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: September 13, 2021
(Date of earliest event reported)
(Exact name of registrant as specified in its charter)
| (State of Incorporation) | Commission file number | (I.R.S. Employer Identification No.) | |||||||||||||||
| (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:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
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 13(a) of the Exchange Act. ☐
| Item 7.01 | Regulation FD Disclosure | ||||
Attached as Exhibit 99.1, and incorporated by reference, to this report is an investor presentation of Sun Communities, Inc. that will be made available to investors beginning on September 13, 2021 . The presentation also will be posted on Sun Communities, Inc.'s website, www.suncommunities.com, on September 13, 2021 .
The information contained and incorporated by reference in this Item 7.01 on Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended.
This report 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 we intend that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this filing that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as “forecasts,” “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,” “plans,” “predicts,” “potential,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,” “will,” “designed to,” “foreseeable future,” “believe,” “believes,” “scheduled,” "guidance", "target" and similar expressions are intended to identify forward-looking statements, although not all forward looking statements contain these words. These forward-looking statements reflect our current views with respect to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this filing. These risks and uncertainties may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. In addition to the risks disclosed under “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2020 and our other filings with the SEC from time to time, such risks and uncertainties include but are not limited to:
•outbreaks of disease, including the COVID-19 pandemic, and related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations;
•changes in general economic conditions, the real estate industry, and the markets in which we operate;
•difficulties in our ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;
•our liquidity and refinancing demands;
•our ability to obtain or refinance maturing debt;
•our ability to maintain compliance with covenants contained in our debt facilities and our senior unsecured notes;
•availability of capital;
•changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar and the Australian dollar;
•our ability to maintain rental rates and occupancy levels;
•our ability to maintain effective internal control over financial reporting and disclosure controls and procedures;
•increases in interest rates and operating costs, including insurance premiums and real property taxes;
•risks related to natural disasters such as hurricanes, earthquakes, floods, droughts and wildfires;
•general volatility of the capital markets and the market price of shares of our capital stock;
•our ability to maintain our status as a REIT;
•changes in real estate and zoning laws and regulations;
•legislative or regulatory changes, including changes to laws governing the taxation of REITs;
•litigation, judgments or settlements;
•competitive market forces;
•the ability of purchasers of manufactured homes and boats to obtain financing; and
•the level of repossessions by manufactured home and boat lenders.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to publicly update or revise any forward-looking statements included or incorporated by reference into this filing, whether as a result of new information, future events, changes in our expectations or otherwise, except as required by law.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements.
| Item 9.01 | Financial Statements and Exhibits | ||||
(d) Exhibits.
| Exhibit No. | Description | ||||
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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: September 13, 2021 | By: | /s/ Karen J. Dearing | |||||||||
Karen J. Dearing, Executive Vice President, Chief Financial Officer, Secretary and Treasurer | |||||||||||
INVESTOR PRESENTATION SEPTEMBER 13, 2021 CYPRESS GREENS – LAKE ALFRED, FL
2 This presentation has been prepared for informational purposes only from information supplied by Sun Communities, Inc., referred to herein as “we,” “our,” “Sun,” and “the Company,” and from third-party sources indicated herein. Such third-party information has not been independently verified. Sun makes no representation or warranty, expressed or implied, as to the accuracy or completeness of such information. This presentation contains various “forward-looking statements” within the meaning of the United States Securities Act of 1933, as amended, and the United States Securities Exchange Act of 1934, as amended, and we intend that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this presentation that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as “forecasts,” “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,” “plans,” “predicts,” “potential,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,” “will,” “designed to,” “foreseeable future,” “believe,” “believes,” “scheduled,” “guidance,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements reflect our current views with respect to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this presentation. These risks and uncertainties may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. In addition to the risks disclosed under “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2020, and our other filings with the Securities and Exchange Commission from time to time, such risks and uncertainties include, but are not limited to: outbreaks of disease, including the COVID-19 pandemic, and related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations; changes in general economic conditions, the real estate