 
23,497

 
23,047

 
23,047

Investment property
 
6,496,339

 
6,390,324

 
6,361,507

 
4,640,468

 
4,573,522

Accumulated depreciation
 
(1,026,858
)
 
(977,486
)
 
(928,882
)
 
(889,941
)
 
(852,407
)
Investment property, net
 
5,469,481

 
5,412,838

 
5,432,625

 
3,750,527

 
3,721,115

Cash and cash equivalents
 
8,164

 
69,829

 
31,441

 
410,408

 
45,086

Inventory of manufactured homes
 
21,632

 
24,147

 
29,044

 
16,636

 
14,828

Notes and other receivables, net
 
81,179

 
87,856

 
76,466

 
54,124

 
47,972

Collateralized receivables, net (3)
 
143,870

 
143,888

 
144,017

 
142,944

 
139,768

Other assets, net
 
146,450

 
166,148

 
109,598

 
188,247

 
213,030

Total assets, net
 
$
5,870,776

 
$
5,904,706

 
$
5,823,191

 
$
4,562,886

 
$
4,181,799

LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Mortgage loans payable
 
$
2,819,567

 
$
2,854,831

 
$
2,792,021

 
$
2,114,818

 
$
2,125,267

Secured borrowings (3)
 
144,477

 
144,522

 
144,684

 
143,664

 
140,440

Preferred OP units - mandatorily redeemable
 
45,903

 
45,903

 
45,903

 
45,903

 
45,903

Lines of credit
 
100,095

 
57,737

 
357,721

 
58,065

 
24,687

Distributions payable
 
51,896

 
51,100

 
47,992

 
45,351

 
41,265

Other liabilities
 
279,667

 
275,650

 
257,423

 
184,102

 
184,859

Total liabilities
 
3,441,605

 
3,429,743

 
3,645,744

 
2,591,903

 
2,562,421

Series A-4 preferred stock
 
50,227

 
50,227

 
50,227

 
61,732

 
61,732

Series A-4 preferred OP units
 
16,717

 
19,906

 
20,266

 
20,762

 
21,065

STOCKHOLDERS' EQUITY:
 
 
 
 
 
 
 
 
 
 
Series A preferred stock
 
34

 
34

 
34

 
34

 
34

Common stock
 
732

 
730

 
686

 
646

 
584

Additional paid-in capital
 
3,321,441

 
3,313,905

 
2,980,382

 
2,706,657

 
2,319,314

Accumulated other comprehensive loss
 
(3,181
)
 
(4,876
)
 
1

 
—

 
—

Distributions in excess of accumulated earnings
 
(1,023,415
)
 
(975,511
)
 
(947,988
)
 
(896,896
)
 
(864,122
)
       Total SUI stockholders' equity
 
2,295,611

 
2,334,282

 
2,033,115

 
1,810,441

 
1,455,810

Noncontrolling interests:
 
 
 
 
 
 
 
 
 
 
Common and preferred OP units
 
69,598

 
73,284

 
76,166

 
80,018

 
82,538

Consolidated variable interest entities
 
(2,982
)
 
(2,736
)
 
(2,327
)
 
(1,970
)
 
(1,767
)
Total noncontrolling interest
 
66,616

 
70,548

 
73,839

 
78,048

 
80,771

Total stockholders' equity
 
2,362,227

 
2,404,830

 
2,106,954

 
1,888,489

 
1,536,581

Total liabilities & stockholders' equity
 
$
5,870,776

 
$
5,904,706

 
$
5,823,191

 
$
4,562,886

 
$
4,181,799



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

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

 
Quarter Ended
 
12/31/2016
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
REVENUES:
 
 
 
 
 
 
 
 
 
Income from real property (excluding transient revenue)
$
156,533

 
$
158,020

 
$
129,117

 
$
119,084

 
$
117,604

Transient revenue
10,824

 
26,304

 
10,884

 
10,151

 
5,568

Revenue from home sales
28,520

 
31,211

 
26,039

 
24,737

 
25,169

Rental home revenue
12,084

 
12,031

 
11,957

 
11,708

 
11,756

Ancillary revenues
4,982

 
16,446

 
7,383

 
4,613

 
3,576

Interest
4,791

 
4,705

 
4,672

 
3,945

 
4,074

Brokerage commissions and other revenues, net
900

 
984

 
747

 
406

 
491

Total revenues
218,634

 
249,701

 
190,799

 
174,644

 
168,238

 
 
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
 
 
Property operating and maintenance
47,917

 
57,089

 
37,067

 
31,201

 
33,360

Real estate taxes
12,184

 
12,384

 
10,153

 
9,585

 
8,683

Cost of home sales
21,617

 
21,935

 
18,684

 
18,184

 
19,296

Rental home operating and maintenance
6,657

 
6,350

 
5,411

 
5,876

 
6,841

Ancillary expenses
4,728

 
9,449

 
5,599

 
3,649

 
3,888

Home selling expenses
2,504

 
2,643

 
2,460

 
2,137

 
2,079

General and administrative
17,177

 
16,575

 
16,543

 
13,792

 
10,511

Transaction costs
4,023

 
4,191

 
20,979

 
2,721

 
4,653

Depreciation and amortization
62,205

 
61,483

 
49,670

 
48,412

 
47,530

Extinguishment of debt
1,127

 
—

 
—

 
—

 
—

Interest
30,641

 
33,800

 
28,428

 
26,294

 
28,066

Interest on mandatorily redeemable preferred OP units
789

 
789

 
787

 
787

 
790

Total expenses
211,569

 
226,688

 
195,781

 
162,638

 
165,697

Income / (loss) before other items
7,065

 
23,013

 
(4,982
)
 
12,006

 
2,541

Other expenses, net (4)
(5,848
)
 
—

 
—

 
—

 
—

Gain on disposition of properties, net
—

 
—

 
—

 
—

 
98,430

Current tax (expense) / benefit
(116
)
 
(283
)
 
(56
)
 
(228
)
 
71

Deferred tax benefit / (expense)
400

 
—

 
—

 
—

 
(1,000
)
Income from affiliate transactions
—

 
500

 
—

 
—

 
—

Net income / (loss)
1,501

 
23,230

 
(5,038
)
 
