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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019.

[ ] TRANSITION PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12616

SUN COMMUNITIES INC

(Exact Name of Registrant as Specified in its Charter)



Maryland		38-2730780
(State of Incorporation)		(I.R.S. 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)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ] No [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. (Check one):



Large accelerated filer [ X ]	Accelerated filer [ ]	Non-accelerated filer [ ]
Smaller reporting company [ ]	Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

Number of shares of Common Stock, $0.01 par value per share, outstanding as of April 18, 2019: 86,505,876

INDEX




PART I – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements:
	Consolidated Balance Sheets as of March 31, 2019 (Unaudited) and December 31, 2018	1
	Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018 (Unaudited)	2
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2019 and 2018 (Unaudited)	3
	Consolidated Statement of Stockholders’ Equity (Unaudited)	4
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018 (Unaudited)	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4.	Controls and Procedures	44

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 6.	Exhibits	45
	Exhibit Index	46
	Signatures	46

PART I – FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

SUN COMMUNITIES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands, except per share amounts)



	(unaudited) March 31, 2019			December 31, 2018
ASSETS
Land	$	1,279,306		$	1,201,945
Land improvements and buildings	5,899,149			5,586,250
Rental homes and improvements	585,994			571,661
Furniture, fixtures and equipment	208,177			201,090
Investment property	7,972,626			7,560,946
Accumulated depreciation	(1,501,370		)	(1,442,630		)
Investment property, net (including $314,669 and $308,171 for consolidated variable interest entities at March 31, 2019 and December 31, 2018; see Note 8)	6,471,256			6,118,316
Cash and cash equivalents	21,946			50,311
Marketable securities	50,501			49,037
Inventory of manufactured homes	52,993			49,199
Notes and other receivables, net	179,814			160,077
Collateralized receivables, net	101,938			106,924
Other assets, net (including $22,369 and $19,809 for consolidated variable interest entities at March 31, 2019 and December 31, 2018; see Note 8)	220,214			176,162
TOTAL ASSETS	$	7,098,662		$	6,710,026
LIABILITIES
Mortgage loans payable (including $43,913 and $44,172 for consolidated variable interest entities at March 31, 2019 and December 31, 2018; see Note 8)	$	2,879,017		$	2,815,957
Secured borrowings on collateralized receivables	102,676			107,731
Preferred Equity - Sun NG RV Resorts LLC - mandatorily redeemable (fully attributable to consolidated variable interest entities; See Note 8)	35,249			35,277
Preferred OP units - mandatorily redeemable	34,663			37,338
Lines of credit	396,512			128,000
Distributions payable	66,887			63,249
Advanced reservation deposits and rent	151,860			133,698
Other liabilities (including $21,049 and $6,914 for consolidated variable interest entities at March 31, 2019 and December 31, 2018; see Note 8)	179,461			157,862
TOTAL LIABILITIES	3,846,325			3,479,112
Commitments and contingencies (see Note 17)
Series A-4 preferred stock, $0.01 par value. Issued and outstanding:1,063 shares at March 31, 2019 and December 31, 2018	31,739			31,739
Series A-4 preferred OP units	9,784			9,877
Series D preferred OP units	51,738			—
Equity Interests - NG Sun LLC (fully attributable to consolidated variable interest entities; See Note 8)	22,167			21,976
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value. Authorized: 180,000 shares; Issued and outstanding:86,463 shares at March 31, 2019 and 86,357 shares at December 31, 2018	865			864
Additional paid-in capital	4,398,641			4,398,949
Accumulated other comprehensive loss	(3,006		)	(4,504		)
Distributions in excess of accumulated earnings	(1,317,605		)	(1,288,486		)
Total Sun Communities, Inc. stockholders' equity	3,078,895			3,106,823
Noncontrolling interests
Common and preferred OP units	51,816			53,354
Consolidated variable interest entities	6,198			7,145
Total noncontrolling interests	58,014			60,499
TOTAL STOCKHOLDERS' EQUITY	3,136,909			3,167,322
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY	$	7,098,662		$	6,710,026

