EX-99.1 2 exhibit991pressreleaseands.htm EXHIBIT 99.1 PRESS RELEASE AND SUPPLEMENTAL PACKAGE JUNE 30, 2017 Exhibit


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Table of Contents                    
    

            
Summary - Earnings Press Release
i - v
 
 
Investor Information
 
 
Portfolio Overview
 
 
Financial Information
 
Balance Sheets
Statements of Operations
4 - 5
Outstanding Securities and Capitalization
Reconciliations to Non-GAAP Financial Measures
Reconciliation of Net Income / (Loss) to Funds from Operations
Reconciliation of Net Income / (Loss) to Recurring EBITDA
Reconciliation of Net Income / (Loss) to Net Operating Income
Non-GAAP and Other Financial Measures
Financial Highlights
Debt Analysis
 
 
Selected Financial Information
 
Statements of Operations – Same Community
Rental Program Summary
Home Sales Summary
Acquisitions Summary
 
 
Other Information
 
Property Summary
18 - 19
Capital Improvements, Development, and Acquisitions
Operating Statistics for Manufactured Homes and Annual/Seasonal RV’s
Footnotes and Definitions
22 - 24
 
 



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NEWS RELEASE
July 26, 2017

Sun Communities, Inc. Reports 2017 Second Quarter Results

Southfield, Michigan, July 26, 2017 – Sun Communities, Inc. (NYSE: SUI) (the "Company"), a real estate investment trust ("REIT") that owns and operates, or has an interest in, manufactured housing ("MH") and recreational vehicle ("RV") communities, today reported its second quarter results.

Financial Results for the Quarter and Six Months Ended June 30, 2017

For the quarter ended June 30, 2017, total revenues increased $47.1 million, or 24.7 percent, to $237.9 million compared to $190.8 million for the same period in 2016. Net income attributable to common stockholders was $12.4 million, or $0.16 per diluted common share, as compared to net loss attributable to common stockholders of $7.8 million, or $0.12 net loss per diluted common share, for the same period in 2016.

For the six months ended June 30, 2017, total revenues increased $106.9 million, or 29.2 percent, to $472.3 million compared to $365.4 million for the same period in 2016. Net income attributable to common stockholders was $33.5 million, or $0.45 per diluted common share, as compared to net income attributable to common stockholders of $0.1 million, or $0.00 per diluted common share, for the same period in 2016.

Non-GAAP Financial Measures and Portfolio Performance

•
Funds from Operations ("FFO")(1) excluding certain items was $0.96 per diluted share and OP unit ("Share") for the quarter ended June 30, 2017 as compared to $0.85 for the same period in 2016, an increase of 12.9 percent.

•
Revenue producing sites increased by 752 sites for the quarter ended June 30, 2017, as compared to an increase of 501 sites in the same period in 2016.

•
Home sales volumes increased by 6.8 percent for the quarter ended June 30, 2017 as compared to the same period in 2016.

•
Same Community Net Operating Income ("NOI")(1) increased by 6.1 percent for the quarter ended June 30, 2017 as compared to the same period in 2016.

•
Same Community occupancy increased 160 basis points to 97.2 percent, as compared to 95.6 percent(10) at June 30, 2016.

“Our second quarter performance demonstrates our ongoing commitment to deliver consistent operational results, while positioning ourselves for continued growth. Solid occupancy gains, stable rate increases and robust home sales all contributed to the quarter’s performance,” said Gary A. Shiffman, Chairman and Chief Executive Officer. “On the capital side, we further strengthened our balance sheet from both a debt and equity perspective. With a sizable expansion platform and an active acquisition pipeline, we expect to continue to drive attractive growth.”


i

OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy was 96.1 percent at both June 30, 2017 and June 30, 2016, including the impact of recently completed but vacant expansion sites. During the quarter ended June 30, 2017, revenue producing sites increased by 752 sites, as compared to 501 revenue producing sites gained during the second quarter of 2016.

Revenue producing sites increased by 1,439 for the six months ended June 30, 2017 as compared to 1,093 revenue producing sites gained during the six months ended June 30, 2016.

Same Community Results

For the 231 communities owned since January 1, 2016, NOI(1) for the quarter ended June 30, 2017 increased 6.1 percent over the same period in 2016, driven by a 6.2 percent increase in revenues and a 6.3 percent increase in operating expenses.  Same community occupancy increased to 97.2 percent at June 30, 2017 from 95.6 percent(10) at June 30, 2016.

For the six months ended June 30, 2017, total revenues increased by 5.7 percent while total expenses increased by 3.8 percent, resulting in an increase to NOI(1) of 6.4 percent over the six months ended June 30, 2016.

Home Sales

Total home sales were 801 for the quarter ended June 30, 2017 as compared to 750 homes sold during the same period in 2016, a 6.8 percent increase.

Rental homes sales, which are included in total home sales, were 302 and 278 for the quarters ended June 30, 2017 and 2016, respectively.

During the six months ended June 30, 2017, 1,627 homes were sold compared to 1,515 for the same period ending 2016. Rental home sales, which are included in total home sales, were 542 and 572 for the six months ended June 30, 2017 and 2016, respectively.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions
 
During the quarter ended June 30, 2017, as previously announced, the Company amended and restated its credit agreement with Citibank, N.A. and certain other lenders. Pursuant to the amendments, the Company can borrow up to $550.0 million under a revolving loan and $100.0 million under a term loan (the "Facility"). The Facility has a four-year term, and replaced the Company's $450.0 million credit facility that was scheduled to mature in August 2019. The Facility bears interest at a floating rate based on the Eurodollar rate plus a margin that can range from 1.35 percent to 2.20 percent for the revolving loan and 1.30 percent to 2.15 percent for the term loan. The Company may borrow up to $100.0 million on the term loan on or before September 30, 2017.


ii

Additionally, during the quarter, the Company completed a $77.0 million secured borrowing that bears interest at a fixed rate of 4.16 percent and has a 25-year term. The Company also repaid a $3.9 million mortgage loan that had an interest rate of 6.54 percent that was due to mature in August 2017.

As of June 30, 2017, the Company had approximately $3.0 billion of debt outstanding. The weighted average interest rate was 4.56 percent and the weighted average maturity was 8.7 years. The Company had $241.6 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month Recurring EBITDA(1) ratio was 6.0 times.

Equity Transactions

During the quarter ended June 30, 2017, the Company closed an underwritten registered public offering of 4,830,000 shares of common stock at a gross price of $86.00 per share. Proceeds from the offering were $408.9 million after deducting expenses related to the offering. The Company utilized proceeds from the offering to fully repay borrowings outstanding on its senior revolving credit facility, redeem certain preferred securities, and fund an acquisition.

The Company also sold 400,000 shares of common stock through its At-the-Market equity sales program ("ATM") at a weighted average price of $85.01 during the quarter ended June 30, 2017. Net proceeds from the sales were $33.6 million.

During the quarter ended June 30, 2017, the Company redeemed 438,448 shares of 6.50% Series A-4 Cumulative Convertible Preferred Stock and 200,000 Series A-4 preferred OP units from certain entities affiliated with the sellers under the Company's previous acquisition of the American Land Lease portfolio for total consideration of $24.7 million.

PORTFOLIO ACTIVITY

Acquisitions(2) 

During the quarter ended June 30, 2017, as previously announced, the Company acquired an undeveloped parcel of land near the ocean in Myrtle Beach, South Carolina, for total consideration of $5.9 million. This land parcel has been successfully entitled and zoned to build a 775 site RV resort.

During the quarter, the Company acquired a 489 site RV resort located in Hillsdale, Illinois and a 458 site MH community in Superior Township, Michigan, for total consideration of approximately $25.0 million.

