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sui-20211231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2021

Commission file number 1-12616

SUN COMMUNITIES, INC.

(Exact Name of Registrant as Specified in its Charter)


Maryland	1-12616	38-2730780
(State of Incorporation)	Commission file number	(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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

SUI

New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 ☒ 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. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

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 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, 2021, the aggregate market value of the registrant’s stock held by non-affiliates was $19,529,836,028 (computed by reference to the closing sales price of the registrant’s common stock as of June 30, 2021). For this computation, the registrant has excluded the market value of all shares of common stock reported as beneficially owned by executive officers and directors of the registrant; such exclusion shall not be deemed to constitute an admission that any such person is an affiliate of the registrant.

Number of shares of Common Stock, $0.01 par value per share, outstanding as of February 15, 2022: 115,961,958

Documents Incorporated By Reference

Unless provided in an amendment to this Annual Report on Form 10-K, the information required by Part III is incorporated by reference to the registrant’s proxy statement to be filed pursuant to Regulation 14A, with respect to the registrant’s 2022 annual meeting of stockholders.

SUN COMMUNITIES, INC.

Table of Contents


Item	Description	Page

Part I.
Item 1.	Business	1
Item 1A.	Risk Factors	14
Item 1B.	Unresolved Staff Comments	30
Item 2.	Properties	31
Item 3.	Legal Proceedings	48
Item 4.	Mine Safety Disclosures	48

Part II.
Item 5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	49
Item 6.	[Reserved]	52
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	53
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	81
Item 8.	Financial Statements and Supplementary Data	82
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	82
Item 9A.	Controls and Procedures	82
Item 9B.	Other Information	82

Part III.
Item 10.	Directors, Executive Officers and Corporate Governance	83
Item 11.	Executive Compensation	83
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	83
Item 13.	Certain Relationships and Related Transactions, and Director Independence	83
Item 14.	Principal Accountant Fees and Services	83

Part IV.
Item 15.	Exhibits and Financial Statement Schedules	84
Item 16.	Form 10-K Summary	84

Exhibits		85

Signatures		87

Index to the Consolidated Financial Statements and Financial Statement Schedule		F-1

SUN COMMUNITIES, INC.

PART I

ITEM 1. BUSINESS

GENERAL OVERVIEW

Sun Communities, Inc., a Maryland corporation, and all wholly-owned or majority-owned and controlled subsidiaries, including Sun Communities Operating Limited Partnership, a Michigan limited partnership (the "Operating Partnership"), Sun Home Services, Inc., a Michigan corporation ("SHS") and Safe Harbor Marinas, LLC ("Safe Harbor") are referred to herein as the "Company," "us," "we," and "our."

We are a fully integrated real estate investment trust ("REIT"). We own manufactured housing ("MH") communities and recreational vehicle ("RV") resorts throughout the United States and in Ontario, Canada. We self-administer, self-manage, and operate or hold an interest in, and develop the majority of our MH communities and RV resorts. A select number of our communities and resorts are operated by independent third party contractors on our behalf under a management agreement. Others are operated by a lessee under a ground lease arrangement. Through Safe Harbor, we own, operate, develop and manage marinas throughout the United States ("U.S.") and Puerto Rico, with the majority of such marinas concentrated in coastal regions and others located in various inland regions. We are a fully-integrated real estate company which, together with our affiliates and predecessors, has been in the business of acquiring, operating, developing and expanding MH communities and RV resorts since 1975 and marinas since 2020. We lease individual parcels of land, or sites, with utility access for the placement of manufactured homes and RVs to our MH and RV customers. Our MH communities are designed to offer affordable housing to individuals and families, while also providing certain amenities. Our RV resorts are designed to offer affordable vacation opportunities to individuals and families complemented by a diverse selection of high-quality amenities. Our marina offerings include wet slip and dry storage space leases, end-to-end service (such as routine maintenance, repair and winterization), fuel sales and other high-end amenities. These services and amenities offer convenience and resort-quality experiences.

As of December 31, 2021, we owned and operated, directly or indirectly, or had an interest in, a portfolio of 602 MH communities, RV resorts and marinas (collectively, the "properties") located in 39 states, Ontario, Canada and Puerto Rico, including 284 MH communities, 160 RV resorts, 33 properties containing both MH and RV sites, and 125 marinas. As of December 31, 2021, the properties contained an aggregate of 204,163 developed sites comprised of 98,621 developed MH sites, 30,540 annual RV sites (inclusive of both annual and seasonal usage rights), 29,847 transient RV sites, and 45,155 wet slips and dry storage spaces. Additionally, there are nearly 11,000 additional MH and RV sites suitable for development.

We are engaged through SHS, a taxable REIT subsidiary, in the marketing, selling, and leasing of new and pre-owned homes to current and future residents in our communities. The operations of SHS support and enhance our occupancy levels, property performance and cash flows.

Our executive and principal property management office is located at 27777 Franklin Road, Suite 200, Southfield, Michigan 48034 and our telephone number is (248) 208-2500. Our Safe Harbor marina segment principal office is located in Dallas, Texas. We have regional property management offices throughout the United States. We employed an aggregate of 5,961 full and part time employees as of December 31, 2021.

Our website address is www.suncommunities.com and we make available, free of charge, on or through our website all of our periodic reports, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and current reports on Form 8-K, as soon as reasonably practicable after we file such reports with the Securities and Exchange Commission (the "SEC"). Additionally, the SEC maintains a website at https://www.sec.gov, that contains reports, proxy information statements and other information about Sun.

SUN COMMUNITIES, INC.

STRUCTURE OF THE COMPANY

The Operating Partnership is structured as an umbrella partnership REIT, or UPREIT. We conduct substantially all of our operations through the Operating Partnership. The Operating Partnership owns, either directly or indirectly through other subsidiaries, substantially all of our assets. This UPREIT structure enables us to comply with certain complex requirements under the federal tax rules and regulations applicable to REITs, and to acquire MH communities, RV resorts and marinas in transactions that defer some or all of the sellers' tax consequences. The financial results of the Operating Partnership and our other subsidiaries are consolidated in our Consolidated Financial Statements. The financial results include certain activities that do not necessarily qualify as REIT activities under the Internal Revenue Code of 1986, as amended (the "Code"). We have formed taxable REIT subsidiaries, as defined in the Code, to engage in such activities. We use taxable REIT subsidiaries to offer certain services to our residents and engage in activities that would not otherwise be permitted under the REIT rules if provided directly by us or by the Operating Partnership. The taxable REIT subsidiaries include our home sales business, SHS, which provides manufactured home sales, leasing, and other services to current and prospective tenants of our properties.

Under the partnership agreement, the Operating Partnership is structured to make distributions with respect to certain of the Operating Partnership units ("OP units") at the same time that distributions are made to our common stockholders. The Operating Partnership is structured to permit limited partners holding certain classes or series of OP units to exchange those OP units for shares of our common stock (in a taxable transaction) and achieve liquidity for their investment.

As the sole general partner of the Operating Partnership, we generally have the power to manage and have complete control over the conduct of the Operating Partnership's affairs and all decisions or actions made or taken by us as the general partner pursuant to the partnership agreement are generally binding upon all of the partners and the Operating Partnership.

SUN COMMUNITIES, INC.

