SEC Filing | Sun Communities

View:

Download DOC

Download PDF

Download XLS

Download XBRL

sui-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2022.

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

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 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock, $0.01 par value per share, outstanding as of July 19, 2022: 123,323,772

INDEX



PART I – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021	1
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)	2
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)	3
	Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)	4
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	70
Item 4.	Controls and Procedures	71

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	72
Item 1A.	Risk Factors	72
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 6.	Exhibits	74

	Signatures	76

SUN COMMUNITIES, INC.

PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(In millions, except for per share amounts)


	(Unaudited)
	June 30, 2022		December 31, 2021
Assets
Land	$	3,766.7	$	2,556.3
Land improvements and buildings	10,867.1		9,958.3
Rental homes and improvements	580.6		591.7
Furniture, fixtures and equipment	749.9		656.4
Investment property	15,964.3		13,762.7
Accumulated depreciation	(2,554.3)		(2,337.2)
Investment property, net (including $673.6 and $623.5 for consolidated VIEs at June 30, 2022 and December 31, 2021; see Note 7)	13,410.0		11,425.5
Cash, cash equivalents and restricted cash (including $23.6 and $13.6 for consolidated VIEs at June 30, 2022 and December 31, 2021; see Note 7)	184.7		78.2
Marketable securities (see Note 15)	114.6		186.9
Inventory of manufactured homes	108.1		51.1
Notes and other receivables, net	509.0		469.6

Goodwill	954.0		495.4
Other intangible assets, net (including $13.5 and $13.4 for consolidated VIEs at June 30, 2022 and December 31, 2021; see Note 7)	399.1		306.8
Other assets, net (including $5.7 and $5.3 for consolidated VIEs at June 30, 2022 and December 31, 2021; see Note 7)	718.3		480.6
Total Assets	$	16,397.8	$	13,494.1
Liabilities
Secured debt (see Note 8) (including $15.0 and $52.6 for consolidated VIEs at June 30, 2022 and December 31, 2021; see Note 7)	$	3,335.7	$	3,380.7
Unsecured debt (see Note 8) (including $35.2 for consolidated VIEs at June 30, 2022 and December 31, 2021, see Note 7)	3,595.2		2,291.1






Distributions payable	109.3		98.4
Advanced reservation deposits and rent	385.2		242.8
Accrued expenses and accounts payable	361.0		237.5
Other liabilities (including $72.2 and $94.0 for consolidated VIEs at June 30, 2022 and December 31, 2021; see Note 7)	779.9		224.1
Total Liabilities	8,566.3		6,474.6
Commitments and contingencies (see Note 16)
Temporary equity (see Note 9) (including $42.6 and $35.4 for consolidated VIEs at June 30, 2022 and December 31, 2021; see Note 7)	293.3		288.9









Shareholders' Equity

Common stock, $0.01 par value. Authorized: 180.0 shares; Issued and outstanding: 121.6 at June 30, 2022 and 116.0 at December 31, 2021	1.2		1.2
Additional paid-in capital	9,159.1		8,175.6
Accumulated other comprehensive income / (loss)	(28.3)		3.1
Distributions in excess of accumulated earnings	(1,684.7)		(1,556.0)
Total SUI shareholders' equity	7,447.3		6,623.9
Noncontrolling interests
Common and preferred OP units	86.2		86.8
Consolidated entities (including $4.1 and $19.4 for consolidated VIEs at June 30, 2022 and December 31, 2021; see Note 7)	4.7		19.9
Total noncontrolling interests	90.9		106.7
Total Shareholders' Equity	7,538.2		6,730.6
Total Liabilities, Temporary Equity and Shareholders' Equity	$	16,397.8	$	13,494.1

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except for per share amounts) (Unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Revenues
Real property	$	487.7	$	405.3	$	875.9	$	735.8
Home sales	142.7		81.8		207.4		134.0
Service, retail, dining and entertainment	168.0		107.1		248.8		157.8
Interest	7.3		2.8		14.1		5.4
Brokerage commissions and other, net	8.6		6.9		16.6		12.9
Total Revenues	814.3		603.9		1,362.8		1,045.9
Expenses
Property operating and maintenance	155.2		123.8		284.5		224.4
Real estate tax	27.7		23.2		53.8		45.6
Home costs and selling	92.9		58.8		138.8		100.4
Service, retail, dining and entertainment	147.9		84.7		218.4		133.1
General and administrative	62.2		45.3		117.9		83.5
Catastrophic event-related charges, net	0.1		0.4		0.1		2.8
Business combinations	15.0		(0.2)		15.5		1.0
Depreciation and amortization	150.2		127.1		298.7		251.0

Loss on extinguishment of debt (see Note 8)	0.1		8.1		0.4		8.1
Interest	55.3		37.7		100.5		77.2
Interest on mandatorily redeemable preferred OP units / equity	1.1		1.0		2.1		2.0
Total Expenses	707.7		509.9		1,230.7		929.1
Income Before Other Items	106.6		94.0		132.1		116.8
Gain / (loss) on remeasurement of marketable securities (see Note 15)	(32.3)		27.5		(66.8)		31.2
Gain / (loss) on foreign currency exchanges	9.0		(0.1)		6.8		(0.1)
Gain / (loss) on dispositions of properties	(0.1)		—		13.3		—
Other income / (expense), net	0.4		(0.2)		(0.2)		(0.7)
Gain on remeasurement of notes receivable (see Note 4)	—		0.1		0.2		0.5
Income from nonconsolidated affiliates (see Note 6)	0.9		0.8		1.8		2.0
Gain / (loss) on remeasurement of investment in nonconsolidated affiliates (see Note 6)	0.4		(0.1)		0.5		—
Current tax expense (see Note 12)	(3.9)		(1.2)		(5.2)		(1.0)
Deferred tax benefit (see Note 12)	0.3		—		0.3		0.1
Net Income	81.3		120.8		82.8		148.8
Less: Preferred return to preferred OP units / equity interests	3.1		3.0		6.1		5.9
Less: Income attributable to noncontrolling interests	4.2		7.0		2.0		7.3