11,778

 
100,042

Less: Preferred return to preferred OP units
(1,213
)
 
(1,257
)
 
(1,263
)
 
(1,273
)
 
(1,281
)
Less: Amounts attributable to noncontrolling interests
310

 
(879
)
 
695

 
(276
)
 
(6,922
)
Less: Preferred stock distribution
(2,198
)
 
(2,197
)
 
(2,197
)
 
(2,354
)
 
(2,440
)
NET (LOSS) / INCOME ATTRIBUTABLE TO SUI
$
(1,600
)

$
18,897


$
(7,803
)

$
7,875


$
89,399

Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
72,277

 
68,655

 
64,757

 
57,736

 
56,181

Diluted
72,685

 
69,069

 
64,757

 
58,126

 
57,639

Earnings / (loss) per share:
 
 
 
 
 
 
 
 
 
Basic
$
(0.02
)
 
$
0.27

 
$
(0.12
)
 
$
0.14

 
$
1.57

Diluted
$
(0.02
)
 
$
0.27

 
$
(0.12
)
 
$
0.14

 
$
1.56




4th Quarter 2016 Supplemental Information     4          Sun Communities, Inc.

Statements of Operations - Quarter to Date Comparison                        
(amounts in thousands, except per share amounts)
 
Three Months Ended December 31,
 
2016
 
2015
 
Change
 
% Change
 
REVENUES:
 
 
 
 
 
 
 
 
Income from real property (excluding transient revenue)
$
156,533

 
$
117,604

 
$
38,929

 
33.1
 %
 
Transient revenue
10,824

 
5,568

 
5,256

 
94.4
 %
 
Revenue from home sales
28,520

 
25,169

 
3,351

 
13.3
 %
 
Rental home revenue
12,084

 
11,756

 
328

 
2.8
 %
 
Ancillary revenues
4,982

 
3,576

 
1,406

 
39.3
 %
 
Interest
4,791

 
4,074

 
717

 
17.6
 %
 
Brokerage commissions and other revenues, net
900

 
491

 
409

 
83.3
 %
 
Total revenues
218,634

 
168,238

 
50,396

 
30.0
 %
 
 
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
 
Property operating and maintenance
47,917

 
33,360

 
14,557

 
43.6
 %
 
Real estate taxes
12,184

 
8,683

 
3,501

 
40.3
 %
 
Cost of home sales
21,617

 
19,296

 
2,321

 
12.0
 %
 
Rental home operating and maintenance
6,657

 
6,841

 
(184
)
 
(2.7
)%
 
Ancillary expenses
4,728

 
3,888

 
840

 
21.6
 %
 
Home selling expenses
2,504

 
2,079

 
425

 
20.4
 %
 
General and administrative
17,177

 
10,511

 
6,666

 
63.4
 %
 
Transaction costs
4,023

 
4,653

 
(630
)
 
(13.5
)%
 
Depreciation and amortization
62,205

 
47,530

 
14,675

 
30.9
 %
 
Extinguishment of debt
1,127

 
—

 
1,127

 
N/A

 
Interest
30,641

 
28,066

 
2,575

 
9.2
 %
 
Interest on mandatorily redeemable preferred OP units
789

 
790

 
(1
)
 
(0.1
)%
 
Total expenses
211,569

 
165,697

 
45,872

 
27.7
 %
 
Income before other items
7,065

 
2,541

 
4,524

 
178.0
 %
 
Other expenses, net (4)
(5,848
)
 
—

 
(5,848
)
 
N/A

 
Gain on disposition of properties, net
—

 
98,430

 
(98,430
)
 
(100.0
)%
 
Current tax (expense) / benefit
(116
)
 
71

 
(187
)
 
(263.4
)%
 
Deferred tax benefit / (expense)
400

 
(1,000
)
 
1,400

 
(140.0
)%
 
Net income
1,501

 
100,042

 
(98,541
)
 
(98.5
)%
 
Less: Preferred return to preferred OP units
(1,213
)
 
(1,281
)
 
68

 
5.3
 %
 
Less: Amounts attributable to noncontrolling interests
310

 
(6,922
)
 
7,232

 
104.5
 %
 
Less: Preferred stock distribution
(2,198
)
 
(2,440
)
 
242

 
9.9
 %
 
NET (LOSS) / INCOME ATTRIBUTABLE TO SUI
$
(1,600
)

$
89,399


$
(90,999
)
 
(101.8
)%
 
Weighted average common shares outstanding:
 
 
 
 
 
 

 
Basic
72,277

 
56,181

 
16,096

 
28.7
 %
 
Diluted
72,685

 
57,639

 
15,046

 
26.1
 %
 
Earnings / (loss) per share:
 
 
 
 
 
 

 
Basic
$
(0.02
)
 
$
1.57

 
$
(1.59
)
 
(101.3
)%
 
Diluted
$
(0.02
)
 
$
1.56

 
$
(1.58
)
 
(101.3
)%
 




4th Quarter 2016 Supplemental Information     5          Sun Communities, Inc.

Statements of Operations - Year to Date Comparison                            
(amounts in thousands, except per share amounts)
 
Year Ended December 31,
 
2016
 
2015
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
Income from real property (excluding transient revenue)
$
562,754

 
$
467,114

 
$
95,640

 
20.5
 %
Transient revenue
58,163

 
38,964

 
19,199

 
49.3
 %
Revenue from home sales
110,507

 
79,728

 
30,779

 
38.6
 %
Rental home revenue
47,780

 
46,236

 
1,544

 
3.3
 %
Ancillary revenues
33,424

 
24,532

 
8,892

 
36.3
 %
Interest
18,113

 
15,938

 
2,175

 
13.7
 %
Brokerage commissions and other revenues, net
3,037

 
2,219

 
818

 
36.9
 %
Total revenues
833,778

 
674,731

 
159,047

 
23.6
 %
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
Property operating and maintenance
173,274

 
135,797

 
37,477

 
27.6
 %
Real estate taxes
44,306

 
34,714

 
9,592

 
27.6
 %
Cost of home sales
80,420

 
58,941

 
21,479

 
36.4
 %
Rental home operating and maintenance
24,294

 
24,956

 
(662
)
 