industry, and the markets in which we operate; difficulties in our ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully; our liquidity and refinancing demands; our ability to obtain or refinance maturing debt; our ability to maintain compliance with covenants contained in our debt facilities and our senior unsecured notes; availability of capital; changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian and Australian dollars; our ability to maintain rental rates and occupancy levels; our ability to maintain effective internal control over financial reporting and disclosure controls and procedures; increases in interest rates and operating costs, including insurance premiums and real property taxes; risks related to natural disasters such as hurricanes, earthquakes, floods, droughts and wildfires; general volatility of the capital markets and the market price of shares of our capital stock; our ability to maintain our status as a REIT; changes in real estate and zoning laws and regulations; legislative or regulatory changes, including changes to laws governing the taxation of REITs; litigation, judgments or settlements; competitive market forces; the ability of purchasers of manufactured homes and boats to obtain financing; and the level of repossessions by manufactured home and boat lenders. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to publicly update or revise any forward-looking statements included in this presentation, whether as a result of new information, future events, changes in our expectations or otherwise, except as required by law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements. FORWARD-LOOKING STATEMENTS
COMPANY HIGHLIGHTS 3Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Leading owner and operator of manufactured housing (“MH”) communities, recreational vehicle (“RV”) resorts and marinas Favorable demand drivers combined with supply constraints Consistent organic growth enhanced with embedded expansion opportunities Industry consolidator with proven value creation from acquisitions Cycle-tested growth driven by attractive value proposition to residents, members and guests Focus on exceptional service supported by culture of accountability and empowerment Proven executive leadership team with over 100 combined years of industry experience EAST FORK CROSSING – BATAVIA, OH FRIENDLY VILLAGE OF SIMI – SIMI VALLEY, CA HARBORAGE MARINA – ST. PETERSBURG, FL
583 properties across 38 states, Ontario, Canada and Puerto Rico 4 Current Portfolio as of September 13, 2021 Proforma Rental Revenue Breakdown SUN COMMUNITIES, INC. OVERVIEW (NYSE: SUI) Property Count as of September 13, 2021 Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix. (1) Does not include five marinas managed for third parties. (2) Represents percentage of rental revenue from the leasing of sites, homes, wet slips, dry storage spaces and commercial leases. Total Number of Sites / Wet Slips and Dry Storage Spaces: 199,778 Headquarters MH & RV Sites (155,312) Marina Wet Slips and Dry Storage Spaces (44,466) 146 2,996 505 3,141 2,629 2,379 927 / 2,650 3,372 2,005 / 3,262 3,450 / 410 1,715 1,852 / 2,110 1,083 2,338 9,170 3,379 324 927 1,200 784 5,308 9,782 2,204 151 280 155 498 589 413 475 5,172 591 32,504 5,009 2,925 1,4484,1462,235 2,323 1,536 2,500 1,462 1,355 2,887 545 / 367 46,661 4,486 142 572 3,440 (2) (1) 3,194 219 1,450
5 YTD 2021 BUSINESS UPDATE PORTFOLIO PERFORMANCE EXTERNAL GROWTH • 2021 full-year Same Community NOI growth guidance range increased by 230 bps to 9.9% - 10.7% • Gained 1,097 revenue producing sites YTD • Same Community 4th of July Weekend transient RV revenue up 35% & Labor Day Weekend up ~30% compared to same weekends in 2019 • Total home sales volume increased 90% year-over-year for 2Q • 2Q21 brokered home sales volume up 113% compared to 2Q20 • ~$1.1bn invested in 11 MH communities, 11 RV resorts and 14 marinas YTD, including ~$479mm since end of 2Q21 • Disposed of 6 MH properties, total proceeds ~$162mm • Opened new ~$58mm, 246 site RV ground-up development, Sun Outdoors San Diego Bay, in San Diego, California • Opened first phase of new ~490 site RV ground-up development, Camp Fimfo, in New Braunfels, Texas SHELTER ISLAND BOATYARD – SAN DIEGO, CA ACQUIRED IN MAY 2021 CAMP FIMFO TEXAS HILL COUNTRY – NEW BRAUNFELS, TX FIRST PHASE OPENED JUNE 2021 Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix.
Sun is the premier owner and operator of MH and RV communities Strong cycle-tested record of operating, expanding and acquiring MH and RV communities dating back to 1975 6 POWERING SUN’S GROWTH ENGINE - INTERNAL INTERNAL LEVERS Contractual Rent Increases MH Occupancy Gains Expansions Transient RV Site Conversions Annual historical 2% - 4% weighted average monthly rental rate increase supported by continual reinvestment into properties 96.7% 2Q 2021 MH Occupancy 79% of MH communities at 98%+ 200bps+ existing MH occupancy upside Over 550 2020 - 2021 YTD vacant site deliveries ~7,400 sites available for expansion 2021 and beyond Target 10% – 14% expansion IRRs(2) ~27,000 2Q 2021 transient RV sites ~1,000 average yearly converted sites(1) 40% – 60% 1st year revenue uplift once converted Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix. (1) 2018-2020 average. (2) Expected 5-year unlevered internal rates of return based on certain assumptions.
EXTERNAL LEVERS Development 7 POWERING SUN’S GROWTH ENGINE - EXTERNAL Acquisitions ~$4.1bn investment in 166 properties since start of 2020 4.3x increase in properties since year end 2010 Targeting 2 - 4 new development project starts / year Over 1,350 2020 – 2021 YTD ground-up site deliveries in 8 properties CAROLINA PINES – CONWAY, SC High degree of visibility into MH, RV and Marina acquisition pipeline with additional opportunities arising Target 7% – 9% ground-up development IRRs(1) GIG HARBOR – GIG HARBOR, WA ACQUIRED IN NOVEMBER 2020 Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix. (1) Expected 5-year unlevered internal rates of return based on certain assumptions.