Net Income Attributable to SUI Common Shareholders	$	74.0	$	110.8	$	74.7	$	135.6

Weighted average common shares outstanding - basic	120.0		112.1		117.6		110.0
Weighted average common shares outstanding - diluted	120.0		112.1		120.4		112.6

Basic earnings per share (see Note 13)	$	0.61	$	0.98	$	0.63	$	1.22
Diluted earnings per share (see Note 13)	$	0.61	$	0.98	$	0.63	$	1.22

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions) (Unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net Income	$	81.3	$	120.8	$	82.8	$	148.8
Foreign currency translation gain / (loss) adjustment	(65.7)		1.2		(67.0)		2.0

Cash Flow Hedges:
Change in unrealized gain on interest rate swaps	9.8		—		35.0		—
Less: interest rate swap gains reclassified to earnings	(0.8)		—		(0.8)		—
Net unrealized gain on interest rate swaps	9.0		—		34.2		—
Total Comprehensive Income	24.6		122.0		50.0		150.8
Less: Comprehensive income attributable to noncontrolling interests	(1.7)		(7.0)		(0.6)		(7.3)
Comprehensive Income attributable to SUI	$	22.9	$	115.0	$	49.4	$	143.5

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In millions) (Unaudited)


			Shareholders' Equity
	Temporary Equity		Common Stock		Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income / (loss)		Noncontrolling Interests		Total Shareholders' Equity		Total Equity
Balance at December 31, 2021	$	288.9	$	1.2	$	8,175.6	$	(1,556.0)	$	3.1	$	106.7	$	6,730.6	$	7,019.5
Issuance of common stock and common OP units, net	—		—		(0.2)		—		—		2.8		2.6		2.6
Common stock withheld to satisfy income tax obligations related to vesting of restricted stock awards	—		—		(16.4)		—		—		—		(16.4)		(16.4)
Conversion of OP units	—		—		0.7		—		—		(0.7)		—		—




Share-based compensation - amortization and forfeitures	—		—		9.7		0.1		—		—		9.8		9.8









Other comprehensive income	—		—		—		—		22.8		1.1		23.9		23.9
Net income / (loss)	(3.1)		—		—		3.7		—		0.9		4.6		1.5
Distributions	(2.1)		—		—		(102.3)		—		(3.1)		(105.4)		(107.5)
OP Units accretion	0.2		—		—		(0.1)		—		—		(0.1)		0.1
Balance at March 31, 2022	$	283.9	$	1.2	$	8,169.4	$	(1,654.6)	$	25.9	$	107.7	$	6,649.6	$	6,933.5
Issuance of common stock and common OP units, net	—		—		968.6		—		—		2.7		971.3		971.3
Common stock withheld to satisfy income tax obligations related to vesting of restricted stock awards	—		—		(1.2)		—		—		—		(1.2)		(1.2)


Third party equity interest in consolidated entities	9.7		—		—		—		—		—		—		9.7

Other redeemable noncontrolling interests	0.1		—		—		(0.1)		—		—		(0.1)		—
Acquisition of third parties equity interest in consolidated entities	—		—		13.2		—		—		(16.5)		(3.3)		(3.3)

Share-based compensation - amortization and forfeitures	—		—		9.1		0.1		—		—		9.2		9.2









Other comprehensive loss	—		—		—		—		(54.2)		(2.5)		(56.7)		(56.7)
Net income	1.5		—		—		77.1		—		2.7		79.8		81.3
Distributions	(2.0)		—		—		(107.0)		—		(3.2)		(110.2)		(112.2)
OP Units accretion	0.1		—		—		(0.2)		—		—		(0.2)		(0.1)
Balance at June 30, 2022	$	293.3	$	1.2	$	9,159.1	$	(1,684.7)	$	(28.3)	$	90.9	$	7,538.2	$	7,831.5

SUN COMMUNITIES, INC.


			Shareholders' Equity
	Temporary Equity		Common Stock		Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total Shareholders' Equity		Total Equity
Balance at December 31, 2020	$	264.4	$	1.1	$	7,087.6	$	(1,566.6)	$	3.2	$	102.0	$	5,627.3	$	5,891.7
Issuance of common stock and common OP units, net	—		—		537.1		—		—		—		537.1		537.1
Common stock withheld to satisfy income tax obligations related to vesting of restricted stock awards	—		—		(14.8)		—		—		—		(14.8)		(14.8)
Conversion of OP units	—		—		1.2		—		—		(1.2)		—		—

Third party equity interest in consolidated entities	—		—		—		—		—		(0.1)		(0.1)		(0.1)
Other redeemable noncontrolling interests	0.1		—		—		(0.1)		—		—		(0.1)		—

Share-based compensation - amortization and forfeitures	—		—		7.0		—		—		—		7.0		7.0









Other comprehensive income	—		—		—		—		0.8		—		0.8		0.8
Net income / (loss)	(1.6)		—		—		27.7		—		1.9		29.6		28.0
Distributions	(1.8)		—		—		(92.8)		—		(3.2)		(96.0)		(97.8)
Other	—		—		—		0.8		—		—		0.8