a2018suppcoversqtr4meeting1.jpg



Table of Contents                    

    

            
Summary - Earnings Press Release
i - vii
 
 
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
 
Real Property Operations – Same Community
Home Sales Summary
Rental Program 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
February 20, 2019

Sun Communities, Inc. Reports 2018 Fourth Quarter Results
and 2019 Guidance

Southfield, Michigan, February 20, 2019 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 fourth quarter results for 2018 and initial 2019 guidance.

Financial Results for the Quarter and Year Ended December 31, 2018

For the quarter ended December 31, 2018, total revenues increased $32.0 million, or 13.2 percent, to $274.0 million compared to $242.0 million for the same period in 2017. Net income attributable to common stockholders was $9.0 million, or $0.11 per diluted common share, for the quarter ended December 31, 2018, as compared to net income attributable to common stockholders of $7.4 million, or $0.09 per diluted common share, for the same period in 2017.

For the year ended December 31, 2018, total revenues increased $144.3 million, or 14.7 percent, to $1.1 billion compared to $982.6 million for the same period in 2017. Net income attributable to common stockholders was $105.5 million, or $1.29 per diluted common share, for the year ended December 31, 2018, as compared to net income attributable to common stockholders of $65.0 million, or $0.85 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 December 31, 2018, was $1.03 per diluted share and OP unit (“Share”) as compared to $0.98 in the prior year, an increase of 5.1 percent.

Core FFO(1) for the year ended December 31, 2018, was $4.58 per Share as compared to $4.17 in the prior year, an increase of 9.8 percent.

Same Community(2) Net Operating Income (“NOI”)(1) increased by 8.4 percent and 6.7 percent for the quarter and year ended December 31, 2018, respectively, as compared to the same periods in 2017.

Home sales volume increased 3.3 percent and 10.6 percent for the quarter and year ended December 31, 2018, respectively, as compared to the same periods in 2017.

Revenue producing sites increased by 722 sites and 2,600 sites for the quarter and year ended December 31, 2018, respectively, as compared to a 573 site and a 2,406 site increase in the same periods in 2017.

i



Gary Shiffman, Chief Executive Officer of Sun Communities, stated, “With same community NOI growth of 8.4 percent in the quarter, Sun completed another successful year which demonstrated the sustained demand for our housing and vacation solutions. We also continue to source attractive growth opportunities across the manufactured housing and RV segments, deploying more than $585 million during 2018. These investments included ongoing expansions at our highly occupied communities, acquisitions of income producing assets, and select greenfield developments, along with a strategic stake in a leading owner, operator and developer of senior manufactured housing communities and RV resorts based in Australia. The tailwinds for our sector remain strong, we have an excellent product, and we are well positioned to continue our track record of industry leading growth.”

OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy was 96.1 percent as of the year ended December 31, 2018, and 95.8 percent as of the year ended December 31, 2017.

During the quarter ended December 31, 2018, revenue producing sites increased by 722 sites, as compared to 573 revenue producing sites gained during the fourth quarter of 2017. During the year ended December 31, 2018, revenue producing sites increased by 2,600 sites, as compared to an increase of 2,406 revenue producing sites during the year ended December 31, 2017.

Same Community(2) Results

For the 336 communities owned and operated by the Company since January 1, 2017, NOI(1) for the quarter ended December 31, 2018, increased 8.4 percent over the same period in 2017, as a result of a 6.2 percent increase in revenues and a 1.4 percent increase in operating expenses. Same Community occupancy(3) increased to 98.0 percent as of the year ended December 31, 2018 from 95.8 percent as of the year ended December 31, 2017.

For the year ended December 31, 2018, total revenues increased by 6.1 percent while total expenses increased by 4.9 percent, resulting in an increase in NOI(1) of 6.7 percent over the year ended December 31, 2017.

Home Sales

During the quarter ended December 31, 2018, the Company sold 878 homes as compared to 850 homes sold during the same period in 2017, a 3.3 percent increase. Rental home sales, which are included in total home sales, were 297 and 340 for the quarters ended December 31, 2018 and 2017, respectively.