(2.7
)%
Ancillary expenses
23,425

 
17,519

 
5,906

 
33.7
 %
Home selling expenses
9,744

 
7,476

 
2,268

 
30.3
 %
General and administrative
64,087

 
47,455

 
16,632

 
35.1
 %
Transaction costs
31,914

 
17,803

 
14,111

 
79.3
 %
Depreciation and amortization
221,770

 
177,637

 
44,133

 
24.8
 %
Extinguishment of debt
1,127

 
2,800

 
(1,673
)
 
(59.8
)%
Interest
119,163

 
107,659

 
11,504

 
10.7
 %
Interest on mandatorily redeemable preferred OP units
3,152

 
3,219

 
(67
)
 
(2.1
)%
Total expenses
796,676

 
635,976

 
160,700

 
25.3
 %
Income before other items
37,102

 
38,755

 
(1,653
)
 
(4.3
)%
Other expenses, net (4)
(5,848
)
 
—

 
(5,848
)
 
N/A

Gain on disposition of properties, net
—

 
125,376

 
(125,376
)
 
(100.0
)%
Current tax expense
(683
)
 
(158
)
 
(525
)
 
(332.3
)%
Deferred tax benefit / (expense)
400

 
(1,000
)
 
1,400

 
140.0
 %
Income from affiliate transactions
500

 
7,500

 
(7,000
)
 
(93.3
)%
Net income
31,471

 
170,473

 
(139,002
)
 
(81.5
)%
Less: Preferred return to preferred OP units
(5,006
)
 
(4,973
)
 
(33
)
 
(0.7
)%
Less: Amounts attributable to noncontrolling interests
(150
)
 
(10,054
)
 
9,904

 
98.5
 %
Less: Preferred stock distribution
(8,946
)
 
(13,793
)
 
4,847

 
35.1
 %
Less: Preferred stock redemption costs
—

 
(4,328
)
 
4,328

 
N/A

NET INCOME ATTRIBUTABLE TO SUI
$
17,369

 
$
137,325

 
$
(119,956
)
 
(87.4
)%
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
65,856

 
53,686

 
$
12,170

 
22.7
 %
Diluted
66,321

 
53,702

 
$
12,619

 
23.5
 %
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.27

 
$
2.53

 
$
(2.26
)
 
(89.3
)%
Diluted
$
0.26

 
$
2.52

 
$
(2.26
)
 
(89.7
)%


4th Quarter 2016 Supplemental Information     6          Sun Communities, Inc.

Summary of Securities Outstanding as of December 31, 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
367
 
2.4390
 
895
 
$100
 
6.0%
Series A-3 preferred OP Units
40
 
1.8605
 
74
 
$100
 
4.5%
Series A-4 preferred OP Units
634
 
0.4444
 
282
 
$25
 
6.5%
Series C preferred OP Units
333
 
1.1100
 
370
 
$100
 
4.0%
Common OP Units
2,759
 
1.0000
 
2,759
 
N/A
 
Mirrors the Common Share distributions
Series A-4 cumulative convertible Preferred Stock
1,682
 
0.4444
 
747
 
$25
 
6.5%
 
 
 
 
 
 
 
 
 
 
Non-Convertible Securities
 
 
 
 
 
 
 
 
 
Preferred Stock ( SUI-PrA)
3,400
 
N/A
 
N/A
 
$25
 
7.125%
 
 
 
 
 
 
 
 
 
 
Common Shares
73,206
 
N/A
 
N/A
 
N/A
 
$2.60*
* Annual distribution is based on the last quarter distribution annualized.


4th Quarter 2016 Supplemental Information     7          Sun Communities, Inc.



















Reconciliations to Non-GAAP Financial Measures


4th Quarter 2016 Supplemental Information     8          Sun Communities, Inc.

Reconciliation of Net (Loss) Income Attributable to Sun Communities, Inc. Common Stockholders to Funds from Operations                            
(amounts in thousands except for per share data)
 
Three Months Ended 
 December 31,
 
Year Ended 
 December 31,
 
2016
 
2015
 
2016
 
2015
Net (loss) income attributable to Sun Communities, Inc. common stockholders
$
(1,600
)
 
$
89,399

 
$
17,369

 
$
137,325

Adjustments:
 

 
 

 
 

 
 

Preferred return to preferred OP units
604

 
631

 
2,462

 
2,612

Amounts attributable to noncontrolling interests
(296
)
 
6,941

 
(41
)
 
9,644

Depreciation and amortization
62,351

 
47,801

 
221,576

 
178,048

Gain on disposition of properties, net
—

 
(98,430
)
 
—

 
(125,376
)
Gain on disposition of assets, net
(3,487
)
 
(3,060
)
 
(15,713
)
 
(10,125
)
Funds from operations ("FFO") attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6)

57,572

 
43,282

 
225,653

 
192,128

Adjustments:
 
 
 
 
 
 
 
Transaction costs
4,023

 
4,653

 
31,914

 
17,803

Other acquisition related costs (5)
1,861

 
—

 
3,328

 
—

Income from affiliate transactions
—

 
—

 
(500
)
 
(7,500
)
Foreign currency exchange (4)
5,005

 
—

 
5,005

 
—

Contingent liability re-measurement (4)
181

 
—

 
181

 
—

Gain on acquisition of property (4)

(510
)
 
—

 
(510
)
 
—

Hurricane related costs (4)
1,172

 
—

 
1,172

 
—

Preferred stock redemption costs
—

 
—

 
—

 
4,328

Extinguishment of debt
1,127

 
—

 
1,127

 
2,800

Debt premium write-off
(839
)
 
—

 
(839
)
 
—

Deferred tax (benefit) expense
(400
)
 
1,000

 
(400
)
 
1,000

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items (1) (6)

$
69,192

 
$
48,935

 
$
266,131

 
$
210,559

 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic:
72,277

 
56,181

 
65,856

 
53,686

Add:
 
 
 
 
 
 
 
Common stock issuable upon conversion of stock options
1

 
13

 
8

 
16

Restricted stock
407

 
423

 
457

 
411

Common OP units
2,793

 
2,863

 
2,844

 
2,803

Common stock issuable upon conversion of Series A-1 preferred OP units
901

 
947

 
925

 
988

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

 
75

 
75

 
75

Weighted average common shares outstanding - fully diluted
76,454

 
60,502

 
70,165

 
57,979

 
 
 
 
 
 
 
 
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (6) per share - fully diluted

$
0.75

 
$
0.72

 
$
3.22

 
$
3.31

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (6) per share excluding certain items - fully diluted

$
0.91

 
$
0.81

 
$
3.79

 
$
3.63





4th Quarter 2016 Supplemental Information     9          Sun Communities, Inc.

