EX-99.1 2 exhibit991pressreleaseands.htm EXHIBIT 99.1 PRESS RELEASE AND SUPPLEMENTAL PACKAGE SEPTEMBER 30, 2018 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 to Funds from Operations
Reconciliation of Net Income to Recurring EBITDA
Reconciliation of Net Income to Net Operating Income
Non-GAAP and Other Financial Measures
Financial and Operating Highlights
Debt Analysis
 
 
Selected Financial Information
 
Statements of Operations – Same Community
Rental Program Summary
Home Sales Summary
Acquisitions and Other Summary
 
 
Other Information
 
Property Summary
18 - 19
Capital Improvements, Development, and Acquisitions
Operating Statistics for Manufactured Homes and Annual RV’s
Footnotes and Definitions
22 - 24
 
 



sunlogofilea05.jpg
NEWS RELEASE
October 24, 2018

Sun Communities, Inc. Reports 2018 Third Quarter Results

Southfield, Michigan, October 24, 2018 – 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 third quarter results for 2018.

Financial Results for the Quarter and Nine Months Ended September 30, 2018

For the quarter ended September 30, 2018, total revenues increased $55.3 million, or 20.6 percent, to $323.5 million compared to $268.2 million for the same period in 2017. Net income attributable to common stockholders was $46.1 million, or $0.56 per diluted common share, for the quarter ended September 30, 2018, as compared to net income attributable to common stockholders of $24.1 million, or $0.31 per diluted common share, for the same period in 2017.

For the nine months ended September 30, 2018, total revenues increased $112.3 million, or 15.2 percent, to $852.9 million compared to $740.5 million for the same period in 2017. Net income attributable to common stockholders was $96.5 million, or $1.19 per diluted common share, as compared to net income attributable to common stockholders of $57.6 million, or $0.76 per diluted common share, for the same period in 2017.

Non-GAAP Financial Measures and Portfolio Performance

•
Core Funds from Operations (“Core FFO”)(1) for the quarter ended September 30, 2018, was $1.35 per diluted share and OP unit (“Share”) as compared to $1.13 per Share in the prior year, an increase of 19.5 percent.

•
Same Community(2) Net Operating Income (“NOI”)(1) increased by 6.2 percent for the quarter ended September 30, 2018, as compared to the same period in 2017.

•
Same Community occupancy(3) increased by 220 basis points to 97.8 percent, as compared to 95.6 percent at September 30, 2017.

•
Home sales volume increased 20.6 percent to 971 homes for the quarter ended September 30, 2018, as compared to 805 homes in the same period in 2017. New home sales volume increased 43.1 percent to 146 homes for the quarter ended September 30, 2018, as compared to 102 homes in the same period in 2017.

•
Revenue producing sites increased by 628 sites for the quarter ended September 30, 2018, as compared to a 394 site increase in the same period in 2017.

Gary Shiffman, Chief Executive Officer of Sun Communities stated, “Our third quarter results demonstrate the ongoing strength of our platform. We delivered solid operational results and continued to position the Company for sustained long term growth.  Core FFO increased 19.5 percent driven by the strength of our MH and RV same community portfolio, 220 basis points in same community occupancy gains and the integration of communities acquired over the last twelve months.  Continued strength in our home sales

i

provides evidence of the desirability of our communities and reinforces our commitment to pursue expansions and new developments - essential ingredients in providing sustained industry leading results.”

OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy was 96.1 percent at September 30, 2018, and 96.2 percent at September 30, 2017. The slight decline in occupancy was primarily attributable to recently constructed but vacant MH expansion sites.

During the quarter ended September 30, 2018, revenue producing sites increased by 628 sites, as compared to 394 revenue producing sites gained during the third quarter of 2017. During the nine months ended September 30, 2018, revenue producing sites increased by 1,878 sites, as compared to an increase of 1,833 revenue producing sites during the nine months ended September 30, 2017.

Same Community(2) Results

For the 336 stabilized communities owned and operated by the Company since January 1, 2017, NOI(1) for the quarter ended September 30, 2018 increased 6.2 percent over the same period in 2017, as a result of a 6.3 percent increase in revenues and a 6.6 percent increase in operating expenses. Expenses were elevated primarily as a result of supply and repair costs as well as changes to certain insurance claim reserves. Same Community occupancy(3) increased to 97.8 percent at September 30, 2018 from 95.6 percent at September 30, 2017.

For the nine months ended September 30, 2018, total revenues increased by 6.1 percent while total expenses increased by 5.9 percent, resulting in an increase in NOI(1) of 6.2 percent over the nine months ended September 30, 2017.

Home Sales

During the quarter ended September 30, 2018, the Company sold 971 homes as compared to 805 homes sold during the same period in 2017, a 20.6 percent increase. Rental home sales, which are included in total home sales, were 316 and 286 for the quarters ended September 30, 2018 and 2017, respectively.

During the nine months ended September 30, 2018, 2,751 homes were sold compared to 2,432 homes sold for the same period in 2017, a 13.1 percent increase. Rental sales, which are included in total home sales, were 825 and 828 for the nine months ended September 30, 2018 and 2017, respectively.

PORTFOLIO ACTIVITY

Acquisitions

As previously disclosed, during the quarter ended September 30, 2018, the Company acquired a 507 site age-restricted RV resort located in Desert Hot Springs, California for total consideration of $14.3 million. Additionally, during the quarter, the Company acquired a 210 site RV resort located in Petoskey, Michigan for total consideration of $9.0 million and a 114 site RV resort located in Moab, Utah for total consideration of $14.6 million.

ii

Hurricanes Florence and Michael

The Company has concluded its initial assessment of the communities impacted by Hurricanes Florence and Michael which indicated minor damage primarily comprised of downed trees, wind related debris and damage to certain outdoor fixtures.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

During the quarter ended September 30, 2018, the Company repaid one collateralized term loan of $30.5 million with an interest rate of 6.34 percent. The loan was due to mature on March 1, 2019.

As of September 30, 2018, the Company had $3.0 billion of debt outstanding. The weighted average interest rate was 4.50 percent and the weighted average maturity was 9.4 years. The Company had $113.6 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month Recurring EBITDA(1) ratio was 5.4 times.

As previously disclosed, during the quarter ended September 30, 2018, the Company entered into a $228.0 million collateralized term loan with a 4.10 percent fixed rate and a 20 year term.

Equity Transactions

During the quarter ended September 30, 2018, the Company closed an underwritten registered public offering of 5,060,000 shares of common stock. Proceeds from the offering were $499.9 million after deducting expenses related to the offering. The Company used the net proceeds of this offering to repay borrowings under the revolving loan and the term loan under our senior credit facility.

During the quarter ended September 30, 2018, the Company issued 398,516 shares of common stock through its At-the-Market (“ATM”) equity sales program at a weighted average price of $100.19 per share. Net proceeds from the sales were $39.4 million.

GUIDANCE 2018

The Company is updating full year 2018 total portfolio guidance to take into account the contribution from closed acquisitions and the impact of completed equity share issuances during the quarter. Updated guidance is as follows:

Total Portfolio
Number of communities: 370
 
 
Q4 2018E
 
FY 2018E
Net Income per fully diluted share
 
$0.22 - $0.26
 
$1.41 - $1.45
Core FFO(1) per fully diluted share
 
$1.01 - $1.04
 
$4.57 - $4.60

The Company is adjusting its 2018 Same Community NOI(1) growth guidance range for the year to 6.75 percent to 7.0 percent, from the prior range of 6.75 percent to 7.25 percent, reflecting the impact of third quarter same community expenses. Guidance does not include prospective acquisitions or capital markets activity.

iii


Core FFO(1) per Share estimates assume certain gain and loss items that management considers unrelated to the operational and financial performance of our core business will be 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.”

iv

EARNINGS CONFERENCE CALL

A conference call to discuss third quarter operating results will be held on Thursday, October 25, 2018 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 November 8, 2018 and can be accessed toll-free by calling 844-512-2921 or 412-317-6671. The Conference ID number for the call and the replay is 13682866. 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 September 30, 2018, owned, operated, or had an interest in a portfolio of 370 communities comprising over 127,000 developed sites in 31 states and Ontario, Canada.