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - dollars in thousands, except per share amounts)



	Three Months Ended March 31,
	2019			2018
REVENUES
Income from real property	$	216,779		$	197,211
Revenue from home sales	39,618			34,900
Rental home revenue	13,971			13,020
Ancillary revenue	8,482			6,568
Interest	4,800			5,316
Brokerage commissions and other revenues, net	3,680			960
Total revenues	287,330			257,975
EXPENSES
Property operating and maintenance	57,909			51,630
Real estate taxes	15,330			13,836
Cost of home sales	29,277			26,571
Rental home operating and maintenance	4,788			5,227
Ancillary expenses	7,101			5,383
Home selling expenses	3,324			3,290
General and administrative	21,887			19,757
Catastrophic weather related charges, net	782			(2,213		)
Depreciation and amortization	76,556			66,437
Loss on extinguishment of debt	653			196
Interest	34,014			31,138
Interest on mandatorily redeemable preferred OP units / equity	1,094			619
Total expenses	252,715			221,871
Income Before Other Items	34,615			36,104
Remeasurement of marketable securities	267			—
Other income / (expense), net	1,898			(2,617		)
Income / (loss) from nonconsolidated affiliates	344			(59		)
Current tax expense	(214		)	(174		)
Deferred tax benefit	217			347
Net Income	37,127			33,601
Less: Preferred return to preferred OP units / equity	(1,323		)	(1,080		)
Less: Amounts attributable to noncontrolling interests	(1,041		)	(2,094		)
Net Income Attributable to Sun Communities, Inc.	34,763			30,427
Less: Preferred stock distribution	(432		)	(441		)
Net income attributable to Sun Communities, Inc. common stockholders	$	34,331		$	29,986
Weighted average common shares outstanding:
Basic	85,520			78,855
Diluted	86,033			79,464
Earnings per share (Refer to Note 14):
Basic	$	0.40		$	0.38
Diluted	$	0.40		$	0.38

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited - dollars in thousands)



	Three Months Ended March 31,
	2019		2018
Net income	$	37,127	$	33,601
Foreign currency translation adjustment	1,575		(1,861		)
Total comprehensive income	38,702		31,740
Less: Comprehensive income attributable to noncontrolling interests	1,118		2,005
Comprehensive income attributable to Sun Communities, Inc.	$	37,584	$	29,735

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited - dollars in thousands)



				Stockholders’ Equity
	Temporary Equity			Common Stock		Additional Paid-in Capital			Distributions in Excess of Accumulated Earnings			Accumulated Other Comprehensive Income / (Loss)			Non-controlling Interests			Total Stockholders’ Equity
Balance at December 31, 2018	$	63,592		$	864	$	4,398,949		$	(1,288,486	)	$	(4,504	)	$	60,499		$	3,167,322
Issuance of common stock and common OP units, net	—			1		(4,322		)	—			—			—			(4,321		)
Conversion of OP units	—			—		280			—			—			(280		)	—
Share-based compensation - amortization and forfeitures	—			—		3,719			74			—			—			3,793
Issuance of Series D OP Units	51,930			—		—			—			—			—			—
Foreign currency translation	—			—		—			—			1,498			77			1,575
Net income	178			—		—			36,086			—			863			36,949
Distributions	(272		)	—		15			(65,279		)	—			(3,145		)	(68,409		)
Balance at March 31, 2019	$	115,428		$	865	$	4,398,641		$	(1,317,605	)	$	(3,006	)	$	58,014		$	3,136,909