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

The following table reconciles Recurring EBITDA to consolidated net (loss) income:
 
Three Months Ended December 31,
 
Year Ended 
 December 31,
 
2016
 
2015
 
2016
 
2015
RECURRING EBITDA (1)
$
105,850

 
$
83,580

 
$
414,228

 
$
347,873

Interest
30,641

 
28,066

 
119,163

 
107,659

Interest on mandatorily redeemable preferred OP units
789

 
790

 
3,152

 
3,219

Depreciation and amortization
62,205

 
47,530

 
221,770

 
177,637

Extinguishment of debt
1,127

 
—

 
1,127

 
2,800

Transaction costs
4,023

 
4,653

 
31,914

 
17,803

Gain on disposition of properties, net
—

 
(98,430
)
 
—

 
(125,376
)
Other expenses, net
5,848

 
—

 
5,848

 
—

Current tax expense / (benefit)
116

 
(71
)
 
683

 
158

Deferred tax (benefit) / expense
(400
)
 
1,000

 
(400
)
 
1,000

Income from affiliate transactions
—

 
—

 
(500
)
 
(7,500
)
Net income
1,501

 
100,042

 
31,471

 
170,473

Less: Preferred return to preferred OP units
1,213

 
1,281

 
5,006

 
4,973

Less: Amounts attributable to noncontrolling interests
(310
)
 
6,922

 
150

 
10,054

Net income attributable to Sun Communities, Inc.
598

 
91,839

 
26,315

 
155,446

Less: Preferred stock distributions
2,198

 
2,440

 
8,946

 
13,793

Less: Preferred stock redemption costs
—

 
—

 
—

 
4,328

Net (loss) / income attributable to Sun Communities, Inc., common stockholders
$
(1,600
)
 
$
89,399

 
$
17,369

 
$
137,325




4th Quarter 2016 Supplemental Information     10          Sun Communities, Inc.

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

The following table reconciles net operating income to consolidated net (loss) income:
 
Three Months Ended December 31,
 
Year Ended 
 December 31,
 
2016
 
2015
 
2016
 
2015
Real Property NOI
$
107,256

 
$
81,129

 
$
403,337

 
$
335,567

Rental Program NOI
20,863

 
20,427

 
85,086

 
83,232

Home Sales NOI/Gross Profit
6,903

 
5,873

 
30,087

 
20,787

Ancillary NOI/Gross Profit (Loss)
254

 
(312
)
 
9,999

 
7,013

Site rent from Rental Program (included in Real Property NOI) (7)
(15,436
)
 
(15,512
)
 
(61,600
)
 
(61,952
)
NOI/Gross profit
119,840

 
91,605

 
466,909

 
384,647

Adjustments to arrive at net (loss) income:
 
 
 
 
 
 
 
Other revenues
5,691

 
4,565

 
21,150

 
18,157

Home selling expenses
(2,504
)
 
(2,079
)
 
(9,744
)
 
(7,476
)
General and administrative
(17,177
)
 
(10,511
)
 
(64,087
)
 
(47,455
)
Transaction costs
(4,023
)
 
(4,653
)
 
(31,914
)
 
(17,803
)
Depreciation and amortization
(62,205
)
 
(47,530
)
 
(221,770
)
 
(177,637
)
Extinguishment of debt
(1,127
)
 
—

 
(1,127
)
 
(2,800
)
Interest expense
(31,430
)
 
(28,856
)
 
(122,315
)
 
(110,878
)
Other expenses, net
(5,848
)
 
—

 
(5,848
)
 
—

Gain on disposition of properties, net
—

 
98,430

 
—

 
125,376

Current tax (expense) / benefit
(116
)
 
71

 
(683
)
 
(158
)
Deferred tax benefit / (expense)
400

 
(1,000
)
 
400

 
(1,000
)
Income from affiliate transactions
—

 
—

 
500

 
7,500

Net income
1,501

 
100,042

 
31,471

 
170,473

Less:  Preferred return to preferred OP units
1,213

 
1,281

 
5,006

 
4,973

Less:  Amounts attributable to noncontrolling interests
(310
)
 
6,922

 
150

 
10,054

Net income attributable to Sun Communities, Inc.
598

 
91,839

 
26,315

 
155,446

Less: Preferred stock distributions
2,198

 
2,440

 
8,946

 
13,793

Less: Preferred stock redemption costs
—

 
—

 
—

 
4,328

Net (loss) / income attributable to Sun Communities, Inc. common stockholders
$
(1,600
)
 
$
89,399

 
$
17,369

 
$
137,325






4th Quarter 2016 Supplemental Information     11          Sun Communities, Inc.






















Non-GAAP and Other Financial Measures

















4th Quarter 2016 Supplemental Information     12          Sun Communities, Inc.