2020-2021 ACQUISITION & DEVELOPMENT ACTIVITY 8 2 ~$4.1bn purchase price Acquisitions Ground-up & Redevelopments Expansions Investment Activity Summary(1) ~57,500 sites added in 166 properties & marinas Robust pipeline of small portfolios and single assets in underwriting $226mm invested Opened 2 new ground-up RV Resorts in TX and CA ~2,500 sites available for ground-up & redevelopments $99mm invested Over 550 site deliveries in 11 properties ~7,400 sites available for expansion in 2021 and beyond JELLYSTONE NATURAL BRIDGE – NATURAL BRIDGE, VA ACQUIRED IN FEBRUARY 2020 RIVER RUN RV RESORT – GRANBY, CO FIRST PHASE OPENED IN JULY 2019 SHADOW WOOD VILLAGE – HUDSON, FL OPENED IN SEPTEMBER 2019 WATER OAK – LADY LAKE, FLCABRILLO ISLE – SAN DIEGO, CA SUN OUTDOORS SAN DIE O BAY – HULA VISTA, CA OPENED IN MARCH 2021 Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix. (1) January 2020 through 2021 YTD.
STICKY CUSTOMER BASE WITH LIMITED CAPEX 9 HOMOSASSA RIVER – HOMOSASSA SPRINGS, FL Annual home move-outs in Sun’s MH communities are less than 1% ꟷ Low turnover driven by a $6k - $10k average cost to resident to move a home ꟷ Average tenure of residents in our MH communities is ~14 years(1) RVs stay in Sun’s resorts for ~11 years on average(1) MH and RV requires lower capex relative to other asset classes as MH and RV are largely a land ownership business MH Resident Trends (% of Total Residents, 3-Year Average) RV Guest Trends (% of Total Residents, 3-Year Average) Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix. (1) Annual average (January 2019 – June 30, 2021). VICTOR VILLA – VICTORVILLE, CA
Multi-Family REITsSun Communities CONSISTENT AND CYCLE TESTED CASH FLOW GROWTH 10 Favorable demand drivers, high barriers to entry and Sun’s investment and operational prowess have resulted in consistent and cycle tested organic cash flow growth Over at least the past 20 years, every individual year or rolling 4-quarter period has recorded positive same community NOI growth Over the same period, Sun’s average annual same community NOI growth was 5.0%, which is ~260bps greater than that of multi-family REITs of 2.4% Same Community NOI Growth Quarterly Year-over-Year Growth Since 2000 Sources: Citi Research, June 2021. (1) Multi-Family REITs includes AIRC, AVB, CPT, EQR, ESS, IRT, MAA and UDR. (2) REIT Industry includes Healthcare, Industrial, Manufactured Housing, Multi-Family, Mall, Office, Self Storage, Shopping Center, Single Family Rental, Student Housing and Diversified REITs. (1) CAGR Since 2000 Sun Communities Multi-Family REITs REIT Industry (1) (2)
11 RENTING – MH VS. OTHER RENTAL OPTIONS Manufactured homes in Sun’s communities provide 25% more space at ~50% less cost per square foot Manufactured Homes in Sun’s Communities RENT $1,076 per month Other Rental Options(1) $1,799 per month SQUARE FOOTAGE PRICE 1,250 sq. ft. 1,000 sq. ft. $0.86 per sq. ft. $1.80 per sq. ft. (1) Other rental options include multi-family, single family and duplex 2-bedroom rentals; Data per Zillow – U.S. Median Monthly Rent (Zillow rent index, June 2021).
HOMEOWNERSHIP – MH VS. SINGLE FAMILY 12 Single Family HomesManufactured Homes Average cost of Single Family is $308,597 or roughly 7 years median income Average cost of a new Manufactured Home is $87,000 or roughly 2 years median income Average Household Income ~$44k(1) Sources: U.S. Department of Census, Cost & Size Comparisons of New Manufactured & New Single-Family Site-Built Homes (2009-2020). (1) Average primary applicant household income for SUI’s manufactured housing communities in 2020. Sun is the premiere provider of highly amenitized living at an affordable price ($ in thousands)
13 EXPANSIONS PROVIDE ATTRACTIVE RETURNS SHERKSTON SHORES – SHERKSTON, ON Investment in expansion sites boosts growth in highly accretive manner Sun expands in communities and resorts with high occupancies and continued strong demand Over 6,100 vacant expansion site deliveries since 2015 12 - 24 months average lease-up for 100-site expansion ~7,400 sites available in expansion inventory Target 10% - 14% IRRs(1) OAK CREST – AUSTIN, TX PECAN PARK RV RESORT – JACKSONVILLE, FL Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix. (1) Expected 5-year unlevered internal rates of return based on certain assumptions.