During the year ended December 31, 2018, 3,629 homes were sold compared to 3,282 homes sold during the same period in 2017, a 10.6 percent increase. Rental home sales, which are included in total home sales, were 1,122 and 1,168 for the year ended December 31, 2018 and 2017, respectively.


ii


PORTFOLIO ACTIVITY

Acquisitions

During, and subsequent, to the quarter ended December 31, 2018, the Company acquired the following communities:
Fourth Quarter 2018:
 
 
 
Date of Acquisition
Type
Location
Usable Sites
Consideration (in Millions)
10/2018
RV
Buckeye, Arizona
376


$11.6

 
 
Total
376


$11.6

 
 
 
 
 
Subsequent to December 31, 2018:
 
 
 
Date of Acquisition
Type
Location
Usable Sites
Consideration (in Millions)
1/2019
MH (Age Restricted)
Edgewater, Florida (1)
730


$115.3

1/2019
RV
Old Orchard Beach, Maine
321

10.8

1/2019
MH
Oregon City, Oregon(2)
518

61.8

2/2019
MH
Buckeye, Arizona
400

22.3

2/2019
MH (3)
Shelby Township, Michigan
1,308

94.5

2/2019
RV
Millsboro, Delaware
291

20.0

 
 
Total
3,568


$324.7

(1) Acquisition includes expansion potential of 70 sites.
(2) In conjunction with the acquisition, the Company created a new class of OP units named Series D Preferred Units. As of February 14, 2019, 488,958 Series D Preferred OP Units were outstanding.
(3) Contains two MH communities.

During the quarter ended December 31, 2018, the Company acquired three land parcels which are located in Texas, Florida, and California for total consideration of $6.3 million. These land parcels are adjacent to existing communities and have potential to add approximately 500 usable sites once constructed.
In November, the Company completed a $54 million strategic investment in Ingenia Communities Group (“Ingenia”), a leading owner, operator, and developer of senior manufactured housing communities and holiday resorts in Australia. The $54 million investment represents a 9.9 percent ownership stake in Ingenia. In addition, the Company and Ingenia have also formed a 50/50 joint venture to establish and grow a manufactured housing community development program in Australia.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

During the quarter ended December 31, 2018, the Company repaid one collateralized term loan of $10.2 million with an interest rate of 5.66 percent. The loan was due to mature on February 28, 2019.

Subsequent to the quarter, the Company completed a $265.0 million twenty-five year term loan transaction which carries an interest rate of 4.17 percent. Concurrently, the Company repaid a $187.9 million term loan which was due to mature in January 2030.

As of December 31, 2018, the Company had $3.1 billion of debt outstanding. The weighted average interest rate was 4.45 percent and the weighted average maturity was 9.0 years. The Company had $50.3 million of

iii


unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month Recurring EBITDA(1) ratio was 5.6 times.

2019 Distributions

After quarter end, the Company announced a 5.6 percent annual distribution increase to $3.00 per common share from $2.84 per common share. This increase will begin with the first quarter distribution to be paid in April 2019.

GUIDANCE 2019

The estimates and assumptions presented below represent a range of possible outcomes and may differ materially from actual results. Guidance estimates include acquisitions completed through the date of this release, and exclude any prospective acquisitions or capital markets activity. The estimates and assumptions are forward looking based on the Company's current assessment of economic and market conditions, as well as other risks outlined below under the caption “Forward Looking Statements.”
 
 
Net Income
 
Core FFO(1)
Weighted average common shares outstanding, fully diluted (in mm)(i)
 
85.6
 
 90.3
First quarter 2019, per fully diluted share
 
$0.31 - $0.34
 
$1.10 - $1.13
Full year 2019, per fully diluted share
 
$1.59 - $1.71
 
$4.76 - $4.86
 
 
1Q19
 
2Q19
 
3Q19
 
4Q19
Seasonality of Core FFO(1)
 
23.2%
 
23.7%
 
30.5%
 
22.6%


Total Portfolio
Number of communities: 378
 
 
2018 Actual
 
2019E
 
 
(in Millions)
 
Change %
Income from real property (excluding transient revenue)
 
$
719.8

 
10.6% - 11.0%
Transient revenue
 
106.2

 
14.2% - 15.4%
Income from real property
 
$
826.0

 
11.1% - 11.6%
Property operating and maintenance
 
236.1

 
14.4% - 15.0%
Real estate taxes
 
56.6

 
11.5% - 12.4%
Total property operating expenses
 
$
292.7

 
13.9% - 14.5%
NOI(1)
 
$
533.3

 
9.2% - 10.4%












iv



Same Community Portfolio(ii) 
Number of communities: 345
 
 
2018 Actual
 
2019E
 
 
(in Millions)
 
Change %
Income from real property (excluding transient revenue)
 
$
682.2

 
6.3% - 6.5%
Transient revenue
 
81.3

 
2.7% - 3.3%
Income from real property(iii)
 
$
763.5

 
5.9% - 6.2%
Property operating and maintenance(iii)(iv)
 
186.0

 
3.8% - 4.9%
Real estate taxes
 
55.7

 
6.5% - 6.8%
Total property operating expenses
 
$
241.7

 
4.4% - 5.4%
NOI(1)
 
