Sun Communities
Annual Report 2014

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2014Commission file number 1-12616SUN COMMUNITIES, INC.(Exact Name of Registrant as Specified in its Charter)Maryland 38-2730780(State of Incorporation) (I.R.S. Employer Identification No.)27777 Franklin Rd. Suite 200 Southfield, Michigan 48034(Address of Principal Executive Offices) (Zip Code)(248) 208-2500(Registrant’s telephone number, including area code)Common Stock, Par Value $0.01 per Share New York Stock ExchangeSecurities Registered Pursuant to Section 12(b) of the Act Name of each exchange on which registered7.125% Series A Cumulative Redeemable Preferred Stock, ParValue $0.01 per Share New York Stock ExchangeSecurities Registered Pursuant to Section 12(b) of the Act Name of each exchange on which registeredSecurities Registered Pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [ ]Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [ ] No [X]Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes [ X ] No [ ]Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check one):Large accelerated filer [ X ]Accelerated filer [ ]Non-accelerated filer [ ]Smaller reporting company [ ]Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes[ ] No [X]As of June 30, 2014, the aggregate market value of the Registrant’s stock held by non-affiliates was approximately $1,948,452,037.28 (computed by reference to the closing salesprice of the Registrant’s common stock as of June 30, 2014). For this computation, the Registrant has excluded the market value of all shares of common stock reported asbeneficially owned by executive officers and directors of the Registrant; such exclusion shall not be deemed to constitute an admission that any such person is an affiliate of theRegistrant.Number of shares of common stock, $0.01 par value per share, outstanding as of February 18, 2015: 53,465,428Documents Incorporated By ReferenceUnless provided in an amendment to this Annual Report on Form 10−K, the information required by Part III is incorporated by reference to the registrant’s proxy statement to befiled pursuant to Regulation 14A, with respect to the registrant’s 2015 annual meeting of stockholders.SUN COMMUNITIES, INC.Table of ContentsItemDescriptionPage Part I. Item 1.Business4Item 1A.Risk Factors10Item 1B.Unresolved Staff Comments22Item 2.Properties23Item 3.Legal Proceedings30Item 4.Mine Safety Disclosures30 Executive Officers of the Registrant31 Part II. Item 5.Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities32Item 6.Selected Financial Data36Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations37Item 7A.Quantitative and Qualitative Disclosures about Market Risk60Item 8.Financial Statements and Supplementary Data61Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure61Item 9A.Controls and Procedures62Item 9B.Other Information63 Part III. Item 10.Directors, Executive Officers and Corporate Governance64Item 11.Executive Compensation64Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters64Item 13.Certain Relationships and Related Transactions, and Director Independence64Item 14.Principal Accountant Fees and Services64 Part IV. Item 15.Exhibits and Financial Statement Schedules653SUN COMMUNITIES, INC.PART IITEM 1. BUSINESSGENERALSun Communities, Inc., a Maryland corporation, together with the Sun Communities Operating Limited Partnership, a Michigan limited partnership (the“Operating Partnership”) and other consolidated subsidiaries are referred to herein as the “Company”, “us”, “we”, and “our”. We are a self-administered andself-managed real estate investment trust (“REIT”).We are a fully integrated real estate company which, together with our affiliates and predecessors, has been in the business of acquiring, operating,developing and expanding manufactured housing ("MH") and recreational vehicle ("RV") communities since 1975. We lease individual parcels of land(“sites”) with utility access for placement of manufactured homes and RVs to our customers. We are also engaged through a taxable subsidiary, Sun HomeServices, Inc., a Michigan corporation (“SHS”), in the marketing, selling, and leasing of new and pre-owned homes to current and future residents in ourcommunities. The operations of SHS support and enhance our occupancy levels, property performance, and cash flows.We own, operate, and develop MH and RV communities throughout the United States. As of December 31, 2014, we owned and operated a portfolio of 217properties located in 29 states (collectively, the “Properties”), including 183 MH communities, 25 RV communities, and nine Properties containing both MHand RV sites. As of December 31, 2014, the Properties contained an aggregate of 79,554 developed sites comprised of 61,231 developed manufactured homesites, 9,297 annual RV sites (inclusive of both annual and seasonal usage rights), 9,026 transient RV sites, and approximately 7,000 additional manufacturedhome sites suitable for development.Our executive and principal property management office is located at 27777 Franklin Road, Suite 200, Southfield, Michigan 48034 and our telephonenumber is (248) 208-2500. We have regional property management offices located in Austin, Texas; San Antonio, Texas; Dayton, Ohio; Grand Rapids,Michigan; Elkhart, Indiana; Indianapolis, Indiana; Traverse City, Michigan; Charlotte, North Carolina; Denver, Colorado; Ft. Myers, Florida and Orlando,Florida; and we employed an aggregate of 1,525 full and part time employees as of December 31, 2014.Our website address is www.suncommunities.com and we make available, free of charge, on or through our website all of our periodic reports, including ourannual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as soon as reasonably practicable after we file such reports withthe Securities and Exchange Commission (the "SEC").STRUCTURE OF THE COMPANYThe Operating Partnership is structured as an umbrella partnership REIT, or UPREIT. In 1993, we contributed our net assets to the Operating Partnership inexchange for the sole general partner interest in the Operating Partnership and the majority of all the Operating Partnership’s initial capital. We substantiallyconduct our operations through the Operating Partnership. The Operating Partnership owns, either directly or indirectly through subsidiaries, all of our assets.This UPREIT structure enables us to comply with certain complex requirements under the federal tax rules and regulations applicable to REITs, and toacquire MH and RV communities in transactions that defer some or all of the sellers’ tax consequences. The financial results of the Operating Partnership andour other subsidiaries are consolidated in our consolidated financial statements. The financial results include certain activities that do not necessarily qualifyas REIT activities under the Internal Revenue Code of 1986, as amended (the “Code”). We have formed taxable REIT subsidiaries, as defined in the Code, toengage in such activities. We use taxable REIT subsidiaries to offer certain services to our residents and engage in activities that would not otherwise bepermitted under the REIT rules if provided directly by us or by the Operating Partnership. The taxable REIT subsidiaries include our home sales business,SHS, which provides manufactured home sales, leasing and other services to current and prospective tenants of the Properties.4SUN COMMUNITIES, INC.We do not own all of the Operating Partnership units ("OP units"). As of December 31, 2014, the Operating Partnership had issued and outstanding:•51,134,405 common OP units,•1,283,819 preferred OP units ("Aspen preferred OP units"),•429,097 Series A-1 preferred OP units,•40,268 Series A-3 preferred OP units,•1,152,766 Series A-4 preferred OP units,•3,400,000 7.125% Series A Cumulative Redeemable Preferred OP Units (“7.125% Series A OP units”), and•112,400 Series B-3 preferred OP units.As of December 31, 2014, we held:•48,573,063 common OP units, or approximately 95% of the issued and outstanding common OP units,•483,317 Series A-4 preferred OP units, or approximately 42% of the issued and outstanding Series A-4 preferred OP units,•all of the 7.125% Series A OP units, and•no Aspen preferred OP units, Series A-1 preferred OP units, Series A-3 preferred OP units or Series B-3 preferred OP units.In January 2015, the Operating Partnership issued an additional 6,047,234 Series A-4 preferred OP units, of which 5,847,234 are held by us.Ranking and PriorityThe various classes and series of OP units issued by the Operating Partnership rank as follows with respect to rights to the payment of distributions and thedistribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Operating Partnership:•first, the 7.125% Series A OP units;•next, the Series A-4 preferred OP units, Aspen preferred OP units and Series A-1 preferred OP units, on parity with each other;•next, the Series B-3 preferred OP units;•next, the Series A-3 preferred OP units; and•finally, the common OP units.Common OP UnitsSubject to certain limitations, the holder of each common OP unit at its option may convert such common OP unit at any time into one share of our commonstock. Holders of common OP units are entitled to receive distributions from the Operating Partnership as and when declared by the general partner, providedthat all accrued distributions payable on OP units ranking senior to the common OP units have been paid. The holders of common OP units generally receivedistributions on the same dates and in amounts equal to the distributions paid to holders of our common stock.Aspen Preferred OP UnitsSubject to certain limitations, at any time prior to January 1, 2024, the holder of each Aspen preferred OP unit at its option may convert such Aspen preferredOP unit into: (a) if the market price of our common stock is $68.00 per share or less, 0.397 common OP units, or (b) if the market price of our common stock isgreater than $68.00 per share, that number of common OP units determined by dividing (i) the sum of (A) $27.00 plus (B) 25% of the amount by which themarket price of our common stock exceeds $68.00 per share, by (ii) the per-share market price of our common stock. The holders of Aspen preferred OP unitsare entitled to receive distributions not less than quarterly. Distributions on Aspen preferred OP units are generally paid on the same dates as distributions arepaid to holders of common OP units. Each Aspen preferred OP unit is entitled to receive distributions in an amount equal to the product of (x) $27.00,multiplied by (y) an annual rate equal to the 10-year United States Treasury bond yield plus 239 basis points; provided, however, that the aggregatedistribution rate shall not be less than 6.5% nor more than 9%. On January 2, 2024, we are required to redeem all Aspen preferred OP units that have not beenconverted to common OP units. In addition, we are required to redeem the Aspen preferred OP units of any holder thereof within five days after receipt of awritten demand during the existence of certain uncured Aspen preferred OP unit defaults, including our failure to pay distributions on the5SUN COMMUNITIES, INC.Aspen preferred OP units when due and our failure to provide certain security for the payment of distributions on the Aspen preferred OP units. We may alsoredeem Aspen preferred OP units from time to time if we and the holder thereof agree to do so.Series A-1 Preferred OP UnitsSubject to certain limitations, the holder of each Series A-1 preferred OP unit at its option may exchange such Series A-1 preferred OP unit at any time into2.439 shares of our common stock (which exchange rate is subject to adjustment upon stock splits, recapitalizations and similar events). The holders of SeriesA-1 preferred OP units are entitled to receive distributions not less than quarterly. Distributions on Series A-1 preferred OP units are generally paid on thesame dates as distributions are paid to holders of common OP units. Each Series A-1 preferred OP unit is entitled to receive distributions in an amount equalto the product of $100.00 multiplied by an annual rate equal to 6.0%. Series A-1 preferred OP units do not have any voting or consent rights requiring theconsent or approval of the Operating Partnership's limited partners.Series A-3 Preferred OP UnitsSubject to certain limitations, the holder of each Series A-3 preferred OP unit at its option may exchange such Series A-3 preferred OP unit at any time into1.8605 shares of our common stock (which exchange rate is subject to adjustment upon stock splits, recapitalizations and similar events). The holders ofSeries A-3 preferred OP units are entitled to receive distributions not less than quarterly. Each Series A-3 preferred OP unit is entitled to receive distributionsin an amount equal to the product of $100.00 multiplied by an annual rate equal to 4.5%. Series A-3 preferred OP units do not have any voting or consentrights requiring the consent or approval of the Operating Partnership's limited partners.Series A-4 Preferred OP UnitsIn connection with the issuance of our 6.50% Series A-4 Cumulative Convertible Preferred Stock (the "Series A-4 Preferred Stock”) in November 2014, theOperating Partnership created the Series A-4 preferred OP units as a new class of OP units. Series A-4 preferred OP units have economic and other rights andpreferences substantially similar to those of the Series A-4 Preferred Stock, including rights to receive distributions at the same time and in the same amountsas distributions paid on Series A-4 Preferred Stock. Each Series A-4 preferred OP unit is exchangeable into approximately 0.4444 shares of common stock orcommon OP units (which exchange rate is subject to adjustment upon stock splits, recapitalizations and similar events). We hold 6,330,551 Series A-4preferred OP units that the Operating Partnership issued to us in connection with the acquisition of certain MH communities from Green Courte Real EstatePartners, LLC, Green Courte Real Estate Partners II, LLC, Green Courte Real Estate Partners III, LLC and certain of their affiliated entities. In 2014, we alsoissued 669,449 Series A-4 preferred OP units to the sellers as consideration for the Green Courte acquisition. In January 2015, we issued 200,000 Series A-4Preferred OP units in a private placement in connection with the Green Courte acquisition. The rights of the 6,330,551 Series A-4 preferred OP units held byus mirror the economic rights of the Series A-4 preferred OP units issued to the Green Courte entities, but certain voting, consent and other rights do not applyto the Series A-4 preferred OP units held by us.7.125% Series A OP UnitsIn connection with the issuance of our 7.125% Series A Cumulative Redeemable Preferred Stock ("Series A Preferred Stock") in November 2012, theOperating Partnership created the 7.125% Series A OP units as a new class of OP units. All of the outstanding 7.125% Series A OP units are held by us andthey have rights, preferences and other terms substantially similar to the Series A Preferred Stock, including rights to receive distributions at the same timeand in the same amounts as distributions paid on Series A Preferred Stock. The Operating Partnership issued the 7.125% Series A OP units to us inconsideration of our contributing to the Operating Partnership the net proceeds of our November 2012 offering of shares of Series A Preferred Stock.Series B-3 Preferred OP UnitsSeries B-3 preferred OP units are not convertible. The holders of Series B-3 preferred OP units generally receive distributions on the same dates asdistributions are paid to holders of common OP units. Each Series B-3 preferred OP unit is entitled to receive distributions in an amount equal to the productof $100.00 multiplied by an annual rate equal to 8.0%. As of December 31, 2014, there were outstanding 36,700 Series B-3 preferred OP units which wereissued on December 1, 2002, 33,450 Series B-3 preferred OP units which were issued on January 1, 2003, and 42,250 Series B-3 preferred OP units which wereissued on January 5, 2004. Subject to certain limitations, (x) during the 90-day period beginning on each of the tenth through fifteenth anniversaries of theissue date of the applicable Series B-3 preferred OP units, (y) at any time after the fifteenth anniversary of the issue date of the applicable Series B-3 preferredOP units, or (z) after our receipt of notice of the death of the electing holder of a Series B-3 preferred OP unit, each holder of Series B-3 preferred OP units mayrequire us to redeem such holder's Series B-3 preferred OP units at the6SUN COMMUNITIES, INC.redemption price of $100.00 per unit. In addition, at any time after the fifteenth anniversary of the issue date of the applicable Series B-3 preferred OP unitswe may redeem, at our option, all of the Series B-3 preferred OP units of any holder thereof at the redemption price of $100.00 per unit. Series B-3 preferredOP units do not have any voting or consent rights requiring the consent or approval of the Operating Partnership's limited partners.REAL PROPERTY OPERATIONSProperties are designed and improved for several home options of various sizes and designs and consist of MH communities and RV communities.An MH community is a residential subdivision designed and improved with sites for the placement of manufactured homes and related improvements andamenities. Manufactured homes are detached, single‑family homes which are produced off‑site by manufacturers and installed on sites within the community.Manufactured homes are available in a wide array of designs, providing owners with a level of customization generally unavailable in other forms of multi-family housing developments.Modern manufactured housing communities, such as the Properties, contain improvements similar to other garden‑style residential developments, includingcentralized entrances, paved streets, curbs and gutters, and parkways. In addition, these communities also often provide a number of amenities, such as aclubhouse, a swimming pool, shuffleboard courts, tennis courts, and laundry facilities.An RV community is a resort or park designed and improved with sites for the placement of RVs for varied lengths of time. Properties may also providevacation rental homes. RV communities, such as the Properties, include a number of amenities, such as restaurants, golf courses, swimming pools, tenniscourts, fitness centers, planned activities and spacious social facilities.The owner of each home on our Properties leases the site on which the home is located. We own the underlying land, utility connections, streets, lighting,driveways, common area amenities and other capital improvements and are responsible for enforcement of community guidelines and maintenance. Some ofthe Properties provide water and sewer service through public or private utilities, while others provide these services to residents from on‑site facilities. Eachowner of a home within our Properties is responsible for the maintenance of the home and leased site. As a result, capital expenditure needs tend to be lesssignificant relative to multi‑family rental apartment complexes.PROPERTY MANAGEMENTOur property management strategy emphasizes intensive, hands‑on management by dedicated, on‑site district and community managers. We believe that thison‑site focus enables us to continually monitor and address resident concerns, the performance of competitive properties and local market conditions. As ofDecember 31, 2014, we employed 1,525 full and part time employees, of which 1,374 were located on‑site as property managers, support staff, ormaintenance personnel.Our community managers are overseen by John B. McLaren, our President and Chief Operating Officer, who has been in the manufactured housing industrysince 1995, two Senior Vice Presidents of Operations and Sales, six Division Vice Presidents and 23 Regional Vice Presidents. The Regional Vice Presidentsare responsible for semi-annual market surveys of competitive communities, interaction with local manufactured home dealers, regular property inspectionsand oversight of property operations and sales functions for eight to twelve properties.Each district or community manager performs regular inspections in order to continually monitor the Property’s physical condition and to effectively addresstenant concerns. In addition to a district or community manager, each district or property has on-site maintenance personnel and management support staff.We hold mandatory training sessions for all new property management personnel to ensure that management policies and procedures are executed effectivelyand professionally. All of our property management personnel participate in on-going training to ensure that changes to management policies and proceduresare implemented consistently. We offer nearly 400 courses for our team members through our Sun University, which has led to increased knowledge andaccountability for daily operations and policies and procedures.HOME SALES AND RENTALSSHS is engaged in the marketing, selling and leasing of new and pre-owned homes to current and future residents in our communities. Since tenants oftenpurchase a home already on-site within a community, such services enhance occupancy and property performance. Additionally, because many of the homeson the Properties are sold through SHS, better control of home quality in our communities can be maintained than if sales services were conducted solelythrough third-party brokers. SHS also leases7SUN COMMUNITIES, INC.homes to prospective tenants. At December 31, 2014, SHS had 10,973 occupied leased homes in its portfolio. Homes for this rental program (the "RentalProgram") are purchased at discounted rates from finance companies that hold pre-owned and repossessed homes within our communities. New homes are alsopurchased for the Rental Program. Leases associated with the Rental Program generally have a term of one year. The Rental Program requires intensivemanagement of costs associated with repair and refurbishment of these homes as the tenants vacate and the homes are re-leased, similar to apartment rentals.We received approximately 34,000 applications during 2014 to live in our Properties, providing a significant "resident boarding" system allowing us tomarket purchasing a home to the best applicants and to rent to the remainder of approved applicants. Through the Rental Program we are able to demonstrateour product and lifestyle to the renters, while monitoring their payment history and converting qualified renters to owners.REGULATIONS AND INSURANCEGeneralMH and RV community properties are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities such asswimming pools, clubhouses and other common areas. We believe that each Property has the necessary operating permits and approvals.InsuranceOur management believes that the Properties are covered by adequate fire, flood (where appropriate), property and business interruption insurance providedby reputable companies with commercially reasonable deductibles and limits. We maintain a blanket policy that covers all of our Properties. We haveobtained title insurance insuring fee title to the Properties in an aggregate amount which we believe to be adequate. Claims made to our insurance carriersthat are determined to be recoverable are classified in other receivables as incurred.SITE LEASES OR USAGE RIGHTSThe typical lease we enter into with a tenant for the rental of a manufactured home site is month‑to‑month or year‑to‑year, renewable upon the consent of bothparties, or, in some instances, as provided by statute. Certain of our leases, mainly Florida properties, are tied to consumer price index or other indices as itrelates to rent increase. Generally, market rate adjustments are made on an annual basis. These leases are cancelable for non‑payment of rent, violation ofcommunity rules and regulations or other specified defaults. During the five calendar years ended December 31, 2014, on average 2.5% of the homes in ourcommunities have been removed by their owners and 4.9% of the homes have been sold by their owners to a new owner who then assumes rental obligationsas a community resident. The cost to move a home is approximately $4,000 to $10,000. The average resident remains in our communities for approximately13 years, while the average home, which gives rise to the rental stream, remains in our communities for approximately 40 years.Please see the risk factors at Item 1A, and financial statements and related notes beginning on page F-1 of this Form 10-K for more detailed information.8SUN COMMUNITIES, INC.CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains various “forward-looking statements” within the meaning of the United States Securities Act of 1933, as amended(the "Securities Act"), and the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"), and we intend that such forward-lookingstatements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this filing that relate to expectations, beliefs,projections, future plans and strategies, trends or prospective events or developments and similar expressions concerning matters that are not historical factsare deemed to be forward-looking statements. Words such as “forecasts,” “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,”“expect,” “expected,” “project,” “projected,” “projections,” “plans,” “predicts,” “potential,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,”“will,” “designed to,” “foreseeable future,” “believe,” “believes,” “scheduled,” "guidance" and similar expressions are intended to identify forward-lookingstatements, although not all forward looking statements contain these words. These forward-looking statements reflect our current views with respect to futureevents and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this filing.These risks and uncertainties may cause our actual results to be materially different from any future results expressed or implied by such forward-lookingstatements. In addition to the risks disclosed under “Risk Factors” contained in this Annual Report on Form 10-K and our other filings with the SEC, suchrisks and uncertainties include:•changes in general economic conditions, the real estate industry and the markets in which we operate;•difficulties in our ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;•our liquidity and refinancing demands;•our ability to obtain or refinance maturing debt;•our ability to maintain compliance with covenants contained in our debt facilities;•availability of capital;•our ability to maintain rental rates and occupancy levels;•our failure to maintain effective internal control over financial reporting and disclosure controls and procedures;•increases in interest rates and operating costs, including insurance premiums and real property taxes;•risks related to natural disasters;•general volatility of the capital markets and the market price of shares of our capital stock;•our failure to maintain our status as a REIT;•changes in real estate and zoning laws and regulations;•legislative or regulatory changes, including changes to laws governing the taxation of REITs;•litigation, judgments or settlements;•competitive market forces;•the ability of manufactured home buyers to obtain financing; and•the level of repossessions by manufactured home lenders.Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Weundertake no obligation to publicly update or revise any forward-looking statements included or incorporated by reference into this filing, whether as a resultof new information, future events, changes in our expectations or otherwise, except as required by law.Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity,performance or achievements. All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entiretyby these cautionary statements.9SUN COMMUNITIES, INC.ITEM 1A. RISK FACTORSOur prospects are subject to certain uncertainties and risks. Our future results could differ materially from current results, and our actual results could differmaterially from those projected in forward‑looking statements as a result of certain risk factors. These risk factors include, but are not limited to, those setforth below, other one‑time events, and important factors disclosed previously and from time to time in our other filings with the SEC.REAL ESTATE RISKSGeneral economic conditions and the concentration of our properties in Michigan, Florida, Indiana, and Texas may affect our ability to generatesufficient revenue.The market and economic conditions in our current markets generally, and specifically in metropolitan areas of our current markets, may significantly affectmanufactured home occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our revenues, and if our communities do notgenerate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay or refinance ourdebt obligations could be adversely affected. We derive significant amounts of our rental income from properties located in Michigan, Florida, Indiana, andTexas. As of December 31, 2014, 70 of our 217 Properties, representing approximately 31% of developed sites, are located in Michigan; 29 Properties,representing approximately 17% of developed sites, are located in Florida; 17 Properties, representing approximately 8% of developed sites, are located inIndiana; and 18 Properties, representing approximately 8% of developed sites, are located in Texas. As a result of the geographic concentration of ourProperties in Michigan, Florida, Indiana, and Texas, we are exposed to the risks of downturns in the local economy or other local real estate marketconditions which could adversely affect occupancy rates, rental rates, and property values of properties in these markets.Our income would also be adversely affected if tenants were unable to pay rent or if sites were unable to be rented on favorable terms. If we were unable topromptly relet or renew the leases for a significant number of the sites, or if the rental rates upon such renewal or reletting were significantly lower thanexpected rates, then our business and results of operations could be adversely affected. In addition, certain expenditures associated with each Property (suchas real estate taxes and maintenance costs) generally are not reduced when circumstances cause a reduction in income from the Property. Furthermore, realestate investments are relatively illiquid and, therefore, will tend to limit our ability to vary our portfolio promptly in response to changes in economic orother conditions.The following factors, among others, may adversely affect the revenues generated by our communities:•the national and local economic climate which may be adversely impacted by, among other factors, plant closings, and industry slowdowns;•local real estate market conditions such as the oversupply of MH and RV sites or a reduction in demand for MH and RV sites in an area;•the number of repossessed homes in a particular market;•the lack of an established dealer network;•the rental market which may limit the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates;•the perceptions by prospective tenants of the safety, convenience and attractiveness of our Properties and the neighborhoods where they are located;•zoning or other regulatory restrictions;•competition from other available MH and RV communities and alternative forms of housing (such as apartment buildings and site‑builtsingle‑family homes);•our ability to provide adequate management, maintenance and insurance;10SUN COMMUNITIES, INC.REAL ESTATE RISKS, CONTINUED•increased operating costs, including insurance premiums, real estate taxes, and utilities; and•the enactment of rent control laws or laws taxing the owners of manufactured homes.Competition affects occupancy levels and rents which could adversely affect our revenues.All of our Properties are located in developed areas that include other MH and RV community properties. The number of competitive MH and RV communityproperties in a particular area could have a material adverse effect on our ability to lease sites and increase rents charged at our Properties or at any newlyacquired properties. We may be competing with others with greater resources and whose officers and directors have more experience than our officers anddirectors. In addition, other forms of multi‑family residential properties, such as private and federally funded or assisted multi‑family housing projects andsingle‑family housing, provide housing alternatives to potential tenants of MH and RV communities.Our ability to sell or lease manufactured homes may be affected by various factors, which may in turn adversely affect our profitability.SHS operates in the manufactured home market offering manufactured home sales and leasing services to tenants and prospective tenants of our communities.The market for the sale and lease of manufactured homes may be adversely affected by the following factors:•downturns in economic conditions which adversely impact the housing market;•an oversupply of, or a reduced demand for, manufactured homes;•the difficulty facing potential purchasers in obtaining affordable financing as a result of heightened lending criteria; and•an increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to new manufactured homesales.Any of the above listed factors could adversely impact our rate of manufactured home sales and leases, which would result in a decrease in profitability.The intended benefits of the Green Courte acquisition may not be realized.Our recent acquisition of 59 Properties from Green Courte poses risks for our ongoing operations, including, among others:•that senior management’s attention may be diverted from the management of daily operations to the integration of the acquired Properties;•costs and expenses associated with any undisclosed or potential liabilities;•that the acquired Properties may not perform as well as anticipated; and•that unforeseen difficulties may arise in integrating the acquired Properties into our portfolio.As a result of the foregoing, we cannot assure you that the Green Courte acquisition will be accretive to us in the near term or at all. Furthermore, if we fail torealize the intended benefits of the acquired Properties, the market prices of our common stock and preferred stock could decline to the extent that the marketprice reflects those benefits.We may not be able to integrate or finance our acquisitions and our acquisitions may not perform as expected.We have acquired and intend to continue to acquire MH and RV communities on a select basis. Our acquisition activities and their success are subject to thefollowing risks:•we may be unable to acquire a desired property because of competition from other well capitalized real estate investors, including both publiclytraded real estate investment trusts and institutional investment funds;•even if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing, including completion of duediligence investigations to our satisfaction, which may not be satisfied;11SUN COMMUNITIES, INC.REAL ESTATE RISKS, CONTINUED•even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price;•we may be unable to finance acquisitions on favorable terms;•acquired properties may fail to perform as expected;•acquired properties may be located in new markets where we face risks associated with a lack of market knowledge or understanding of the localeconomy, lack of business relationships in the area and unfamiliarity with local governmental and permitting procedures; and•we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existingoperations.If any of the above occurred, our business and results of operations could be adversely affected.In addition, we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As aresult, if a liability were to be asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle it, which couldadversely affect our cash flow.Increases in taxes and regulatory compliance costs may reduce our revenue.Costs resulting from changes in real estate laws, income taxes, service or other taxes, generally are not passed through to tenants under leases and mayadversely affect our funds from operations and our ability to pay or refinance our debt. Similarly, changes in laws increasing the potential liability forenvironmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipatedexpenditures, which would adversely affect our business and results of operations.We may not be able to integrate or finance our expansion and development activities.From time to time, we engage in the construction and development of new communities or expansion of existing communities, and may continue to engagein the development and construction business in the future. Our development and construction business may be exposed to the following risks which are inaddition to those risks associated with the ownership and operation of established MH and RV communities:•we may not be able to obtain financing with favorable terms for community development which may make us unable to proceed with thedevelopment;•we may be unable to obtain, or face delays in obtaining, necessary zoning, building and other governmental permits and authorizations, whichcould result in increased costs and delays, and even require us to abandon development of the community entirely if we are unable to obtain suchpermits or authorizations;•we may abandon development opportunities that we have already begun to explore and as a result we may not recover expenses already incurred inconnection with exploring such development opportunities;•we may be unable to complete construction and lease‑up of a community on schedule resulting in increased debt service expense and constructioncosts;•we may incur construction and development costs for a community which exceed our original estimates due to increased materials, labor or othercosts, which could make completion of the community uneconomical and we may not be able to increase rents to compensate for the increase indevelopment costs which may impact our profitability;•we may be unable to secure long‑term financing on completion of development resulting in increased debt service and lower profitability; and12SUN COMMUNITIES, INC.REAL ESTATE RISKS, CONTINUED•occupancy rates and rents at a newly developed community may fluctuate depending on several factors, including market and economic conditions,which may result in the community not being profitable.If any of the above occurred, our business and results of operations could be adversely affected.Rent control legislation may harm our ability to increase rents.State and local rent control laws in certain jurisdictions may limit our ability to increase rents and to recover increases in operating expenses and the costs ofcapital improvements. Enactment of such laws has been considered from time to time in other jurisdictions. Certain Properties are located, and we maypurchase additional properties, in markets that are either subject to rent control or in which rent-limiting legislation exists or may be enacted.We may be subject to environmental liability.Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate is liable for the costs of removal or remediation ofcertain hazardous substances at, on, under or in such property. Such laws often impose such liability without regard to whether the owner knew of, or wasresponsible for, the presence of such hazardous substances. The presence of such substances, or the failure to properly remediate such substances, mayadversely affect the owner’s ability to sell or rent such property, to borrow using such property as collateral or to develop such property. Persons who arrangefor the disposal or treatment of hazardous substances also may be liable for the costs of removal or remediation of such substances at a disposal or treatmentfacility owned or operated by another person. In addition, certain environmental laws impose liability for the management and disposal ofasbestos‑containing materials and for the release of such materials into the air. These laws may provide for third parties to seek recovery from owners oroperators of real properties for personal injury associated with asbestos‑containing materials. In connection with the ownership, operation, management, anddevelopment of real properties, we may be considered an owner or operator of such properties and, therefore, are potentially liable for removal or remediationcosts, and also may be liable for governmental fines and injuries to persons and property. When we arrange for the treatment or disposal of hazardoussubstances at landfills or other facilities owned by other persons, we may be liable for the removal or remediation costs at such facilities.All of the Properties have been subject to a Phase I or similar environmental audit (which involves general inspections without soil sampling or ground wateranalysis) completed by independent environmental consultants. These environmental audits have not revealed any significant environmental liability thatwould have a material adverse effect on our business. These audits cannot reflect conditions arising after the studies were completed, and no assurances canbe given that existing environmental studies reveal all environmental liabilities, that any prior owner or operator of a property or neighboring owner oroperator did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to anyone or more Properties.Losses in excess of our insurance coverage or uninsured losses could adversely affect our cash flow.We maintain comprehensive liability, fire, flood (where appropriate), extended coverage, and rental loss insurance on the Properties with policyspecifications, limits, and deductibles which are customarily carried for similar properties. Certain types of losses, however, may be either uninsurable or noteconomically insurable, such as losses due to earthquakes, riots, or acts of war. In the event an uninsured loss occurs, we could lose both our investment inand anticipated profits and cash flow from the affected property. Any loss could adversely affect our ability to repay our debt.FINANCING AND INVESTMENT RISKSOur significant amount of debt could limit our operational flexibility or otherwise adversely affect our financial condition.We have a significant amount of debt. As of December 31, 2014, we had approximately $1.8 billion of total debt outstanding, consisting of approximately$1.7 billion in debt that is collateralized by mortgage liens on 147 of the Properties, $123.7 million that is secured by collateralized receivables, and $45.9million that is unsecured debt. If we fail to meet our obligations under our secured debt, the lenders would be entitled to foreclose on all or some of thecollateral securing such debt which could have a material adverse effect on us and our ability to make expected distributions, and could threaten ourcontinued viability.We are subject to the risks normally associated with debt financing, including the following risks:13SUN COMMUNITIES, INC.FINANCING AND INVESTMENT RISKS, CONTINUED•our cash flow may be insufficient to meet required payments of principal and interest, or require us to dedicate a substantial portion of our cash flowto pay our debt and the interest associated with our debt rather than to other areas of our business;•our existing indebtedness may limit our operating flexibility due to financial and other restrictive covenants, including restrictions on incurringadditional debt;•it may be more difficult for us to obtain additional financing in the future for our operations, working capital requirements, capital expenditures,debt service or other general requirements;•we may be more vulnerable in the event of adverse economic and industry conditions or a downturn in our business;•we may be placed at a competitive disadvantage compared to our competitors that have less debt; and•we may not be able to refinance at all or on favorable terms, as our debt matures.If any of the above risks occurred, our financial condition and results of operations could be materially adversely affected.We may incur substantially more debt, which would increase the risks associated with our substantial leverage.Despite our current indebtedness levels, we may incur substantially more debt in the future. If new debt is added to our current debt levels, an even greaterportion of our cash flow will be needed to satisfy our debt service obligations. As a result, the related risks that we now face could intensify and increase therisk of a default on our indebtedness.TAX RISKSWe may suffer adverse tax consequences and be unable to attract capital if we fail to qualify as a REIT.We believe that since our taxable year ended December 31, 1994, we have been organized and operated, and intend to continue to operate, so as to qualifyfor taxation as a REIT under the Code. Although we believe that we have been and will continue to be organized and have operated and will continue tooperate so as to qualify for taxation as a REIT, we cannot be assured that we have been or will continue to be organized or operated in a manner to so qualifyor remain so qualified. Qualification as a REIT involves the satisfaction of numerous requirements (some on an annual and quarterly basis) established underhighly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and involves the determination ofvarious factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation, which require us tocontinually monitor our tax status.If we fail to qualify as a REIT in any taxable year, we could be subject to federal income tax (including any applicable alternative minimum tax) on ourtaxable income at regular corporate rates. Moreover, unless entitled to relief under certain statutory provisions,we also would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. This treatmentwould reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability to us for the years involved. Inaddition, distributions to stockholders would no longer be required to be made.We intend for the Operating Partnership to be taxed as a partnership, but we cannot guarantee that it will qualify.We believe that the Operating Partnership has been organized as a partnership and will qualify for treatment as such under the Code. However, if theOperating Partnership is deemed to be a “publicly traded partnership,” it will be treated as a corporation instead of a partnership for federal income taxpurposes unless at least 90% of its income is qualifying income as defined in the Code. The income requirements applicable to REITs and the definition of“qualifying income” for purposes of this 90% test are similar in most respects. Qualifying income for the 90% test generally includes passive income, such asspecified types of real property rents, dividends and interest. We believe that the Operating Partnership has and will continue to meet this 90% test, but wecannot guarantee that it has or will. If the Operating Partnership were to be taxed as a regular corporation, it would incur substantial tax liabilities, we wouldfail to qualify as a REIT for federal income tax purposes, and our ability to raise additional capital could be significantly impaired.14SUN COMMUNITIES, INC.TAX RISKS, CONTINUEDOur ability to accumulate cash may be restricted due to certain REIT distribution requirements.In order to qualify as a REIT, we must distribute to our stockholders at least 90% of our REIT taxable income (calculated without any deduction fordividends paid and excluding net capital gain) and to avoid federal income taxation, our distributions must not be less than 100% of our REIT taxableincome, including capital gains. As a result of the distribution requirements, we do not expect to accumulate significant amounts of cash. Accordingly, thesedistributions could significantly reduce the cash available to us in subsequent periods to fund our operations and future growth.Our taxable REIT subsidiaries, or TRSs, are subject to special rules that may result in increased taxes.As a REIT, we must pay a 100% penalty tax on certain payments that we receive if the economic arrangements between us and any of our TRSs are notcomparable to similar arrangements between unrelated parties. The Internal Revenue Service may successfully assert that the economic arrangements of anyof our inter-company transactions are not comparable to similar arrangements between unrelated parties.Dividends payable by REITs do not qualify for the reduced tax rates applicable to certain dividends.The maximum federal tax rate for certain qualified dividends payable to domestic stockholders that are individuals, trusts and estates is 20%. Dividendspayable by REITs, however, are generally not eligible for this reduced rate. Although this rule does not adversely affect the taxation of REITs or dividendspaid by REITs, the more favorable rates applicable to regular qualified corporate dividends could cause investors who are individuals, trusts and estates toperceive investments in REITs to be relatively less competitive than investments in stock of non-REIT corporations that pay dividends, which couldadversely affect the comparative value of the stock of REITs, including our common stock and preferred stock.Complying with REIT requirements may cause us to forego otherwise attractive opportunities.To remain qualified as a REIT for federal income tax purposes, we must continually satisfy requirements and tests under the tax law concerning, among otherthings, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. Inorder to meet these tests, we may be required to forego or limit attractive business or investment opportunities and distribute all of our net earnings ratherthan invest in attractive opportunities or hold larger liquid reserves. Therefore, compliance with the REIT requirements may hinder our ability to operatesolely to maximize profits.Our ability to use net operating loss carryforwards to reduce future tax payments may be limited if we experience a change in ownership, or if taxableincome does not reach sufficient levels.Under Section 382 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50% change (by value) in its equityownership over a rolling three-year period), the corporation’s ability to use its pre-ownership-change net operating loss carryforwards to offset its post-ownership-change income may be limited. We may experience ownership changesBUSINESS RISKSin the future. If an ownership change were to occur, we would be limited in the portion of net operating loss carryforwards that we could use in the future tooffset taxable income for U.S. federal income tax purposes.Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests.Ownership of Origen. We own 5,000,000 shares of Origen Financial, Inc. (“Origen”) common stock and Shiffman Origen LLC (which is owned by the MiltonM. Shiffman Spouse’s Marital Trust, Gary A. Shiffman (our Chief Executive Officer), and members of Mr. Shiffman’s family) owns 1,025,000 shares of Origencommon stock. Gary A. Shiffman is a member of the Board of Directors of Origen, and one of our directors, Arthur A. Weiss, is a trustee of the Milton M.Shiffman Spouse’s Marital Trust. Ronald A. Klein, one of our directors, is the Chief Executive Officer and a director of Origen. Mr. Klein, Mr. Weiss and BrianM. Hermelin, another of our directors, beneficially own approximately 570,000, 10,000, and 200,000 shares of Origen common stock,15SUN COMMUNITIES, INC.BUSINESS RISKS, CONTINUEDrespectively. Accordingly, in all transactions involving Origen, Mr. Shiffman, Mr. Weiss, Mr. Hermelin or Mr. Klein may have a conflict of interest withrespect to their respective obligations as our officer and/or director.Lease of Executive Offices. Gary A. Shiffman, together with certain of his family members, indirectly owns a 21% equity interest in American Center LLC, theentity from which we lease office space for our principal executive offices. Each of Arthur A. Weiss and Ronald A. Klein owns a less than one percent indirectinterest in American Center LLC. Under this lease agreement, we lease approximately 62,900 rentable square feet. The term of the lease is until October 31,2026, and the base rent through October 31, 2015 is $16.45 per square foot (gross). From November 1, 2015 to October 31, 2016, the base rent will be $16.95per square foot (gross) and from November 1, 2016 to October 31, 2017, the base rent will be $17.45 per square foot (gross). We also have a temporary leasefor approximately 10,500 rentable square feet with base rent equal to $12.71 per square foot (gross). This temporary lease is currently operating on a month tomonth basis. Each of Mr. Shiffman, Mr. Weiss and Mr. Klein may have a conflict of interest with respect to his obligations as our officer and/or director andhis ownership interest in American Center LLC.Legal Counsel. During 2014, Jaffe, Raitt, Heuer, & Weiss, Professional Corporation acted as our general counsel and represented us in various matters. ArthurA. Weiss, one of our directors, is the Chairman of the Board of Directors and a shareholder of such firm. We incurred legal fees and expenses owed to Jaffe,Raitt, Heuer, & Weiss of approximately $7.5 million, $3.2 million and $3.4 million in the years ended December 31, 2014, 2013 and 2012, respectively.Tax Consequences Upon Sale of Properties. Gary A. Shiffman holds limited partnership interests in the Operating Partnership which were received inconnection with the contribution of properties from partnerships previously affiliated with him. Prior to any redemption of these limited partnership interestsfor our common stock, Mr. Shiffman will have tax consequences different from those on us and our public stockholders upon the sale of any of thesepartnerships. Therefore, we and Mr. Shiffman may have different objectives regarding the appropriate pricing and timing of any sale of those properties.We rely on key management.We are dependent on the efforts of our executive officers, Gary A. Shiffman, John B. McLaren, Karen J. Dearing and Jonathan M. Colman. The loss of servicesof one or more of these executive officers could have a temporary adverse effect on our operations. We do not currently maintain or contemplate obtainingany “key-man” life insurance on the Executive Officers.Certain provisions in our governing documents may make it difficult for a third-party to acquire us.9.8% Ownership Limit. In order to qualify and maintain our qualification as a REIT, not more than 50% of the outstanding shares of our capital stock may beowned, directly or indirectly, by five or fewer individuals. Thus, ownership of more than 9.8%, in number of shares or value, of the issued and outstandingshares of our capital stock by any single stockholder has been restricted, with certain exceptions, for the purpose of maintaining our qualification as a REITunder the Code. Such restrictions in our charter do not apply to Milton M. Shiffman, Gary A. Shiffman, and Robert B. Bayer; trustees, personal representativesand agents to the extent acting for them or their respective estates; or certain of their respective relatives.The 9.8% ownership limit, as well as our ability to issue additional shares of common stock or shares of other stock (which may have rights and preferencesover the common stock), may discourage a change of control of the Company and may also: (1) deter tender offers for the common stock, which offers may beadvantageous to stockholders; and (2) limit the opportunity for stockholders to receive a premium for their common stock that might otherwise exist if aninvestor were attempting to assemble a block of common stock in excess of 9.8% of our outstanding shares or otherwise effect a change of control of theCompany.Preferred Stock. Our charter authorizes the Board of Directors to issue up to 10,000,000 shares of preferred stock and to establish the preferences and rights(including the right to vote and the right to convert into shares of common stock) of any shares issued.In November 2012, we amended our charter to designate 3,450,000 shares of preferred stock as 7.125% Series A Cumulative Redeemable Preferred Stock,$0.01 par value per share, and issued 3,400,000 of such shares of stock. In November 2014, we amended our charter to designate 6,330,551 shares of preferredstock as 6.50% Series A-4 Cumulative Convertible Preferred Stock, $0.01 par value per share, and in November 2014 and January 2015 we issued in theaggregate 6,330,551 of such shares of stock. The power to issue preferred stock could have the effect of delaying or preventing a change in control of theCompany even if a change in control were in the stockholders' interest.16SUN COMMUNITIES, INC.BUSINESS RISKS, CONTINUEDUpon the occurrence of certain change of control events, the result of which is that shares of our common stock and the common securities of the acquiring orsurviving entity (or ADRs representing such securities) are not listed on the New York Stock Exchange (“NYSE”), the NYSE MKT or NASDAQ or listed orquoted on an exchange or quotation system that is a successor to the NYSE, the NYSE MKT or NASDAQ, holders of shares of Series A Preferred Stock willhave the right, subject to certain limitations, to convert some or all of their shares of Series A Preferred Stock into shares of our common stock (or equivalentvalue of alternative consideration) and under these circumstances we will also have a special optional redemption right to redeem the shares of Series APreferred Stock. Upon such a conversion, the holders of shares of Series A Preferred Stock will be limited to a maximum number of shares of our commonstock. If our common stock price, as determined in accordance with our charter for these purposes, is less than $20.97, subject to adjustment, the holders willreceive a maximum of 1.1925 shares of our common stock per shares of Series A Preferred Stock, which may result in a holder receiving value that is less thanthe liquidation preference of the Series A Preferred Stock. Subject to certain limitations, upon written notice to us, each holder of shares of Series A-4Preferred Stock at its option may convert each share of Series A-4 Preferred Stock held by it for that number of shares of our common stock equal to thequotient obtained by dividing $25.00 by the then-applicable conversion price. The initial conversion price is $56.25, so initially each share of Series A-4Preferred Stock is convertible into approximately 0.4444 shares of common stock. At our option, instead of issuing the shares of common stock to theconverting holder of Series A-4 Preferred Stock as described above, we may make a cash payment to the converting holder with respect to each share of SeriesA-4 Preferred Stock the holder desires to convert equal to the fair market value of one share of our common stock. If, at any time after November 26, 2019, thevolume weighted average of the daily volume weighted average price of a share of our common stock on the NYSE equals or exceeds 115.5% of the thenprevailing conversion price for at least 20 trading days in a period of 30 consecutive trading days, then, within 10 days thereafter, upon written notice to theholders thereof, we may convert each outstanding share of Series A-4 Preferred Stock into that number of shares of common stock equal to the quotientobtained by dividing $25.00 by the then prevailing conversion price.These features of the Series A Preferred Stock and Series A-4 Preferred Stock may have the effect of inhibiting a third party from making an acquisitionproposal for Sun or of delaying, deferring or preventing a change of control of Sun under circumstances that otherwise could provide the holders of ourcommon stock and preferred stock with the opportunity to realize a premium over the then-current market price or that stockholders may otherwise believe isin their best interests.Rights Plan. We adopted a stockholders' rights plan in 2008 that provides our stockholders (other than a stockholder attempting to acquire a 15% or greaterinterest in us) with the right to purchase our stock at a discount in the event any person attempts to acquire a 15% or greater interest in us. Because this plancould make it more expensive for a person to acquire a controlling interest in us, it could have the effect of delaying or preventing a change in control even ifa change in control were in the stockholders' interest.Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking otherchange of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their bestinterest.Certain provisions of the Maryland General Corporation Law, or MGCL, may have the effect of inhibiting a third party from making a proposal to acquire usor of impeding a change of control under circumstances that otherwise could provide the holders of shares of our capital stock with the opportunity to realizea premium over the then-prevailing market price of such shares, including: •“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder”(defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate orassociate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock atany time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the stockholderbecomes an interested stockholder, and thereafter impose fair price and/or supermajority and stockholder voting requirements on thesecombinations; and•“control share” provisions that provide that “control shares” of our company (defined as shares that, when aggregated with other shares controlledby the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “controlshare acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no votingrights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on thematter, excluding all interested shares.17SUN COMMUNITIES, INC.BUSINESS RISKS, CONTINUEDThe provisions of the MGCL relating to business combinations do not apply, however, to business combinations that are approved or exempted by our Boardof Directors prior to the time that the interested stockholder becomes an interested stockholder. As permitted by the statute, our Board of Directors has byresolution exempted Milton M. Shiffman, Robert B. Bayer, and Gary A. Shiffman, their affiliates and all persons acting in concert or as a group with theforegoing, from the business combination provisions of the MGCL and, consequently, the five-year prohibition and the supermajority vote requirements willnot apply to business combinations between us and these persons. As a result, these persons may be able to enter into business combinations with us that maynot be in the best interests of our stockholders without compliance by our company with the supermajority vote requirements and the other provisions of thestatute.Also, pursuant to a provision in our bylaws, we have exempted any acquisition of our stock from the control share provisions of the MGCL. However, ourBoard of Directors may by amendment to our bylaws opt in to the control share provisions of the MGCL at any time in the future.Additionally, Subtitle 8 of Title 3 of the MGCL permits our Board of Directors, without stockholder approval and regardless of what is currently provided inour charter or bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring orpreventing a transaction or a change of control of our company that might involve a premium to the market price of our common stock or otherwise be in ourstockholders' best interests. These provisions include a classified board; two-thirds vote to remove a director; that the number of directors may only be fixedby the Board of Directors; that vacancies on the board as a result of an increase in the size of the board or due to death, resignation or removal can only befilled by the board, and the director appointed to fill the vacancy serves for the remainder of the full term of the class of director in which the vacancyoccurred; and a majority requirement for the calling by stockholders of special meetings. Other than a classified board, the filling of vacancies as a result ofthe removal of a director and a majority requirement for the calling by stockholders of special meetings, we are already subject to these provisions, either byprovisions of our charter and bylaws unrelated to Subtitle 8 or by reason of an election to be subject to certain provisions of Subtitle 8. In the future, ourBoard of Directors may elect, without stockholder approval, to make us subject to the provisions of Subtitle 8 to which we are not currently subject.Changes in our investment and financing policies may be made without stockholder approval.Our investment and financing policies, and our policies with respect to certain other activities, including our growth, debt, capitalization, distributions, REITstatus, and operating policies, are determined by our Board of Directors. Although the Board of Directors has no present intention to do so, these policies maybe amended or revised from time to time at the discretion of the Board of Directors without notice to or a vote of our stockholders. Accordingly, stockholdersmay not have control over changes in our policies and changes in our policies may not fully serve the interests of all stockholders.Substantial sales of our common stock could cause our stock price to fall.The sale or issuance of substantial amounts of our common stock or preferred stock, whether directly by us or in the secondary market, the perception thatsuch sales could occur or the availability of future issuances of shares of our common stock, preferred stock, OP Units or other securities convertible into orexchangeable or exercisable for our common stock or preferred stock, could materially and adversely affect the market price of our common stock or preferredstock and our ability to raise capital through future offerings of equity or equity-related securities. In addition, we may issue capital stock that is senior to ourcommon stock in the future for a number of reasons, including to finance our operations and business strategy, to adjust our ratio of debt to equity or for otherreasons.Based on the applicable conversion ratios then in effect, as of February 18, 2015, in the future we may issue to the limited partners of the OperatingPartnership, up to approximately 4.6 million shares of our common stock in exchange for their OP Units. The limited partners may sell such shares pursuant toregistration rights, if available, or an available exemption from registration. As of February 18, 2015, options to purchase 29,500 shares of our common stockwere outstanding under our equity incentive plans. We currently have the authority to issue restricted stock awards or options to purchase up to an additional299,398 shares of our common stock pursuant to our equity incentive plans. In addition, we entered into an “at-the-market” Sales Agreement in May 2012 toissue and sell shares of common stock. As of February 18, 2015, our Board of Directors had authorized us to sell approximately an additional $43.7 million ofcommon stock under this agreement. No prediction can be made regarding the effect that future sales of shares of our common stock or our other securitieswill have on the market price of shares.18SUN COMMUNITIES, INC.BUSINESS RISKS, CONTINUEDThe issuance of the securities issued on January 6, 2015 in connection with the Green Courte acquisition is expected to be dilutive, which may adverselyaffect the market price of our common stock or preferred stock.We expect that the issuance on January 6, 2015 of 4,527,073 shares of common stock, 5,847,234 shares of Series A-4 Preferred Stock and 200,000 Series A-4preferred OP units in connection with the Green Courte acquisition and a related private placement will have a dilutive effect on our earnings per share andfunds from operations per share for the year ending December 31, 2015. The actual amount of dilution cannot be determined at this time and will be based onnumerous factors.An increase in interest rates may have an adverse effect on the price of our common stock.One of the factors that may influence the price of our common stock in the public market will be the annual distributions to stockholders relative to theprevailing market price of the common stock. An increase in market interest rates may tend to make the common stock less attractive relative to otherinvestments, which could adversely affect the market price of our common stock.The volatility in economic conditions and the financial markets may adversely affect our industry, business and financial performance.Although demand in the U.S. improved recently, the U.S. macroeconomic environment remains uncertain and was the primary factor in a slowdown startingin 2008. The global economy remains unstable, and we expect the economic environment may continue to be challenging as continued economicuncertainty has generally given the marketplace less confidence. In particular, the financial crisis that affected the banking system and financial markets andthe related uncertainty in global economic conditions resulted in a tightening in the credit markets, a low level of liquidity in many financial markets andvolatility in credit, equity and fixed income markets. If such conditions are experienced in future periods, our industry, business and results of operations maybe severely impacted. The slow recovery and possible impact of automatic sequesters or a failure to raise the “debt ceiling” in the U.S. may adversely impactus. The other risk factors presented in this Form 10-K discuss some of the principal risks inherent in our business, including liquidity risks, operational risks,and credit risks, among others. Turbulence in financial markets accentuates each of these risks and magnifies their potential effect on us. If these economicdevelopments continue to rebound slowly or worsen, there could be an adverse impact on our access to capital, stock price and our operating results.Our business operations may not generate the cash needed to make distributions on our capital stock or to service our indebtedness, and we may adjust ourcommon stock distribution policy.Our ability to make distributions on our common stock and preferred stock, and payments on our indebtedness and to fund planned capital expenditures willdepend on our ability to generate cash in the future. We cannot assure you that our business will generate sufficient cash flow from operations or that futureborrowings will be available to us in an amount sufficient to enable us to make distributions on our common stock or preferred stock, to pay our indebtednessor to fund our other liquidity needs.The decision to declare and pay distributions on shares of our common stock in the future, as well as the timing, amount and composition of any such futuredistributions, will be at the sole discretion of our Board of Directors in light of conditions then existing, including our earnings, financial condition, capitalrequirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions and the general overall economic conditionsand other factors. Any change in our distribution policy could have a material adverse effect on the market price of our common stock.Our ability to pay distributions is limited by the requirements of Maryland law.Our ability to pay distributions on our common stock and preferred stock is limited by the laws of Maryland. Under Maryland law, a Maryland corporationgenerally may not make a distribution if, after giving effect to the distribution, the corporation would not be able to pay its debts as they become due in theusual course of business, or the corporation's total assets would be less than the sum of its total liabilities plus, unless the corporation's charter providesotherwise, the amount that would be needed, if the corporation were dissolved at the time of the distribution, to satisfy the preferential rights upondissolution of stockholders whose preferential rights are superior to those receiving the distribution, provided, however, that a Maryland corporation maymake a distribution from: (i) its net earnings for the fiscal year in which the distribution is made; (ii) its net earnings for the preceding fiscal year; or (iii) thesum of its net earnings for its preceding eight fiscal quarters even if, after such distribution, the corporation's total assets would be less than its total liabilities.Accordingly, we generally may not make a distribution on our common stock or preferred stock if, after giving effect to the distribution, we would not be ableto pay our debts as they become due in the usual19SUN COMMUNITIES, INC.BUSINESS RISKS, CONTINUEDcourse of business or, unless paid from one of the permitted sources of net earnings as described above, our total assets would be less than the sum of our totalliabilities plus, unless the terms of such class or series of stock provide otherwise, the amount that would be needed to satisfy the preferential rights upondissolution of the holders of shares of any class or series of stock then outstanding, if any, with preferential rights upon dissolution senior to those of ourcommon stock or currently outstanding preferred stock.We may not be able to pay distributions upon events of default under our financing documents.Some of our financing documents contain restrictions on distributions upon the occurrence of events of default thereunder. If such an event of default occurs,such as our failure to pay principal at maturity or interest when due for a specified period of time, we would be prohibited from making payments on ourcommon stock and preferred stock.Our share price could be volatile and could decline, resulting in a substantial or complete loss on our stockholders' investment.The stock markets, including the NYSE on which we list our common stock and Series A Preferred Stock, have experienced significant price and volumefluctuations. As a result, the market price of our common stock and preferred stock could be similarly volatile, and investors in our common stock andpreferred stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. The price ofour common stock and preferred stock could be subject to wide fluctuations in response to a number of factors, including:•issuances of other equity securities in the future, including new series or classes of preferred stock;•our operating performance and the performance of other similar companies;•our ability to maintain compliance with covenants contained in our debt facilities;•actual or anticipated variations in our operating results, funds from operations, cash flows or liquidity;•changes in expectations of future financial performance or changes in our earnings estimates or those of analysts;•changes in our distribution policy;•publication of research reports about us or the real estate industry generally;•increases in market interest rates that lead purchasers of our common stock to demand a higher dividend yield;•changes in market valuations of similar companies;•increases in market interest rates that lend purchases of our common stock and preferred stock to demand a higher dividend yield;•adverse market reaction to the amount of our debt outstanding at any time, the amount of our debt maturing in the near- and medium-term andour ability to refinance our debt, or our plans to incur additional debt in the future;•additions or departures of key management personnel;•speculation in the press or investment community;•equity issuances by us, or share resales by our stockholders or the perception that such issuances or resales may occur;•actions by institutional stockholders; and•general market and economic conditions.20SUN COMMUNITIES, INC.BUSINESS RISKS, CONTINUEDMany of the factors listed above are beyond our control. Those factors may cause the market price of our common stock or preferred stock to declinesignificantly, regardless of our financial condition, results of operations and prospects. It is impossible to provide any assurance that the market price of ourcommon stock or preferred stock will not fall in the future, and it may be difficult for holders to resell shares of our common stock or preferred stock at pricesthey find attractive, or at all. In the past, securities class action litigation has often been instituted against companies following periods of volatility in theirstock price. This type of litigation could result in substantial costs and divert our management's attention and resources.Our Series A Preferred Stock and Series A-4 Preferred Stock has not been rated.We have not sought to obtain a rating for our Series A Preferred Stock or Series A-4 Preferred Stock. No assurance can be given, however, that one or morerating agencies might not independently determine to issue such a rating or that such a rating, if issued, would not adversely affect the market price of theSeries A Preferred Stock or Series A-4 Preferred Stock. In addition, we may elect in the future to obtain a rating of the Series A Preferred Stock or Series A-4Preferred Stock, which could adversely affect the market price of such preferred stock. Ratings only reflect the views of the rating agency or agencies issuingthe ratings and such ratings could be revised downward, placed on a watch list or withdrawn entirely at the discretion of the issuing rating agency if in itsjudgment circumstances so warrant. Any such downward revision, placing on a watch list or withdrawal of a rating could have an adverse effect on the marketprice of the Series A Preferred Stock or Series A-4 Preferred Stock.Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation tosuffer.In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our tenants and clientsand personally identifiable information of our employees, in our facility and on our network. Despite our security measures, our information technology andinfrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach couldcompromise our network and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss ofinformation could result in legal claims or proceedings, disrupt our operations, damage our reputation, and cause a loss of confidence, which could adverselyaffect our business.21SUN COMMUNITIES, INC.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.22SUN COMMUNITIES, INC.ITEM 2. PROPERTIESAs of December 31, 2014, the Properties consisted of 183 MH communities, 25 RV communities, and 9 properties containing both MH and RV sites locatedin 29 states. As of December 31, 2014, the Properties contained an aggregate of 79,554 developed sites comprised of 61,231 developed manufactured homesites, 9,297 annual RV sites (inclusive of both annual and seasonal usage rights), 9,026 transient RV sites, and approximately 7,000 additional manufacturedhome sites suitable for development. Most of the Properties include amenities oriented toward family and retirement living. Of the 217 Properties, 93 havemore than 300 developed manufactured home sites; with the largest having 1,080 developed manufactured home sites. See "Real Estate and AccumulatedDepreciation, Schedule III" for detail on Properties that are encumbered.As of December 31, 2014, the Properties had an occupancy rate of 92.6% excluding transient RV sites. Since January 1, 2014, the Properties have averaged anaggregate annual turnover of homes (where the home is moved out of the community) of approximately 2.6% and an average annual turnover of residents(where the resident-owned home is sold and remains within the community, typically without interruption of rental income) of approximately 5.0%. Theaverage renewal rate for residents in our Rental Program was 59.4% for the year ended December 31, 2014.We believe that our Properties’ high amenity levels contribute to low turnover and generally high occupancy rates. All of the Properties provide residentswith attractive amenities with most offering a clubhouse, a swimming pool, and laundry facilities. Many of the Properties offer additional amenities such assauna/whirlpool spas, tennis, shuffleboard and basketball courts and/or exercise rooms.We have concentrated our communities within certain geographic areas in order to achieve economies of scale in management and operation. The Propertiesare principally concentrated in the midwestern, southern, northeastern and southeastern United States. We believe that geographic diversification helps toinsulate the portfolio from regional economic influences.The following tables set forth certain information relating to the properties owned as of December 31, 2014. The occupancy percentage includes MH sitesand annual RV sites, and excludes transient RV sites.PropertyMH/RVCityStateMH andAnnual RVSites as of12/31/14Transient RVSites as of12/31/14Occupancy as of12/31/14Occupancy as of12/31/13Occupancy as of12/31/12MIDWEST Michigan Academy/West Pointe (1)MHCantonMI441—96% 92% 93% Allendale Meadows Mobile VillageMHAllendaleMI352—96% 89% 80% Alpine Meadows Mobile VillageMHGrand RapidsMI403—99% 98% 91% Apple Carr VillageMHMuskegonMI529—87% 83% 76% Brentwood Mobile VillageMHKentwoodMI195—99% 97% 97% Brookside VillageMHKentwoodMI196—99% 100% 97% Byron Center Mobile VillageMHByron CenterMI143—99% 94% 89% Camelot VillaMHMacombMI712—86% 79% N/A Candlewick CourtMHOwossoMI211—64% 66% 70% Cider Mill CrossingsMHFentonMI262—91% 72% 51% Cider Mill VillageMHMiddlevilleMI258—89% 83% 77% College Park EstatesMHCantonMI230—85% 84% 77% Continental NorthMHDavisonMI474—56% 54% 51% Country Acres Mobile VillageMHCadillacMI182—98% 95% 90% Country Hills VillageMHHudsonvilleMI239—100% 98% 93% Country Meadows Mobile VillageMHFlat RockMI577—97% 97% 95% Country Meadows VillageMHCaledoniaMI307—100% 95% 88% Creekwood MeadowsMHBurtonMI336—79% 76% 73% 23SUN COMMUNITIES, INC.PropertyMH/RVCityStateMH andAnnual RVSites as of12/31/14Transient RVSites as of12/31/14Occupancy as of12/31/14Occupancy as of12/31/13Occupancy as of12/31/12Cutler Estates Mobile VillageMHGrand RapidsMI259—95% 95% 96% Dutton Mill VillageMHCaledoniaMI307—99% 98% 98% East Village EstatesMHWashington Twp.MI708—99% 99% 93% EgelcraftMHMuskegonMI458—95% N/A N/A Fisherman’s CoveMHFlintMI162—96% 94% 91% Frenchtown Villa/Elizabeth Woods(1)MHNewportMI1,061—73% N/A N/A Grand Mobile EstatesMHGrand RapidsMI230—84% 76% 72% Hamlin MHWebbervilleMI209—91%(3) 87%(3) 83%(3) Hickory Hills VillageMHBattle CreekMI283—98% 98% 94% Hidden Ridge RV ResortRVHopkinsMI116160100%(5) 100%(5) N/A Holiday West VillageMHHollandMI341—99% 99% 99% Holly Village/Hawaiian Gardens (1)MHHollyMI425—93% 96% 96% Hunters CrossingMHCapacMI114—97% 90% 89% Hunters GlenMHWaylandMI280—87%(2) 79%(2) 69%(2) Kensington MeadowsMHLansingMI290—97% 98% 96% Kings Court Mobile VillageMHTraverse CityMI639—100% 99% 100% Knollwood EstatesMHAllendaleMI161—96% 94% 89% Lafayette PlaceMHWarrenMI254—74% 71% 68% LakeviewMHYpsilantiMI392—97% 97% 98% Leisure VillageMHBelmontMI238—100% 100% 100% Lincoln EstatesMHHollandMI191—97% 98% 93% Meadow Lake EstatesMHWhite LakeMI425—98% 95% 92% Meadowbrook EstatesMHMonroeMI453—93% 94% 92% Northville CrossingsMHNorthvilleMI756—100% 91% 82% Oak Island VillageMHEast LansingMI250—99% 97% 95% Pinebrook VillageMHGrand RapidsMI185—99% 92% 93% Presidential Estates Mobile VillageMHHudsonvilleMI364—98% 97% 95% Richmond PlaceMHRichmondMI117—80% 86% 83% River Haven VillageMHGrand HavenMI721—67% 64% 60% Rudgate ClintonMHClinton TownshipMI667—97% 96% 90% Rudgate ManorMHSterling HeightsMI931—99% 96% 89% Scio Farms EstatesMHAnn ArborMI913—99% 98% 95% Sheffield EstatesMHAuburn HillsMI228—96% 92% 96% Sherman OaksMHJacksonMI366—73% 73% 72% Silver SpringsMHClinton TownshipMI546—99% 96% 89% Southwood VillageMHGrand RapidsMI394—99% 99% 97% St. Clair PlaceMHSt. ClairMI100—75% 74% 75% Sunset RidgeMHPortland TownshipMI190—98% 95% 95% Sycamore VillageMHMasonMI396—99% 99% 91% Tamarac VillageMHLudingtonMI298—99% 99% 98% Tamarac VillageRVLudingtonMI10314100%(5) 100%(5) 100%(5) Timberline EstatesMHGrand RapidsMI296—98% 94% 87% 24SUN COMMUNITIES, INC.PropertyMH/RVCityStateMH andAnnual RVSites as of12/31/14Transient RVSites as of12/31/14Occupancy as of12/31/14Occupancy as of12/31/13Occupancy as of12/31/12Town & Country Mobile VillageMHTraverse CityMI192—99% 100% 99% Village TrailsMHHoward CityMI100—97% 94% 97% Warren Dunes VillageMHBridgmanMI188—99% 95% 91% Waverly Shores VillageMHHollandMI326—100% 100% 100% West Village EstatesMHRomulusMI628—99% 100% 93% White Lake Mobile Home VillageMHWhite LakeMI315—96% 96% 98% Windham Hills EstatesMHJacksonMI402—93% 85%(3) 78%(3) Windsor Woods VillageMHWaylandMI314—96% 90% 83% Woodhaven PlaceMHWoodhavenMI220—91% 96% 97% Michigan Total 24,54917492% 88% 85% Indiana Brookside Mobile Home VillageMHGoshenIN570—74% 71% 65% Carrington PointeMHFt. WayneIN320—87%(3) 82%(3) 80%(3) Clear Water Mobile VillageMHSouth BendIN227—92% 92% 82% Cobus Green Mobile Home ParkMHElkhartIN386—90% 78% 66% Deerfield RunMHAndersonIN175—78%(3) 73%(3) 62%(3) Four SeasonsMHElkhartIN218—95% 92% 86% Holiday Mobile Home VillageMHElkhartIN326—75% 74% 71% Lake Rudolph RV Campground & RVResortRVSanta ClausIN—501N/A(5) N/A N/A Liberty FarmsMHValparaisoIN220—98% 98% 99% MaplewoodMHLawrenceIN207—62% 66% 67% MeadowsMHNappaneeIN330—46% 47% 51% Pebble Creek (4)MHGreenwoodIN257—98% 93% 98% Pine HillsMHMiddleburyIN129—91% 90% 87% Roxbury ParkMHGoshenIN398—98% 99% 88% Valley Brook (7)MHIndianapolisIN798—50% 52% 53% West Glen VillageMHIndianapolisIN552—82% 80% 76% Woods Edge Mobile VillageMHWest LafayetteIN598—53%(3) 53%(3) 52%(3) Indiana Total 5,71150175% 71% 68% Ohio Apple Creek Manufactured HomeCommunity and Self StorageMHAmeliaOH176—93% 93% 95% CatalinaMHMiddletownOH462—60% 59% 59% East Fork (4)MHBataviaOH350—74%(3) 90% 99% Indian Creek RV & Camping ResortRVGeneva on the LakeOH332301100%(5) 100%(5) N/A Oakwood VillageMHMiamisburgOH511—97% 98% 96% Orchard LakeMHMilfordOH147—96% 99% 98% Westbrook Senior VillageMHToledoOH112—96% 96% 99% Westbrook VillageMHToledoOH344—94% 94% 96% Willowbrook PlaceMHToledoOH266—95% 94% 87% 25SUN COMMUNITIES, INC.PropertyMH/RVCityStateMH andAnnual RVSites as of12/31/14Transient RVSites as of12/31/14Occupancy as of12/31/14Occupancy as of12/31/13Occupancy as of12/31/12Woodside TerraceMHHollandOH439—91% 87% 83% Worthington ArmsMHLewis CenterOH224—98% 95% 96% Ohio Total 3,36330188% 89% 88% SOUTH Texas Blazing StarRVSan AntonioTX86176100%(5) 100%(5) N/A Boulder RidgeMHPflugervilleTX526—99% 99% 98% Branch Creek EstatesMHAustinTX392—100% 100% 100% Casa del ValleMHAlamoTX130—97% 98% 100% Casa del ValleRVAlamoTX145106100%(5) 100%(5) 100%(5) Chisholm Point EstatesMHPflugervilleTX417—98% 99% 99% Comal Farms (4)MHNew BraunfelsTX355—98% 99% 97% Kenwood RV and Mobile Home PlazaMHLaFeriaTX41—95% 95% 100% Kenwood RV and Mobile Home PlazaRVLaFeriaTX44195100%(5) 100%(5) 100%(5) Oak CrestMHAustinTX433—98% 100% 99% Pecan BranchMHGeorgetownTX69—96% 94% 93% Pine Trace MHHoustonTX619—83%(3) 99% 99% River Ranch (4)MHAustinTX541—99% 73%(2) 79%(2) River RidgeMHAustinTX515—99% 100% 97% SaddlebrookMHAustinTX260—98% 99% 97% Snow to SunMHWeslacoTX184—96% 98% 99% Snow to SunRVWeslacoTX128163100%(5) 100%(5) 100%(5) Stonebridge (4)MHSan AntonioTX335—99% 98% 99% Summit Ridge (4)MHConverseTX370—98% 91% 67% Sunset Ridge (4)MHKyleTX171—100% 100% 99% Woodlake Trails (4)MHSan AntonioTX227—98% 98% 70%(3) Texas Total 5,98864097% 96% 94% SOUTHEAST Florida Arbor Terrace RV ParkRVBradentonFL141220100%(5) 100%(5) 100%(5) Ariana Village Mobile Home ParkMHLakelandFL207—95% 94% 92% Blueberry HillRVBushnellFL152253100%(5) 100%(5) 100%(5) Buttonwood BayMHSebringFL407—100% 100% 100% Buttonwood BayRVSebringFL364168100%(5) 100%(5) 100%(5) Carriage CoveMHSanfordFL464—95% N/A N/A Club NaplesRVNaplesFL158147100%(5) 100%(5) 100%(5) Gold CoasterMHHomesteadFL47174100%(5) 98%(5) 99%(5) Grand LakesRVCitraFL154249100%(5) 100%(5) 100%(5) Groves RV ResortRVFt. MyersFL17796100%(5) 100%(5) 100%(5) 26SUN COMMUNITIES, INC.PropertyMH/RVCityStateMH andAnnual RVSites as of12/31/14Transient RVSites as of12/31/14Occupancy as of12/31/14Occupancy as of12/31/13Occupancy as of12/31/12Holly Forest EstatesMHHolly HillFL402—99% 99% 99% Indian Creek ParkMHFt. Myers BeachFL353—100% 100% 100% Indian Creek ParkRVFt. Myers BeachFL957121100%(5) 100%(5) 100%(5) Island LakesMHMerritt IslandFL301—100% 100% 100% Kings LakeMHDebaryFL245—100% 100% 99% Lake Juliana LandingsMHAuburndaleFL274—97% 97% 98% Lake San Marino RV ParkRVNaplesFL206201100%(5) 100%(5) 100%(5) Lakeshore LandingsMHOrlandoFL306—95% N/A N/A Meadowbrook VillageMHTampaFL257—100% 100% 100% Naples RV ResortRVNaplesFL7194100%(5) 100%(5) 100%(5) North LakeRVMoore HavenFL19082100%(5) 100%(5) 100%(5) Orange City RV ResortMHOrange CityFL4—100% 100% 100% Orange City RV ResortRVOrange CityFL242279100%(5) 100%(5) 100%(5) Orange Tree VillageMHOrange CityFL246—100% 100% 99% Rainbow RV ResortMHFrostproofFL37—100% 100% 100% Rainbow RV ResortRVFrostproofFL296166100%(5) 100%(5) 100%(5) Royal CountryMHMiamiFL864—100% 100% 100% Saddle Oak ClubMHOcalaFL376—100% 99% 99% Siesta Bay RV ParkRVFt. Myers BeachFL71483100%(5) 100%(5) 100%(5) Silver Star Mobile VillageMHOrlandoFL406—99% 99% 98% Tampa EastMHDoverFL31—100% 100% 100% Tampa EastRVDoverFL217452100%(5) 100%(5) 100%(5) Three LakesRVHudsonFL178130100%(5) 100%(5) 100%(5) Water Oak Country Club EstatesMHLady LakeFL1,080—100% 99% 99% Florida Total 10,9482,81599% 99% 99% SOUTHWEST Arizona Blue StarMHApache JunctionAZ8—100% N/A N/A Blue StarRVApache JunctionAZ—143N/A(5) N/A N/A Brentwood WestMHMesaAZ350—95% N/A N/A Desert HarborMHApache JunctionAZ205—100% N/A N/A Fiesta VillageMHMesaAZ172—74% N/A N/A La Casa BlancaMHApache JunctionAZ198—99% N/A N/A Lost DutchmanMHApache JunctionAZ179—82% N/A N/A Lost DutchmanRVApache JunctionAZ—45N/A(5) N/A N/A Mountain ViewMHMesaAZ170—99% N/A N/A Palm Creek Golf & RV ResortMHCasa GrandeAZ281—58% 94% 97% Palm Creek Golf & RV ResortRVCasa GrandeAZ848892100%(5) 100%(5) 100%(5) Rancho MirageMHApache JunctionAZ312—98% N/A N/A Reserve at Fox CreekMHBullhead CityAZ313—89% N/A N/A Sun ValleyMHApache JunctionAZ268—88% N/A N/A Arizona Total 3,3041,08091% 99% 99% 27SUN COMMUNITIES, INC.PropertyMH/RVCityStateMH andAnnual RVSites as of12/31/14Transient RVSites as of12/31/14Occupancy as of12/31/14Occupancy as of12/31/13Occupancy as of12/31/12Colorado Cave CreekMHEvansCO447—77%(3) 98% 99% Eagle CrestMHFirestoneCO441—100% 99% 99% The Grove at Alta RidgeMHDenverCO409—99% N/A N/A North Point EstatesMHPuebloCO108—100% 95% 84%(2) SkylineMHFort CollinsCO172—98% N/A N/A Swan Meadow VillageMHDillonCO175—99% N/A N/A Timber RidgeMHFt. CollinsCO585—100% 100% 100% Colorado Total 2,337—95% 99% 84% OTHER Autumn RidgeMHAnkenyIA413—99% 99% 99% Bell CrossingMHClarksvilleTN237—99% 90%(3) 79%(3) Big Timber Lake RV ResortRVCape MayNJ269259100%(5) 100%(5) N/A Candlelight VillageMHChicago HeightsIL309—97% 97% 97% Castaways RV Resort & CampgroundRVBerlinMD9384100%(5) N/A N/A Colonial VillageMHAlleganyNY153—88% N/A N/A Countryside AtlantaMHLawrencevilleGA271—100%(6) 100%(6) 100%(6) Countryside EstatesMHMckeanPA304—94% N/A N/A Countryside GwinnettMHBufordGA331—99% 99% 98% Countryside Lake LanierMHBufordGA548—99% 92% 86% Countryside VillageMHGreat FallsMT226—98% N/A N/A Creekside (4)MHReidsvilleNC45—62%(2) 64%(2) 62%(2) Driftwood Camping ResortRVClermontNJ596106100%(5) N/A N/A EdwardsvilleMHEdwardsvilleKS634—77% 74% 70% Forest MeadowsMHPhilomathOR75—100% 100% 100% Glen Laurel (4)MHConcordNC260—99% 88%(2) 77%(2) Gwynn's Island RV Resort &CampgroundRVGwynnVA9620100%(5) 100%(5) N/A High PointeMHFredericaDE409—98% 96% 96% Jellystone Park(TM) of Western NewYorkRVNorth JavaNY59216100%(5) N/A N/A Jellystone Park(TM) at Birchwood AcresRVWoodridgeNY5297100%(5) 100%(5) N/A Lake In WoodRVNarvonPA265156100%(5) 100%(5) N/A Lake Laurie RV & Camping ResortRVCape MayNJ311408100%(5) 100%(5) N/A Maple BrookMHMattesonIL441—100% N/A N/A Maplewood ManorMHBrunswickME296—93% N/A N/A Meadowbrook (4)MHCharlotteNC321—82%(3) 59%(3) 99% MerrymeetingMHBrunswickME43—72% N/A N/A New Point RV ResortRVNew PointVA173150100%(5) 100%(5) N/A Oak CreekMHCoarsegoldCA198—97% N/A N/A Oak RidgeMHMantenoIL426—86% N/A N/A Parkside VillageMHCheektowagaNY156—100% N/A N/A 28SUN COMMUNITIES, INC.PropertyMH/RVCityStateMH andAnnual RVSites as of12/31/14Transient RVSites as of12/31/14Occupancy as of12/31/14Occupancy as of12/31/13Occupancy as of12/31/12Peter's Pond RV ResortRVSandwichMA297106100%(5) 100%(5) N/A Pheasant RidgeMHLancasterPA553—100% 100% 100% Pin Oak ParcMHO’FallonMO502—90% 86% 83% Pine RidgeMHPetersburgVA245—97% 98% 97% Saco/Old Orchard Beach KOARVSacoME—127N/A(5) N/A N/A Sea Air VillageMHRehoboth BeachDE372—99% 99% 100% Sea Air VillageRVRehoboth BeachDE12312100%(5) 100%(5) 100%(5) Seaport RV ResortRVMysticCT25116100%(5) 100%(5) N/A Seashore Campsites RV Park andCampgroundRVCape MayNJ432246100%(5) N/A N/A Sky HarborMHCheektowagaNY522—90% N/A N/A SouthforkMHBeltonMO474—64% 62% 61% Southern Hills/Northridge PlaceMHStewartvilleMN405—85% N/A N/A Sun Villa EstatesMHRenoNV324—99% 97% 98% Thunderhill EstatesMHSturgeon BayWI226—87% N/A N/A Town & Country VillageMHLisbonME144—81% N/A N/A Valley View EstatesMHAlleganyNY197—86% N/A N/A The Villas at Calla PointeMHCheektowagaNY116—100% N/A N/A Vines RV ResortRVPaso RoblesCA—130N/A N/A N/A Wagon Wheel RV Resort & CampgroundRVOld Orchard BeachME181100100%(5) 100%(5) N/A Westward Ho RV Resort & CampgroundRVGlenbeulahWI205118100%(5) 100%(5) N/A Wild Acres RV Resort & CampgroundRVOrchard BeachME232398100%(5) 100%(5) N/A Wildwood CommunityMHSandwichIL476—98% N/A N/A Wine Country RV ResortRVPaso RoblesCA—166N/A N/A N/A Woodland Park EstatesMHEugeneOR398—100% 100% 100% Other Total 14,3283,51594% 91% 91% TOTAL / AVERAGE 70,5289,02693% 90% 87% (1) Properties have two licenses but operate as one community.(2) Occupancy in these Properties reflects the fact that these communities are ground-up developments and have not reached full occupancy.(3) Occupancy in these Properties reflects the fact that these communities are in a lease-up phase following an expansion.(4) This Property is owned by an affiliate of SunChamp LLC, a joint venture that owns 11 of our consolidated manufactured home communities, in which we own approximately an82.6% equity interest as of December 31, 2014.(5) Occupancy percentage excludes transient RV sites. Percentage calculated by dividing revenue producing sites by developed sites. A revenue producing site is defined as a site that isoccupied by a paying resident or reserved by a customer with annual or seasonal usage rights. A developed site is defined as an adequate sized parcel of land that has road and utilityaccess which is zoned and licensed (if required) for use as a home site.(6) The number of developed sites and occupancy percentage at this Property includes sites that have been covered under our comprehensive insurance coverage (subject to deductiblesand certain limitations) for both property damage and business interruption from a flood that caused substantial damage to this Property.(7) Property was sold on January 14, 2015.29SUN COMMUNITIES, INC.ITEM 3. LEGAL PROCEEDINGSWe are involved in various legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to have amaterial adverse impact on our results of operations or financial condition.ITEM 4. MINE SAFETY DISCLOSURESNone.30SUN COMMUNITIES, INC.EXECUTIVE OFFICERS OF THE REGISTRANTThe persons listed below are our executive officers.Name Age OfficeGary A. Shiffman 60 Chairman and Chief Executive OfficerJohn B. McLaren 44 President and Chief Operating OfficerKaren J. Dearing 50 Executive Vice President, Treasurer, Chief Financial Officer and SecretaryJonathan M. Colman 59 Executive Vice PresidentGary A. Shiffman is our Chairman and Chief Executive Officer and has been an executive officer since our inception. He is a member of the ExecutiveCommittee of our Board of Directors. He has been actively involved in the management, acquisition, construction and development of MH communities andhas developed an extensive network of industry relationships over the past thirty years. He has overseen the acquisition, rezoning, development andmarketing of numerous manufactured home expansion projects, as well as other types of income producing real estate. Additionally, Mr. Shiffman hassignificant direct holdings in various real estate asset classes, which include office, multi-family, industrial, residential and retail. Mr. Shiffman is anexecutive officer and a director of SHS and all of our other corporate subsidiaries. Mr. Shiffman is also a director of Origen.John B. McLaren has been in the manufactured housing industry since 1995. He has served as our President since February 2014 and as our Chief OperatingOfficer since February 2008. From February 2008 to February 2014, he served as an Executive Vice President of the Company. From August 2005 to February2008, he was Senior Vice President of SHS with overall responsibility for home sales and leasing. Prior to that, Mr. McLaren was a Regional Vice Presidentfor Apartment Investment & Management Company (“AIMCO”), a Real Estate Investment Trust engaged in leasing apartments. Prior to AIMCO,Mr. McLaren spent approximately three years as Vice President of Leasing & Service for SHS with responsibility for developing and leading our RentalProgram.Karen J. Dearing joined us in October 1998 as the Director of Finance where she worked extensively with accounting and finance matters related to ourground up developments and expansions. Ms. Dearing became our Corporate Controller in 2002, a Senior Vice President in 2006, and Executive VicePresident and Chief Financial Officer in February 2008. She is responsible for the overall management of our information technology, accounting and financedepartments, and all internal and external financial reporting. Prior to working for us, Ms. Dearing had eight years of experience as the Financial Controller ofa privately-owned automotive supplier and five years’ experience as a certified public accountant with Deloitte.Jonathan M. Colman joined us in 1994 as Vice President-Acquisitions and became a Senior Vice President in 1995 and an Executive Vice President inMarch 2003. A certified public accountant, Mr. Colman has over thirty years of experience in the manufactured housing community industry. He has beeninvolved in the acquisition, financing and management of over 75 manufactured housing communities for two of the 10 largest manufactured housingcommunity owners, including Uniprop, Inc. during its syndication of over $90.0 million in public limited partnerships in the late 1980s. Mr. Colman is also aVice President of all of our corporate subsidiaries.31SUN COMMUNITIES, INC.PART IIITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESMarket InformationOur common stock has been listed on the NYSE since December 8, 1993, and traded under the symbol “SUI”. The following table sets forth the high and lowsales prices per share for the common stock for the periods indicated as reported by the NYSE and the distributions per share paid by us with respect to eachperiod:Year Ended December 31, 2014 High Low Distributions1st Quarter $48.70 $41.65 $0.65 2nd Quarter $50.84 $42.97 $0.65 3rd Quarter $55.00 $49.36 $0.65 4th Quarter $64.22 $50.25 $0.65(1) Year Ended December 31, 2013 High Low Distributions1st Quarter $49.38 $40.28 $0.63 2nd Quarter $57.78 $46.40 $0.63 3rd Quarter $53.35 $41.93 $0.63 4th Quarter $45.96 $39.53 $0.63(2) (1) Paid on January 16, 2015, to stockholders of record on December 31, 2014(2) Paid on January 17, 2014, to stockholders of record on December 31, 2013On February 18, 2015, the closing share price of our common stock was $67.32 per share on the NYSE, and there were 237 holders of record for the53,465,428 million outstanding shares of common stock. On February 18, 2015, the Operating Partnership had (i) 2,561,342 common OP units issued andoutstanding, not held by us, which were convertible into an equal number of shares of our common stock, (ii) 1,283,819 Aspen preferred OP units issued andoutstanding which were exchangeable for 509,676 shares of our common stock, (iii) 427,120 Series A-1 preferred OP units issued and outstanding which wereexchangeable for 1,041,754 shares of our common stock, (iv) 40,268 Series A-3 preferred OP units issued and outstanding which were exchangeable for74,919 shares of our common stock, and (v) 869,449 Series A-4 preferred OP units issued and outstanding, not held by us, which were exchangeable for386,383 shares of our common stock.We have historically paid regular quarterly distributions to holders of our common stock and common OP Units. In addition, we are obligated to makedistributions to holders of shares of Series A Preferred Stock, Series A-4 Preferred Stock, Aspen preferred OP units, Series A-1 preferred OP units, Series A-3preferred OP units, Series A-4 preferred OP units and Series B-3 preferred OP units. See “Structure of the Company” under Part I, Item 1 of this Form 10-K. Ourability to make distributions on our common and preferred stock and OP units and payments on our indebtedness and to fund planned capital expenditureswill depend on our ability to generate cash in the future. The decision to declare and pay distributions on shares of our common stock and common OP unitsin the future, as well as the timing, amount and composition of any such future distributions, will be at the sole discretion of our Board of Directors in light ofconditions then existing, including our earnings, financial condition, capital requirements, debt maturities, the availability of debt and equity capital,applicable REIT and legal restrictions and the general overall economic conditions and other factors.32SUN COMMUNITIES, INC.Securities Authorized for Issuance Under Equity Compensation PlansThe following table reflects information about the securities authorized for issuance under our equity compensation plans as of December 31, 2014. Number of securities to beissued upon exercise ofoutstanding options,warrants and rights Weighted-averageexercise price ofoutstanding options,warrants and rights Number of securitiesremaining available forfuture issuance under equitycompensation plans(excluding securitiesreflected in column a) Plan Category (a) (b) (c)Equity compensation plans approved by shareholders 32,500 $29.56 316,494Equity compensation plans not approved by shareholders — — —Total 32,500 $29.56 316,494Issuer Purchases of Equity SecuritiesIn November 2004, our Board of Directors authorized us to repurchase up to 1,000,000 shares of our common stock. We have 400,000 common sharesremaining in the repurchase program. No common shares were repurchased under this program during 2014. There is no expiration date specified for therepurchase program.Recent Sales of Unregistered SecuritiesFrom time to time, we may issue shares of common stock in exchange for OP units that may be tendered to the Operating Partnership for redemption inaccordance with the terms and provisions of the limited partnership agreement of the Operating Partnership. Such shares are issued based on the exchangeratios and formulas described in “Structure of the Company” under Item 1 above.Holders of common OP Units have converted 9,110 units, zero units and 2,400 units to common stock for the years ended December 31, 2014, 2013 and2012, respectively.Holders of Series A-1 preferred OP units converted 26,379 units into 64,335 shares of common stock during the year ended December 31, 2014. No Series A-1preferred OP units were converted into common stock during 2013 or 2012.On November 26, 2014, as consideration for the Green Courte acquisition, we issued to the Green Courte sellers 361,797 shares of common stock and483,717 shares of Class A-4 Preferred Stock, and our Operating Partnership issued to the Green Courte sellers 455,296 common OP units and 608,220 SeriesA-4 preferred OP units. On December 17, 2014, as additional consideration for the Green Courte acquisition, our Operating Partnership issued to the GreenCourte sellers 45,834 common OP units and 61,229 Series A-4 preferred OP units. All of the shares of common stock and common OP units were issued at anissuance price of $50.00 per share or unit. All of the shares of Series A-4 Preferred Stock and Series A-4 preferred OP units were issued at an issuance price of$25.00 per share or unit. See Note 2 to our financial statements for other consideration transferred in the transaction.Subject to certain limitations, upon written notice to us, each holder of shares of Series A-4 Preferred Stock at its option may convert any or all of the shares ofSeries A-4 Preferred Stock held by it for that number of shares of our common stock equal to the quotient obtained by dividing $25.00 by the then-applicableconversion price. The initial conversion price is $56.25, so initially each share of Series A-4 Preferred Stock is convertible into approximately 0.4444 sharesof common stock. The conversion price is subject to adjustment upon various events. At our option, instead of issuing the shares of common stock to theconverting holder of Series A-4 Preferred Stock as described above, we may make a cash payment to the converting holder with respect to each share of SeriesA-4 Preferred Stock the holder desires to convert equal to the fair market value of one share of our common stock. If, at any time after November 26, 2019, thevolume weighted average of the daily volume weighted average price of a share of our common stock on the NYSE equals or exceeds 115.5% of the thenprevailing conversion price for at least 20 trading days in a period of 30 consecutive trading days, then, within 10 days thereafter, upon written notice to theholders thereof, we may convert each outstanding share of Series A-4 Preferred Stock into that number of shares of common stock equal to the quotientobtained by dividing $25.00 by the then prevailing conversion price.Each Series A-4 preferred OP unit is initially exchangeable for that number of shares of common stock or common OP units obtained by dividing $25.00 by$56.25. The number of shares of common stock or common OP units into which each Series A-433SUN COMMUNITIES, INC.preferred OP unit is exchangeable are subject to adjustment under certain circumstances on the same basis applicable to adjustments in the conversion pricefor Series A-4 Preferred Stock described above.Each common OP unit issued by the Operating Partnership is exchangeable at any time (subject to certain limited exceptions) at the holder’s option for oneshare of our common stock.All of the securities described above were issued in private placements in reliance on Section 4(a)(2) of the Securities Act, including Regulation Dpromulgated thereunder, based on certain investment representations made by the parties to whom the securities were issued. No underwriters were used inconnection with any of such issuances.34SUN COMMUNITIES, INC.Performance GraphSet forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on our common stock against thecumulative total return of a broad market index composed of all issuers listed on the NYSE and an industry index comprised of fifteen publicly tradedresidential real estate investment trusts, for the five year period ending on December 31, 2014. This line graph assumes a $100 investment on December 31,2009, a reinvestment of distributions and actual increase of the market value of our common stock relative to an initial investment of $100. The comparisonsin this table are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock. As of December 31,Index 2009 2010 2011 2012 2013 2014Sun Communities, Inc. $100.00 $185.98 $222.54 $257.86 $291.24 $434.43SNL US REIT Residential $100.00 $146.88 $168.25 $179.02 $173.98 $238.09NYSE Market Index $100.00 $113.60 $109.43 $127.11 $160.65 $171.67SUI Peer Group 2013 Index(1) $100.00 $141.85 $163.64 $176.97 $164.77 $227.55SUI Peer Group 2014 Index(2) $100.00 $142.14 $163.63 $177.38 $163.82 $226.40(1) Includes American Campus Communities, Inc., American Capital Agency Corp., Apartment Investment and Management Company, Associated Estates Realty Corporation,AvalonBay Communities, Inc., BRE Properties, Inc., Camden Property Trust, Education Realty Trust, Inc., Equity Lifestyles Properties, Inc., Equity Residential, Essex Property Trust,Inc., Home Properties, Inc., Mid-America Apartment Communities, Inc., Senior Housing Properties Trust and UDR, Inc.(2) Includes the same companies as SUI Peer Group 2013 Index, with the exception of BRE Properties Trust, which merged with Essex Properties Trust, Inc. in 2014.The information included under the heading “Performance Graph” is not to be treated as “soliciting material” or as “filed” with the SEC, and is notincorporated by reference into any filing by the Company under the Securities Act or the Exchange Act that is made on, before or after the date of filing ofthis Form 10-K.35SUN COMMUNITIES, INC.ITEM 6. SELECTED FINANCIAL DATAThe following table sets forth selected financial and operating information on a historical basis. The historical financial data has been derived from ourhistorical financial statements. The following information should be read in conjunction with the information included in “Management’s Discussion andAnalysis of Financial Condition and Results of Operations”, and the financial statements and accompanying notes included herein. Year Ended December 31, 2014 2013 (1) 2012 (1) 2011 (1) 2010 (1) (In thousands, except for share related data)OPERATING DATA: Revenues$471,675 $415,222 $338,952 $288,600 $265,407Net income (loss) attributable to Sun Communities, Inc. commonstockholders: Income (loss) from continuing operations$22,376 $10,610 $4,958 $(1,086) $(2,883)Net income (loss)$22,376 $10,610 $4,958 $(1,086) $(2,883)Income (loss) from continuing operations per share - basic$0.54 $0.31 $0.19 $(0.05) $(0.15)Income (loss) from continuing operations per share - diluted$0.54 $0.31 $0.18 $(0.05) $(0.15) Cash distributions declared per common share (2)$2.60 $2.52 $2.52 $3.15 $2.52 BALANCE SHEET DATA: Investment property before accumulated depreciation$3,363,917 $2,489,119 $2,177,305 $1,794,605 $1,580,544Total assets$2,937,692 $1,994,904 $1,754,628 $1,367,974 $1,165,342Total debt and lines of credit$1,832,087 $1,492,820 $1,453,501 $1,397,225 $1,258,139Total stockholders’ equity (deficit)$940,152 $383,541 $199,457 $(114,188) $(145,047) OTHER FINANCIAL DATA: Net operating income (NOI) (3) from: Real property operations$232,478 $203,176 $167,715 $146,876 $135,222Home sales and home rentals$29,341 $26,620 $18,677 $12,954 $12,981 Funds from operations (FFO) (3)$134,549 $117,583 $92,409 $73,691 $62,765Adjustment to FFO13,807 3,928 4,296 1,564 874FFO excluding certain items$148,356 $121,511 $96,705 $75,255 $63,639 FFO per share excluding certain items - fully diluted$3.37 $3.22 $3.19 $3.13 $2.97(1) Financial information has been revised to reflect certain reclassifications in prior periods to conform to current period presentation.(2) In 2011, we paid $2.52 in cash distributions per common share and declared $3.15 in distributions per common share.(3) Refer to Item 7, Supplemental Measures, for information regarding the presentation of the NOI financial measure and FFO financial measure.36SUN COMMUNITIES, INC.ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONThe following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the consolidatedfinancial statements and notes thereto included in this Form 10-K.EXECUTIVE SUMMARY2014 Accomplishments•Completed largest acquisition to date with the first closing of the Green Courte acquisition representing 31 MH communities.•Completed acquisitions of six RV communities for an aggregate purchase price of approximately $137.4 million.•Closed on the disposition of 10 MH communities and recognized a gain on disposition of assets, net of approximately $17.7 million.•Increased our Same Site occupancy to 93.2% in 2014 from 91.5% in 2013.•Closed two underwritten registered public offerings totaling 11.7 million shares of common stock with net proceeds of approximately $562.9million after deducting offering related expenses.•Increased our annual distribution rate to $2.60 per share in 2014, an increase of $0.08 compared to $2.52 per share in 2013.Property Operations:Occupancy in our Properties as well as our ability to increase rental rates directly affects revenues. Our revenue streams are predominantly derived fromcustomers renting our sites on a long-term basis. Our Same Site properties continue to achieve revenue and occupancy increases which drive continued NetOperating Income (“NOI”) growth. Home sales are at their historical high, and we expect to continue to increase the number of homes sold in our portfolio.Portfolio Information: Year Ended December 31, 2014 2013 2012Occupancy % - Total Portfolio - MH and annual RV(1) 92.6% 89.7% 87.3%Occupancy % - Same Site - MH and annual RV(1)(2) 93.2% 91.5% 87.1%Funds from operations excluding certain items(3) $3.37 $3.22 $3.19NOI(3) - Total Portfolio $232,478 $203,176 $167,715NOI(3) - Same Site $206,744 $191,938 $164,041Homes Sold 1,966 1,929 1,742Number of Occupied Rental Homes 10,973 9,726 8,110(1) Occupancy % includes MH and annual RV sites, and exclude transient RV sites, which are included in total developed sites.(2) Occupancy % excludes recently completed but vacant expansion sites.(3) Refer to Item 7, Supplemental Measures, for information regarding the presentation of the NOI financial measure and funds from operations excludingcertain items financial measure.37SUN COMMUNITIES, INC.Acquisition and Disposition Activity:During the past three years, we have completed acquisitions of 68 properties with over 26,000 sites located in high growth areas and retirement and vacationdestinations such as Florida, California and Eastern coastal areas such as Old Orchard Beach, Maine; Cape May, New Jersey; Chesapeake Bay, Virginia andCape Cod, Massachusetts.During 2014, we completed eight acquisitions consisting of six RV communities and 33 MH communities:Property/Portfolio Location Type Total Consideration Number ofsites -MH/Annual Number ofsites -TransientWine Country RV Resort Paso Robles, CA RV $13,199 — 166Castaways RV Resort & Campground Worcester County, MD RV $36,102 7 362Seashore Campsites RV & Campground Cape May, NJ RV $23,582 430 253Driftwood Camping Resort Clermont, NJ RV $31,259 570 128Saco/Old Orchard Beach RV Resort Saco, Maine RV $4,133 — 127Lake Rudolph Campground & RV Resort Santa Claus, IN RV $29,101 — 501Green Courte properties AZ, FL, NY, PA, MT, MI, CO,ME, MN, WI, IL, CA MH $460,683 9,351 188Oak Creek Coarsegold, CA MH $6,015 198 —During 2014, we announced our acquisition of the Green Courte properties for a purchase price of $1.3 billion, which is our largest acquisition to date. TheGreen Courte portfolio includes 59 MH communities comprised of over 19,000 sites. This acquisition provides us with a portfolio of large, well-located high-quality communities with attractive amenities and potential for occupancy and rent growth. It increases our overall geographic diversification and size of ourage-restricted portfolio with additional exposure to the sought after Florida and Arizona markets. Approximately, 56% of the communities are located inFlorida and 73% are considered age-restricted, adding significant growth to our existing highly-stable age-restricted portfolio.The acquisition was completed in two phases. We acquired 33 properties, which we will operate as 31 communities, on November 26, 2014, and theremaining 26 properties on January 6, 2015.We continue to experience an active pipeline of acquisition opportunities and will seek to enhance the growth of the Company through continued selectiveacquisitions. In December 2014, we announced that we entered into an agreement to purchase six MH communities which is expected to close during thesecond quarter of 2015, comprised of approximately 3,150 sites located in the Orlando, Florida area and with expansion potential of approximately 380 sites.The transaction is subject to the Company's satisfaction with its due diligence investigation and customary closing conditions, including consent of theexisting lenders.We continually review the properties in our portfolio to ensure that they fit our business objectives. During 2014, we sold 10 MH Properties, and redeployedcapital to properties in markets we believe have greater long-term potential. A gain of $17.7 million is recorded in "Gain on disposition of properties, net" inour consolidated statements of operations.Development Activity:We have been focused on development and expansion opportunities adjacent to our existing communities, and we have developed nearly 1,400 sites overthe past three years. We expanded 374 sites at three properties in 2014. The total cost to construct the sites was approximately $11.0 million. We continue toexpand our properties utilizing our inventory of owned and entitled land (approximately 7,000 developed sites) and expect to construct over 800 additionalsites in 2015.38SUN COMMUNITIES, INC.Capital Activity:We closed two underwritten registered public offerings during 2014 totaling 11.7 million shares of common stock with net proceeds of approximately $562.9million after deducting offering related expenses.Proceeds from these capital raises help us to maintain our targeted leverage levels while continuing to expand our portfolio. MarketsThe following table identifies the Company's largest markets by number of sites:Major Market Number of Properties Total Sites Percentage of Total SitesMichigan 70 24,723 31.1%Florida 29 13,763 17.3%Northeast 26 9,000 11.3%Southwest 18 6,721 8.4%Texas 18 6,628 8.3%Indiana 17 6,212 7.8%Ohio 11 3,664 4.6%Other 28 8,843 11.1%TOTAL 217 79,554 A large geographic concentration of our properties continues to be in Michigan, Florida and Texas. Occupancy at our Michigan communities has grown from85% in 2012 to 93% in 2014, occupancy at our Texas communities has grown from 94% in 2012 to 97% in 2014, while occupancy at our Floridacommunities has remained consistent at 99%. As a result of our recent acquisitions, we have increased the concentration of our properties located in otherareas of the United States, predominantly in high growth areas and retirement and vacation destinations, such as Arizona, California and the Northeasterncoastal areas. Several of our acquisitions in these areas have been RV communities. Through our expansion into RV communities, we have experiencedstrong revenue growth. The age demographic of RV communities is attractive, as the population of retirement age baby boomers in the U.S. is growing. RVcommunities have become a trending vacation opportunity not only for the retiree population, but as an affordable vacation alternative for families.39SUN COMMUNITIES, INC.SUPPLEMENTAL MEASURESIn addition to the results reported in accordance with generally accepted accounting principles in the United States (“GAAP”), we have provided informationregarding NOI in the following tables. NOI is derived from revenues minus property operating and maintenance expenses and real estate taxes. We use NOI asthe primary basis to evaluate the performance of our operations. A reconciliation of NOI to net income (loss) attributable to Sun Communities, Inc. isincluded in “Results of Operations” below.We believe that NOI is helpful to investors and analysts as a measure of operating performance because it is an indicator of the return on property investment,and provides a method of comparing property performance over time. We use NOI as a key management tool when evaluating performance and growth ofparticular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense, and non-property specific expenses such as general and administrative expenses, all of which are significant costs, and therefore, NOI is a measure of the operatingperformance of our properties rather than of the Company overall. We believe that these costs included in net income (loss) often have no effect on themarket value of our property and therefore limit its use as a performance measure. In addition, such expenses are often incurred at a parent company level andtherefore are not necessarily linked to the performance of a real estate asset.NOI should not be considered a substitute for the reported results prepared in accordance with GAAP. NOI should not be considered as an alternative to netincome (loss) as an indicator of our financial performance, or to cash flows as a measure of liquidity; nor is it indicative of funds available for our cash needs,including our ability to make cash distributions. NOI, as determined and presented by us, may not be comparable to related or similarly titled measuresreported by other companies.We also provide information regarding Funds From Operations (“FFO”). We consider FFO an appropriate supplemental measure of the financial performanceof an equity REIT. Under the National Association of Real Estate Investment Trusts (“NAREIT”) definition, FFO represents net income, excludingextraordinary items (as defined under GAAP), and gain (loss) on sales of depreciable property, plus real estate related depreciation and amortization(excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and joint ventures. Management also uses FFO excludingcertain items, a non-GAAP financial measure, which excludes certain gain and loss items that management considers unrelated to the operational andfinancial performance of our core business. We believe that this provides investors with another financial measure of our operating performance that is morecomparable when evaluating period over period results. A discussion of FFO, FFO excluding certain items, a reconciliation of FFO to net income (loss), andFFO to FFO excluding certain items are included in the presentation of FFO following our “Results of Operations."40SUN COMMUNITIES, INC.The following table is a summary of our consolidated financial results which are discussed in more detail in the following paragraphs (in thousands): Year Ended December 31, 2014 2013 2012Real Property NOI $232,478 $203,176 $167,715Rental Program NOI 70,232 58,481 47,084Home Sales NOI/Gross Profit 13,398 14,555 10,229Site rent from Rental Program (included in Real Property NOI) (54,289) (46,416) (38,636)NOI/Gross profit 261,819 229,796 186,392Adjustments to arrive at net income: Other revenues 20,715 14,773 11,455General and administrative (42,622) (35,854) (28,353)Transaction costs (18,259) (3,928) (4,296)Depreciation and amortization (133,726) (110,078) (89,674)Asset impairment charge (837) — —Interest expense (76,981) (76,577) (71,180)Gain on disposition of properties, net 17,654 — —Gain on settlement 4,452 — —Provision for state income taxes (219) (234) (249)Distributions from affiliate 1,200 2,250 3,900Net income 33,196 20,148 7,995Less: Preferred return to A-1 preferred OP units 2,654 2,598 2,329Less: Preferred return to A-3 preferred OP units 181 166 —Less: Preferred return to A-4 preferred OP units 100 — —Less: Amounts attributable to noncontrolling interests 1,752 718 (318)Net income attributable to Sun Communities, Inc. 28,509 16,666 5,984Less: Preferred Stock Distributions 6,133 6,056 1,026Net income attributable to Sun Communities, Inc. common stockholders $22,376 $10,610$4,95841SUN COMMUNITIES, INC.RESULTS OF OPERATIONSWe report operating results under two segments: Real Property Operations and Home Sales and Rentals. The Real Property Operations segment owns,operates, and develops MH communities and RV communities throughout the United States and is in the business of acquiring, operating, and expandingMH and RV communities. The Home Sales and Rentals segment offers manufactured home sales and leasing services to tenants and prospective tenants ofour communities. We evaluate segment operating performance based on NOI and gross profit.COMPARISON OF THE YEARS ENDED DECEMBER 31, 2014 AND 2013REAL PROPERTY OPERATIONS – TOTAL PORTFOLIOThe following tables reflect certain financial and other information for our Total Portfolio for the years ended December 31, 2014 and 2013: Year Ended December 31,Financial Information (in thousands) 2014 2013 Change % ChangeIncome from Real Property $357,793 $313,097 $44,696 14.3%Property operating expenses: Payroll and benefits 30,107 26,750 3,357 12.5%Legal, taxes, & insurance 5,089 4,769 320 6.7%Utilities 41,275 36,071 5,204 14.4%Supplies and repair 13,535 11,213 2,322 20.7%Other 11,128 8,834 2,294 26.0%Real estate taxes 24,181 22,284 1,897 8.5%Property operating expenses 125,315 109,921 15,394 14.0%Real Property NOI $232,478 $203,176 $29,302 14.4% As of December 31,Other Information 2014 2013 ChangeNumber of properties 217 188 29Developed sites 79,554 69,789 9,765Occupied sites (1) (2) 65,340 55,459 9,881Occupancy % (1) 92.6% 89.7% 2.9%Weighted average monthly site rent - MH $458 $445 $13Weighted average monthly site rent - RV (3) $391 $376 $15Weighted average monthly site rent - Total $450 $436 $14Sites available for development 6,987 6,339 648(1) Occupied sites and occupancy % include MH and annual RV sites, and exclude transient RV sites, which are included in total developed sites.(2) Occupied sites include 9,779 sites acquired during 2014 and 2,480 sites acquired in 2013.(3) Weighted average rent pertains to annual RV sites and excludes transient RV sites.The 14.4% growth in Real Property NOI consists of $14.5 million from newly acquired properties and $14.8 million from our Same Site properties as detailedbelow.42SUN COMMUNITIES, INC.REAL PROPERTY OPERATIONS – SAME SITEA key management tool used when evaluating performance and growth of our properties is a comparison of "Same Site" communities. Same Site communitiesconsist of properties owned and operated throughout 2014 and 2013. The Same Site data may change from time-to-time depending on acquisitions,dispositions, management discretion, significant transactions, or unique situations. The Same Site data in this Form 10-K includes all properties acquiredprior to December 31, 2012 and which we have owned and operated continuously since January 1, 2013.In order to evaluate the growth of the Same Site communities, management has classified certain items differently than our GAAP statements. Thereclassification difference between our GAAP statements and our Same Site portfolio is the reclassification of water and sewer revenues from income from realproperty to utilities. A significant portion of our utility charges are re-billed to our residents. We reclassify these amounts to reflect the utility expensesassociated with our Same Site portfolio net of recovery.The following tables reflect certain financial and other information for our Same Site communities for the years ended December 31, 2014 and 2013: Year Ended December 31,Financial Information (in thousands) (1) 2014 2013 Change % ChangeIncome from Real Property $291,720 $273,574 $18,146 6.6 %Property operating expenses: Payroll and benefits 22,585 22,918 (333) (1.5)%Legal, taxes, & insurance 4,630 4,390 240 5.5 %Utilities 16,593 15,620 973 6.2 %Supplies and repair 11,396 10,222 1,174 11.5 %Other 8,354 7,610 744 9.8 %Real estate taxes 21,418 20,876 542 2.6 %Property operating expenses 84,976 81,636 3,340 4.1 %Real Property NOI $206,744 $191,938 $14,806 7.7 %(1) Excludes 10 properties that were disposed during 2014 (refer to Note 2 to our consolidated financial statements). As of December 31,Other Information (1) 2014 2013 ChangeNumber of properties 163 163 —Developed sites 61,734 61,141 593Occupied sites (2) 52,831 51,119 1,712Occupancy % (2) (3) 93.2% 91.5% 1.7%Weighted average monthly site rent - MH $461 $446 $15Weighted average monthly site rent - RV (4) $413 $405 $8Weighted average monthly site rent - Total $456 $442 $14Sites available for development 5,823 6,339 (516)(1) Excludes 10 properties that were disposed during 2014 (refer to Note 2 to our consolidated financial statements).(2) Occupied sites and occupancy % include MH and annual RV sites, and exclude transient RV sites, which are included in total developed sites.(3) Occupancy % excludes recently completed but vacant expansion sites.(4) Weighted average rent pertains to annual RV sites and excludes transient RV sites.The 7.7% growth in NOI is primarily due to increased revenues of $18.1 million partially offset by a $3.3 million increase in expenses.Income from real property revenue consists of MH and RV site rent, and miscellaneous other property revenues. The 6.6% growth in income from realproperty was due to a combination of factors. Revenue from our MH and RV portfolio increased $17.1 million due to weighted average rental rate increasesof 3.2% and the increased number of occupied home sites. This growth in revenue was partially offset by rent concessions offered to new residents and currentresidents converting from home renters to home owners. Additionally, other revenues increased $1.1 million primarily due to increases in late fees andinsufficient fund charges, month to month fees, application fees, trash income and cable television royalties.Property operating expenses increased approximately $3.3 million, or 4.1%, compared to 2013. Of that increase, supplies and repair increased $1.2 million, ofwhich approximately $0.5 million was primarily related to weather related maintenance and repair43SUN COMMUNITIES, INC.costs resulting from extreme temperatures experienced in certain areas of the country during the first part of 2014, $0.4 million was related to lawn servicesand tree trimming and removal and $0.2 million was related to general community maintenance and vehicle maintenance. Utilities increased $1.0 millionprimarily as a result of increased gas, electric and trash removal costs. Real estate taxes increased by $0.5 million, and other expenses increased by $0.7million primarily due to increases in bad debt expense and miscellaneous expenses such as software maintenance expense and bank service and credit cardprocessing charges.HOME SALES AND RENTALSWe acquire pre-owned and repossessed manufactured homes generally located within our communities from lenders and dealers at substantial discounts. Welease or sell these value priced homes to current and prospective residents. We also purchase new homes to lease and sell to current and prospectiveresidents. The following table reflects certain financial and statistical information for our Home Sales Program for the years ended December 31, 2014 and 2013 (inthousands, except for statistical information): Year Ended December 31,Financial Information 2014 2013 Change % ChangeNew home sales $9,464 $6,645 $2,819 42.4 %Pre-owned home sales 44,490 48,207 (3,717) (7.7)%Revenue from homes sales 53,954 54,852 (898) (1.6)%New home cost of sales 7,977 5,557 2,420 43.5 %Pre-owned home cost of sales 32,579 34,740 (2,161) (6.2)%Cost of home sales 40,556 40,297 259 0.6 %NOI / Gross profit $13,398 $14,555 $(1,157) (7.9)% Gross profit – new homes $1,487 $1,088 $399 36.7 %Gross margin % – new homes 15.7% 16.4% (0.7)% Gross profit – pre-owned homes $11,911 $13,467 $(1,569) (11.7)%Gross margin % – pre-owned homes 26.8% 27.9% (1.1)% Statistical Information Home sales volume: New home sales 113 85 28 32.9 %Pre-owned home sales 1,853 1,844 9 0.5 %Total homes sold 1,966 1,929 37 1.9 %Home Sales NOI/Gross profit increased $0.4 million on new home sales and decreased $1.6 million on pre-owned home sales. The increased profit on newhome sales is primarily due to an increase in volume of home sales. The decreased profit on pre-owned home sales is primarily a result of decreased per unitselling prices in 2014.44SUN COMMUNITIES, INC.The following table reflects certain financial and other information for our Rental Program for the years ended December 31, 2014 and 2013 (in thousands,except for statistical information): Year Ended December 31,Financial Information 2014 2013 Change % ChangeRental home revenue $39,213 $32,500 $6,713 20.7 %Site rent from Rental Program (1) 54,289 46,416 7,873 17.0 %Rental Program revenue 93,502 78,916 14,586 18.5 %Expenses Commissions 2,607 2,507 100 4.0 %Repairs and refurbishment 11,068 9,411 1,657 17.6 %Taxes and insurance 5,286 4,446 840 18.9 %Marketing and other 4,309 4,071 238 5.8 %Rental Program operating and maintenance 23,270 20,435 2,893 14.2 %Rental Program NOI $70,232 $58,481 $11,751 20.0 % Other Information Number of occupied rentals, end of period 10,973 9,726 1,247 12.8 %Investment in occupied rental homes $429,605 $355,789 $73,816 20.7 %Number of sold rental homes 799 924 (125) (13.5)%Weighted average monthly rental rate $822 $796 $26 3.3 %(1) The renter’s monthly payment includes the site rent and an amount attributable to the leasing of the home. The site rent is reflected in the Real Property Operations segment. Forpurposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the RentalProgram, and assess the overall growth and performance of Rental Program and financial impact to our operations.The 20.0% growth in NOI is primarily as a result of the increased number of residents participating in the Rental Program and from increased monthly rentalrates as indicated in the table above. We renew approximately 60% of our rental home leases primarily at current market rates or above existing rates.The increase in operating and maintenance expense of $2.9 million was primarily a result of increased repair and refurbishment expenses of $1.7 million, ofwhich $0.9 million was due to increased refurbishment costs related to occupant turnover and $0.8 million was due to increased repair costs on occupiedhome rentals. In addition, insurance and personal property and use taxes increased $0.8 million due to the additional number of homes in the Rental Programand bad debt expense increased $0.6 million, partially offset by a decrease in advertising expense of $0.4 million.45SUN COMMUNITIES, INC.OTHER INCOME STATEMENT ITEMSThe following table summarizes other income and expenses for the years ended December 31, 2014 and 2013 (amounts in thousands): Year Ended December 31, 2014 2013 Change % ChangeAncillary revenues, net $5,217 $1,151 $4,066 353.3 %Interest income $14,462 $13,073 $1,389 10.6 %Brokerage commissions and other revenues $1,036 $549 $487 88.7 %Real property general and administrative $31,769 $25,941 $5,828 22.5 %Home sales and rentals general and administrative $10,853 $9,913 $940 9.5 %Transaction costs $18,259 $3,928 $14,331 364.8 %Depreciation and amortization $133,726 $110,078 $23,648 21.5 %Asset impairment charge $837 $— $837 N/AInterest expense $76,981 $76,577 $404 0.5 %Gain on disposition of properties, net $17,654 $— $17,654 N/AGain on settlement $4,452 $— $4,452 N/ADistributions from affiliates $1,200 $2,250 $(1,050) (46.7)%Ancillary revenues, net increased $4.1 million primarily related to increased vacation rental income of $3.2 million and increased merchandise income. Theincreased merchandise income was primarily a result of our acquisition of six RV communities during 2014 and a full year of activity for the 14 RVcommunities acquired in 2013.Interest income increased $1.4 million primarily due to an increase in interest income from collateralized receivables of $1.2 million.Real property general and administrative expenses increased $5.8 million primarily due to increased salaries, wages and bonus expense of $2.3 million as aresult of our acquisitions and increased headcount year over year, increased deferred compensation of $1.7 million due to awards of restricted stock to ourexecutives and key employees, increased legal expense of $0.7 million and increased other expenses of $1.2 million primarily related to increased consultingfees, director fees, corporate office rent and software support and maintenance fees.Transaction costs increased primarily due to due diligence and other transaction costs related to the Green Courte acquisition (see Note 2).Depreciation and amortization expenses increased as a result of additional depreciation and amortization of $16.2 million primarily related to our newlyacquired properties (See Note 2 to our financial statements), $5.7 million related to depreciation on investment property for use in our rental program, $2.3million related to depreciation on investment property for our vacation rental property, and $1.7 million related to the amortization of in place leases andpromotions, partially offset by $2.6 million related to the write off of the remaining net book value for assets replaced during the year.Asset impairment charge of $0.8 million is a result of an impairment loss recorded on a long-lived asset for our MH and RV community in La Feria, Texasduring 2014. We did not recognize any impairment losses in 2013.Gain on disposition of properties, net of $17.7 million is a result of the sale of 10 MH properties during the year ended December 31, 2014 (see Note 2). Wedid not dispose of any properties in 2013.Gain on settlement of $4.5 million is the result of a settlement reached with the selling entities of 10 RV communities that we acquired in February 2013.The settlement was related to various warranties, representations and indemnities included in the agreements under which we acquired the RV communities,including a covenant made by the sellers related to the 2012 revenue of the acquired properties. No such gain was recorded in 2013.46SUN COMMUNITIES, INC.Distributions from affiliate decreased $1.1 million. We suspended equity accounting in 2010 on our affiliate, Origen, as our investment balance is zero. Theincome recorded in 2014 is distribution income. The amount of the distribution is determined by Origen on a quarterly basis. See Note 7 to our financialstatements.47SUN COMMUNITIES, INC.COMPARISON OF THE YEARS ENDED DECEMBER 31, 2013 AND 2012REAL PROPERTY OPERATIONS – TOTAL PORTFOLIOThe following tables reflect certain financial and other information for our Total Portfolio for the year ended December 31, 2013 and 2012: Year Ended December 31,Financial Information (in thousands) 2013 2012 Change % ChangeIncome from Real Property $313,097 $255,761 $57,336 22.4%Property operating expenses: Payroll and benefits 26,750 19,410 7,340 37.8%Legal, taxes, & insurance 4,769 3,216 1,553 48.3%Utilities 36,071 29,445 6,626 22.5%Supplies and repair 11,213 10,085 1,128 11.2%Other 8,834 6,683 2,151 32.2%Real estate taxes 22,284 19,207 3,077 16.0%Property operating expenses 109,921 88,046 21,875 24.8%Real Property NOI $203,176 $167,715 $35,461 21.1% As of December 31,Other Information 2013 2012 ChangeNumber of properties 188 173 15Developed sites 69,789 63,697 6,092Occupied sites (1) (2) 55,459 50,412 5,047Occupancy % (1) 89.7% 87.3% 2.4%Weighted average monthly site rent - MH (3) $445 $433 $12Weighted average monthly site rent - RV (3) $376 $392 $(16)Weighted average monthly site rent - Total $436 $430 $6Sites available for development 6,339 6,969 (630)(1) Occupied sites and occupancy % include MH and annual RV sites and excludes transient RV sites.(2) Occupied sites include 2,480 sites acquired in 2013 and 4,989 sites acquired during 2012. (3) Weighted average rent pertains to annual RV sites and excludes transient RV sites.The 21.1% growth in NOI was primarily due to $25.9 million from newly acquired properties and $9.6 million from Same Site properties as detailed below.48SUN COMMUNITIES, INC.REAL PROPERTY OPERATIONS – SAME SITEThe Same Site information in this comparison of the years ended December 31, 2013 and 2012 includes all properties acquired on or prior to December 31,2011 and which were owned and operated by the Company during the years ended December 31, 2013 and 2012. Year Ended December 31,Financial Information (in thousands) 2013 2012 Change % ChangeIncome from Real Property $245,703 $233,858 $11,845 5.1 %Property operating expenses: Payroll and benefits 19,349 18,522 827 4.5 %Legal, taxes, & insurance 4,101 3,125 976 31.2 %Utilities 13,624 13,279 345 2.6 %Supplies and repair 9,279 9,687 (408) (4.2)%Other 6,706 6,421 285 4.4 %Real estate taxes 18,970 18,783 187 1.0 %Property operating expenses 72,029 69,817 2,212 3.2 %Real Property NOI $173,674 $164,041 $9,633 5.9 % As of December 31,Other Information 2013 2012 ChangeNumber of properties 159 159 —Developed sites 55,590 55,006 584Occupied sites (1) 46,908 45,224 1,684Occupancy % (1) (2) 88.9% 87.1% 1.8%Weighted average monthly rent per site - MH (3) $445 $433 $12Weighted average monthly rent per site - RV (3) $405 $392 $13Weighted average month rent per site - Total $442 $430 $12Sites available for development 5,631 6,104 (473)(1) Occupied sites and occupancy % include MH and annual RV sites, and excludes transient RV sites.(2) Occupancy % excludes recently completed but vacant expansion sites.(3) Weighted average rent pertains to annual RV sites and excludes transient RV sites.The 5.9% growth in NOI is primarily due to increased revenues of $11.8 million partially offset by a $2.2 million increase in expenses.Income from real property revenue consists of MH and RV site rent, and miscellaneous other property revenues. The 5.1% growth in income from realproperty was due to a combination of factors. Revenue from our MH and RV portfolio increased $10.7 million due to weighted average rental rate increasesof 3.1% and due to the increased number of occupied home sites. This growth in revenue was partially offset by rent concessions offered to new residents andcurrent residents converting from home renters to home owners. Additionally, other revenues increased $1.1 million primarily due to increases in late feesand insufficient fund charges, cable television royalties, property tax revenues and utility income.Property operating expenses increased approximately $2.2 million, or 3.2%, compared to 2012. Of that increase, payroll and benefits increased by $0.8million primarily as a result of increased health insurance, workers compensation costs and salary increases. Legal, taxes and insurance increased $1.0 millionprimarily due to $0.6 million of increased property and casualty insurance and $0.4 million of increased legal fees. Utility expense increased $0.3 millionprimarily as a result of the increased gas and electric costs. These increases were partially offset by a decrease in supplies and repairs of $0.4 million, whichwas primarily due to decreased lawn services and tree trimming/removal expense, decreased maintenance and repair expenses for water, irrigation and electricsystems and decreased maintenance expenses for our clubhouses, garages, sheds and carports.49SUN COMMUNITIES, INC.HOME SALES AND RENTALSWe acquire pre-owned and repossessed manufactured homes generally located within our communities from lenders and dealers at substantial discounts. Welease or sell these value priced homes to current and prospective residents. We also purchase new homes to lease and sell to current and prospectiveresidents. The following table reflects certain financial and statistical information for our Home Sales Program for the years ended December 31, 2013 and 2012 (inthousands, except for statistical information): Year Ended December 31,Financial Information 2013 2012 Change % ChangeNew home sales $6,645 $5,380 $1,265 23.5%Pre-owned home sales 48,207 39,767 8,440 21.2%Revenue from homes sales 54,852 45,147 9,705 21.5%New home cost of sales 5,557 4,553 1,004 22.1%Pre-owned home cost of sales 34,740 30,365 4,375 14.4%Cost of home sales 40,297 34,918 5,379 15.4%NOI / Gross profit $14,555 $10,229 $4,326 42.3% Gross profit – new homes $1,088 $827 $261 31.6%Gross margin % – new homes 16.4% 15.4% 1.0% Gross profit – pre-owned homes $13,467 $9,402 $4,065 43.2%Gross margin % – pre-owned homes 27.9% 23.6% 4.3% Statistical Information Home sales volume: New home sales 85 76 9 11.8%Pre-owned home sales 1,844 1,666 178 10.7%Total homes sold 1,929 1,742 187 10.7%Home Sales NOI/Gross profit increased $0.3 million on new home sales and $4.1 million on preowned home sales. The increased profits are due to both anincrease in volume of home sales and an increase in average selling price.50SUN COMMUNITIES, INC.The following table reflects certain financial and other information for our Rental Program for the years ended December 31, 2013 and 2012 (in thousands,except for statistical information): Year Ended December 31,Financial Information 2013 2012 Change % ChangeRental home revenue $32,500 $26,589 $5,911 22.2 %Site rent from Rental Program (1) 46,416 38,636 7,780 20.1 %Rental Program revenue 78,916 65,225 13,691 21.0 %Expenses Commissions 2,507 2,207 300 13.6 %Repairs and refurbishment 9,411 9,002 409 4.5 %Taxes and insurance 4,446 3,467 979 28.2 %Marketing and other 4,071 3,465 606 17.5 %Rental Program operating and maintenance 20,435 18,141 2,294 12.6 %Rental Program NOI $58,481 $47,084 $11,397 24.2 % Other Information Number of occupied rentals, end of period 9,726 8,110 1,616 19.9 %Investment in occupied rental homes $355,789 $287,261 $68,528 23.9 %Number of sold rental homes 924 953 (29) (3.0)%Weighted average monthly rental rate $796 $782 $14 1.8 %(1) The renter’s monthly payment includes the site rent and an amount attributable to the leasing of the home. The site rent is reflected in the Real Property Operations segment. Forpurposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the RentalProgram, and assess the overall growth and performance of Rental Program and financial impact to our operations.The 24.2% growth in NOI is primarily as a result of the increased number of residents participating in the Rental Program and from increased monthly rentalrates as indicated in the table above.The increase in operating and maintenance expense of $2.3 million was a result of several factors. Personal property and use taxes increased $0.6 million andproperty and casualty insurance increased $0.4 million, both due to the additional homes in the Rental Program, and bad debt expense increased $0.5million. Commissions increased $0.3 million, primarily due to the increased number of new leases.51SUN COMMUNITIES, INC.OTHER INCOME STATEMENT ITEMSThe following table summarizes other income and expenses for the years ended December 31, 2013 and 2012 (amounts in thousands): Year Ended December 31, 2013 2012 Change % ChangeAncillary revenues, net $1,151 $(180) $1,331 (739.4)%Interest income $13,073 $11,018 $2,055 18.7 %Brokerage commissions and other revenues $549 $617 $(68) (11.0)%Real property general and administrative $25,941 $20,037 $5,904 29.5 %Home sales and rentals general and administrative $9,913 $8,316 $1,597 19.2 %Transaction costs $3,928 $4,296 $(368) (8.6)%Depreciation and amortization $110,078 $89,674 $20,404 22.8 %Interest expense $76,577 $71,180 $5,397 7.6 %Distributions from affiliates $2,250 $3,900 $(1,650) (42.3)%Ancillary revenues, net increased $1.3 million primarily related to increases in our vacation rental income and golf course, restaurant and pro shop income,as a result of our acquisition of 14 RV communities during 2013.Interest income increased primarily due to increases in interest income of $1.3 million from collateralized receivables and $0.7 million from installment notereceivables.Real property general and administrative costs increased primarily due to increased salaries, wages and bonus expense of $2.1 million as a result of ouracquisitions and increased headcount year over year, increased health insurance and workers compensation costs of $0.5 million, increased deferredcompensation of $1.7 million due to awards of restricted stock to our executives and key employees, increased other expenses of $0.9 million related totraining and development, travel, consulting fees, software support and maintenance expenses, office expenses and rent, increased human resources expenseof $0.3 million primarily related to pre-employment costs and an update to our payroll processing software and increased legal expense of $0.3 million.Home sales and rentals general and administrative costs increased primarily due to increased salary expense of $0.5 million, increased health insurancecosts of $0.2 million, increased commissions on home sales of $0.3 million, increased advertising expense of $0.3 million and increased utility expense of$0.2 million.Depreciation and amortization costs increased as a result of additional depreciation and amortization of $9.5 million primarily related to our newlyacquired properties (See Note 2 to our financial statements), $6.9 million related to depreciation on investment property for use in our rental program, $2.3million related to the amortization of in place leases and promotions, and $1.7 million related to the write off of the remaining net book value for assetsreplaced during the year.Interest expense on debt, including interest on mandatorily redeemable debt, increased primarily due to an increase of $1.8 million in our mortgage interestdue to debt associated with the acquired properties (See Note 2 to our financial statements), an increase of $1.5 million in amortized financing costs, anincrease of $1.3 million in interest expense on our secured borrowing arrangements, and an increase of $0.9 million in interest on our lines of credit, partiallyoffset by a decrease in preferred OP unit interest expense.Distributions from affiliate decreased approximately $1.7 million. We suspended equity accounting in 2010 on our affiliate, Origen, as our investmentbalance is zero. The income recorded in 2013 and 2012 is distribution income. The amount of the distribution is determined by Origen on a quarterly basis.See Note 7 to our financial statements.52SUN COMMUNITIES, INC.FUNDS FROM OPERATIONSWe provide information regarding FFO as a supplemental measure of operating performance. FFO is defined by NAREIT as net income (loss) (computed inaccordance GAAP), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and afteradjustments for unconsolidated partnerships and joint ventures. Due to the variety among owners of identical assets in similar condition (based on historicalcost accounting and useful life estimates), we believe excluding gains and losses related to sales of previously depreciated operating real estate assets,excluding impairment and excluding real estate asset depreciation and amortization provides a better indicator of our operating performance. FFO is a usefulsupplemental measure of our operating performance because it reflects the impact to operations from trends in occupancy rates, rental rates, and operatingcosts, providing perspective not readily apparent from net income (loss). Management believes that the use of FFO has been beneficial in improving theunderstanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Management,the investment community, and banking institutions routinely use FFO, together with other measures, to measure operating performance in our industry.Further, management uses FFO for planning and forecasting future periods.Because FFO excludes significant economic components of net income (loss) including depreciation and amortization, FFO should be used as an adjunct tonet income (loss) and not as an alternative to net income (loss). The principal limitation of FFO is that it does not represent cash flow from operations asdefined by GAAP and is a supplemental measure of performance that does not replace net income (loss) as a measure of performance or net cash provided byoperating activities as a measure of liquidity. In addition, FFO is not intended as a measure of a REIT’s ability to meet debt principal repayments and othercash requirements, nor as a measure of working capital. FFO only provides investors with an additional performance measure. FFO is compiled in accordancewith its interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term inaccordance with the current NAREIT definition or that interpret the current NAREIT definition differently.53SUN COMMUNITIES, INC.The following table reconciles net income to FFO data for diluted purposes for the years ended December 31, 2014, 2013 and 2012 (in thousands): Year Ended December 31, 2014 2013 2012Net income attributable to Sun Communities, Inc. common stockholders $22,376 $10,610 $4,958Adjustments: Preferred return to Series A-1 preferred OP units — 2,598 2,329Preferred return to Series A-3 preferred OP units — 166 Amounts attributable to noncontrolling interests 1,086 718 (318)Preferred distribution to Series A-4 Preferred Stock 76 — —Preferred return to Series A-3 preferred OP units 181 — —Preferred return to Series A-4 preferred OP units 100 — —Depreciation and amortization 134,252 111,083 90,577Asset impairment charge 837 — —Gain on disposition of properties, net (17,654) — Gain on disposition of assets (6,705) (7,592) (5,137)Funds from operations ("FFO") $134,549 $117,583 $92,409Adjustments: Transaction costs 18,259 3,928 4,296Gain on settlement (4,452) — —FFO excluding certain items $148,356 $121,511 $96,705 Weighted average common shares outstanding: 41,337 34,228 26,970Add: Common stock issuable upon conversion of stock options 16 15 17Restricted stock 237 167 138Series A-4 Preferred Stock 215 — —Common OP units 2,114 2,069 2,071Common stock issuable upon conversion of Series A-4 preferred OP units 28 — —Common stock issuable upon conversion of Series A-3 preferred OP units 75 67 —Common stock issuable upon conversion of Series A-1 preferred OP units — 1,111 1,111Weighted average common shares outstanding - fully diluted 44,022 37,657 30,307 FFO per share - fully diluted $3.06 $3.11 $3.05FFO per share excluding certain items - fully diluted $3.37 $3.22 $3.1954SUN COMMUNITIES, INC.LIQUIDITY AND CAPITAL RESOURCESOur principal liquidity demands have historically been, and are expected to continue to be, distributions to our stockholders and the unitholders of theOperating Partnership, capital improvements to properties, the purchase of new and pre-owned homes, property acquisitions, development and expansion ofproperties, and debt repayment.Subject to market conditions, we intend to continue to look for opportunities to expand our development pipeline and acquire existing communities. Wealso intend to continue to strengthen our capital and liquidity positions by continuing to focus on our core fundamentals, which are generating positive cashflows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our liquidity requirementsthrough available cash balances, cash flows generated from operations, draws on our secured credit facility, secured debt financing transactions, and the useof debt and equity offerings under our automatic shelf registration statement.We completed eight acquisitions in 2014 in which we acquired 39 properties in total, 33 MH communities and six RV communities. See our ExecutiveSummary above and Note 2 to our financial statements for details on the acquisitions, and Note 9 to our financial statements for related debt transactions. Wewill continue to evaluate acquisition opportunities that meet our criteria for acquisition. Should additional investment opportunities arise in 2015, we mayfinance the acquisitions through secured financing, draws on our credit facilities, the assumption of existing debt on the properties and/or the issuance ofcertain equity securities.During the year ended December 31, 2014, we invested $52.9 million in the acquisition of homes intended for the Rental Program net of proceeds from thirdparty financing from homes sales. Expenditures for 2015 will be dependent upon the condition of the markets for repossessions and new home sales, as wellas rental homes. We finance a portion of our new home purchases with a $12.0 million floor plan facility. Our ability to purchase homes for sale or rent maybe limited by cash received from third party financing of our home sales, available floor plan financing, operating cash flows and working capital availableon our secured lines of credit.Our cash flow activities are summarized as follows (in thousands): Year Ended December 31, 2014 2013 2012Net Cash Provided by Operating Activities $133,320 $114,683 $87,251Net Cash Used in Investing Activities $(550,705) $(352,412) $(375,219)Net Cash Provided by Financing Activities $496,091 $212,974 $311,619Operating ActivitiesCash and cash equivalents increased by $78.7 million from $4.8 million as of December 31, 2013, to $83.5 million as of December 31, 2014. Net cashprovided by operating activities increased by $18.6 million from $114.7 million for the year ended December 31, 2013 to $133.3 million for the year endedDecember 31, 2014.Our net cash flows provided by operating activities from continuing operations may be adversely impacted by, among other things: (a) the market andeconomic conditions in our current markets generally, and specifically in metropolitan areas of our current markets; (b) lower occupancy and rental rates ofour properties; (c) increased operating costs, such as wage and benefit costs, insurance premiums, real estate taxes and utilities, that cannot be passed on toour tenants; (d) decreased sales of manufactured homes and (e) current volatility in economic conditions and the financial markets. See Part I, Item 1A, “RiskFactors” in this 10-K.Investing ActivitiesNet cash used in investing activities was $550.7 million for the year ended December 31, 2014, compared to $352.4 million for the year ended December 31,2013. The increase is primarily due to increased cash invested into acquisitions during 2014, of which approximately $283.2 million is related to the firstclosing of our acquisition of the Green Courte properties during the fourth quarter. Additionally, we made payments for deposits on pending acquisitionsscheduled for 2015 (see Note 21 to our financial statements). These items are partially offset by proceeds related to the disposition of 10 of our MH propertiesduring 2014. We did not dispose of any properties during 2013. Net cash used in investing activities during 2013 includes an investment55SUN COMMUNITIES, INC.in a note receivable, which was extinguished in a net cash settlement during the acquisition of the properties the note was attributable to. No such investmentwas made during 2014.Financing ActivitiesNet cash provided by financing activities was $496.1 million for the year ended December 31, 2014, compared to $213.0 million for the year endedDecember 31, 2013. The increase is primarily related to increased net proceeds received from the issuance of additional shares of common stock. Wecompleted two underwritten registered public offerings during 2014 for net proceeds of $562.9 million and completed one underwritten registered publicoffering during 2013 for net proceeds of $249.5 million. Additionally, due to the recent refinancing activity of our mortgage debt (see Note 9 to our financialstatements), we increased proceeds from and decreased payments on other debt as compared to 2013. These items are partially offset by increased netpayments on our lines of credit and increased distributions to our stockholders and OP unit holders, as a result of our increase in distribution per share andnumber of shares outstanding in 2014.We continually evaluate our debt maturities, and, based on management's current assessment, believe we have viable financing and refinancing alternativesthat will not materially adversely impact our expected financial results. We continue to pursue borrowing opportunities with a variety of different lendinginstitutions and have noticed that, although pricing and loan-to-value ratios remain dependent on specific deal terms, spreads for non-recourse mortgagefinancing are compressing and loan-to-value ratios are gradually increasing from levels a year ago. The unsecured debt markets are functioning well andcredit spreads are at manageable levels. We continue to assess our debt maturities and financing needs in 2014 and beyond to try to best position theCompany if current credit market conditions change.Financial FlexibilityWe have a senior secured revolving credit facility (the "Facility") with a maximum borrowing capacity of $350.0 million, subject to certain borrowing basecalculations, and a built in accordion allowing for up to $250.0 million in additional borrowings. As of December 31, 2014, we did not have a balanceoutstanding under the Facility. As of December 31, 2013, we had $178.1 million outstanding under the Facility. Borrowings under the Facility bear interestat a floating rate based on the Eurodollar rate plus a margin that is determined based on our leverage ratio calculated in accordance with the Facility, whichcan range from 1.65% to 2.90%. During 2014, the highest balance on the Facility was $247.3 million. The borrowings under the Facility mature May 15,2017, which date can be extended for one additional year at our option, subject to the satisfaction of certain conditions as defined in the credit agreement.Although the Facility is a committed facility, the financial failure of one or more of the participating financial institutions may reduce the amount of creditavailable to us.Our Facility provides us with the ability to issue letters of credit. Our issuance of letters of credit does not increase our borrowings outstanding under our lineof credit, but it does reduce the borrowing amount available. At December 31, 2014, we had outstanding letters of credit to back standby letters of credittotaling approximately $3.2 million, leaving approximately $346.8 million available under the Facility.Pursuant to the terms of the Facility, we are subject to various financial and other covenants. We are currently in compliance with these covenants. The mostrestrictive financial covenants for the Facility are as follows:Covenant Must Be As of 12/31/14Maximum Leverage Ratio < 68.5% 44.3%Minimum Fixed Charge Coverage Ratio > 1.40 2.51Minimum Tangible Net Worth > $1,270,104 $1,714,403Maximum Dividend Payout Ratio < 95.0% 72.5%Market and Economic ConditionsThe U.S. rate environment, changes in the Euro area, falling oil prices and turmoil in emerging markets are factors that are influencing financial markets as wemove into 2015. Questions on whether the U.S. economy will sustain the growth indicators it has reported and whether or when the U.S. Federal Reserve willhike its benchmark rate for the first time in 10 years, as well as how much of the Eurozone will remain or fall into recession and what the effect of additionalglobal turmoil will have on the world economy keep economic outlooks tempered. While the U.S. economy looks poised for self-sustaining growth, theglobal economy is expected to slow. Continued economic uncertainty, both nationally and internationally, causes increased volatility in investor56SUN COMMUNITIES, INC.confidence thereby creating similar volatility in the availability of both debt and equity capital. If such volatility is experienced in future periods, ourindustry, business and results of operations may be adversely impacted.We anticipate meeting our long-term liquidity requirements, such as scheduled debt maturities, large property acquisitions, and Operating Partnership unitredemptions through the issuance of certain debt or equity securities and/or the collateralization of our properties. At December 31, 2014, we had 70unencumbered properties with an estimated market value of $783.0 million, 56 of these properties support the borrowing base for our $350.0 million securedline of credit. From time to time, we may also issue shares of our capital stock, issue equity units in our Operating Partnership, obtain debt financing, or sellselected assets. Our ability to finance our long-term liquidity requirements in such a manner will be affected by numerous economic factors affecting themanufactured housing community industry at the time, including the availability and cost of mortgage debt, our financial condition, the operating history ofthe properties, the state of the debt and equity markets, and the general national, regional, and local economic conditions. When it becomes necessary for usto approach the credit markets, the volatility in those markets could make borrowing more difficult to secure, more expensive, or effectivelyunavailable. See “Risk Factors” in Part I, Item 1A. If we are unable to obtain additional debt or equity financing on acceptable terms, our business, results ofoperations and financial condition would be adversely impacted.Contractual Cash ObligationsOur primary long-term liquidity needs are principal payments on outstanding indebtedness. As of December 31, 2014, our outstanding contractualobligations, including interest expense, were as follows: Payments Due By Period (In thousands)Contractual Cash Obligations (1) Total Due <1 year 1-3 years 3-5 years After 5 yearsCollateralized term loans - FNMA $482,639 $8,389 $47,832 $70,856 $355,562Collateralized term loans - FMCC 152,462 2,376 5,461 5,944 138,681Collateralized term loans - Life Company 203,615 25,542 17,679 8,237 152,157Collateralized term loans - CMBS 799,823 12,595 336,310 16,718 434,200Preferred OP Units 45,903 3,670 7,570 — 34,663Lines of credit 5,794 5,794 — — —Secured borrowing 123,650 5,167 11,974 14,164 92,345 Total principal payments 1,813,886 63,533 426,826 115,919 1,207,608 Interest expense (2) 604,694 91,685 151,133 123,101 238,775Operating leases 14,325 1,040 2,175 2,301 8,809 Total contractual obligations $2,432,905 $156,258 $580,134 $241,321 $1,455,192(1) Our contractual cash obligations exclude debt premiums/discounts.(2) Our contractual cash obligation related to interest expense is calculated based on the current debt levels, rates and maturities as of December 31, 2014 (excluding securedborrowings), and actual payments required in future periods may be different than the amounts included above.As of December 31, 2014, our net debt to enterprise value approximated 34.8% (assuming conversion of all common OP units, A-1 preferred OP units, A-3preferred OP units, and A-4 preferred OP units to shares of common stock). Our debt has a weighted average maturity of approximately 7.5 years and aweighted average interest rate of 5.2%.Capital expenditures for the year ended December 31, 2014 and 2013 included recurring capital expenditures of $10.2 million and $14.0 million,respectively. We are committed to the continued upkeep of our properties and therefore do not expect a significant decline in our recurring capitalexpenditures during 2015.57SUN COMMUNITIES, INC.CRITICAL ACCOUNTING POLICIES AND ESTIMATESManagement’s Discussion and Analysis of Financial Condition and Results of Operations discuss our consolidated financial statements, which have beenprepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reportedamounts of revenues and expenses during the reporting periods. In preparing these financial statements, management has made its best estimate and judgmentof certain amounts included in the financial statements. Nevertheless, actual results may differ from these estimates under different assumptions or conditions.Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation ofour consolidated financial statements: Investment PropertyInvestment property is recorded at cost, less accumulated depreciation. We review the carrying value of long-lived assets to be held and used for impairmentquarterly or whenever events or changes in circumstances indicate a possible impairment. Our primary indicator for potential impairment is based on NOItrends period over period. Circumstances that may prompt a test of recoverability may also include a significant decrease in the anticipated market price, anadverse change to the extent or manner in which an asset may be used or in its physical condition or other such events that may significantly change thevalue of the long-lived asset. An impairment loss is recognized when a long-lived asset’s carrying value is not recoverable and exceeds estimated fair value.We estimate the fair value of our long-lived assets based on future cash flows and any potential disposition proceeds for a given asset. Forecasting cash flowsrequires management to make estimates and assumptions about such variables as the estimated holding period, rental rates, occupancy, development andoperating expenses during the holding period, as well as disposition proceeds. Management uses its best judgment when developing these estimates andassumptions, but the development of the projected future cash flows is based on subjective variables. Future events could occur which would cause us toconclude that impairment indicators exist, and significant adverse changes in national, regional, or local market conditions or trends may cause us to changethe estimates and assumptions used in our impairment analysis. The results of an impairment analysis could be material to our financial statements.Capitalized CostsWe capitalize certain costs incurred in connection with the development, redevelopment, capital enhancement and leasing of our properties. Management isrequired to use professional judgment in determining whether such costs meet the criteria for immediate expense or capitalization. The amounts aredependent on the volume and timing of such activities and the costs associated with such activities. Maintenance, repairs and minor improvements toproperties are expensed when incurred. Renovations and improvements to properties are capitalized and depreciated over their estimated useful lives andconstruction costs related to the development of new community or expansion sites are capitalized until the property is substantially complete. Costsincurred to initially renovate pre-owned and repossessed homes that we acquire for our Rental Program are capitalized and costs incurred to refurbish thehomes at turnover and repair the homes while occupied are expensed. Certain expenditures to dealers and residents related to obtaining lessees in ourcommunities are capitalized and amortized over a seven year period based on the anticipated term of occupancy of a resident. Costs associated withimplementing our computer systems are capitalized and amortized over the estimated useful lives of the related software and hardware. Costs incurred toobtain new financing are capitalized and amortized over the terms of the related loan agreement using the straight-line method (which approximates theeffective interest method).Notes and Other ReceivablesWe make financing available to purchasers of manufactured homes generally located in our communities. The notes are collateralized by the underlyingmanufactured home sold. Notes receivable include both installment loans purchased by the Company as well as transferred loans that have not met therequirements for sale accounting which are presented herein as collateralized receivables (See Note 5 to our financial statements for additional information).For purposes of accounting policy, all notes receivable are considered one homogeneous segment, as the notes are typically underwritten using the samerequirements and terms. Notes receivable are reported at their outstanding unpaid principal balance adjusted for an allowance for loan loss. Interest income isaccrued based upon the unpaid principal balance of the loans.Past due status of our notes receivable is determined based upon the contractual terms of the note. When a note receivable becomes 60 days delinquent, westop accruing interest on the note receivable. The interest on nonaccrual loans is accounted for on the cash basis until qualifying for return to accrual. Loansare returned to accrual when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. Loans on anonaccrual status were immaterial at December 31, 2014 and 2013. The ability to collect our notes receivable is measured based on current and historicalinformation and events.58SUN COMMUNITIES, INC.We consider numerous factors including: length of delinquency, estimated costs to lease or sell, and repossession history. Our experience supports a highrecovery rate for notes receivable; however there is some degree of uncertainty about the recoverability of our investment in these notes receivable. We aregenerally able to recover our recorded investment in uncollectible notes receivable by repossessing the homes on the notes retained by us and repurchasingthe homes on the collateralized receivables, and subsequently selling or leasing these homes to potential residents in our communities. We have established aloan loss reserve based on our estimated unrecoverable costs associated with repossessed/repurchased homes. We estimate our unrecoverable costs to be therepurchase price of the home collateralizing the note receivable plus repair and remarketing costs in excess of the estimated selling price of the home beingrepossessed. A historical average of this excess cost is calculated based on prior repossessions/repurchases and is applied to our estimated annual futurerepossessions to create the allowance for both installment and collateralized notes receivable. See Note 5 to our financial statements for additionalinformation.We evaluate the collectability of a loan based on our ability to collect the scheduled payments of principal and interest when due according to thecontractual terms of the loan agreement. We generally see that if the obligor is delinquent on the loan they are also delinquent on site rent. If the scheduledpayment is delinquent more than five to seven days, dependent on state law, we begin the repossession and eviction process simultaneously. This processgenerally takes 30 to 45 days; due to the short time frame from delinquent loan to repossession we do not evaluate the note receivables for impairments. Noloans were considered impaired as of December 31, 2014 and 2013.We evaluate the credit quality of our notes receivable at the inception of the receivable. We consider the following factors in order to determine the creditquality of the applicant - rental payment history; home debt to income ratio; loan value to the collateralized asset; total debt to income ratio; length ofemployment; previous landlord references; and FICO scores.Other receivables are generally comprised of amounts due from residents for rent and related charges, home sale proceeds receivable from sales near year endand various other miscellaneous receivables. Accounts receivable from residents are typically due within 30 days and stated at amounts due from residentsnet of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. We evaluate therecoverability of our receivables whenever events occur or there are changes in circumstances such that management believes it is probable that it will beunable to collect all amounts due according to the contractual terms of the loan and lease agreements. Receivables related to community rents are reservedwhen we believe that collection is less than probable, which is generally after a resident balance reaches 60 to 90 days past due.Revenue RecognitionRental income attributable to site and home leases is recorded on a straight-line basis when earned from tenants. Leases entered into by tenants are generallyfor one year terms but may range from month-to-month to two years and are renewable by mutual agreement from us and the resident, or in some cases, asprovided by state statute. Revenue from the sale of manufactured homes is recognized upon transfer of title at the closing of the sales transaction. Interestincome on notes receivable is recorded on a level yield basis over the life of the notes. We report certain taxes collected from the resident and remitted totaxing authorities in revenue. These taxes include certain Florida property and fire taxes.Refer to Note 1 to our consolidated financial statements for additional information on certain critical accounting policies and estimate.Impact of New Accounting StandardsSee Note 18 to our financial statements, "Recent Accounting Pronouncements", within this Form 10-K.Off-Balance Sheet ArrangementsThe Company does not have any off-balance sheet arrangements with any unconsolidated entities that it believes have or are reasonably likely to have amaterial effect on its financial condition, results of operations, liquidity or capital resources.59SUN COMMUNITIES, INC.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKOur principal market risk exposure is interest rate risk. We mitigate this risk by maintaining prudent amounts of leverage, minimizing capital costs andinterest expense while continuously evaluating all available debt and equity resources and following established risk management policies and procedures,which include the periodic use of derivatives. Our primary strategy in entering into derivative contracts is to minimize the variability interest rate changescould have on our future cash flows. We generally employ derivative instruments that effectively convert a portion of our variable rate debt to fixed rate debt.We do not enter into derivative instruments for speculative purposes.We have two derivative contracts consisting of two interest rate cap agreements with a total notional amount of $162.4 million as of December 31, 2014. Thefirst interest rate cap agreement has a cap rate of 11.27%, a notional amount of $152.4 million, and a termination date of April 2015. The second interest ratecap agreement has a cap rate of 11.02%, a notional amount of $10.0 million and a termination date of October 2016.Our remaining variable rate debt totals $166.4 million and $344.0 million as of December 31, 2014 and 2013, respectively, which bear interest at prime orvarious LIBOR rates. If prime or LIBOR increased or decreased by 1.0% during the year ended December 31, 2014 and 2013, we believe our interest expensewould have increased or decreased by approximately $2.8 million and $2.4 million based on the $279.1 million and $235.9 million average balancesoutstanding under our variable rate debt facilities for the years ended December 31, 2014 and 2013, respectively.60SUN COMMUNITIES, INC.ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAFinancial statements and supplementary data are filed herewith under Item 15.ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.61SUN COMMUNITIES, INC.ITEM 9A. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresOur management is responsible for establishing and maintaining disclosure controls and procedures as defined in the rules promulgated under the ExchangeAct. Under the supervision and with the participation of our management, including our Chief Executive Officer, Gary A. Shiffman, and Chief FinancialOfficer, Karen J. Dearing, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2014.Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective asof December 31, 2014, to ensure that information we are required to disclose in filings with the SEC under the Exchange Act is recorded, processed,summarized and reported, within the time periods specified in the Commission’s rules and forms, and to ensure that information required to be disclosed byus in the reports that we file under the Exchange Act is accumulated and communicated to our management, including its principal executive officer andprincipal financial officer, as appropriate to allow timely decisions regarding required disclosure.Design and Evaluation of Internal Control Over Financial ReportingPursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we have included a report of management’s assessment of the design and effectiveness of ourinternal controls as part of this Form 10-K for the fiscal year ended December 31, 2014. Our independent registered public accounting firm also attested to,and reported on, the effectiveness of internal control over financial reporting. Management’s report and the independent registered public accounting firm’sattestation report are included in our 2014 financial statements under the captions entitled “Management’s Report on Internal Control Over FinancialReporting” and “Report of Independent Registered Public Accounting Firm”.Changes in Internal Control Over Financial ReportingThere have been no changes in our internal control over financial reporting during the quarterly period ended December 31, 2014 that have materiallyaffected, or are reasonably likely to materially affect, our internal control over financial reporting.62SUN COMMUNITIES, INC.ITEM 9B. OTHER INFORMATIONNone.63SUN COMMUNITIES, INC.PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEPursuant to instruction 3 to paragraph (b) of Item 401 of Regulation S−K, certain information regarding our executive officers is contained in Part I of thisForm 10−K. Unless provided in an amendment to this Annual Report on Form 10−K, the other information required by this Item is incorporated herein byreference to the applicable information in the proxy statement for our 2015 annual meeting, including the information set forth under the captions “Board ofDirectors and Corporate Governance - Incumbent Directors and Nominees,” “Management and Executive Compensation -Executive Officers,” “Section 16(a)Beneficial Ownership Reporting Compliance,” “Board of Directors and Corporate Governance - Board of Directors and Committees” and “Board of Directorsand Corporate Governance - Consideration of Director Nominees”ITEM 11. EXECUTIVE COMPENSATIONUnless provided in an amendment to this Annual Report on Form 10−K, the information required by this Item is incorporated by reference to the applicableinformation in the proxy statement for our 2015 annual meeting, including the information set forth under the captions “Management and ExecutiveCompensation,” “Board of Directors and Corporate Governance - Director Compensation Table,” “Compensation Committee Interlocks and InsiderParticipation” and “Compensation Committee Report.” The information in the section of an amendment to this Annual Report on Form 10−K or the proxystatement for our 2015 annual meeting captioned “Compensation Committee Report” is incorporated by reference herein but shall be deemed furnished, notfiled, and shall not be deemed to be incorporated by reference into any filing we make under the Securities Act of 1933 or the Securities Exchange Act of1934.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSUnless provided in an amendment to this Annual Report on Form 10−K, the information required by this Item is incorporated by reference to the applicableinformation in the proxy statement for our 2015 annual meeting, including the information set forth under the captions “Security Ownership of CertainBeneficial Owners and Management” and “Securities Authorized for Issuance under Equity Compensation Plans.”ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEUnless provided in an amendment to this Annual Report on Form 10−K, the information required by this Item is incorporated by reference to the proxystatement for our 2015 annual meeting, including the information set forth under the captions “Certain Relationships and Related Transactions and DirectorIndependence,” “Board of Directors and Corporate Governance - Board of Directors and Committees” and “Board of Directors and Corporate Governance -Board Leadership Structure and Independence of Non-Employee Directors.”ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESUnless provided in an amendment to this Annual Report on Form 10−K, the information required by this Item is incorporated by reference to the proxystatement for our 2015 annual meeting, including the information set forth under the caption “Ratification of Selection of Grant Thornton LLP.”64SUN COMMUNITIES, INC.PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESThe following documents are filed herewith as part of this Form 10-K:1. Financial Statements.A list of the financial statements required to be filed as a part of this Form 10‑K is shown in the “Index to the Consolidated Financial Statements andFinancial Statement Schedules” filed herewith.2. Financial SchedulesA list of the financial statement schedules required to be filed as a part of this Form 10‑K is shown in the “Index to the Consolidated FinancialStatements and Financial Statement Schedules” filed herewith.3. Exhibits.A list of the exhibits required by Item 601 of Regulation S‑K to be filed as a part of this Form 10-K is shown on the “Exhibit Index” filed herewith.65SUN COMMUNITIES, INC.SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. SUN COMMUNITIES, INC.(Registrant)March 2, 2015By/s/Gary A. Shiffman Gary A. ShiffmanChief Executive OfficerPursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf ofthe registrant and in the capacities and on the dates indicated. Name Capacity Date/s/Gary A. Shiffman Chief Executive Officer and Chairman of the Board of Directors(Principal Executive Officer) March 2, 2015 Gary A. Shiffman /s/Karen J. Dearing Executive Vice President, Chief Financial Officer, Treasurer,Secretary (Principal Financial Officer and Principal AccountingOfficer) March 2, 2015 Karen J. Dearing /s/Stephanie W. Bergeron Director March 2, 2015 Stephanie W. Bergeron /s/James R. Goldman Director March 2, 2015 James R. Goldman /s/Brian M. Hermelin Director March 2, 2015 Brian M. Hermelin /s/Ronald A. Klein Director March 2, 2015 Ronald A. Klein /s/Paul D. Lapides Director March 2, 2015 Paul D. Lapides /s/Clunet R. Lewis Director March 2, 2015 Clunet R. Lewis /s/Ronald L. Piasecki Director March 2, 2015 Ronald L. Piasecki /s/Randall K. Rowe Director March 2, 2015 Randall K. Rowe /s/Arthur A. Weiss Director March 2, 2015 Arthur A. Weiss 66SUN COMMUNITIES, INC.EXHIBIT INDEXExhibitNumberDescriptionMethod of Filing2.1Omnibus Agreement, dated July 30, 2014, by and among Green Courte Real Estate Partners, LLC, GCP REIT II, GCP REIT III, American Land Lease, Inc., Asset Investors Operating Partnership, L.P., SunCommunities, Inc., Sun Communities Operating Limited Partnership and Sun Home Services, Inc.*Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20142.2Contribution Agreement, dated July 30, 2014, by and between Green Courte Real Estate Partners, LLC and SunCommunities Operating Limited Partnership*Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20142.3Contribution Agreement, dated July 30, 2014, by and between Green Courte Real Estate Partners, LLC and SunCommunities Operating Limited Partnership*Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20142.4Contribution Agreement, dated July 30, 2014, by and between Green Courte Real Estate Partners, LLC and SunCommunities Operating Limited Partnership*Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20142.5Contribution Agreement, dated July 30, 2014, by and between Green Courte Real Estate Partners, LLC and SunCommunities Operating Limited Partnership*Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20142.6Membership Interest Purchase Agreement, dated July 30, 2014, between Asset Investors Operating Partnership, L.P.and Sun Communities Operating Limited Partnership*Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20142.7Membership Interest Purchase Agreement, dated July 30, 2014, between GCP REIT III and Sun CommunitiesOperating Limited Partnership*Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20142.8Merger Agreement, dated July 30, 2014, by and between Sun Communities, Inc., Sun Maryland, Inc. and GCP REITII*Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20142.9Merger Agreement, dated July 30, 2014, by and between Sun Communities, Inc., Sun Maryland, Inc. and GCP REITIII*Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20142.10Subscription Agreement, dated July 30, 2014, by and among Green Courte Real Estate Partners III, LLC, SunCommunities, Inc. and Sun Communities Operating Limited PartnershipIncorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20142.11Contribution Agreement (Deerwood I) dated December 4, 2014, by and among Deerwood I Sponsor, LLC,Deerwood I Holding, LLC, Deerwood I Park, LLC and Sun Communities Operating Limited Partnership*Incorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 10, 20142.12Contribution Agreement (Deerwood II) dated December 4, 2014, by and among Deerwood II Sponsor, LLC,Deerwood II Holding, LLC, Deerwood II Park, LLC and Sun Communities Operating Limited Partnership*Incorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 10, 20142.13Contribution Agreement (Hamptons) dated December 4, 2014, by and among Hamptons Sponsor, LLC, HamptonsHolding, LLC, Hamptons Park, LLC and Sun Communities Operating Limited Partnership*Incorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 10, 20142.14Contribution Agreement (Palm Key Village) dated December 4, 2014, by and among Palm Key Village Sponsor,LLC, Palm Key Village Holding, LLC, Palm Key Village Park, LLC and Sun Communities Operating LimitedPartnership*Incorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 10, 20142.15Contribution Agreement dated December 4, 2014, by and among 481 Associates, Route 27 Associates, Ltd. and SunCommunities Operating Limited Partnership*Incorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 10, 20142.16Contribution Agreement (Southport Springs) dated December 4, 2014, by and among Southport Springs Sponsor,LLC, Southport Springs Holding, LLC, Southport Springs Park, LLC and Sun Communities Operating LimitedPartnership*Incorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 10, 20142.17Contribution Agreement (Windmill Village) dated December 4, 2014, by and among Windmill Village Sponsor, LLC,Windmill Village Holding, LLC, Windmill Village Park, LLC and Sun Communities Operating Limited Partnership*Incorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 10, 20143.1Amended and Restated Articles of Incorporation of Sun Communities, Inc.Incorporated by reference to Sun Communities,Inc.'s Registration Statement No. 33 693403.2Articles Supplementary of Board of Directors of Sun Communities, Inc. Designating a Series of Preferred StockIncorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K datedSeptember 29, 19993.3Articles Supplementary, dated October 16, 2006Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K datedOctober 16, 20063.4Articles Supplementary of Board of Directors Classifying and Designating a Series of Preferred Stock as JuniorParticipating Preferred Stock and Fixing Distribution and Other Preferences and Rights of Such SeriesIncorporated by reference to Sun Communities,Inc.'s Registration Statement on Form 8-A datedJune 3, 200867SUN COMMUNITIES, INC.3.5Articles of Amendment dated June 13, 1997Incorporated by reference to Sun Communities,Inc.’s Registration Statement on Form 8-A datedNovember 9, 20123.6Articles Supplementary designating 7.125% Series A Cumulative Redeemable Preferred Stock dated November 9,2012Incorporated by reference to Sun Communities,Inc.'s Registration Statement on Form 8-A datedNovember 9, 20123.7Articles Supplementary canceling and reclassifying 9.125% Series A Cumulative Redeemable Perpetual PreferredStock dated November 9, 2012Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K datedNovember 9, 20123.8Articles of Amendment dated July 24, 2013Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July23, 20133.9Articles Supplementary designating 6.50% Series A-4 Cumulative Convertible Preferred Stock dated November 25,2014Incorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 2, 20143.10Second Amended and Restated Bylaws†Filed herewith 4.1Rights Agreement, dated as of June 2, 2008, between Sun Communities, Inc. and Computershare Trust Company,N.A., as Rights AgentIncorporated by reference to Sun Communities,Inc.'s Registration Statement on Form 8-A datedJune 3, 20084.2Sun Communities, Inc. Equity Incentive Plan#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July22, 20094.3Registration Rights Agreement dated June 23, 2011 among Sun Communities, Inc., and the holders of Series A-1Preferred Units that are parties theretoIncorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated June23, 20114.4First Amendment to Registration Rights Agreement dated as of February 3, 2014 among Sun Communities, Inc., andthe holders of Series A-1 Preferred Units that are parties theretoIncorporated by reference to Sun Communities,Inc.'s Annual Report on Form 10-K for the yearended December 31, 20134.5Form of certificate evidencing common stockIncorporated by reference to Sun Communities,Inc.'s Registration Statement on Form 8-A datedNovember 9, 20124.6Form of certificate evidencing 7.125% Series A Cumulative Redeemable Preferred StockIncorporated by reference to Sun Communities,Inc.'s Registration Statement on Form 8-A datedNovember 9, 20124.7Registration Rights Agreement dated February 8, 2013 among Sun Communities, Inc., and the holders of Series A-3Preferred Units that are parties theretoIncorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K datedFebruary 6, 20134.8First Amendment to Rights Agreement, dated July 30, 2014, by and between Sun Communities, Inc. andComputershare Trust Company, N.A.Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July30, 20144.9Registration Rights Agreement dated November 26, 2014, among Sun Communities, Inc. and the holders ofRegistrable SharesIncorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 2, 20144.10Form of certificate evidencing 6.50% Series A-4 Cumulative Convertible Preferred StockIncorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 2, 201410.1Form of Stock Option Agreement between Sun Communities, Inc. and certain directors, officers and otherindividuals#Incorporated by reference to Sun Communities,Inc.'s Registration Statement No. 33 6934010.2Amended and Restated 1993 Non-Employee Director Stock Option Plan#Incorporated by reference to Sun Communities,Inc.'s Registration Statement No. 33 8097210.3Form of Non-Employee Director Stock Option Agreement between Sun Communities, Inc. and certain directors#Incorporated by reference to Sun Communities,Inc.'s Registration Statement No. 33 8097268SUN COMMUNITIES, INC.10.4Long Term Incentive Plan#Incorporated by reference to Sun Communities,Inc.'s Annual Report on Form 10-K for the yearended December 31, 199710.5Second Amended and Restated 1993 Stock Option Plan#Incorporated by reference to Sun Communities,Inc.'s Proxy Statement, dated April 20, 199910.6Lease, dated November 1, 2002, by and between the Operating Partnership as Tenant and American Center LLC asLandlordIncorporated by reference to Sun Communities,Inc.'s Annual Report on Form 10-K for the yearended December 31, December 31, 2002, asamended10.7Form of Restricted Stock Award Agreement#Incorporated by reference to Sun Communities,Inc.'s Annual Report on Form 10-K for the yearended December 31, 200410.8Restricted Stock Award Agreement between Sun Communities, Inc. and Karen J. Dearing, dated February 5, 2008#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K datedFebruary 4, 200810.9Employment Agreement dated March 7, 2011 among Sun Communities, Inc., Sun Communities Operating LimitedPartnership and John B. McLaren#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated March7, 201110.10Employment Agreement dated March 7, 2011 among Sun Communities, Inc., Sun Communities Operating LimitedPartnership and Karen J. Dearing#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated March7, 201110.11Third Lease Modification dated October 31, 2011 by and between the Operating Partnership as Tenant and AmericanCenter LLC as LandlordIncorporated by reference to Sun Communities,Inc.'s Current Report on Form 10-K for the yearended December 31, 201110.12First Amended and Restated 2004 Non-Employee Director Option Plan#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July19, 201210.13Credit Agreement, dated February 6, 2013, by and among Sun Communities Operating Limited Partnership, SunCommunities, Inc., certain of its wholly owned subsidiaries, Bank of Montreal, as administrative agent and lender, andBMO Capital Markets, as sole lead arranger and sole book managerIncorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K datedFebruary 6, 201310.14At the Market Offering Sales Agreement, dated May 10, 2012, among Sun Communities, Inc., Sun CommunitiesOperating Limited Partnership, BMO Capital Markets Corp. and Liquidnet, Inc.Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated May10, 201210.15Employment Agreement dated June 20, 2013 among Sun Communities, Inc., Sun Communities Operating LimitedPartnership and Gary A. Shiffman#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated June20, 201310.16Third Amended and Restated Agreement of Limited Partnership of Sun Communities Operating Limited Partnership,dated June 19, 2014.Incorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K dated June19, 201410.17First Amendment to Employment Agreement among Sun Communities, Inc., Sun Communities Operating LimitedPartnership and Gary A. Shiffman dated July 15, 2014#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July14, 201410.18First Amendment to Employment Agreement among Sun Communities, Inc., Sun Communities Operating LimitedPartnership and John B. McLaren dated July 15, 2014#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July14, 201410.19First Amendment to Employment Agreement among Sun Communities, Inc., Sun Communities Operating LimitedPartnership and Karen J. Dearing dated July 15, 2014#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July14, 201410.20First Amendment to Restricted Stock Award Agreement between Sun Communities, Inc. and Gary A. Shiffman datedJuly 15, 2014#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July14, 201410.21Amendment No. 2 dated November 26, 2014, to the Third Amended and Restated Agreement of Limited Partnershipof Sun Communities Operating Limited PartnershipIncorporated by reference to Sun Communities,Inc.’s Current Report on Form 8-K datedDecember 2, 201410.22Sun Communities, Inc. Executive Compensation "Clawback" Policy#Incorporated by reference to Sun Communities,Inc.'s Current Report on Form 8-K dated July14, 201421.1List of Subsidiaries of Sun Communities, Inc.Filed herewith23.1Consent of Grant Thornton LLPFiled herewith69SUN COMMUNITIES, INC.31.1Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Filed herewith31.2Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Filed herewith32.1Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-OxleyAct of 2002Furnished herewith101.1The following Sun Communities, Inc. financial information, formatted in XBRL (eXtensible Business ReportingLanguage): (i) Consolidated Balance Sheets as of December 31, 2014 and 2013, (ii) Consolidated Statements ofOperations for the Years Ended December 31, 2014, 2013 and 2012, (iii) Consolidated Statements of Stockholders'Equity (Deficit) and Comprehensive Loss for the Years Ended December 31, 2014, 2013 and 2012, (v) ConsolidatedStatements of Cash Flows, for the Years Ended December 31, 2014, 2013 and 2012; (v) Notes to ConsolidatedFinancial Statements, and (vi) Schedule III - Real Estate and Accumulated DepreciationFiled herewith*Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K because such schedules and exhibits do not contain information which ismaterial to an investment decision or which is not otherwise disclosed in the filed agreements. The Company will furnish the omitted schedules and exhibits to the Securitiesand Exchange Commission upon request by the Commission.†The Second Amended and Restated Bylaws are being re-filed to correct an error in the form filed as an exhibit to Sun Communities, Inc.’s Current Report on Form 8-Kdated July 23, 2013. The form previously filed erroneously included language applying the provisions of Article III, Section 14 of the bylaws to vacancies in the Board ofDirectors arising as a result of a removal of a director. As set forth in the form filed herewith and consistent with Sun Communities, Inc.’s charter and the election made by itsBoard of Directors, such Section 14 in fact applies only to vacancies arising from the death or resignation of a director or an increase in the size of the Board of Directors.#Management contract or compensatory plan or arrangement.70SUN COMMUNITIES, INC.INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS ANDFINANCIAL STATEMENT SCHEDULE PageManagement’s Report on Internal Control Over Financial ReportingF-2Reports of Independent Registered Public Accounting FirmF-3Financial Statements: Consolidated Balance Sheets as of December 31, 2014 and 2013F-5Consolidated Statements of Operations for the Years Ended December 31, 2014, 2013 and 2012F-6Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013 and 2012F-7Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2014, 2013 and 2012F-8Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012F-9Notes to Consolidated Financial StatementsF-11Real Estate and Accumulated Depreciation, Schedule IIIF-47F - 1SUN COMMUNITIES, INC.Management’s Report on Internal Control Over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f)promulgated under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles and includes those policies and procedures that:•pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles;•provide reasonable assurance that receipts and expenditures are being made only in accordance with authorization of our management and directors;and•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial adverse effect on the financial statements.All internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable, not absolute, assurance that theobjectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits ofcontrols must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absoluteassurance that all control issues and instances of fraud, if any, within the Company have been detected. Even those systems determined to be effective canprovide only reasonable assurance with respect to financial statement preparation and presentation.Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2014. In making this assessment, management usedthe criteria for effective internal control over financial reporting set forth in “Internal Control – Integrated Framework (2013)” issued by the Committee ofSponsoring Organizations of the Treadway Commission. Based on this assessment, management determined that, as of December 31, 2014, our internalcontrol over financial reporting was effective.Grant Thornton LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting as ofDecember 31, 2014, and their report is included herein.F - 2SUN COMMUNITIES, INC.Report of Independent Registered Public Accounting FirmBoard of Directors and StockholdersSun Communities, Inc.We have audited the accompanying consolidated balance sheets of Sun Communities, Inc. (a Maryland corporation) and subsidiaries (the “Company”) as ofDecember 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, stockholders’ equity (deficit), and cash flows foreach of the three years in the period ended December 31, 2014. Our audits of the basic consolidated financial statements included the financial statementschedule listed in the index appearing under Item 15. These financial statements and financial statement schedule are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sun Communities, Inc.and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period endedDecember 31, 2014 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financialstatement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, theinformation set forth therein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal controlover financial reporting as of December 31, 2014, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committeeof Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 2, 2015 expressed an unqualified opinion./s/ GRANT THORNTON LLPGRANT THORNTON LLPSouthfield, MichiganMarch 2, 2015F - 3SUN COMMUNITIES, INC.Report of Independent Registered Public Accounting FirmBoard of Directors and StockholdersSun Communities, Inc.We have audited the internal control over financial reporting of Sun Communities, Inc. (a Maryland corporation) and subsidiaries (the “Company”) as ofDecember 31, 2014, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations ofthe Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for itsassessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control OverFinancial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testingand evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteriaestablished in the 2013 Internal Control-Integrated Framework issued by COSO.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financialstatements of the Company as of and for the year ended December 31, 2014, and our report dated March 2, 2015 expressed an unqualified opinion on thosefinancial statements./s/ GRANT THORNTON LLPGRANT THORNTON LLPSouthfield, MichiganMarch 2, 2015F - 4SUN COMMUNITIES, INC.CONSOLIDATED BALANCE SHEETS(In thousands, except per share amounts) As of December 31, 2014 2013 (revised)ASSETS Investment property, net (including $94,230 and $56,805 for consolidated variable interest entities atDecember 31, 2014 and 2013; see Note 8)$2,568,164 $1,755,052Cash and cash equivalents83,459 4,753Inventory of manufactured homes8,860 5,810Notes and other receivables, net174,857 162,141Other assets, net102,352 67,148TOTAL ASSETS$2,937,692 $1,994,904LIABILITIES Debt (including $65,849 and $45,209 for consolidated variable interest entities at December 31, 2014 and2013; see Note 8)$1,826,293 $1,311,437Lines of credit5,794 181,383Other liabilities165,453 118,543TOTAL LIABILITIES1,997,540 1,611,363Commitments and contingencies STOCKHOLDERS’ EQUITY Series A Preferred Stock, $0.01 par value. Authorized: 10,000 shares; Issued and outstanding: 3,400 shares at December 31, 2014 and 201334 34Series A-4 Preferred Stock, $0.01 par value. Authorized: 6,331 shares; Issued and outstanding: 483 shares at December 31, 2014 and none at December 31, 20135 —Common stock, $0.01 par value. Authorized: 90,000 shares;Issued and outstanding: 48,573 shares at December 31, 2014 and 36,140 shares at December 31, 2013486 361Additional paid-in capital1,754,759 1,141,590Accumulated other comprehensive loss— (366)Distributions in excess of accumulated earnings(863,545) (773,301)Total Sun Communities, Inc. stockholders' equity891,739 368,318Noncontrolling interests: Common and preferred OP units48,829 15,760Consolidated variable interest entities(416) (537)Total noncontrolling interests48,413 15,223TOTAL STOCKHOLDERS’ EQUITY940,152 383,541TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$2,937,692 $1,994,904See accompanying Notes to Consolidated Financial Statements.F - 5SUN COMMUNITIES, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts) Year Ended December 31, 2014 2013 2012REVENUES Income from real property$357,793 $313,097 $255,761Revenue from home sales53,954 54,852 45,147Rental home revenue39,213 32,500 26,589Ancillary revenues, net5,217 1,151 (180)Interest14,462 13,073 11,018Brokerage commissions and other income, net1,036 549 617Total revenues471,675 415,222 338,952COSTS AND EXPENSES Property operating and maintenance101,134 87,637 68,839Real estate taxes24,181 22,284 19,207Cost of home sales40,556 40,297 34,918Rental home operating and maintenance23,270 20,435 18,141General and administrative - real property31,769 25,941 20,037General and administrative - home sales and rentals10,853 9,913 8,316Transaction costs18,259 3,928 4,296Depreciation and amortization133,726 110,078 89,674Asset impairment charge837 — —Interest73,771 73,339 67,859Interest on mandatorily redeemable debt3,210 3,238 3,321Total expenses461,566 397,090 334,608Income before other gains (losses)10,109 18,132 4,344Gain on disposition of properties, net17,654 — —Gain on settlement4,452 — —Provision for state income taxes(219) (234) (249)Distributions from affiliate1,200 2,250 3,900Net income33,196 20,148 7,995Less: Preferred return to Series A-1 preferred OP units2,654 2,598 2,329Less: Preferred return to Series A-3 preferred OP units181 166 —Less: Preferred return to Series A-4 preferred OP units100 — —Less: Amounts attributable to noncontrolling interests1,752 718 (318)Net income attributable to Sun Communities, Inc.28,509 16,666 5,984Less: Preferred stock distributions6,133 6,056 1,026Net income attributable to Sun Communities, Inc. common stockholders$22,376 $10,610 $4,958Weighted average common shares outstanding: Basic41,337 34,228 26,970Diluted41,805 34,410 27,125Earnings per share: Basic$0.54 $0.31 $0.19Diluted$0.54 $0.31 $0.18 See accompanying Notes to Consolidated Financial Statements.F - 6SUN COMMUNITIES, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In thousands) Year Ended December 31, 2014 2013 2012Net income $33,196 $20,148 $7,995Unrealized gain on interest rate swaps 97 362 643Total comprehensive income 33,293 20,510 8,638Less: Comprehensive income (loss) attributable to the noncontrolling interests 1,483 750 (252)Comprehensive income attributable to Sun Communities, Inc. $31,810 $19,760 $8,890See accompanying Notes to Consolidated Financial Statements.F - 7SUN COMMUNITIES, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)(In thousands) 7.125% Series ACumulativeRedeemablePreferred Stock 6.50%Series A-4CumulativeConvertiblePreferred Stock Common Stock Additional Paid-In Capital Accumulated OtherComprehensiveIncome (Loss) Distributions inExcess ofAccumulatedEarnings Non-ControllingInterests Total Stockholders'Equity (Deficit)Balance as of December 31, 2011,as reported$— $— $218 $492,399 $(1,273) $(617,953) $25,954 $(100,655)Prior period revision— — — — — (12,189) (1,344) (13,533)Balance as of December 31, 2011,revised— — 218 492,399 (1,273) (630,142) 24,610 $(114,188)Issuance of common stock fromexercise of options, net— — — 166 — — — 166Issuance and associated costs ofcommon stock, net— — 80 300,554 — — — 300,634Issuance and associated costs ofSeries A preferred stock34 — — 82,166 — — — 82,200Share-based compensation -amortization and forfeitures— — — 1,335 — 90 — 1,425Net income (loss)— — — — — 8,313 (318) 7,995Unrealized gain on interest rateswaps— — — — 577 — 66 643Distributions— — — — — (74,184) (5,234) (79,418)Balance as of December 31, 2012,revised$34 $— $298 $876,620 $(696) $(695,923) $19,124 $199,457Issuance of common stock fromexercise of options, net— — — 201 — — — 201Issuance and associated costs ofcommon stock, net— — 63 261,697 — — — 261,760Issuance of preferred OP units— — — — — — 3,463 3,463Share-based compensation -amortization and forfeitures— — — 3,072 — 127 — 3,199Net income— — — — — 19,430 718 20,148Unrealized gain on interest rateswaps— — — — 330 — 32 362Distributions— — — — — (96,935) (8,114) (105,049)Balance as of December 31, 2013,revised$34 $— $361 $1,141,590 $(366) $(773,301) $15,223 $383,541Issuance of common stock fromexercise of options, net— — — 127 — — — 127Issuance, conversion of OP unitsand associated costs of commonstock, net— — 125 594,940 — — (2,638) 592,427Issuance and associated costs ofSeries A-4 preferred stock— 5 — 13,605 — — — 13,610Issuance of preferred OP units— — — — — — 18,852 18,852Issuance of common OP units— — — — — — 24,064 24,064Share-based compensation -amortization and forfeitures— — — 4,706 — 173 — 4,879Net income— — — — — 31,444 1,752 33,196Settlement of membership interest— — — (209) — — (4) (213)Unrealized gain on interest rateswaps— — — — 366 — (269) 97Distributions— — — — — (121,861) (8,567) (130,428)Balance at December 31, 2014$34 $5 $486 $1,754,759 $— $(863,545) $48,413 $940,152See accompanying Notes to Consolidated Financial Statements.F - 8SUN COMMUNITIES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Year Ended December 31, 2014 2013 2012OPERATING ACTIVITIES: Net income$33,196 $20,148 $7,995Adjustments to reconcile net income to net cash provided by operating activities: Gain on disposition of assets(2,748) (867) (99)Gain on disposition of properties, net(17,654) — —Asset impairment charges837 — —Loss on valuation of derivative instruments— — (4)Share-based compensation4,879 3,199 1,463Depreciation and amortization131,003 105,210 86,487Amortization of deferred financing costs1,056 2,713 1,619Distributions from affiliate(1,200) (2,250) (3,900)Change in notes receivable from financed sales of inventory homes, net of repayments(15,300) (6,228) (8,583)Change in inventory, other assets and other receivables, net(11,144) (1,441) (1,211)Change in other liabilities10,395 (5,801) 3,484NET CASH PROVIDED BY OPERATING ACTIVITIES133,320 114,683 87,251INVESTING ACTIVITIES: Investment in properties(177,866) (179,413) (125,075)Acquisitions of properties(426,591) (122,176) (249,317)Payments for deposits on acquisitions(17,064) — —Investment in note receivable of acquired properties— (49,441) —Proceeds related to affiliate dividend distribution1,200 2,250 3,900Proceeds related to disposition of land221 — 172Proceeds related to disposition of assets and depreciated homes, net3,312 (1,017) 936Proceeds related to the disposition of properties59,706 — —Issuance of notes and other receivables297 (3,841) (6,440)Repayments of notes and other receivables6,080 1,226 605NET CASH USED FOR INVESTING ACTIVITIES(550,705) (352,412) (375,219)FINANCING ACTIVITIES: Issuance and associated costs of common stock, OP units, and preferred OP units, net572,171 261,760 300,634Net proceeds from stock option exercise127 201 166Net proceeds from issuance of Series A Preferred Stock— — 82,200Distributions to stockholders, OP unit holders, and preferred OP unit holders(121,377) (100,403) (73,371)Payments to retire preferred operating partnership units(1,119) (300) —Borrowings on lines of credit526,546 415,410 253,195Payments on lines of credit(702,135) (263,808) (352,448)Proceeds from issuance of other debt323,241 175,507 192,278Payments on other debt(95,269) (269,400) (89,004)Proceeds received from return of prepaid deferred financing costs2,384 — —Payments for deferred financing costs(8,478) (5,993) (2,031)NET CASH PROVIDED BY FINANCING ACTIVITIES496,091 212,974 311,619Net change in cash and cash equivalents78,706 (24,755) 23,651Cash and cash equivalents, beginning of period4,753 29,508 5,857Cash and cash equivalents, end of period$83,459 $4,753 $29,508F - 9SUN COMMUNITIES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED(In thousands) Year Ended December 31, 2014 2013 2012SUPPLEMENTAL INFORMATION: Cash paid for interest (net of capitalized interest of $464, $678 and $0, respectively)$60,289 $61,268 $79,400Cash paid for interest on mandatorily redeemable debt$3,225 $3,238 $3,326Cash paid for state income taxes$314 $155 $320Noncash investing and financing activities: Unrealized gain on interest rate swaps$97 $362 $643Reduction in secured borrowing balance$21,812 $17,906 $13,680Change in distributions declared and outstanding$9,051 $4,646 $21,093Settlement of membership interest$213 $— $—Noncash investing and financing activities at the date of acquisition: Acquisitions - Series A-3 preferred OP units issued$— $3,463 $—Acquisitions - Series A-4 preferred OP units issued$18,852 $— $—Acquisitions - Series A-4 Preferred Stock issued$13,610 $— $—Acquisitions - Common stock and OP units issued$44,321 $— $—Acquisitions - debt assumed$209,658 $— $62,826Acquisitions - other liabilities$4,221 $— $880Acquisitions - release of note receivable and accrued interest$— $49,441 $—See accompanying Notes to Consolidated Financial Statements.F - 10SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1.Summary of Significant Accounting PoliciesBusinessSun Communities, Inc., a Maryland corporation, together with the Sun Communities Operating Limited Partnership, a Michigan limited partnership (the“Operating Partnership”) and other consolidated subsidiaries are referred to herein as the “Company”, “us”, “we”, and “our”. We are a self-administered andself-managed real estate investment trust (“REIT”).We own, operate, and develop manufactured housing ("MH") and recreational vehicle ("RV") communities throughout the United States. As of December 31,2014, we owned and operated a portfolio of 217 properties located in 29 states (the “Properties”), including 183 MH communities, 25 RV communities, andnine properties containing both MH and RV sites. As of December 31, 2014, the Properties contained an aggregate of 79,554 developed sites comprised of61,231 developed manufactured home sites, 9,297 annual RV sites (inclusive of both annual and seasonal usage rights), 9,026 transient RV sites, andapproximately 7,000 additional MH and RV sites suitable for development.Principles of ConsolidationThe accompanying financial statements include our accounts and all majority-owned and controlled subsidiaries, including entities in which we have acontrolling interest or have been determined to be the primary beneficiary of a variable interest entity ("VIE"). All inter-company transactions have beeneliminated in consolidation. Any subsidiaries in which we have an ownership percentage equal to or greater than 50%, but less than 100%, or consider a VIE,represent subsidiaries with a noncontrolling interest. The noncontrolling interests in our subsidiaries are allocated their proportionate share of thesubsidiaries’ financial results. This allocation is recorded as the noncontrolling interest in our consolidated financial statements.Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management tomake estimates and assumptions related to the reported amounts included in our consolidated financial statements and accompanying footnote disclosures.Actual results could differ from those estimates.Reclassifications and RevisionsCertain reclassifications have been made to prior periods’ financial statements in order to conform to current period presentation.In the fourth quarter of 2014, management identified that certain accruals related to real estate taxes, deferred revenue and utilities primarily associated withcommunities acquired prior to 2007 were incorrect. The cumulative reivison for the incorrect accruals approximated $13.5 million.Pursuant to the guidance of Staff Accounting Bulletin (“SAB”) No. 99, Materiality, the Company concluded that the errors were not material to any of itsprior period financial statements. Although the errors were immaterial to prior periods, the prior period financial statements were revised, in accordance withSAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, due to thesignificance of the out-of-period correction in the fourth quarter of 2014.F - 11SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1.Summary of Significant Accounting Policies, continuedA reconciliation of the effects of the revisions to the previously reported balance sheet at December 31, 2013 follows: December 31, 2013 As reported Revision As revised (in thousands)Notes and other receivables, net $164,685 $(2,544) $162,141Other assets, net $68,936 $(1,788) $67,148Total assets $1,999,236 $(4,332) $1,994,904Other liabilities $109,342 $9,201 $118,543Total liabilities $1,602,162 $9,201 $1,611,363Distributions in excess of accumulated earnings $(761,112) $(12,189) $(773,301)Common and preferred OP units $17,104 $(1,344) $15,760Total stockholders' equity $397,074 $(13,533) $383,541A reconciliation of the effects of the revisions to the previously reported statement of stockholders' equity (deficit) for the years ending December 31, 2013,2012 and 2011 follows: Year Ended December 31, 2013 2012 2011 (in thousands)Distributions in excess of accumulated earnings, as reported $(761,112) $(683,734) $(617,953)Prior period revision (12,189) (12,189) (12,189)Distributions in excess of accumulated earnings, revised $(773,301) $(695,923) $(630,142) Noncontrolling interests, as reported $16,567 $20,468 $25,954Prior period revision (1,344) (1,344) (1,344)Noncontrolling interests, revised $15,223 $19,124 $24,610Investment PropertyInvestment property is recorded at cost, less accumulated depreciation. We review the carrying value of long-lived assets to be held and used for impairmentquarterly or whenever events or changes in circumstances indicate a possible impairment.Our primary indicator for potential impairment is based on NOItrends period over period. Circumstances that may prompt a test of recoverability may include a significant decrease in the anticipated market price, anadverse change to the extent or manner in which an asset may be used or in its physical condition or other such events that may significantly change thevalue of the long-lived asset. An impairment loss is recognized when a long-lived asset’s carrying value is not recoverable and exceeds estimated fair value.We estimate the fair value of our long-lived assets based on discounted future cash flows and any potential disposition proceeds for a given asset. Forecastingcash flows requires management to make estimates and assumptions about such variables as the estimated holding period, rental rates, occupancy andoperating expenses during the holding period, as well as disposition proceeds. Management uses its best judgment when developing these estimates andassumptions, but the development of the projected future cash flows is based on subjective variables. Future events could occur which would cause us toconclude that impairment indicators exist, and significant adverse changes in national, regional, or local market conditions or trends may cause us to changethe estimates and assumptions used in our impairment analysis. The results of an impairment analysis could be material to our financial statements.F - 12SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1.Summary of Significant Accounting Policies, continuedWe periodically receive offers from interested parties to purchase certain of our properties. These offers may be the result of an active program initiated by usto sell the property, or from an unsolicited offer to purchase the property. The typical sale process involves a significant negotiation and due diligence periodbetween us and the potential purchaser. As the intent of this process is to determine if there are items that would cause the purchaser to be unwilling topurchase or we would be unwilling to sell, it is not unusual for such potential offers of sale/purchase to be withdrawn as such issues arise. We classify assets as“held for sale” when it is probable, in our opinion, that a sale transaction will be completed within one year. This typically occurs when all significantcontingencies surrounding the closing have been resolved, which often corresponds with the closing date.We allocate the purchase price of properties to net tangible and identified intangible assets acquired based on their fair values. In making estimates of fairvalues for purposes of allocating purchase price, we utilize an independent third party to value the net tangible and identified intangible assets in connectionwith the acquisition of the respective property. We provide historical and pro forma financial information obtained about each property, as well as any otherinformation needed in order for the third party to ascertain the fair value of the tangible and intangible assets (including in-place leases) acquired.Other Capitalized CostsWe capitalize certain costs incurred in connection with the development, redevelopment, capital enhancement and leasing of our properties. Management isrequired to use professional judgment in determining whether such costs meet the criteria for immediate expense or capitalization. The amounts aredependent on the volume and timing of such activities and the costs associated with such activities. Maintenance, repairs and minor improvements toproperties are expensed when incurred. Renovations and improvements to properties are capitalized and depreciated over their estimated useful lives andconstruction costs related to the development of new community or expansion sites are capitalized until the property is substantially complete. Costsincurred to initially renovate pre-owned and repossessed homes that we acquire for our Rental Program are capitalized and costs incurred to refurbish thehomes at turnover and repair the homes while occupied are expensed. Certain expenditures to dealers and residents related to obtaining lessees in ourcommunities are capitalized and amortized over a seven year period based on the anticipated term of occupancy of a resident. Costs associated withimplementing our computer systems are capitalized and amortized over the estimated useful lives of the related software and hardware. Costs incurred toobtain new financing are capitalized and amortized over the terms of the related loan agreement using the straight-line method (which approximates theeffective interest method).Cash and Cash EquivalentsWe consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash and cash equivalents. The maximumamount of credit risk arising from cash deposits in excess of federally insured amounts was approximately $80.7 million and $5.7 million as of December 31,2014 and 2013, respectively. From time to time, we may have cash deposits in excess of federally insured amounts.InventoryInventory of manufactured homes is stated at lower of specific cost or market based on the specific identification method.Investments in AffiliatesInvestments in affiliates in which we do not have a controlling direct or indirect voting interest, but can exercise significant influence over the entity withrespect to its operations and major decisions, are accounted for using the equity method of accounting. The carrying value of our investment is adjusted forour proportionate share of the affiliate’s net income or loss and reduced by distributions received. We review the carrying value of our investment in affiliatesfor other than temporary impairment whenever events or changes in circumstances indicate a possible impairment. Financial condition, operationalperformance, and other economic trends are some of the factors we consider when we evaluate the existence of impairment indicators. When we have acarrying value of zero for our investment, we suspend the equity method of accounting until such time that the affiliate’s net income equals or exceeds theshare of net losses not recognized during the time in which the equity method of accounting was suspended. See Note 7 for additional information.F - 13SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Summary of Significant Accounting Policies, continuedNotes and Other ReceivablesWe provide financing to purchasers of manufactured homes generally located in our communities. The notes are collateralized by the underlyingmanufactured home sold. Notes receivable include both installment loans retained by the Company as well as transferred loans that have not met therequirements for sale accounting which are presented herein as collateralized receivables (See Note 5 for additional information). For purposes of accountingpolicy, all notes receivable are considered one homogenous population, as the notes are typically underwritten using the same requirements and terms. Notesreceivable are reported at their outstanding unpaid principal balance adjusted for an allowance for loan loss. Interest income is accrued based upon theunpaid principal balance of the loans.Past due status of our notes receivable is determined based upon the contractual terms of the note. When a note receivable becomes 60 days delinquent, westop accruing interest on the note receivable. The interest on nonaccrual loans is accounted for on the cashbasis until qualifying for return to accrual. Loans are returned to accrual when all principal and interest amounts contractually due are brought current andfuture payments are reasonably assured. Loans on a nonaccrual status were immaterial at December 31, 2014 and 2013. The ability to collect our notesreceivable is measured based on current and historical information and events. We consider numerous factors including: length of delinquency, estimatedcosts to lease or sell, and repossession history. Our experience supports a high recovery rate for notes receivable; however there is some degree of uncertaintyabout the recoverability of our investment in these notes receivable. We are generally able to recover our recorded investment in uncollectible notesreceivable by repossessing the homes on the notes retained by us and repurchasing the homes on the collateralized receivables, and subsequently selling orleasing these homes to potential residents in our communities. We have established a loan loss reserve based on our estimated unrecoverable costs associatedwith repossessed/repurchased homes. We estimate our unrecoverable costs to be the repurchase price of the home collateralizing the note receivable plusrepair and remarketing costs in excess of the estimated selling price of the home being repossessed. A historical average of this excess cost is calculated basedon prior repossessions/repurchases and is applied to our estimated annual future repossessions to create the allowance for both installment and collateralizednotes receivable. See Note 5 for additional information.We evaluate the collectability of a loan based on our ability to collect the scheduled payments of principal and interest when due according to thecontractual terms of the loan agreement. We generally see that if the obligor is delinquent on the loan they are also delinquent on site rent. If the scheduledpayment is delinquent more than five to seven days, dependent on state law, we begin the repossession and eviction process simultaneously. This processgenerally takes 30 to 45 days; due to the short time frame from delinquent loan to repossession we do not evaluate the note receivables for impairment. Noloans were considered impaired as of December 31, 2014 and 2013.We evaluate the credit quality of our notes receivable at the inception of the receivable. We consider the following factors in order to determine the creditquality of the applicant - rental payment history; home debt to income ratio; total debt to income ratio; length of employment; previous landlord references;and credit scores.Other receivables are generally comprised of amounts due from residents for rent and related charges, home sale proceeds receivable from sales near year endand various other miscellaneous receivables. Accounts receivable from residents are typically due within 30 days and stated at amounts due from residentsnet of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. We evaluate therecoverability of our receivables whenever events occur or there are changes in circumstances such that management believes it is probable that it will beunable to collect all amounts due according to the contractual terms of the loan and lease agreements. Receivables related to community rents are reservedwhen we believe that collection is less than probable, which is generally after a resident balance reaches 60 to 90 days past due.Restricted CashRestricted cash consists of amounts held in deposit at a financial institution to collateralize derivative instruments in a liability position and deposits for tax,insurance and repair escrows held by lenders in accordance with certain debt agreements. At December 31, 2014 and 2013, $11.8 million and $9.4 million ofrestricted cash, respectively, was included as a component of Other assets on the consolidated balance sheets.F - 14SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1.Summary of Significant Accounting Policies, continuedIdentified Intangible AssetsThe Company amortizes identified intangible assets that are determined to have finite lives over the period the assets are expected to contribute directly orindirectly to the future cash flows of the property or business. At December 31, 2014 and 2013, the carrying amounts of the identified intangible assets areincluded in Other assets on the consolidated balance sheets. See Note 6 for additional information on our intangible assets.Deferred Tax AssetsWe are subject to certain state taxes that are considered to be income taxes and have certain subsidiaries that are taxed as regular corporations. Deferred taxassets or liabilities are recognized for temporary differences between the tax basis of assets and liabilities and their carrying amounts in the financialstatements and net operating loss carryforwards. Deferred tax assets and liabilities are measured using currently enacted tax rates. A valuation allowance isestablished if, based on the available evidence, it is considered more likely than not that some portion or all of the deferred tax assets will not be realized. SeeNote 13 for additional information.Deferred Financing CostsDeferred financing costs include fees and costs incurred to obtain long-term financing. The costs are amortized over the terms of the respective loans.Unamortized deferred financing costs are written off when debt is retired before the maturity date. Upon amendment of the line of credit or refinancing ofmortgage debt, unamortized deferred financing costs are accounted for in accordance with Financial Accounting Standards Board ("FASB") AccountingStandards Codification ("ASC") 470-50-40, Modifications and Extinguishments. At December 31, 2014 and 2013, deferred financing costs are included as acomponent of Other assets on the consolidated balance sheets.Share-Based CompensationShare-based compensation cost for service vesting restricted stock awards is measured based on the closing share price of our common stock on the date ofgrant. Share-based compensation for restricted stock awards with performance conditions is measured based on an estimate of shares expected to vest. If it isnot probable that the performance conditions will be satisfied, we do not recognize compensation expense. We measure the fair value of awards withperformance conditions using the closing price of our common stock as of the grant date to calculate compensation cost. Each reporting period, we reevaluateour estimate of the number of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditionsusing a Monte Carlo simulation. We recognize compensation cost ratably over each tranche of shares based on the fair value estimated by the model.Share-based compensation cost for stock options is estimated at the grant date based on each option’s fair-value as calculated by the Binomial (lattice)option-pricing model. The Binomial (lattice) option-pricing model incorporates various assumptions including expected volatility, expected life, dividendyield, and interest rates. See Note 11 for additional information.Fair Value of Financial InstrumentsOur financial instruments consist of cash and cash equivalents, accounts and notes receivable, accounts payable, derivative instruments, and debt. We utilizefair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures, pursuant to FASB ASC 820,Fair Value Measurements and Disclosures. See Note 17 for additional information regarding the estimates and assumptions used to estimate the fair value ofeach class of financial instrument.Revenue RecognitionRental income attributable to site and home leases is recorded on a straight-line basis when earned from tenants. Leases entered into by tenants are generallyfor one year terms but may range from month-to-month to two years and are renewable by mutual agreement from us and the resident, or in some cases, asprovided by state statute. Revenue from the sale of manufactured homes is recognized upon transfer of title at the closing of the sales transaction. Interestincome on notes receivable is recorded on a level yield basis over the life of the notes. We report certain taxes collected from the resident and remitted totaxing authorities in revenue. These taxes include certain Florida property and fire taxes.F - 15SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1.Summary of Significant Accounting Policies, continuedAdvertising CostsAdvertising costs are expensed as incurred. As of December 31, 2014, 2013 and 2012, we had advertising costs of $3.2 million, $2.9 million and $2.5 million,respectively.Depreciation and AmortizationDepreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets. Useful lives are 30 years for landimprovements and buildings, 10 years for rental homes, seven to 15 years for furniture, fixtures and equipment, and seven to 15 years for intangible assets.Derivative Instruments and Hedging ActivitiesWe do not enter into derivative instruments for speculative purposes. We adjust our balance sheet on a quarterly basis to reflect the current fair market valueof our derivatives. For those hedges that qualify for cash flow hedge accounting, we adjust our balance sheet on a quarterly basis to reflect current fair marketvalue of our derivatives. Changes in the fair value of derivatives are recorded in earnings or comprehensive income, as appropriate. The ineffective portion ofthe hedge is immediately recognized in earnings to the extent that the change in value of a derivative does not perfectly offset the change in value of theinstrument being hedged. The effective portion of the hedge is recorded in accumulated other comprehensive income. We use standard market conventions todetermine the fair values of derivative instruments, including the quoted market prices or quotes from brokers or dealers for the same or similar instruments.All methods of assessing fair value result in a general approximation of value and such value may never actually be realized. See Note 16 for additionalinformation. Cash flows from derivative instruments are classified in the same category as the cash flows of the underlying hedged items, which are in theoperating activities section of the consolidated statements of cash flows.2. Real Estate Acquisitions and DispositionsGreen CourteFirst ClosingDuring the fourth quarter of 2014, we completed the first closing of the acquisition of the Green Courte properties. We acquired 32 MH communities withover 9,000 developed sites in 11 states. Included in the total consideration paid for the first closing was the issuance of 361,797 shares of common stock,501,130 common OP units, 483,317 shares of Series A-4 Preferred Stock and 669,449 Series A-4 preferred OP units.Second ClosingSubsequent to year-end, in January 2015, we completed the second closing of the acquisition of the Green Courte properties. We acquired the remaining 26communities comprised of over 10,000 sites. Included in the total consideration paid for the second closing was the issuance of 4,377,072 shares of commonstock and 5,847,234 shares of Series A-4 Preferred Stock.Additionally, subsequent to year-end, one of Green Courte Partners funds purchased 150,000 shares of our common stock and 200,000 Series A-4 preferredOP units, for an aggregate purchase price of $12.5 million.F - 16SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS2. Real Estate Acquisitions and Dispositions, continuedThe following tables summarize the fair value of the assets acquired and liabilities assumed at the acquisition dates and the consideration paid (inthousands): First Closing Second Closing At Acquisition Date November 26, 2014 (1) January 6, 2015 (1) TotalInvestment in property $656,965 $818,530 $1,475,495Notes receivable 5,189 964 6,153Other (liabilities) assets (4,221) 4,221 —In-place leases and other intangible assets 12,870 15,460 28,330Below market lease intangible (10,820) (54,580) (65,400)Assumed debt (199,300) (171,300) (370,600)Total identifiable assets and liabilities assumed $460,683 $613,295 $1,073,978 Consideration Common OP units (2) $24,064 $— $24,064Series A-4 preferred OP units (3) 18,852 1,000 19,852Common stock 20,257 258,918 279,175Series A-4 Preferred Stock 13,610 175,417 189,027Consideration from new mortgages 100,700 120,960 221,660Cash consideration transferred 283,200 57,000 340,200Total consideration transferred $460,683 $613,295 $1,073,978(1) The purchase price allocations for the first and second closings are preliminary and may be adjusted as final costs and final valuations are determined.(2) To estimate the fair value of the common OP units at the valuation date, we utilized the market approach, observing public price of our common stock.(3) To estimate the fair value of the Series A-4 preferred OP units at the valuation date, we utilized a Binomial Lattice Method of the income approach.The amount of revenue and net income included in the consolidated statements of operations related to the Green Courte properties for the year endedDecember 31, 2014 is set forth in the following table (in thousands): Year Ended December 31, 2014 (unaudited)Revenue $6,515Net income $(6,744)F - 17SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS2. Real Estate Acquisitions and Dispositions, continued2014 Other Acquisitions:In December 2014, we acquired Oak Creek, a MH community with 198 sites located in Coarsegold, California.In June 2014, we acquired Lake Rudolph Campground and Recreational Vehicle Resort ("Lake Rudolph"), an RV community with 503 sites located in SantaClaus, Indiana.In April 2014, we acquired Saco/Old Orchard Beach RV Resort ("Saco"), an RV community with 127 sites located in Saco, Maine.In February 2014, we acquired Driftwood Camping Resort ("Driftwood"), an RV community with 698 sites and expansion potential of approximately 30 siteslocated in Clermont, New Jersey, and Seashore Campsites RV and Campground ("Seashore"), an RV community with 685 sites located in Cape May, NewJersey.In January 2014, we acquired Castaways RV Resort & Campground ("Castaways"), an RV community with 369 sites and expansion potential ofapproximately 25 sites located in Worcester County, Maryland, and Wine Country RV Resort ("Wine Country"), an RV community with 166 sites andexpansion potential of approximately 34 sites located in Paso Robles, California.The following tables summarize the fair value of the assets acquired and liabilities assumed at the acquisition dates and the consideration paid for otheracquisitions completed in 2014 (in thousands):At Acquisition Date WineCountry Castaways Seashore Driftwood Saco (1) LakeRudolph(1) Oak Creek(1) TotalInvestment in property $13,250 $36,597 $24,258 $31,301 $4,366 $30,454 $15,944 $156,170In-place leases and other intangible assets — — 500 790 — — 390 1,680Other assets 9 2 12 4 31 64 236 358Below market lease and franchiseintangibles — — — — (6) — (140) (146)Other liabilities (60) (497) (1,188) (836) (258) (1,417) (57) (4,313)Assumed debt — — — — — — (10,358) (10,358)Total identifiable assets and liabilitiesassumed $13,199 $36,102 $23,582 $31,259 $4,133 $29,101 $6,015 $143,391 Consideration Cash consideration transferred $13,199 $36,102 $23,582 $31,259 $4,133 $29,101 $6,015 $143,391(1) The purchase price allocations for Saco, Lake Rudolph and Oak Creek are preliminary and may be adjusted as final costs and final valuations are determined.The following unaudited pro forma financial information presents the results of our operations for the years ended December 31, 2014 and 2013 as if theproperties acquired during 2014 were acquired on January 1, 2013. The unaudited pro forma results reflect certain adjustments for items that are not expectedto have a continuing impact, such as adjustments for transaction costs incurred, management fees and purchase accounting. The information presented belowhas been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations thatwould have actually occurred had the acquisitions been consummated on January 1, 2013 (in thousands, except per-share data). Year Ended December 31, (unaudited) 2014 2013Total revenues $567,731 $539,020Net income attributable to Sun Communities, Inc. common stockholders $83,125 $60,985Net income per share attributable to Sun Communities, Inc. common stockholders - basic $2.01 $1.78Net income per share attributable to Sun Communities, Inc. common stockholders - diluted $1.99 $1.77F - 18SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS2. Real Estate Acquisitions and Dispositions, continued2013 Acquisition Activity:During the fourth quarter of 2013, we acquired Camelot Villa, a MH community with approximately 712 sites located in Macomb, Michigan, Jellystone Parkat Birchwood Acres ("Jellystone at Birchwood"), an RV community with approximately 269 sites located in Woodridge, New York, and Vines RV Resort("Vines"), an RV community with approximately 130 sites located in Paso Robles, California.During the second quarter of 2013, we acquired Big Timber Lake RV Resort ("Big Timber Lake"), an RV community with approximately 528 sites located inCape May, New Jersey, and Jellystone RV Resort ("Jellystone"), an RV community with approximately 299 sites located in North Java, New York.During the first quarter of 2013, we acquired 10 RV communities from Gwynns Island RV Resort LLC, Indian Creek RV Resort LLC, Lake Laurie RV ResortLLC, Newpoint RV Resort LLC, Peters Pond RV Resort Inc., Seaport LLC, Virginia Tent LLC,Wagon Wheel Maine LLC, Westward Ho RV Resort LLC and Wild Acres LLC (collectively, "Morgan RV Properties"), with approximately 3,700 siteslocated in Ohio, Virginia, Maine, Massachusetts, Connecticut, New Jersey and Wisconsin.The following table summarizes the amounts of the assets acquired and liabilities assumed recognized at the acquisition dates and the consideration paid forthe 2013 acquisitions (in thousands): 2013At Acquisition Date Morgan RVProperties Jellystone Big TimberLake Camelot Villa Jellystone atBirchwood Vines TotalInvestment in property $109,122 $9,754 $21,898 $22,121 $6,087 $8,000 $176,982Inventory of manufactured homes — — — 2,324 — — 2,324Notes and other receivables — — — 852 — — 852In-place leases and other intangible assets 2,940 390 580 610 450 — 4,970Other assets 157 7 48 84 12 1 309Below market leases — — (3,490) (240) — — (3,730)Other liabilities (3,697) (930) (1,157) (546) (293) (4) (6,627)Total identifiable assets and liabilitiesassumed $108,522 $9,221 $17,879 $25,205 $6,256 $7,997 $175,080 Consideration Cash $55,618 $9,221 $17,879 $25,205 $6,256 $7,997 $122,176Series A-3 preferred OP units (1) 3,463 — — — — — 3,463Extinguishment of note receivable 49,441 — — — — — 49,441Fair value of total consideration transferred $108,522 $9,221 $17,879 $25,205 $6,256 $7,997 $175,080(1) Included in the total consideration paid for Morgan RV Properties was the issuance of 40,268 Series A-3 preferred OP units. In order to estimate the fair value of these units at thevaluation date, we utilized the income approach using estimated future discounted cash flows.F - 19SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS2. Real Estate Acquisitions and Dispositions, continuedThe following unaudited pro forma financial information presents the results of our operations for the years ended December 31, 2013 and 2012 as ifacquisitions completed in 2013 were acquired on January 1, 2012. The unaudited pro forma results reflect certain adjustments for items that are not expectedto have a continuing impact, such as adjustments for transaction costs incurred, management fees and purchase accounting. The information presented belowhas been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations thatwould have actually occurred had the acquisitions been consummated on January 1, 2012 (in thousands, except per-share data). Year Ended December 31, (unaudited) 2013 2012Total revenues$423,490 $392,862Net income attributable to Sun Communities, Inc. shareholders$16,352 $23,833Net income per share attributable to Sun Communities, Inc. shareholders - basic$0.47 $0.87Net income per share attributable to Sun Communities, Inc. shareholders - diluted$0.47 $0.87The amount of revenue and net income included in the consolidated statements of operations for the years ended December 31, 2014, 2013 and 2012 for allacquisitions described above is set forth in the following table (in thousands): Year Ended December 31, (unaudited) 2014 2013 2012Revenue$42,258 $60,148 $38,557Net income$9,214 $5,914 $290Transaction CostsTransaction costs of approximately $18.3 million, $3.9 million and $4.3 million have been incurred for the years ended December 31, 2014, 2013 and 2012,respectively, and are presented as “Transaction costs” in our consolidated statements of operations.DispositionsDuring the year ended December 31, 2014, we completed the sales of 10 MH communities: Bedford Hills, White Oak, Falcon Pointe, Timberbrook, WoodlakeEstates, Byrne Hill, Continental Estates, Davison East, Countryside Village and Desert View Village. During the first quarter of 2014, the Company chose toearly adopt Accounting Standards Update ("ASU") 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity("ASU 2014-08"). Pursuant to ASU 2014-08, the disposals of the communities do not qualify for presentation as discontinued operations, as the sales do nothave a major impact on our operations and financial results and do not represent a strategic shift. Additionally, the communities are not consideredindividually significant components and therefore do not qualify for presentation as discontinued operations. A gain of $17.7 million is recorded in "Gain ondisposition of properties, net" in our consolidated statement of operations.F - 20SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS3. Investment PropertyThe following table sets forth certain information regarding investment property (in thousands): December 31, 2014 December 31, 2013Land $309,386 $194,404Land improvements and buildings 2,471,436 1,806,546Rental homes and improvements 477,554 393,562Furniture, fixtures, and equipment 81,586 65,086Land held for future development 23,955 29,521Investment property 3,363,917 2,489,119Accumulated depreciation (795,753) (734,067)Investment property, net $2,568,164 $1,755,052Land improvements and buildings consist primarily of infrastructure, roads, landscaping, clubhouses, maintenance buildings and amenities.During 2014, we recorded an impairment charge of $0.8 million associated with a long-lived asset for an MH and RV community located in La Feria, Texas.This community consists of 280 developed sites. Circumstances that prompted this test of recoverability included a decrease in net operating income and theoverall operating performance of the community. We recognized the impairment loss because the long-lived asset's carrying value was deemed notrecoverable and exceeded the estimated fair value. We estimated the fair value of the long-lived asset based on discounted future cash flows and anypotential disposition proceeds for the asset. The impairment loss is recorded in "Asset impairment charge" on our consolidated statements of operations.See Note 2, "Real Estate Acquisitions and Dispositions", for details on acquisitions.F - 21SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS4. Transfers of Financial AssetsWe completed various transactions with an unrelated entity involving our notes receivable during 2014 and 2013 under which we received a total of $35.0million and $34.0 million, respectively, of cash proceeds in exchange for relinquishing our right, title and interest in certain notes receivable. We have nofurther obligations or rights with respect to the control, management, administration, servicing, or collection of the installment notes. However, we are subjectto certain recourse provisions requiring us to purchase the underlying homes collateralizing such notes, in the event of a note default and subsequentrepossession of the home by the unrelated entity. The recourse provisions are considered to be a form of continuing involvement, and therefore thesetransferred loans did not meet the requirements for sale accounting. We continue to recognize these transferred loans on our balance sheet and refer to them ascollateralized receivables as a transfer of financial assets. The proceeds from the transfer have been recognized as a secured borrowing.In the event of note default, and subsequent repossession of a manufactured home by the unrelated entity, the terms of the agreement require us to repurchasethe manufactured home. Default is defined as the failure to repay the installment note according to contractual terms. The repurchase price is calculated as apercentage of the outstanding principal balance of the collateralized receivable, plus any outstanding late fees, accrued interest, legal fees, and escrowadvances associated with the installment note. The percentage used to determine the repurchase price of the outstanding principal balance on the installmentnote is based on the number of payments made on the note. In general, the repurchase price is determined as follows:Number of Payments Repurchase %Less than or equal to 15 100%Greater than 15 but less than 64 90%Equal to or greater than 64 but less than 120 65%120 or more 50%The transferred assets have been classified as collateralized receivables in Notes and Other Receivables (see Note 5) and the cash proceeds received fromthese transactions have been classified as a secured borrowing in Debt (see Note 9) within the consolidated balance sheets. The balance of the collateralizedreceivables was $123.0 million (net of allowance of $0.7 million) and $109.8 million (net of allowance of $0.7 million) as of December 31, 2014 andDecember 31, 2013, respectively. The outstanding balance on the secured borrowing was $123.7 million and $110.5 million as of December 31, 2014 andDecember 31, 2013, respectively.The balances of the collateralized receivables and secured borrowings fluctuate. The balances increase as additional notes receivable are transferred andexchanged for cash proceeds. The balances are reduced as the related collateralized receivables are collected from the customers, or as the underlyingcollateral is repurchased. The change in the aggregate gross principal balance of the collateralized receivables is as follows (in thousands): Year Ended December 31, 2014 December 31, 2013Beginning balance$110,510 $94,409Financed sales of manufactured homes34,952 34,007Principal payments and payoffs from our customers(11,845) (7,930)Principal reduction from repurchased homes(9,967) (9,976)Total activity13,140 16,101Ending balance$123,650 $110,510The collateralized receivables earn interest income and the secured borrowings accrue interest expense at the same interest rates. The amount of interestincome and expense recognized was $11.8 million, $10.6 million and $9.4 million for the years ended December 31, 2014, 2013 and 2012, respectively. F - 22SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS5. Notes and Other ReceivablesThe following table sets forth certain information regarding notes and other receivables (in thousands): December 31, 2014 December 31, 2013Installment notes receivable on manufactured homes, net $25,884 $25,471Collateralized receivables, net (see Note 4) 122,962 109,821Other receivables, net 26,011 29,393Total notes and other receivables, net $174,857 $164,685Installment Notes Receivable on Manufactured HomesThe installment notes of $25.9 million (net of allowance of $0.1 million) and $25.5 million (net of allowance of $0.1 million) as of December 31, 2014 andDecember 31, 2013, respectively, are collateralized by manufactured homes. The notes represent financing provided by us to purchasers of manufacturedhomes primarily located in our communities and require monthly principal and interest payments. The notes have a net weighted average interest rate andmaturity of 8.7% and 10.4 years as of December 31, 2014, and 8.9% and 11.9 years as of December 31, 2013.The change in the aggregate gross principal balance of the installment notes is as follows (in thousands): Year Ended December 31, 2014 December 31, 2013Beginning balance$25,575 $22,019Financed sales of manufactured homes946 7,798Acquired notes (see Note 2)5,189 852Principal payments and payoffs from our customers(4,088) (3,838)Principal reduction from repossessed homes(1,598) (1,256)Total activity449 3,556Ending balance$26,024 $25,575Collateralized ReceivablesCollateralized receivables represent notes receivable that were transferred to a third party, but did not meet the requirements for sale accounting (see Note 4).The receivables have a balance of $123.0 million (net of allowance of $0.7 million) and $109.8 million (net of allowance of $0.7 million) as of December 31,2014 and December 31, 2013, respectively. The receivables have a net weighted average interest rate and maturity of 10.4% and 14.6 years as of December31, 2014, and 10.7% and 13.6 years as of December 31, 2013.Allowance for Losses for Collateralized and Installment Notes ReceivableThe following table sets forth the allowance for losses for collateralized and installment notes receivable as of December 31, 2014 and December 31, 2013 (inthousands): Year Ended December 31, 2014 December 31, 2013Beginning balance$(793) $(697)Lower of cost or market write-downs280 421Increase to reserve balance(316) (517)Total activity(36) (96)Ending balance$(828) $(793)F - 23SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS5. Notes and Other Receivables, continuedOther ReceivablesAs of December 31, 2014, other receivables were comprised of amounts due from residents for rent and water and sewer usage of $4.9 million (net ofallowance of $1.0 million), home sale proceeds of $7.4 million, insurance receivables of $1.0 million, insurance settlement of $3.7 million, rebates and otherreceivables of $6.8 million and a note receivable of $2.2 million. The $2.2 million note bears interest at 8.0% for the first two years and 7.9% for theremainder of the loan, is secured by the senior mortgage on one MH community and a deed of land, and is due on December 31, 2016. As of December 31,2013 other receivables were comprised of amounts due from residents for rent and water and sewer usage of $6.9 million (net of allowance of $0.7 million),home sale proceeds of $5.7 million, insurance receivables of $2.0 million, insurance settlement of $3.7 million, rebates and other receivables of $4.6 millionand two notes receivable of $4.3 million and $2.2 million.In June 2014, a $4.3 million note receivable, which was secured by senior mortgages on two RV communities, a pledge of $4.0 million in Series A-3 PreferredOP Units, a subordinated interest in cash collateral account and equity interests in another RV community, was paid in full.6. Intangible AssetsOur intangible assets are in-place leases from acquisitions and franchise fees. These intangible assets are recorded within Other assets on the consolidatedbalance sheet. The accumulated amortization and gross carrying amounts are as follows (in thousands): December 31, 2014 December 31, 2013Intangible Asset Useful Life Gross CarryingAmount AccumulatedAmortization Gross CarryingAmount AccumulatedAmortizationIn-place leases 7 years $41,511 $(12,107) $26,961 $(8,239)Franchise fees 15 years 764 (106) 770 (29)Total $42,275 $(12,213) $27,731 $(8,268)During 2014, in connection with our acquisitions, we purchased intangible assets classified as in-place leases valued at approximately $14.6 million.The aggregate net amortization expenses related to the intangible assets are as follows (in thousands): Year Ended December 31,Intangible Asset 2014 2013 2012In-place leases $3,867 $3,297 $1,657Franchise fees 77 60 —Total $3,944 $3,357 $1,657We anticipate the amortization expense for the existing intangible assets to be as follows for the next five years (in thousands): Year 2015 2016 2017 2018 2019Estimated expense $5,564 $5,564 $5,690 $4,902 $3,896F - 24SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS7. Investment in AffiliatesOrigen Financial Services, LLC (“OFS LLC”)At December 31, 2014 and 2013, we had a 22.9% ownership interest in OFS LLC, an entity formed to originate manufactured housing installmentcontracts. We have suspended equity accounting as the carrying value of our investment is zero.Origen Financial, Inc. (“Origen”)Through Sun OFI, LLC, a taxable REIT subsidiary, we own 5,000,000 shares of common stock of Origen which approximates an ownership interest of 19.0%.Although it is no longer originating or servicing loans, Origen continues to manage an existing portfolio of manufactured home loans and asset backedsecurities. We have suspended equity accounting for this investment as the carrying value of our investment is zero. We did, however, receive distributions of$1.2 million on our shares of Origen common stock during 2014. Our investment in Origen had a market value of approximately $8.2 million based on aquoted market closing price of $1.64 per share as reported on the OTC Pink Marketplace as of December 31, 2014.In January 2015, Origen announced that it completed the sale of substantially all of its assets to an affiliate of GoldenTree Asset Management LP. Origen alsoannounced that it has entered into a letter of intent with Mack Real Estate Credit Strategies, ("MRECS"), an affiliate of Mack Real Estate Group, for aproposed transaction pursuant to which MRECS and other third parties would invest additional capital into Origen by purchasing shares of newly issuedcommon stock. Origen would continue to operate its business as a mortgage REIT and would be externally managed pursuant to a market based managementagreement with MRECS. Under the letter of intent, it is anticipated that Origen's stockholders would be given the option to: (a) tender their shares to Origenfor cash in an amount equal to Origen's estimated current net cash value, payable at the conclusion of the tender period, or (b) retain their shares in Origen.Origen’s Board of Directors approved the letter of intent and, as permitted by the plan of dissolution approved by Origen’s stockholders in October 2014,Origen has abandoned the plan of dissolution and the distribution of its remaining cash net of expenses and reserves pending completion of the transactionwith MRECS. The MRECS transaction is subject to the further negotiation and execution of definitive transaction documents, MRECS’s satisfactorycompletion of its due diligence on Origen, and other customary closing conditions.The following table sets forth certain summarized financial information for Origen, which was determined to be a significant subsidiary in2013 and 2012 (inthousands): Year Ended December 31, 2013 2012Revenues $49,775 $64,838Expenses (51,912) (66,215)Net loss $(2,137) $(1,377) December 31, 2013ASSETS Loans receivable$463,254Other assets15,529Total assets$478,783LIABILITIES Warehouse and securitization financing$423,369Other liabilities38,109Total liabilities$461,478F - 25SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS8. Consolidated Variable Interest EntitiesVariable interest entities ("VIEs") that are consolidated include Rudgate Village SPE, LLC, Rudgate Clinton SPE, LLC, Rudgate Clinton Estates SPE, LLC(the “Rudgate Borrowers”) and Wildwood Village Mobile Home Park, LLC ("Wildwood"). We evaluated our arrangements with these properties under theguidance set forth in FASB ASC Topic 810, Consolidation. We concluded that the Rudgate Borrowers and Wildwood qualify as VIEs as we are the primarybeneficiary and hold controlling financial interests in these entities due to our power to direct the activities that most significantly impact the economicperformance of the entities, as well as our obligation to absorb the most significant losses and our rights to receive significant benefits from these entities. Assuch, the transactions and accounts of these VIEs are included in the accompanying consolidated financial statements.In December 2014, we assumed a mezzanine loan in the amount of $17.7 million, in connection with the Green Courte acquisition, and also assumed aproperty management agreement to manage and operate the Wildwood community.In November 2012, we guaranteed certain non-recourse carveouts under a $45.9 million mortgage loan (the “Senior Loan”) from Ladder Capital Finance LLCto the Rudgate Borrowers. The Senior Loan is secured by the two MH communities that we manage but do not own, which are located in southeast Michigan.In addition, we entered into a mezzanine loan agreement with the sole members of the Rudgate Borrowers under which we agreed to provide mezzaninefinancing in the amount of $15.1 million in respect of the two MH communities managed by us, and entered into property management agreements tomanage and operate these two communities.Included in our consolidated financial statements after appropriate eliminations were amounts related to the VIEs at December 31, 2014 and December 31,2013 as follows (in thousands): December 31, 2014 December 31, 2013ASSETS Investment property, net$94,230 $56,805Other assets4,400 3,926 Total Assets$98,630 $60,731 LIABILITIES AND STOCKHOLDERS' EQUITY Debt$65,849 $45,209Other liabilities10,442 6,564Noncontrolling interests(416) (537) Total Liabilities and Stockholders' Equity$75,875 $51,236Investment property, net and other assets related to the consolidated VIEs comprised approximately 3.4% and 3.0% of our consolidated total assets and debtand other liabilities comprised approximately 3.8% and 3.2% of our consolidated total liabilities at December 31, 2014 and December 31, 2013, respectively.Noncontrolling interest related to the consolidated VIEs comprised less than 1.0% of our consolidated total equity at December 31, 2014 and December 31,2013.F - 26SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS9. Debt and Lines of CreditThe following table sets forth certain information regarding debt (in thousands): PrincipalOutstanding Weighted AverageYears to Maturity Weighted AverageInterest Rates December 31,2014 December 31,2013 December 31,2014 December 31,2013 December 31, 2014 December 31, 2013Collateralized term loans - FMNA$492,800 $440,790 7.1 7.7 4.0% 3.8%Collateralized term loans - FMCC152,462 — 9.9 — 4.0% —%Collateralized term loans - LifeCompanies204,638 2,489 10.9 3.3 4.3% 8.0%Collateralized term loans - CMBS806,840 710,626 5.4 5.9 5.3% 5.3%Preferred OP Units45,903 47,022 6.8 7.6 6.9% 6.9%Secured Borrowing123,650 110,510 14.6 13.5 10.4% 10.6%Total debt$1,826,293 $1,311,437 7.5 7.2 5.1% 5.3%Collateralized Term LoansIn December 2014, we borrowed the aggregate amount of $74.0 million under two mortgage loans from The Northwestern Mutual Life Insurance Company(“NM”). The loans have a 15 year term and a blended rate of 3.65%. During the fourth quarter of 2014, in relation to the acquisition of the Green Courte properties (see Note 2), we refinanced approximately $100.7 million ofmortgage debt with Freddie Mac ("FMCC") on 12 of the communities (resulting in proceeds of $152.5 million) at an interest rate of 4.03% per annum and aterm of 10 years, and we assumed approximately $182.4 million of mortgage debt on 12 of the communities at a weighted average interest rate of 5.89% anda weighted average remaining term of 4.35 years.In September 2014, we paid off the $2.4 million mortgage agreement secured by Brookside Village upon maturity and $13.5 million mortgage agreementsecured by Cave Creek and Pine Trace.In August 2014, we paid off $52.6 million of Fannie Mae ("FNMA") debt, and we paid in full a $6.5 million mortgage agreement secured by Sheffield Estatesupon maturity.In July and August 2014, we borrowed the aggregate amount of $63.5 million under five mortgage loans from Ladder Capital Finance, LLC ("Ladder"). Theloans have a 10 year term and a blended annual interest rate of 4.56%. The proceeds of the loans were used to pay down a portion of our senior secured line ofcredit.In January 2014, we and four of our subsidiaries borrowed the aggregate amount of $99.0 million under four mortgage loans (each, an “Individual Loan” and,together, the “Loan”) from NM pursuant to a Master Loan Agreement with NM. Each Individual Loan accrues interest at a rate of 4.20% and matures onFebruary 13, 2026. We and each of the four borrowers have guaranteed the Loan. The proceeds of the Loan were used to repay a portion of our senior securedline of credit.In December 2013, we and nine of our subsidiaries entered into a loan agreement with a lender for a $72.4 million term loan ("Pool A Loan"), and we and nineof our other subsidiaries entered into a loan agreement with the same lender for a $69.1 million term loan ("Pool B Loan", and collectively with the Pool ALoan, the "Loans"). The Loans mature on January 1, 2024. The Pool A Loan accrues interest at 4.89% per year and is secured by eight MH communities andtwo RV communities. The Pool B Loan accrues interest at 4.90% per year and is secured by eight MH communities and one RV community. We used theproceeds of the Loans and $34.4 million of additional cash to repay in full 11 loans previously made to subsidiaries of the Company.In October 2013, we paid off maturing loans totaling $5.8 million, which were secured by two properties, Dutton Mills and Falcon Pointe.In May 2013, we extended until May 1, 2023, $151.4 million of FNMA debt, which had an original maturity date of May 1, 2013. The current weightedaverage interest rate on this debt is 3.6%.F - 27SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS9. Debt and Lines of Credit, continuedIn May 2013, we paid off the entire $3.5 million mortgage agreement secured by Holiday West Village upon maturity.In April 2013, we paid off the sellers note associated with the acquisition of Rainbow RV Resort. The note had a principal balance of $0.6 million.In January 2013, we paid off the sellers note associated with the acquisition of Palm Creek. The note had a principal balance of $36.0 million and an interestrate of 2.0%. We also paid off the remaining $30.0 million outstanding under our $36.0 million variable financing loan from Bank of America, N.A. and ThePrivate Bank.The collateralized term loans totaling $1.7 billion as of December 31, 2014, are secured by 147 properties comprised of 49,390 sites representingapproximately $1.6 billion of net book value.Preferred OP unitsThe Aspen preferred OP units are convertible into 509,676 common shares based on a conversion price of $68 per share with a redemption date of January 1,2024. The current preferred rate is 6.5%.Secured BorrowingSee Note 4, "Transfers of Financial Assets", for additional information regarding our collateralized receivables and secured borrowing transactions.Lines of CreditWe have a senior secured revolving credit facility with Citibank, N.A. and certain other lenders in the amount of $350.0 million (the "Facility"). The Facilityhas a four year term ending May 15, 2017, which can be extended for one additional year at our option, subject to the satisfaction of certain conditions asdefined in the credit agreement. The credit agreement also provides for, subject to the satisfaction of certain conditions, additional commitments in anamount not to exceed $250.0 million. The Facility bears interest at a floating rate based on the Eurodollar rate plus a margin that is determined based on ourleverage ratio calculated in accordance with the credit agreement, which can range from 1.65% to 2.90%. Based on our calculation of the leverage ratio as ofDecember 31, 2014, the margin was 1.65%. At December 31, 2014 we had no amount outstanding under the Facility and at December 31, 2013, we hadapproximately $178.1 million outstanding under the Facility. At December 31, 2014 and 2013, approximately $3.2 million and$2.7 million, respectively, ofavailability was used to back standby letters of credit.The Facility is secured by a first priority lien on all of our equity interests in each entity that owns all or a portion of the properties constituting the borrowingbase and collateral assignments of our senior and junior debt positions in certain borrowing base properties.In February 2013, we entered into a $61.5 million credit agreement to fund a portion of the purchase of the Morgan RV Properties acquisition (see Note 2"Real Estate Acquisitions and Dispositions"). This loan was paid off in March 2013.We also have a $20.0 million secured line of credit agreement collateralized by a portion of our rental home portfolio. The net book value of the rental homespledged as security for the loan must meet or exceed 200% of the outstanding loan balance. Theterms of the agreement require interest only payments for the first five years, with the remainder of the term being amortized based on a 10 year term. Theinterest rate is the prime rate as published in the Wall Street Journal adjusted the first day of each calendar month plus 200 basis points with a minimum rateof 5.5%. At both December 31, 2014 and 2013, the effective interest rate was 5.5%, and there was no amount outstanding.We have a $12.0 million manufactured home floor plan facility renewable indefinitely until our lender provides us at least twelve months’ notice of its intentto terminate the agreement. The interest rate is 100 basis points over the greater of the prime rate published in the Wall Street Journal on the first business dayof each month or 6.0%. At December 31, 2014 the effective interestF - 28SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS9. Debt and Lines of Credit, continuedrate was 7.0%. The outstanding balance was $5.8 million and $3.3 million as of December 31, 2014 and December 31, 2013, respectively.Long-term Debt MaturitiesAs of December 31, 2014, the total of maturities and amortization of our debt (excluding premiums and discounts) and lines of credit during the next fiveyears are as follows (in thousands): Maturities and Amortization By Year Total Due 2015 2016 2017 2018 2019 ThereafterLines of credit$5,794 $5,794 $— $— $— $— $—Mortgage loans payable: Maturities1,410,652 24,810 267,863 92,289 38,315 16,508 970,867Principal amortization227,887 24,093 23,804 23,325 23,263 23,670 109,732Preferred OP units45,903 3,670 7,570 — — — 34,663Secured borrowing123,650 5,167 5,715 6,258 6,802 7,362 92,346Total$1,813,886 $63,534 $304,952 $121,872 $68,380 $47,540 $1,207,608CovenantsThe most restrictive of our debt agreements place limitations on secured borrowings and contain minimum fixed charge coverage, leverage, distribution andnet worth requirements. As of December 31, 2014, we were in compliance with all covenants.10. Equity TransactionsDuring the fourth quarter of 2014, in connection with the Green Courte acquisition, we issued 361,797 shares of common stock at an issuance price of $50.00per share, 501,130 common OP units at an issuance price of $50.00 per unit, 483,317 shares of Series A-4 Preferred Stock at an issuance price of $25.00 pershare and 669,449 Series A-4 preferred OP units at an issuance price of $25.00 per unit (see Note 2). Series A-4 Preferred Stock and Series A-4 preferred OPunit holders can convert the shares or units into shares of common stock based upon an initial conversion price of $56.25 per share (subject to adjustmentupon various events) and receive a preferred return of 6.50% per year.In September 2014, we closed an underwritten registered public offering of 6,900,000 shares of common stock at a price of $50.60 per share, which includes900,000 shares sold to the underwriter pursuant to the full exercise of its option to purchase additional shares. Net proceeds from the offering wereapproximately $348.9 million after deducting expenses related to the offering. We used the majority of the net proceeds of the offering to fund the cashportion of the purchase price for the acquisition of MH communities from the Green Courte entities (see Note 2) and used the remainder of the net proceedsfrom the offering to repay borrowings outstanding under the Facility.In March 2014, we closed an underwritten registered public offering of 4,200,000 shares of common stock at a price of $44.45 per share, and in April 2014,the underwriters exercised their option to purchase an additional 630,000 shares of common stock at a price of $44.45 less the declared dividend of $0.65 pershare. Net proceeds from the offering were $214.0 million after deducting underwriting discounts and the expenses related to the offering. We used the netproceeds of the offering to repay borrowings outstanding under the Facility, for acquisitions of properties and for working capital and general corporatepurposes.F - 29SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS10. Equity Transactions, continuedIn March 2013, we closed an underwritten registered public offering of 5,750,000 shares of common stock at a price of $45.25 per share. The net proceedsfrom the offering were $249.5 million after deducting underwriting discounts and the expenses related to the offering. We used a portion of the proceeds topay down debt. We used the remaining net proceeds of the offering to fund the acquisition of properties and for working capital and general corporatepurposes.In February 2013, we issued $4.0 million of Series A-3 preferred OP units in connection with the Morgan RV Properties acquisition (see Note 2). Series A-3preferred OP unit holders can convert the Series A-3 preferred OP units into shares of common stock based upon a conversion price of $53.75 per share. TheSeries A-3 preferred OP unit holders receive a preferred return of 4.5% per year.In May 2012, we entered into an "at-the-market" sales agreement with BMO Capital Markets Corp. and Liquidnet Inc. to issue and sell up to $100 million ofshares from time to time. During 2014, 157,989 shares of common stock were sold through the agreement. The shares of common stock were sold at theprevailing market price of our common stock at the time of each sale with a weighted average sale price of $62.42, and we received net proceeds ofapproximately $9.7 million. Subsequent to year-end, we sold an additional 342,011 shares of common stock through the agreement at a weighted averagesale price of $63.94. We received net proceeds of approximately $21.5 million. We are authorized to sell an additional $43.7 million of common stockremaining under the sales agreement.In November 2004, our Board of Directors authorized us to repurchase up to 1,000,000 shares of our common stock. We have 400,000 common sharesremaining in the repurchase program. No common shares were repurchased during 2014 or 2013. There is no expiration date specified for the repurchaseprogram. Common OP Unit holders can convert their Common OP units into an equivalent number of shares of common stock at any time. During 2014, holders ofCommon OP units converted 9,110 units into common stock. No units were converted into common stock during 2013.Series