Since 2010, Sun has acquired properties valued at over $9.2 billion, increasing its number of properties by 4.3x Professional Operational Management Home Sales & Rental Program Skilled Expense Management Call Center & Digital Marketing Outreach Repositioning with Additional Capex Adding Value with Expansions MAXIMIZING VALUE FROM STRATEGIC ACQUISITIONS 14 Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix. Properties and Sites
28.2% 25.2% 19.0% 21.4% 16.8% 2017 2018 2019 2020 2Q21 2021 2022 2023 2024 2025 Fannie Mae CMBS Freddie Mac Life Companies $50.5 $0 $315.3 $185.6 $82.2 6.3x 5.6x 5.5x 6.9x 5.1x 2017 2018 2019 2020 2Q21 STRATEGIC BALANCE SHEET 15 Net Debt / TEV(5) Quarter Ended June 30, 2021 Principal Outstanding(2) WA Interest Rates Total Secured Debt $3,457.7 3.75% Total Unsecured Debt $853.4 2.57% Total $4,311.2 3.52% Current Debt Outstanding(1) principal amounts in millions Balance sheet supports growth strategy Total debt maturities over the next 5 years averages 3.7% per year Investment Grade ratings obtained from S&P (BBB) and Moody’s (Baa3); $600mm inaugural bond issuance in June 2021 Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix. (1) For further Debt breakdown, please refer to the Supplemental for the quarter ended June 30, 2021. (2) Includes premium / discount on debt and financing costs. (3) The debt ratios are calculated using trailing 12 months recurring EBITDA for the period ended June 30, 2021. (4) Includes full debt load of recently completed acquisitions but less than a full year of EBITDA contribution. Proforma leverage with full year EBITDA contribution in the high 4x net debt to EBITDA. (5) Total Enterprise Value includes common shares outstanding (per Supplemental), Common OP Units, and Preferred OP Units, as converted, outstanding at the end of each respective period. Mortgage Debt 5-Year Maturity Ladder amounts in millions (4) (4) Net Debt / TTM EBITDA(3)
Environmental SUN COMMUNITIES’ ESG INITIATIVES 16 ESG Highlights(1) We are committed to sustainable business practices to benefit all stakeholders: team members, residents and guests, shareholders and the broader communities where we operate We will continue to enhance Sun’s sustainability program through the formal adoption of additional environmental policies, establishing a data baseline for utility usage, expanding the ESG team, and consulting with vital stakeholders to identify key ESG considerations and solutions We will be publishing our 3rd annual, and GRI-aligned, ESG report in 4Q21 Social Sun University Internal training program, Sun University, offers over 200 courses to team members Sun Unity Sun’s social responsibility program Governance BoD Nominating and Corporate Governance Committee formally oversees all ESG initiatives Enterprise Risk Management Committee identifies, monitors and mitigates risks across the organization Executive Manager Certification Development program for community & resort managers to support career growth BoD Composition 38% female and 75% independent IDEA Launched Inclusion, Diversity, Equity and Access Initiative Comprehensive Policies and Procedures foster sound corporate governance Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix. (1) Performance and initiatives for the 2018 and 2019 reporting years are referenced. Also reference our 2020-2021 ESG Interim Updates. LED Lighting 95%, or 400+ communities and resorts retrofitted with LED lighting Smart Thermostats Installed smart thermostat technology at 300+ communities and resorts Solar Project Invested $35M+ in solar energy construction projects at 32 properties National Park Foundation (NPF) Launched new partnership with NPF to support their outdoor exploration pillar
STRATEGY-DRIVEN OUTPERFORMANCE 17 Sun has significantly outperformed major REIT and broader market indices over the last ten years Sun Communities, Inc. (SUI) MSCI US REIT (RMS)S&P 500 2021 YTD Total Return 5-year Total Return 10-year Total Return 3-year Total Return Source: S&P Global as of August 31, 2021.