$
521.8

 
6.2% - 7.0%

Same community property operating and maintenance expense includes $1.9 million of previously capitalized internal leasing costs related to the implementation of the new lease accounting standard. Without this change, 2019 Same community NOI(1) growth would be in the range of 6.6 percent to 7.4 percent.
Weighted average monthly rental rate increase
 
 
 
 
 
 
 
4.0%
 
 
 
 
 
 
 
 
 
 
 
1Q19
 
2Q19
 
3Q19
 
4Q19
Same Community NOI(1) Seasonality
 
25.2%
 
23.8%
 
26.1%
 
24.9%


v



Total Company Supplementary Information:
 
 
2018 Actual
 
2019E
 
 
(in Millions)
 
Change %
Rental program, net
 
$
30.6

 
10.1% - 12.4%
Ancillary revenues, net
 
16.5

 
9.1% - 10.9%
Home sales contribution to Core FFO(v), net of home selling expenses
 
3.6

 
19.4% - 25.0%
Interest income
 
20.9

 
(5.7%) - (4.3%)
Brokerage commissions, other revenues, net, and income from nonconsolidated affiliates
 
6.9

 
75.4% - 76.8%
General and administrative
 
81.4

 
8.8% - 10.6%
Loss of earnings in 2019 from Florida Keys included in Core FFO(1)
 
1.5

 
 –

General and administrative expense includes approximately $3.5 million of previously capitalized internal leasing costs related to the implementation of the new lease accounting standard. Without this change, 2019 General and administrative expense growth would be in the range of 4.6 percent to 6.3 percent.
Other line items impacted by the lease accounting standard include Rental program, net and Home sales contribution to FFO(1), net of home selling expenses. The capitalization of allowable costs within these line items substantially offsets the additional expense recognized in property operating and maintenance and general and administrative expense making the overall impact to the Company’s 2019 FFO(1) minimal.
 
 
2019E
Increase in revenue producing sites
 
2,500 - 2,700
Expansion sites constructed
 
1,200 - 1,400
Ground-up development sites constructed
 
800 - 1,000
 
 
 
New home sales volume
 
550 - 600
Pre-owned home sales volume
 
2,700 - 3,000

(i) Certain securities that are dilutive to the computation of Core FFO per fully diluted share in the table above have been excluded from the computation of net income per fully diluted share, as inclusion of these securities would have been anti-dilutive to net income per fully diluted share.
(ii) The amounts in the table reflect constant currency, as Canadian currency figures included within the 2018 actual amounts have been translated at the assumed exchange rate used for 2019 guidance.
(iii) Water and sewer utility revenue of $34.5 million has been reclassified from Income from real property to net against the related expense in Property operating maintenance.
(iv) 2018 actual property operating and maintenance expense excludes $0.7 million of expenses incurred for recently acquired properties to bring the properties up to the Company’s operating standards that do not meet the Company’s capitalization policy.
(v) Includes gross profit from new and certain pre-owned home sales. Gross profit from pre-owned home sales of depreciated rental homes is excluded.


vi


EARNINGS CONFERENCE CALL

A conference call to discuss fourth quarter operating results will be held on Thursday, February 21, 2019 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 March 7, 2019 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 13685225. The conference call will be available live on Sun Communities’ website www.suncommunities.com. The replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of December 31, 2018, owned, operated, or had an interest in a portfolio of 371 communities comprising over 128,000 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.


vii


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
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4th Quarter 2018 Supplemental Information     1          Sun Communities, Inc.


Portfolio Overview                            
(As of December 31, 2018)

sunportfoliomapjan2019.jpg





4th Quarter 2018 Supplemental Information     2          Sun Communities, Inc.


Balance Sheets                                                
(amounts in thousands)
 
 
12/31/2018
 
12/31/2017
ASSETS:
 
 
 
 
Land
 
$
1,201,945

 
$
1,107,838

Land improvements and buildings
 
5,586,250

 
5,102,014

Rental homes and improvements
 
571,661

 
528,074

Furniture, fixtures and equipment
 
201,090

 
144,953

Investment property
 
7,560,946

 
6,882,879

Accumulated depreciation
 
(1,442,630
)
 
(1,237,525
)
Investment property, net
 
6,118,316

 
5,645,354

Cash and cash equivalents
 
50,311

 
10,127

Inventory of manufactured homes
 
49,199

 
30,430

Notes and other receivables, net
 
160,077

 
163,496

Collateralized receivables, net (4)
 