We do not own all of the OP units. The following table sets forth:

•The various series of OP units and the number of units of each series outstanding as of December 31, 2021;

•The relative ranking of the various series of OP units with respect to rights to the payment of distributions and the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Operating Partnership;

•The number of shares of our common stock issuable upon the exchange of each OP unit of the applicable series;

•The annual distribution rate on each series of OP Units; and

•Information regarding the terms of redemption rights for each series of OP units, as applicable.


Ranking	Description	OP Units Outstanding at December 31, 2021	Exchange Rate(1)	Annual Distribution Rate(2)		Cash Redemption(3)	Redemption Period
1	Preferred OP units (or "Aspen preferred OP units")	1,283,819(4)	Variable(5)	Variable(6)		Mandatory	Variable(7)
1	Series A-1 preferred OP units	275,024	2.439	6.0	%	N/A	N/A
2	Series C preferred OP units	306,163	1.11	Variable(8)		N/A	N/A
3	Series D preferred OP units	488,958	0.8	Variable(9)		Holder's Option	Any time after earlier of January 31, 2024 or death of holder
4	Series E preferred OP units	90,000	0.6897	Variable(10)		N/A	N/A
5	Series F preferred OP units	90,000	0.625	3.0	%	Holder's Option	Any time after earlier of May 14, 2025 or death of holder
6	Series G preferred OP units	240,710	0.6452	3.2	%	Holder's Option	Any time after earlier of September 30, 2025 or death of holder
7	Series H preferred OP units	581,407	0.6098	3.0	%	Holder's Option	Any time after earlier of October 30, 2025 or death of holder
8	Series I preferred OP units	922,000	0.6098	3.0	%	Holder's Option	Any time after earlier of December 31, 2025 or death of holder
9	Series J preferred OP units	240,000	0.6061	2.85	%	Holder's Option	During the 30-day period following a change of control of the Company or any time after April 21, 2026.
10	Series A-3 preferred OP units	40,268	1.8605	4.5	%	N/A	N/A
11	Common OP units	118,514,363(11)	1.0	Same distribution rate for common stock and common OP units		N/A	N/A

(1) Exchange rates are subject to adjustment upon stock splits, recapitalizations and similar events. The exchange rates of certain series of OP units are approximated to four decimal places.

(2) Except for common OP units, distributions are payable on the issue price of each OP unit, which is $27.00 per unit for all Aspen preferred OP units and $100.00 per unit for all other preferred OP units.

(3) The redemption price for each OP unit redeemed will be equal to its issue price plus all accrued but unpaid distributions.

(4) Of the outstanding Aspen preferred OP units, 270,000 are designated as "Aspen 2034 Units."

(5) At any time prior to January 1, 2024 (or prior to January 1, 2034 with respect to the Aspen 2034 Units), at the holder's option, each Aspen preferred OP unit may be exchanged into: (a) if the average closing price of our common stock for the preceding ten trading days is $68.00 per share or less, 0.397 common OP units, or (b) if the average closing price of our common stock for the preceding ten trading days is greater than $68.00 per share, the number of common OP units determined by dividing (i) the sum of (A) $27.00 plus (B) 25 percent of the amount by which the average closing price of our common stock for the preceding ten trading days exceeds $68.00 per share, by (ii) the average closing price of our common stock for the preceding ten trading days.

(6) The annual distribution rate for Aspen 2034 Units is 3.8 percent. The annual distribution rate on all other Aspen preferred OP units is equal to the 10-year U.S. Treasury bond yield plus 239 basis points; provided, however, that such aggregate distribution rate shall not be less than 6.5 percent nor more than 9.0 percent.

(7) We are required to redeem all outstanding Aspen preferred OP units other than the Aspen 2034 Units on January 2, 2024. We are required to redeem all outstanding Aspen 2034 Units on January 2, 2034. In addition, we are required to redeem the Aspen preferred OP units (including Aspen 2034 Units) of any holder thereof within five days after receipt of a written demand during the existence of certain uncured Aspen preferred OP unit defaults, including our failure to pay distributions on the Aspen preferred OP units when due and our failure to provide certain security for the payment of distributions on the Aspen preferred OP units.

(8) 4.5 percent until April 1, 2020 and 5.0 percent thereafter.

(9) 3.75 percent until January 31, 2021 and 4.0 percent thereafter.

(10) 5.25 percent until January 9, 2022 and 5.5 percent thereafter.

(11) Of the 118,514,363 common OP units, 115,976,408, or 97.9 percent were held by us, and 2,537,955, or 2.1 percent were owned by the limited partners.

SUN COMMUNITIES, INC.

REAL PROPERTY OPERATIONS

MH communities and RV resorts

An MH community is a residential subdivision with sites for the placement of manufactured homes, related improvements and amenities. Manufactured homes are detached single‑family homes which are produced off‑site by manufacturers and installed on site within the community. Manufactured homes are available in a wide array of designs, providing owners with a level of customization generally unavailable in multi-family housing developments. Modern MH communities contain improvements similar to other garden‑style residential developments, including centralized entrances, paved streets, curbs, gutters and parkways. In addition, these communities also often provide a number of amenities, such as a clubhouse, a swimming pool, basketball courts, shuffleboard courts, tennis courts and laundry facilities.

An RV resort is a resort with sites for the placement of RVs for varied lengths of time. RV resorts may also provide vacation rental homes and may include a number of amenities such as restaurants, golf courses, swimming pools, water parks, tennis courts, fitness centers, planned activities and spacious social facilities.

Renters at our MH and RV properties lease the site on which a manufactured home, RV or vacation rental home is located. We typically own the underlying land, utility connections, streets, lighting, driveways, common area amenities, and other capital improvements and are responsible for enforcement of community guidelines and maintenance. In certain MH and RV properties, we do not own all of the underlying land and operate the communities pursuant to ground leases. Certain of the properties provide water and sewer service through public or private utilities companies, while others provide these services to residents from on-site facilities. Each owner of a home within our properties is responsible for the maintenance of the home and leased site. As a result, our capital expenditure needs tend to be less significant relative to multi-family rental apartment complexes.

In 2021, we began to rebrand certain of our RV resorts under the "Sun Outdoors" umbrella. Sun Outdoors offers tent camping, RV sites and vacation rentals with world-class amenities throughout the U.S. and in Ontario, Canada. We believe this rebranding under the Sun Outdoors umbrella will allow us to gain a competitive advantage in the outdoor recreation market. We are in the process of implementing the Sun Outdoors brand at certain of our RV resorts and expect implementation to be substantially completed by the end of 2022. Implementation consists of conversion of digital presence (Website, Facebook, Rezplot reservation software and other internal systems) and signage replacement at the resorts.

We compete with other available MH communities and RV resorts, and alternative forms of housing (such as on-site constructed homes, apartments, condominiums and townhouses) as they provide housing alternatives to potential tenants of MH communities and RV resorts.

Marina

A marina is a specially-designed harbor that can be located on oceans, lakes, bays or rivers and typically includes dry storage systems that provide storage solutions for the placement of vessels ranging in size from small boats to super yachts for varied lengths of time. Dry storage systems also allow for the required maintenance to the vessels that we store. Marinas also provide ancillary services, such as fuel stations, ship stores, restaurants, swimming pools, cabin and lodging rentals, boat rentals, tennis courts, fitness centers, shower and laundry facilities, planned activities and other services to create a robust member experience.