$140 Shopping Centers BEST PERFORMANCE AMONG REAL ESTATE SECTORS 18 Sun has proven its strategy through recession resilience and consistent outperformance of multi-family in terms of same community NOI growth since 2000 Indexed Same Community NOI Growth Source: Citi Research, June 2021. (1) Multi-Family includes AIRC, AVB, CPT, EQR, ESS, IRT, MAA and UDR. (2) REIT Industry includes Healthcare, Industrial, Manufactured Housing, Multi-Family, Mall, Office, Self Storage, Shopping Centers, Single Family Rental, Student Housing and Diversified REITs. $282 Sun Communities $264 Self-Storage $151 Multi-Family $129 Mall $162 Industrial $135 Office CAGR 5.0% 4.7% 4.8% 2.3% 1.5% 1.2% 1.6% Sun Communities Multi- Family REIT Industry CAGR since 2000 (1) (2) YTD $266 MH 2.4%
APPENDIX FRIENDLY VILLAGE OF SIMI VALLEY – SIMI VALLEY, CA
NON-GAAP TERMS DEFINED 20 Investors in and analysts following the real estate industry utilize funds from operations (“FFO”), net operating income (“NOI”), and earnings before interest, tax, depreciation and amortization (“EBITDA”) as supplemental performance measures. The Company believes that FFO, NOI, and EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. Additionally, FFO, NOI, and EBITDA are commonly used in various ratios, pricing multiples, yields and returns and valuation calculations used to measure financial position, performance and value. FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of generally accepted accounting principles (“GAAP”) depreciation and amortization of real estate assets. NOI provides a measure of rental operations that does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses. EBITDA provides a further measure to evaluate ability to incur and service debt and to fund dividends and other cash needs. FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating property, plus real estate- related depreciation and amortization, real estate related impairments, and after adjustments for nonconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company’s operating performance. By excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared period-over-period, reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from GAAP net income (loss). Management believes the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. The Company also uses FFO excluding certain gain and loss items that management considers unrelated to the operational and financial performance of our core business (“Core FFO”). The Company believes that Core FFO provides enhanced comparability for investor evaluations of period-over-period results. The Company believes that GAAP net income (loss) is the most directly comparable measure to FFO. The principal limitation of FFO is that it does not replace GAAP net income (loss) as a performance measure or GAAP cash flow from operations as a liquidity measure. Because FFO excludes significant economic components of GAAP net income (loss) including depreciation and amortization, FFO should be used as a supplement to GAAP net income (loss) and not as an alternative to it. Further, FFO is not intended as a measure of a REIT’s ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO is calculated in accordance with the Company’s interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that interpret the NAREIT definition differently. NOI is derived from revenues minus property operating expenses and real estate taxes. NOI is a non-GAAP financial measure that the Company believes is helpful to investors as a supplemental measure of operating performance because it is an indicator of the return on property investment and provides a method of comparing property performance over time. The Company uses NOI as a key measure when evaluating performance and growth of particular properties and / or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense and non-property specific expenses such as general and administrative expenses, all of which are significant costs. Therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall. The Company believes that GAAP net income (loss) is the most directly comparable measure to NOI. NOI should not be considered to be an alternative to GAAP net income (loss) as an indication of the Company’s financial performance or GAAP cash flow from operating activities as a measure of the Company’s liquidity; nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions. Because of the inclusion of items such as interest, depreciation, and amortization, the use of GAAP net income (loss) as a performance measure is limited as these items may not accurately reflect the actual change in market value of a property, in the case of depreciation and in the case of interest, may not necessarily be linked to the operating performance of a real estate asset, as it is often incurred at a parent company level and not at a property level. EBITDA as defined by NAREIT (referred to as “EBITDAre”) is calculated as GAAP net income (loss), plus interest expense, plus income tax expense, plus depreciation and amortization, plus or minus losses or gains on the disposition of depreciated property (including losses or gains on change of control), plus impairment write-downs of depreciated property and of investments in nonconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of nonconsolidated affiliates. EBITDAre is a non-GAAP financial measure that the Company uses to evaluate its ability to incur and service debt, fund dividends and other cash needs and cover fixed costs. Investors utilize EBITDAre as a supplemental measure to evaluate and compare investment quality and enterprise value of REITs. The Company also uses EBITDAre excluding certain gain and loss items that management considers unrelated to measurement of the Company’s performance on a basis that is independent of capital structure (“Recurring EBITDA”). The Company believes that GAAP net income (loss) is the most directly comparable measure to EBITDAre. EBITDAre is not intended to be used as a measure of the Company’s cash generated by operations or its dividend-paying capacity and should therefore not replace GAAP net income (loss) as an indication of the Company’s financial performance or GAAP cash flow from operating, investing and financing activities as measures of liquidity.