106,924

 
128,246

Other assets, net
 
225,199

 
134,304

TOTAL ASSETS
 
$
6,710,026

 
$
6,111,957

LIABILITIES:
 
 
 
 
Mortgage loans payable
 
$
2,815,957

 
$
2,867,356

Secured borrowings (4)
 
107,731

 
129,182

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

 

Preferred OP units - mandatorily redeemable
 
37,338

 
41,443

Lines of credit (5)
 
128,000

 
41,257

Distributions payable
 
63,249

 
55,225

Advanced reservation deposits and rent
 
133,698

 
132,205

Other liabilities
 
157,862

 
138,536

TOTAL LIABILITIES
 
3,479,112

 
3,405,204

Commitments and contingencies
 

 

Series A-4 preferred stock
 
31,739

 
32,414

Series A-4 preferred OP units
 
9,877

 
10,652

Equity Interests - NG Sun LLC
 
21,976

 

STOCKHOLDERS' EQUITY:
 
 
 
 
Common stock
 
864

 
797

Additional paid-in capital
 
4,398,949

 
3,758,533

Accumulated other comprehensive (loss) / income
 
(4,504
)
 
1,102

Distributions in excess of accumulated earnings
 
(1,288,486
)
 
(1,162,001
)
Total Sun Communities, Inc. stockholders' equity
 
3,106,823

 
2,598,431

Noncontrolling interests:
 
 
 
 
Common and preferred OP units
 
53,354

 
60,971

Consolidated variable interest entities
 
7,145

 
4,285

Total noncontrolling interests
 
60,499

 
65,256

TOTAL STOCKHOLDERS' EQUITY
 
3,167,322

 
2,663,687

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
6,710,026

 
$
6,111,957



4th 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 December 31,
 
2018
 
2017
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
Income from real property (excluding transient revenue)
$
183,059

 
$
169,102

 
$
13,957

 
8.3
 %
Transient revenue
17,426

 
12,348

 
5,078

 
41.1
 %
Revenue from home sales
43,783

 
36,089

 
7,694

 
21.3
 %
Rental home revenue
13,700

 
12,775

 
925

 
7.2
 %
Ancillary revenue
7,900

 
5,425

 
2,475

 
45.6
 %
Interest
5,004

 
5,571

 
(567
)
 
(10.2
)%
Brokerage commissions and other revenues, net
3,132

 
716

 
2,416

 
337.4
 %
Total Revenues
274,004

 
242,026

 
31,978

 
13.2
 %
EXPENSES:
 
 
 
 
 
 
 
Property operating and maintenance
54,120

 
50,417

 
3,703

 
7.3
 %
Real estate taxes
14,110

 
12,966

 
1,144

 
8.8
 %
Cost of home sales
32,138

 
27,115

 
5,023

 
18.5
 %
Rental home operating and maintenance
6,356

 
5,204

 
1,152

 
22.1
 %
Ancillary expenses
8,638

 
5,441

 
3,197

 
58.8
 %
Home selling expenses
4,403

 
3,066

 
1,337

 
43.6
 %
General and administrative
20,570

 
18,409

 
2,161

 
11.7
 %
Transaction costs (6)
334

 
2,811

 
(2,477
)
 
(88.1
)%
Catastrophic weather related charges, net
2,079

 
228

 
1,851

 
811.8
 %
Depreciation and amortization
81,070

 
71,817

 
9,253

 
12.9
 %
Loss on extinguishment of debt

 
5,260

 
(5,260
)
 
(100.0
)%
Interest
32,170

 
31,363

 
807

 
2.6
 %
Interest on mandatorily redeemable preferred OP units / equity
1,143

 
753

 
390

 
51.8
 %
Total Expenses
257,131

 
234,850

 
22,281

 
9.5
 %
Income Before Other Items
16,873

 
7,176

 
9,697

 
135.1
 %
Remeasurement of marketable securities
(3,639
)
 

 
(3,639
)
 
N/A

Other (expense) / income, net (7)
(3,239
)
 
3,642

 
(6,881
)
 
(188.9
)%
Income from nonconsolidated affiliates
587

 

 
587

 
N/A

Current tax benefit / (expense)
17

 
(313
)
 
330

 
105.4
 %
Deferred tax benefit / (expense)
73

 
(163
)
 
236

 
144.8
 %
Net Income
10,672

 
10,342

 
330

 
3.2
 %
Less: Preferred return to preferred OP units / equity
(1,151
)
 
(1,099
)
 
(52
)
 
4.7
 %
Less: Amounts attributable to noncontrolling interests
(51
)
 
(876
)
 