Renters at our marinas lease the wet slip or dry storage space on which the vessel is stored. We typically own the underlying land, building improvements, dock improvements, site improvements and other on-site amenity structures. Because we own the facilities and improvements on the land or submerged land at those marinas, we are responsible for the capital improvements and maintenance. In certain marinas, we do not own all of the underlying land and operate the marinas pursuant to ground leases.

We compete with other available marinas in the U.S. and Puerto Rico.

PROPERTY MANAGEMENT

Our property management strategy emphasizes intensive, detail-oriented, hands-on management by dedicated, on-site community, resort and marina managers. We believe our focus on creating an exceptional resident, guest and member experience creates a competitive advantage. It enables us to continually monitor and address concerns, the performance of competitive properties and local market conditions. As of December 31, 2021, of our 5,961 employees, 4,145 were located on-site as property managers, support staff or maintenance personnel, and of those, approximately 83.0 percent were full-time employees.

SUN COMMUNITIES, INC.

Our MH and RV property managers are overseen by John B. McLaren, our President and Chief Operating Officer, who has been in the MH industry since 1995, Bruce Thelen, our Executive Vice President of Operations and Sales, who has led our manufactured home sales and leasing subsidiary, SHS, since January 2018, three Senior Vice Presidents of Operations and Sales, 11 Divisional Vice Presidents and 45 Regional Vice Presidents. Each Regional Vice President oversees one to 16 properties and is responsible for regular property inspections, oversight of property operations and sales functions, semi-annual market surveys of competitive communities and interaction with local manufactured home dealers.

Each property manager performs regular inspections in order to monitor the physical condition of properties and to effectively address tenant concerns. In addition to an on-site manager, each district or property has on-site maintenance personnel and management support staff. We hold mandatory training sessions for all new property management personnel to ensure that policies and procedures are executed effectively and professionally. All of our property management personnel participate in on-going training to ensure that changes to policies and procedures are implemented consistently. Our internal training program has led to increased knowledge and accountability for daily operations and policies and procedures.

Our marina business is overseen by Baxter Underwood, the Chief Executive Officer of Safe Harbor, who has been in the marina business since 2006, two Chief Operating Officers and 17 Regional Vice Presidents who are responsible for regular marina inspections and oversight of operations.

HOME SALES AND RENTALS

SHS is engaged in the marketing, selling and leasing of new and pre-owned homes to residents in our communities. Because tenants often purchase a home already on-site within a community, such services enhance occupancy and property performance. Additionally, because many of the homes on the properties are sold through SHS, better control of home quality in our communities can be maintained than if sales services were conducted solely through third-party brokers.

SHS also leases homes to prospective tenants. At December 31, 2021, SHS had 9,870 occupied leased homes in its portfolio. New and pre-owned homes are purchased for the Rental Program. Leases associated with the Rental Program generally have a term of one year. The Rental Program requires management of costs associated with repair and refurbishment of these homes as the tenants vacate and the homes are re-leased, similar to apartment rentals. We received approximately 55,500 applications during 2021 to live in our MH and RV properties, providing a significant "resident onboarding" system that allows us to market the purchase of a home to qualified applicants. Through the Rental Program we demonstrate our product and lifestyle to the renters, while monitoring their payment history and converting qualified renters to owners.

Our home sales and leasing operations compete with other local and national MH dealers and MH community owners.

MARINA MEMBER BASE

We are engaged in the marketing and leasing of wet slips and dry storage spaces and have approximately 45,000 members throughout our marina network as of December 31, 2021.

SITE LEASES OR USAGE RIGHTS

Typical tenant leases for MH sites are year-to-year or month-to-month, renewable upon the consent of both parties, or, in some instances, as provided by statute. Certain of our leases, mainly at our Florida and California properties, are tied to the consumer price index or other indices as they relate to rent increases. Generally, market rate adjustments are made on an annual basis. These leases are cancellable for non-payment of rent, violation of community rules and regulations or other specified defaults. During the five calendar years ended December 31, 2021, on average less than 1.0 percent of the homes in our MH communities have been removed by their owners and 6.5 percent of the homes have been sold by their owners to a new owner who then assumes rental obligations as a community resident. The average cost to move a home is approximately $7,000. On average, our residents remain in our communities for approximately 14 years.

Typical resident agreements for RV sites are year-to-year or from move-in date until the end of the current calendar year. Generally, increases and market rate adjustments are made on an annual basis. These agreements are cancellable for non-payment of rent, violation of resort rules and regulations or other specified defaults.

Leases for wet slips and dry storage spaces at our marinas are year-to-year, season-to-season, month-to-month, or transient by night, renewable upon the consent of both parties. On average, our members maintain leases in our marinas for approximately eight years.

SUN COMMUNITIES, INC.

ACQUISITIONS

During the year ended December 31, 2021, we acquired 35 MH communities and RV resorts, totaling 9,277 sites and 19 marinas totaling 6,539 wet slips and dry storage spaces for a total purchase price of approximately $1.4 billion.

On November 13, 2021, we entered into an agreement to acquire Tiger Topco 1 Limited (together with its subsidiaries, "Park Holidays"), an owner and operator of holiday communities in the United Kingdom. The transaction values Park Holidays at an enterprise value of £950 million (or approximately $1.3 billion). We anticipate that the acquisition of Park Holidays will close within the three months ending March 31, 2022. However, the closing is subject to the approval of the UK Financial Conduct Authority, which regulates certain loan brokering activities of Park Holidays.

We are also currently pursuing additional significant acquisition opportunities outside the United States, including in the United Kingdom and Europe.

EXPANSION / DEVELOPMENT

During the year ended December 31, 2021, we completed the construction of over 1,030 sites in eight ground-up developments and re-developments, and nearly 580 expansion sites in six MH communities and five RV resorts.

REGULATIONS AND INSURANCE

General

MH, RV and marina properties are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities such as swimming pools, clubhouses and other common areas. Each property has the necessary operating permits and approvals.

Insurance

Our management believes that the properties are covered by adequate fire, property, business interruption, general liability, and (where appropriate) flood and earthquake insurance provided by reputable companies with commercially reasonable deductibles and limits. We maintain a blanket policy that covers all of our properties. We have obtained title insurance insuring fee title to the properties in an aggregate amount which we believe to be adequate. Claims made to our insurance carriers that are determined to be recoverable are classified in other receivables as incurred.

HUMAN CAPITAL

Human capital management is key to our success and focuses on diversity, equity and inclusion, employee retention and talent development practices. We are committed to building an equitable and inclusive culture that inspires and supports the growth of our employees, serves our communities and shapes a more sustainable business. The most significant measures and objectives that we focus on in managing our business and our related human capital initiatives include the following:

CULTURE

We are taking deliberate actions to foster a growth culture that is grounded in our vision and culture statements: We are an inspired, engaged and collaborative team committed to providing extraordinary service to our residents, customers and team members. Together as one team, we embrace the following seven key behaviors that make our company a great place to work:

•Live the Golden Rule: Treat others the way you want to be treated;

•Do the right thing;

•We over me;

•Nothing changes if nothing changes;

•Mindset is everything;

•Keep it simple; and

•Be yourself and thrive.

SUN COMMUNITIES, INC.