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

CONTACT

Please address all inquiries to our investor relations department at our website www.suncommunities.com, by phone to (248) 208-2500, by email to investorrelations@suncommunities.com or by mail to 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 its 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.

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.


v

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
 
 
Samir Khanal
 
(212) 888-3796
 
samir.khanal@evercoreisi.com
Green Street Advisors
 
John Pawlowski
 
(949) 640-8780
 
jpawlowski@greenstreetadvisors.com
 
 
Ryan Lumb
 
(949) 640-8780
 
rlumb@greenstreetadvisors.com
RBC Capital Markets
 
Wes Golladay
 
(440) 715-2650
 
wes.golladay@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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3rd Quarter 2018 Supplemental Information     1          Sun Communities, Inc.

Portfolio Overview                            
(As of September 30, 2018)
sunportfoliomapoct20183.jpg










3rd Quarter 2018 Supplemental Information     2          Sun Communities, Inc.

Balance Sheets                                                
(amounts in thousands)
 
 
9/30/2018
 
12/31/2017
ASSETS:
 
 
 
 
Land
 
$
1,187,502

 
$
1,107,838

Land improvements and buildings
 
5,523,554

 
5,102,014

Rental homes and improvements
 
559,290

 
528,074

Furniture, fixtures and equipment
 
174,315

 
144,953

Investment property
 
7,444,661

 
6,882,879

Accumulated depreciation
 
(1,390,684
)
 
(1,237,525
)
Investment property, net
 
6,053,977

 
5,645,354

Cash and cash equivalents
 
113,556

 
10,127

Inventory of manufactured homes
 
41,030

 
30,430

Notes and other receivables, net
 
167,698

 
163,496

Collateralized receivables, net (4)
 
112,228

 
128,246

Other assets, net
 
165,237

 
134,304

Total assets
 
$
6,653,726

 
$
6,111,957

LIABILITIES:
 
 
 
 
Mortgage loans payable
 
$
2,819,225

 
$
2,867,356

Secured borrowings (4)
 
113,089

 
129,182

Preferred Equity - Sun NG Resorts - mandatorily redeemable
 
35,277

 
—

Preferred OP units - mandatorily redeemable
 
37,338

 
41,443

Lines of credit (5)
 
—

 
41,257

Distributions payable
 
63,250

 
55,225

Advanced reservation deposits and rent
 
135,647

 
132,205

Other liabilities
 
163,459

 
138,536

Total liabilities
 
3,367,285

 
3,405,204

Commitments and contingencies
 
—

 
—

Series A-4 preferred stock
 
31,739

 
32,414

Series A-4 preferred OP units
 
10,026

 
10,652

Equity Interests - NG Sun LLC
 
21,976

 
—

STOCKHOLDERS' EQUITY:
 
 
 
 
Common stock
 
864

 
797

Additional paid-in capital
 
4,396,092

 
3,758,533

Accumulated other comprehensive (loss) / income
 
(390
)
 
1,102

Distributions in excess of accumulated earnings
 
(1,237,428
)
 
(1,162,001
)
Total SUI stockholders' equity
 
3,159,138

 
2,598,431

Noncontrolling interests:
 
 
 
 
Common and preferred OP units
 
56,018

 
60,971

Consolidated variable interest entities
 
7,544

 
4,285

Total noncontrolling interests
 
63,562

 
65,256

Total stockholders' equity
 
3,222,700

 
2,663,687

Total liabilities & stockholders' equity
 
$
6,653,726

 
$
6,111,957



3rd Quarter 2018 Supplemental Information     3          Sun Communities, Inc.


Statements of Operations - Quarter to Date Comparison                         
(amounts in thousands, except per share amounts)
 
Three Months Ended September 30,
 
2018
 
2017
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
Income from real property (excluding transient revenue)
$
184,414

 
$
169,533

 
$
14,881

 
8.8
 %
Transient revenue
45,193

 
28,730

 
16,463

 
57.3
 %
Revenue from home sales
46,131

 
33,197

 
12,934

 
39.0
 %
Rental home revenue
13,589

 
12,757

 
832

 
6.5
 %
Ancillary revenues
27,608

 
17,017

 
10,591

 
62.2
 %
Interest
5,256

 
5,920

 
(664
)
 
(11.2
)%
Brokerage commissions and other revenues, net
1,347

 
1,091

 
256

 
23.5
 %
Total revenues
323,538

 
268,245

 
55,293

 
20.6
 %
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
Property operating and maintenance
71,364

 
59,249

 
12,115

 
20.4
 %
Real estate taxes
14,533

 
13,053

 
1,480

 
11.3
 %
Cost of home sales
33,692

 
25,094

 
8,598

 
34.3
 %
Rental home operating and maintenance
6,139

 
6,775

 
(636
)
 
(9.4
)%
Ancillary expenses
15,361

 
10,086

 
5,275

 
52.3
 %
Home selling expenses
4,043

 
3,290

 
753

 
22.9
 %
General and administrative
20,127

 
18,174

 
1,953

 
10.7
 %
Transaction costs (6)
24

 
2,167

 
(2,143
)
 
(98.9
)%
Catastrophic weather related charges, net
173

 
7,756

 
(7,583
)
 
(97.8
)%
Depreciation and amortization
71,982

 
64,232

 
7,750

 
12.1
 %
Loss on extinguishment of debt
939

 
—

 
939

 
N/A

Interest
33,521

 
32,085

 
1,436

 
4.5
 %
Interest on mandatorily redeemable preferred OP units / equity
1,142

 
790

 
352

 
44.6
 %
Total expenses
273,040

 
242,751

 
30,289

 
12.5
 %
Income before other items
50,498

 
25,494

 
25,004

 
98.1
 %
Other income, net (7)
1,231

 
3,345

 
(2,114
)
 
(63.2
)%
Current tax (expense) / benefit
(213
)
 
38

 
(251
)
 
(660.5
)%
Deferred tax benefit
199

 
81

 
118

 
145.7
 %
Net income
51,715

 
28,958

 
22,757

 
78.6
 %
Less: Preferred return to preferred OP units / equity
(1,152
)
 
(1,112
)
 
(40
)
 
3.6
 %
Less: Amounts attributable to noncontrolling interests
(4,071
)
 
(1,776
)
 
(2,295
)
 
129.2
 %
Less: Preferred stock distribution
(432
)
 
(1,955
)
 
1,523

 
(77.9
)%
NET INCOME ATTRIBUTABLE TO SUI
$
46,060

 
$
24,115

 
$
21,945

 
91.0
 %
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
81,599

 
78,369

 
3,230

 
4.1
 %
Diluted
82,081

 
78,808

 
3,273

 
4.2
 %
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.56

 
$
0.31

 
$
0.25

 
80.6
 %
Diluted
$
0.56

 
$
0.31

 
$
0.25

 
80.6
 %


3rd Quarter 2018 Supplemental Information     4          Sun Communities, Inc.