825

 
(94.2
)%
Net Income Attributable to Sun Communities, Inc.
9,470


8,367

 
1,103

 
13.2
 %
Less: Preferred stock distribution
(431
)
 
(929
)
 
498

 
(53.6
)%
Net Income Attributable to Sun Communities, Inc. Common Stockholders
$
9,039

 
$
7,438

 
$
1,601

 
21.5
 %
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
85,481

 
78,633

 
6,848

 
8.7
 %
Diluted
85,982

 
79,107

 
6,875

 
8.7
 %
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.11

 
$
0.09

 
$
0.02

 
22.2
 %
Diluted
$
0.11

 
$
0.09

 
$
0.02

 
22.2
 %

4th Quarter 2018 Supplemental Information     4          Sun Communities, Inc.


Statements of Operations - Year to Date Comparison                            
(amounts in thousands, except per share amounts)

 
 
Year Ended December 31,
 
 
2018
 
2017
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
Income from real property (excluding transient revenue)
 
$
719,763

 
$
664,281

 
$
55,482

 
8.4
 %
Transient revenue
 
106,210

 
77,947

 
28,263

 
36.3
 %
Revenue from home sales
 
166,031

 
127,408

 
38,623

 
30.3
 %
Rental home revenue
 
53,657

 
50,549

 
3,108

 
6.1
 %
Ancillary revenue
 
54,107

 
37,511

 
16,596

 
44.2
 %
Interest
 
20,853

 
21,180

 
(327
)
 
(1.5
)%
Brokerage commissions and other revenues, net
 
6,204

 
3,694

 
2,510

 
67.9
 %
Total Revenues
 
1,126,825

 
982,570

 
144,255

 
14.7
 %
EXPENSES:
 
 
 
 
 
 
 
 
Property operating and maintenance
 
236,097

 
210,278

 
25,819

 
12.3
 %
Real estate taxes
 
56,555

 
52,288

 
4,267

 
8.2
 %
Cost of home sales
 
123,333

 
95,114

 
28,219

 
29.7
 %
Rental home operating and maintenance
 
23,099

 
22,114

 
985

 
4.5
 %
Ancillary expenses
 
37,623

 
27,436

 
10,187

 
37.1
 %
Home selling expenses
 
15,722

 
12,457

 
3,265

 
26.2
 %
General and administrative
 
81,438

 
74,232

 
7,206

 
9.7
 %
Transaction costs (6)
 
472

 
9,801

 
(9,329
)
 
(95.2
)%
Catastrophic weather related charges, net
 
92

 
8,352

 
(8,260
)
 
(98.9
)%
Depreciation and amortization
 
287,262

 
261,536

 
25,726

 
9.8
 %
Loss on extinguishment of debt
 
2,657

 
6,019

 
(3,362
)
 
(55.9
)%
Interest
 
129,089

 
127,128

 
1,961

 
1.5
 %
Interest on mandatorily redeemable preferred OP units / equity
 
3,694

 
3,114

 
580

 
18.6
 %
Total Expenses
 
997,133

 
909,869

 
87,264

 
9.6
 %
Income Before Other Items
 
129,692

 
72,701

 
56,991

 
78.4
 %
Remeasurement of marketable securities
 
(3,639
)
 

 
(3,639
)
 
N/A

Other (expense) / income, net (7)
 
(6,453
)
 
8,982

 
(15,435
)
 
(171.8
)%
Income from nonconsolidated affiliates
 
646

 

 
646

 
N/A

Current tax expense
 
(595
)
 
(446
)
 
(149
)
 
33.4
 %
Deferred tax benefit
 
507

 
582

 
(75
)
 
(12.9
)%
Net Income
 
120,158

 
81,819

 
38,339

 
46.9
 %
Less: Preferred return to preferred OP units / equity
 
(4,486
)
 
(4,581
)
 
95

 
(2.1
)%
Less: Amounts attributable to noncontrolling interests
 
(8,443
)
 
(5,055
)
 
(3,388
)
 
67.0
 %
Net Income Attributable to Sun Communities, Inc.
 
107,229

 
72,183

 
35,046

 
48.6
 %
Less: Preferred stock distribution
 
(1,736
)
 
(7,162
)
 
5,426

 
(75.8
)%
Net Income Attributable to Sun Communities, Inc. Common Stockholders
 
$
105,493

 
$
65,021

 
$
40,472

 
62.2
 %
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
81,387

 
76,084

 
5,303

 
7.0
 %
Diluted
 
82,040

 
76,711

 
5,329

 
6.9
 %
Earnings per share:
 
 
 
 
 
 
 

Basic
 
$
1.29

 
$
0.85

 
$
0.44

 
51.8
 %
Diluted
 
$
1.29

 
$
0.85

 
$
0.44

 
51.8
 %

4th Quarter 2018 Supplemental Information     5          Sun Communities, Inc.