LEADERSHIP, TALENT, TRAINING AND DEVELOPMENT

We expect our leaders to be role models and lead in a way that enables our organization to achieve success. Our strategy is anchored in promoting the right internal talent and hiring the right external talent for career opportunities across our organization. We are focused on hiring and developing talent that mirrors the markets we serve, and investing in learning opportunities and capabilities that equip our workforce with the skills they need while improving engagement and retention.

•Our internal training program, Sun University, offers over 100 courses to our MH and RV team members on a range of topics, including leadership, communications, inclusion and diversity, software and operations. Our internal training program has led to increased knowledge and accountability for daily operations and policies and procedures. In 2021, team members logged 52,506 learning hours;

•We hold mandatory ongoing training sessions for all property management personnel to ensure that policies and procedures are executed effectively, professionally and consistently; and

•New team members are required to complete information security training, and safety and compliance-related training, with routine refreshers at least annually on critical topics.

We are dedicated to the attraction, development and retention of our talent, focusing our efforts on ensuring that the returning seasonal team member pipeline remains robust each year and our annual talent management processes focus on the professional development of salaried team members. As of December 31, 2021, nearly 10 percent of our employees had over 10 years tenure.

Our compensation philosophy, aimed to apply merit-based, equitable compensation practices, is designed to attract and retain top talent. For eligible team members, we offer competitive salary, health, welfare, retirement and pet insurance benefits, tuition reimbursement and rent / vacation discounts at our properties.

DIVERSITY, EQUITY AND INCLUSION ("DEI")

We make it a priority to recognize and appreciate the diverse characteristics that make individuals unique in an atmosphere that promotes and celebrates individual and collective achievement. We believe it's not just about gender or race, but about being diverse in thoughts, life and work experiences. Our inclusive environment challenges, inspires, rewards, and transforms our team to be the best. We do not tolerate harassing, discriminatory, or retaliatory conduct as such conduct is prohibited and inconsistent with our policies, practices and philosophy. We continue to put our resources and energy into strategies and initiatives to create a more equitable environment.

Workforce Diversity

We believe we are a stronger organization when our workforce represents a diversity of ideas and experiences. We value and embrace diversity in our employee recruiting, hiring and development practices. As of December 31, 2021, 41 percent of our employees were female, 21 percent of our employees were racially or ethnically diverse, and 47 percent of our employees were aged 50 years and older, with approximately 24 percent being aged 60 years and older.

Training and Resources

We offer trainings and resources on diversity, equity and inclusion to our employees. Diversity education and training programs for our team focus on unconscious bias, gender identity and transitions, generational differences, religion in the workplace, and self-awareness and self-assessments.

•We launched our formal initiative for Inclusion, Diversity, Equity and Accountability ("IDEA") focused on enhancing diversity through education, awareness and outreach throughout our company, communities and resorts;

•We engaged a third-party DEI consultant who conducted a company-wide training on DEI-related key foundational terms and helped develop an organization-wide IDEA strategy for Sun; and

•We set the foundation with senior leaders at our 2021 Elevate conference where we held break out sessions on allyship with inclusion and belonging, continuing the IDEA conversation, inclusive leadership, introduction to IDEA, and workplace microaggressions and unconscious bias.

SUN COMMUNITIES, INC.

In order to implement and sustain this initiative, in 2021:

•We created our IDEA council to help implement Sun's IDEA Strategy;

•Our Chief Executive Officer signed a pledge for the CEO Action for Diversity & Inclusion, a commitment to advance diversity and inclusion within the workplace;

•We made Juneteenth an annual company holiday to celebrate the end of slavery in the United States;

•We launched an anti-racism resource center for employees inclusive of videos, podcasts, articles, books, films and television series; and

•We implemented "Job Analyzer" in our applicant tracking system to proactively identify and address gender bias in job postings.

EQUITY PAY

We are committed to providing a total compensation package that is market-based, performance driven, fair and internally equitable. Our goal is to be competitive both within the general employment market as well as with our competitors in the real estate industry, with our strongest performers being paid more.

•Compensation for each position is determined by utilizing reliable third-party compensation surveys to obtain current market data. Additionally, position descriptions and compensation are routinely reviewed for market competitiveness.

•On an annual basis, the performance of all team members is evaluated and merit increases are allocated based on performance. This process ensures equitable performance review and corresponding pay practices that attract, retain, and reward top talent.

•In 2021, we conducted an analysis on data related to open positions, retention, market compensation pay gaps, and internal equity, and remediated any identified pay gaps. A total of 3,300 team members received some level of pay increase apart from their normal merit-based increase.

BUSINESS INTEGRITY

Our Code of Conduct and Business Ethics is grounded in our commitment to do the right thing. It serves as the foundation of our approach to ethics and compliance, and our anti-corruption compliance program is focused on conducting business in a fair, ethical and legal manner.

WORKPLACE HEALTH AND SAFETY

Sun actively seeks opportunities to minimize health, safety and environmental risks to our team members, residents, and guests we serve in our communities and resorts by utilizing safe operating procedures and practices:

•As part of our commitment to safety, Sun oversees annual safety training programs for all employees to provide tools and safeguards for accident prevention. Our managers are responsible for ensuring that team members receive the appropriate training to perform their jobs safely;

•All team members participate in safety training during the onboarding process, and thereafter, team members in the field complete an annual safety training course;

•We work hard to uphold a safe workplace by complying with safety and health laws and regulations, maintaining internal requirements and remediating risks. Each community is regularly inspected to ensure safety standards are being met, with comprehensive safety inspections completed annually; and

•Our COVID-19 Response and Action Plan, described below, continues to serve as a guideline for the safe operation of our communities, resorts and main office.

SUN COMMUNITIES, INC.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")

We uphold a company-wide commitment to ESG goals through various programs and everyday business practices. We are fully committed to reducing our environmental impact across the scope of our operations and through the services we deliver to our residents and guests. We continue to identify opportunities to invest in energy-efficient technology, water efficiency and waste reduction strategies throughout our communities, resorts and corporate headquarters. By conserving natural resources, reducing our carbon footprint and participating in efforts to protect the environment through our Sun Unity program, we are striving to achieve our environmental sustainability goals.

We recognize the important opportunity of providing access to affordable and sustainable housing. Our business contributes to a vitally important function in our economy by providing high-quality, yet affordable, housing for both all-age and age-restricted needs. Manufactured homes cost approximately 52 percent less per square foot than conventional site-built homes, expanding the opportunity for residents to own their home, despite an ever-increasing housing affordability gap. Our homes provide more space at less cost per square foot compared to other options.

As a nationwide provider of affordable housing, and a leader in the marina business, we believe we have a responsibility not only to our residents, guests and team members, but also to the communities in which we live and work. These social responsibility efforts are initiated through our Sun Unity program, so we can join together as a team and give back to these communities to achieve goals like promotion, education and waste reduction.

COVID-19 RELIEF AND SUPPORT

The health and safety of our residents, guests and team members is our top priority. In 2020, at the height of the COVID-19 pandemic, we instituted our COVID-19 Response and Action Plan which established guidelines for safe operations of our communities, resorts and our main office. We continue to revise our guidelines to be in line with revised government and regulatory mandates. Content contained within this plan includes:

•Methods for preventing and reducing exposure and transmission of COVID-19 among individuals;

•Methods for identification and isolation of sick persons;

•Operational protocols for social distancing, including reduced occupancy requirements;

•Sanitation policies and procedures, including cleaning, disinfecting and decontamination;

•Communications and training for team members and leaders that are necessary to implement the plan; and

•Procedures to ensure effective ongoing implementation of the plan.