GUIDANCE 2017

The Company is updating its 2017 full year guidance of FFO(1) per Share to be in the range of $4.12 to $4.18. The revised guidance reflects the impacts of the May equity offering and ATM issuances of $(0.12) per Share, and year to date outperformance of the portfolio and contribution from completed acquisitions of $0.06 per Share. The Company anticipates FFO(1) per Share of $1.11 to $1.14 for the third quarter and $0.95 to $0.98 for the fourth quarter.

The Company affirms 2017 full year guidance of Same Community NOI(1) growth of 6.4 percent to 6.8 percent. Guidance does not include prospective acquisitions or capital markets activity.


iii

FFO(1) per Share estimates assume certain non-core items are adjusted from FFO(1). The estimates and assumptions presented above represent a range of possible outcomes and may differ materially from actual results. The estimates and assumptions are forward looking based on the Company's current assessment of economic and market conditions, as well as other risks outlined below under the caption "Forward-Looking Statements."

EARNINGS CONFERENCE CALL

A conference call to discuss second quarter operating results will be held on Thursday, July 27, 2017 at 11:00 A.M. (ET). To participate, call toll-free 877-407-9039. Callers outside the U.S. or Canada can access the call at 201-689-8470. A replay will be available following the call through August 10, 2017 and can be accessed toll-free by calling 844-512-2921 or by calling 412-317-6671. The Conference ID number for the call and the replay is 13661890. The conference call will be available live on Sun Communities' website www.suncommunities.com. Replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of June 30, 2017, owned or had an interest in a portfolio of 344 communities comprising approximately 120,000 developed sites in 29 states and Ontario, Canada.

For more information about Sun Communities, Inc., please visit the website at www.suncommunities.com.

CONTACT

Please address all inquiries to our investor relations department at our website www.suncommunities.com, by phone (248) 208-2500, by email investorrelations@suncommunities.com or by mail Sun Communities, Inc. Attn: Investor Relations, 27777 Franklin Road, Ste. 200, Southfield, MI 48034.


Forward-Looking Statements

This press release contains various "forward-looking statements" within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the Company intends that such forward-looking statements will be subject to the safe harbors created thereby. Forward-looking statements can be identified by words such as "will," "may," "could," "expect," "anticipate," "believes," "intends," "should," "plans," "estimates," "approximate," "guidance," and similar expressions in this press release that predict or indicate future events and trends and that do not report historical matters.

These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control. These risks, uncertainties, and other factors may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, the performance of recent acquisitions, the ability to integrate future acquisitions smoothly and efficiently, changes in market rates of interest, changes in foreign currency exchange rates, the ability of manufactured home buyers to obtain financing and the level of repossessions by manufactured home lenders. Further details of potential risks that may affect the Company are described in our periodic reports filed with the U.S. Securities and Exchange Commission, including in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2016.

The forward-looking statements contained in this press release speak only as of the date hereof and the Company expressly disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in the Company’s assumptions, expectations of future events, or trends.


iv

Investor Information                        

RESEARCH COVERAGE
 
 
 
 
 
 
 
 
 
 
 
 
 
Firm
 
Analyst
 
Phone
 
Email
Bank of America Merrill Lynch
 
Joshua Dennerlein
 
(646) 855-1681
 
joshua.dennerlein@baml.com
BMO Capital Markets
 
John Kim
 
(212) 885-4115
 
johnp.kim@bmo.com
Citi Research
 
Michael Bilerman
 
(212) 816-1383
 
michael.bilerman@citi.com
 
 
Nicholas Joseph
 
(212) 816-1909
 
nicholas.joseph@citi.com
Evercore ISI
 
Steve Sakwa
 
(212) 446-9462
 
steve.sakwa@evercoreisi.com
 
 
Gwen Clark
 
(212) 446-5611
 
gwen.clark@evercoreisi.com
Green Street Advisors
 
Ryan Burke
 
(949) 640-8780
 
rburke@greenstreetadvisors.com
RBC Capital Markets
 
Neil Malkin
 
(440) 715-2651
 
neil.malkin@rbccm.com
Robert W. Baird & Co.
 
Drew Babin
 
(610) 238-6634
 
dbabin@rwbaird.com
Wells Fargo
 
Todd Stender
 
(562) 637-1371
 
todd.stender@wellsfargo.com
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INQUIRIES
 
 
 
 
 
 
 
 
 
 
 
 
 
Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media, or any prospective investor. Please address all inquiries to our Investor Relations department.
 
 
 
 
 
 
 
At Our Website
 
www.suncommunities.com
 
 
 
 
By Email
 
investorrelations@suncommunities.com
 
 
By Phone
 
(248) 208-2500
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2nd Quarter 2017 Supplemental Information     1          Sun Communities, Inc.

Portfolio Overview                            
(As of June 30, 2017)

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2nd Quarter 2017 Supplemental Information     2          Sun Communities, Inc.

Balance Sheets                                                
(amounts in thousands)
 
 
6/30/2017
 
12/31/2016
ASSETS:
 
 
 
 
Land
 
$
1,066,792

 
$
1,051,536

Land improvements and buildings
 
4,934,110

 
4,825,043

Rental homes and improvements
 
507,362

 
489,633

Furniture, fixtures and equipment
 
137,546

 
130,127

Investment property
 
6,645,810

 
6,496,339

Accumulated depreciation
 
(1,128,671
)
 
(1,026,858
)
Investment property, net
 
5,517,139

 
5,469,481

Cash and cash equivalents
 
241,646

 
8,164

Inventory of manufactured homes
 
25,582

 
21,632

Notes and other receivables, net
 
110,499

 
81,179

Collateralized receivables, net (3)
 
138,696

 
143,870

Other assets, net
 
145,151

 
146,450

Total assets
 
$
6,178,713

 
$
5,870,776

LIABILITIES:
 
 
 
 
Mortgage loans payable
 
$
2,832,819

 
$
2,819,567

Secured borrowings (3)
 
139,496

 
144,477

Preferred OP units - mandatorily redeemable
 
45,903

 
45,903

Lines of credit
 
435

 
100,095

Distributions payable
 
56,283

 
51,896

Other liabilities
 
298,759

 
279,667

Total liabilities
 
3,373,695

 
3,441,605

Series A-4 preferred stock
 
32,414

 
50,227

Series A-4 preferred OP units
 
11,051

 
16,717

STOCKHOLDERS' EQUITY:
 
 
 
 
Series A preferred stock
 
34

 
34

Common stock
 
790

 
732

Additional paid-in capital
 
3,780,599

 
3,321,441

Accumulated other comprehensive loss
 
(981
)
 
(3,181
)
Distributions in excess of accumulated earnings
 
(1,089,428
)
 
(1,023,415
)
       Total SUI stockholders' equity
 
2,691,014

 
2,295,611

Noncontrolling interests:
 
 
 
 
Common and preferred OP units
 
67,135

 
69,598

Consolidated variable interest entities
 
3,404

 
(2,982
)
Total noncontrolling interest
 
70,539

 
66,616

Total stockholders' equity
 
2,761,553

 
2,362,227

Total liabilities & stockholders' equity
 
$
6,178,713

 
$
5,870,776



2nd Quarter 2017 Supplemental Information     3          Sun Communities, Inc.