Statements of Operations - Year to Date Comparison                            
(amounts in thousands, except per share amounts)
 
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
Income from real property (excluding transient revenue)
 
$
536,704

 
$
495,179

 
$
41,525

 
8.4
 %
Transient revenue
 
88,784

 
65,599

 
23,185

 
35.3
 %
Revenue from home sales
 
122,248

 
91,319

 
30,929

 
33.9
 %
Rental home revenue
 
39,957

 
37,774

 
2,183

 
5.8
 %
Ancillary revenues
 
46,207

 
32,086

 
14,121

 
44.0
 %
Interest
 
15,849

 
15,609

 
240

 
1.5
 %
Brokerage commissions and other revenues, net
 
3,131

 
2,978

 
153

 
5.1
 %
Total revenues
 
852,880

 
740,544

 
112,336

 
15.2
 %
 
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
 
Property operating and maintenance
 
181,579

 
159,861

 
21,718

 
13.6
 %
Real estate taxes
 
42,445

 
39,322

 
3,123

 
7.9
 %
Cost of home sales
 
91,195

 
67,999

 
23,196

 
34.1
 %
Rental home operating and maintenance
 
16,577

 
16,821

 
(244
)
 
(1.5
)%
Ancillary expenses
 
28,985

 
21,995

 
6,990

 
31.8
 %
Home selling expenses
 
11,319

 
9,391

 
1,928

 
20.5
 %
General and administrative
 
61,432

 
55,912

 
5,520

 
9.9
 %
Transaction costs (6)
 
138

 
6,990

 
(6,852
)
 
(98.0
)%
Catastrophic weather related charges, net
 
(1,987
)
 
8,124

 
(10,111
)
 
(124.5
)%
Depreciation and amortization
 
206,192

 
189,719

 
16,473

 
8.7
 %
Loss on extinguishment of debt
 
2,657

 
759

 
1,898

 
250.1
 %
Interest
 
96,919

 
95,765

 
1,154

 
1.2
 %
Interest on mandatorily redeemable preferred OP units / equity
 
2,551

 
2,361

 
190

 
8.0
 %
Total expenses
 
740,002

 
675,019

 
64,983

 
9.6
 %
Income before other items
 
112,878

 
65,525

 
47,353

 
72.3
 %
Other (expense) / income, net (7)
 
(3,214
)
 
5,340

 
(8,554
)
 
(160.2
)%
Current tax expense
 
(612
)
 
(133
)
 
(479
)
 
(360.2
)%
Deferred tax benefit
 
434

 
745

 
(311
)
 
(41.7
)%
Net income
 
109,486

 
71,477

 
38,009

 
53.2
 %
Less: Preferred return to preferred OP units / equity
 
(3,335
)
 
(3,482
)
 
147

 
(4.2
)%
Less: Amounts attributable to noncontrolling interests
 
(8,392
)
 
(4,179
)
 
(4,213
)
 
100.8
 %
Less: Preferred stock distribution
 
(1,305
)
 
(6,233
)
 
4,928

 
(79.1
)%
NET INCOME ATTRIBUTABLE TO SUI
 
$
96,454

 
$
57,583

 
$
38,871

 
67.5
 %
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
80,022

 
75,234

 
4,788

 
6.4
 %
Diluted
 
80,024

 
75,846

 
4,178

 
5.5
 %
Earnings per share:
 
 
 
 
 
 
 

Basic
 
$
1.19

 
$
0.76

 
$
0.43

 
56.6
 %
Diluted
 
$
1.19

 
$
0.76

 
$
0.43

 
56.6
 %


3rd Quarter 2018 Supplemental Information     5          Sun Communities, Inc.

Outstanding Securities and Capitalization    
(in thousands except for *)
Outstanding Securities - As of September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Number of Units/Shares Outstanding
 
Conversion Rate*
 
If Converted
 
Issuance Price per unit*
 
Annual Distribution Rate*
Convertible Securities
 
 
 
 
 
 
 
 
 
Series A-1 preferred OP units
332
 
2.4390
 
810
 
$100
 
6.0%
Series A-3 preferred OP units
40
 
1.8605
 
74
 
$100
 
4.5%
Series A-4 preferred OP units
410
 
0.4444
 
182
 
$25
 
6.5%
Series C preferred OP units
314
 
1.1100
 
349
 
$100
 
4.5%
Common OP units
2,729
 
1.0000
 
2,729
 
N/A
 
Mirrors common shares distributions
Series A-4 cumulative convertible preferred stock
1,063
 
0.4444
 
472
 
$25
 
6.5%
 
 
 
 
 
 
 
 
 
 
Non-Convertible Securities
 
 
 
 
 
 
 
 
 
Common shares
86,355
 
N/A
 
N/A
 
N/A
 
$2.84^
^ Annual distribution is based on the last quarterly distribution annualized.
Capitalization - As of September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
Shares
 
Share Price*
 
Total
Common shares
 
86,355

 
$
101.54

 
$
8,768,487

Common OP units
 
2,729

 
$
101.54

 
277,103

Subtotal
 
89,084

 
 
 
$
9,045,590

 
 
 
 
 
 
 
Series A-1 preferred OP units
 
810

 
$
101.54

 
82,247

Series A-3 preferred OP units
 
74

 
$
101.54

 
7,514

Series A-4 preferred OP units
 
182

 
$
101.54

 
18,480

Series C preferred OP units
 
349

 
$
101.54

 
35,437

Total diluted shares outstanding
 
90,499

 
 
 
$
9,189,268

 
Debt
Mortgage loans payable
 
 
 
 
 
$
2,819,225

Secured borrowings (4)
 
 
 
 
 
113,089

Preferred Equity - Sun NG Resorts - mandatorily redeemable
 
 
 
 
 
35,277

Preferred OP units - mandatorily redeemable
 
 
 
 
 
37,338

Lines of credit (5)
 
 
 
 
 
—

Total Debt
 
 
 
 
 
$
3,004,929

 
Preferred
A-4 preferred stock
 
1,063

 
$
25.00

 
$
26,575

Total Capitalization
 
 
 
 
 
$
12,220,772


3rd Quarter 2018 Supplemental Information     6          Sun Communities, Inc.



















Reconciliations to Non-GAAP Financial Measures


3rd Quarter 2018 Supplemental Information     7          Sun Communities, Inc.

Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to Funds from Operations                            
(amounts in thousands except for per share data)
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2018
 
2017
 
2018
 
2017
Net income attributable to Sun Communities, Inc. common stockholders:
$
46,060

 
$
24,115

 
$
96,454

 
$
57,583

Adjustments:
 

 
 

 
 

 
 

Depreciation and amortization
72,269

 
64,484

 
206,892

 
190,143

Amounts attributable to noncontrolling interests
4,311

 
1,608

 
7,724

 
3,710

Preferred return to preferred OP units
549

 
578

 
1,654

 
1,750

Preferred distribution to Series A-4 preferred stock
432

 
441

 
1,305

 
1,666

Gain on disposition of assets, net
(6,603
)
 
(4,309
)
 
(16,977
)
 
(11,342
)
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)
$
117,018

 
$
86,917

 
$
297,052

 
$
243,510

Adjustments:
 
 
 
 
 
 
 
Transaction costs (6)
—

 
2,167

 
—

 
6,990

Other acquisition related costs (9)
345

 
343

 
781

 
2,712

Loss on extinguishment of debt
939

 
—

 
2,657

 
759

Catastrophic weather related charges, net
173

 
7,756

 
(1,987
)
 
8,124

Loss of earnings - catastrophic weather related (10)
325

 
—

 
975

 
—

Other (income) / expense, net (7)
(1,231
)
 
(3,345
)
 
3,214

 
(5,340
)
Debt premium write-off
(411
)
 
—

 
(1,402
)
 
(438
)
Ground lease intangible write-off
—

 
—

 
817

 
—

Deferred tax benefit
(199
)
 
(81
)
 
(434
)
 