Financial Highlights                                                
(amounts in thousands, except per share data)
 
Quarter Ended
 
12/31/2016
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
OPERATING INFORMATION
 
 
 
 
 
 
 
 
 
Total revenues
$
218,634

 
$
249,701

 
$
190,799

 
$
174,644

 
$
168,238

Net income (loss)
$
1,501

 
$
23,230

 
$
(5,038
)
 
$
11,778

 
$
100,042

Net (loss) income attributable to common stockholders
$
(1,600
)
 
$
18,897

 
$
(7,803
)
 
$
7,875

 
$
89,399

(Loss) earnings per share basic
$
(0.02
)
 
$
0.27

 
$
(0.12
)
 
$
0.14

 
$
1.57

(Loss) earnings per share diluted
$
(0.02
)
 
$
0.27

 
$
(0.12
)
 
$
0.14

 
$
1.56

 
 
 
 
 
 
 
 
 
 
Recurring EBITDA (1)
$
105,850

 
$
123,276

 
$
94,882

 
$
90,220

 
$
83,580

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1) (6)
$
57,572

 
$
78,023

 
$
37,473

 
$
53,270

 
$
43,282

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items(1) (6)
$
69,192

 
$
83,181

 
$
58,452

 
$
55,991

 
$
48,935

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (6) per share - fully diluted
$
0.75

 
$
1.06

 
$
0.54

 
$
0.86

 
$
0.72

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (6) per share excluding certain items - fully diluted
$
0.91

 
$
1.13

 
$
0.85

 
$
0.90

 
$
0.81

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE SHEETS
 
 
 
 
 
 
 
 
 
Total assets
$
5,870,776

 
$
5,904,706

 
$
5,823,191

 
$
4,562,886

 
$
4,181,799

Total debt
$
3,110,042

 
$
3,102,993

 
$
3,340,329

 
$
2,362,450

 
$
2,336,297

Total liabilities 
$
3,441,605

 
$
3,429,743

 
$
3,645,744

 
$
2,591,903

 
$
2,562,421




4th Quarter 2016 Supplemental Information     13          Sun Communities, Inc.

Debt Analysis                                                    
(amounts in thousands)
 
Quarter Ended
 
12/31/2016
 
9/30/2016
 
6/30/2016
 
3/31/2016
 
12/31/2015
DEBT OUTSTANDING
 
 
 
 
 
 
 
 
 
Lines of credit
$
100,095

 
$
57,737

 
$
357,721

 
$
58,065

 
$
24,687

Mortgage loans payable
2,819,567

 
2,854,831

 
2,792,021

 
2,114,818

 
2,125,267

Preferred OP units - mandatorily redeemable
45,903

 
45,903

 
45,903

 
45,903

 
45,903

Secured borrowing (3)
144,477

 
144,522

 
144,684

 
143,664

 
140,440

Total debt
$
3,110,042

 
$
3,102,993

 
$
3,340,329

 
$
2,362,450

 
$
2,336,297

 
 
 
 
 
 
 
 
 
 
% FIXED/FLOATING
 
 
 
 
 
 
 
 
 
Fixed
91.8%
 
93.1%
 
84.5%
 
90.7%
 
92.0%
Floating
8.2%
 
6.9%
 
15.5%
 
9.3%
 
8.0%
Total
100.0%
 
100.0%
 
100.0%
 
100.0%
 
100.0%
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE INTEREST RATES
 
 
 
 
 
 
 
 
 
Lines of credit
2.14%
 
1.93%
 
1.89%
 
1.87%
 
1.62%
Mortgage loans payable
4.24%
 
4.30%
 
4.38%
 
4.67%
 
4.65%
Preferred OP units - mandatorily redeemable
6.87%
 
6.87%
 
6.87%
 
6.87%
 
6.87%
Average before Secured borrowing
4.21%
 
4.29%
 
4.13%
 
4.64%
 
4.66%
Secured borrowing (3)
10.03%
 
10.06%
 
10.09%
 
10.12%
 
10.17%
Total average
4.48%
 
4.56%
 
4.39%
 
4.98%
 
4.99%
 
 
 
 
 
 
 
 
 
 
DEBT RATIOS
 
 
 
 
 
 
 
 
 
Net Debt/(T-12) Recurring EBITDA (1)
7.5
 
7.7
 
9.1
 
5.5
 
6.6
 
 
 
 
 
 
 
 
 
 
Net Debt/Enterprise Value
33.8%
 
32.8%
 
36.6%
 
27.7%
 
34.0%
 
 
 
 
 
 
 
 
 
 
Net Debt + Preferred Stock/Enterprise Value
35.2%
 
34.2%
 
38.0%
 
29.7%
 
36.1%
 
 
 
 
 
 
 
 
 
 
Net Debt/Gross Assets
45.0%
 
44.1%
 
49.0%
 
35.8%
 
45.6%
 
 
 
 
 
 
 
 
 
 
COVERAGE RATIOS
 
 
 
 
 
 
 
 
 
(T-12) Recurring EBITDA/ Interest (1)
3.2
 
3.1
 
3.1
 
3.0
 
3.1
 
 
 
 
 
 
 
 
 
 
       (T-12) Recurring EBITDA/ Interest + Pref.
Distributions + Pref. Stock Distribution (1)
2.9
 
2.9
 
2.8
 
2.7
 
2.6
MATURITIES/PRINCIPAL AMORTIZATION NEXT FIVE YEARS
2017
 
2018
 
2019
 
2020
 
2021
Lines of credit
$
—

 
$
2,889

 
$
—

 
$
97,455

 
$
—

Mortgage loans payable:
 
 
 
 
 
 
 
 
 
Maturities
32,688

 
26,186

 
64,314

 
58,078

 
270,680

Weighted average rate of maturities
6.67
%
 
6.22
%
 
5.35
%
 
3.39
%
 
5.53
%
Principal amortization
51,878

 
53,318

 
54,035

 
54,575

 
53,436

Preferred OP units - mandatorily redeemable
11,240

 
—

 
—

 
—

 
—

Secured borrowing (3)
5,645

 
6,186

 
6,727

 
7,341

 
7,888

Total
$
101,451

 
$
88,579

 
$
125,076

 
$
217,449

 
$
332,004


4th Quarter 2016 Supplemental Information     14          Sun Communities, Inc.