Temporary relief measures extended to residents and guests include:

•Enhanced cleaning procedures, as well as additional signage, and changes to policies and procedures further promoting social distancing.

•Amenity kits are being provided to guests upon check-in which include hand sanitizer, face masks and sanitation wipes.

•Contactless processes are put in place for rent collection, lease renewals, reservations and guest check-ins.

•Large quantities of personal protection equipment and cleaning products are distributed to all of Sun's locations.

While COVID-19 had a material effect on our employees, residents and guests during 2021, it did not materially impact our financial performance.

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COMMITMENT TO A SUSTAINABLE FUTURE

While the pandemic has been the defining issue of the last two years, climate change is the challenge of our lifetime. Climate change poses a clear threat and challenge to the real estate sector, as buildings contribute up to 30 percent of global annual greenhouse gas (“GHG”) emissions. Climate change impacts are material to our overall value as well as our ability to serve our residents, guests, employees, investors and other stakeholders. We are committed to reducing our GHG emissions and working to improve upon the environmental performance of the communities and properties within our portfolio. We are at the very beginning of this process with a focus on expanding our climate analysis to be more comprehensive and integrated into our overall business strategy. Some of our accomplishments include:

Climate Risk Assessment - In 2021, we performed an analysis of the climate risk impact on our properties. Various models were used to determine risks related to the sea-level rise, flooding, wildfire, water scarcity, cold waves and heat waves across three timeframes (2020, 2030 and 2050). We reviewed the results of this assessment and are using them to develop our risk mitigation and resilience (climate change adaptation) strategies. We are now integrating a climate risk analysis in the due diligence process during acquisitions of properties.

Greenhouse Gas Emissions - We created a framework to track the GHG emissions across our portfolio. We are implementing GHG emissions-reduction strategies where feasible to reduce emissions and their negative impact on climate change. The framework allows us to track, monitor and evaluate current performance, and make adjustments to our GHG emissions-reduction strategies.

Please see the Risk Factors in Item 1A, and our accompanying Consolidated Financial Statements and related notes thereto beginning on page F-1 of this Annual Report on Form 10-K for more detailed information.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains various "forward-looking statements" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), 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" in this Annual Report on Form 10-K and in our other filings with the SEC, 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, Australian dollar and British pound;

•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.

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The summary of risks below provides an overview of the principal risks that could affect our business, financial condition, results of operations, cash flows and / or prospects. This summary does not contain all of the information that may be important to you, and you should read the more detailed discussion of risks that follows this summary.

SUMMARY OF RISK FACTORS

MATERIAL RISKS RELATING TO OUR MH, RV AND MARINA BUSINESSES

•The geographic concentration of our properties in specific regions exposes us to the risks of downturns in local economies or other local real estate market conditions;

•We build and develop new MH communities, RV resorts and marinas and expand our existing properties, which exposes us to risks relating to zoning and permit laws, construction delays, unexpected development costs and fluctuations in occupancy rates at our newly developed properties;

•The industries in which we operate are highly-fragmented and we are subject to competition with national and regional players that may have greater resources than us;

•The cyclical and seasonal nature of the RV and marina industries lead to fluctuations in our operating results;

•Our continued growth is subject to our ability to successfully integrate and finance our acquisitions on favorable terms.

•The successful operation of our marinas depends on our ability to retain key employees with experience in the marina business, including Baxter R. Underwood, who is the Chief Executive Officer of Safe Harbor;

•Many of our properties are in areas that experience extreme weather conditions like floods, hurricanes, wildfires, sea-level rises or earthquakes and climate change could exacerbate these weather conditions;

•Marinas are specific-use properties and may contain features or assets that have limited alternative uses;

•Many of our marinas are situated on land controlled by governmental bodies and we must lease this land from them. These governmental authorities may terminate, fail to renew, or interpret in ways unfavorable to us, any of the permits, licenses, leases and approvals necessary for the operation of our marinas;

•Our properties are subject to various federal, state, local and foreign environmental laws and we may incur liability under these environmental laws for remediation and disposal of hazardous materials located on our properties;

•We may not complete our previously announced acquisition of Park Holidays and, even if we complete the acquisition, we may not realize the intended benefits of the Park Holidays acquisition;

•We will be subject to additional legal, regulatory, tax, supply chain, political and economic risks as we continue to expand our international investments;

•The ongoing COVID-19 pandemic may materially and adversely impact our financial condition, results of operations, cash flows and performance in unanticipated ways; and

•State and local rent control laws may inhibit our ability to increase rents to recover increases in our operating expenses.

RISKS RELATED TO OUR DEBT FINANCINGS

•We have a significant amount of debt which could limit our operational flexibility or otherwise adversely affect our financial condition;

•Any failure to meet our obligations on our secured debt could result in foreclosure on the collateral securing the debt; and

•Increases in market interest rates could materially increase our costs associated with existing and future debt. We mitigate the risks underlying increases in interest rates through hedging activities, but no hedging activity can protect us completely.

TAX RISKS RELATED TO OUR STATUS AS A REIT

•If we fail to qualify as a REIT our taxable income would be subject to federal income tax at a regular corporate rate which would materially and adversely affect our financial condition;

•The Operating Partnership could be classified as a "publicly traded partnership" which would subject it to taxation as a corporation and lead to substantial tax liabilities; and

•Compliance with the complex requirements and tests that are applied to REITs may hinder our ability to operate solely to maximize profits.

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RISKS RELATED TO RELATED PARTY TRANSACTIONS AND OUR STRUCTURE

•Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests;

•Our governing documents prohibit, with limited exceptions, a single stockholder from owning more than 9.8 percent of our capital stock, which may discourage a change of control of the Company; and

•Certain provisions of Maryland law may discourage third parties from conducting a tender offer or otherwise acquiring us via a change of control transaction that could be beneficial to our stockholders.

GENERAL RISK FACTORS

•Our share price is subject to fluctuations that could be caused by a wide range of factors that could ultimately lead to a complete loss on our shareholders' investment;

•The sale or issuance of substantial amounts of our common or preferred stock could materially and adversely affect the market price of our common or preferred stock;

•We may not generate cash flows in an amount sufficient enough to make distributions on our stock, to pay our indebtedness, or to fund our other liquidity needs;

•A failure to maintain an effective system of internal controls may cause our financial reports to become inaccurate which could harm our reputation and have a material adverse effect on our operating results;

•Our, or our third party vendors', networks could become compromised, and the information stored there could be accessed, publicly disclosed, lost or stolen;

•We may experience losses in excess of our insurance coverages;

•Adverse content about us on social media platforms could result in damage to our reputation or brand; and

•We may be adversely impacted by fluctuations in foreign currency exchange rates.

SUN COMMUNITIES, INC.

ITEM 1A. RISK FACTORS

Our prospects are subject to certain uncertainties and risks. Our future results could differ materially from current results, and our actual results could differ materially from those projected in forward-looking statements as a result of certain risk factors. These risk factors include, but are not limited to, those set forth below, other one-time events, and important factors disclosed previously and from time to time in our other filings with the SEC.