(745
)
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)
$
116,959

 
$
93,757

 
$
301,673

 
$
255,572

 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic:
81,599

 
78,369

 
80,022

 
75,234

Add:
 
 
 
 
 
 
 
Common stock issuable upon conversion of stock options
2

 
2

 
2

 
2

Restricted stock
480

 
437

 
633

 
610

Common OP units
2,731

 
2,761

 
2,735

 
2,758

Common stock issuable upon conversion of Series A-1 preferred OP units
813

 
858

 
825

 
877

Common stock issuable upon conversion of Series A-4 preferred stock
472

 
482

 
472

 
620

Common stock issuable upon conversion of Aspen preferred OP units
448

 
—

 
—

 
—

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

 
75

 
75

 
75

Weighted average common shares outstanding - fully diluted
86,620

 
82,984

 
84,764

 
80,176

 
 
 
 
 
 
 
 
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted
$
1.35

 
$
1.05

 
$
3.50

 
$
3.04

Core FFO attributable to Sun Communities, Inc. common stockholders
and dilutive convertible securities (1) (8) per share - fully diluted
$
1.35

 
$
1.13

 
$
3.56

 
$
3.19


3rd Quarter 2018 Supplemental Information     8          Sun Communities, Inc.

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

 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2018
 
2017
 
2018
 
2017
Net income attributable to Sun Communities, Inc., common stockholders:
$
46,060

 
$
24,115

 
$
96,454

 
$
57,583

Adjustments:
 
 
 
 
 
 
 
Interest expense
34,663

 
32,875

 
99,470

 
98,126

Loss on extinguishment of debt
939

 
—

 
2,657

 
759

Current tax (benefit) / expense
213

 
(38
)
 
612

 
133

Deferred tax benefit
(199
)
 
(81
)
 
(434
)
 
(745
)
Depreciation and amortization
71,982

 
64,232

 
206,192

 
189,719

Gain on disposition of assets, net
(6,603
)
 
(4,309
)
 
(16,977
)
 
(11,342
)
EBITDAre (1)
$
147,055

 
$
116,794

 
$
387,974

 
$
334,233

Adjustments:
 
 
 
 
 
 
 
Transaction costs (6)
24

 
2,167

 
138

 
6,990

Other (income) / expense, net (7)
(1,231
)
 
(3,345
)
 
3,214

 
(5,340
)
Catastrophic weather related charges, net
173

 
7,756

 
(1,987
)
 
8,124

Preferred return to preferred OP units / equity
1,152

 
1,112

 
3,335

 
3,482

Amounts attributable to noncontrolling interests
4,071

 
1,776

 
8,392

 
4,179

Preferred stock distribution
432

 
1,955

 
1,305

 
6,233

Plus: Gain on dispositions of assets, net
6,603

 
4,309

 
16,977

 
11,342

Recurring EBITDA (1)
$
158,279

 
$
132,524


$
419,348


$
369,243




3rd Quarter 2018 Supplemental Information     9          Sun Communities, Inc.

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

 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2018
 
2017
 
2018
 
2017
Net income attributable to Sun Communities, Inc., common stockholders:
$
46,060

 
$
24,115

 
$
96,454

 
$
57,583

Other revenues
(6,603
)
 
(7,011
)
 
(18,980
)
 
(18,587
)
Home selling expenses
4,043

 
3,290

 
11,319

 
9,391

General and administrative
20,127

 
18,174

 
61,432

 
55,912

Transaction costs (6)
24

 
2,167

 
138

 
6,990

Depreciation and amortization
71,982

 
64,232

 
206,192

 
189,719

Loss on extinguishment of debt
939

 
—

 
2,657

 
759

Interest expense
34,663

 
32,875

 
99,470

 
98,126

Catastrophic weather related charges, net
173

 
7,756

 
(1,987
)
 
8,124

Other (income) / expense, net (7)
(1,231
)
 
(3,345
)
 
3,214

 
(5,340
)
Current tax expense / (benefit)
213

 
(38
)
 
612

 
133

Deferred tax benefit
(199
)
 
(81
)
 
(434
)
 
(745
)
Preferred return to preferred OP units / equity
1,152

 
1,112

 
3,335

 
3,482

Amounts attributable to noncontrolling interests
4,071

 
1,776

 
8,392

 
4,179

Preferred stock distribution
432

 
1,955

 
1,305

 
6,233

NOI(1) / Gross Profit
$
175,846


$
146,977


$
473,119


$
415,959


 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2018
 
2017
 
2018
 
2017
Real Property NOI (1)
$
143,710

 
$
125,961

 
$
401,464

 
$
361,595

Rental Program NOI (1)
23,847

 
22,060

 
72,625

 
68,759

Home Sales NOI (1) / Gross Profit
12,439

 
8,103

 
31,053

 
23,320

Ancillary NOI (1) / Gross Profit
12,247

 
6,931

 
17,222

 
10,091

Site rent from Rental Program (included in Real Property NOI) (1)(11)
(16,397
)
 
(16,078
)
 
(49,245
)
 
(47,806
)
NOI (1) / Gross profit
$
175,846

 
$
146,977

 
$
473,119

 
$
415,959







3rd Quarter 2018 Supplemental Information     10          Sun Communities, Inc.






















Non-GAAP and Other Financial Measures

















3rd Quarter 2018 Supplemental Information     11          Sun Communities, Inc.

Financial and Operating Highlights                                        
(amounts in thousands, except for *)
 
Quarter Ended
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
Total revenues
$
323,538

 
$
271,426

 
$
257,916

 
$
242,026

 
$
268,245

Net income
51,715

 
24,170

 
33,601

 
10,342

 
28,958

Net income attributable to common stockholders
46,060

 
20,408

 
29,986

 
7,438

 
24,115

Earnings per share basic*
$
0.56

 
$
0.25

 
$
0.38

 
$
0.09

 
$
0.31

Earnings per share diluted*
0.56

 
0.25

 
0.38

 
0.09

 
0.31

 
 
 
 
 
 
 
 
 
 
Recurring EBITDA (1)
$
158,279

 
$
128,790

 
$
132,222

 
$
119,408

 
$
132,524

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)
117,018

 
85,623

 
94,976

 
76,609

 
86,917

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)
116,959

 
90,372

 
94,907

 
81,812

 
93,757

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted*
$
1.35

 
$
1.02

 
$
1.14

 
$
0.92

 
$
1.05

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted*
1.35

 
1.07

 
1.14

 
0.98

 
1.13

 
 
 
 
 
 
 
 
 
 
BALANCE SHEETS
 
 
 
 
 
 
 
 
 
Total assets
$
6,653,726

 
$
6,492,348

 
$
6,149,653

 
$
6,111,957

 
$
6,157,836

Total debt
3,004,929

 
3,364,081

 
3,129,440

 
3,079,238

 
3,003,427

Total liabilities
3,367,285

 
3,736,621

 
3,471,096

 
3,405,204

 
3,351,021



 
Quarter Ended
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
OPERATING INFORMATION*
 
 
 
 
 
 
 
 
 
New home sales
146

 
134

 
106

 
103

 
102

Pre-owned home sales
825

 
809

 
731

 
747

 
703

Total homes sold
971

 
943


837


850

 
805

 
 
 
 
 
 
 
 
 
 
Communities
370

 
367

 
350

 
350

 
348

Developed sites
108,142

 
107,192

 
106,617

 
106,036

 
104,359

Transient RV sites
19,432

 
19,007

 
15,693

 
15,856

 
15,915

Total sites
127,574

 
126,199

 
122,310

 
121,892

 
120,274

 
 
 
 
 
 
 
 
 
 
MH occupancy
94.9
%
 
95.0
%
 
94.7
%
 
94.6
%
 
95.2
%
RV occupancy
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Total blended MH and RV occupancy
96.1
%
 
96.1
%
 
95.8
%
 
95.8
%
 
96.2
%


3rd Quarter 2018 Supplemental Information     12          Sun Communities, Inc.