Outstanding Securities and Capitalization    
(amounts in thousands except for *)

Outstanding Securities - As of December 31, 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
2,726
 
1.0000
 
2,726
 
N/A
 
Mirrors common shares distributions
Series A-4 preferred stock
1,063
 
0.4444
 
472
 
$25
 
6.5%
 
 
 
 
 
 
 
 
 
 
Non-Convertible Securities
 
 
 
 
 
 
 
 
 
Common shares
86,357
 
N/A
 
N/A
 
N/A
 
$2.84^
^ Annual distribution is based on the last quarterly distribution annualized.
Capitalization - As of December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
Shares
 
Share Price*
 
Total
Common shares
 
86,357

 
$
101.71

 
$
8,783,370

Common OP units
 
2,726

 
$
101.71

 
277,261

Subtotal
 
89,083

 
 
 
$
9,060,631

 
 
 
 
 
 
 
Series A-1 preferred OP units
 
810

 
$
101.71

 
82,385

Series A-3 preferred OP units
 
74

 
$
101.71

 
7,527

Series A-4 preferred OP units
 
182

 
$
101.71

 
18,511

Series C preferred OP units
 
349

 
$
101.71

 
35,497

Total diluted shares outstanding
 
90,498

 
 
 
$
9,204,551

 
Debt
Mortgage loans payable
 
 
 
 
 
$
2,815,957

Secured borrowings (4)
 
 
 
 
 
107,731

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

Preferred OP units - mandatorily redeemable
 
 
 
 
 
37,338

Lines of credit (5)
 
 
 
 
 
128,000

Total debt
 
 
 
 
 
$
3,124,303

 
Preferred
Series A-4 preferred stock
 
1,063

 
$
25.00

 
$
26,575

Total Capitalization
 
 
 
 
 
$
12,355,429


4th Quarter 2018 Supplemental Information     6          Sun Communities, Inc.




















Reconciliations to Non-GAAP Financial Measures


4th Quarter 2018 Supplemental Information     7          Sun Communities, Inc.


Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to FFO    
(amounts in thousands except for per share data)

 
Three Months Ended 
 December 31,
 
Year Ended 
 December 31,
 
2018
 
2017
 
2018
 
2017
Net income attributable to Sun Communities, Inc. common stockholders:
$
9,039

 
$
7,438

 
$
105,493

 
$
65,021

Adjustments:
 
 
 
 
 
 
 
Depreciation and amortization
81,314

 
72,068

 
288,206

 
262,211

Remeasurement of marketable securities
3,639

 

 
3,639

 

Amounts attributable to noncontrolling interests
15

 
825

 
7,740

 
4,535

Preferred return to preferred OP units
552

 
570

 
2,206

 
2,320

Preferred distribution to Series A-4 preferred stock
432

 
441

 
1,737

 
2,107

Gain on disposition of assets, net
(6,429
)
 
(4,733
)
 
(23,406
)
 
(16,075
)
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)
$
88,562

 
$
76,609

 
$
385,615

 
$
320,119

Adjustments:
 
 
 
 
 
 
 
Transaction costs (6)

 
2,811

 

 
9,801

Other acquisition related costs (9)
220

 
98

 
1,001

 
2,810

Loss on extinguishment of debt

 
5,260

 
2,657

 
6,019

Catastrophic weather related charges, net
2,079

 
228

 
92

 
8,352

Loss of earnings - catastrophic weather related (10)
(1,267
)
 
292

 
(292
)
 
292

Other expense / (income), net (7)
3,239

 
(3,642
)
 
6,453

 
(8,982
)
Debt premium write-off
(65
)
 
(905
)
 
(1,467
)
 
(1,343
)
Ground lease intangible write-off

 
898

 
817

 
898

Deferred tax (benefit) / expense
(73
)
 
163

 
(507
)
 
(582
)
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)
$
92,695

 
$
81,812

 
$
394,369

 
$
337,384

 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic:
85,481

 
78,633

 
81,387

 
76,084

Add:
 
 
 
 
 
 
 
Common stock issuable upon conversion of stock options
2

 
2

 
2

 
2

Restricted stock
499

 
472

 
651

 
625

Common OP units
2,727

 
2,751

 
2,733

 
2,756

Common stock issuable upon conversion of Series A-1 preferred OP units
810

 
847

 
821

 
869

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

 
482

 
472

 
585

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

 
75

 
75

 
75

Weighted average common shares outstanding - fully diluted
90,066

 
83,262

 
86,141

 
80,996

 
 