				Stockholders’ Equity
	Temporary Equity			Common Stock		Additional Paid-in Capital			Distributions in Excess of Accumulated Earnings			Accumulated Other Comprehensive Income / (Loss)			Non-controlling Interests			Total Stockholders’ Equity
Balance at December 31, 2017	$	43,066		$	797	$	3,758,533		$	(1,162,001	)	$	1,102		$	65,256		$	2,663,687
Issuance of common stock and common OP units, net	—			2		(3,298		)	—			—			—			(3,296		)
Conversion of OP units	(60		)	—		342			—			—			(283		)	59
Share-based compensation - amortization and forfeitures	—			—		3,489			90			—			—			3,579
Foreign currency translation	—			—		—			—			(1,772		)	(89		)	(1,861		)
Net income	71			—		—			31,507			—			2,023			33,530
Distributions	(171		)	—		—			(57,159		)	—			(2,888		)	(60,047		)
Balance at March 31, 2018	$	42,906		$	799	$	3,759,066		$	(1,187,563	)	$	(670	)	$	64,019		$	2,635,651

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - dollars in thousands)



	Three Months Ended March 31,
	2019			2018
OPERATING ACTIVITIES:
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	103,141		$	80,905
INVESTING ACTIVITIES:
Investment in properties	(114,804		)	(68,524		)
Acquisitions of properties, net of cash acquired	(279,302		)	(2,384		)
Proceeds from dispositions of assets and depreciated homes, net	11,788			5,312
Purchases of notes receivable	—			(893		)
Other investing activities	—			(1,925		)
Repayments of notes and other receivables	1,030			679
Investments in nonconsolidated affiliates	(11,195		)	(783		)
NET CASH USED FOR INVESTING ACTIVITIES	(392,483		)	(68,518		)
FINANCING ACTIVITIES:
Issuance of common stock, OP units, and preferred OP units, net	(4,321		)	(3,296		)
Redemption of Series B-3 preferred OP units	(2,675		)	(4,105		)
Borrowings on lines of credit	1,428,948			302,355
Payments on lines of credit	(1,160,436		)	(201,853		)
Proceeds from issuance of other debt	265,000			—
Payments on other debt	(200,892		)	(43,883		)
Prepayment penalty on debt	—			(196		)
Proceeds received from return of prepaid deferred financing costs	1,618			—
Distributions to stockholders, OP unit holders, and preferred OP unit holders	(65,145		)	(56,881		)
Payments for deferred financing costs	(1,000		)	(605		)
NET CASH PROVIDED BY FINANCING ACTIVITIES	261,097			(8,464		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	158			(8		)
Net change in cash, cash equivalents and restricted cash	(28,087		)	3,915
Cash, cash equivalents and restricted cash, beginning of period	62,262			23,509
Cash, cash equivalents and restricted cash, end of period (See Note 16)	$	34,175		$	27,424



	Three Months Ended March 31,
	2019			2018
SUPPLEMENTAL INFORMATION:
Cash paid for interest (net of capitalized interest of $1,357 and $1,184 respectively)	$	32,711		$	30,402
Cash paid for interest on mandatorily redeemable debt	$	1,094		$	619
Cash paid (refunds) for income taxes	$	(60	)	$	135
Noncash investing and financing activities:
Reduction in secured borrowing balance	$	5,055		$	5,105
Change in distributions declared and outstanding	$	3,536		$	3,337
Conversion of common and preferred OP units	$	280		$	342
Noncash investing and financing activities at the date of acquisition:
Acquisitions - Series D preferred interest	$	51,930		$	—
Acquisitions - Escrow	$	4,035		$	—

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Sun Communities, Inc., a Maryland corporation, and all wholly-owned or majority-owned and controlled subsidiaries, including Sun Communities Operating Limited Partnership (the “Operating Partnership”) and Sun Home Services, Inc. (“SHS”) are referred to herein as the “Company,” “us,” “we,” and “our.”

We follow accounting standards set by the Financial Accounting Standards Board (“FASB”). FASB sets generally accepted accounting principles (“GAAP”), which we follow to ensure that we consistently report our financial condition, results of operations, and cash flows. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification (“ASC”).

These unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and in accordance with GAAP. Pursuant to the SEC rules and regulations we present interim disclosures and certain information and footnote disclosures as required. Accordingly, the unaudited Consolidated Financial Statements do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying unaudited Consolidated Financial Statements reflect, in the opinion of management, all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of the interim financial statements. All intercompany transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period financial statements in order to conform to current period presentation.