Debt Analysis    
(amounts in thousands)
 
Quarter Ended
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
DEBT OUTSTANDING
 
 
 
 
 
 
 
 
 
Mortgage loans payable
$
2,819,225

 
$
2,636,847

 
$
2,826,225

 
$
2,867,356

 
$
2,822,640

Secured borrowings (4)
113,089

 
118,242

 
124,077

 
129,182

 
134,884

Preferred Equity - Sun NG Resorts - mandatorily redeemable
35,277

 
35,277

 
—

 
—

 
—

Preferred OP units - mandatorily redeemable
37,338

 
37,338

 
37,338

 
41,443

 
45,903

Lines of credit (5)
—

 
536,377

 
141,800

 
41,257

 
—

Total debt
$
3,004,929

 
$
3,364,081

 
$
3,129,440

 
$
3,079,238

 
$
3,003,427

 
 
 
 
 
 
 
 
 
 
% FIXED/FLOATING
 
 
 
 
 
 
 
 
 
Fixed
100.0
%
 
84.0
%
 
90.6
%
 
93.7
%
 
94.9
%
Floating
—
%
 
16.0
%
 
9.4
%
 
6.3
%
 
5.1
%
Total
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE INTEREST RATES
 
 
 
 
 
 
 
 
 
Mortgage loans payable
4.23
%
 
4.27
%
 
4.25
%
 
4.25
%
 
4.26
%
Preferred Equity - Sun NG Resorts - mandatorily redeemable
6.00
%
 
6.00
%
 
—
%
 
—
%
 
—
%
Preferred OP units - mandatorily redeemable
6.61
%
 
6.61
%
 
6.61
%
 
6.75
%
 
6.87
%
Lines of credit (5)
—
%
 
3.31
%
 
3.01
%
 
2.79
%
 
—
%
Average before Secured borrowings (4)
4.28
%
 
4.15
%
 
4.22
%
 
4.26
%
 
4.30
%
Secured borrowings (4)
9.95
%
 
9.96
%
 
9.97
%
 
9.97
%
 
9.98
%
Total average
4.50
%
 
4.36
%
 
4.45
%
 
4.50
%
 
4.56
%
 
 
 
 
 
 
 
 
 
 
DEBT RATIOS
 
 
 
 
 
 
 
 
 
Net Debt / Recurring EBITDA (1) (TTM)
5.4

 
6.5

 
6.2

 
6.3

 
6.0

Net Debt / Enterprise Value
23.9
%
 
28.6
%
 
28.8
%
 
28.2
%
 
28.3
%
Net Debt / Gross Assets
35.9
%
 
42.7
%
 
41.9
%
 
41.8
%
 
39.0
%
 
 
 
 
 
 
 
 
 
 
COVERAGE RATIOS
 
 
 
 
 
 
 
 
 
Recurring EBITDA (1) (TTM) / Interest
3.9

 
3.7

 
3.6

 
3.6

 
3.5

Recurring EBITDA (1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution
3.8

 
3.6

 
3.4

 
3.3

 
3.2

MATURITIES/PRINCIPAL AMORTIZATION NEXT FIVE YEARS
Remaining 2018
 
2019
 
2020
 
2021
 
2022
Mortgage loans payable:
 
 
 
 
 
 
 
 
 
Maturities
$
—

 
$
10,141

 
$
58,078

 
$
270,680

 
$
82,544

Weighted average rate of maturities
—
%
 
5.66
%
 
5.92
%
 
5.53
%
 
4.46
%
Principal amortization
13,310

 
57,868

 
59,240

 
58,437

 
56,011

Secured borrowings (4)
1,296

 
5,471

 
5,970

 
6,410

 
6,606

Preferred Equity - Sun NG Resorts - mandatorily redeemable
—

 
—

 
—

 
—

 
35,277

Preferred OP units - mandatorily redeemable
1,500

 
1,175

 
—

 
—

 
—

Lines of credit (5)
—

 
—

 
—

 
—

 
—

Total
$
16,106

 
$
74,655

 
$
123,288

 
$
335,527

 
$
180,438


3rd Quarter 2018 Supplemental Information     13          Sun Communities, Inc.

Statements of Operations – Same Community(2)                    
(amounts in thousands except for Other Information)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
Change
 
% Change
 
2018
 
2017
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from real property (12)
$
198,883

 
$
187,056

 
$
11,827

 
6.3
%
 
$
565,213

 
$
532,707

 
$
32,506

 
6.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROPERTY OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and benefits
18,662

 
18,595

 
67

 
0.4
%
 
50,795

 
50,193

 
602

 
1.2
%
Legal, taxes & insurance
2,546

 
1,882

 
664

 
35.3
%
 
6,973

 
5,267

 
1,706

 
32.4
%
Utilities (12)
16,274

 
15,396

 
878

 
5.7
%
 
42,949

 
39,884

 
3,065

 
7.7
%
Supplies and repair (13)
8,370

 
7,408

 
962

 
13.0
%
 
20,945

 
19,341

 
1,604

 
8.3
%
Other
6,869

 
6,217

 
652

 
10.5
%
 
18,429

 
16,871

 
1,558

 
9.2
%
Real estate taxes
13,761

 
12,862

 
899

 
7.0
%
 
40,627

 
39,027

 
1,600

 
4.1
%
Total property operating expenses
66,482

 
62,360

 
4,122

 
6.6
%
 
180,718

 
170,583

 
10,135

 
5.9
%
NET OPERATING INCOME (NOI)(1)
$
132,401

 
$
124,696

 
$
7,705

 
6.2
%
 
$
384,495

 
$
362,124

 
$
22,371

 
6.2
%
 
 
As of September 30,
 
 
2018
 
2017
 
Change
 
% Change
 
OTHER INFORMATION
 
 
 
 
 
 
 
 
Communities
336

 
336

 
—

 
 
 
 
 
 
 
 
 
 
 
 
MH occupancy (3)
97.2
%
 
 
 
 
 
 
 
RV occupancy (3)
100.0
%
 
 
 
 
 
 
 
MH & RV blended occupancy % (3)
97.8
%
 
95.6
%
 
2.2
%
 
 
 
 
 
 
 
 
 
 
 
 
Sites available for development
7,250

 
6,003

 
1,247

 
20.8
%
 
 
 
 
 
 
 
 
 
 
Monthly base rent per site - MH
$
551

 
$
530

 
$
21

 
3.9
%
(15) 
Monthly base rent per site - RV (14)
$
447

 
$
425

 
$
22

 
5.0
%
(15) 
Monthly base rent per site - Total (14)
$
527

 
$
507

 
$
20

 
4.0
%
(15) 

 


3rd Quarter 2018 Supplemental Information     14          Sun Communities, Inc.