 
 
 
 
 
 
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted
$
0.98

 
$
0.92

 
$
4.48

 
$
3.95

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted
$
1.03

 
$
0.98

 
$
4.58

 
$
4.17


4th 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 
 December 31,
 
Year Ended 
 December 31,
 
2018
 
2017
 
2018
 
2017
Net income attributable to Sun Communities, Inc., common stockholders:
$
9,039

 
$
7,438

 
$
105,493

 
$
65,021

Adjustments:
 
 
 
 
 
 
 
Interest expense
33,313

 
32,116

 
132,783

 
130,242

Loss on extinguishment of debt

 
5,260

 
2,657

 
6,019

Current tax (benefit) / expense
(17
)
 
313

 
595

 
446

Deferred tax (benefit) / expense
(73
)
 
163

 
(507
)
 
(582
)
Income from nonconsolidated affiliates
(587
)
 

 
(646
)
 

Depreciation and amortization
81,070

 
71,817

 
287,262

 
261,536

Gain on disposition of assets, net
(6,429
)
 
(4,733
)
 
(23,406
)
 
(16,075
)
EBITDAre (1)
$
116,316

 
$
112,374

 
$
504,231

 
$
446,607

Adjustments:
 
 
 
 
 
 
 
Transaction costs (6)
334

 
2,811

 
472

 
9,801

Remeasurement of marketable securities
3,639

 

 
3,639

 

Other expense / (income), net (7)
3,239

 
(3,642
)
 
6,453

 
(8,982
)
Catastrophic weather related charges, net
2,079

 
228

 
92

 
8,352

Preferred return to preferred OP units / equity
1,151

 
1,099

 
4,486

 
4,581

Amounts attributable to noncontrolling interests
51

 
876

 
8,443

 
5,055

Preferred stock distribution
431

 
929

 
1,736

 
7,162

Plus: Gain on dispositions of assets, net
6,429

 
4,733

 
23,406

 
16,075

Recurring EBITDA (1)
$
133,669

 
$
119,408


$
552,958


$
488,651




4th Quarter 2018 Supplemental Information     9          Sun Communities, Inc.


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


 
Three Months Ended 
 December 31,
 
Year Ended 
 December 31,
 
2018
 
2017
 
2018
 
2017
Net income attributable to Sun Communities, Inc., common stockholders:
$
9,039

 
$
7,438

 
$
105,493

 
$
65,021

Other revenues
(8,136
)
 
(6,287
)
 
(27,057
)
 
(24,874
)
Home selling expenses
4,403

 
3,066

 
15,722

 
12,457

General and administrative
20,570

 
18,409

 
81,438

 
74,232

Transaction costs (6)
334

 
2,811

 
472

 
9,801

Catastrophic weather related charges, net
2,079

 
228

 
92

 
8,352

Depreciation and amortization
81,070

 
71,817

 
287,262

 
261,536

Loss on extinguishment of debt

 
5,260

 
2,657

 
6,019

Interest expense
33,313

 
32,116

 
132,783

 
130,242

Remeasurement of marketable securities
3,639

 

 
3,639

 

Other expense / (income), net (7)
3,239

 
(3,642
)
 
6,453

 
(8,982
)
Income from nonconsolidated affiliates
(587
)
 

 
(646
)
 

Current tax (benefit) / expense
(17
)
 
313

 
595

 
446

Deferred tax (benefit) / expense
(73
)
 
163

 
(507
)
 
(582
)
Preferred return to preferred OP units / equity
1,151

 
1,099

 
4,486

 
4,581

Amounts attributable to noncontrolling interests
51

 
876

 
8,443

 
5,055

Preferred stock distribution
431

 
929

 
1,736

 
7,162

NOI(1) / Gross Profit
$
150,506


$
134,596


$
623,061


$
550,466


 
Three Months Ended 
 December 31,
 
Year Ended 
 December 31,
 
2018
 
2017
 
2018
 
2017
Real Property NOI (1)
$
132,255

 
$
118,067

 
$
533,321

 
$
479,662

Rental Program NOI (1)
23,714

 
23,598

 
96,173

 
92,268

Home Sales NOI (1) / Gross Profit
11,645

 
8,974

 
42,698

 
32,294

Ancillary NOI (1) / Gross Profit
(738
)
 
(16
)
 
16,484

 
10,075

Site rent from Rental Program (included in Real Property NOI) (1)(11)
(16,370
)
 
(16,027
)
 
(65,615
)
 
(63,833
)
NOI (1) / Gross profit
$
150,506

 
$
134,596

 
$
623,061

 
$
550,466







4th Quarter 2018 Supplemental Information     10          Sun Communities, Inc.