Statements of Operations - Quarter to Date Comparison                        
(amounts in thousands, except per share amounts)
 
Three Months Ended June 30,
 
2017
 
2016
 
Change
 
% Change
REVENUES
 
 
 
 
 
 
 
Income from real property (excluding transient revenue)
$
163,770

 
$
129,117

 
$
34,653

 
26.8
 %
Transient revenue
15,691

 
10,884

 
4,807

 
44.2
 %
Revenue from home sales
30,859

 
26,039

 
4,820

 
18.5
 %
Rental home revenue
12,678

 
11,957

 
721

 
6.0
 %
Ancillary revenues
8,850

 
7,383

 
1,467

 
19.9
 %
Interest
5,043

 
4,672

 
371

 
7.9
 %
Brokerage commissions and other revenues, net
1,008

 
747

 
261

 
34.9
 %
Total revenues
237,899

 
190,799

 
47,100

 
24.7
 %
 
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
 
Property operating and maintenance
53,446

 
37,067

 
16,379

 
44.2
 %
Real estate taxes
13,126

 
10,153

 
2,973

 
29.3
 %
Cost of home sales
22,022

 
18,684

 
3,338

 
17.9
 %
Rental home operating and maintenance
4,944

 
5,411

 
(467
)
 
(8.6
)%
Ancillary expenses
7,058

 
5,599

 
1,459

 
26.1
 %
Home selling expenses
2,990

 
2,460

 
530

 
21.5
 %
General and administrative
19,989

 
16,543

 
3,446

 
20.8
 %
Transaction costs
2,437

 
20,979

 
(18,542
)
 
(88.4
)%
Depreciation and amortization
62,721

 
49,670

 
13,051

 
26.3
 %
Extinguishment of debt
293

 
—

 
293

 
N/A

Interest
32,358

 
28,428

 
3,930

 
13.8
 %
Interest on mandatorily redeemable preferred OP units
787

 
787

 
—

 
—
 %
Total expenses
222,171

 
195,781

 
26,390

 
13.5
 %
Income / (loss) before other items
15,728

 
(4,982
)
 
20,710

 
415.7
 %
Other income, net (4)
875

 
—

 
875

 
N/A

Current tax benefit / (expense)
7

 
(56
)
 
63

 
112.5
 %
Deferred tax benefit
364

 
—

 
364

 
N/A

Net income / (loss)
16,974

 
(5,038
)
 
22,012

 
436.9
 %
Less: Preferred return to preferred OP units
(1,196
)
 
(1,263
)
 
67

 
(5.3
)%
Less: Amounts attributable to noncontrolling interests
(1,315
)
 
695

 
(2,010
)
 
(289.2
)%
Less: Preferred stock distribution
(2,099
)
 
(2,197
)
 
98

 
(4.5
)%
NET INCOME / (LOSS) ATTRIBUTABLE TO SUI
$
12,364

 
$
(7,803
)
 
$
20,167

 
258.5
 %
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
74,678

 
64,757

 
9,921

 
15.3
 %
Diluted
75,154

 
64,757

 
10,397

 
16.1
 %
Earnings / (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.16

 
$
(0.12
)
 
$
0.28

 
233.3
 %
Diluted
$
0.16

 
$
(0.12
)
 
$
0.28

 
233.3
 %




2nd Quarter 2017 Supplemental Information     4          Sun Communities, Inc.

Statements of Operations - Year to Date Comparison                            
(amounts in thousands, except per share amounts)
 
Six Months Ended June 30,
 
2017
 
2016
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
Income from real property (excluding transient revenue)
$
325,646

 
$
248,201

 
$
77,445

 
31.2
 %
Transient revenue
36,869

 
21,035

 
15,834

 
75.3
 %
Revenue from home sales
58,122

 
50,776

 
7,346

 
14.5
 %
Rental home revenue
25,017

 
23,665

 
1,352

 
5.7
 %
Ancillary revenues
15,069

 
11,996

 
3,073

 
25.6
 %
Interest
9,689

 
8,617

 
1,072

 
12.4
 %
Brokerage commissions and other revenues, net
1,887

 
1,153

 
734

 
63.7
 %
Total revenues
472,299

 
365,443

 
106,856

 
29.2
 %
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
Property operating and maintenance
100,612

 
68,268

 
32,344

 
47.4
 %
Real estate taxes
26,269

 
19,738

 
6,531

 
33.1
 %
Cost of home sales
42,905

 
36,868

 
6,037

 
16.4
 %
Rental home operating and maintenance
10,046

 
11,287

 
(1,241
)
 
(11.0
)%
Ancillary expenses
11,726

 
9,248

 
2,478

 
26.8
 %
Home selling expenses
6,101

 
4,597

 
1,504

 
32.7
 %
General and administrative
37,921

 
30,335

 
7,586

 
25.0
 %
Transaction costs
4,823

 
23,700

 
(18,877
)
 
(79.7
)%
Depreciation and amortization
125,487

 
98,082

 
27,405

 
27.9
 %
Extinguishment of debt
759

 
—

 
759

 
N/A

Interest
63,680

 
54,722

 
8,958

 
16.4
 %
Interest on mandatorily redeemable preferred OP units
1,571

 
1,574

 
(3
)
 
(0.2
)%
Total expenses
431,900

 
358,419

 
73,481

 
20.5
 %
Income before other items
40,399

 
7,024

 
33,375

 
475.2
 %
Other income, net (4)
1,627

 
—

 
1,627

 
N/A

Current tax expense
(171
)
 
(284
)
 
113

 
39.8
 %
Deferred tax benefit
664

 
—

 
664

 
N/A

Net income
42,519

 
6,740

 
35,779

 
530.9
 %
Less: Preferred return to preferred OP units
(2,370
)
 
(2,536
)
 
166

 
(6.6
)%
Less: Amounts attributable to noncontrolling interests
(2,403
)
 
419

 
(2,822
)
 
(673.5
)%
Less: Preferred stock distribution
(4,278
)
 
(4,551
)
 
273

 
(6.0
)%
NET INCOME ATTRIBUTABLE TO SUI
$
33,468

 
$
72

 
33,396

 
46,383.3
 %
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
73,677

 
61,247

 
12,430

 
20.3
 %
Diluted
74,272

 
61,673

 
12,599

 
20.4
 %
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.45

 
$
0.00

 
$
0.45

 
N/A

Diluted
$
0.45

 
$
0.00

 
$
0.45

 
N/A



2nd Quarter 2017 Supplemental Information     5          Sun Communities, Inc.

Outstanding Securities and Capitalization        
(in thousands except for *)
Outstanding Securities - As of June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
Number of Units/Shares Outstanding
 
Conversion Rate*
 
If Converted
 
Issuance Price per unit*
 
Annual Distribution Rate*
Convertible Securities
 
 
 
 
 
 
 
 
 
Series A-1 preferred OP units
361
 
2.4390
 
880
 
$100
 
6.0%
Series A-3 preferred OP units
40
 
1.8605
 
74
 
$100
 
4.5%
Series A-4 preferred OP units
429
 
0.4444
 
191
 
$25
 
6.5%
Series C preferred OP units
328
 
1.1100
 
364
 
$100
 
4.5%
Common OP units
2,770
 
1.0000
 
2,770
 
N/A
 
Mirrors common shares distributions
Series A-4 cumulative convertible preferred stock
1,085
 
0.4444
 
482
 
$25
 
6.5%
 
 
 
 
 
 
 
 
 
 
Non-Convertible Securities
 
 
 
 
 
 
 
 
 
Preferred stock (SUI-PrA)
3,400
 
N/A
 
N/A
 
$25
 
7.125%
 
 
 
 
 
 
 
 
 
 
Common shares
78,987
 
N/A
 
N/A
 
N/A
 
$2.68^
^ Annual distribution is based on the last quarterly distribution annualized.
Capitalization - As of June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
Shares
 
Share Price*
 
Total
Common shares
 
78,987

 
$
87.69

 
$
6,926,370

Common OP units
 
2,770

 
$
87.69

 
242,901

Subtotal
 
81,757

 
 
 
$
7,169,271

 
 
 
 
 
 
 
Series A-1 preferred OP units
 
880

 
$
87.69

 
77,167

Series A-3 preferred OP units
 
74

 
$
87.69

 
6,489

Series A-4 preferred OP units
 
191

 
$
87.69

 
16,749

Series C preferred OP units
 
364

 
$
87.69

 
31,919

Total diluted shares outstanding
 
83,266

 
 
 
$
7,301,595

 
Debt
Mortgage loans payable
 
 
 
 
 
$
2,832,819

Secured borrowings (3)
 
 
 
 
 
139,496

Preferred OP units - mandatorily redeemable
 
 
 
 
 
45,903

Lines of credit
 
 
 
 
 
435

Total Debt
 
 
 
 
 
$
3,018,653

 
Preferred
Perpetual preferred
 
3,400

 
$
25.00

 
$
85,000

A-4 preferred stock
 
1,085

 
$
25.00

 
$
27,125

Total Capitalization
 
 
 
 
 
$
10,432,373


2nd Quarter 2017 Supplemental Information     6          Sun Communities, Inc.



