Rental Program Summary     
(amounts in thousands except for *)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
Change
 
% Change
 
2018
 
2017
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental home revenue
$
13,589

 
$
12,757

 
$
832

 
6.5
 %
 
$
39,957

 
$
37,774

 
$
2,183

 
5.8
 %
Site rent included in Income from real property
16,397

 
16,078

 
319

 
2.0
 %
 
49,245

 
47,806

 
1,439

 
3.0
 %
Rental program revenue
29,986

 
28,835

 
1,151

 
4.0
 %
 
89,202

 
85,580

 
3,622

 
4.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions
481

 
891

 
(410
)
 
(46.0
)%
 
1,500

 
1,902

 
(402
)
 
(21.1
)%
Repairs and refurbishment
2,818

 
3,306

 
(488
)
 
(14.8
)%
 
7,339

 
7,950

 
(611
)
 
(7.7
)%
Taxes and insurance
1,580

 
1,546

 
34

 
2.2
 %
 
4,673

 
4,489

 
184

 
4.1
 %
Marketing and other
1,260

 
1,032

 
228

 
22.1
 %
 
3,065

 
2,480

 
585

 
23.6
 %
Rental program operating and maintenance
6,139

 
6,775

 
(636
)
 
(9.4
)%
 
16,577

 
16,821


(244
)
 
(1.5
)%
NET OPERATING INCOME (NOI) (1)
$
23,847

 
$
22,060

 
$
1,787

 
8.1
 %
 
$
72,625

 
$
68,759

 
$
3,866

 
5.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
As of September 30,
Occupied rental homes information:
 
2018
 
2017
 
Change
 
% Change
Number of occupied rental homes, end of period* 
 
10,913

 
10,960

 
(47
)
 
(0.4
)%
Investment in occupied rental homes, end of period
 
$
517,321

 
$
482,591

 
$
34,730

 
7.2
 %
Number of sold rental homes (YTD)* 
 
825

 
828

 
(3
)
 
(0.4
)%
Weighted average monthly rental rate, end of period* 
 
$
940

 
$
895

 
$
45

 
5.0
 %


3rd Quarter 2018 Supplemental Information     15          Sun Communities, Inc.

Home Sales Summary     
(amounts in thousands except for *)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
Change
 
% Change
 
2018
 
2017
 
Change
 
% Change
REVENUES AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New home sales
$
16,433

 
$
10,331

 
$
6,102

 
59.1
%
 
$
42,978

 
$
24,760

 
$
18,218

 
73.6
%
Pre-owned home sales
29,698

 
22,866

 
6,832

 
29.9
%
 
79,270

 
66,559

 
12,711

 
19.1
%
Revenue from home sales
46,131

 
33,197

 
12,934

 
39.0
%
 
122,248

 
91,319

 
30,929

 
33.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New home cost of sales
14,278

 
8,699

 
5,579

 
64.1
%
 
37,187

 
21,044

 
16,143

 
76.7
%
Pre-owned home cost of sales
19,414

 
16,395

 
3,019

 
18.4
%
 
54,008

 
46,955

 
7,053

 
15.0
%
Cost of home sales
33,692

 
25,094

 
8,598

 
34.3
%
 
91,195

 
67,999

 
23,196

 
34.1
%
NOI / Gross Profit (1)
$
12,439

 
$
8,103

 
$
4,336

 
53.5
%
 
$
31,053

 
$
23,320

 
$
7,733

 
33.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – new homes
$
2,155

 
$
1,632

 
$
523

 
32.0
%
 
$
5,791

 
$
3,716

 
$
2,075

 
55.8
%
Gross margin % – new homes
13.1
%
 
15.8
%
 
(2.7
)%
 
 
 
13.5
%
 
15.0
%
 
(1.5
)%
 
 
Average selling price – new homes*
$
112,555


$
101,284

 
$
11,271

 
11.1
%
 
$
111,342


$
95,598

 
$
15,744

 
16.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – pre-owned homes
$
10,284

 
$
6,471

 
$
3,813

 
58.9
%
 
$
25,262

 
$
19,604

 
$
5,658

 
28.9
%
Gross margin % – pre-owned homes
34.6
%
 
28.3
%
 
6.3
 %
 
 
 
31.9
%
 
29.5
%
 
2.4
 %
 
 
Average selling price – pre-owned homes*
$
35,998


$
32,526

 
$
3,472

 
10.7
%
 
$
33,518


$
30,630


$
2,888

 
9.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home sales volume:
 
 
 
 
 
 
 
 
New home sales*
146

 
102

 
44

 
43.1
%
 
386

 
259

 
127

 
49.0
%
Pre-owned home sales*
825

 
703

 
122

 
17.4
%
 
2,365

 
2,173

 
192

 
8.8
%
Total homes sold*
971

 
805

 
166

 
20.6
%
 
2,751

 
2,432

 
319

 
13.1
%
    

3rd Quarter 2018 Supplemental Information     16          Sun Communities, Inc.

Acquisitions and Other Summary (16) 
(amounts in thousands except for statistical data)

 
 
Three Months Ended 
 September 30, 2018
 
Nine Months Ended 
 September 30, 2018
REVENUES:
 
 
 
 
Income from real property
 
$
22,355

 
$
36,136

 
 
 
 
 
PROPERTY AND OPERATING EXPENSES:
 
 
 
 
Payroll and benefits
 
3,421

 
5,617

Legal, taxes & insurance
 
197

 
338

Utilities(12)
 
2,561

 
4,275

Supplies and repair
 
913

 
1,426

Other
 
3,076

 
5,693

Real estate taxes
 
772

 
1,818

Property operating expenses
 
10,940

 
19,167

NET OPERATING INCOME (NOI) (1)
 
$
11,415

 
$
16,969

 
 
 
 
 
 
 
 
 
As of September 30, 2018
Other information:
 
 
 
 
Number of properties
 
 
 
34

Occupied sites
 
 
 
2,520

Developed sites
 
 
 
2,581

Occupancy %
 
 
 
97.6
%
Transient sites
 
 
 
5,063

    


3rd Quarter 2018 Supplemental Information     17          Sun Communities, Inc.

Property Summary
 
 
 
 
 
 
 
 
 
 
(includes MH and Annual RVs)
 
 
 
 
 
 
 
 
 
 
 
COMMUNITIES
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
FLORIDA
 
 
 
 
 
 
 
 
 
 
Communities
 
124

 
124

 
123

 
123

 
121

Developed sites (17)
 
37,879

 
37,723

 
37,726

 
37,254

 
36,587

Occupied (17)
 
36,822

 
36,602

 
36,546

 
36,170

 
35,414

Occupancy % (17)
 
97.2
%
 
97.0
%
 
96.9
%
 
97.1
%
 
96.8
%
Sites for development
 
1,494

 
1,335

 
1,397

 
1,485

 
1,469

MICHIGAN
 
 
 
 
 
 
 
 
 
 
Communities
 
70

 
69

 
68

 
68

 
68

Developed sites (17)
 
26,116

 
26,039

 
25,881

 
25,881

 
25,498

Occupied (17)
 
24,830

 
24,709

 
24,319

 
24,147

 
23,996

Occupancy % (17)
 
95.1
%
 
94.9
%
 
94.0
%
 
93.3
%
 
94.1
%
Sites for development
 
1,533

 
1,668

 
1,371

 
1,371

 
1,752

TEXAS
 
 
 
 
 
 
 
 
 
 
Communities
 
23

 
23

 
21

 
21

 
21

Developed sites (17)
 
6,905

 
6,622

 
6,614

 
6,601

 
6,410

Occupied (17)
 
6,301

 
6,251

 
6,191

 
6,152

 
6,041

Occupancy % (17)
 
91.3
%
 
94.4
%
 
93.6
%
 
93.2
%
 
94.2
%
Sites for development
 
907

 
1,168

 
1,100

 
1,100

 
1,277

CALIFORNIA
 
 
 
 
 
 
 
 
 
 
Communities
 
30

 
29

 
27

 
27

 
27

Developed sites (17)
 
5,932

 
5,694

 
5,692

 
5,692

 
5,693

Occupied (17)
 
5,881

 
5,647

 
5,646

 
5,639

 
5,630

Occupancy % (17)
 
99.1
%
 
99.2
%
 
99.2
%
 
99.1
%
 
98.9
%
Sites for development
 
59

 
177

 
389

 
389

 
379

ONTARIO, CANADA
 
 
 
 
 
 
 
 
 