Non-GAAP and Other Financial Measures

















4th Quarter 2018 Supplemental Information     11          Sun Communities, Inc.


Financial and Operating Highlights                                        
(amounts in thousands, except for *)
 
Quarter Ended
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
Total revenues
$
274,004

 
$
323,538

 
$
271,426

 
$
257,916

 
$
242,026

Net income
10,672

 
51,715

 
24,170

 
33,601

 
10,342

Net income attributable to Sun Communities Inc.
9,039

 
46,060

 
20,408

 
29,986

 
7,438

Earnings per share basic*
$
0.11

 
$
0.56

 
$
0.25

 
$
0.38

 
$
0.09

Earnings per share diluted*
0.11

 
0.56

 
0.25

 
0.38

 
0.09

 
 
 
 
 
 
 
 
 
 
Cash distributions declared per common share*
$
0.71

 
$
0.71

 
$
0.71

 
$
0.71

 
$
0.67

 
 
 
 
 
 
 
 
 
 
Recurring EBITDA (1)
$
133,669

 
$
158,153

 
$
128,798

 
$
132,281

 
$
119,408

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)
88,562

 
117,018

 
85,623

 
94,976

 
76,609

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)
92,695

 
116,959

 
90,372

 
94,907

 
81,812

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted*
$
0.98

 
$
1.35

 
$
1.02

 
$
1.14

 
$
0.92

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted*
1.03

 
1.35

 
1.07

 
1.14

 
0.98

 
 
 
 
 
 
 
 
 
 
BALANCE SHEETS
 
 
 
 
 
 
 
 
 
Total assets
$
6,710,026

 
$
6,653,726

 
$
6,492,348

 
$
6,149,653

 
$
6,111,957

Total debt
3,124,303

 
3,004,929

 
3,364,081

 
3,129,440

 
3,079,238

Total liabilities
3,479,112

 
3,367,285

 
3,736,621

 
3,471,096

 
3,405,204



 
Quarter Ended
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
OPERATING INFORMATION*
 
 
 
 
 
 
 
 
 
New home sales
140

 
146

 
134

 
106

 
103

Pre-owned home sales
738

 
825

 
809

 
731

 
747

Total homes sold
878

 
971


943


837

 
850

 
 
 
 
 
 
 
 
 
 
Communities
371

 
370

 
367

 
350

 
350

 
 
 
 
 
 
 
 
 
 
Developed sites
108,963

 
108,142

 
107,192

 
106,617

 
106,036

Transient RV sites
19,491

 
19,432

 
19,007

 
15,693

 
15,856

Total sites
128,454

 
127,574

 
126,199

 
122,310

 
121,892

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


4th Quarter 2018 Supplemental Information     12          Sun Communities, Inc.


Debt Analysis    
(amounts in thousands)

 
Quarter Ended
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
DEBT OUTSTANDING
 
 
 
 
 
 
 
 
 
Mortgage loans payable
$
2,815,957

 
$
2,819,225

 
$
2,636,847

 
$
2,826,225

 
$
2,867,356

Secured borrowings (4)
107,731

 
113,089

 
118,242

 
124,077

 
129,182

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

 
35,277

 
35,277

 

 

Preferred OP units - mandatorily redeemable
37,338

 
37,338

 
37,338

 
37,338

 
41,443

Lines of credit (5)
128,000

 

 
536,377

 
141,800

 
41,257

Total debt
$
3,124,303

 
$
3,004,929

 
$
3,364,081

 
$
3,129,440

 
$
3,079,238

 
 
 
 
 
 
 
 
 
 
% FIXED/FLOATING
 
 
 
 
 
 
 
 
 
Fixed
95.9
%
 
100.0
%
 
84.0
%
 
90.6
%
 
93.7
%
Floating
4.1
%
 
%
 
16.0
%
 
9.4
%
 
6.3
%
Total
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE INTEREST RATES
 
 
 
 
 
 
 
 
 
Mortgage loans payable
4.22
%
 
4.23
%
 
4.27
%
 
4.25
%
 
4.25
%
Preferred Equity - Sun NG Resorts - mandatorily redeemable
6.00
%
 
6.00
%
 
6.00
%
 
%
 
%
Preferred OP units - mandatorily redeemable
6.61
%
 
6.61
%
 
6.61
%
 
6.61
%
 
6.75
%
Lines of credit (5)
3.77
%
 
%
 
3.31
%
 
3.01
%