The results of operations for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the SEC on February 21, 2019 (the “2018 Annual Report”). These statements have been prepared on a basis that is substantially consistent with the accounting principles applied in our 2018 Annual Report.

2. Revenue

Disaggregation of Revenue

The following tables details our revenue by major source (in thousands):



	Three Months Ended March 31, 2019						Three Months Ended March 31, 2018
	Real Property Operations		Home Sales and Rentals		Consolidated		Real Property Operations		Home Sales and Rentals		Consolidated
REVENUE
Income from real property	$	216,779	$	—	$	216,779	$	197,211	$	—	$	197,211
Revenue from home sales	—		39,618		39,618		—		34,900		34,900
Rental home revenue	—		13,971		13,971		—		13,020		13,020
Ancillary revenues	8,482		—		8,482		6,568		—		6,568
Interest	4,800		—		4,800		5,316		—		5,316
Brokerage commissions and other revenues, net	3,680		—		3,680		960		—		960
Total revenue	$	233,741	$	53,589	$	287,330	$	210,055	$	47,920	$	257,975

Revenue Recognition Policies and Performance Obligations

On January 1, 2018, we adopted FASB Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers” and the other related ASUs and amendments to the codification (collectively “ASC 606”). The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. A five-step transactional analysis is required to determine how and when to recognize revenue. ASC 606 applies to all contracts with customers, except those that are within the scope of other topics in the FASB accounting standards codification.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As a real estate owner and operator, the majority of our revenue is derived from site and home leases that are accounted for pursuant to ASC 842 “Leases.” For transactions in the scope of ASC 606, we recognize revenue when control of goods or services transfers to the customer, in the amount that we expect to receive for the transfer of goods or provision of services. The adoption of ASC 606 did not result in any change to our accounting policies for revenue recognition. Accordingly, retrospective application to prior periods or a cumulative catch-up adjustment was unnecessary.

Income from real property - Residents in our communities lease the site on which their home is located, and either own or lease their home. Lease revenues for sites and homes fall under the scope of ASC 842, and are accounted for as operating leases with straight-line recognition. Resident leases are generally for one-year or month-to-month terms, and are renewable by mutual agreement from us and the resident, or in some cases, as provided by jurisdictional statute. Income from real property includes site leases for annual MH residents which are within the scope of ASC 842. Annual recreational vehicle (“RV”) site leases with residents are also included within the scope of ASC 842 and revenue is recorded within Income from real property. Non-lease components of our site lease contracts, which are primarily provision of utility services, are accounted for with the site lease as a single lease under ASC 842. Additionally, we include collections of real estate taxes from residents within Income from real property. The site rental associated with a transient RV resident stay is accounted for under ASC 842 and is recorded within Income from real property.

Revenue from home sales - Our taxable REIT subsidiary, SHS, sells manufactured homes (“MH”) to current and prospective residents in our communities. Prior to adoption of ASC 606, we recognized revenue for home sales pursuant to ASC 605 “Revenue Recognition,” as manufactured homes are tangible personal property that can be located on any land parcel. Manufactured homes are not permanent fixtures or improvements to the underlying real estate, and were therefore not considered to be subject to the guidance in ASC 360-20 “Real Estate Sales” by the Company. In accordance with the core principle of ASC 606, we recognize revenue from home sales at the time of closing when control of the home transfers to the customer. After closing of the sale transaction, we have no remaining performance obligation.

Rental home revenue - is comprised of rental agreements whereby we lease homes to residents in our communities. We account for these revenues under ASC 842.

Ancillary revenues - are primarily composed of proceeds from restaurant, golf, merchandise and other activities at our RV communities and are included in the scope of ASC 606. Short-term vacation home rentals are included within ancillary revenues and within the scope of ASC 842. Revenues are recognized at point of sale when control of the good or service transfers to the customer and our performance obligation is satisfied. In addition, ancillary revenues include the leasing of short term vacation rentals. Sales and other taxes that we collect concurrent with revenue-producing activities are excluded from the transaction price.