 
Communities
 
15

 
15

 
15

 
15

 
15

Developed sites (17)
 
3,832

 
3,752

 
3,650

 
3,634

 
3,620

Occupied (17)
 
3,832

 
3,752

 
3,650

 
3,634

 
3,620

Occupancy % (17)
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Sites for development
 
1,662

 
1,662

 
1,664

 
1,696

 
1,628

ARIZONA
 
 
 
 
 
 
 
 
 
 
Communities
 
11

 
11

 
11

 
11

 
11

Developed sites (17)
 
3,826

 
3,804

 
3,797

 
3,786

 
3,602

Occupied (17)
 
3,515

 
3,485

 
3,468

 
3,446

 
3,410

Occupancy % (17)
 
91.9
%
 
91.6
%
 
91.3
%
 
91.0
%
 
94.7
%
Sites for development
 
—

 
—

 
—

 
—

 
269

INDIANA
 
 
 
 
 
 
 
 
 
 
Communities
 
11

 
11

 
11

 
11

 
11

Developed sites (17)
 
3,089

 
3,089

 
3,048

 
2,900

 
2,900

Occupied (17)
 
2,778

 
2,791

 
2,785

 
2,756

 
2,759

Occupancy % (17)
 
89.9
%
 
90.4
%
 
91.4
%
 
95.0
%
 
95.1
%
Sites for development
 
277

 
277

 
318

 
466

 
330


3rd Quarter 2018 Supplemental Information     18          Sun Communities, Inc.

Property Summary
 
 
 
 
 
 
 
 
 
 
(includes MH and Annual RVs)
 
 
 
 
 
 
 
 
 
 
 
COMMUNITIES
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
OHIO
 
 
 
 
 
 
 
 
 
 
Communities
 
9

 
9

 
9

 
9

 
9

Developed sites (17)
 
2,770

 
2,767

 
2,756

 
2,759

 
2,757

Occupied (17)
 
2,694

 
2,698

 
2,672

 
2,676

 
2,676

Occupancy % (17)
 
97.3
%
 
97.5
%
 
97.0
%
 
97.0
%
 
97.1
%
Sites for development
 
59

 
59

 
75

 
75

 
75

COLORADO
 
 
 
 
 
 
 
 
 
 
Communities
 
8

 
8

 
8

 
8

 
8

Developed sites (17)
 
2,335

 
2,335

 
2,335

 
2,335

 
2,335

Occupied (17)
 
2,313

 
2,319

 
2,327

 
2,325

 
2,318

Occupancy % (17)
 
99.1
%
 
99.3
%
 
99.7
%
 
99.6
%
 
99.3
%
Sites for development
 
2,129

 
1,819

 
650

 
650

 
670

OTHER STATES
 
 
 
 
 
 
 
 
 
 
Communities
 
69

 
68

 
57

 
57

 
57

Developed sites (17)
 
15,458

 
15,367

 
15,118

 
15,194

 
14,957

Occupied (17)
 
14,932

 
14,786

 
14,544

 
14,587

 
14,532

Occupancy % (17)
 
96.6
%
 
96.2
%
 
96.2
%
 
96.0
%
 
97.2
%
Sites for development
 
3,195

 
3,233

 
2,381

 
2,385

 
2,540

TOTAL - PORTFOLIO
 
 
 
 
 
 
 
 
 
 
Communities
 
370

 
367

 
350

 
350

 
348

Developed sites (17)
 
108,142


107,192


106,617


106,036


104,359

Occupied (17)
 
103,898


103,040


102,148


101,532


100,396

Occupancy % (17)(18)
 
96.1
%
 
96.1
%
 
95.8
%
 
95.8
%
 
96.2
%
Sites for development
 
11,315


11,398


9,345


9,617


10,389

% Communities age restricted
 
32.2
%
 
32.2
%
 
33.7
%
 
33.7
%
 
33.6
%
 
 
 
 
 
 
 
 
 
 
 
TRANSIENT RV PORTFOLIO SUMMARY
 
 
 
 
 
 
 
 
 
 
    Location
 
 
 
 
 
 
 
 
 
 
Florida
 
5,786

 
5,942

 
5,870

 
6,074

 
6,133

California
 
1,774

 
1,377

 
806

 
806

 
808

Texas
 
1,758

 
1,776

 
1,360

 
1,373

 
1,392

Arizona
 
1,057

 
1,079

 
1,085

 
1,096

 
1,012

Ontario, Canada
 
1,056

 
1,133

 
1,234

 
1,248

 
1,262

New York
 
910

 
928

 
610

 
614

 
623

New Jersey
 
893

 
906

 
931

 
917

 
1,016

Michigan
 
629

 
350

 
256

 
256

 
258

Maine
 
578

 
591

 
591

 
596

 
529

Indiana
 
519

 
519

 
519

 
520

 
520

Ohio
 
150

 
153

 
148

 
145

 
147

Other locations
 
4,322

 
4,253

 
2,283

 
2,211

 
2,215

Total transient RV sites
 
19,432


19,007


15,693


15,856


15,915



3rd Quarter 2018 Supplemental Information     19          Sun Communities, Inc.



Capital Improvements, Development, and Acquisitions     
(amounts in thousands except for *)
 
 Recurring Capital Expenditures
Average/Site*
Recurring
Capital Expenditures (19) 
 Lot Modifications (20) 
Acquisitions (21) 

 Expansion &
Development (22) 
Revenue Producing (23)
YTD 2018
$
161

$
14,716

$
15,485

$
379,323

$
96,246

$
1,926

2017
$
214

$
14,166

$
18,049

$
204,375

$
88,331

$
1,990

2016
$
211

$
17,613

$
19,040

$
1,822,564

$
47,958

$
2,631



3rd Quarter 2018 Supplemental Information     20          Sun Communities, Inc.

Operating Statistics for Manufactured Homes and Annual RVs    

LOCATIONS
 
Resident Move-outs
 
Net Leased Sites (24)
 
New Home Sales
 
Pre-owned Home Sales
 
Brokered Re-sales
Florida
 
1,007

 
652

 
175

 
220

 
996

Michigan
 
324

 
526

 
58

 
1,178

 
115

Ontario, Canada
 
446

 
198

 
34

 
21

 
191

Texas
 
173

 
149

 
20

 
280

 
32

Arizona
 
57

 
69

 
24

 
13

 
122

Indiana
 
40

 
22

 
4

 
184

 
8

Ohio
 
65

 
18

 
1

 
117

 
8

California
 
26

 
11

 
14

 
5

 
63

Colorado
 
4

 
(12
)
 
2

 
69

 
51

Other locations
 
639

 
245

 
54

 
278

 
97

Nine Months Ended September 30, 2018
 
2,781

 
1,878

 
386

 
2,365

 
1,683


TOTAL FOR YEAR ENDED
 
Resident Move-outs 
 
New Leased Sites (24)
 
New Home Sales
 
Pre-owned Home Sales
 
Brokered Re-sales
2017
 
2,739

 
2,406

 
362

 
2,920

 
2,006

2016
 
1,722

 
1,686

 
329

 
2,843

 
1,655


PERCENTAGE TRENDS
 
Resident Move-outs
 
Resident Re-sales
2018 (TTM)
 