A-1 preferred OP unit holders can convert their preferred OP units into 2.439 shares of our common stock (which exchange rate is subject to adjustmentupon stock splits, recapitalizations and similar events) at any time. During 2014, holders of Series A-1 preferred OP units converted 26,379 units into 64,335shares of common stock. No Series A-1 preferred OP units were converted into common stock during 2013.Cash distributions of $0.65 per share were declared for the quarter ended December 31, 2014. On January 16, 2015, cash payments of approximately $33.2million for aggregate distributions and distribution equivalents were made to common stockholders, common OP unitholders and restricted stockholders ofrecord as of December 31, 2014. Cash distributions of $0.4453 per share were declared on the Company's Series A cumulative redeemable preferred stock forthe quarter ended December 31, 2014. On January 15, 2015, cash payments of approximately $1.5 million for aggregate distributions were made to Series Acumulative redeemable preferred stockholders of record as of January 2, 2015. In addition, cash distributions of $0.1580 per share were declared on theCompany's Series A-4 Preferred Stock for the quarter ended December 31, 2014. On December 31, 2014, cash payments of approximately $0.1 million weremade to Series A-4 Preferred Stock holders of record as of December 19, 2014. During 2014, we made total cash payments of approximately $112.3 million tocommon stockholders, common OP unitholders and restricted stockholders, $6.0 million to Series A Preferred Stock holders and $0.1 million to Series A-4Preferred Stock holders.F - 30SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS11. Share-Based CompensationAs of December 31, 2014, we have two share-based compensation plans approved by stockholders: Sun Communities, Inc. Equity Incentive Plan (“2009Equity Plan”) and the First Amended and Restated 2004 Non-Employee Director Option Plan (“Director Plan”). We believe granting equity awards willprovide certain executives, key employees and directors additional incentives to promote our financial success, and promote employee and director retentionby providing an opportunity to acquire or increase the direct proprietary interest of those individuals in our operations and future.2009 Equity PlanThe 2009 Equity Plan was approved by our stockholders at the Annual Meeting of Stockholders held on July 29, 2009. The 2009 Equity Plan replaced theSun Communities, Inc. Stock Option Plan adopted in 1993, as amended and restated in 1996 and 2000, and terminates automatically July 29, 2019.The types of awards that may be granted under the 2009 Equity Plan include stock options, stock appreciation rights, restricted stock, and other stock basedawards. The maximum number of shares of common stock that may be issued under the 2009 Equity Plan is 950,000 shares, with 240,820 shares remainingfor future issuance.During 2014, the Company and Gary A. Shiffman (the Company's Chairman and Chief Executive Officer) entered into an Amended and Restated RestrictedStock Award Agreement, which amended and restated in its entirety the Restricted Stock Award Agreement dated June 20, 2013 between the Company andMr. Shiffman. Under the original stock award agreement, the Company granted Mr. Shiffman 250,000 restricted shares of the Company's common stock, ofwhich 175,000 restricted shares were awarded in respect of the performance of Mr. Shiffman and the Company over the prior three years and 75,000 restrictedshares were awarded to induce Mr. Shiffman to execute a new five-year employment agreement. All of these restricted shares were scheduled to vest over timethrough June 2020. The restated stock award agreement amended the vesting schedule of the restricted shares, of which 100,000 restricted shares are nowsubject to market and performance conditions and the remaining 150,000 shares will vest over time through June 2020. We accounted for the modification ofthis award is accordance with the FASB ASC Topic 718. See discussion below on the fair value measurement of these awards.During 2014, we granted 45,250 shares of restricted stock to employees under our 2009 Equity Plan. The restricted shares had a an average fair value of$52.54 per share and will vest as follows: 35% in 2017; 35% in 2018; 20% in 2019, 5% in 2020; and 5% in 2021. The fair value was determined using theclosing price of our common stock on the date the shares were issued.During 2014, we also granted 58,000 shares of restricted stock to our executive officers under our 2009 Equity Plan. The restricted shares had a fair value of$48.93 per share and will vest as follows: 20% in 2018; 30% in 2019; 35% in 2020; 10% in 2021; and 5% in 2022. The fair value was determined by usingthe closing share price of our common stock on the date the shares were issued.Director PlanThe Director Plan was approved by our stockholders at the Annual Meeting of Stockholders held on July 19, 2012. The Director Plan amended and restatedin its entirety our 2004 Non-Employee Director Stock Option Plan.The types of awards that may be granted under the Director Plan are options, restricted stock and OP units. Only non-employee directors are eligible toparticipate in the Director Plan. The maximum number of options, restricted stock and OP units that may be issued under the Director Plan is 175,000 shares,with 75,674 shares remaining for future issuance.In February 2014, we granted 14,000 shares of restricted stock to our directors under our Director Plan. The awards vest on February 12, 2017, and had a fairvalue of $48.01 per share. The fair value was determined by using the closing share price of our common stock on the date the shares were issued.During the year ended December 31, 2014, 6,833 shares of common stock were issued in connection with the exercise of stock options and the net proceedsreceived were $0.1 million.We have recognized compensation costs associated with share based awards of $4.9 million, $3.2 million, and $1.5 million for the years ended December 31,2014, 2013, and 2012 respectively.F - 31SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS11. Share-Based Compensation, continuedRestricted StockThe majority of our share-based compensation is awarded as service vesting restricted stock grants to executives and key employees. We have also awardedrestricted stock to our non-employee directors. We measure the fair value associated with these awards using the closing price of our common stock as of thegrant date to calculate compensation cost. Employee awards typically vest over several years and are subject to continued employment by the employee.Award recipients receive distribution payments on unvested shares of restricted stock.As of December 31, 2014, we have 50,000 shares of restricted stock issued to Mr. Shiffman subject to certain Company performance criteria, of which 12,500shares vest on March 1 of each 2015, 2016, 2017 and 2018. Compensation expense is recognized in accordance with ASC Topic 718 and based on anestimate of shares expected to vest. If it is not probable that the performance conditions will be satisfied, we do not recognize compensation expense. The fairvalue of these awards was measured using the closing price of our common stock as of the grant modification date to calculate compensation cost. Eachreporting period, we reevaluate our estimate of the number of shares expected to vest. The performance conditions were satisfied for the shares vesting onMarch 1, 2015 and compensation expense was recognized as of December 31, 2014.We also have 50,000 shares of restricted stock issued to Mr. Shiffman subject to certain market performance criteria, of which 16,667 shares vest on March 1of each 2016, 2017 and 2018. In accordance with ASC Topic 718, we estimated the fair value of the shares using a Monte Carlo simulation. We recognizecompensation cost ratably over each tranche of shares based on the fair value estimated by the model.The following table summarizes our restricted stock activity for the years ended December 31, 2014, 2013 and 2012: Number of Shares Weighted Average GrantDate Fair ValueUnvested restricted shares at January 1, 2012275,871 $28.93 Granted44,600 $40.93 Vested(8,750) $19.92 Forfeited(1,214) $37.04Unvested restricted shares at December 31, 2012310,507 $30.88 Granted371,300 $47.19 Vested(37,291) $16.87 Forfeited(12,560) $38.47Unvested restricted shares at December 31, 2013631,956 $41.14 Granted117,250 $49.97 Vested(55,488) $25.57 Forfeited(4,975) $38.45Unvested restricted shares at December 31, 2014688,743 $43.87Total compensation cost recognized for restricted stock was $4.9 million, $3.2 million, and $1.4 million for the years ended December 31, 2014, 2013, and2012, respectively. The total fair value of shares vested was $1.4 million, $0.6 million, and $0.2 million for the years ended December 31, 2014, 2013 and2012, respectively. The remaining net compensation cost related to ourunvested restricted shares outstanding as of December 31, 2014 is approximately $21.1 million. That expense is expected to be recognized $5.3 million in2015, $4.7 million in 2016, $4.6 million in 2017 and $6.5 million thereafter.OptionsWe have granted stock options to certain employees and non-employee directors. Option awards are generally granted with an exercise price equal to themarket price of our common stock as of the grant date. Stock options generally vest over a three yearF - 32SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS11. Share-Based Compensation, continuedperiod from the date of grant and have a maximum term of 10 years. No grants of options were made in 2014, 2013 or 2012. We issue new shares of commonstock at the time of share option exercise (or share unit conversion).The weighted average fair value of the options issued is estimated on the date of the grant using the Binomial (lattice) option pricing model. The optionsoutstanding as of December 31, 2014 consist of 32,500 non-employee director options. There are no employee options outstanding. The compensationexpense associated with non-vested stock option awards was not significant for the years ended December 31, 2014, 2013, and 2012.The following table summarizes our option activity during the years ended December 31, 2014, 2013 and 2012: Number ofOptions WeightedAverageExercise Price(per common share)Options outstanding at January 1, 201277,086 $29.64Granted— $—Exercised(16,256) $30.12Forfeited or expired(4,880) $33.16Options outstanding at December 31, 201255,950 $29.19Granted— $—Exercised(9,700) $21.67Forfeited or expired— $—Options outstanding at December 31, 201346,250 $30.77Granted— $—Exercised(12,250) $33.40Forfeited or expired(1,500) $35.44Options outstanding at December 31, 201432,500 $29.56The following table summarizes our options outstanding and options currently exercisable at December 31, 2014: December 31, 2014 Number ofOptions WeightedAverageExercise Price(per common share) WeightedAverageContractualTerm(in years) AggregateIntrinsicValue(in thousands)Options vested and expected to vest32,500 $29.56 4.2 $1,004 Options vested and exercisable32,500 $29.56 4.2 $1,004Aggregate intrinsic value represents the value of our closing share price as of the end of the year in excess of the exercise price multiplied by the number ofoptions outstanding or exercisable. The aggregate intrinsic value excludes the effect of stock options that have a zero or negative intrinsic value. For theyears ended December 31, 2014, 2013 and 2012, the intrinsic value of exercised options was $0.3 million, $0.2 million and $0.2 million, respectively. Forthe years ended December 31, 2014, 2013 and 2012, the intrinsic value of vested and exercisable options was $1.0 million, $0.5 million and $0.5 million,respectively.F - 33SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS12. Segment ReportingWe group our operating segments into reportable segments that provide similar products and services. Each operating segment has discrete financialinformation evaluated regularly by the Company's chief operating decision maker in evaluating and assessing performance. We have two reportablesegments: (i) Real Property Operations and (ii) Home Sales and Rentals. The Real Property Operations segment owns, operates, and develops MHcommunities and RV communities and is in the business of acquiring, operating, and expanding MH and RV communities. The Home Sales and Rentalssegment offers manufactured home sales and leasing services to tenants and prospective tenants of our communities. Transactions between our segments are eliminated in consolidation. Transient RV revenue is included in Real Property Operations’ revenues and isapproximately $31.6 million for the year ended December 31, 2014. This transient revenue was recognized 25.3% in the first quarter, 18.3% in the secondquarter, 43.3% in the third quarter and 13.1% in the fourth quarter of 2014.A presentation of segment financial information is summarized as follows (in thousands): Year Ended December 31, 2014 Real PropertyOperations Home Sales and HomeRentals ConsolidatedRevenues$357,793 $93,167 $450,960Operating expenses/Cost of home sales125,315 63,826 189,141Net operating income/Gross profit232,478 29,341 261,819Adjustments to arrive at net income (loss): Ancillary, interest and other income, net20,715 — 20,715General and administrative(31,769) (10,853) (42,622)Acquisition related costs(18,251) (8) (18,259)Depreciation and amortization(88,695) (45,031) (133,726)Asset impairment charge(837) — (837)Interest(73,752) (19) (73,771)Interest on mandatorily redeemable debt(3,210) — (3,210)Gain on disposition of properties17,447 207 17,654Gain on settlement4,452 — 4,452Distributions from affiliate1,200 — 1,200Provision for state income taxes(219) — (219)Net income (loss)59,559 (26,363) 33,196Less: Preferred return to Series A-1 preferred OP units2,654 — 2,654Less: Preferred return to Series A-3 preferred OP units181 — 181Less: Preferred return to Series A-4 preferred OP units100 — 100Less: Amounts attributable to noncontrolling interests3,698 (1,946) 1,752Net income (loss) attributable to Sun Communities, Inc.52,926 (24,417) 28,509Less: Preferred stock distributions6,133 — 6,133Net income (loss) attributable to Sun Communities, Inc. commonstockholders$46,793 $(24,417) $22,376F - 34SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS12. Segment Reporting, continued Year Ended December 31, 2013 Real PropertyOperations Home Sales and HomeRentals ConsolidatedRevenues$313,097 $87,352 $400,449Operating expenses/Cost of home sales109,921 60,732 170,653Net operating income/Gross profit203,176 26,620 229,796Adjustments to arrive at net income (loss): Ancillary, interest and other income, net14,773 — 14,773General and administrative(25,941) (9,913) (35,854)Acquisition related costs(3,928) — (3,928)Depreciation and amortization(73,729) (36,349) (110,078)Interest expense(73,001) (338) (73,339)Interest on mandatorily redeemable debt(3,238) — (3,238)Distributions from affiliate2,250 — 2,250Provision for state income taxes(234) — (234)Net income (loss)40,128 (19,980) 20,148Less: Preferred return to Series A-1 preferred OP units2,598 — 2,598Less: Preferred return to Series A-3 preferred OP units166 — 166Less: Amounts attributable to noncontrolling interests2,450 (1,732) 718Net income (loss) attributable to Sun Communities, Inc.34,914 (18,248) 16,666Less: Preferred stock distributions6,056 — 6,056Net income (loss) attributable to Sun Communities, Inc. commonstockholders$28,858 $(18,248) $10,610F - 35SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS12. Segment Reporting, continued Year Ended December 31, 2012 Real PropertyOperations Home Sales and HomeRentals ConsolidatedRevenues$255,761 $71,736 $327,497Operating expenses/Cost of home sales88,046 53,059 141,105Net operating income/Gross profit167,715 18,677 186,392Adjustments to arrive at net income (loss): Ancillary, interest and other income, net11,455 — 11,455General and administrative(20,037) (8,316) (28,353)Acquisition related costs(4,296) — (4,296)Depreciation and amortization(61,039) (28,635) (89,674)Interest(67,756) (103) (67,859)Interest on mandatorily redeemable debt(3,321) — (3,321)Distributions from affiliate3,900 — 3,900Provision for state income taxes(249) — (249)Net income (loss)26,372 (18,377) 7,995Less: Preferred return to Series A-1 preferred OP units2,329 — 2,329Less: Amounts attributable to noncontrolling interests1,640 (1,958) (318)Net income (loss) attributable to Sun Communities, Inc.22,403 (16,419) 5,984Less: Preferred stock distributions1,026 — 1,026Net income (loss) attributable to Sun Communities, Inc. commonstockholders$21,377 $(16,419) $4,958 December 31, 2014 December 31, 2013 Real PropertyOperations Home Sales andHome Rentals Consolidated Real PropertyOperations Home Sales andHome Rentals ConsolidatedIdentifiable assets: Investment property, net$2,207,526 $360,638 $2,568,164 $1,460,628 $294,424 $1,755,052Cash and cash equivalents81,864 1,595 83,459 5,336 (583) 4,753Inventory of manufactured homes— 8,860 8,860 — 5,810 5,810Notes and other receivables, net163,713 11,144 174,857 151,980 10,161 162,141Other assets97,485 4,867 102,352 62,554 4,594 67,148Total assets$2,550,588 $387,104 $2,937,692 $1,680,498 $314,406 $1,994,904F - 36SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS13. Income TaxesWe have elected to be taxed as a real estate investment trust (“REIT”) as defined under Section 856 of the Internal Revenue Code of 1986 (“Code”), asamended. In order for us to qualify as a REIT, at least ninety-five percent (95%) of our gross income in any year must be derived from certain-specifiedqualifying sources and at least seventy-five percent (75%) of our gross income must be derived from income qualifying as real estate income under the Code.In addition, a REIT must distribute at least ninety percent (90%) of its REIT ordinary taxable income to its stockholders and meet other tests.Qualification as a REIT involves the satisfaction of numerous requirements (some on an annual and quarterly basis) established under highly technical andcomplex Code provisions for which there are only limited judicial or administrative interpretations, and involves the determination of various factual mattersand circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation which requires us to continually monitorour tax status. We analyzed the various REIT tests and determined that we continued to qualify as a REIT for the year ended December 31, 2014.As a REIT, we generally will not be subject to U.S. federal income taxes at the corporate level on the ordinary taxable income we distribute to ourstockholders as dividends. If we fail to qualify as a REIT in any taxable year, our taxable income could be subject to U.S. federal income tax at regularcorporate rates (including any applicable alternative minimum tax). Even if we qualify as a REIT, we may be subject to certain state and local income taxesand to U.S. federal income and excise taxes on our undistributed income.For income tax purposes, distributions paid to common stockholders consist of ordinary income, capital gains, and return of capital. For the years endedDecember 31, 2014, 2013, and 2012, distributions paid per share were taxable as follows (unaudited): Years Ended December 31, 2014 2013 2012 Amount Percentage Amount Percentage Amount PercentageOrdinary income$0.82 31.7% $0.87 34.6% $0.92 48.7%Capital gain0.64 24.6% — —% — —%Return of capital1.14 43.7% 1.65 65.4% 0.97 51.3%Total distributions declared$2.60 100.0% $2.52 100.0% $1.89 100.0%Sun Home Services, Inc. ("SHS"), our taxable REIT subsidiary, is subject to U.S. federal income taxes. Our deferred tax assets and liabilities reflect the impactof temporary differences between the amounts of assets and liabilities for financial reporting purposes and the bases of such assets and liabilities as measuredby tax laws. Deferred tax assets are reduced, if necessary, by a valuation allowance to the amount where realization is more likely than not assured afterconsidering all available evidence. Our temporary differences primarily relate to net operating loss carryforwards and depreciation.The deferred tax assets included in the consolidated balance sheets are comprised of the following tax effects of temporary differences (in thousands): As of December 31, 2014 2013Deferred tax assets: Net operating loss carryforwards$26,214 $24,237Real estate assets29,092 23,999Amortization of intangibles(128) (128)Gross deferred tax assets55,178 48,108Valuation allowance(54,178) (47,108)Net deferred tax assets$1,000 $1,000SHS has operating loss carryforwards of approximately $77.1 million (or $26.2 million after tax) as of December 31, 2014. The loss carryforwards will beginto expire in 2021 through 2031 if not offset by future taxable income. Management believes its net deferred tax asset will be realized but realization iscontinuously subject to an assessment as to recoverability in the future.F - 37SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS13. Income Taxes, continuedThe deferred tax asset will be used when we generate sufficient taxable income. No federal tax expense was recognized in the years ended December 31,2014, 2013, and 2012.We had no unrecognized tax benefits as of December 31, 2014 and 2013. We expect no significant increases or decreases in unrecognized tax benefits due tochanges in tax positions within one year of December 31, 2014.We classify certain state taxes as income taxes for financial reporting purposes. We record Texas Margin Tax as income tax in our financial statements. Werecorded a provision for state income taxes of approximately $0.2 million, for each of the years ended December 31, 2014, 2013, and 2012. No deferred taxliability is recorded in relation to the Texas Margin Tax as of December 31, 2014 and 2013.We and our subsidiaries are subject to income taxes in the U.S. and various state jurisdictions. Tax regulations within each jurisdiction are subject to theinterpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, we are no longer subject to U.S. federal,state and local, examinations by tax authorities for the tax years ended December 31, 2008 and prior.Our policy is to report income tax penalties and income tax related interest expense as a component of income tax expense. No interest or penalty associatedwith any unrecognized income tax benefit or provision was accrued, nor was any income tax related interest or penalty recognized during the years endedDecember 31, 2014, 2013 and 2012.14. Earnings Per ShareWe have outstanding stock options, unvested restricted shares and Series A-4 Preferred Stock, and our Operating Partnership has Common OP units,convertible Series A-1 preferred OP units, Series A-3 preferred OP units, Series A-4 preferred OP units and Aspen preferred OP Units, which if converted orexercised, may impact dilution. Computations of basic and diluted earnings per share were as follows (in thousands, except per share data): Year Ended December 31,Numerator 2014 2013 2012Net income attributable to common stockholders $22,376 $10,610 $4,958Allocation of income to restricted stock awards (127) (144) 58Net income attributable to common stockholders after allocation $22,249 $10,466 $5,016Allocation of income to restricted stock awards 127 144 (58)Amounts attributable to Series A-4 Preferred Stock 76 — —Diluted earnings: net income attributable to common stockholders after allocation $22,452 $10,610 $4,958Denominator Weighted average common shares outstanding 41,337 34,228 26,970Add: dilutive stock options 16 15 17Add: dilutive restricted stock 237 167 138Add: dilutive Series A-4 Preferred Stock 215 — —Diluted weighted average common shares and securities 41,805 34,410 27,125Earnings per share available to common stockholders: Basic $0.54 $0.31 $0.19Diluted $0.54 $0.31 $0.18F - 38SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS14. Earnings Per Share, continuedWe excluded certain securities from the computation of diluted earnings per share because the inclusion of these securities would have been anti-dilutive forthe periods presented. The following table presents the outstanding securities that were excluded from the computation of diluted earnings per share for theyears ended December 31, 2014, 2013 and 2012 (amounts in thousands): Year Ended December 31, 2014 2013 2012Common OP units2,561 2,069 2,071Series A-1 preferred OP units429 455 455Series A-3 preferred OP units40 40 —Series A-4 preferred OP units669 — —Aspen preferred OP units1,284 1,325 1,325Total securities4,983 3,889 3,851F - 39SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS15. Quarterly Financial Information (Unaudited)The following is a condensed summary of our unaudited quarterly results for years ended December 31, 2014 and 2013. Income (loss) per share for the yearmay not equal the sum of the fiscal quarters' income (loss) per share due to changes in basic and diluted shares outstanding. Quarters 1st 2nd 3rd 4th (In thousands, except per share amounts)2014 Total revenues $111,181 $115,387 $125,435 $119,672Total expenses 100,651 108,993 112,655 139,267Income (loss) before income taxes and distributions from affiliate $10,530 $6,394 $12,780 $(19,595) Distributions from affiliate (1) $400 $400 $400 $—Gain on disposition of properties, net (2) $— $885 $13,631 $3,138Gain on settlement $— $— $— $4,452Net income (loss) attributable to Sun Communities, Inc. common stockholders $7,846 $4,928 $22,671 $(13,069) Earnings per share: Basic $0.21 $0.12 $0.54 $(0.27)Diluted $0.21 $0.12 $0.54 $(0.27) 2013 (3) Total revenues $102,913 $100,151 $107,201 $104,957Total expenses 94,983 97,290 101,841 102,976Income (loss) before income taxes and distributions from affiliate $7,930 $2,861 $5,360 $1,981 Distributions from affiliate (1) $400 $450 $700 $700Net income (loss) attributable to Sun Communities, Inc. common stockholders $5,744 $1,035 $3,749 $82 Earnings (loss) per share: Basic $0.19 $0.03 $0.10 $—Diluted $0.19 $0.03 $0.10 $—(1) Refer to Note 7 for more information regarding distributions from affiliate.(2) During the second quarter of 2014, we recorded a gain on disposition of properties, net of $0.9 million. In the fourth quarter of 2014, we identified and recorded a revision to thisgain of $3.2 million. Had this revision been recorded in the second quarter instead of the fourth quarter, our basic and diluted earnings per share would have been income of $0.20 inthe second quarter and a loss of $0.34 in the fourth quarter. Management of the Company concluded that the effect of the fourth quarter revision was not material to the second andfourth quarter 2014 financial statements.(3) Financial information includes certain reclassifications to conform to current period presentation.F - 40SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS16. Derivative Instruments and Hedging ActivitiesOur objective in using interest rate derivatives is to manage exposure to interest rate movements thereby minimizing the effect of interest rate changes andthe effect it could have on future cash flows. Interest rate swaps and caps are used to accomplish this objective. We require hedging derivative instruments tobe highly effective in reducing the risk exposure that they are designated to hedge. We formally designate any instrument that meets these hedging criteria asa hedge at the inception of the derivative contract. We do not enter into derivative instruments for speculative purposes.The following table provides the terms of our interest rate derivative contracts that were in effect as of December 31, 2014:Type Purpose Effective Date Maturity Date Notional (in millions) Based on Variable Rate Fixed Rate Spread EffectiveFixed RateCap Cap Floating Rate 4/1/2012 4/1/2015 $152.4 3 Month LIBOR 0.2320% 11.2650% —% N/ACap Cap Floating Rate 10/3/2011 10/3/2016 $10.0 3 Month LIBOR 0.2320% 11.0200% —% N/AIn January 2014, our interest rate swap agreement with a notional amount of $20.0 million expired. We did not enter into a new interest rate swap agreement.In accordance with ASC Topic 815, Derivatives and Hedging, we have recorded the fair value of our derivative instruments designated as cash flow hedgeson the balance sheet. See Note 17 for information on the determination of fair value for the derivative instruments. The following table summarizes the fairvalue of derivative instruments included in our consolidated balance sheets as of December 31, 2014 and December 31, 2013 (in thousands): Asset Derivatives Liability Derivatives Balance Sheet Location Fair Value Balance Sheet Location Fair ValueDerivatives designated as hedginginstruments December 31,2014 December 31,2013 December 31,2014 December 31,2013Interest rate swap and capagreementsOther assets $— $— Other liabilities $— $97Total derivatives designatedas hedging instruments $— $— $— $97These valuation adjustments will only be realized under certain situations. For example, if we terminate contracts prior to maturity or if derivatives fail toqualify for hedge accounting, we would need to amortize amounts currently included in accumulated other comprehensive income into interest expense overthe terms of the derivative contracts. We did not terminate our swap prior to maturity, and it did not fail to qualify for hedge accounting; therefore, the net ofvaluation adjustments through the maturity date approximated zero.Our hedges were highly effective and had minimal effect on income. The following table summarizes the impact of derivative instruments for the years endedDecember 31, 2014, 2013 and 2012 as recorded in the consolidated statements of operations (in thousands):Derivatives incash flow hedging relationship Amount of gain or (loss)recognized in OCI(effective portion) Location of gain or(loss) reclassified fromaccumulated OCI into income(effective portion) Amount of gain or (loss) reclassified fromaccumulated OCI into income (effectiveportion) Year Ended December 31, Year Ended December 31, 2014 2013 2012 2014 2013 2012Interest rate swap and cap agreements $97 $362 $643 Interest expense $— $— $—Our financial derivative instruments are designated and qualify as cash flow hedges and the effective portion of the gain or loss on such hedges are reportedas a component of accumulated other comprehensive loss in our consolidated balance sheets. To the extent that the hedging relationship is not effective ordoes not qualify as a cash flow hedge, the ineffective portion is recorded in interest expense. Hedges that received designated hedge accounting treatment areevaluated for effectiveness at the time that they are designated as well as through the hedging period. No gain or loss was recognized in the consolidatedfinancial statementsF - 41SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS16. Derivative Instruments and Hedging Activities, continuedrelated to hedge ineffectiveness or to amounts excluded from effectiveness testing on our cash flow hedge during the years ended December 31, 2014 and2013. An insignificant loss was recognized during the year ended December 31, 2012.Certain of our derivative instruments contain provisions that require us to provide ongoing collateralization on derivative instruments in a liabilityposition. As of December 31, 2013, we had collateral deposits recorded in other assets of approximately $0.7 million. As of December 31, 2014, we had nosuch deposits recorded.17. Fair Value of Financial InstrumentsOur financial instruments consist primarily of cash and cash equivalents, accounts and notes receivable, accounts payable, derivative instruments, and debt.ASC Topic 820, Fair Value Measurements and Disclosures, establishes guidance for the fair value hierarchy that requires the use of observable market data,when available, and prioritizes the inputs to valuation techniques used to measure fair value in the following categories:Level 1—Quoted unadjusted prices for identical instruments in active markets.Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all observable inputs and significant value drivers are observable in active markets.Level 3—Model derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developedby us.We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The followingmethods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value.Derivative InstrumentsThe derivative instruments held by us are interest rate swap and cap agreements for which quoted market prices are indirectly available. For those derivatives,we use model-derived valuations in which all observable inputs and significant value drivers are observable in active markets provided by brokers or dealersto determine the fair values of derivative instruments on a recurring basis (Level 2).Installment Notes on Manufactured HomesThe net carrying value of the installment notes on manufactured homes estimates the fair value as the interest rates in the portfolio comparable to currentprevailing market rates (Level 2).Long Term Debt and Lines of CreditThe fair value of long term debt (excluding the secured borrowing) is based on the estimates of management and on rates currently quoted and rates currentlyprevailing for comparable loans and instruments of comparable maturities (Level 2).Collateralized Receivables and Secured BorrowingThe fair value of these financial instruments offset each other as our collateralized receivables represent a transfer of financial assets and the cash proceedsreceived from these transactions have been classified as a secured borrowing in the consolidated comparable to current prevailing market rates (Level 2).Other Financial InstrumentsThe carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair market values due to the short-term natureof these instruments.F - 42SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS17. Fair Value of Financial Instruments, continuedThe table below sets forth our financial assets and liabilities that required disclosure of their fair values on a recurring basis as of December 31, 2014. Thetable presents the carrying values and fair values of our financial instruments as of December 31, 2014 and December 31, 2013 that were measured using thevaluation techniques described above (in thousands). The table excludes other financial instruments such as cash and cash equivalents, accounts receivable,and accounts payable because the carrying values associated with these instruments approximate fair value since their maturities are less than one year. December 31, 2014 December 31, 2013Financial assets Carrying Value Fair Value Carrying Value Fair ValueInstallment notes receivable on manufactured homes, net $25,884 $25,884 $25,471 $25,471Collateralized receivables, net $122,962 $122,962 $109,821 $109,821Financial liabilities Derivative instruments $— $— $97 $97Debt (excluding secured borrowing) $1,702,643 $1,752,939 $1,200,927 $1,211,821Secured borrowing $123,650 $123,649 $110,510 $110,510Lines of credit $5,794 $5,794 $181,383 $181,383The table below sets forth, by level, our financial assets and liabilities that were required to be carried at fair value in the consolidated balance sheets as ofDecember 31, 2014 and 2013 (in thousands): Description Frequency Asset/(Liability) Level 1 Level 2 Level 3December 31, 2014Derivative instruments Recurring $— $— $— $—December 31, 2013Derivative instruments Recurring $(97) $— $(97) $—The derivative instruments are the only financial liabilities that were required to be carried at fair value in the consolidated balance sheets for the periodsindicated, and we have no financial assets that are required to be carried at fair value.F - 43SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS18. Recent Accounting PronouncementsIn August 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2014-15, (“ASU 2014-15”), Disclosure of Uncertainties About anEntity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability tocontinue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclosegoing concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’sability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15,2016, with early adoption permitted. We are currently evaluating the potential impacts the new standard will have on our quarterly reporting process.In May 2014, the FASB issued ASU No. 2014-09, (“ASU 2014-09”), Revenue from Contracts with Customers as a new Topic, Accounting StandardsCodification ("ASC") Topic 606. The objective of ASU 2014-09 is to establish a single comprehensive model for entities to use in accounting for revenuearising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The coreprinciple is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects theconsideration to which the entity expects to be entitled in exchange for those goods or services. In applying the new standard, companies will perform a five-step analysis of transactions to determine when and how revenue is recognized. ASU 2014-09 applies to all contracts with customers except those that arewithin the scope of other topics in the FASB ASC. This ASU is effective for annual reporting periods (including interim periods within those periods)beginning after December 15, 2016 and shall be applied using either a full retrospective or modified retrospective approach. Early adoption is not permitted.We are currently evaluating the new guidance and have not determined the impact this standard may have on our consolidated financial statements nordecided upon the method of adoption.In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("ASU 2014-08"). ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation by requiring only those disposals of a component or group ofcomponents that represent a strategic shift or that will have a major effect on a company’s operational and financial results and also requires new disclosuresof both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The guidance does not change thepresentation requirements for discontinued operations in the statement where net income is presented. ASU 2014-08 also requires the reclassification of assetsand liabilities of a discontinued operation in the statement of financial position for all prior periods presented. The standard expands the disclosures fordiscontinued operations and requires new disclosures related to individually material disposals that do not meet the definition of a discontinued operation,an entity's continuing involvement with a discontinued operation following the disposal date and retained equity method investments in a discontinuedoperation. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014 and interim periods within annual periods beginning on orafter December 15, 2015. Early adoption is permitted but only for disposals (or classifications as held for sale) that have not been reported in financialstatements previously issued or available for issue. We have chosen to early adopt this pronouncement and have applied the guidance to recent applicabledisposals (see Note 2).19. Commitments and ContingenciesOn June 4, 2010, we settled all of the claims arising out of the litigation filed in 2004 by TJ Holdings, LLC in the Superior Court of Guilford County, NorthCarolina and the associated arbitration proceeding commenced by TJ Holdings in Southfield, Michigan. Under the terms of the settlement agreement, inwhich neither party admitted any liability whatsoever, we paid TJ Holdings $360,000. In addition, pursuant to this settlement, TJ Holdings’ percentageownership interest in Sun/Forest, LLC will be increased on a one time basis, in the event of a sale or refinance of all of the SunChamp Properties, to between9.03% and 28.99% depending on our average closing stock price as reported by the NYSE during the 30 days preceding the sale or refinance of all theSunChamp Properties. Once this percentage ownership interest has been adjusted, there will be no further adjustments from subsequent sales or refinances ofthe SunChamp Properties. The likelihood of a sale or refinancing of all of the SunChamp properties is not probable as these properties continue to see growthpotential nor do we have a need to refinance all of the properties, so we do not expect it to have a material adverse impact on our results of operations orfinancial condition.We are involved in various other legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to havea material adverse impact on our results of operations or financial condition.F - 44SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS20. Related Party TransactionsWe have entered into the following transactions with OFS LLC:Investment in OFS LLC. We entered into an agreement with four unrelated companies and we contributed cash of approximately $0.6 million towards theformation of OFS LLC. OFS LLC purchased the loan origination platform of Origen. The purpose of the venture is to originate manufactured housinginstallment contracts for its members. We accounted for our investment in OFS LLC using the equity method of accounting which we have since suspended.As of December 31, 2014, we had an ownership interest in the OFS LLC of 22.9%, and the carrying value of our investment was zero.Loan Origination, Sale and Purchase Agreement. As of 2014, our agreement with OFS LLC, in which OFS LLC agreed to fund loans that meet ourunderwriting guidelines and then transfer those loans to us pursuant to a Loan Origination, Sale and Purchase Agreement, was terminated. In 2013, we paidOFS LLC a fee of $650 per loan pursuant to a Loan Origination, Sale and Purchase Agreement which totaled approximately $0.1 million and we purchased, atpar, $7.7 million of these loans during the year ended December 31, 2013.We have entered into the following transactions with Origen:Investment in Origen. We own 5,000,000 shares of Origen common stock and Shiffman Origen LLC (which is owned by the Milton M. Shiffman Spouse'sMarital Trust, Gary A. Shiffman (our Chairman and Chief Executive Officer), and members of Mr. Shiffman's family) owns 1,025,000 shares of Origencommon stock. Gary A. Shiffman is a member of the Board of Directors of Origen and Arthur A. Weiss, our director, is a trustee of the Milton M. ShiffmanSpouse's Marital Trust. Ronald A. Klein, one of our directors, is the Chief Executive Officer and a director of Origen. Mr. Klein, Mr. Weiss and Brian M.Hermelin, another of our directors, beneficially own approximately 570,000, 10,000, and 200,000 shares of Origen common stock, respectively. Weaccounted for our investment in Origen using the equity method of accounting which we have since suspended. As of December 31, 2014 we had anownership interest in Origen of approximately 19%, and the carrying value of our investment was zero.Board Membership and Chief Executive Officer. Gary A. Shiffman, our Chairman and Chief Executive Officer, is a board member of Origen, and Ronald A.Klein is a board member and the Chief Executive Officer of Origen.In addition to the transactions with Origen described above, Mr. Shiffman, Mr. Weiss and Mr. Klein have entered into the following transactions with us:Lease of Executive Offices. Gary A. Shiffman, together with certain of his family members, indirectly owns a 21% equity interest in American Center LLC, theentity from which we lease office space for our principal executive offices. Each of Arthur A. Weiss and Ronald A. Klein owns a less than one percent indirectinterest in American Center LLC. Under this lease agreement, we lease approximately 62,900 rentable square feet. The term of the lease is until October 31,2026, and the base rent through October 31, 2015 is $16.45 per square foot (gross). From November 1, 2015 to October 31, 2016, the base rent will be $16.95per square foot (gross) and from November 1, 2016 to October 31, 2017, the base rent will be $17.45 per square foot (gross). We also have a temporary leasefor approximately 10,500 rentable square feet with base rent equal to $12.71 per square foot (gross). This temporary lease is currently operating on a month tomonth basis. Our annual rent expense associated with the lease of our executive offices was approximately $1.0 million for each of the years ended December31, 2014 and 2013, and $0.7 million for the year ended December 31, 2012. Our future annual rent expense will be approximately $1.0 million for 2015, $1.1million for 2016, 2017 and 2018, $1.2 million for 2019 and $8.8 million thereafter. Each of Mr. Shiffman, Mr. Weiss and Mr. Klein may have a conflict ofinterest with respect to his obligations as our officer and/or director and his ownership interest in American Center LLC.Legal Counsel. During 2012-2014, Jaffe, Raitt, Heuer, & Weiss, Professional Corporation acted as our general counsel and represented us in various matters.Arthur A. Weiss is the Chairman of the Board of Directors and a shareholder of such firm. We incurred legal fees and expenses owed to Jaffe, Raitt, Heuer, &Weiss of approximately $7.5 million, $3.2 million and $3.4 million in the years ended December 31, 2014, 2013 and 2012, respectively.Tax Consequences Upon Sale of Properties. Gary A. Shiffman holds limited partnership interests in the Operating Partnership which were received inconnection with the contribution of properties from partnerships previously affiliated with him. Prior to any redemption of these limited partnership interestsfor our common stock, Mr. Shiffman will have tax consequences different from those on us and our public stockholders upon the sale of any of thesepartnerships. Therefore, we and Mr. Shiffman may have different objectives regarding the appropriate pricing and timing of any sale of those properties.F - 45SUN COMMUNITIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS21. Subsequent EventsWe have evaluated our financial statements for subsequent events through the date that this Form 10-K was issued.Second Closing of Green Courte AcquisitionDuring January 2015, we completed the second closing of the acquisition of the Green Courte properties. See Note 2 for details on the acquisition.DebtIn relation to the acquisition of the Green Courte properties (see Note 2), subsequent to year end we refinanced approximately $120.9 million of mortgagedebt on 13 of the communities (resulting in proceeds of $126.0 million) at a weighted average interest rate of 3.87% per annum and a weighted average termof 14.1 years, and we assumed approximately $149.9 million of mortgage debt at a weighted average interest rate of 5.74% and a weighted average remainingterm of 6.3 years.DispositionIn January 2015, we completed the sale of a MH community comprised of 798 sites located in Indiana for $17.3 million.Acquisition AgreementOn December 4, 2014,we entered into seven separate contribution agreements (the “Contribution Agreements”) with a group of related selling entities(collectively, the “Selling Parties”) with respect to our planned acquisition of a portfolio of seven manufactured housing communities, including associatedmanufactured homes and certain other personal property and intangibles. After closing, we will operate the properties as six communities rather than seven.The properties are located in the Orlando, Florida area, are comprised of approximately 3,150 manufactured housing sites (approximately 60% of which are inage-restricted communities) and are 96% occupied. In addition to the developed sites, there are approximately 380 potential expansion sites in the Properties.Total consideration for the acquisition is approximately $257.6 million, including the assumption of approximately $157.5 million of debt. The balance ofthe consideration will be paid in a combination of up to approximately $41.8 million in cash, common OP units of the Operating Partnership at an issuanceprice of $61 per unit and newly-created Series C preferred OP units of the Operating Partnership at an issuance price of $100 per unit (the “Series C PreferredUnits”). Of the consideration to be paid with OP units in the Operating Partnership, 60% will be paid in Series C Preferred Units and 40% will be paid incommon OP units. Distributions will be paid on the Series C Preferred Units at a rate equal to 4.0% per year from the date of issuance until the secondanniversary of the date of issuance, 4.5% per year during the following three years, and 5.0% per year thereafter. Subject to certain limited exceptions, at theholder's option, each Series C Preferred Unit will be exchangeable into 1.1111 shares of the Company's common stock. Holders of Series C Preferred Unitswill not have voting or consent rights.The transaction is subject to the Company's satisfaction with its due diligence investigation and customary closing conditions, including consent of theexisting lenders. The transaction is expected to close in the second quarter of 2015.F - 46SUN COMMUNITIES, INC.REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE IIIDECEMBER 31, 2014(amounts in thousands) Initial Cost toCompany Costs CapitalizedSubsequent toAcquisition(Improvements) Gross Amount Carriedat December 31, 2014 Property Name Location Encumbrance Land Depreciable Assets Land DepreciableAssets Land Depreciable Assets Total AccumulatedDepreciation Date Acquired (A)orConstructed(C)Academy/Westpoint Canton, MI B $1,485 $14,278 $— $7,882 $1,485 $22,160 $23,645 $9,663 2000 (A)Allendale Allendale,MI B 366 3,684 — 11,260 366 14,944 15,310 6,738 1996 (A)Alpine GrandRapids, MI E 729 6,692 — 9,532 729 16,224 16,953 7,391 1996 (A)Apple Carr Village Muskegon,MI 3,511 800 6,172 — 4,499 800 10,671 11,471 1,381 2011 (A)Apple Creek Amelia, OH C 543 5,480 — 2,205 543 7,685 8,228 3,310 1999 (A)Arbor Terrace Bradenton,FL A 456 4,410 — 2,516 456 6,926 7,382 3,043 1996 (A)Ariana Village Lakeland, FL 5,915 240 2,195 — 1,207 240 3,402 3,642 1,841 1994 (A)Autumn Ridge Ankeny, IA B 890 8,054 (33) 3,241 857 11,295 12,152 5,614 1996 (A)Bell Crossing Clarksville,TN C 717 1,916 (13) 9,077 704 10,993 11,697 3,965 1999 (A)Big Timber LakeRV Resort Cape May,NJ E 590 21,308 — 1,216 590 22,524 23,114 1,268 2013 (A)Blazing Star San Antonio,TX 3,913 750 6,163 — 1,205 750 7,368 8,118 692 2012 (A)Blue Star ApacheJunction, AZ 2,681 980 507 — — 980 507 1,487 10 2014 (A)Blueberry Hill Bushnell, FL C 3,830 3,240 — 1,839 3,830 5,079 8,909 509 2012 (A)Boulder Ridge Pflugerville,TX — 1,000 500 3,324 23,427 4,324 23,927 28,251 10,825 1998 (C)Branch Creek Austin, TX B 796 3,716 — 5,260 796 8,976 9,772 4,885 1995 (A)Brentwood Kentwood,MI A 385 3,592 — 2,648 385 6,240 6,625 3,255 1996 (A)Brentwood West Mesa, AZ 20,043 13,620 24,202 — 2 13,620 24,204 37,824 424 2014 (A)Brookside Manor Goshen, IN B 260 1,080 386 13,133 646 14,213 14,859 6,660 1985 (A)Brookside Village Kentwood,MI — 170 5,564 — 706 170 6,270 6,440 815 2011 (A)Buttonwood Bay Sebring, FL A 1,952 18,294 — 5,251 1,952 23,545 25,497 9,905 2001 (A)Byron Center ByronCenter, MI E 253 2,402 — 2,544 253 4,946 5,199 2,412 1996 (A)Camelot Villa Macomb, MI E 910 21,211 — 4,864 910 26,075 26,985 1,418 2013 (A)Candlelight Village Sauk Village,IL D 600 5,623 — 7,305 600 12,928 13,528 5,998 1996 (A)Candlewick Court Owosso, MI A 125 1,900 132 2,876 257 4,776 5,033 2,685 1985 (A)Carriage Cove Sanford, FL 17,652 6,050 21,235 — 356 6,050 21,591 27,641 369 2014 (A)Carrington Pointe Ft. Wayne,IN B 1,076 3,632 — 8,178 1,076 11,810 12,886 5,242 1997 (A)Casa Del Valle Alamo, TX C 246 2,316 — 1,835 246 4,151 4,397 1,538 1997 (A)Castaways Berlin, MD 22,537 14,320 22,277 — 2,096 14,320 24,373 38,693 518 2014 (A)Catalina Middletown,OH A 653 5,858 — 4,979 653 10,837 11,490 5,782 1993 (A)Cave Creek Evans, CO — 2,241 15,343 — 14,021 2,241 29,364 31,605 7,132 2004 (A)Chisholm Point Pflugerville,TX B 609 5,286 — 5,788 609 11,074 11,683 6,070 1995 (A)F - 47SUN COMMUNITIES, INC.REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE IIIDECEMBER 31, 2014(amounts in thousands) Initial Cost toCompany Costs CapitalizedSubsequent toAcquisition(Improvements) Gross Amount Carriedat December 31, 2014 PropertyName Location Encumbrance Land Depreciable Assets Land DepreciableAssets Land Depreciable Assets Total AccumulatedDepreciation Date Acquired (A)orConstructed(C)Cider MillCrossings Fenton, MI C $520 $1,568 $— $12,480 $520 $14,048 $14,568 $1,956 2011 (A)Cider MillVillage Middleville, MI E 250 3,590 — 2,926 250 6,516 6,766 883 2011 (A)ClearwaterVillage South Bend, IN B 80 1,270 61 5,401 141 6,671 6,812 2,812 1986 (A)Club Naples Naples, FL C 5,780 4,952 — 1,613 5,780 6,565 12,345 834 2011 (A)Cobus Green Osceola, IN E 762 7,037 — 6,892 762 13,929 14,691 6,669 1993 (A)College ParkEstates Canton, MI C 75 800 174 9,778 249 10,578 10,827 5,288 1978 (A)ColonialVillage Allegany, NY 4,225 60 5,760 — — 60 5,760 5,820 99 2014 (A)ComalFarms New Braunfels,TX C 1,455 1,732 — 8,994 1,455 10,726 12,181 4,313 2000 (A&C)ContinentalNorth Davison, MI E 749 6,089 — 11,031 749 17,120 17,869 8,807 1996 (A)CorporateHeadquarters Southfield, MI — — — — 20,425 — 20,425 20,425 7,745 VariousCountryAcres Cadillac, MI E 380 3,495 — 3,213 380 6,708 7,088 3,142 1996 (A)CountryHills Village Hudsonville, MI E 340 3,861 — 3,084 340 6,945 7,285 1,153 2011 (A)CountryMeadows Flat Rock, MI B 924 7,583 296 18,652 1,220 26,235 27,455 13,217 1994 (A)CountryMeadowsVillage Caledonia, MI C 550 5,555 — 3,308 550 8,863 9,413 1,339 2011 (A)CountrysideEstates Mckean, PA 7,020 320 11,610 — 122 320 11,732 12,052 199 2014 (A)CountrysideAtlanta Lawrenceville,GA 12,950 1,274 10,957 — 1,476 1,274 12,433 13,707 4,515 2004 (A)CountrysideGwinnett Buford, GA 10,182 1,124 9,539 — 4,266 1,124 13,805 14,929 5,285 2004 (A)CountrysideLake Lanier Buford, GA 16,810 1,916 16,357 — 9,008 1,916 25,365 27,281 8,272 2004 (A)CountrysideVillage Great Falls, MT 4,237 430 7,157 — 2 430 7,159 7,589 124 2014 (A)Creekside Reidsville, NC C 350 1,423 (331) (1,149) 19 274 293 51 2000 (A&C)CreekwoodMeadows Burton, MI D 808 2,043 404 13,100 1,212 15,143 16,355 7,629 1997 (C)CutlerEstates Grand Rapids,MI C 749 6,941 — 3,276 749 10,217 10,966 5,441 1996 (A)DeerfieldRun Anderson, IN C 990 1,607 — 5,483 990 7,090 8,080 2,934 1999 (A)DesertHarbor Apache Junction,AZ 11,850 3,940 14,891 — — 3,940 14,891 18,831 258 2014 (A)Driftwood Clermont, NJ 20,000 1,450 29,851 — 1,578 1,450 31,429 32,879 618 2014 (A)Dutton MillVillage Caledonia, MI E 370 8,997 — 1,752 370 10,749 11,119 1,404 2011 (A)Eagle Crest Firestone, CO B 2,015 150 — 35,333 2,015 35,483 37,498 13,481 1998 (C)East Fork Batavia, OH C 1,280 6,302 — 13,967 1,280 20,269 21,549 6,265 2000 (A&C)East VillageEstates WashingtonTwp., MI 21,031 1,410 25,413 — 3,013 1,410 28,426 29,836 2,634 2012 (A)Edwardsville Edwardsville,KS C 425 8,805 541 8,849 966 17,654 18,620 8,872 1987 (A)Egelcraft Muskegon, MI 10,577 690 22,596 — 430 690 23,026 23,716 385 2014 (A)FiestaVillage Mesa, AZ — 2,830 4,475 — — 2,830 4,475 7,305 79 2014 (A)Fisherman'sCove Flint, MI E 380 3,438 — 3,682 380 7,120 7,500 3,841 1993 (A)ForestMeadows Philomath, OR E 1,031 2,050 — 790 1,031 2,840 3,871 1,448 1999 (A)F - 48SUN COMMUNITIES, INC.REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE IIIDECEMBER 31, 2014(amounts in thousands) Initial Cost toCompany Costs CapitalizedSubsequent toAcquisition(Improvements) Gross Amount Carriedat December 31, 2014 Property Name Location Encumbrance Land Depreciable Assets Land DepreciableAssets Land Depreciable Assets Total AccumulatedDepreciation Date Acquired (A)orConstructed(C)Four Seasons Elkhart, IN D $500 $4,811 $— $2,823 $500 $7,634 $8,134 $3,205 2000 (A)FrenchtownVilla District Newport, MI 30,975 1,450 52,327 — 1,088 1,450 53,415 54,865 896 2014 (A)Glen Laurel Concord, NC C 1,641 453 — 