5.5% 5.9% 7.7% 9.1% 7.1% 6.9% 6.7% 7.3% 4.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E $314 $182 $744 $1,143 $1,769 $145 $364 $815 $2,979 $1,085 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD2021 SUN’S INTERNAL AND EXTERNAL OPERATIONAL GROWTH Total New and Pre-Owned Homes Sales Ground-Up and Expansion Site Deliveries MH Weighted Average Rental Rate Growth RV Weighted Average Rental Rate Growth Acquisitions Volume Same Community NOI Growth Historical Average: 6.7% 21 Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Note: The estimates and assumptions presented on this page represent a range of possible outcomes and may differ materially from actual results. Guidance estimates include acquisitions completed through July 26, 2021, and exclude any prospective acquisitions or capital markets activity. The estimates and assumptions are forward looking based on the Company’s current assessment of economic and market conditions, as well as other risks outlined above under the caption “Forward Looking Statements.” 10.7% 9.9% 452 1,000 375 650 304 2,133 1,632 2,326 1,346 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 1,600 Historical Average: 1,100 1,200 1,742 1,929 1,966 2,483 3,172 3,282 3,629 3,439 2,866 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 3,250Historical Average: 2,723 2,950 2.8% 2.8% 3.4% 3.4% 3.3% 3.6% 4.0% 4.2% 3.4% 3.2% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E Historical Average: 3.4% 5.1% 1.7% 2.0% 2.9% 3.1% 4.2% 5.4% 6.1% 5.4% 4.3% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E Historical Average: 4.0% ($ in mm)
$39.89 $42.64 $60.46 $68.53 $76.61 $92.78 $101.71 $150.10 $151.95 $201.49 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 8.4x 7.2x 7.3x 6.6x 7.5x 6.3x 5.6x 5.5x 6.9x 5.1x 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 $3.05 $3.22 $3.37 $3.63 $3.79 $4.17 $4.58 $4.92 $5.09 $6.31 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E HEALTHY BALANCE SHEET AND HIGH RETURNS Net Debt to TTM EBITDA (3.3x) FFO Per Share Share Price 50.4% 45.8% 34.8% 34.0% 33.8% 28.2% 25.2% 19.0% 21.4% 16.8% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2Q21 22 Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. Refer to information regarding non-GAAP financial measures in the attached Appendix. Note: The estimates and assumptions presented on this page represent a range of possible outcomes and may differ materially from actual results. Guidance estimates include acquisitions completed through July 26, 2021, and exclude any prospective acquisitions or capital markets activity. 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 above under the caption “Forward Looking Statements.” (1) Midpoint of current guidance range. (2) As of August 31, 2021. (1) Net Debt / TEV CAGR 8.4% (33.6)% CAGR 20.6% (2)
90% 88% 85% 81% 77% South Southeast Northeast Midwest Southwest SAFE HARBOR IS THE PREMIER MARINA OPERATOR Unrivaled Among Competitors 120 Owned Marinas 33,800 Approximate Wet Slips 23 States & Puerto Rico 79% of Marinas Located in Coastal Markets(3) 44,000 Approximate Members 7.6 Years Average Member Tenure 76% of Marinas Owned Fee Simple(4)(1) 10,700 Approximate Dry Storage Spaces(2) 23 Unmatched in scale, portfolio quality and depth of network offering (# of owned marinas – 9/13/2021) Safe Harbor is the largest and most diversified marina owner and operator in the United States (1) As of September 13, 2021, Safe Harbor directly or indirectly owns 120 marinas and manages five marinas on behalf of third parties. (2) Dry Storage Spaces include Indoor Storage. (3) Calculation of marinas located in coastal markets include those along the Great Lakes. (4) 29 currently owned marinas operate with underlying ground leases with an average remaining term of ~28 years. (5) For 75 properties owned and operated by Safe Harbor since 1/1/2020. Same Marina - Rental Revenue CAGR(5) 2Q21 1H21 9.7% 8.0% 120 32 25 23 8 NEW ENGLAND BOATWORKS – PORTSMOUTH, RI Wet Slip Occupancy by Region as of June 30, 2021