Reconciliations to Non-GAAP Financial Measures


2nd Quarter 2017 Supplemental Information     7          Sun Communities, Inc.

Reconciliation of Net Income / (Loss) Attributable to Sun Communities, Inc. Common Stockholders to Funds from Operations                            
(amounts in thousands except for per share data)
 
Three Months Ended 
June 30,
 
Six Months Ended 
June 30,
 
2017
 
2016
 
2017
 
2016
Net income / (loss) attributable to Sun Communities, Inc. common stockholders
$
12,364

 
(7,803
)
 
$
33,468

 
$
72

Adjustments:
 

 
 

 
 

 
 

Depreciation and amortization
62,842

 
49,340

 
125,659

 
97,416

Amounts attributable to noncontrolling interests
1,202

 
(779
)
 
2,102

 
(430
)
Preferred return to preferred OP units
586

 
618

 
1,172

 
1,243

Preferred distribution to Series A-4 preferred stock
560

 
—

 
1,225

 
—

Gain on disposition of assets, net
(4,352
)
 
(3,903
)
 
(7,033
)
 
(7,558
)
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6)

73,202

 
37,473

 
156,593

 
90,743

Adjustments:
 
 
 
 
 
 
 
Transaction costs
2,437

 
20,979

 
4,823

 
23,700

Other acquisition related costs (5)
1,525

 
—

 
2,369

 
—

Extinguishment of debt
293

 
—

 
759

 
—

Other income, net (4)
(875
)
 
—

 
(1,627
)
 
—

Debt premium write-off
(24
)
 
—

 
(438
)
 
—

Deferred tax benefit
(364
)
 
—

 
(664
)
 
—

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

$
76,194

 
$
58,452

 
$
161,815

 
$
114,443

 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic:
74,678

 
64,757

 
73,677

 
61,247

Add:
 
 
 
 
 
 
 
Common stock issuable upon conversion of stock options
2

 
9

 
2

 
9

Restricted stock
474

 
444

 
593

 
417

Common OP units
2,757

 
2,863

 
2,756

 
2,863

Common stock issuable upon conversion of Series A-1 preferred OP units
882

 
933

 
887

 
939

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

 
75

 
75

 
75

Common stock issuable upon conversion of Series A-4 preferred stock
645

 
—

 
690

 
—

Weighted average common shares outstanding - fully diluted
79,513

 
69,081

 
78,680

 
65,550

 
 
 
 
 
 
 
 
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share - fully diluted

$
0.92

 
$
0.54

 
$
1.99

 
$
1.38

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

$
0.96

 
$
0.85

 
$
2.06

 
$
1.75





2nd Quarter 2017 Supplemental Information     8          Sun Communities, Inc.

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

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Net income / (loss) attributable to Sun Communities, Inc., common stockholders
$
12,364

 
$
(7,803
)
 
$
33,468

 
$
72

Interest
32,358

 
28,428

 
63,680

 
54,722

Interest on mandatorily redeemable preferred OP units
787

 
787

 
1,571

 
1,574

Depreciation and amortization
62,721

 
49,670

 
125,487

 
98,082

Extinguishment of debt
293

 
—

 
759

 
—

Transaction costs
2,437

 
20,979

 
4,823

 
23,700

Other income, net (4)
(875
)
 
—

 
(1,627
)
 
—

Current tax (benefit) / expense
(7
)
 
56

 
171

 
284

Deferred tax benefit
(364
)
 
—

 
(664
)
 
—

Preferred return to preferred OP units
1,196

 
1,263

 
2,370

 
2,536

Amounts attributable to noncontrolling interests
1,315

 
(695
)
 
2,403

 
(419
)
Preferred stock distributions
2,099

 
2,197

 
4,278

 
4,551

RECURRING EBITDA (1)
$
114,324

 
$
94,882


$
236,719


$
185,102




2nd Quarter 2017 Supplemental Information     9          Sun Communities, Inc.

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

 
Three Months Ended June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Net income / (loss) attributable to Sun Communities, Inc., common stockholders:
$
12,364

 
$
(7,803
)
 
$
33,468

 
$
72

Other revenues
(6,051
)
 
(5,419
)
 
(11,576
)
 
(9,770
)
Home selling expenses
2,990

 
2,460

 
6,101

 
4,597

General and administrative
19,989

 
16,543

 
37,921

 
30,335

Transaction costs
2,437

 
20,979

 
4,823

 
23,700

Depreciation and amortization
62,721

 
49,670

 
125,487

 
98,082

Extinguishment of debt
293

 
—

 
759

 
—

Interest expense
33,145

 
29,215

 
65,251

 
56,296

Other income, net (4)
(875
)
 
—

 
(1,627
)
 
—

Current tax (benefit) / expense
(7
)
 
56

 
171

 
284

Deferred tax benefit
(364
)
 
—

 
(664
)
 
—

Preferred return to preferred OP units
1,196

 
1,263

 
2,370

 
2,536

Amounts attributable to noncontrolling interests
1,315

 
(695
)
 
2,403

 
(419
)
Preferred stock distributions
2,099

 
2,197

 
4,278

 
4,551

NOI(1) / Gross Profit
$
131,252


$
108,466


$
269,165


$
210,264

 
 
 
 
 
 
 
 

 
Three Months Ended June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Real Property NOI (1)
$
112,889

 
$
92,781

 
$
235,634

 
$
181,230

Rental Program NOI (1)
23,743

 
21,959

 
46,699

 
43,009

Home Sales NOI(1) / Gross Profit
8,837

 
7,355

 
15,217

 
13,908

Ancillary NOI(1) / Gross Profit
1,792

 
1,784

 
3,343

 
2,748

Site rent from Rental Program (included in Real Property NOI) (1)(7)
(16,009
)
 
(15,413
)
 
(31,728
)
 
(30,631
)
NOI(1) / Gross profit
$
131,252

 
$
108,466

 
$
269,165

 
$
210,264







2nd Quarter 2017 Supplemental Information     10          Sun Communities, Inc.






















Non-GAAP and Other Financial Measures

















2nd Quarter 2017 Supplemental Information     11          Sun Communities, Inc.