15,310 1,641 15,763 17,404 5,158 2001 (A&C)Goldcoaster Homestead, FL E 446 4,234 172 4,379 618 8,613 9,231 3,894 1997 (A)Grand Grand Rapids,MI A 374 3,587 — 3,429 374 7,016 7,390 3,151 1996 (A)Grand Lakes Citra, FL C 5,280 4,501 — 2,079 5,280 6,580 11,860 653 2012 (A)The Grove atAlta Ridge Denver, CO 28,640 5,370 37,152 — 102 5,370 37,254 42,624 630 2014 (A)Groves Ft. Myers, FL D 249 2,396 — 2,450 249 4,846 5,095 1,873 1997 (A)Gwynn's Island Gwynn, VA C 760 595 — 1,275 760 1,870 2,630 127 2013 (A)Hamlin Webberville,MI A 125 1,675 536 9,863 661 11,538 12,199 4,713 1984 (A)Hickory HillsVillage Battle Creek,MI 4,242 760 7,697 — 2,077 760 9,774 10,534 1,365 2011 (A)Hidden Ridge Hopkins, MI C 440 893 — 974 440 1,867 2,307 222 2011 (A)High Point Frederica, DE 17,282 898 7,031 (42) 5,892 856 12,923 13,779 5,092 1997 (A)Holiday Village Elkhart, IN B 100 3,207 143 3,972 243 7,179 7,422 3,618 1986 (A)Holiday WestVillage Holland, MI C 340 8,067 — 1,432 340 9,499 9,839 1,321 2011 (A)Holly/HawaiianGardens Holly, MI A 1,514 13,596 — 3,146 1,514 16,742 18,256 5,569 2004 (A)Holly Forest Holly Hill, FL B 920 8,376 — 600 920 8,976 9,896 5,105 1997 (A)HuntersCrossing Capac, MI C 430 1,092 — 752 430 1,844 2,274 169 2012 (A)Hunters Glen Wayland, MI C 1,102 11,926 — 5,621 1,102 17,547 18,649 6,021 2004 (A)Indian Creek Ft. MyersBeach, FL 69,012 3,832 34,660 — 8,153 3,832 42,813 46,645 22,665 1996 (A)Indian Creek Geneva on theLake, OH C 420 20,791 — 1,984 420 22,775 23,195 1,251 2013 (A)Island Lake Merritt Island,FL 12,816 700 6,431 — 557 700 6,988 7,688 4,309 1995 (A)Jellystone North Java, NY 7,146 870 8,884 — 1,549 870 10,433 11,303 763 2013 (A)Jellystone atBirchwoodAcres Woodridge, NY 4,179 560 5,527 — 2,345 560 7,872 8,432 454 2013 (A)KensingtonMeadows Lansing, MI B 250 2,699 — 8,421 250 11,120 11,370 5,535 1995 (A)Kenwood La Feria, TX C 145 1,842 (111) (869) 34 973 1,007 43 1999 (A)King's Court Traverse City,MI B 1,473 13,782 (11) 4,042 1,462 17,824 19,286 10,180 1996 (A)King's Lake Debary, FL 9,859 280 2,542 — 2,868 280 5,410 5,690 2,870 1994 (A)KnollwoodEstates Allendale, MI 2,664 400 4,061 — 3,379 400 7,440 7,840 3,191 2001 (A)La Casa Blanca ApacheJunction, AZ 9,593 4,370 14,142 — 2 4,370 14,144 18,514 246 2014 (A)Lafayette Place Warren, MI D 669 5,979 — 5,170 669 11,149 11,818 5,285 1998 (A)Lake In Wood Narvon, PA 11,013 7,360 7,097 — 1,045 7,360 8,142 15,502 770 2012 (A)Lake Juliana Auburndale, FL D 335 3,048 — 1,726 335 4,774 5,109 2,674 1994 (A)F - 49SUN COMMUNITIES, INC.REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE IIIDECEMBER 31, 2014(amounts in thousands) Initial Cost toCompany Costs CapitalizedSubsequent toAcquisition(Improvements) Gross Amount Carriedat December 31, 2014 PropertyName Location Encumbrance Land Depreciable Assets Land DepreciableAssets Land Depreciable Assets Total AccumulatedDepreciation Date Acquired (A)orConstructed(C)Lake LaurieRV Resort Cape May, NJ C $650 $7,736 $— $3,157 $650 $10,893 $11,543 $742 2013 (A)Lake Rudolph Santa Claus, IN 18,352 2,340 28,113 — 1,137 2,340 29,250 31,590 783 2014 (A)Lake SanMarino Naples, FL D 650 5,760 — 3,002 650 8,762 9,412 3,833 1996 (A)LakeshoreLandings Orlando, FL 10,705 2,570 19,481 — 2 2,570 19,483 22,053 337 2014 (A)Lakeview Ypsilanti, MI C 1,156 10,903 (1) 4,611 1,155 15,514 16,669 5,520 2004 (A)LeisureVillage Belmont, MI C 360 8,219 — 241 360 8,460 8,820 1,033 2011 (A)Liberty Farms Valparaiso, IN A 66 1,201 116 2,992 182 4,193 4,375 2,327 1985 (A)LincolnEstates Holland, MI A 455 4,201 — 2,842 455 7,043 7,498 3,588 1996 (A)LostDutchman ApacheJunction, AZ 4,084 4,140 12,213 — 6 4,140 12,219 16,359 213 2014 (A)Maple Brook Matteson, IL 29,614 8,460 48,865 — 3 8,460 48,868 57,328 844 2014 (A)MaplewoodMobile Indianapolis, IN A 275 2,122 — 2,212 275 4,334 4,609 2,549 1989 (A)MaplewoodManor Brunswick, ME 8,325 1,770 12,982 — — 1,770 12,982 14,752 225 2014 (A)Meadow LakeEstates White Lake, MI B 1,188 11,498 127 8,951 1,315 20,449 21,764 11,548 1994 (A)Meadowbrook Charlotte, NC C 1,310 6,570 — 14,192 1,310 20,762 22,072 6,371 2000 (A&C)MeadowbrookEstates Monroe, MI E 431 3,320 379 12,148 810 15,468 16,278 8,104 1986 (A)MeadowbrookVillage Tampa, FL A 519 4,728 — 660 519 5,388 5,907 3,565 1994 (A)Meadows Nappanee, IN A 287 2,300 — 4,107 287 6,407 6,694 3,760 1987 (A)Merrymeeting Brunswick, ME — 250 1,020 — — 250 1,020 1,270 18 2014 (A)MountainView Mesa, AZ 11,378 5,490 12,325 — 2 5,490 12,327 17,817 216 2014 (A)NaplesGardens Naples, FL C 3,640 2,020 — 1,111 3,640 3,131 6,771 391 2011 (A)New PointRV Resort New Point, VA C 1,550 5,259 — 2,845 1,550 8,104 9,654 492 2013 (A)North LakeEstates Moore Haven,FL C 4,150 3,486 — 985 4,150 4,471 8,621 592 2011 (A)North PointEstates Pueblo, CO C 1,582 3,027 — 4,968 1,582 7,995 9,577 2,845 2001 (C)NorthvilleCrossing Northville, MI 20,565 1,250 29,564 (14) 9,717 1,236 39,281 40,517 3,693 2012 (A)Oak Creek Coarsegold, CA 9,914 4,760 11,185 — — 4,760 11,185 15,945 195 2014 (A)Oak Crest Austin, TX C 4,311 12,611 — 11,109 4,311 23,720 28,031 7,485 2002 (A)Oak IslandVillage East Lansing,MI 3,291 320 6,843 — 2,145 320 8,988 9,308 1,216 2011 (A)Oak Ridge Manteno, IL 10,557 1,090 36,941 — 3 1,090 36,944 38,034 637 2014 (A)OakwoodVillage Miamisburg,OH B 1,964 6,401 — 13,129 1,964 19,530 21,494 8,642 1998 (A)Orange City Orange City,FL C 920 5,540 — 1,262 920 6,802 7,722 838 2011 (A)Orange Tree Orange City,FL — 283 2,530 15 973 298 3,503 3,801 2,146 1994 (A)Orchard Lake Milford, OH C 395 4,025 (15) 885 380 4,910 5,290 2,191 1999 (A)Palm Creek Casa Grande,AZ 41,945 11,836 76,143 — 5,097 11,836 81,240 93,076 7,956 2012 (A)ParksideVillage Cheektowaga,NY 5,745 550 10,402 — — 550 10,402 10,952 179 2014 (A)F - 50SUN COMMUNITIES, INC.REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE IIIDECEMBER 31, 2014(amounts in thousands) Initial Cost toCompany Costs CapitalizedSubsequent toAcquisition(Improvements) Gross Amount Carriedat December 31, 2014 PropertyName Location Encumbrance Land Depreciable Assets Land DepreciableAssets Land Depreciable Assets Total AccumulatedDepreciation Date Acquired (A)orConstructed(C)Paso RoblesRV Resort Paso Robles,CA — $1,396 $— $— $— $1,396 $— $1,396 $— 2014 (A)PebbleCreek Greenwood, IN C 1,030 5,074 — 6,996 1,030 12,070 13,100 5,407 2000 (A&C)PecanBranch Georgetown,TX C 1,379 — 235 4,984 1,614 4,984 6,598 2,312 1999 (C)Peter's PondRV Resort Sandwich, MA C 4,700 22,840 — 3,032 4,700 25,872 30,572 1,670 2013 (A)PheasantRidge Lancaster, PA D 2,044 19,279 — 495 2,044 19,774 21,818 8,233 2002 (A)Pin OakParc O'Fallon, MO B 1,038 3,250 467 10,879 1,505 14,129 15,634 5,892 1994 (A)Pine Hills Middlebury, IN E 72 544 60 3,195 132 3,739 3,871 1,956 1980 (A)Pine Ridge Prince George,VA A 405 2,397 — 3,829 405 6,226 6,631 3,155 1986 (A)Pine Trace Houston, TX — 2,907 17,169 (5) 11,785 2,902 28,954 31,856 7,472 2004 (A)PinebrookVillage Grand Rapids,MI C 130 5,692 — 1,507 130 7,199 7,329 931 2011 (A)Presidential Hudsonville,MI B 680 6,314 — 6,204 680 12,518 13,198 6,102 1996 (A)RainbowRV Frostproof, FL E 1,890 5,682 — 1,989 1,890 7,671 9,561 678 2012 (A)RanchoMirage ApacheJunction, AZ 15,491 7,510 22,238 — 1 7,510 22,239 29,749 386 2014 (A)Reserve atFox Creek Bullhead City,AZ 9,049 1,950 20,074 — — 1,950 20,074 22,024 346 2014 (A)Richmond Richmond, MI D 501 2,040 — 1,835 501 3,875 4,376 1,934 1998 (A)River Haven Grand Haven,MI C 1,800 16,967 — 6,854 1,800 23,821 25,621 9,778 2001 (A)River Ranch Austin, TX C 4,690 843 (4) 35,438 4,686 36,281 40,967 5,701 2000 (A&C)River Ridge Austin, TX 9,632 3,201 15,090 (2,351) 7,212 850 22,302 23,152 8,423 2002 (A)River RidgeExpansion Austin, TX — — — 2,351 4,503 2,351 4,503 6,854 466 2010 (C)Roxbury Goshen, IN B 1,057 9,870 — 3,873 1,057 13,743 14,800 5,531 2001 (A)RoyalCountry Miami, FL 54,000 2,290 20,758 — 1,773 2,290 22,531 24,821 15,079 1994 (A)RudgateClinton ClintonTownship, MI 27,832 1,090 23,664 — 4,758 1,090 28,422 29,512 2,580 2012 (A)RudgateManor SterlingHeights, MI 16,653 1,440 31,110 — 6,748 1,440 37,858 39,298 3,393 2012 (A)Saco RV Saco, ME — 790 3,576 — 731 790 4,307 5,097 119 2014 (A)Saddle OakClub Ocala, FL B 730 6,743 — 1,324 730 8,067 8,797 4,996 1995 (A)Saddlebrook San Marcos,TX C 1,703 11,843 — 9,565 1,703 21,408 23,111 7,460 2002 (A)Scio Farms Ann Arbor, MI A 2,300 22,659 (11) 13,944 2,289 36,603 38,892 19,390 1995 (A)Sea Air RehobothBeach, DE 20,000 1,207 10,179 — 1,984 1,207 12,163 13,370 5,005 1997 (A)Seaport RVResort Mystic, CT C 120 290 — 2,130 120 2,420 2,540 224 2013 (A)Seashore Cape May, NJ — 1,030 23,228 — 982 1,030 24,210 25,240 455 2014 (A)Sheffield Auburn Hills,MI — 778 7,165 — 1,570 778 8,735 9,513 2,706 2006 (A)ShermanOaks Jackson, MI C 200 2,400 240 7,108 440 9,508 9,948 5,306 1986 (A)Siesta Bay Ft. MyersBeach, FL D 2,051 18,549 — 3,393 2,051 21,942 23,993 12,103 1996 (A)SilverSprings ClintonTownship, MI 7,984 861 16,595 — 4,512 861 21,107 21,968 2,028 2012 (A)F - 51SUN COMMUNITIES, INC.REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE IIIDECEMBER 31, 2014(amounts in thousands) Initial Cost toCompany Costs CapitalizedSubsequent toAcquisition(Improvements) Gross Amount Carriedat December 31, 2014 PropertyName Location Encumbrance Land Depreciable Assets Land DepreciableAssets Land Depreciable Assets Total AccumulatedDepreciation Date Acquired (A)orConstructed(C)Silver Star Orlando, FL A $1,022 $9,306 $— $1,029 $1,022 $10,335 $11,357 $5,987 1996 (A)Sky Harbor Cheektowaga,NY 16,352 2,318 24,253 — 172 2,318 24,425 26,743 418 2014 (A)Skyline Fort Collins, CO 10,435 2,260 12,120 — 2 2,260 12,122 14,382 210 2014 (A)Snow toSun Weslaco, TX C 190 2,143 13 2,003 203 4,146 4,349 1,654 1997 (A)Southfork Belton, MO D 1,000 9,011 — 6,063 1,000 15,074 16,074 6,475 1997 (A)SouthernHills Stewartville,MN 8,000 360 12,723 — 442 360 13,165 13,525 216 2014 (A)SouthwoodVillage Grand Rapids,MI 5,531 300 11,517 — 1,841 300 13,358 13,658 1,693 2011 (A)St. ClairPlace St. Clair, MI E 501 2,029 — 1,297 501 3,326 3,827 1,852 1998 (A)Stonebridge San Antonio,TX C 2,515 2,096 (615) 9,021 1,900 11,117 13,017 4,722 2000 (A&C)Stonebridge Richfield Twp.,MI — 2,044 — 2,227 — 4,271 — 4,271 — 1998 (C)SummitRidge Converse, TX C 2,615 2,092 (883) 18,545 1,732 20,637 22,369 5,162 2000 (A&C)Sun Valley ApacheJunction, AZ 10,679 2,750 18,408 — 1 2,750 18,409 21,159 318 2014 (A)Sun Villa Reno, NV 18,300 2,385 11,773 (1,100) 906 1,285 12,679 13,964 6,750 1998 (A)SunsetRidge Kyle, TX C 2,190 2,775 — 7,603 2,190 10,378 12,568 4,442 2000 (A&C)SunsetRidge Portland, MI C 2,044 — (9) 15,681 2,035 15,681 17,716 6,728 1998 (C)SwanMeadow Dillon, CO 14,325 2,140 19,734 — 58 2,140 19,792 21,932 318 2014 (A)SycamoreVillage Mason, MI 5,867 390 13,341 — 3,280 390 16,621 17,011 2,215 2011 (A)TamaracVillage Ludington, MI 5,409 300 12,028 85 2,550 385 14,578 14,963 1,653 2011 (A)Tampa East Dover, FL E 734 6,310 — 3,727 734 10,037 10,771 2,905 2005 (A)ThreeLakes Hudson, FL C 5,050 3,361 — 1,575 5,050 4,936 9,986 506 2012 (A)ThunderhillEstates Sturgeon Bay,WI 5,775 640 9,008 — 205 640 9,213 9,853 155 2014 (A)TimberRidge Ft. Collins, CO B 990 9,231 — 4,571 990 13,802 14,792 7,483 1996 (A)TimberlineEstates Coopersville,MI B 535 4,867 — 5,829 535 10,696 11,231 5,081 1994 (A)Town andCountry Traverse City,MI E 406 3,736 — 1,407 406 5,143 5,549 2,927 1996 (A)Town &CountryVillage Lisbon, ME 2,700 230 4,539 — — 230 4,539 4,769 78 2014 (A)ValleyViewEstates Allegany, NY 4,225 110 4,511 — 78 110 4,589 4,699 78 2014 (A)ValleyBrook Indianapolis, IN B 150 3,500 1,277 14,015 1,427 17,515 18,942 9,984 1989 (A)VillageTrails Howard City,MI — 988 1,472 (51) 2,141 937 3,613 4,550 1,893 1998 (A)The Villasat CallaPointe Cheektowaga,NY 4,318 380 11,014 — — 380 11,014 11,394 189 2014 (A)Vines RVResort Paso Robles,CA — 890 7,110 — 662 890 7,772 8,662 408 2013 (A)WagonWheel Old OrchardBeach, ME C 590 7,703 — 2,541 590 10,244 10,834 684 2013 (A)WarrenDunesVillage Bridgman, MI — 310 3,350 — 1,706 310 5,056 5,366 762 2011 (A)Water Oak Lady Lake, FL 54,000 2,834 16,706 101 17,142 2,935 33,848 36,783 16,699 1993 (A)WaverlyShoresVillage Holland, MI 4,986 340 7,267 — 518 340 7,785 8,125 988 2011 (A)F - 52SUN COMMUNITIES, INC.REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE IIIDECEMBER 31, 2014(amounts in thousands) Initial Cost to Company Costs CapitalizedSubsequent toAcquisition(Improvements) Gross Amount Carriedat December 31, 2014 PropertyName Location Encumbrance Land Depreciable Assets Land DepreciableAssets Land Depreciable Assets Total AccumulatedDepreciation Date Acquired (A)orConstructed(C)West GlenVillage Indianapolis,IN A $1,100 $10,028 $— $8,022 $1,100 $18,050 $19,150 $8,898 1994 (A)West VillageEstates Romulus, MI 6,424 884 19,765 — 2,649 884 22,414 23,298 2,060 2012 (A)Westbrook Toledo, OH B 1,110 10,462 — 3,919 1,110 14,381 15,491 6,654 1999 (A)WestbrookSenior Toledo, OH B 355 3,295 — 311 355 3,606 3,961 1,587 2001 (A)WestwardHo RVResort Glenbeulah,WI C 1,050 5,642 — 1,509 1,050 7,151 8,201 457 2013 (A)White Lake White Lake,MI B 672 6,179 — 9,259 672 15,438 16,110 7,380 1997 (A)Wild Acres OrchardBeach, ME C 1,640 26,786 — 3,607 1,640 30,393 32,033 2,136 2013 (A)WildwoodCommunity Sandwich, IL 21,364 1,890 37,732 — 3 1,890 37,735 39,625 651 2014 (A)Willowbrook Toledo, OH B 781 7,054 — 3,579 781 10,633 11,414 4,918 1997 (A)WindhamHills Jackson, MI B 2,673 2,364 — 15,985 2,673 18,349 21,022 7,473 1998 (A)WindsorWoodsVillage Wayland, MI C 270 5,835 — 3,560 270 9,395 9,665 1,261 2011 (A)WineCountry RVResort Paso Robles,CA — 1,740 11,510 — 561 1,740 12,071 13,811 234 2014 (A)WoodhavenPlace Woodhaven,MI B 501 4,541 — 4,160 501 8,701 9,202 3,746 1998 (A)WoodlakeTrails San Antonio,TX C 1,186 287 (56) 10,474 1,130 10,761 11,891 2,793 2000 (A&C)WoodlandPark Estates Eugene, OR 1,811 1,592 14,398 — 1,138 1,592 15,536 17,128 8,346 1998 (A)Woods Edge WestLafayette, IN C 100 2,600 3 10,592 103 13,192 13,295 6,588 1985 (A)WoodsideTerrace Holland, OH B 1,064 9,625 (1) 6,195 1,063 15,820 16,883 7,408 1997 (A)WorthingtonArms LewisCenter, OH B 376 2,624 — 2,912 376 5,536 5,912 2,871 1990 (A) $325,135 $2,044,542 $8,208 $986,032 $333,343 $3,030,574 $3,363,917 $795,753 A These communities collateralize $158.5 million of secured debt.B These communities collateralize $308.1 million of secured debt.C These communities support the borrowing base for our secured line of credit, which had no amount outstanding.D These communities collateralize $109.4 million of secured debt.E These communities collateralize $141.5 million of secured debt.F - 53SUN COMMUNITIES, INC.REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE IIIDECEMBER 31, 2014(amounts in thousands)The change in investment property for the years ended December 31, 2014, 2013, and 2012 is as follows: Years Ended December 31, 2014 2013 2012 Beginning balance$2,489,119 $2,177,305 $1,794,605 Community and land acquisitions, including immediate improvements798,827 192,660 302,487 Community expansion and development22,195 17,985 13,424 Improvements, other173,989 145,916 110,029 Asset impairment(1,870) — — Dispositions and other(118,343) (44,747) (43,240) Ending balance$3,363,917 $2,489,119 $2,177,305The change in accumulated depreciation for the years ended December 31, 2014, 2013, and 2012 is as follows: Years Ended December 31, 2014 2013 2012 Beginning balance$734,067 $659,169 $597,999 Depreciation for the period121,103 96,499 80,124 Asset impairment(1,033) — — Dispositions and other(58,384) (21,601) (18,954) Ending balance$795,753 $734,067 $659,169F - 54SECOND AMENDED AND RESTATED BYLAWSOFSUN COMMUNITIES, INC.Article I CHARTER AND OFFICESSection 1. CHARTER. These bylaws (these “Bylaws”) shall be subject to the terms of the charter (the “Charter”), as fromtime to time in effect, of Sun Communities, Inc. (the “Corporation”).Section 2. PRINCIPAL OFFICE. The principal office of the Corporation shall be located at such place or places as the Boardof Directors may designate.Section 3. ADDITIONAL OFFICES. The Corporation may have additional offices at such places as the Board of Directorsmay from time to time determine or the business of the Corporation may require.ARTICLE II MEETINGS OF STOCKHOLDERSSection 1. PLACE. All meetings of stockholders shall be held at the principal office of the Corporation or at such other placeas shall be set by the Board of Directors and stated in the notice of the meeting.Section 2. ANNUAL MEETING. An annual meeting of the stockholders for the election of directors and the transaction ofany business within the powers of the Corporation shall be held on a date and at the time set by the Board of Directors. Failure to holdan annual meeting does not invalidate the Corporation’s existence or affect any otherwise valid acts of the Corporation.Section 3. SPECIAL MEETINGS.(a) General. Special meetings of the stockholders of the Corporation, for any purpose or purposes, may be called atany time by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President. Subject to subsection (b)of this Section 3, a special meeting of stockholders shall also be called by the Secretary of the Corporation upon the written request ofstockholders entitled to cast not less than ten percent (10%) of all the votes entitled to be cast at the meeting. Unless requested by the stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting, a specialmeeting need not be called to consider any matter which issubstantially the same as a matter voted on at any special meeting of the stockholders held during the preceding twelve (12) months.(b) Stockholder Requested Special Meetings.(1) Any stockholder of record seeking to have stockholders request a special meeting shall, by sending written noticeto the Secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fixa record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). The Record DateRequest Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or morestockholders of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date RequestNotice), shall bear the date of signature of each such stockholder (or such duly authorized agent) and shall set forth all informationrelating to each such stockholder that must be disclosed in solicitations of proxies for election of directors in an election contest (even ifan election contest is not involved), or as otherwise required, in each case pursuant to Regulation 14A (or any successor provision)under the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder (the “Exchange Act”). Upon receivingthe Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precedeand shall not be more than ten (10) days after the close of business on the date on which the resolution fixing the Request Record Dateis adopted by the Board of Directors. If the Board of Directors, within ten (10) days after the date on which a valid Record DateRequest Notice is received, fails to adopt a resolution fixing the Request Record Date and make a public announcement of suchRequest Record Date, the Request Record Date shall be the close of business on the tenth (10th) day after the date on which suchRecord Date Request Notice is received by the Secretary.(2) In order for any stockholder to request a special meeting, one or more written requests for a special meeting signedby stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Dateentitled to cast not less than 10% (the “Special Meeting Percentage”) of all of the votes entitled to be cast at such meeting (the“Special Meeting Request”) shall be delivered to the Secretary. In addition, the Special Meeting Request shall set forth the purpose ofthe meeting and the matters proposed to be acted on at it (which shall be limited to the matters set forth in the Record Date RequestNotice received by the Secretary), shall bear the date of signature of each such stockholder (or such duly authorized agent) signing theSpecial Meeting Request, shall set forth the name and address, as they appear in the Corporation’s records, of each stockholder signingsuch request (or on whose behalf the Special Meeting Request is signed) and the class, series and number of all shares of stock of theCorporation which are owned of record and beneficially by each such stockholder, shall be sent to the Secretary by registered mail,return receipt requested, and shall be received by the Secretary within sixty (60) days after the Request Record Date. Any requestingstockholder (or agent duly authorized in a writing accompanying the revocation or the Special Meeting Request) may revoke his, heror its request for a special meeting at any time by written revocation delivered to the Secretary.- 2 -(3) The Secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and mailingthe notice of meeting (including the Corporation’s proxy materials). The Secretary shall not be required to call a special meeting uponstockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (2) of this Section 3,the Secretary receives payment of such reasonably estimated cost prior to the mailing of any notice of the meeting.(4) Except as provided in the next sentence, any special meeting shall be held at such date and time as may bedesignated by the Chairman of the Board, the Chief Executive Officer, the Board of Directors or the President, whoever has called themeeting. In the case of any special meeting called by the Secretary upon the request of stockholders (a “Stockholder RequestedMeeting”), such meeting shall be held at such date and time as may be designated by the Board of Directors; provided, however, thatthe date of any Stockholder Requested Meeting shall not be more than ninety (90) days after the record date for such meeting (the“Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within ten (10) days after the date thata valid Special Meeting Request is actually received by the Secretary (the “Delivery Date”), a date and time for a StockholderRequested Meeting, then such meeting shall be held at 2:00 p.m. local time on the ninetieth (90th) day after the Meeting Record Date,or if such ninetieth (90th) day is not a Business Day (as defined below), on the first preceding Business Day; and provided further thatin the event that the Board of Directors fails to designate a place for a Stockholder Requested Meeting within ten (10) days after theDelivery Date, then such meeting shall be held at the principal executive office of the Corporation. In fixing a date for any specialmeeting, the Chairman of the Board of Directors, the Chief Executive Officer, the Board of Directors or the President, may considersuch factors as he, she or it deems relevant within the good faith exercises of business judgment, including, without limitation, thenature of the matters to be considered, the facts and circumstances surrounding any request for meeting and any plan of the Board ofDirectors to call an annual meeting or special meeting. In the case of any Stockholder Requested Meeting, if the Board of Directorsfails to fix a Meeting Record Date that is a date within thirty (30) days after the Delivery Date, then the close of business on thethirtieth (30th) day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for anyStockholder Requested Meeting in the event the requesting stockholders fail to comply with the provisions of paragraph (3) of thisSection 3.(5) If written revocations of requests for the special meeting have been delivered to the Secretary and the result is thatstockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the SpecialMeeting Percentage have delivered, and not revoked, requests for a special meeting to the Secretary, the Secretary shall: (i) if the noticeof meeting has not already been mailed, refrain from mailing the notice of the meeting and send to all requesting stockholders whohave not revoked such requests written notice of any revocation of a request for the special meeting, or (ii) if the notice of meeting hasbeen mailed and if the Secretary first sends to all requesting stockholders who have not revoked requests for a special meeting writtennotice of any revocation of a request for the special meeting and written notice of the Secretary’s intention to revoke the notice of themeeting, revoke the notice of the meeting at any time before ten (10) days before the commencement of the meeting. Any request for aspecial meeting received after a revocation by the Secretary of a notice of a meeting shall be considered a request for a new specialmeeting.- 3 -(6) The Board of Directors may appoint one or more persons as inspectors of elections to act as the agent of theCorporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Requestreceived by the Secretary. For the purpose of permitting the inspectors to perform such review, no such purported request shall bedeemed to have been delivered to the Secretary until the earlier of (i) five (5) Business Days after receipt by the Secretary of suchpurported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by theSecretary represent at least the Special Meeting Percentage. Nothing contained in this paragraph (6) shall in any way be construed tosuggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during orafter such five (5)-Business Day period, or to take any other action (including, without limitation, the commencement, prosecution ordefense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).(7) For purposes of these Bylaws, “Business Day” shall mean any day other than a Sunday or a day on whichbanking institutions in the State of Michigan are authorized or obligated by law or executive order to close.Section 4. RECORD DATE. The Board of Directors may set a record date for the purpose of determining the stockholders ofthe Corporation who are entitled to notice of or to vote at any meeting. The record date may not be prior to the close of business on theday the record date is fixed, and may not be more than ninety (90) days prior to the date of the notice or the date of the meeting (exceptas permitted by Article II, Section 7), nor fewer than ten (10) days before the date of the meeting. If no record date has been fixed, therecord date for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders of the Corporation shall bethe later of the close of business on the day on which notice of the meeting is mailed and the thirtieth (30th) day before the meeting. Allpersons who were holders of record of shares of stock of the Corporation as of the record date of the meeting, and no others, shall beentitled to notice of and to vote at such meeting and adjournments and postponements thereof.Section 5. NOTICE. Not less than ten (10) nor more than ninety (90) days before each meeting of stockholders, the Secretaryshall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice ofthe meeting notice in writing or by electronic transmission stating the date, time and place of the meeting, if any, and the means ofremote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and may vote at themeeting and, in the case of a special meeting or a meeting at which an action proposed to be taken requires advance notice of thepurpose of such action, the purpose or purposes for which the meeting is called. Notice is given to a stockholder when it is (i)personally delivered to the stockholder, (ii) left at the stockholder’s residence or usual place of business, (iii) mailed to the stockholder,postage prepaid, at the stockholder’s address as it appears on the records of the Corporation, or (iv) transmitted to the stockholder by anelectronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. A singlenotice to all stockholders who share an address shall be effective as to any stockholder at such address who consents to such notice orafter having been notified of the Corporation’s intent to give a single notice fails to object in writing to such single notice within sixty(60) days. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect thevalidity of any meeting fixed in accordance with this Article II, or the validity of any proceedings at any such meeting.- 4 -The Corporation may postpone or cancel a meeting of stockholders by making a “public announcement” (as defined inSection 13(c)(3)) of such postponement or cancellation prior to the meeting. Notice of the date to which the meeting is postponed shallbe given not less than ten (10) days prior to such date and otherwise in the manner set forth in this Section 5.Section 6. SCOPE OF NOTICE. Subject to Section 13(a) of this Article II, any business of the Corporation may betransacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is requiredby any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specificallydesignated in the notice.Section 7. QUORUM. At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast amajority of the votes entitled to be cast (without regard to class or series) shall constitute a quorum, except with respect to any suchmatter that, under applicable statutes or regulatory requirements or the Charter, requires approval by a separate vote of one or moreclasses or series of stock, in which case the presence in person or by proxy of the holders of shares entitled to cast a majority of thevotes entitled to be cast by each such class or series on such a matter shall constitute a quorum. However, this section shall not affectany requirement under any statute or the Charter for the vote necessary for the adoption of any measure. For the purposes ofestablishing whether a quorum is present, all shares of stock present and entitled to vote, including abstentions and broker non-votes,shall be counted. If, however, such quorum shall not be present at any meeting of the stockholders, the chairman of the meeting mayadjourn the meeting from time to time to a date not more than one hundred and twenty (120) days after the original record date withoutnotice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may betransacted which might have been transacted at the meeting as originally notified. The stockholders present either in person or byproxy, at a meeting which has been duly called and at which a quorum was established, may continue to transact business untiladjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.The absence from any meeting in person or by proxy of holders of the number of shares of stock of the Corporation requiredfor action upon any given matter shall not prevent action at the meeting on any other matter or matters that may properly come beforethe meeting, so long as there are present, in person or by proxy, holders of the number of shares of stock of the Corporation requiredfor action upon the other matter or matters.Section 8. VOTING. At a meeting of stockholders duly called and at which a quorum is present, a majority of the votes castfor a nominee and votes cast against such nominee shall be sufficient to elect a director, and a majority of the votes cast shall besufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast isrequired by statute or by the Charter of the Corporation; provided, however, that directors shall be elected by a plurality of the votescast at any meeting of stockholders for which (i) the Secretary receives a notice that a stockholder has nominated a person for electionto the Board of Directors in compliance with the advance notice requirements for stockholder nominees for director set forth in ArticleII, Section 13 of these Bylaws and (ii) such nomination has not been withdrawn by such stockholder on or prior to the day nextpreceding the date the Corporation first mails its notice of- 5 -meeting for such meeting to the stockholders. If directors are to be elected by a plurality of the votes cast, stockholders shall not bepermitted to vote against a nominee. Unless otherwise provided in the Charter, each outstanding share, regardless of class, shall beentitled to one vote on each matter submitted to a vote at a meeting of stockholders.Section 9. PROXIES. A stockholder may cast the votes entitled to be cast by the holder of shares of stock owned of record bythe stockholder either in person or by proxy executed or authorized by the stockholder or by the stockholder’s duly authorized agent inany manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the Secretary before or at themeeting. Unless otherwise specifically limited by their terms, proxies shall entitle the holder thereof to vote at any postponement oradjournment of a meeting. No proxy shall be valid after the expiration of eleven (11) months from the date of its execution, unlessotherwise provided in the proxy. Except in those cases in which the proxy states that it is irrevocable and where an irrevocable proxy ispermitted by law, a stockholder who has submitted a proxy at a meeting may revoke or withdraw the proxy: (i) with respect to anymatter to be considered at the meeting or any postponement or adjournment thereof if such revocation or withdrawal is properlyreceived prior to the vote on that matter and (ii) by delivering a duly executed proxy bearing a later date or by attending the meeting orthe postponement or adjournment thereof and voting in person.Section 10. VOTING OF STOCK BY CERTAIN HOLDERS. Shares of stock of the Corporation directly or indirectlyowned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled tobe voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted indetermining the total number of outstanding shares at any given time.The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporationthat any shares of stock registered in the name of the stockholder are held for the account of a specified person other than thestockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which thecertification may be made, the form of certification and the information to be contained in it; if the certification is with respect to arecord date or closing of the stock transfer books, the time after the record date or closing of the stock transfer books within which thecertification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directorsconsiders necessary or desirable. On receipt of such certification, the person specified in the certification shall be regarded as, for thepurposes set forth in the certification, the stockholder of record of the specified stock in place of the stockholder who makes thecertification.Section 11. ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted by an individualappointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment, by the Chairman of theBoard or, in the case of a vacancy in the office or absence of the Chairman of the Board, by one of the following officers present at themeeting: the Vice Chairman of the Board, if there is one, the Chief Executive Officer, the President, the Vice Presidents in their orderof rank and seniority, or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votescast by stockholders present in person or by proxy. The Secretary or, in the Secretary’s absence, an Assistant Secretary, or in theabsence of both the Secretary and Assistant Secretaries, an individual appointed by the Board of Directors, or in the absence of suchappointment, an individual appointed by the chairman- 6 -of the meeting, shall act as Secretary. In the event that the Secretary presides at a meeting of the stockholders, an Assistant Secretary, orin the absence of Assistant Secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall recordthe minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determinedby the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take suchaction as, in the discretion of such chairman, are appropriate for the proper conduct of the meeting, including, without limitation,(a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders ofrecord of the Corporation, their duly authorized proxies and other such individuals as the chairman of the meeting may determine;(c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, theirduly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted toquestions or comments by participants; (e) determining when the polls should be opened and closed; (f) maintaining order and securityat the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules orguidelines as set forth by the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later dateand time and place announced at the meeting (but not more than 120 days after the record date); and (i) complying with any state andlocal laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings ofstockholders shall not be required to be held in accordance with the rules of parliamentary procedure.Section 12. INSPECTORS. In advance of or at any meeting of stockholders, the Board of Directors, or at the meeting, thechairman of the meeting, may, or upon the request of any stockholder shall, appoint one or more persons as inspectors for such meetingor any postponement or adjournment thereof. Unless otherwise instructed by the Board of Directors or the chairman of the meeting,such inspectors shall determine the number of shares of stock outstanding of the Corporation, the shares of stock represented at themeeting, the existence of a quorum, and the authenticity, validity and effect of proxies; shall receive votes, ballots or consents; shallhear and determine all challenges and questions in any way arising in connection with the right to vote; and shall count and tabulate allvotes and consents, determine the results, and perform such other acts as are proper to conduct the election and voting with impartialityand fairness to all the stockholders.Each report of an inspector shall be in writing and signed by him or by a majority of them if there is more than one inspectoracting at such meeting, if there is more than one inspector, the report of a majority of the inspectors shall be the report of the inspectors.The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be primafacie evidence thereof.Section 13. NOMINATIONS AND STOCKHOLDER BUSINESS.- 7 -(a) Annual Meetings of Stockholders.(1) Nominations of individuals for election to the Board of Directors and the proposal of other business to beconsidered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting,(ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record bothat the time of giving of notice by the stockholder as provided for in this Section 13(a)(1) and at the time of the annual meeting, who isentitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 13(a)(1). The requirements ofthis Section 13 shall apply to any business to be brought before an annual meeting by a stockholder whether such business is to beincluded in the Corporation’s proxy statement pursuant to Rule 14a-8 of the proxy rules (or any successor provision) promulgatedunder the Exchange Act, presented to stockholders by means of an independently financed proxy solicitation or otherwise presented tostockholders.(2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant toclause (iii) of paragraph (a)(1) of this Section 13, the stockholder must have given timely notice thereof in writing to the Secretary ofthe Corporation and such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’snotice shall be delivered to the Secretary at the principal executive office of the Corporation not earlier than the one hundred andtwentieth (120th) day and not later than 5:00 p.m., Eastern Time, on the ninetieth (90th) day prior to the first anniversary of thepreceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed bymore than thirty (30) days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder to betimely must be so delivered not earlier than the one hundred and twentieth (120th) day prior to the date of such annual meeting and notlater than 5:00 p.m., Eastern Time, on the ninetieth (90th) day prior to the date of such annual meeting or, if the first publicannouncement of the date of such annual meeting is less than one hundred (100) days prior to the date of such annual meeting, thetenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. In noevent shall any postponement or adjournment of an annual meeting or the announcement thereof commence a new time period for thegiving of a stockholder’s notice as described above.To be in proper form, a stockholder’s notice (whether given pursuant to Section 13(a)(2) or Section 13(b)) shall set forth: (i) asto each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”),all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxiesfor the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or wouldotherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) underthe Exchange Act and the rules thereunder (including the Proposed Nominee’s written consent to being named in the proxy statementas a nominee and to serving as a director if elected); (ii) as to any business that the stockholder proposes to bring before the meeting, adescription of such business, the stockholder’s reasons for proposing such business at the meeting and any material interest in suchbusiness of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including anyanticipated benefit to the stockholder and the Stockholder Associated Person therefrom; (iii) as to the stockholder giving the notice, anyProposed Nominee and any Stockholder Associated Person: (A) the class, series and number of all shares of beneficial interest- 8 -or other securities of the Corporation or any affiliate thereof (collectively, the “Company Securities”), if any, which are owned(beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each suchCompany Security was acquired and the investment intent of such acquisition, and any short interest (including any opportunity toprofit or share in any benefit from any decrease in the price of such shares or other security) in any Company Securities of any suchperson; (B) the nominee holder for, and number of any Company Securities owned beneficially but not of record by such stockholder,Proposed Nominee or and by Stockholder Associated Person; (C) whether and the extent to which such stockholder, ProposedNominee or Stockholder Associated Person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during thelast six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement,arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement),the effect or intent of which is to (I) manage risk or benefit of changes in the price of Company Securities or (II) to increase or decreasethe voting power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation or any affiliate thereofdisproportionately to such person’s economic interest therein; in the Company Securities; (iv) as to the stockholder giving the notice,any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph (3) of thisSection 13(a) and any Proposed Nominee: (A) the name and address of such stockholder, as they appear on the Corporation’s shareledger, and the current name, business address, if different, of each such Stockholder Associated Person and any Proposed Nominee;(B) the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not anindividual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investorsin such stockholder, each such Stockholder Associated Person and any Proposed Nominee; and (C) a description of all direct andindirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and anyother material relationships, between or among the stockholder giving the notice and any Stockholder Associated Person, if any, andtheir respective affiliates and associates, or others acting in concert therewith, on the one hand, and each Proposed Nominee, and his orher respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, allinformation that would be required to be disclosed pursuant to Item 404 promulgated under Regulation S-K if the stockholder makingthe nomination and any Stockholder Associated Person, or any affiliate or associate thereof or person acting in concert therewith, werethe “registrant” for purposes of such Item and the Proposed Nominee were a director or executive officer of such registrant; and (v) tothe extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee forelection or reelection as a director or the proposal of other business on the date of such stockholder’s notice.(3) Notwithstanding anything in this subsection (a)(2) of this Section 13 to the contrary, in the event the Board ofDirectors increases the number of directors and there is no public announcement by the Corporation naming all of the nominees fordirector or specifying the size of the increased Board of Directors at least one hundred (100) days prior to the first anniversary of thepreceding year’s annual meeting, a stockholder’s notice required by this Section 13(a) shall also be considered timely, but only withrespect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executiveoffice of the Corporation- 9 -not later than 5:00 p.m., Eastern Time, on the tenth (10th) day following the day on which such public announcement is first made bythe Corporation.(4) For purposes of this Section 13, “Stockholder Associated Person” of any stockholder shall mean (i) any personcontrolling, directly or indirectly, or acting in concert with, such stockholder, including any beneficial owner of the Corporation’ssecurities on whose behalf a nomination or proposal is made, (ii) any beneficial owner of shares of stock of the Corporation owned ofrecord or beneficially by such stockholder and (iii) any person controlling, controlled by or under common control with suchStockholder Associated Person.(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders asshall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election tothe Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) pursuant to theCorporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) provided that the Board of Directors hasdetermined that directors shall be elected at such special meeting, by any stockholder of the Corporation who is a stockholder of recordboth at the time of giving of notice provided for in this Section 13 and at the time of the special meeting, who is entitled to vote at themeeting and who complies with the notice procedures set forth in this Section 13 as to such nomination. In the event the Corporationcalls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any suchstockholder may nominate an individual or individuals (as the case may be) for election to such position(s) as specified in theCorporation’s notice of meeting, if the stockholder’s notice required by paragraph (2) of Section 13(a) shall be delivered to theSecretary at the principal executive office of the Corporation not earlier than the one hundred and twentieth (120th) day prior to suchspecial meeting and not later than 5:00 p.m., Eastern Time, on the ninetieth (90th) day prior to such special meeting or, if the first publicannouncement of the date of such special meeting is less than one hundred (100) days prior to the date of such special meeting, thetenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nomineesproposed by the Board of Directors to be elected at such meeting. In no event shall any postponement or adjournment of a specialmeeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.(c) General.(1) Upon written request by the Secretary or the Board of Directors or any committee thereof, any stockholderproposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall provide, within five(5) Business Days of delivery of such request (or such other period as may be specified in such request), written verification,satisfactory, in the discretion of the Board of Directors or any committee thereof or any authorized officer of the Corporation, todemonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 13. If a stockholder fails to providesuch written verification within such period, the information as to which written verification was requested may be deemed not to havebeen provided in accordance with this Section 13.- 10 -(2) Only such individuals who are nominated in accordance with the procedures set forth in this Section 13 shall beeligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall havebeen brought before the meeting in accordance with the procedures set forth in this Section 13. Except as otherwise provided by law,the charter of the Corporation or these Bylaws, the chairman of the meeting shall have the power to determine whether a nomination orany business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the proceduresset forth in this Section 13 and, if any proposed nomination or business is not in compliance with the procedures set forth in thisSection 13, to declare that such defective proposal or nomination shall be disregarded.(3) For purposes of this Section 13, “public announcement” shall mean disclosure (i) in a press release reported bythe Dow Jones News Service, Associated Press, Business Wire, PR Newswire or comparable news service or (ii) in a documentpublicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.(4) Notwithstanding the foregoing provisions of this Section 13, a stockholder shall also comply with all applicablerequirements of state law and of the Exchange Act with respect to the matters set forth in this Section 13. Nothing in this Section 13shall require disclosure of revocable proxies received by the stockholder or Stockholder Associate Person pursuant to a solicitation ofproxies after the filing of an effective Schedule 14A under Section 14(a) of the Exchange Act.Section 14. INFORMAL ACTION BY STOCKHOLDERS. Any action required or permitted to be taken at a meeting ofstockholders may be taken without a meeting if a consent in writing or by electronic transmission, setting forth such action, is given byeach stockholder entitled to vote on the matter and any other stockholder entitled to notice of a meeting of stockholders (but not to votethereat) has waived in writing or by electronic transmission any right to dissent from such action, and such consent and waiver are filedwith the with the records of stockholders meetings. A consent may not take effect unless written consents signed by a sufficientnumber of stockholders to take action are delivered to the Corporation within sixty (60) days after the date on which the earliestconsent is dated.Unless the Charter requires otherwise, the holders of any class of stock, other than common stock, entitled to vote generally inthe election of directors, may take action or consent to any action by delivering a consent in writing or by electronic transmission of thestockholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at astockholders meeting if the corporation gives notice of the action to each holder of the class of stock not later than ten (10) days afterthe effective time of the action. Section 15. MEETING BY CONFERENCE TELEPHONE. The Board of Directors or the chairman of the meeting maypermit stockholders to participate in a meeting of stockholders by means of conference telephone or other communications equipmentby which all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these meansconstitutes presence in person at the meeting.- 11 -Section 16. CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of the Charter of theCorporation or these Bylaws, Title 3, Subtitle 7 of the Corporations and Associations Article of the Annotated Code of Maryland (orany successor statute) shall not apply to any acquisition by any person of stock of the Corporation. This section may be repealed, inwhole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent providedby any successor bylaw, apply to any prior or subsequent control share acquisition.ARTICLE III DIRECTORSSection 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of itsBoard of Directors. All powers of the Corporation may be exercised by or under authority of the Board of Directors except asconferred on or reserved to the stockholders by law, by the Charter or by these Bylaws. All acts taken at any meeting of the Board ofDirectors (or by written consent) or by any person acting as a director, so long as his successor shall not have been duly elected orappointed, shall, notwithstanding that it be afterwards discovered that there was some defect in the election of the directors or of suchperson acting as aforesaid or that they or any of them were disqualified, be as valid as if the directors or such other person, as the casemay be, had been duly elected and were or was qualified to be directors or a director of the Corporation.Section 2. NUMBER. The number of Directors may be increased or decreased from time to time by resolution of the Boardof Directors adopted by a majority of the entire Board of Directors, provided that the number thereof shall never be less than theminimum number required by the Charter, nor more than fifteen (15), and further provided that the tenure of office of a director shallnot be affected by any decrease in the number of directors.Section 3. TERM. Each director shall hold office for a term expiring at the annual meeting of stockholders next following hisor her election and until his or her successor is elected and qualified.Section 4. QUALIFICATIONS. The Board of Directors may adopt qualification requirements for directors from time to time(e.g., term limits, maximum age), and any such qualification requirements shall be deemed incorporated by reference into theseBylaws.Section 5. RESIGNATION. A director of the Corporation may resign at any time by giving written or electronic notice of hisresignation to the Board of Directors, the Chairman of the Board, the President or the Secretary of the Corporation. Any resignationshall take effect at the time specified in it or, should the time when it is to become effective not be specified in it, immediately upon itsreceipt. Acceptance of a resignation shall not be necessary to make it effective unless the resignation so states.- 12 -Section 6. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be heldimmediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary.Regular meetings of the Board of Directors may be held at such time and place either within or outside the State of Maryland or bymeans of remote communication as determined by the Board of Directors by resolution and without other notice than such resolution,provided that notice of every determination of the Board of Directors fixing or changing the time or place for the holding of regularmeetings of the Board shall be sent promptly to each Director not present at the meeting at which such time and place was fixed orsuch change was made. Such notice shall be in the manner provided for notices of special meetings of the Board of Directors.Section 7. SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any time and at any place or byremote communication designated in the call of the meeting when called by or at the request of the Chairman of the Board (or any co-Chairman of the Board if more than one), the President or by a majority of the directors then in office, sufficient notice thereof asdescribed in Section 8 of this Article 3 below being given to each director by the Secretary or an Assistant Secretary or by the personcalling the meeting.Section 8. NOTICE. It shall be sufficient notice to a director of a special meeting to send notice by overnight mail at leastforty eight (48) hours or by email or facsimile at least twenty four (24) hours before the meeting addressed to the director at his or herusual or last known business or residence address, email address or facsimile number as applicable, or to give notice to him or her inperson or by telephone at least twenty four (24) hours before the meeting. Notwithstanding the foregoing, in the event the time or placeof a meeting is changed less than twenty four (24) hours before the meeting, notice of the change shall be deemed sufficient if providedto a director by email, telephone or in person at any time prior to the start of the meeting. Neither notice of a meeting nor a waiver of anotice need specify the purposes of the meeting unless specifically required by statute or these Bylaws.Section 9. QUORUM. A majority of the entire board of directors shall constitute a quorum for transaction of business at anymeeting of the Board of Directors, provided that, if less than a majority of such directors are present at said meeting, a majority of thedirectors present may adjourn the meeting from time to time and the meeting may be held as adjourned without further notice andprovided further, that if, pursuant to applicable law, the Charter of the Corporation or these Bylaws, the vote of a majority of aparticular group of directors is required for action, a quorum must also include a majority of such group.The Board of Directors present at a meeting which has been duly called and convened may continue to transact business untiladjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum, unless the concurrence of a greaterproportion is required for such action by applicable law, the Charter of the Corporation or these Bylaws.Section 10. VOTING. The action of the majority of the directors present at a meeting at which a quorum is present shall bethe action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable statute, theCharter, or these Bylaws.