MATERIAL RISKS RELATING TO OUR MH, RV AND MARINA BUSINESSES

General economic conditions and the concentration of our MH, RV and Marina properties in certain geographic areas may affect our ability to generate sufficient revenue.

The market and economic conditions in our current markets generally, and specifically in metropolitan areas of our current markets, may significantly affect occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our revenues, and if our properties do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay or refinance our debt obligations could be adversely affected.

As of December 31, 2021, 152 MH and RV properties, representing 25.5 percent of developed sites, are located in Florida; 90 properties, representing 17.8 percent of developed sites, are located in Michigan; 33 properties, representing 6.3 percent of developed sites, are located in Texas; and 45 properties, representing 6.3 percent of developed sites, are located in California. As of December 31, 2021, we have revenue concentrations of marinas in Florida, Rhode Island and California of approximately 22.6 percent, 8.0 percent and 6.5 percent, respectively. As a result of the geographic concentration of our MH and RV properties in Florida, Michigan, Texas and California, and geographic concentration of our marinas in Florida, Rhode Island and California, we are exposed to the risks of downturns in local economies or other local real estate market conditions which could adversely affect occupancy rates, rental rates and property values in these markets.

Our revenue would also be adversely affected if tenants were unable to pay rent or if sites were unable to be rented on favorable terms. If we were unable to promptly relet or renew the leases for a significant number of the sites, or if the rental rates upon such renewal or reletting were significantly lower than expected rates, then our business and results of operations could be adversely affected. In addition, certain expenditures associated with each property (such as real estate taxes and maintenance costs) generally are not reduced when circumstances cause a reduction in income from the property. Furthermore, real estate investments are relatively illiquid and, therefore, will tend to limit our ability to vary our portfolio promptly in response to changes in economic or other conditions.

The following factors, among others, may adversely affect the revenues generated by our properties:

•Outbreaks of disease, including the COVID-19 pandemic, and related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations;

•The national and local economic climate which may be adversely impacted by, among other factors, plant closings and industry slowdowns;

•Local real estate market conditions such as the oversupply of MH and RV sites or a reduction in demand for MH and RV sites in an area;

•A decrease in the number of people interested in the RV lifestyle or boating;

•Changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar, the Australian dollar and the British pound;

•The number of repossessed homes in a particular market;

•An oversupply of, or a reduced demand for, manufactured homes;

•The difficulty facing potential purchasers in obtaining affordable financing as a result of heightened lending criteria;

•An increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to new manufactured home sales;

•The lack of an established MH dealer network;

•The housing rental market which may limit the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates;

•The perceptions by prospective tenants of the safety, convenience and attractiveness of our MH properties and the neighborhoods where they are located;

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•Zoning or other environmental regulatory restrictions;

•Competition from other available MH communities and RV resorts and alternative forms of housing (such as apartment buildings and site-built single-family homes) and from other marinas;

•Our ability to effectively manage, maintain and insure our properties;

•Increased operating costs, including insurance premiums, real estate taxes and utilities; and

•The enactment of rent control laws or laws taxing the owners of manufactured homes.

We may not be able to integrate or finance our expansion and development activities.

We build and develop new MH communities, RV resorts and marinas and we expand existing communities and marinas. Our construction and development pipeline may be exposed to the following risks which are in addition to those risks associated with the ownership and operation of established MH communities, RV resorts and marinas:

•We may not be able to obtain financing with favorable terms for development which may make us unable to proceed with the development;

•We may be unable to obtain, or face delays in obtaining, necessary zoning, building and other governmental permits and authorizations, which could result in increased costs and delays, and even require us to abandon development of the property entirely if we are unable to obtain such permits or authorizations;

•We may abandon development opportunities that we have already begun to explore and as a result we may not recover expenses already incurred in connection with exploring such development opportunities;

•We may be unable to complete construction and lease-up of a property on schedule resulting in increased debt service expense and construction costs;

•We may incur construction and development costs for a property which exceed our original estimates due to increased materials, labor or other costs, which could make completing the development uneconomical and we may not be able to increase rents to compensate for the increase in development costs which may impact our profitability;

•We may be unable to secure long-term financing on completion of development resulting in increased debt service and lower profitability;

•Occupancy rates and rents at a newly developed property may fluctuate depending on several factors, including market and economic conditions, which may result in the property not being profitable; and

•Climate change may cause new marina developments to be paused or restricted.

If any of the above risks occur, our business and results of operations could be adversely affected.

Competition affects occupancy levels and rents, which could adversely affect our revenues.

The MH, RV and marina industries are highly-fragmented. There is competition within the MH, RV and marina markets we currently serve and in new markets that we may enter. We have both national and regional competitors in the MH, RV and marina markets. Our properties are located in developed areas that include other MH communities, RV resorts and marinas. The number of competitive MH communities, RV resorts and marinas in a particular area could have a material adverse effect on our ability to lease sites and increase rents charged at our properties or at any newly acquired properties. We may be competing with others with greater resources. In addition, other forms of multi‑family residential properties, such as private and federally funded or assisted multi-family housing projects and single‑family housing, provide housing alternatives to potential tenants of MH communities and RV resorts.

The cyclical and seasonal nature of the RV and marina industries may lead to fluctuations in our operating results.

The RV and marina industries can experience cycles of growth and downturn due to seasonality patterns. Results of operations in any one period may not be indicative of results in future periods. In the RV market, certain properties maintain higher occupancy during the summer months, while other properties maintain higher occupancy during the winter months. The RV market typically shows a decline in demand over the winter months, yet usually produces higher growth in the spring and summer months due to higher use by vacationers. In the marina market, demand for wet slip storage increases during the summer months as customers contract for the summer boating season, which also drives non-storage revenue streams such as service, fuel and on-premise restaurants or convenience storage. Demand for dry storage increases during the winter season as seasonal weather patterns require boat owners to store their vessels on dry docks and within covered racks. Our results on a quarterly basis can fluctuate due to this cyclicality and seasonality.

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We may not be able to integrate or finance our acquisitions and our acquisitions may not perform as expected.

We have acquired and intend to continue to selectively acquire MH, RV and marina properties. Our acquisition activities and their success are subject to the following risks:

•We may be unable to acquire a desired property because of competition from other well-capitalized real estate investors, including both publicly traded REITs and institutional investment funds;

•Even if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing, including completion of due diligence investigations to our satisfaction, which may not be satisfied;

•Even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price;

•We may be unable to finance acquisitions on favorable terms;

•Acquired properties may fail to perform as expected;

•Acquired properties may be located in new markets where we face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, and unfamiliarity with local governmental and permitting procedures; and

•We may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations.

If any of the above risks occur, our business and results of operations could be adversely affected.

In addition, we may acquire properties subject to liabilities and we may be left with no, or limited, recourse, with respect to unknown liabilities. As a result, we may have to pay substantial sums to settle any liabilities asserted against us based upon ownership of newly acquired properties, which could adversely affect our cash flow.

We depend on Safe Harbor's management to operate our marina business, and our acquisition of Safe Harbor presents us with new risks.