Financial Highlights                                                
(amounts in thousands, except per share data)
 
Quarter Ended
 
6/30/2017
 
3/31/2017
 
12/31/2016
 
9/30/2016
 
6/30/2016
OPERATING INFORMATION
 
 
 
 
 
 
 
 
 
Total revenues
$
237,899

 
$
234,400

 
$
218,634

 
$
249,701

 
$
190,799

Net income / (loss)
$
16,974

 
$
25,545

 
$
1,501

 
$
23,230

 
$
(5,038
)
Net income / (loss) attributable to common stockholders
$
12,364

 
$
21,104

 
$
(1,600
)
 
$
18,897

 
$
(7,803
)
Earnings / (loss) per share basic
$
0.16

 
$
0.29

 
$
(0.02
)
 
$
0.27

 
$
(0.12
)
Earnings / (loss) per share diluted
$
0.16

 
$
0.29

 
$
(0.02
)
 
$
0.27

 
$
(0.12
)
 
 
 
 
 
 
 
 
 
 
Recurring EBITDA (1)
$
114,324

 
$
122,395

 
$
105,850

 
$
123,276

 
$
94,882

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1) (6)
$
73,202

 
$
83,391

 
$
57,572

 
$
78,023

 
$
37,473

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items(1) (6)
$
76,194

 
$
85,621

 
$
69,192

 
$
83,181

 
$
58,452

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share - fully diluted
$
0.92

 
$
1.07

 
$
0.75

 
$
1.06

 
$
0.54

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share excluding certain items - fully diluted
$
0.96

 
$
1.10

 
$
0.91

 
$
1.13

 
$
0.85

 
 
 
 
 
 
 
 
 
 
BALANCE SHEETS
 
 
 
 
 
 
 
 
 
Total assets
$
6,178,713

 
$
5,902,447

 
$
5,870,776

 
$
5,904,706

 
$
5,823,191

Total debt
$
3,018,653

 
$
3,140,547

 
$
3,110,042

 
$
3,102,993

 
$
3,340,329

Total liabilities 
$
3,373,695

 
$
3,478,132

 
$
3,441,605

 
$
3,429,743

 
$
3,645,744




2nd Quarter 2017 Supplemental Information     12          Sun Communities, Inc.

Debt Analysis                                                    
(amounts in thousands)
 
Quarter Ended
 
6/30/2017
 
3/31/2017
 
12/31/2016
 
9/30/2016
 
6/30/2016
DEBT OUTSTANDING
 
 
 
 
 
 
 
 
 
Mortgage loans payable
$
2,832,819

 
$
2,774,645

 
$
2,819,567

 
$
2,854,831

 
$
2,792,021

       Secured borrowings (3)
139,496

 
141,671

 
144,477

 
144,522

 
144,684

Preferred OP units - mandatorily redeemable
45,903

 
45,903

 
45,903

 
45,903

 
45,903

Lines of credit (8)
435

 
178,328

 
100,095

 
57,737

 
357,721

Total debt
$
3,018,653

 
$
3,140,547

 
$
3,110,042

 
$
3,102,993

 
$
3,340,329

 
 
 
 
 
 
 
 
 
 
% FIXED/FLOATING
 
 
 
 
 
 
 
 
 
Fixed
94.9%
 
89.4%
 
91.8%
 
93.1%
 
84.5%
Floating
5.1%
 
10.6%
 
8.2%
 
6.9%
 
15.5%
Total
100.0%
 
100.0%
 
100.0%
 
100.0%
 
100.0%
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE INTEREST RATES
 
 
 
 
 
 
 
 
 
Mortgage loans payable
4.26%
 
4.26%
 
4.24%
 
4.30%
 
4.38%
Preferred OP units - mandatorily redeemable
6.87%
 
6.87%
 
6.87%
 
6.87%
 
6.87%
Lines of credit
—%
 
2.52%
 
2.14%
 
1.93%
 
1.89%
Average before Secured borrowings
4.30%
 
4.19%
 
4.21%
 
4.29%
 
4.13%
Secured borrowings (3)
9.99%
 
10.01%
 
10.03%
 
10.06%
 
10.09%
Total average
4.56%
 
4.45%
 
4.48%
 
4.56%
 
4.39%
 
 
 
 
 
 
 
 
 
 
DEBT RATIOS
 
 
 
 
 
 
 
 
 
Net Debt / Recurring EBITDA(1) (TTM)
6.0
 
7.0
 
7.5
 
7.7
 
9.1
 
 
 
 
 
 
 
 
 
 
Net Debt / Enterprise Value
27.2%
 
32.8%
 
33.8%
 
32.8%
 
36.6%
 
 
 
 
 
 
 
 
 
 
Net Debt + Preferred Stock / Enterprise Value
28.4%
 
34.2%
 
35.2%
 
34.2%
 
38.0%
 
 
 
 
 
 
 
 
 
 
Net Debt / Gross Assets
38.0%
 
44.8%
 
45.0%
 
44.1%
 
49.0%
 
 
 
 
 
 
 
 
 
 
COVERAGE RATIOS
 
 
 
 
 
 
 
 
 
Recurring EBITDA(1) (TTM) / Interest
3.4
 
3.3
 
3.2
 
3.1
 
3.1
 
 
 
 
 
 
 
 
 
 
       Recurring EBITDA(1) (TTM) / Interest + Pref.
Distributions + Pref. Stock Distribution
3.1
 
3.0
 
2.9
 
2.9
 
2.8
MATURITIES/PRINCIPAL AMORTIZATION NEXT FIVE YEARS
2017
 
2018
 
2019
 
2020
 
2021
Mortgage loans payable:
 
 
 
 
 
 
 
 
 
Maturities
$
—

 
$
26,186

 
$
64,314

 
$
58,078

 
$
270,680

Weighted average rate of maturities
—
%
 
6.13
%
 
6.24
%
 
5.92
%
 
5.53
%
Principal amortization
26,533

 
55,143

 
55,937

 
56,558

 
55,503

Secured borrowings (3)
2,763

 
5,923

 
6,440

 
7,028

 
7,550

Preferred OP units - mandatorily redeemable
3,670

 
7,570

 
—

 
—

 
—

Lines of credit
—

 
435

 
—

 
—

 
—

Total
$
32,966

 
$
95,257

 
$
126,691

 
$
121,664

 
$
333,733


2nd Quarter 2017 Supplemental Information     13          Sun Communities, Inc.

Statements of Operations – Same Community                        
(amounts in thousands except for Other Information)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
Change
% Change
 
2017
 
2016
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from real property
$
131,008

 
$
123,399

 
$
7,609

6.2
%
 
$
259,764

 
$
245,842

$
13,922

 
5.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROPERTY OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Payroll and benefits
11,615

 
11,143

 
472

4.2
%
 
21,710

 
20,811

899

 
4.3
%
Legal, taxes & insurance
1,564

 
1,418

 
146

10.3
%
 
2,748

 
2,717

31

 
1.1
%
Utilities
7,192

 
6,577

 
615

9.4
%
 
13,944

 
13,261

683

 
5.2
%
Supplies and repair
5,560

 
5,130

 
430

8.4
%
 
9,010

 
8,612

398

 
4.6
%
Other
3,296

 
3,180

 
116

3.7
%
 
6,472

 
6,457

15

 
0.2
%
Real estate taxes
9,767

 
9,224

 
543

5.9
%
 
19,473

 
18,795

678

 
3.6
%
Property operating expenses
38,994

 
36,672

 
2,322

6.3
%
 
73,357

 
70,653

2,704

 
3.8
%
NET OPERATING INCOME (NOI)(1)
$
92,014

 
$
86,727

 
$
5,287

6.1
%
 
$
186,407

 
$
175,189

$
11,218

 
6.4
%

 
As of June 30,
 
 
2017
 
2016
 
Change
 
% Change
 
OTHER INFORMATION
 
 
 
 
 
 
 
 
Number of properties
231

 
231

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Overall occupancy (9)
97.2
%
 
95.6
%
(10) 
1.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Sites available for development
6,193

 
6,919

 
(726
)
 
(10.6
)%
 
 
 
 
 
 
 
 
 
 
Monthly base rent per site - MH
$
510

 
$
493

 
$
17

 
3.4
 %
(12) 
Monthly base rent per site - RV (11)
$
448

 
$
432

 
$
16

 
3.6
 %
(12) 
Monthly base rent per site - Total
$
502

 
$
486

 
$
16

 
3.4
 %
(12) 

2nd Quarter 2017 Supplemental Information     14          Sun Communities, Inc.