2.4
%
 
7.3
%
2017
 
1.9
%
 
6.6
%
2016
 
2.0
%
 
6.1
%

3rd Quarter 2018 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 earnings before interest, tax, depreciation and amortization (“EBITDA”) as supplemental performance measures. The Company believes that FFO, NOI, and EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. Additionally, FFO, NOI, and EBITDA are commonly used in various ratios, pricing multiples, yields and returns and valuation calculations used to measure financial position, performance and value.
•
FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of generally accepted accounting principles (“GAAP”) depreciation and amortization of real estate assets.
•
NOI provides a measure of rental operations that does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses.
•
EBITDA provides a further measure to evaluate ability to incur and service debt and to fund dividends and other cash needs.
FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, 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. By excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared period-over-period, reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from GAAP net income (loss). Management believes the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. The Company also uses FFO excluding certain gain and loss items that management considers unrelated to the operational and financial performance of our core business (“Core FFO”). The Company believes that Core FFO provides enhanced comparability for investor evaluations of period-over-period results.
The Company believes that GAAP net income (loss) is the most directly comparable measure to FFO. The principal limitation of FFO is that it does not replace GAAP net income (loss) as a performance measure or GAAP cash flow from operations as a liquidity measure. Because FFO excludes significant economic components of GAAP net income (loss) including depreciation and amortization, FFO should be used as a supplement to GAAP net income (loss) and not as an alternative to it. Further, FFO is not intended as a measure of a REIT’s ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO is calculated in accordance with the Company’s interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that interpret the NAREIT definition differently.
NOI is derived from revenues minus property operating expenses and real estate taxes. NOI is a non-GAAP financial measure that the Company believes is helpful to investors as a supplemental measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key measure when evaluating performance and growth of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense and non-property specific expenses such as general and administrative expenses, all of which are significant costs. Therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.
The Company believes that GAAP net income (loss) is the most directly comparable measure to NOI. NOI should not be considered to be an alternative to GAAP net income (loss) as an indication of the Company’s financial performance or GAAP cash flow from operating activities as a measure of the Company’s liquidity; nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions. Because of the inclusion of items such as interest, depreciation, and amortization, the use of GAAP net income (loss) as a performance measure is limited as these items may not accurately reflect the actual change in market value of a property, in the case of depreciation and in the case of interest, may not necessarily be linked to the operating performance of a real estate asset, as it is often incurred at a parent company level and not at a property level.

3rd Quarter 2018 Supplemental Information     22          Sun Communities, Inc.

EBITDA as defined by NAREIT (referred to as “EBITDAre”) is calculated as GAAP net income (loss), plus interest expense, plus income tax expense, plus depreciation and amortization, plus or minus losses or gains on the disposition of depreciated property (including losses or gains on change of control), plus impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates. EBITDAre is a non-GAAP financial measure that the Company uses to evaluate its ability to incur and service debt, fund dividends and other cash needs and cover fixed costs. Investors utilize EBITDAre as a supplemental measure to evaluate and compare investment quality and enterprise value of REITs. The Company also uses EBITDAre excluding certain gain and loss items that management considers unrelated to measurement of the Company’s performance on a basis that is independent of capital structure (“Recurring EBITDA”).
The Company believes that GAAP net income (loss) is the most directly comparable measure to EBITDAre. EBITDAre is not intended to be used as a measure of the Company’s cash generated by operations or its dividend-paying capacity, and should therefore not replace GAAP net income (loss) as an indication of the Company’s financial performance or GAAP cash flow from operating, investing and financing activities as measures of liquidity.
(2) Same Community results reflect constant currency for comparative purposes. Canadian currency figures in the prior comparative period have been translated at 2018 actual exchange rates.
(3) The Same Community occupancy percentage for 2018 is derived from 103,634 developed sites, of which 101,378 were occupied. The number of developed sites excludes RV transient sites and approximately 1,900 recently completed but vacant MH expansion sites. The Same Community occupancy percentage for 2017 has been adjusted to reflect incremental period-over-period growth from filled expansion sites and the conversion of transient RV sites to annual RV sites.
(4) 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 and amount.
(5) Lines of credit includes the Company’s MH floor plan facility. The effective interest rate on the MH floor plan facility was 7.0 percent for all periods presented. However, the Company pays no interest if the floor plan balance is repaid within 60 days.
(6) In January 2018, new accounting guidance became effective, which clarified the definition of a business with the objective of assisting entities in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. Under previous guidance, substantially all of the Company’s property acquisitions were accounted for as business combinations with identifiable assets and liabilities measured at fair value, and acquisition related costs expensed as incurred and reported as Transaction costs. Under the new guidance, substantially all of the Company’s property acquisitions are accounted for as asset acquisitions. The purchase price of these properties are allocated on a relative fair value basis and direct acquisition related costs are capitalized as part of the purchase price. Acquisitions costs that do not meet the criteria for capitalization are expensed as incurred.
(7)
Other income / (expense), net was as follows (in thousands):
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2018
 
2017
 
2018
 
2017
Foreign currency translation gain / (loss)
$
1,547

 
$
3,494

 
$
(2,640
)
 
$
6,444

Contingent liability remeasurement gain / (loss)
(97
)
 
(149
)
 
(285
)
 
(1,104
)
Long term lease termination expense
(219
)
 
—

 
(289
)
 
—

Other income / (expense), net
$
1,231

 
$
3,345

 
$
(3,214
)
 
$
5,340

(8) The effect of certain anti-dilutive convertible securities is excluded from these items.
(9) These costs represent the expenses incurred to bring recently 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.
(10)
Core FFO(1) includes an adjustment of $0.3 million and $1.0 million for the three and nine months ended September 30, 2018 for estimated loss of earnings in excess of the applicable business interruption deductible in relation to our Florida Keys communities that require redevelopment due to damages sustained from Hurricane Irma in September 2017, as previously announced.

3rd Quarter 2018 Supplemental Information     23          Sun Communities, Inc.

(11) The renter’s monthly payment includes the site rent and an amount attributable to the home lease. Site rent is reflected in Real Property NOI. For purposes of management analysis, site rent is included in 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 the Company’s operations.
(12) Same Community results net $8.4 million and $7.9 million of utility revenue against the related utility expense in property operating and maintenance expense for the three months ended September 30, 2018 and 2017, respectively and net $24.1 million and $22.9 million for the nine months ended September 30, 2018 and 2017, respectively.
(13) Same Community supplies and repair expense excludes $0.3 million and $2.6 million for the three and nine months ended September 30, 2017, respectively, of expenses incurred for recently acquired properties to bring the 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.
(14) Monthly base rent per site pertains to annual RV sites and excludes transient RV sites.
(15) Calculated using actual results without rounding.
(16) Acquisitions and other is comprised of 19 properties acquired in 2018, nine properties acquired in 2017, three Florida Keys properties that require redevelopment as a result of damage sustained from Hurricane Irma in 2017, one recently opened ground-up development, one property undergoing redevelopment, one property that we have an interest in but do not operate, and other miscellaneous transactions and activity.
(17) Includes MH and annual RV sites, and excludes transient RV sites, as applicable. Total sites for development were comprised of approximately 71.9 percent for expansion, 23.1percent for greenfield development and 5.0 percent for redevelopment.
(18) At September 30, 2018, total portfolio MH occupancy was 94.9 percent (including the impact of approximately 1,900 recently constructed but vacant MH expansion sites) and annual RV occupancy was 100.0 percent.
(19) Recurring capital expenditures are 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, 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.
(20) Lot modification capital expenditures 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.
(21) Capital expenditures related to acquisitions represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. These costs for the nine months ended September 30, 2018 include $73.6 million of capital improvements identified during due diligence that are necessary to bring a community to the Company’s operating 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, often require 24 to 36 months after closing to complete.
(22) Expansion and development expenditures consist primarily of construction costs and costs necessary to complete home site improvements.
(23) Capital costs related to revenue generating activities consist primarily of garages, sheds, 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.
(24) Net leased sites do not include occupied sites acquired during that year.
Certain financial information has been revised to reflect reclassifications in prior periods to conform to current period presentation.


3rd Quarter 2018 Supplemental Information     24          Sun Communities, Inc.