Statements of Operations – Same Community                        
(amounts in thousands except for Other Information)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2016
 
2015
 
Change
 
% Change
 
2016
 
2015
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from real property
$
113,884

 
$
107,224

 
$
6,660

 
6.2
 %
 
$
466,967

 
$
440,202

 
$
26,765

 
6.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROPERTY OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and benefits
8,809

 
8,944

 
(135
)
 
(1.5
)%
 
38,688

 
36,465

 
2,223

 
6.1
 %
Legal, taxes & insurance
1,224

 
1,412

 
(188
)
 
(13.3
)%
 
5,398

 
6,633

 
(1,235
)
 
(18.6
)%
Utilities
5,761

 
5,958

 
(197
)
 
(3.3
)%
 
26,161

 
25,674

 
487

 
1.9
 %
Supplies and repair
3,884

 
4,651

(8) 
(767
)
 
(16.5
)%
 
16,617

 
17,154

(8) 
(537
)
 
(3.1
)%
Other
3,283

 
2,333

 
950

 
40.7
 %
 
12,945

 
11,823

 
1,122

 
9.5
 %
Real estate taxes
7,936

 
7,880

 
56

 
0.7
 %
 
34,239

 
31,563

 
2,676

 
8.5
 %
Property operating expenses
30,897

 
31,178

 
(281
)
 
(0.9
)%
 
134,048

 
129,312

 
4,736

 
3.7
 %
NET OPERATING INCOME (NOI)(1)
$
82,987

 
$
76,046

 
$
6,941

 
9.1
 %
 
$
332,919

 
$
310,890

 
$
22,029

 
7.1
 %

 
As of December 31,
 
2016
 
2015
 
Change
 
% Change
OTHER INFORMATION
 
 
 
 
 
 
 
Number of properties
219

 
219

 
—

 
 
 
 
 
 
 
 
 
 
Overall occupancy (9)
96.6
%
 
94.7
%
(10) 
1.9
%
 
 
 
 
 
 
 
 
 
 
Sites available for development
6,542

 
5,906

 
636

 
10.8
%
 
 
 
 
 
 
 
 
Monthly base rent per site - MH
$
498

 
$
482

 
$
16

 
3.3
%
Monthly base rent per site - RV (11)
$
436

 
$
423

 
$
13

 
3.1
%
Monthly base rent per site - Total
$
489

 
$
474

 
$
15

 
3.2
%

4th Quarter 2016 Supplemental Information     15          Sun Communities, Inc.

Rental Program Summary     
(amounts in thousands except for *)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2016
 
2015
 
Change
 
% Change
 
2016
 
2015
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental home revenue
$
12,084

 
$
11,756

 
$
328

 
2.8
 %
 
$
47,780

 
$
46,236

 
$
1,544

 
3.3
 %
Site rent included in Income from real property
15,436

 
15,512

 
(76
)
 
(0.5
)%
 
61,600

 
61,952

 
(352
)
 
(0.6
)%
Rental Program revenue
27,520

 
27,268

 
252

 
0.9
 %
 
109,380

 
108,188

 
1,192

 
1.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions
532

 
775

 
(243
)
 
(31.4
)%
 
2,242

 
3,216

 
(974
)
 
(30.3
)%
Repairs and refurbishment
3,537

 
4,198

 
(661
)
 
(15.8
)%
 
12,825

 
12,326

 
499

 
4.1
 %
Taxes and insurance
1,556

 
973

 
583

 
59.9
 %
 
5,734

 
5,638

 
96

 
1.7
 %
Marketing and other
1,032

 
895

 
137

 
15.3
 %
 
3,493

 
3,776

 
(283
)
 
(7.5
)%
Rental Program operating and maintenance
6,657

 
6,841

 
(184
)
 
(2.7
)%
 
24,294

 
24,956


(662
)
 
(2.7
)%
NET OPERATING INCOME (NOI) (1)
$
20,863

 
$
20,427

 
$
436

 
2.1
 %
 
$
85,086

 
$
83,232

 
$
1,854

 
2.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupied rental home information as of December 31, 2016 and 2015:
 
 
 
 
 
 
Number of occupied rentals, end of period* 
 
 
 
 
 
 
 
 
10,733

 
10,685

 
48

 
0.5
 %
Investment in occupied rental homes, end of period
 
 
 
 
 
 
 
 
$
457,691

 
$
448,837

 
$
8,854

 
2.0
 %
Number of sold rental homes* 
 
 
 
 
 
 
 
 
1,089

 
908

 
181

 
19.9
 %
Weighted average monthly rental rate, end of period* 
 
 
 
 
 
 
 
 
$
882

 
$
858

 
$
24

 
2.8
 %


4th Quarter 2016 Supplemental Information     16          Sun Communities, Inc.

Homes Sales Summary     
(amounts in thousands except for *)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2016
 
2015
 
Change
 
% Change
 
2016
 
2015
 
Change
 
% Change
New home sales
$
10,505

 
$
7,318

 
$
3,187

 
43.6
 %
 
$
30,977

 
$
22,208

 
$
8,769

 
39.5
%
Pre-owned home sales
18,015

 
17,851

 
164

 
0.9
 %
 
79,530

 
57,520

 
22,010

 
38.3
%
Revenue from home sales
28,520

 
25,169

 
3,351

 
13.3
 %
 
110,507

 
79,728

 
30,779

 
38.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New home cost of sales
9,289

 
6,272

 
3,017

 
48.1
 %
 
26,802

 
18,620

 
8,182

 
43.9
%
Pre-owned home cost of sales
12,328

 
13,024

 
(696
)
 
(5.3
)%
 
53,618

 
40,321

 
13,297

 
33.0
%
Cost of home sales
21,617

 
19,296

 
2,321

 
12.0
 %
 
80,420

 
58,941

 
21,479

 
36.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI / Gross Profit (1)
$
6,903

 
$
5,873

 
$
1,030

 
17.5
 %
 
$
30,087

 
$
20,787

 
$
9,300

 
44.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – new homes
$
1,216

 
$
1,046

 
$
170

 
16.3
 %
 
$
4,175

 
$
3,588

 
$
587

 
16.4
%
Gross margin % – new homes
11.6
%
 
14.3
%
 
(2.7
)%
 
 
 
13.5
%
 
16.2
%
 
(2.7
)%
 
 
Average selling price – new homes*
$
105,050


$
89,242

 
$
15,808

 
17.7
 %
 
$
94,156


$
81,346

 
$
12,810

 
15.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – pre-owned homes
$
5,687