MARINA SECTOR PIONEER AND CONSOLIDATOR 24 Key Transactions(1) 1 3Q 2015 Date Acquired Flagship(2) 2 3 4 5 6 7 7 Marinas 4,717 Slips / Dry Storage Spaces (1) Date acquired reflects period in which last marina acquisition closed. (2) Properties acquired prior to Sun Communities’ acquisition of Safe Harbor Marinas in October 2020. 8 2Q 2016 Date Acquired CNL(2) 15 Marinas 7,134 Slips / Dry Storage Spaces 1Q 2017 Date Acquired Brewer(2) 26 Marinas 7,411 Slips / Dry Storage Spaces 1Q 2018 Date Acquired OPC(2) 3 Marinas 660 Slips / Dry Storage Spaces 4Q 2018 Date Acquired Charleston(2) 3 Marinas 401 Slips / Dry Storage Spaces 4Q 2019 Date Acquired Newport/NEB(2) 2 Marinas 329 Slips / Dry Storage Spaces 3Q 2020 Date Acquired Tri-W(2) 5 Marinas 2,251 Slips / Dry Storage Spaces 4Q 2020 Date Acquired Rybovich 2 Marinas 78 Slips / Dry Storage Spaces PUERTO DEL REY – FAJARDO, PUERTO RICO ACQUIRED IN SEPTEMBER 2021 Marina Acquisition Pace 9 Lauderdale 2Q 2021 Date Acquired 1 Marina 202 Slips / Dry Storage Spaces $83mm Purchase Price $113mm Purchase Price $263mm Purchase Price $65mm Purchase Price $45mm Purchase Price $113mm Purchase Price $78mm Purchase Price $369mm Purchase Price $340mm Purchase Price $466 $40 $423 $214 7 4 4 6 4Q20 1Q21 2Q21 3Q21 (Through 9/13/21) Dollar Amount ($ mm) Number of Marinas
NET INCOME TO FFO RECONCILIATION 25 (amounts in thousands except per share data) Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. 2021 2020 2021 2020 2020 2019 2018 Net Income Attributable to Sun Communities, Inc. Common Stockholders 110,770$ 58,910$ 135,552$ 42,824$ 131,614$ 160,265$ 105,493$ Adjustments Depreciation and amortization 126,227 87,296 249,303 171,048 376,897 328,646 288,206 Depreciation on nonconsolidated affiliates 31 19 61 19 66 - - (Gain) / loss on remeasurement of marketable securities (27,494) (24,519) (31,155) 4,128 (6,129) (34,240) 3,639 (Gain) / loss on remeasurement of investment in nonconolidated affiliates 115 (1,132) 11 1,059 1,608 - - (Gain) / loss on remeasurement of notes receivable (93) (246) (469) 1,866 3,275 - - Income attributable to noncontrolling interests 5,033 1,942 4,886 1,646 7,881 8,474 7,740 Preferred return to preferred OP units 478 - 958 1,000 2,231 2,610 2,206 Preferred distribution to Series A-4 preferred stock - - - - - 1,288 1,737 Interest expense on Aspen preferred OP units 514 - 1,028 - - - - Gain on disposition of properties - - - - (5,595) - - Gain on disposition of assets, net (17,564) (4,178) (25,719) (9,740) (22,180) (26,356) (23,406) FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities 198,017$ 118,092$ 334,456$ 213,850$ 489,668$ 440,687$ 385,615$ Adjustments Business combination expense and other acquisition related costs 2,284 504 4,237 889 25,334 1,146 1,001 Loss on extinguishment of debt 8,108 1,930 8,108 5,209 5,209 16,505 1,190 Catastrophic event-related charges, net 364 (567) 2,778 39 885 1,737 92 (Gain) / loss of earnings - catastrophic event-related - - 200 300 - - (292) (Gain) / loss on foreign currency translation 264 (10,374) 239 7,105 (8,039) (4,557) 8,234 Other (income) / expense, net 517 552 1,233 854 3,768 1,100 (1,781) Other adjustments 66 188 (81) 58 (1,265) 314 310 Core FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities 209,620$ 110,325$ 351,170$ 228,304$ 515,560$ 456,932$ 394,369$ Weighted average common shares outstanding - basic 112,082 95,859 110,007 94,134 97,521 88,460 81,387 Weighted average common shares outstanding - fully diluted 116,413 98,613 114,145 97,770 101,342 92,817 86,141 FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities Per Share - Fully Diluted 1.70$ 1.20$ 2.93$ 2.19$ 4.83$ 4.75$ 4.48$ Core FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities Per Share - Fully Diluted 1.80$ 1.12$ 3.08$ 2.34$ 5.09$ 4.92$ 4.58$ Six Months Ended June 30, Year Ended December 31,Three Months Ended June 30,