Rental Program Summary     
(amounts in thousands except for *)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
Change
 
% Change
 
2017
 
2016
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental home revenue
$
12,678

 
$
11,957

 
$
721

 
6.0
 %
 
$
25,017

 
$
23,665

 
$
1,352

 
5.7
 %
Site rent included in Income from real property
16,009

 
15,413

 
596

 
3.9
 %
 
31,728

 
30,631

 
1,097

 
3.6
 %
Rental program revenue
28,687

 
27,370

 
1,317

 
4.8
 %
 
56,745

 
54,296

 
2,449

 
4.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions
401

 
384

 
17

 
4.4
 %
 
1,011

 
1,159

 
(148
)
 
(12.8
)%
Repairs and refurbishment
2,363

 
3,273

 
(910
)
 
(27.8
)%
 
4,644

 
5,939

 
(1,295
)
 
(21.8
)%
Taxes and insurance
1,506

 
1,167

 
339

 
29.1
 %
 
2,943

 
2,732

 
211

 
7.7
 %
Marketing and other
674

 
587

 
87

 
14.8
 %
 
1,448

 
1,457

 
(9
)
 
(0.6
)%
Rental program operating and maintenance
4,944

 
5,411

 
(467
)
 
(8.6
)%
 
10,046

 
11,287


(1,241
)
 
(11.0
)%
NET OPERATING INCOME (NOI) (1)
$
23,743

 
$
21,959

 
$
1,784

 
8.1
 %
 
$
46,699

 
$
43,009

 
$
3,690

 
8.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Occupied rental home information as of June 30, 2017 and 2016:
 
 
 
 
 
 
 
 
Number of occupied rentals, end of period* 
 
11,083

 
10,997

 
86

 
0.8
 %
Investment in occupied rental homes, end of period
 
$
479,503

 
$
453,869

 
$
25,634

 
5.7
 %
Number of sold rental homes (YTD)* 
 
542

 
572

 
(30
)
 
(5.2
)%
Weighted average monthly rental rate, end of period* 
 
$
897

 
$
868

 
$
29

 
3.3
 %


2nd Quarter 2017 Supplemental Information     15          Sun Communities, Inc.

Home Sales Summary     
(amounts in thousands except for *)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
Change
 
% Change
 
2017
 
2016
 
Change
 
% Change
New home sales
$
7,546

 
$
5,612

 
$
1,934

 
34.5
 %
 
$
14,429

 
$
11,081

 
$
3,348

 
30.2
%
Pre-owned home sales
23,313

 
20,427

 
2,886

 
14.1
 %
 
43,693

 
39,695

 
3,998

 
10.1
%
Revenue from home sales
30,859

 
26,039

 
4,820

 
18.5
 %
 
58,122

 
50,776

 
7,346

 
14.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New home cost of sales
6,497

 
4,773

 
1,724

 
36.1
 %
 
12,345

 
9,617

 
2,728

 
28.4
%
Pre-owned home cost of sales
15,525

 
13,911

 
1,614

 
11.6
 %
 
30,560

 
27,251

 
3,309

 
12.1
%
Cost of home sales
22,022

 
18,684

 
3,338

 
17.9
 %
 
42,905

 
36,868

 
6,037

 
16.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI / Gross Profit (1)
$
8,837

 
$
7,355

 
$
1,482

 
20.2
 %
 
$
15,217

 
$
13,908

 
$
1,309

 
9.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – new homes
$
1,049

 
$
839

 
$
210

 
25.0
 %
 
$
2,084

 
$
1,464

 
$
620

 
42.4
%
Gross margin % – new homes
13.9
%
 
15.0
%
 
(1.1
)%
 
 
 
14.4
%
 
13.2
%
 
1.2
 %
 
 
Average selling price – new homes*
$
93,161


$
95,119

 
$
(1,958
)
 
(2.1
)%
 
$
91,905


$
88,648

 
$
3,257

 
3.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – pre-owned homes
$
7,788

 
$
6,516

 
$
1,272

 
19.5
 %
 
$
13,133

 
$
12,444

 
$
689

 
5.5
%
Gross margin % – pre-owned homes
33.4
%
 
31.9
%
 
1.5
 %
 
 
 
30.1
%
 
31.3
%
 
(1.2
)%
 
 
Average selling price – pre-owned homes*
$
32,379


$
29,562

 
$
2,817

 
9.5
 %
 
$
29,723


$
28,558


$
1,165

 
4.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home sales volume:
 
 
 
 
 
 
 
 
New home sales*
81

 
59

 
22

 
37.3
 %
 
157

 
125

 
32

 
25.6
%
Pre-owned home sales*
720

 
691

 
29

 
4.2
 %
 
1,470

 
1,390

 
80

 
5.8
%
Total homes sold*
801

 
750

 
51

 
6.8
 %
 
1,627

 
1,515

 
112

 
7.4
%
    

2nd Quarter 2017 Supplemental Information     16          Sun Communities, Inc.

Acquisitions Summary - Properties Acquired in 2017 and 2016
(amounts in thousands except for statistical data)

 
 
Three Months Ended 
 June 30, 2017
 
Six Months Ended 
 June 30, 2017
REVENUES:
 
 
 
 
Income from real property
 
$
42,455

 
$
89,956

PROPERTY AND OPERATING EXPENSES:
 
 
 
 
Payroll and benefits
 
6,640

 
11,466

Legal, taxes & insurance
 
326

 
670

Utilities
 
6,649

 
13,137

Supplies and repair
 
1,752

 
3,001

Other
 
2,854

 
5,659

Real estate taxes
 
3,359

 
6,796

Property operating expenses
 
21,580

 
40,729

 
 
 
 
 
NET OPERATING INCOME (NOI) (1)
 
$
20,875

 
$
49,227

 
 
 
 
 
 
 
 
 
As of June 30, 2017
Other information:
 
 
 
 
Number of properties
 
 
 
113

Occupied sites (13)
 
 
 
21,728

Developed sites (13)
 
 
 
22,395

Occupancy % (13)
 
 
 
97.0
%
Transient sites
 
 
 
7,358

Monthly base rent per site - MH
 
 
 
$
620

Monthly base rent per site - RV (11)
 
 
 
$
404

Monthly base rent per site - Total (11)
 
 
 
$
507

Ancillary revenues, net (in thousands)
 
 
 
$
1,217

 
 
 
 
 
Home sales:
 
 
 
 
Gross profit from home sales (in thousands)
 
 
 
$
1,958

New homes sales
 
 
 
44

Pre-owned homes sales
 
 
 
172

 
 
 
 
 
Occupied rental home information:
 
 
 
 
Rental program NOI (1) (in thousands)
 
 
 
$
297

Number of occupied rentals, end of period
 
 
 
352

Investment in occupied rental homes (in thousands)
 
 
 
$
8,163

Weighted average monthly rental rate
 
 
 
$
991

    


2nd Quarter 2017 Supplemental Information     17          Sun Communities, Inc.