 
$
4,827

 
$
860

 
17.8
 %
 
$
25,912

 
$
17,199

 
$
8,713

 
50.7
%
Gross margin % – pre-owned homes
31.6
%
 
27.0
%
 
4.6
 %
 
 
 
32.6
%
 
29.9
%
 
2.7
 %
 
 
Average selling price – pre-owned homes*
$
27,213


$
27,211

 
$
2

 
—
 %
 
$
27,974


$
26,027


$
1,947

 
7.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home sales volume:
 
 
 
 
 
 
 
 
New home sales*
100

 
82

 
18

 
22.0
 %
 
329

 
273

 
56

 
20.5
%
Pre-owned home sales*
662

 
656

 
6

 
0.9
 %
 
2,843

 
2,210

 
633

 
28.6
%
Total homes sold*
762

 
738

 
24

 
3.3
 %
 
3,172

 
2,483

 
689

 
27.8
%
    

4th Quarter 2016 Supplemental Information     17          Sun Communities, Inc.

Acquisitions Summary - Properties Acquired in 2016 and 2015
(amounts in thousands except for statistical data)

 
Three Months Ended December 31, 2016
 
Year Ended 
 December 31, 2016
REVENUES:
 
 
 
Income from real property
$
53,473

 
$
153,950

PROPERTY AND OPERATING EXPENSES:
 
 
 
Payroll and benefits
7,363

 
18,056

Legal, taxes & insurance
330

 
543

Utilities
12,893

 
41,334

Supplies and repair
1,774

 
4,115

Other
2,596

 
9,417

Real estate taxes
4,248

 
10,067

Property operating expenses
29,204

 
83,532

 
 
 
 
NET OPERATING INCOME (NOI) (1)
$
24,269

 
$
70,418

 
 
 
 
 
 
 
As of December 31, 2016
Other information:
 
 
 
Number of properties
 
 
122

Occupied sites (12)
 
 
24,359

Developed sites (12)
 
 
25,055

Occupancy % (12)
 
 
97.2
%
Transient sites
 
 
8,703

Monthly base rent per site - MH
 
 
$
596

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

Monthly base rent per site - Total (11)
 
 
$
509

Ancillary revenues, net (in thousands)
 
 
$
2,992

 
 
 
 
Home sales:
 
 
 
Gross profit from home sales (in thousands)
 
 
$
4,452

New homes sales
 
 
95

Pre-owned homes sales
 
 
306

 
 
 
 
Occupied rental home information:
 
 
 
Rental program NOI (1) (in thousands)
 
 
$
540

Number of occupied rentals, end of period
 
 
292

Investment in occupied rental homes (in thousands)
 
 
$
9,716

Weighted average monthly rental rate
 
 
$
955



4th Quarter 2016 Supplemental Information     18          Sun Communities, Inc.

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

 
121

 
121

 
61

 
61

 
Developed sites (12)
 
36,326

 
36,050

 
36,119

 
24,312

 
24,216

 
Occupied (12)
 
35,021

 
34,745

 
34,720

 
23,359

 
23,201

 
Occupancy % (12)
 
96.4
%
 
96.4
%
 
96.1
%
 
96.1
%
 
95.8
%
 
Sites for development
 
1,465

 
1,259

 
1,259

 
823

 
823

 
MICHIGAN
 
 
 
 
 
 
 
 
 
 
 
Communities
 
67

 
67

 
66

 
66

 
65

 
Developed sites (12)
 
24,512

 
24,388

 
24,387

 
24,363

 
23,966

 
Occupied (12)
 
23,248

 
23,218

 
23,198

 
23,079

 
22,677

 
Occupancy % (12)
 
94.8
%
 
95.2
%
 
95.1
%
 
94.7
%
 
94.6
%
 
Sites for development
 
2,589

 
2,628

 
2,248

 
2,105

 
2,105

 
TEXAS
 
 
 
 
 
 
 
 
 
 
 
Communities
 
21

 
21

 
21

 
17

 
16

 
Developed sites (12)
 
6,186

 
6,088

 
6,071

 
5,970

 
5,965

 
Occupied (12)
 
5,862

 
5,774

 
5,771

 
5,602

 
5,517

 
Occupancy % (12)
 
94.8
%
 
94.8
%
 
95.1
%
 
93.8
%
 
92.5
%
 
Sites for development
 
1,474

 
1,455

 
1,347

 
1,347

 
1,347

 
CALIFORNIA
 
 
 
 
 
 
 
 
 
 
 
Communities
 
22

 
22

 
22

 
3

 
3

 
Developed sites (12)
 
4,862

 
4,863

 
4,864

 
198

 
198

 
Occupied (12)
 
4,793

 
4,792

 
4,796

 
192

 
192

 
Occupancy % (12)
 
98.6
%
 
98.5
%
 
98.6
%
 
97.0
%
 
97.0
%
 
Sites for development
 
332

 
332

 
332

 
332

 
332

 
ARIZONA
 
 
 
 
 
 
 
 
 
 
 
Communities
 
11

 
11

 
11

 
10

 
10

 
Developed sites (12)
 
3,565

 
3,567

 
3,532

 
3,302

 
3,301

 
Occupied (12)
 
3,338

 
3,305

 
3,281

 
3,102

 
3,078

 
Occupancy % (12)
 
93.6
%
 
92.7
%
 
92.9
%
 
93.9
%
 
93.2
%
 
Sites for development
 
358

 
358

 
358

 
393

 
393

 
ONTARIO, CANADA
 
 
 
 
 
 
 
 
 
 
 
Communities
 
15

 
15

 
15

 
—

 
—

 
Developed sites (12)
 
3,368

 
3,453

 
3,375

 
—

 
—

 
Occupied (12)
 
3,368

 
3,453

 
3,375

 
—

 
—

 
Occupancy % (12)
 
100.0
%
 
100.0
%
 
100.0
%
 
—
%
 
—
%
 
Sites for development
 
1,599

 
2,029

 
2,029

 
—

 
—

 
INDIANA
 
 
 
 
 
 
 
 
 
 
 
Communities
 
11

 
11

 
11

 
11

 
11

 
Developed sites (12)
 
2,900

 
2,900

 
2,900

 
2,900

 
2,900

 
Occupied (12)
 
2,724

 
2,712

 
2,700

 
2,674

 
2,628

 
Occupancy % (12)
 
93.9
%
 
93.5
%
 
93.1
%
 
92.2
%
 
90.6
%
 
Sites for development
 
316

 
316

 
316

 
363

 
363

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4th Quarter 2016 Supplemental Information     19          Sun Communities, Inc.

