a2018suppcoversqtr3rgb2.jpg



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)
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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
%