Property Summary
 
 
 
 
 
 
 
 
 
 
(includes MH and Annual/Seasonal RV’s)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMMUNITIES
 
6/30/2017
 
3/31/2017
 
12/31/2016
 
9/30/2016
 
6/30/2016
FLORIDA
 
 
 
 
 
 
 
 
 
 
Communities
 
121

 
121

 
121

 
121

 
121

Developed sites (13)
 
36,661

 
36,533

 
36,326

 
36,050

 
36,119

Occupied (13)
 
35,479

 
35,257

 
35,021

 
34,745

 
34,720

Occupancy % (13)
 
96.8
%
 
96.5
%
 
96.4
%
 
96.4
%
 
96.1
%
Sites for development
 
1,368

 
1,359

 
1,465

 
1,259

 
1,259

MICHIGAN
 
 
 
 
 
 
 
 
 
 
Communities
 
68

 
67

 
67

 
67

 
66

Developed sites (13)
 
25,496

 
25,024

 
24,512

 
24,388

 
24,387

Occupied (13)
 
23,924

 
23,443

 
23,248

 
23,218

 
23,198

Occupancy % (13)
 
93.8
%
 
93.7
%
 
94.8
%
 
95.2
%
 
95.1
%
Sites for development
 
1,752

 
1,798

 
2,589

 
2,628

 
2,248

TEXAS
 
 
 
 
 
 
 
 
 
 
Communities
 
21

 
21

 
21

 
21

 
21

Developed sites (13)
 
6,312

 
6,292

 
6,186

 
6,088

 
6,071

Occupied (13)
 
6,021

 
5,943

 
5,862

 
5,774

 
5,771

Occupancy % (13)
 
95.4
%
 
94.5
%
 
94.8
%
 
94.8
%
 
95.1
%
Sites for development
 
1,345

 
1,387

 
1,474

 
1,455

 
1,347

CALIFORNIA
 
 
 
 
 
 
 
 
 
 
Communities
 
23

 
23

 
22

 
22

 
22

Developed sites (13)
 
4,894

 
4,865

 
4,862

 
4,863

 
4,864

Occupied (13)
 
4,834

 
4,804

 
4,793

 
4,792

 
4,796

Occupancy % (13)
 
98.8
%
 
98.7
%
 
98.6
%
 
98.5
%
 
98.6
%
Sites for development
 
367

 
411

 
332

 
332

 
332

ARIZONA
 
 
 
 
 
 
 
 
 
 
Communities
 
11

 
11

 
11

 
11

 
11

Developed sites (13)
 
3,589

 
3,582

 
3,565

 
3,567

 
3,532

Occupied (13)
 
3,383

 
3,370

 
3,338

 
3,305

 
3,281

Occupancy % (13)
 
94.3
%
 
94.1
%
 
93.6
%
 
92.7
%
 
92.9
%
Sites for development
 
269

 
269

 
358

 
358

 
358

ONTARIO, CANADA
 
 
 
 
 
 
 
 
 
 
Communities
 
15

 
15

 
15

 
15

 
15

Developed sites (13)
 
3,564

 
3,451

 
3,368

 
3,453

 
3,375

Occupied (13)
 
3,564

 
3,451

 
3,368

 
3,453

 
3,375

Occupancy % (13)
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Sites for development
 
1,628

 
1,628

 
1,599

 
2,029

 
2,029

INDIANA
 
 
 
 
 
 
 
 
 
 
Communities
 
11

 
11

 
11

 
11

 
11

Developed sites (13)
 
2,900

 
2,900

 
2,900

 
2,900

 
2,900

Occupied (13)
 
2,758

 
2,741

 
2,724

 
2,712

 
2,700

Occupancy % (13)
 
95.1
%
 
94.5
%
 
93.9
%
 
93.5
%
 
93.1
%
Sites for development
 
330

 
330

 
316

 
316

 
316


2nd Quarter 2017 Supplemental Information     18          Sun Communities, Inc.

Property Summary
 
 
 
 
 
 
 
 
 
 
(includes MH and Annual/Seasonal RV’s)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMMUNITIES
 
6/30/2017
 
3/31/2017
 
12/31/2016
 
9/30/2016
 
6/30/2016
OHIO
 
 
 
 
 
 
 
 
 
 
Communities
 
9

 
9

 
9

 
9

 
9

Developed sites (13)
 
2,735

 
2,719

 
2,715

 
2,719

 
2,718

Occupied (13)
 
2,643

 
2,623

 
2,595

 
2,602

 
2,616

Occupancy % (13)
 
96.6
%
 
96.5
%
 
95.6
%
 
95.7
%
 
96.2
%
Sites for development
 
75

 
75

 
—

 
—

 
—

COLORADO
 
 
 
 
 
 
 
 
 
 
Communities
 
8

 
8

 
8

 
7

 
7

Developed sites (13)
 
2,335

 
2,335

 
2,335

 
2,335

 
2,335

Occupied (13)
 
2,326

 
2,329

 
2,325

 
2,323

 
2,320

Occupancy % (13)
 
99.6
%
 
99.7
%
 
99.6
%
 
99.5
%
 
99.4
%
Sites for development
 
656

 
656

 
656

 
304

 
304

OTHER STATES
 
 
 
 
 
 
 
 
 
 
Communities
 
57

 
56

 
56

 
55

 
54

Developed sites (13)
 
14,891

 
14,567

 
14,313

 
14,415

 
14,337

Occupied (13)
 
14,439

 
14,130

 
13,919

 
13,991

 
13,912

Occupancy % (13)
 
97.0
%
 
97.0
%
 
97.3
%
 
97.1
%
 
97.0
%
Sites for development
 
2,582

 
1,977

 
1,827

 
1,823

 
1,728

TOTAL - PORTFOLIO
 
 
 
 
 
 
 
 
 
 
Communities
 
344

 
342

 
341

 
339

 
337

Developed sites (13)
 
103,377

 
102,268

 
101,082

 
100,778

 
100,638

Occupied (13)
 
99,371

 
98,091

 
97,193

 
96,915

 
96,689

Occupancy % (13)
 
96.1
%
 
95.9
%
 
96.2
%
 
96.2
%
 
96.1
%
Sites for development
 
10,372

 
9,890

 
10,616

 
10,504

 
9,921

% Communities age restricted
 
32.8
%
 
33.0
%
 
33.1
%
 
33.3
%
 
33.5
%
 
 
 
 
 
 
 
 
 
 
 
TRANSIENT RV PORTFOLIO SUMMARY
 
 
 
 
 
 
 
 
 
 
    Location
 
 
 
 
 
 
 
 
 
 
Florida
 
6,244

 
6,467

 
6,497

 
7,232

 
6,990

Ontario, Canada
 
1,314

 
1,451

 
1,500

 
1,485

 
1,657

Texas
 
1,403

 
1,412

 
1,407

 
1,446

 
1,455

Arizona
 
1,025

 
1,032

 
1,049

 
1,047

 
1,055

New Jersey
 
1,028

 
1,059

 
1,042

 
1,047

 
1,084

New York
 
630

 
588

 
830

 
484

 
483

Maine
 
533

 
543

 
555

 
556

 
571

California
 
808

 
840

 
513

 
478

 
518

Indiana
 
520

 
520

 
502

 
501

 
501

Michigan
 
260

 
210

 
204

 
203

 
126

Ohio
 
169

 
194

 
198

 
194

 
195

Other locations
 
2,253

 
1,966

 
1,997

 
1,801

 
1,864

Total transient RV sites
 
16,187

 
16,282

 
16,294

 
16,474

 
16,499



2nd Quarter 2017 Supplemental Information     19          Sun Communities, Inc.



Capital Improvements, Development, and Acquisitions     
(amounts in thousands except for *)
 
Recurring
 
 
 
 
 
 
 
 
 
 
 
Capital
Recurring
 
 
 
 
 
 
 
 
 
Expenditures
Capital
Lot
 
 
Expansion &
Revenue
 
 
Average/Site*

Expenditures (14)
 
Modifications (15)
 
Acquisitions (16)
 
Development (17)
 
Producing (18)
YTD 2017
 
$
94

 
$
8,410

 
$
10,703

 
$
69,402

 
$
32,541

 
$
784

2016
 
$
211

 
$
17,613

 
$
19,040

 
$
1,822,564

 
$
47,958

 
$
2,631

2015
 
$
230

 
$
20,344

 
$
13,961

 
$
1,214,482

 
$
28,660

 
$
4,497



2nd Quarter 2017 Supplemental Information     20          Sun Communities, Inc.