Before we acquired Safe Harbor in October 2020, we did not own or operate any marinas. Safe Harbor's operations are separate from our other operations. The successful operation of our marinas depends on our ability to retain key employees with experience in the marina business, including Baxter R. Underwood, who is the Chief Executive Officer of Safe Harbor. The loss of services of Mr. Underwood or other key employees could have a materially adverse effect on our ability to operate Safe Harbor. Although Mr. Underwood has entered into an employment and non-competition agreement, upon certain events he will have the option to eliminate the non-competition covenant by foregoing certain compensation and other benefits.

We do not currently maintain or contemplate obtaining any "key-man" life insurance on any of the key employees of Safe Harbor. Our entry into the marina business also subjects us to new laws and regulations and may lead to increased litigation and regulatory risk including but not limited to statutes and government regulations that govern the use of, and construction on, rivers, lakes and other waterways. Exposure to the marina industry may expose us to certain weather events and risks to which we have not previously been exposed. Additionally, the marina business may be affected in different ways or to a greater extent than our existing MH and RV business by the COVID-19 pandemic with respect to infection control, facility and work-site access, or other related issues.

Investments through joint ventures involve risks not present for properties in which we are the sole owner.

We have invested and may continue to invest as a joint venture partner in joint ventures. These investments involve risks, including, but not limited to, the possibility the other joint venture partner may have business goals which are inconsistent with ours, possess the ability to take or force action or withhold consent contrary to our requests, fail to provide capital or fulfill its obligations, or become insolvent and require us to assume and fulfill the joint venture's financial obligations. Conflicts arising between us and our joint venture partners may be difficult to manage or resolve and it could be difficult to manage or otherwise monitor the existing business arrangements. We and our joint venture partners may each have the right to initiate a buy-sell arrangement, which could cause us to sell our interest, or acquire a joint venture partner's interest, at a time when we otherwise would not have entered into such a transaction. Each joint venture agreement is individually negotiated, and our ability to operate, finance or dispose of a property in our sole discretion may be limited to varying degrees depending on the terms of the applicable joint venture agreement.

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Many of our properties are located in areas that experience extreme weather conditions and natural disasters and climate change may adversely affect our business.

Extreme weather or weather-related conditions and other natural disasters, including hurricanes, flash floods, sea-level rise, tornadoes, wildfires or earthquakes, may interrupt our operations, damage our properties and reduce the number of customers who utilize our properties in the affected areas. Many of our properties are on coastlines that are subject to hurricane seasons, flash flooding and sea-level rise; in areas adversely affected by wildfires, such as the western United States; and in earthquake-prone areas, such as the West Coast. If there are prolonged disruptions at our properties due to extreme weather or natural disasters, our results of operations and financial condition could be materially adversely affected.

While we maintain insurance coverage that may cover certain of the costs and loss of revenue associated with the effect of extreme weather and natural disasters at our properties, our coverage is subject to deductibles and limits on maximum benefits. We cannot assure you that we will be able to fully collect, if at all, on any claims resulting from extreme weather or natural disasters.

If any of our properties are damaged or if their operations are disrupted as a result of extreme weather or natural disasters, or if extreme weather or natural disasters adversely impact general economic or other conditions in the areas in which our properties are located or from which they draw their tenants and customers, our business, financial condition and results of operations could be materially adversely affected.

Significant changes in the climate could exacerbate extreme weather conditions or natural disasters that may occur in areas where our properties are located, all of which may result in additional physical damage to, or a decrease in demand for, properties located in these areas or affected by these conditions. If the impact of climate change is material in nature, including significant property damage to or destruction of our properties, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected. In addition, changes in federal, state, local and foreign legislation and regulation based on concerns about climate change could result in increased capital expenditures on our properties (for example, to improve their energy efficiency and / or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our net income.

Marinas may not be readily adaptable to other uses.

Marinas are specific-use properties and may contain features or assets that have limited alternative uses. These properties may also have distinct operational functions that involve specific procedures and training. If the operations of any of our marinas become unprofitable due to industry competition, operational execution or otherwise, then it may not be feasible to operate the property for another use, and the value of certain features or assets used at the property, or the property itself, may be impaired. Should any of these events occur, our financial condition, results of operations and cash flows could be adversely impacted.

We may be unable to obtain, renew or maintain permits, licenses and approvals necessary for the operation of our marinas.

The U.S. Army Corps of Engineers, the Coast Guard and other governmental bodies control much of the land located beneath and surrounding many of our marinas and lease such land to Safe Harbor under leases that typically range from five to 50 years. As a result, it is unlikely that we can obtain fee-simple title to the land on or near these marinas. If these governmental authorities terminate, fail to renew, or interpret in ways that are materially less favorable any of the permits, licenses and approvals necessary for operation of these properties, then our financial condition, results of operations and cash flows could be adversely impacted.

Some marinas must be dredged from time to time to remove silt and mud that collect in harbor-areas in order to assure that boat traffic can safely enter the harbor. Dredging and disposing of the dredged material can be very costly and require permits from various governmental authorities. If the permits necessary to dredge marinas or dispose of the dredged material cannot be timely obtained after the acquisition of a marina, or if dredging is not practical or is exceedingly expensive, the operations of such property would be materially and adversely affected.

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We may incur liability under environmental laws arising from conditions at properties we acquire or operations at the properties we own and operate.

Under various federal, state, local and foreign laws, ordinances and regulations, an owner or operator of real estate is liable for the costs of removal or remediation of certain hazardous substances at, on, under, or in such property. Such hazardous substances may be used at or located on our properties, especially our marinas. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner's ability to sell or rent the property, to borrow using the property as collateral or to develop the property. Persons who arrange for the disposal or treatment of hazardous substances also may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility owned or operated by another person. In addition, certain environmental laws impose liability for the management and disposal of asbestos-containing materials and for the release of such materials into the air. These laws may result in fines or penalties and may permit third parties to seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials.

As the purchaser of properties we acquire or in connection with the operation of properties we own or manage, we may be liable for removal or remediation costs, governmental fines and injuries to persons and property. When we arrange for the treatment or disposal of hazardous substances at landfills or other facilities owned by other persons, we may be liable for the removal or remediation costs at such facilities.

We subject our properties to a Phase I or similar environmental assessment as well as limited compliance evaluations (which involve general inspections without soil sampling or ground water analysis) completed by independent environmental and engineering consultants. In some cases, where these evaluations have recommended further, invasive investigations, those have also been conducted. These environmental evaluations have not revealed any significant environmental liability that would have a material adverse effect on our business. These audits cannot reflect conditions arising after the studies were completed, and no assurances can be given that existing environmental studies reveal all environmental liabilities, that any prior owner or operator of a property or neighboring owner or operator did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any one or more properties.

Moreover, we cannot be sure that: (a) future laws, ordinances or regulations will not impose any material environmental liability; or (b) the current environmental condition of our properties will not be affected by tenants and occupants of the properties, by the condition of land or operations in the vicinity of our properties (such as the presence of underground storage tanks), or by unrelated third parties. Environmental liabilities that we may incur could have an adverse effect on our financial condition, results of operations and cash flows.

We may not complete our previously-announced acquisition of Park Holidays.