Interest income - is earned primarily on our notes and collateralized receivables, which includes installment loans for manufactured homes purchased by the Company from loan originators and transferred loans that previously did not meet the requirements for sale accounting. Interest income on these receivables is accrued based on the unpaid principal balances of the underlying loans on a level yield basis over the life of the loans. Interest income is not in the scope of ASC 606. Refer to Notes 4, “Collateralized Receivables and Transfers of Financial Assets” and 5, “Notes and Other Receivables” for additional information.

Broker commissions and other revenues, net - is primarily comprised of brokerage commissions for sales of manufactured homes, where we act as agent and arrange for a third party to transfer a manufactured home to a customer within one of our communities. Brokerage commission revenues are recognized on a net basis at closing, when the transaction is completed and our performance obligations have been fulfilled. Loan loss reserve expenses for our collateralized receivables and notes receivables are also included herein. Refer to Notes 4, “Collateralized Receivables and Transfers of Financial Assets” and 5, “Notes and Other Receivables” for additional information regarding our loan loss reserves.

Contract Balances

As of March 31, 2019 and December 31, 2018, we had $18.0 million and $16.1 million, respectively, of receivables from contracts with customers. Receivables from contracts with customers are presented as a component of Notes and other receivables on our Consolidated Balance Sheets. These receivables represent balances owed to us for previously completed performance obligations for sales of manufactured homes. Due to the nature of our revenue from contracts with customers, we do not have material contract assets or liabilities that fall under the scope of ASC 606.

3. Real Estate Acquisitions

2019 Acquisitions

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In 2019 we acquired the following communities:

Community Name

Type

Sites

Development Sites

State

Month Acquired

Massey’s Landing RV

291

—

February

Shelby Properties⁽¹⁾

1,308

—

February

Buena Vista

400

—

February

Country Village Estates ⁽²⁾

518

—

January

Hid’n Pines RV

321

—

January

Hacienda del Rio

MH (Age-Restricted)

730

January

Total

3,568

⁽¹⁾ Contains two MH communities.

⁽²⁾ In conjunction with the acquisition, we issued Series D Preferred Operating Partnership (“OP”) Units. As of March 31, 2019, 488,958 Series D Preferred OP Units were outstanding.

The following table summarizes the amounts of assets acquired net of liabilities assumed at the acquisition date and the consideration paid for the acquisitions completed in the three months ended March 31, 2019 (in thousands):



At Acquisition Date ⁽¹⁾	Massey's Landing			Shelby Properties			Buena Vista			Country Village		Hid'n Pines			Hacienda del Rio			Total
Investment in property	$	20,000		$	85,969		$	20,221		$	62,784	$	10,680		$	111,971		$	311,625
Inventory of manufactured homes	—			2,011			439			—		—			15			2,465
In-place leases and other intangible assets	—			6,520			1,590			2,020		70			3,280			13,480
Other assets (liabilities), net	(446		)	(1,015		)	(93		)	31		(233		)	(237		)	(1,993		)
Total identifiable assets acquired net of liabilities assumed	$	19,554		$	93,485		$	22,157		$	64,835	$	10,517		$	115,029		$	325,577


Consideration
Cash and escrow	$	19,554		$	93,485		$	22,157		$	12,905	$	10,517		$	115,029		$	273,647
Series D Preferred OP units	—			—			—			51,930		—			—			51,930
Total consideration	$	19,554		$	93,485		$	22,157		$	64,835	$	10,517		$	115,029		$	325,577

⁽¹⁾ The purchase price allocations are preliminary and may be adjusted as final valuations are determined.

As of March 31,2019, the Company has incurred $5.1 million of additional capitalized transaction costs which have been allocated among the various categories above.

During the quarter, the Company entered into a four year Temporary Occupancy and Use Permit with the Port of San Diego to operate an RV resort located in Chula Vista, CA until such time as a new RV resort is constructed in the area. Concurrent with the transaction, we purchased tangible personal property from the prior owner of the RV resort for $0.3 million.

Refer to Note 19, “Subsequent Events,” for information regarding real estate acquisition activity after March 31, 2019.