Operating Statistics for Manufactured Homes and Annual/Seasonal RV’s    

 
Resident
Net Leased
New Home
Pre-owned
Brokered
LOCATIONS
Move-outs
Sites (19)
Sales
Home Sales
Re-sales
Florida
 
540

 
458

 
79

 
227

 
681

Michigan
 
265

 
386

 
16

 
651

 
60

Texas
 
123

 
159

 
15

 
183

 
17

California
 
12

 
11

 
2

 
10

 
8

Arizona
 
32

 
45

 
16

 
14

 
100

Ontario, Canada
 
88

 
196

 
8

 
20

 
79

Indiana
 
22

 
34

 
1

 
114

 
12

Ohio
 
55

 
48

 
—

 
57

 
3

Colorado
 
4

 
1

 
3

 
65

 
27

Other locations
 
373

 
101

 
17

 
129

 
79

Six Months Ended June 30, 2017
 
1,514

 
1,439

 
157

 
1,470

 
1,066


 
Resident
Net Leased
New Home
Pre-owned
Brokered
TOTAL FOR YEAR ENDED
Move-outs 
Sites (19)
Sales
Home Sales
Re-sales
2016
 
1,722

 
1,686

 
329

 
2,843

 
1,655

2015
 
1,344

 
1,905

 
273

 
2,210

 
1,244


 
Resident
 
Resident
 
PERCENTAGE TRENDS
Move-outs
 
Re-sales
 
2017 (TTM)
 
2.1
%
 
6.3
%
2016
 
2.0
%
 
6.1
%
2015
 
2.0
%
 
5.9
%

2nd Quarter 2017 Supplemental Information     21          Sun Communities, Inc.

Footnotes and Definitions                        
(1)
Investors in and analysts following the real estate industry utilize funds from operations (FFO), net operating income (NOI), and recurring earnings before interest, tax, depreciation and amortization (Recurring EBITDA) as supplemental performance measures. We believe FFO, NOI, and Recurring EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation/amortization of real estate assets. NOI provides a measure of rental operations and does not factor in depreciation/amortization and non-property specific expenses such as general and administrative expenses. Recurring EBITDA, a metric calculated as EBITDA exclusive of certain nonrecurring items, provides a further tool to evaluate ability to incur and service debt and to fund dividends and other cash needs. Additionally, FFO, NOI, and Recurring EBITDA are commonly used in various ratios, pricing multiples/yields and returns and valuation calculations used to measure financial position, performance and value.

FFO is defined by the National Association of Real Estate Investment Trusts (NAREIT) as net income (loss) computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company's operating performance. Management generally considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared period over period, reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from net income (loss). Management believes that the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. FFO is computed in accordance with the Company's interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company. The Company also uses FFO excluding certain items, which excludes certain gain and loss items that management considers unrelated to the operational and financial performance of our core business. We believe that this provides investors with another financial measure of our operating performance that is more comparable when evaluating period over period results.

Because FFO excludes significant economic components of net income (loss) including depreciation and amortization, FFO should be used as an adjunct to net income (loss) and not as an alternative to net income (loss). The principal limitation of FFO is that it does not represent cash flow from operations as defined by GAAP and is a supplemental measure of performance that does not replace net income (loss) as a measure of performance or net cash provided by operating activities as a measure of liquidity. In addition, FFO is not intended as a measure of a REIT’s ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO only provides investors with an additional performance measure that, when combined with measures computed in accordance with GAAP such as net income (loss), cash flow from operating activities, investing activities and financing activities, provide investors with an indication of our ability to service debt and to fund acquisitions and other expenditures. Other REITs may use different methods for calculating FFO, accordingly, our FFO may not be comparable to other REITs.

NOI is derived from revenues minus property operating expenses and real estate taxes. NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity; nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions. The Company believes that net income (loss) is the most directly comparable GAAP measurement to NOI. Because of the inclusion of items such as interest, depreciation, and amortization, the use of net income (loss) as a performance measure is limited as these items may not accurately reflect the actual change in market value of a property, in the case of depreciation and in the case of interest, may not necessarily be linked to the operating performance of a real estate asset, as it is often incurred at a parent company level and not at a property level. The Company believes that NOI is helpful to investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key management tool when evaluating performance and growth of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization interest expense and non-property specific expenses such as general and administrative expenses, all of which are significant

2nd Quarter 2017 Supplemental Information     22          Sun Communities, Inc.

costs, therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.

EBITDA is defined as NOI plus other income, plus (minus) equity earnings (loss) from affiliates, minus general and administrative expenses. EBITDA includes EBITDA from discontinued operations. The Company believes that net income (loss) is the most directly comparable GAAP measurement to EBITDA.

(2) The consideration amounts presented with respect to acquired communities represent the economic transaction and do not contemplate the fair value purchase accounting required by GAAP.

(3) This is a transferred asset transaction which has been classified as collateralized receivables and the cash received from this transaction has been classified as a secured borrowing. The interest income and interest expense accrue at the same rate/amount.

(4) Other income, net for the three months ended June 30, 2017, is comprised of a foreign currency translation gain of $2.2 million partially offset by contingent liability re-measurement of $0.8 million, hurricane related expenses of $0.3 million and other expenses of $0.2 million. For the six months ended June 30, 2017, Other income, net is comprised primarily of a foreign currency translation gain of $3.0 million, partially offset by contingent liability re-measurement of $1.0 million and hurricane related expenses of $0.4 million.

(5) These costs represent the first year expenses incurred to bring acquired properties up to the Company's operating standards, including items such as tree trimming and painting costs that do not meet the Company's capitalization policy.

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

(7) The renter's monthly payment includes the site rent and an amount attributable to the leasing of the home. The site rent is reflected in Real Property NOI. For purposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the Rental Program, and to assess the overall growth and performance of the Rental Program and financial impact on our operations.

(8) Lines of credit balance of $0.4 million at June 30, 2017 represents the Company's MH floor plan facility. There were no borrowings outstanding on the revolving loan or term loan as of June 30, 2017. As of June 30, 2017, the effective interest rate on the MH floor plan facility was 7.0 percent, however, the Company pays no interest if the floor plan balance is repaid within 60 days.

(9) Includes manufactured housing (MH) and annual/seasonal recreational vehicle (RV) sites, and excludes transient RV sites and recently completed but vacant expansion sites.

(10) Occupancy reflects current year gains from expansion sites and the conversion of transient RV guests to annual/seasonal RV contracts as vacant in 2016.

(11) Monthly base rent per site pertains to annual/seasonal RV sites and excludes transient RV sites.

(12) Calculated using actual results without rounding.

(13) Includes MH and annual/seasonal RV sites, and excludes transient RV sites.

(14) Includes capital expenditures necessary to maintain asset quality, including purchasing and replacing assets used to operate the community. These capital expenditures include items such as: major road, driveway, and pool improvements; clubhouse renovations; adding or replacing street lights; playground equipment; signage; maintenance facilities; manager housing and property vehicles. The minimum capitalized amount is five hundred dollars.

(15) Includes capital expenditures which improve the asset quality of the community. These costs are incurred when an existing older home moves out, and the site is prepared for a new home, more often than not, a multi-sectional home. These activities which are mandated by strict manufacturer’s installation requirements and state building code include items such as new foundations, driveways, and utility upgrades.

2nd Quarter 2017 Supplemental Information     23          Sun Communities, Inc.


(16) Acquisitions represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. Acquisitions for the six months ended June 30, 2017 also include $29.5 million of capital improvements identified during due diligence that are necessary to bring the community up to the Company’s standards. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, they sometimes require 24 to 36 months after closing to complete.

(17) Expansion and development costs consist primarily of construction costs and costs necessary to complete home site improvements.

(18) Capital costs related to revenue generating activities, consist primarily of garages, sheds, and sub-metering of water, sewer and electricity. Revenue generating attractions at our RV resorts are also included here and, occasionally, a special capital project requested by residents and accompanied by an extra rental increase will be classified as revenue producing.

(19) Net leased sites do not include occupied sites acquired in that year.

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




2nd Quarter 2017 Supplemental Information     24          Sun Communities, Inc.