In November 2021, we entered into an agreement to acquire Park Holidays which owns, operates and manages 42 holiday communities in the United Kingdom. The acquisition values Park Holidays at an enterprise value of £950 million (or approximately $1.3 billion). While we anticipate that the Park Holidays acquisition will close in the first quarter of 2022, the closing is subject to the approval of the UK Financial Conduct Authority, which regulates certain loan brokering activities of Park Holidays. If this condition is not satisfied or waived, or if the Park Holidays purchase agreement is otherwise terminated in accordance with its terms, then we will not complete the Park Holidays acquisition. If we do not complete the acquisition, our common stock will not reflect any interest in Park Holidays; if the closing is delayed, this interest will not be reflected during the period of delay; and if the acquisition is restructured, it is uncertain as to whether this interest will be adversely affected. In addition, the price of our common stock may decline to the extent that the current market price of our common stock reflects a market assumption that the acquisition will be completed and that we will realize certain anticipated benefits of acquiring Park Holidays.

The closing of the Proposed Loan Amendment is subject to, among other things, the closing of our acquisition of Park Holidays. Therefore, if we are unable to complete the acquisition of Park Holidays then we will be unable to complete the Proposed Loan Amendment. Refer to Note 19, "Subsequent Events," in our accompanying Consolidated Financial Statements for additional information about the Proposed Loan Amendment.

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The intended benefits of the Park Holidays acquisition may not be realized.

The Park Holidays acquisition poses risks for our ongoing operations, including, among others:

•That senior management's attention may be diverted from the management of daily operations in our U.S. and Canadian properties to the integration of the Park Holidays properties;

•Costs and expenses associated with any undisclosed or potential liabilities that are not covered by our transaction insurance;

•That the Park Holidays properties may not perform as well as anticipated; and

•Unforeseen difficulties may arise in integrating operations in the United Kingdom into our company.

As a result of the foregoing, we cannot assure you that the Park Holidays acquisition will be accretive to us in the near term or at all. Furthermore, if we fail to realize the intended benefits of the Park Holidays properties, the market price of our common stock could decline to the extent that the market price reflects those benefits.

We will be subject to additional risks from our investment in Park Holidays and any other international investments.

Park Holidays will be our first major investment in the United Kingdom. We are also pursuing other significant acquisition opportunities outside the United States, including in the United Kingdom and elsewere in Europe, although there can be no assurances that we will be successful in completing any of these prospective acquisitions. These investments may expose us to a variety of risks that are different from and in addition to those commonly found in our current markets. Our ownership of Park Holidays and any other international investments will subject us to additional risks, including:

•the laws, rules and regulations applicable in such jurisdictions outside of the United States, including those related to property ownership by foreign entities, consumer and data protection, privacy, network security, encryption, payments and restricting us from removing profits earned from activities within the country to the United States (i.e., nationalization of assets located within a country);

•complying with a wide variety of foreign laws;

•fluctuations in exchange rates between foreign currencies and the U.S. dollar, and exchange controls;

•limited experience with local business and cultural factors that differ from our usual standards and practices;

•changes in the availability, cost and terms of mortgage funds and other borrowings resulting from varying national economic policies or changes in interest rates;

•reliance on local management;

•challenges in establishing effective controls and procedures to regulate operations in different regions and to monitor and ensure compliance with applicable regulations, such as applicable laws related to corrupt practices, employment, licensing, construction, climate change or environmental compliance;

•unexpected changes in regulatory requirements, tax, tariffs, trade barriers and other laws within jurisdictions outside the United States or between the United States and such jurisdictions;

•potentially adverse tax consequences with respect to our properties;

•the impact of regional or country-specific business cycles and economic instability, including deterioration in political relations with the United States, instability in, or further withdrawals from, the European Union or other international trade alliances or agreements;

•the impact of extreme weather or weather-related conditions and other natural disasters that may affect specific locations in which our properties are located, including hurricanes, flash floods, sea-level rise and coastal erosion, that may affect Park Holidays' properties;

•the impact of disruptions in global, regional or local supply chains, including disruptions occurring during and after the COVID-19 pandemic; and

•political instability, uncertainty over property rights, civil unrest, drug trafficking, political activism or the continuation or escalation of terrorist activities.

If we are unable to adequately address these risks, they could have a significant adverse effect on our operations.

SUN COMMUNITIES, INC.

The United Kingdom's departure from the European Union could increase volatility in the financial markets and currency exchange rates, including the British pound.

The United Kingdom's exit from the European Union, commonly referred to as "Brexit," has created an uncertain political and economic environment in the United Kingdom and elsewhere. The consequences of Brexit, and continuing uncertainties related to Brexit, could negatively affect taxes and costs of business, diminish travel to and from the United Kingdom, cause volatility in currency exchange rates, interest rates, and European, United Kingdom or worldwide political, regulatory, economic or market conditions, and contribute to instability in political institutions, regulatory agencies, and financial markets. Brexit could also lead to legal uncertainty arising from divergence of the laws of the United Kingdom from those of the European Union. Any of these effects of Brexit, and others that cannot be anticipated, could adversely effect our existing and planned expansion in the United Kingdom and elsewhere, and therefore, could have a material adverse effect on us.

The current pandemic of the coronavirus, or COVID-19, may materially and adversely impact and disrupt our financial condition, results of operations, cash flows and performance.

The COVID-19 pandemic at times has had, and in the future it could continue to have, or a future pandemic could have, material and adverse effects on our ability to successfully operate, and on our financial condition, results of operations and cash flows, including in the following possible ways, among others:

•A downturn in the economy may affect the ability of the residents or customers in our MH communities and marinas to pay their rent.

•Travel restrictions may affect the ability of potential guests to travel to and use our RV resorts and marinas. A downturn in the economy may independently reduce demand for our RV resorts and marinas, and our RV revenue may decrease if we cannot convert as many transient RV sites to annual RV sites as planned.

•Certain properties may be subject to government restrictions which limit the ability to operate or provide certain amenities.

•We may have difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deterioration in credit and financing conditions may result in insufficient liquidity or affect our access to capital necessary to fund and grow our business and address maturing liabilities on a timely basis. As of December 31, 2021, we had drawn $1.0 billion on our senior credit facility, of which the total capacity, excluding the unexercised accordion feature, is $2.0 billion.

•The financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our debt agreements and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our senior credit facility.

•Our ground up development and expansion activities, and conversions of transient RV sites to annual RV sites may be disrupted, and we may be delayed in our current projects and timelines, the magnitude of which will depend, in part, on the length and severity of the current governmental restrictions or limitations implemented in the future.

•The ancillary revenue from amenities at our properties, such as restaurants, golf courses, resort and marina activities, may decrease.

•The operation of our marinas may be disrupted by the COVID-19 pandemic with respect to infection control, facility and work-site access, or other related issues. As result, we may experience delays in our current projects and timelines, the magnitude of which will depend on governmental restrictions or limitations implemented in the future.

•Negative impacts on our results of operations and our access to capital could cause us to eliminate or reduce the amount of our distributions to stockholders, or to pay some or all of our distributions in common stock rather than cash.

•A general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to acquire additional properties.

•A recession or additional market corrections resulting from the spread of COVID-19 could affect the value of our common stock. We expect our stock price to continue to be volatile.

•Governmental agencies that permit and approve our projects, suppliers, homebuilders, and other business partners and third parties may be prevented from conducting business activities in the ordinary course for an indefinite period of time, which could in turn negatively affect our business.

•Disruptions in the global supply-chain could negatively impact our ability to secure the volume of homes and vacation rentals we need to meet market demand. These disruptions also could drive up costs across our business including capital expenditures, homes, home setups, and general property operations.