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

 
9

 
9

 
9

 
9

 
Developed sites (12)
 
2,715

 
2,719

 
2,718

 
2,700

 
2,703

 
Occupied (12)
 
2,595

 
2,602

 
2,616

 
2,585

 
2,560

 
Occupancy % (12)
 
95.6
%
 
95.7
%
 
96.2
%
 
95.7
%
 
94.7
%
 
Sites for development
 
—

 
—

 
—

 
—

 
—

 
COLORADO
 
 
 
 
 
 
 
 
 
 
 
Communities
 
8

 
7

 
7

 
7

 
7

 
Developed sites (12)
 
2,335

 
2,335

 
2,335

 
2,335

 
2,335

 
Occupied (12)
 
2,325

 
2,323

 
2,320

 
2,319

 
2,315

 
Occupancy % (12)
 
99.6
%
 
99.5
%
 
99.4
%
 
99.3
%
 
99.1
%
 
Sites for development
 
656

 
304

 
304

 
304

 
304

 
OTHER STATES
 
 
 
 
 
 
 
 
 
 
 
Communities
 
56

 
55

 
54

 
49

 
49

 
Developed sites (12)
 
14,313

 
14,415

 
14,337

 
13,683

 
13,657

 
Occupied (12)
 
13,919

 
13,991

 
13,912

 
13,237

 
13,142

 
Occupancy % (12)
 
97.3
%
 
97.1
%
 
97.0
%
 
96.7
%
 
96.2
%
 
Sites for development
 
1,827

 
1,823

 
1,728

 
1,514

 
1,514

 
TOTAL - PORTFOLIO
 
 
 
 
 
 
 
 
 
 
 
Communities
 
341

 
339

 
337

 
233

 
231

 
Developed sites (12)
 
101,082

 
100,778

 
100,638

 
79,763

 
79,241

 
Occupied (12)
 
97,193

 
96,915

 
96,689

 
76,149

 
75,310

 
Occupancy % (12)
 
96.2
%
 
96.2
%
 
96.1
%
 
95.5
%
 
95.0
%
 
Sites for development
 
10,616

 
10,504

 
9,921

 
7,181

 
7,181

 
% Communities age restricted
 
33.1
%
 
33.3
%
 
33.5
%
 
26.2
%
 
26.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
TRANSIENT RV PORTFOLIO SUMMARY
 
 
 
 
 
 
 
 
 
 
 
    Location
 
 
 
 
 
 
 
 
 
 
 
Florida
 
6,497

 
7,232

 
6,990

 
2,664

 
2,823

 
Ontario, Canada
 
1,500

 
1,485

 
1,657

 
—

 
—

 
Texas
 
1,407

 
1,446

 
1,455

 
799

 
414

 
Arizona
 
1,049

 
1,047

 
1,055

 
1,096

 
1,087

 
New Jersey
 
1,042

 
1,047

 
1,084

 
995

 
981

 
New York
 
830

 
484

 
483

 
489

 
499

 
Maine
 
555

 
556

 
571

 
575

 
604

 
California
 
513

 
478

 
518

 
296

 
296

 
Indiana
 
502

 
501

 
501

 
501

 
501

 
Michigan
 
204

 
203

 
126

 
150

 
160

 
Ohio
 
198

 
194

 
195

 
213

 
210

 
Other States
 
1,997

 
1,801

 
1,864

 
2,099

 
2,092

 
Total transient RV sites
 
16,294

 
16,474

 
16,499

 
9,877

 
9,667

 


4th Quarter 2016 Supplemental Information     20          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)
2016
 
$
211

 
$
17,613

 
$
19,040

 
$
1,822,564

 
$
47,958

 
$
2,631

2015
 
$
230

 
$
20,344

 
$
13,961

 
$
1,214,482

 
$
28,660

 
$
4,497

2014
 
$
227

 
$
18,077

 
$
9,414

 
$
785,624

 
$
22,196

 
$
1,454



4th Quarter 2016 Supplemental Information     21          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
 
439

 
310

 
9

 
1,231

 
152

Florida
 
358

 
662

 
186

 
338

 
987

Texas
 
180

 
249

 
14

 
377

 
49

Indiana
 
54

 
96

 
—

 
213

 
9

Ohio
 
100

 
36

 
1

 
102

 
6

Arizona
 
49

 
127

 
40

 
28

 
133

Colorado
 
12

 
12

 
16

 
204

 
46

Other states and Ontario, Canada
 
530

 
194

 
63

 
350

 
273

Year Ended December 31, 2016
 
1,722

 
1,686

 
329

 
2,843

 
1,655


 
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
 
2016
 
2.0
%
 
6.1
%
2015
 
2.0
%
 
5.9
%
2014
 
2.6
%
 
5.0
%

4th Quarter 2016 Supplemental Information     22          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. Additionally, 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

4th Quarter 2016 Supplemental Information     23          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.

(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) Other expenses, net on the Consolidated Statements of Operations is comprised of: foreign currency exchange $5.0 million; hurricane related costs $1.2 million; and contingent liability re-measurement $0.2 million; partially offset by gain on acquisition of property $0.5 million.

(5) 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. As these costs have become more significant in connection with the size of our acquisitions, they are included as an adjustment to FFO for the year ended December 31, 2016. The Company incurred $1.1 million and $2.8 million of these first year expenses for the three months and year ended December 31, 2015, 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 $0.83 and $3.68 for the three months and year ended December 31, 2015.

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

(7) 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.

(8) Three months and year ended December 31, 2015 excludes $1.1 million and $2.8 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 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.


4th Quarter 2016 Supplemental Information     24          Sun Communities, Inc.

(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 the Company’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.

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




4th Quarter 2016 Supplemental Information     25          Sun Communities, Inc.