Sun Communities Inc (SUI) 8-K Earnings Release



Summary - Earnings Press Release	i - v

Investor Information	1

Portfolio Overview	2

Financial Information
Balance Sheets	3
Statements of Operations	4 - 5
Outstanding Securities and Capitalization	6
Reconciliations to Non-GAAP Financial Measures	7
Reconciliation of Net Income to Funds from Operations	8
Reconciliation of Net Income to Recurring EBITDA	9
Reconciliation of Net Income to Net Operating Income	10
Non-GAAP and Other Financial Measures	11
Financial and Operating Highlights	12
Debt Analysis	13

Selected Financial Information
Statements of Operations – Same Community	14
Rental Program Summary	15
Home Sales Summary	16
Acquisitions and Other Summary	17

Other Information
Property Summary	18 - 19
Capital Improvements, Development, and Acquisitions	20
Operating Statistics for Manufactured Homes and Annual RV’s	21
Footnotes and Definitions	22 - 24

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

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.

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.”

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.

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)

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⁾	—

Sun Communities Inc (SUI) SEC Filing 8-K Material Event for the period ending Wednesday, October 24, 2018

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