The total amount of revenues and net income included in the Consolidated Statements of Operations for the three months ended March 31, 2019 related to the acquisitions completed in 2019 are set forth in the following table (in thousands):



	Three Months Ended March 31, 2019
	(unaudited)
Total revenues	$	3,764
Net income	$	1,317

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following unaudited pro forma financial information presents the results of our operations for the three months ended March 31, 2019 and 2018, as if the properties acquired in 2019 had been acquired on January 1, 2018. The unaudited pro forma results reflect certain adjustments for items that are not expected to have a continuing impact, such as adjustments for transaction costs incurred, management fees, and purchase accounting.

The information presented below has been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations that would have actually occurred had the acquisition been consummated on January 1, 2018 (in thousands, except per-share data):



	Three Months Ended March 31,
	(unaudited)
	2019		2018
Total revenues	$	289,253	$	263,706
Net income attributable to Sun Communities, Inc. common stockholders	$	34,885	$	31,732
Net income per share attributable to Sun Communities, Inc. common stockholders - basic	$	0.41	$	0.40
Net income per share attributable to Sun Communities, Inc. common stockholders - diluted	$	0.41	$	0.40

2018 Acquisitions

In 2018 we acquired the following communities:

Community Name

Type

Sites

Development Sites

State

Month Acquired

Leaf Verde RV Resort

376

—

October

Archview

114

August

Petoskey KOA

210

—

August

The Sands RV and Golf Resort

RV (Age Restricted)

507

—

July

Sun NG RV Resorts LLC ⁽¹⁾⁽²⁾

2,700

940

Various

June

Silver Creek

264

176

June

Highway West ⁽¹⁾

536

—

UT & OR

June

Compass RV

175

—

May

Total

4,882

1,166

⁽¹⁾Highway West and Sun NG RV Resorts LLC are comprised of 4 RV and 10 RV resorts, respectively.

⁽²⁾Refer to Note 8, “Consolidated Variable Interest Entities,” Note 9, “Debt and Lines of Credit,” and Note 10, “Equity and Temporary Equity” in our accompanying Consolidated Financial Statements for additional information.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes the amounts of assets acquired net of liabilities assumed at the acquisition date and the consideration paid for the acquisitions completed in 2018 (in thousands):



At Acquisition Date	Leaf Verde		Archview		Petoskey KOA		Sands		Sun NG Resorts			Silver Creek		Highway West		Compass		Total
Investment in property	$	11,587	$	14,550	$	8,730	$	13,790	$	240,649		$	7,250	$	36,500	$	13,930	$	346,986
In-place leases and other intangible assets	60		—		270		460		16,339			—		—		70		17,199
Debt assumed	—		—		—		—		(3,120		)	—		—		—		(3,120		)
Other liabilities, net	—		—		—		—		(11,990		)	—		—		—		(11,990		)
Total identifiable assets acquired net of liabilities assumed	$	11,647	$	14,550	$	9,000	$	14,250	$	241,878		$	7,250	$	36,500	$	14,000	$	349,075

Consideration
Cash	$	11,647	$	14,550	$	9,000	$	14,250	$	184,625		$	7,250	$	36,500	$	14,000	$	291,822
Preferred Equity - Sun NG Resorts	—		—		—		—		35,277			—		—		—		35,277
Equity Interests - NG Sun LLC	—		—		—		—		21,976			—		—		—		21,976
Total consideration	$	11,647	$	14,550	$	9,000	$	14,250	$	241,878		$	7,250	$	36,500	$	14,000	$	349,075

In 2018, we acquired the following land for expansion / development:

Name

Location

Type

Expansion / Development Sites

Cost (millions)

Month Acquired

Ocean West

McKinleyville, CA

0.2

December

Water Oak Country Club Estates

Lady Lake, FL

296

1.9

November

Oak Crest

Austin, TX

220

4.2

October

Pecan Park

Jacksonville, FL

158

1.3

September

Smith Creek Crossing

Granby, CO

310

0.9

September

Apple Carr

Egelston, MI

121

0.2

May

River Run Ranch