NET INCOME TO NOI RECONCILIATION 26 (amounts in thousands) Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. 2021 2020 2021 2020 2020 2019 2018 Net Income Attributable to Sun Communities, Inc., Common Stockholders 110,770$ 58,910$ 135,552$ 42,824$ 131,614$ 160,265$ 105,493$ Interest income (2,719) (2,635) (5,350) (4,985) (10,119) (17,857) (20,852) Brokerage commissions and other revenues, net (6,939) (3,274) (12,899) (7,187) (17,230) (14,127) (6,205) General and administrative expenses 45,127 26,527 83,330 51,876 109,616 92,777 80,690 Catastrophic event related charges, net 355 (566) 2,769 40 885 1,737 92 Business combination expense, net (201) - 1,031 - 23,008 - - Depreciation and amortization 126,423 87,265 249,727 170,954 376,876 328,067 287,262 Loss on extinguishment of debt 8,108 1,930 8,108 5,209 5,209 16,505 1,190 Interest expense 37,681 31,428 77,198 63,844 129,071 133,153 130,556 Interest on mandatorily redeemable preferred OP units / equity 1,041 1,042 2,077 2,083 4,177 4,698 3,694 (Gain) / loss on remeasurement of marketable securities (27,494) (24,519) (31,155) 4,128 (6,129) (34,240) 3,639 (Gain) / loss on foreign currency translation 264 (10,374) 239 7,105 (8,039) (4,557) 8,234 Gain on disposition of property - - - - (5,595) - - Other (income) / expense, net 660 821 1,759 1,793 5,561 1,779 (1,781) (Gain) / loss on remeasurement of notes receivable (93) (246) (469) 1,866 3,275 - - Income from nonconsolidated affiliates (794) (92) (1,965) (144) (1,740) (1,374) (790) (Gain) / loss on remeasurement of investment in nonconsolidated affiliates 115 (1,132) 11 1,059 1,608 - - Current tax expense 1,245 119 1,016 569 790 1,095 595 Deferred tax (benefit) / expense 66 (112) (81) (242) (1,565) (222) (507) Preferred return to preferred OP units / equity 3,035 1,584 5,899 3,154 6,935 6,058 4,486 Income attributable to noncontrolling interests 7,044 2,861 7,339 1,899 8,902 9,768 8,443 Preferred stock distribution - - - - - 1,288 1,736 NOI 303,694$ 169,537$ 524,136$ 345,845$ 757,110$ 684,813$ 605,975$ 2021 2020 2021 2020 2020 2019 2018 Real Property NOI 252,742$ 162,600$ 457,394$ 333,939$ 721,302$ 649,706$ 578,263$ Home Sales NOI 23,085 6,479 33,694 13,027 28,624 32,825 26,923 Service, retail dining and entertainment NOI 27,867 458 33,048 (1,121) 7,184 2,282 789 NOI 303,694$ 169,537$ 524,136$ 345,845$ 757,110$ 684,813$ 605,975$ Year Ended December 31, Year Ended December 31, Three Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30,
NET INCOME TO RECURRING EBITDA RECONCILIATION 27 (amounts in thousands) Source: Company information. Refer to Sun Communities, Inc. Form 10-Q and Supplemental for the quarter ended June 30, 2021, as well as Press Releases and SEC Filings after June 30, 2021, for additional information. 2021 2020 2021 2020 2020 2019 2018 Net Income Attributable to Sun Communities, Inc., Common Stockholders 110,770$ 58,910$ 135,552$ 42,824$ 131,614$ 160,265$ 105,493$ Adjustments Depreciation and amortization 126,423 87,265 249,727 170,954 376,876 328,067 287,262 Loss on extinguishment of debt 8,108 1,930 8,108 5,209 5,209 16,505 1,190 Interest expense 37,681 31,428 77,198 63,844 129,071 133,153 130,556 Interest on mandatorily redeemable preferred OP units / equity 1,041 1,042 2,077 2,083 4,177 4,698 3,694 Current tax expense 1,245 119 1,016 569 790 1,095 595 Deferred tax (benefit) / expense 66 (112) (81) (242) (1,565) (222) (507) Income from nonconsolidated affiliates (794) (92) (1,965) (144) (1,740) (1,374) (790) Less: Gain on disposition of assets, net (17,564) (4,178) (25,719) (9,740) (22,180) (26,356) (23,406) Less: Gain on disposition of properties - - - - (5,595) - - EBITDAre 266,976$ 176,312$ 445,913$ 275,357$ 616,657$ 615,831$ 504,087$ Adjustments Catastrophic event related charges, net 355 (566) 2,769 40 885 1,737 92 Business combination expense, net (201) - 1,031 - 23,008 - - (Gain) / loss on remeasurement of marketable securities (27,494) (24,519) (31,155) 4,128 (6,129) (34,240) 3,639 (Gain) / loss on foreign currency translation 264 (10,374) 239 7,105 (8,039) (4,557) 8,234 Other (income) / expense, net 660 821 1,759 1,793 5,561 1,779 (1,781) (Gain) / loss on remeasurement of notes receivable (93) (246) (469) 1,866 3,275 - - (Gain) / loss on remeasurement of investment in nonconsolidated affiliates 115 (1,132) 11 1,059 1,608 - - Preferred return to preferred OP units / equity 3,035 1,584 5,899 3,154 6,935 6,058 4,486 Income attributable to noncontrolling interests 7,044 2,861 7,339 1,899 8,902 9,768 8,443 Preferred stock distribution - - - - - 1,288 1,736 Plus: Gain on dispositions of assets, net 17,564 4,178 25,719 9,740 22,180 26,356 23,406 Recurring EBITDA 268,225$ 148,919$ 459,055$ 306,141$ 674,843$ 624,020$ 552,342$ Year Ended December 31,Three Months Ended June 30, Six Months Ended June 30,