- 13 -Section 11. ORGANIZATION. At each meeting of the Board of Directors, the Chairman of the Board or, in the absence ofthe Chairman, the Vice Chairman of the Board, if any, shall act as chairman of the meeting. In the absence of both the Chairman andVice Chairman of the Board, the Chief Executive Officer or in the absence of the Chief Executive Officer, the President (provided, ineach case, that the Chief Executive Officer or President is a director) or in the absence of the President, a director chosen by a majorityof the directors present, shall act as chairman of the meeting. The Secretary or, in his or her absence, an Assistant Secretary, or in theabsence of the Secretary and all Assistant Secretaries, an individual appointed by the chairman of the meeting, shall act as Secretary ofthe meeting.Section 12. MEETING BY CONFERENCE TELEPHONE. Directors may participate in a meeting by means of aconference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the sametime. Participation in a meeting by these means shall constitute presence in person at the meeting.Section 13. INFORMAL ACTION BY DIRECTORS. Any action required or permitted to be taken at any meeting of theBoard of Directors or a committee of the Board may be taken without a meeting, if a consent in writing or by electronic transmission tosuch action is given by each director or committee member and such consent is filed in paper or electronic form with the minutes ofproceedings of the Board of Directors or committee.Section 14. VACANCIES. Vacancies on the Board of Directors as a result of the death or resignation of a director or anincrease in the size of the Board of Directors shall be subject to and shall be filled in accordance with Section 3-804(c) of the MarylandGeneral Corporation Law. Accordingly, any vacancy on the Board of Directors that results from the death or resignation of a directoror an increase in the size of the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors inoffice, even if the remaining directors do not constitute a quorum, and any director elected to fill such a vacancy shall hold office forthe remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualifies.Section 15. COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolutionof the Board of Directors, directors may receive fixed sums per year and/or per meeting. Expenses of attendance, if any, may beallowed to directors for attendance at each annual, regular or special meeting of the Board of Directors or of any committee thereof; butnothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receivingcompensation therefor.Section 16. REMOVAL OF DIRECTORS. The stockholders may remove any director for cause, in the manner provided inthe Charter of Corporation.Section 17. LOSS OF DEPOSITS. No director shall be liable for any loss which may occur by reason of the failure of thebank, trust company, savings and loan association, or other institution with whom moneys or stock have been deposited.Section 18. SURETY BONDS. Unless required by law, no director shall be obligated to give any bond or surety or othersecurity for the performance of any of his duties.- 14 -Section 19. RELIANCE. Each director of the Corporation shall, in the performance of his or her duties with respect to theCorporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financialdata, prepared or presented by an officer or employee of the Corporation whom the director reasonably believes to be reliable andcompetent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director of theCorporation reasonably believes to be within the person’s professional or expert competence, or, by a committee of the Board ofDirectors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes thecommittee to merit confidence.Section 20. EMERGENCY PROVISIONS. Notwithstanding any other provision in these Bylaws, this Section 20 shall applyduring the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directorsunder Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided bythe Board of Directors, (i) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by anymeans feasible under the circumstances; (ii) notice of any meeting of the Board of Directors during such an Emergency may be givenless than 24 hours prior to the meeting to as many directors and by such means as it may be feasible at the time, including publication,television or radio, and (iii) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.ARTICLE IV COMMITTEESSection 1. NUMBER, ESTABLISHMENT AND QUALIFICATIONS. The Board of Directors may appoint from amongits members an Executive Committee, an Audit Committee, a Compensation Committee and other committees, composed of one ormore directors, to serve at the pleasure of the Board of Directors. Each committee may fix its own rules and procedures, and adopt itsown charter, in each case subject to approval by the Board of Directors and not inconsistent with the resolution appointing thecommittee or these Bylaws. Only a director who is an Independent Director, determined in accordance with the Listed CompanyManual of the New York Stock Exchange and applicable federal securities laws, shall be eligible to serve as a member of the AuditCommittee, the Compensation Committee, or the Nominating and Corporate Governance Committee. The Board of Directors shallhave the power at any time to change the members of any committee so designated, to fill vacancies or to dissolve any such committee.Section 2. POWERS. The Board of Directors may delegate to committees appointed under Section 1 of this Article IV any ofthe powers of the Board of Directors, except as prohibited by law.Section 3. SUBSTITUTE MEMBER. In the absence of any member of any committee, the members thereof present at anymeeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member.- 15 -Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of Directors may participate in a meeting bymeans of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other atthe same time. Participation in a meeting by these means shall constitute presence in person at the meeting.Section 5. QUORUM, VOTING AND MINUTES. Unless the specific rules and procedures adopted by a committee inaccordance with Section 1 of this Article IV provide otherwise, a majority of the members of any committee of the Board of Directorsshall constitute a quorum for the transaction of business, and the act of a majority of the members of the committee present at anycommittee meeting at which there is a quorum shall be the act of the committee. Each committee shall keep minutes of its proceedingsand actions and shall submit a report thereof at the next regular meeting of the Board of Directors.ARTICLE V OFFICERSSection 1. GENERAL PROVISIONS. The officers of the Corporation shall include a “Chairman of the Board”, a “ChiefExecutive Officer”, a “President”, a “Chief Financial Officer”, a “Secretary” and a “Treasurer” and may include a “Vice Chairman ofthe Board” (who shall be a director), one or more “Vice Presidents”, a “Chief Operating Officer”, one or more “Assistant Secretaries”and one or more “Assistant Treasurers.” In addition, the Board of Directors may from time to time appoint such other officers withsuch powers and duties as they shall deem necessary or desirable. The officers of the Corporation shall be elected annually by theBoard of Directors at the first meeting of the Board of Directors held after each annual meeting of stockholders, except that the ChiefExecutive Officer may appoint one or more vice presidents, assistant secretaries and assistant treasurers. If the election of officers shallnot be held at such meeting, such election shall be held as soon thereafter as may be convenient. Each officer shall hold office until hissuccessor is elected and qualifies or until his death, resignation or removal in the manner hereinafter provided. Any two or more officesexcept president and vice president may be held by the same person. In its discretion, the Board of Directors may leave unfilled anyoffice except that of president, treasurer and secretary.Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed by the Board ofDirectors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudiceto the person’s contract rights, if any, but the appointment of any person as an officer or agent of the Corporation shall not of itselfcreate contract rights. Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Board ofDirectors, the Chairman of the Board (or any co-Chairmen of the Board if more than one), the Chief Executive Officer, the Presidentor the Secretary. Such resignation shall be effective upon receipt unless specified to be effective at some other time. The acceptance ofa resignation shall not be necessary to make it effective unless otherwise stated in the resignation.Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors at any time for the balance of theterm.- 16 -Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors shall designate a Chief Executive Officer. In theabsence of such designation, the Chairman of the Board (or, if more than one, the co-Chairmen of the Board in the order designated atthe time of their election or, in the absence of any designation, then in the order of their election) shall be the Chief Executive Officerof the Corporation. The Chief Executive Officer shall have general responsibility for implementation of the policies of the Corporation,as determined by the Board of Directors, and for the management of the business and affairs of the Corporation not inconsistent withthese Bylaws.Section 5. CHIEF OPERATING OFFICER. The Board of Directors may designate a Chief Operating Officer. The ChiefOperating Officer shall have the responsibilities and duties as set forth by the Board of Directors or the Chief Executive Officer notinconsistent with these Bylaws.Section 6. CHIEF FINANCIAL OFFICER. The Board of Directors may designate a Chief Financial Officer. The ChiefFinancial Officer shall have the responsibilities and duties as set forth by the Board of Directors or the Chief Executive Officer notinconsistent with these Bylaws.Section 7. CHAIRMAN OF THE BOARD. The Directors shall designate from their own number a Chairman of the Board(or one or more co-Chairmen of the Board) to hold office until his or her successor shall have been duly elected and qualified or untilhis earlier death, resignation, removal or disqualification. At each meeting of the Board of Directors, the Chairman of the Board or, inthe absence of the Chairman, the Vice Chairman of the Board, if any, shall act as chairman of the meeting. If no person is designatedby the Board to preside over meetings of the stockholders, the Chairman shall preside over such meetings at which he shall be present.If there be more than one, the co-Chairmen designated by the Board of Directors will perform such duties. The Chairman shall havesuch other duties and powers as the Board of Directors may from time to time determine not inconsistent with these Bylaws, but shallhave no individual authority to act for the Corporation as an officer of the Corporation.Section 8. PRESIDENT. The President shall, in general, supervise and control all of the business and affairs of theCorporation. In the absence of a designation of a Chief Operating Officer by the Board of Directors, the President shall be the ChiefOperating Officer. He may execute any deed, mortgage, bond, contract or other instrument, except in cases where the executionthereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation orshall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and suchother duties as may be prescribed by the Board of Directors or the Chief Executive Officer from time to time not inconsistent withthese Bylaws.Section 9. VICE PRESIDENTS. In the absence of the President or in the event of a vacancy in such office, the VicePresident (or in the event there be more than one Vice President, the Vice Presidents in the order designated at the time of their electionor, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so actingshall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time totime may be assigned to him by the Chief Executive Officer, the President or by the Board of Directors not inconsistent with theseBylaws. The Board of Directors may designate one or more Vice Presidents as Executive Vice President or as Vice President forparticular areas of responsibility.- 17 -Section 10. SECRETARY. The Secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board ofDirectors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are dulygiven in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the sealof the Corporation (if any); (d) keep a register of the post office address of each stockholder which shall be furnished to the Secretaryby such stockholder; (e) have general charge of the share transfer books of the Corporation; and (f) in general perform such otherduties as from time to time be assigned to him by the Chief Executive Officer, the President or by the Board of Directors notinconsistent with these Bylaws.Section 11. TREASURER. The Treasurer shall have the custody of the funds and securities of the Corporation and shall keepfull and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and othervalue effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. Inthe absence of a designation of a Chief Financial Officer by the Board of Directors, the Treasurer shall be the Chief Financial Officerof the Corporation.The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchersfor such disbursements, and shall render to the Chief Executive Officer, the President and the Board of Directors, at the regularmeetings of the Board of Directors or whenever it may so require, an account of all his transactions as treasurer and of the financialcondition of the Corporation.Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant Secretaries and AssistantTreasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or Treasurer, respectively, or by theChief Executive Officer, the President or the Board of Directors.Section 13. SALARIES. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officershall be prevented from receiving such salary by reason of the fact that he is also a director.ARTICLE VI CONTRACTS, LOANS, CHECKS AND DEPOSITSSection 1. CONTRACTS. The Board of Directors may authorize any officer or agent to enter into any contract or to executeand deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specificinstances.Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidencesof indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporationand in such manner as shall from time to time be determined by the Board of Directors.- 18 -Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited or invested from time to timeto the credit of the Corporation as the Board of Directors may designate.ARTICLE VII STOCKSection 1. CERTIFICATES OR UNCERTIFICATED SHARES. The shares of the Corporation’s stock may be certificatedor uncertificated, as provided under Maryland law and in accordance with a Direct Registration System approved by the Securities andExchange Commission and the New York Stock Exchange, or any securities exchange on which the stock of the Corporation mayfrom time to time be traded, and shall be entered in the books of the Corporation and registered as they are issued. Any certificatesrepresenting shares of stock shall comply with applicable law and otherwise shall be in such form as the Board of Directors shallprescribe, certifying the number of shares of the stock of the Corporation owned by the stockholder. Any certificates issued to anystockholder of the Corporation shall be signed by, or in the name of the Corporation by the Chief Executive Officer, the President or aVice President and countersigned by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and may besealed with the seal, if any, of the Corporation. Any or all the signatures on the certificate may be a facsimile. Certificates shall beconsecutively numbered and if the Corporation shall, from time to time, issue several classes of stock, each class may have its ownnumber series. A certificate is valid and may be issued whether or not an officer who signed it is still and officer when it is issued.If the shares of stock are uncertificated, the Corporation or its agent shall send to the registered owner thereof any noticesrequired by applicable law.Section 2. TRANSFERS. Transfers of shares of the Corporation shall be made only on the books of the Corporation by theholder of record thereof or by the holder’s legal representative, who shall furnish proper evidence of authority to transfer, and either (a)in the case of stock represented by a certificate, on surrender for cancellation of any certificate for such shares, or (b) in the case ofuncertificated shares, on proper instructions from the holder of record of such shares or the holder’s legal representative. Upon receiptof such certificates or instructions, the Corporation shall issue a new certificate or evidence of the issuance of uncertificated shares tothe stockholder entitled thereto, cancel the old certificate or uncertificated shares, and record the transaction upon the Corporation’sbooks.The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and,accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person,whether or not it shall have express or other notice thereof, except as otherwise required by the laws of the State of Maryland.- 19 -Notwithstanding the foregoing, transfers of shares of any class of stock will be subject in all respects to the Charter of theCorporation and all of the terms and conditions contained therein.Section 3. LOST CERTIFICATE. The Board of Directors (or any officer designated by it) may direct (i) a new certificate orcertificates for stock of the Corporation or (ii) uncertificated shares, be issued in place of any certificate previously issued by theCorporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming thecertificate to be lost, stolen or destroyed. In addition, when authorizing the issuance of a new certificate or uncertificated shares, theBoard of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen ordestroyed certificate or his legal representative to advertise the same in such manner as they shall require and/or to give bond, withsufficient surety, to the Corporation to indemnify it against any loss or claim which may arise as a result of the issuance of a newcertificate or uncertificated shares and/or to take such other actions as may be approved by the Board of Directors.Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board of Directors may set, inadvance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, orstockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination ofstockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record dateis fixed and shall be not more than ninety (90) days and, in the case of a meeting of stockholders, not less than ten (10) days, before thedate on which the meeting or particular action requiring such determination of stockholders is to be held or taken.In lieu of fixing a record date, the Board of Directors may provide that the stock transfer books shall be closed for a statedperiod but not longer than twenty (20) days. If the stock transfer books are closed for the purpose of determining stockholders entitledto notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten (10) days before the date of such meeting.If no record date is fixed and the stock transfer books are not closed for the determination of stockholders, (a) the record datefor the determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on theday on which the notice of meeting is mailed or the thirtieth (30th) day before the meeting, whichever is later; and (b) the record datefor the determination of stockholders entitled to receive payment of a dividend or an allotment of any other rights shall be the close ofbusiness on the day on which the resolution of the directors, declaring the dividend or allotment of rights, is adopted, but the paymentor allotment may not be made more than sixty (60) days after the date on which the resolution is adoptedWhen a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section,such determination shall apply to any adjournment thereof, except where the determination has been made through the closing of thetransfer books and the stated period of closing has expired.- 20 -Section 5. STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountantsor transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares ofeach class held by such stockholder.Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may cause the Corporation to (i) issuefractional stock; (ii) eliminate a fractional interest by rounding up to a full share of stock; (iii) arrange for the disposition of a fractionalinterest by the person entitled to it; (iv) pay cash for the fair value of a fractional share of stock determined as of the time when theperson entitled to receive it is determined; or (v) provide for the issuance of scrip, all on such terms and under such conditions as theymay determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may issue units consistingof different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securitiesissued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporationissued in such unit may be transferred on the books of the Corporation only in such unit.Section 7. REGULATIONS. The Board of Directors may make such additional rules and regulations, not inconsistent withthese Bylaws, as they may deem necessary or appropriate concerning the issue, certification, transfer and registration of shares of stock.ARTICLE VIII ACCOUNTING YEARThe Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adoptedresolution.ARTICLE IX INVESTMENT POLICYSubject to the provisions of the Charter of the Corporation, the Board of Directors may from time to time adopt, amend, reviseor terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.ARTICLE X SEALSection 1. SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall haveinscribed thereon the name of the Corporation and the year of its organization. The Board of Directors may authorize one or moreduplicate seals and provide for the custody thereof.Section 2. AFFIXING SEAL. Whenever the Corporation is required to place its seal to a document, it shall be sufficient tomeet the requirements of any law, rule or regulation relating- 21 -to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of theCorporation.ARTICLE XI INDEMNIFICATIONSection 1. DEFINITIONS. For purposes of this Article, the following words have the meaning indicated:(a) “Corporation” includes the Corporation and any domestic or foreign predecessor entity of the Corporation in amerger, consolidation or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.(b) “Party” means a Person who was, is, or is threatened to be made a named defendant or respondent in a proceeding.(c) “Person” means a person who is or was a director, officer, employee or agent of the Corporation, or is or wasserving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another foreign or domesticcorporation, partnership, joint venture, trust, limited liability company or other enterprise, whether for profit or not. “Serving at therequest of the Corporation” shall include, without limitation, any service as a director, officer, employee or agent of the Corporationwhich imposed duties on, or involves services by, the director, officer, employee or agent with respect to an employee benefit plan, itsparticipants or beneficiaries, and “other enterprise” shall include, without limitation, employee benefit plans.(d) “Proceeding” means any threatened, pending or completed action, suit or proceeding, whether civil, criminal,administrative or investigative, and whether formal or informal.Section 2. INDEMNITY.(a) In the event a Person was or is a Party to a Proceeding by reason of service in a capacity that causes such Person tofall within the definition of a “Person”, the Corporation shall indemnify such Person against judgments, penalties, fines, settlements andexpenses, including, without limitation, attorneys’ fees, actually and reasonably incurred by such Person in connection with theProceeding, unless it is established that: (i) the act or omission of the Person was material to the matter giving rise to the Proceeding,and was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the Person actually received an improperpersonal benefit in money, property or services; (iii) in the case of any criminal proceeding, the Person had reasonable cause to believethat the act or omission was unlawful; or (iv) in the event of a Proceeding by or in the right of the Corporation, the Person shall havebeen adjudged to be liable to the Corporation.(b) The termination of any Proceeding by judgment, order or settlement does not create a presumption that the Persondid not meet the requisite standard of conduct set forth in this section. The termination of any Proceeding by conviction, or a plea ofnolo contendere or its equivalent, or any entry of an order of probation prior to judgment, creates a rebuttable presumption that thePerson did not meet that requisite standard of conduct.(c) The Corporation may not indemnify a Person or advance expenses as provided for under Section 3 for aProceeding brought by that Person against the Corporation, except- 22 -for (i) a proceeding brought to enforce indemnification under this section; or (ii) if the Charter, these Bylaws, a resolution of the Boardof Directors, or an agreement approved by the Board of Directors to which the Corporation is a party expressly provide otherwise. (d) An indemnification under this section, unless ordered by a court, shall be made by the Corporation only asauthorized in the specific case upon a determination that indemnification of the Person is proper in the circumstances because suchPerson has met the applicable standard of conduct set forth in this section. This determination shall be made:(1) By a majority vote of a quorum of the Board of Directors consisting of directors who are not, at the time, parties tothe Proceeding;(2) If the quorum described in subparagraph (1) cannot be obtained, then by a majority vote of a committee of two ormore disinterested directors who are not, at the time, parties to the Proceeding and who were duly designated to act in the matter by amajority vote of the full Board of Directors in which the designated directors who are parties may participate;(3) By independent legal counsel selected by the Board of Directors or a committee of the Board of Directors as setforth in subparagraph (2); or if the requisite quorum of the full Board cannot be obtained therefore and the committee cannot beestablished, by majority vote of the full Board in which Persons who are parties may participate; or(4) By the stockholders.Authorization of indemnification and determination as to reasonableness of expenses shall be made in the same manneras the determination that indemnification is permissible. However, if the determination that indemnification is permissible is made byindependent legal counsel, authorization of indemnification and determination as to reasonableness of expenses shall be made in themanner specified in subparagraph (3) for selection of such counsel.Shares held by Persons who are parties to the Proceeding may not be voted on the subject matter under this Section 2.Section 3. ADVANCE PAYMENT OF EXPENSES. Reasonable expenses incurred by a Person who is a Party to aProceeding shall be paid or reimbursed by the Corporation in advance of the final disposition of the Proceeding upon receipt by theCorporation of: (i) a written affirmation by the Person of such Person’s good faith belief that the standard of conduct necessary forindemnification by the Corporation has been met; and (ii) a written undertaking by or on behalf of the Person to repay the expenses if itis ultimately determined that the Person is not entitled to be indemnified by the Corporation. The undertakings required by thissubsection shall be an unlimited general obligation of the Person on whose behalf advances are made but need not be secured and maybe accepted without reference to financial ability to make repayment. Notwithstanding the foregoing, the Company is not limited frompaying or reimbursing expenses incurred by a Person in connection with an appearance as a witness in a Proceeding at a time when thePerson has not been made a named defendant or respondent in the Proceeding. Section 4. DEFENSE OF PROCEEDING. In the event a Person is a Party to a Proceeding covered by Section 2 of thisArticle, such Person shall promptly notify the Corporation- 23 -of such Proceeding; provided, however, that the omission to so notify the Corporation shall not relieve the Corporation from anyliability or obligation under this Article unless, and only to the extent that, such failure to notify the Corporation results in the loss ofsubstantive rights or defenses in the Proceeding. The Corporation shall be entitled to participate in any such Proceeding and, afterwritten notice to such Person, the Corporation, at its sole cost and expense, shall be entitled to assume the defense of the Proceedingwith counsel of its choosing, provided that such counsel is reasonably satisfactory to such Person. Notwithstanding the election of theCorporation to assume the defense of the Proceeding, such Person shall have the right to employ separate counsel and to control itsown defense, and the Corporation shall bear the fees and expenses of such separate counsel, if, in the reasonable opinion of the“Indemnification Committee” (as defined below) or, if there is no Indemnification Committee, counsel to such Person: (i) there may belegal defenses available to such Person or to other Persons that are different from or in addition to those available to the Corporation; or(ii) a conflict or potential conflict otherwise exists between such Person and the Corporation that would make such separaterepresentation advisable. For purposes of this Section 4, “Indemnification Committee” means a committee comprised of two or moredisinterested directors who are not, at the time, parties to the Proceeding and who were duly designated to act in the matter by amajority vote of the full Board of Directors in which the designated directors who are parties may participate. In addition to theforegoing duties, the Indemnification Committee, for and on behalf of the Corporation, shall have the authority to cause theCorporation to make any and all payments required by this Section 4.Section 5. REPORT OF INDEMNIFICATION TO STOCKHOLDERS. Any indemnification of, or advance of expensesto, a Person in accordance with this Article, if arising out of a Proceeding by or in the right of the Corporation, shall be reported inwriting to the stockholders with the notice of the next stockholders’ meeting or prior to the meeting.Section 6. MISCELLANEOUS.(a) The Corporation shall be deemed to have requested a Person to serve an employee benefit plan where theperformance of such Person’s duties to the Corporation also imposes duties on, or otherwise involves services by, the Person to theplan or participants or beneficiaries of the plan.(b) Excise taxes assessed on a director with respect to an employee benefit plan pursuant to applicable law shall bedeemed fines.(c) The indemnification or advancement of expenses provided or authorized under this Article shall not be deemedexclusive of any other rights, by indemnification or otherwise, to which a Person may be entitled under the Charter, these Bylaws, or aresolution of stockholders or directors, a contractual agreement or otherwise, both as to action in an official capacity and as to action inanother capacity while holding such office. However, the total amount of expenses advanced or indemnified from all sourcescombined shall not exceed the amount of actual expenses incurred by the Person seeking indemnification or advancement of expenses.(d) The indemnification provided for in this Article continues as to a Person who ceases to be a director, officer,employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such Person.- 24 -(e) The Corporation shall have the power to purchase and maintain insurance on behalf of any Person against anyliability asserted against and incurred by such Person in any such capacity or arising out of such Person’s position, whether or not theCorporation would have the power to indemnify against such liability under this Article.(f) Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of theBylaws or Charter of the Corporation inconsistent with this Article, shall apply to or affect in any respect the applicability of thepreceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.(g) The Corporation intends to indemnify any Person to the maximum extent permitted by Maryland law in effect fromtime to time. If Maryland law is hereafter amended to authorize further indemnification or it is determined that presently existingMaryland law permits greater indemnification than set forth in this Article XII, then these Bylaws shall be construed to authorize theCorporation to indemnify any Person to the fullest extent permitted by Maryland law.ARTICLE XII WAIVER OF NOTICEWhenever any notice is required to be given pursuant to the Charter of the Corporation or these Bylaws or pursuant toapplicable law, a written waiver or a waiver by electronic transmission, signed or sent by the person or persons entitled to such notice,whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to betransacted at, nor the purpose of, any meeting need be set forth in the waiver of notice, unless specifically required by statute. Theattendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends ameeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called orconvened.ARTICLE XIII AMENDMENT OF BYLAWSThe Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make newBylaws.- 25 -SUN COMMUNITIES, INC.Exhibit 21.1 – List of SubsidiariesMain operating subsidiary:Sun Communities Operating Limited Partnership, a Michigan limited partnershipOther subsidiaries:AIOP Brentwood West, L.L.C., a Delaware limited liability companyAIOP Florida Properties I, L.L.C., a Delaware limited liability companyAIOP Florida Properties II, L.L.C., a Delaware limited liability companyAIOP Gulfstream Harbor, L.L.C., a Delaware limited liability companyAIOP Gulfstream Outlots, L.L.C., a Delaware limited liability companyAIOP Lost Dutchman Notes, L.L.C., a Delaware limited liability companyAIOP Serendipity, L.L.C., a Delaware limited liability companyALL Acquisition, L.L.C., a Delaware limited liability companyAllegany Communities, LLC, a Delaware limited liability companyAMLL Mountain View Estates, LLC, a Delaware limited liability companyAMLL Mountain View Estates Holding, LLC, a Delaware limited liability companyApple Carr Village MHP Holding Company #1, LLC, a Michigan limited liability companyApple Carr Village Mobile Home Park, LLC, a Michigan limited liability companyApple Orchard, L.L.C., a Michigan limited liability companyAspen-Alpine Project, LLC, a Michigan limited liability companyAspen-Brentwood Project, LLC, a Michigan limited liability companyAspen-Byron Project, LLC, a Michigan limited liability companyAspen-Country Project, LLC, a Michigan limited liability companyAspen-Ft. Collins Limited Partnership, a Michigan limited partnershipAspen-Grand Project, LLC, a Michigan limited liability companyAspen-Holland Estates, LLC, a Michigan limited liability companyAspen-Town & Country Associates II, LLC, a Michigan limited liability companyAsset Investors Operating Partnership, L.P., a Delaware limited partnershipBlue Heron Delaware One LLC, a Delaware limited liability companyBlue Heron Delaware Two LLC, a Delaware limited liability companyBrentwood Delaware One LLC, a Delaware limited liability companyBrentwood Delaware Two LLC, a Delaware limited liability companyBright Insurance Agency, Inc., a Michigan corporationBrookside Village MHP Holding Company #1, LLC, a Michigan limited liability companyBrookside Village Mobile Home Park, LLC, a Michigan limited liability companyCarriage Cove, LLC, a Delaware limited liability companyCarriage Cove Holding, LLC, a Delaware limited liability companyCAX Cypress Greens, L.L.C., a Delaware limited liability companyCAX La Casa Blanca, L.L.C., a Delaware limited liability companyCAX La Casa Blanca East, L.L.C., a Delaware limited liability companyCAX Lakeshore, L.L.C., a Delaware limited liability companyCAX Rancho Mirage, L.L.C., a Delaware limited liability companyCider Mill Village Mobile Home Park, LLC, a Michigan limited liability companyComal Farms Manager LLC, a Michigan limited liability companyCommunity Blue Heron Pines Joint Venture LLC, a Delaware limited liability companyCommunity Brentwood Joint Venture LLC, a Delaware limited liability companyCommunity Savanna Club Joint Venture, a Delaware general partnershipCommunity Sunlake Joint Venture, a Delaware general partnershipCountry Hills Village Mobile Home Park, LLC, a Michigan limited liability companyCountry Meadows Village MHP Holding Company #1, LLC, a Michigan limited liability companyCountry Meadows Village Mobile Home Park, LLC, a Michigan limited liability companyCP Comal Farms Limited Partnership, a Michigan limited partnershipCP Creekside LLC, a Michigan limited liability companyCP Woodlake Limited Partnership, a Michigan limited partnershipCreekside Manager LLC, a Michigan limited liability companyDELP GP, LLC, a Delaware limited liability companyDELP Property, LLC, a Delaware limited liability companyD-E Limited Partnership, an Illinois limited partnershipDutton Mill Village, LLC, a Michigan limited liability companyEgelcraft, LLC, a Delaware limited liability companyEast Fork Crossing Manager LLC, a Michigan limited liability companyFC East Fork Crossing LLC, a Michigan limited liability companyFC Glen Laurel LLC, a Michigan limited liability companyFC Meadowbrook LLC, a Michigan limited liability companyFC Pebble Creek LLC, a Michigan limited liability companyFC River Ranch Limited Partnership, a Michigan limited partnershipFC Stonebridge Limited Partnership, a Michigan limited partnershipFC Summit Ridge Limited Partnership, a Michigan limited partnershipFC Sunset Ridge Limited Partnership, a Michigan limited partnershipFiesta SPE, L.L.C., an Arizona limited liability companyFox Creek Reserve, L.L.C., a Delaware limited liability companyGCP Countryside GP, LLC, a Delaware limited liability companyGCP Countryside Limited Partnership, a Delaware limited partnershipGCP Countryside Montana, LLC, a Delaware limited liability companyGCP Countryside Montana Holding, LLC, a Delaware limited liability companyGCP Fairfield Village, LLC, a Delaware limited liability companyGCP I Capital, LLC, a Delaware limited liability companyGCP Kings Pointe, LLC, a Delaware limited liability companyGCP LaCosta Holding, LLC, a Delaware limited liability companyGCP Lake Pointe Village, LLC, a Delaware limited liability companyGCP Lakeshore, LLC, a Delaware limited liability companyGCP Lamplighter, LLC, a Delaware limited liability companyGCP Lamplighter Holding, LLC, a Delaware limited liability companyGCP Maplewood, LLC, a Delaware limited liability companyGCP Maplewood Holding, LLC, a Delaware limited liability companyGCP Maplewood Two, LLC, a Delaware limited liability companyGCP Murex Holding, LLC, a Delaware limited liability companyGCP Oak Creek, LLC, a Delaware limited liability companyGCP Oak Creek Holding, LLC, a Delaware limited liability companyGCP Parkside Holding, LLC, a Delaware limited liability companyGCP Parkside Village, LLC, a Delaware limited liability companyGCP Plantation Landings, LLC, a Delaware limited liability companyGCP Plantation Landings Holding, LLC, a Delaware limited liability companyGCP Skyline, LLC, a Delaware limited liability companyGCP Smart Holding, LLC, a Delaware limited liability companyGCP Smart Parent, LLC, a Delaware limited liability companyGCP Stewartville, LLC, a Delaware limited liability companyGCP Sundance, LLC, a Delaware limited liability companyGCP Swan Meadow, LLC, a Delaware limited liability companyGCP Town and Country, LLC, a Delaware limited liability companyGCP Town and Country Holding, LLC, a Delaware limited liability companyGCP Valley View, LLC, a Delaware limited liability companyGCP Walden Woods One, LLC, a Delaware limited liability companyGCP Walden Woods Two, LLC, a Delaware limited liability companyGCP Westside Ridge, LLC, a Delaware limited liability companyGCP Wildwood, LLC, a Delaware limited liability companyGCP Wildwood Holdings, LLC, a Delaware limited liability companyGlen Laurel Manager LLC, a Michigan limited liability companyGreen Courte R.E.Fund, LLC, a Delaware limited liability companyHickory Hills Village, LLC, a Michigan limited liability companyHickory Hills Village MHP Holding Company #1, LLC, a Michigan limited liability companyHidden Ridge An RV Community, LLC, a Michigan limited liability companyHidden Ridge RV Park Holding Company #1, LLC, a Michigan limited liability companyHigh Point Associates, L.P., a Delaware limited partnershipHigh Point GP One LLC, a Michigan limited liability companyHoliday West Village MHP Holding Company #1, LLC, a Michigan limited liability companyHoliday West Village Mobile Home Park, LLC, a Michigan limited liability companyLaCosta Property, LLC, a Delaware limited liability companyLakeshore Landings, LLC, a Delaware limited liability companyLakeshore Utilities, Inc., a Delaware corporationLakeshore Utilities, L.L.C., a Delaware limited liability companyLeisure Village MHP Holding Company #1, LLC, a Michigan limited liability companyLeisure Village Mobile Home Park, LLC, a Michigan limited liability companyLIW Limited Partnership, a Michigan limited partnershipMaple Brook, L.L.C., an Illinois limited liability companyMcIntosh Utilities, Inc., a Florida non-profit corporationMeadowbrook Manager LLC, a Michigan limited liability companyMeadow Lake Development Company LLC, a Michigan limited liability companyMiami Lakes GP One LLC, a Michigan limited liability companyMiami Lakes GP Two LLC, a Michigan limited liability companyMiami Lakes QRS, Inc., a Michigan corporationMiami Lakes Venture Associates, a Florida general partnershipOak Island Village MHP Holding Company #1, LLC, a Michigan limited liability companyOak Island Village Mobile Home Park, LLC, a Michigan limited liability companyOak Ridge, L.L.C., an Illinois limited liability companyPalm Creek Holdings LLC, an Arizona limited liability companyPark Place Community, L.L.C., a Delaware limited liability companyPark Royale MHP, L.L.C, a Delaware limited liability companyPebble Creek Manager LLC, a Michigan limited liability companyPelican Bay Communities, LLC, a Delaware limited liability companyPelican Commercial, LLC, a Delaware limited liability companyPinebrook Village Mobile Home Park, LLC, a Michigan limited liability companyPrime-Forest Partners, a Florida general partnershipR.E.Fund Newport, LLC, a Delaware limited liability companyRiver Haven Operating Company LLC, a Michigan limited liability companyRiver Ranch Manager LLC, a Michigan limited liability companyRiver Ridge Equities LLC, a Michigan limited liability companyRiver Ridge Investments LLC, a Michigan limited liability companyRiverside Golf Course Community, L.L.C., a Delaware limited liability companyRiverside Utilities, L.L.C., a Delaware limited liability companyRoyal Palm Village, L.L.C., a Delaware limited liability companySavanna Eagles Retreat, L.L.C., a Delaware limited liability companySavanna Landlord, L.L.C., a Delaware limited liability companySavanna Links, L.L.C., a Delaware limited liability companySavanna Preserve, L.L.C., a Delaware limited liability companySCF Manager Inc., a Michigan corporationSea Breeze GP One LLC, a Michigan limited liability companySea Breeze Limited Partnership, a Delaware limited partnershipSheffield MHP, LLC, a Michigan limited liability companySky Harbor Property, LLC, a Delaware limited liability companySnowbird Concessions, Inc., a Texas corporationSouthwood Village MHP Holding Company #1, LLC, a Michigan limited liability companySouthwood Village Mobile Home Park, LLC, a Michigan limited liability companySR East LLC, a Delaware limited liability companySR Hunters Crossing LLC, a Michigan limited liability companySR Silver Springs LLC, a Michigan limited liability companySR West LLC, a Michigan limited liability companyStonebridge Manager LLC, a Michigan limited liability companyStonebrook Community, L.L.C., a Delaware limited liability companySummit Ridge Manager LLC, a Michigan limited liability companySun ACQ LLC, a Michigan limited liability companySun AIOP GP LLC, a Delaware limited liability companySun Arbor Terrace LLC, a Michigan limited liability companySun Ariana LLC, a Michigan limited liability companySun Bell Crossing LLC, a Michigan limited liability companySun Big Timber RV LLC, a Michigan limited liability companySun Blazing Star LLC, a Delaware limited liability companySun Blueberry Hill LLC, a Michigan limited liability companySun Camelot Villa LLC, a Michigan limited liability companySun Candlelight Village LLC, a Michigan limited liability companySun Candlewick LLC, a Michigan limited liability companySun Cave Creek LLC, a Michigan limited liability companySunChamp Holdings LLC, a Michigan limited liability companySunChamp LLC, a Michigan limited liability companySun Cider Mill Crossings LLC, a Michigan limited liability companySun Club Naples LLC, a Michigan limited liability companySun Cobus Green LLC, a Michigan limited liability companySun Communities Acquisitions, LLC, a Michigan limited liability companySun Communities Finance, LLC, a Michigan limited liability companySun Communities Financial LLC, a Michigan limited liability companySun Communities Funding GP L.L.C., a Michigan limited liability companySun Communities Funding II LLC, a Michigan limited liability companySun Communities Funding Limited Partnership, a Michigan limited partnershipSun Communities Mezzanine Lender, LLC, a Michigan limited liability companySun Communities Springing Corp., a Michigan corporationSun Communities Texas Limited Partnership, a Michigan limited partnershipSun Communities Texas Mezzanine Lender Limited Partnership, a Michigan limited partnershipSun Continental North LLC, a Michigan limited liability companySun Countryside Atlanta LLC, a Michigan limited liability companySun Countryside Lake Lanier LLC, a Michigan limited liability companySun Deerfield Run LLC, a Michigan limited liability companySun Driftwood RV LLC, a Michigan limited liability companySun Financial, LLC, a Michigan limited liability companySun Financial Texas Limited Partnership, a Michigan limited partnershipSun Fisherman’s Cove LLC, a Michigan limited liability companySun/Forest Holdings LLC, a Michigan limited liability companySun/Forest LLC, a Michigan limited liability companySun Forest Meadows LLC a Michigan limited liability companySun Four Seasons LLC, a Michigan limited liability companySun Gold Coaster LLC, a Michigan limited liability companySun GP L.L.C., a Michigan limited liability companySun Grand Lake Golf, Inc., a Michigan corporationSun Grand Lake LLC, a Michigan limited liability companySun Groves LLC, a Michigan limited liability companySun Gwinnett LLC, a Michigan limited liability companySun Gwynn’s Island RV LLC, a Michigan limited liability companySun Gypsum Mill Development LLC, a Michigan limited liability companySun Gypsum Mill East LLC, a Michigan limited liability companySun Gypsum Mill West LLC, a Michigan limited liability companySun Hatch Court LLC, a Michigan limited liability companySun HG Limited Partnership, a Michigan limited partnershipSun High Point QRS, Inc., a Michigan corporationSun Holly Forest LLC, a Michigan limited liability companySun Home Services, Inc., a Michigan corporationSun Hunters Glen LLC, a Michigan limited liability companySun Indian Creek LLC, a Michigan limited liability companySun Indian Creek RV LLC, a Michigan limited liability companySun Island Lakes LLC, a Michigan limited liability companySun Jelly-Birchwood NY RV LLC, a Michigan limited liability companySun Jelly-WNY RV LLC, a Michigan limited liability companySun Kings Lake LLC, a Michigan limited liability companySun Knollwood LLC, a Michigan limited liability companySun Lafayette Place LLC, a Michigan limited liability companySunlake Estates Utilities, L.L.C., a Delaware limited liability companySun Lake Juliana LLC, a Michigan limited liability companySun Lake Laurie RV LLC, a Michigan limited liability companySun Lake San Marino LLC, a Michigan limited liability companySun Lakeview LLC, a Michigan limited liability companySun Lender RV LLC, a Michigan limited liability companySun Life Associates Limited Partnership, an Arizona limited partnershipSun Life Trailer Resort Limited Partnership, an Arizona limited partnershipSun LIW GP LLC, a Michigan limited liability companySun MA, LLC, a Michigan limited liability companySun Meadowbrook FL LLC, a Michigan limited liability companySun MHC Development LLC, a Michigan limited liability companySun Naples Gardens LLC, a Michigan limited liability companySun Newpoint RV LLC, a Michigan limited liability companySun North Lake Estates LLC, a Michigan limited liability companySun Northville Crossing LLC, a Michigan limited liability companySun Oakcrest Limited Partnership, a Michigan limited partnershipSUNOA, LLC, a Michigan limited liability companySun OFI, LLC, a Michigan limited liability companySun Orange City LLC, a Michigan limited liability companySun Orange Tree LLC, a Michigan limited liability companySun Palm Creek SPC, LLC, a Delaware limited liability companySun Paso Robles RV LLC, a Michigan limited liability companySun Peters Pond RV LLC, a Michigan limited liability companySun Pheasant Ridge Limited Partnership, a Michigan limited partnershipSun Pine Hills LLC, a Michigan limited liability companySun Pine Trace Limited Partnership, a Michigan limited partnershipSun Pool 1 LLC, a Michigan limited liability companySun Pool 3 LLC, a Michigan limited liability companySun Pool 8 LLC, a Michigan limited liability companySun Pool 12 LLC, a Michigan limited liability companySun QRS Countryside Manager, Inc., a Michigan corporationSun QRS Gwinnett, Inc., a Michigan corporationSun QRS, Inc., a Michigan corporationSun QRS Knollwood, Inc., a Michigan corporationSun QRS Pool 1, Inc., a Michigan corporationSun QRS Pool 2, Inc., a Michigan corporationSun QRS Pool 4, Inc., a Michigan corporationSun QRS Pool 8, Inc., a Michigan corporationSun QRS Pool 9, Inc., a Michigan corporationSun QRS Pool 11, Inc., a Michigan corporationSun QRS Pool 12, Inc., a Michigan corporationSun QRS Pool 13, Inc., a Michigan corporationSun QRS Pool A, Inc., a Michigan corporationSun QRS Pool B, Inc., a Michigan corporationSun QRS River Ridge, Inc., a Michigan corporationSun QRS Sheffield, Inc., a Michigan corporationSun Rainbow RV LLC, a Michigan limited liability companySun Receivables LLC, a Delaware limited liability companySun Resort Amenities LLC, a Michigan limited liability companySun Richmond Industrial LLC, a Michigan limited liability companySun Richmond LLC, a Michigan limited liability companySun River Ridge II LLC, a Michigan limited liability companySun River Ridge Limited Partnership, a Michigan limited partnershipSun Rudgate Lender LLC, a Michigan limited liability companySun Saco RV LLC, a Michigan limited liability companySun Saddle Brook Limited Partnership, a Michigan limited partnershipSun Saddle Oak LLC, a Michigan limited liability companySun Scio Farms LLC, a Michigan limited liability companySun Sea Breeze QRS, Inc., a Michigan corporationSun Seaport RV LLC, a Michigan limited liability companySun Seashore RV, LLC, a Michigan limited liability companySun Secured Financing GP, Inc., a Michigan corporationSun Secured Financing Houston Limited Partnership, a Michigan limited partnershipSun Secured Financing LLC, a Michigan limited liability companySunset Ridge Manager LLC, a Michigan limited liability companySun Siesta Bay LLC, a Michigan limited liability companySun Silver Star LLC, a Michigan limited liability companySun Southfork LLC, a Michigan limited liability companySun Sylvan Lender LLC, a Michigan limited liability companySun Tampa East, LLC, a Michigan limited liability companySun Texas Pool Limited Partnership, a Michigan limited partnershipSun Texas QRS, Inc., a Michigan corporationSun Three Lakes LLC, a Michigan limited liability companySun TRS Big Timber LLC, a Michigan limited liability companySun TRS Blue Heron Pines LLC, a Michigan limited liability companySun TRS Castaways LLC, a Michigan limited liability companySun TRS Castaways SPE, Inc., a Michigan corporationSun TRS Cypress Greens LLC, a Michigan limited liability companySun TRS Driftwood LLC, a Michigan limited liability companySun TRS Gwynn’s Island LLC, a Michigan limited liability companySun TRS Indian Creek LLC, a Michigan limited liability companySun TRS Jelly-Birchwood NY LLC, a Michigan limited liability companySun TRS Jelly-WNY LLC, a Michigan limited liability companySun TRS Lake Laurie LLC, a Michigan limited liability companySun TRS Lake Rudolph LLC, a Michigan limited liability companySun TRS LIW LLC, a Michigan limited liability companySun TRS LL Castaways LLC, a Michigan limited liability companySun TRS Newpoint LLC, a Michigan limited liability companySun TRS Palm Creek LLC, a Michigan limited liability companySun TRS Peters Pond LLC, a Michigan limited liability companySun TRS Riverside LLC, a Michigan limited liability companySun TRS Saco LLC, a Michigan limited liability companySun TRS Seaport LLC, a Michigan limited liability companySun TRS Seashore LLC, a Michigan limited liability companySun TRS Vines LLC, a Michigan limited liability companySun TRS Virginia Park LLC, a Michigan limited liability companySun TRS Wagon Wheel LLC, a Michigan limited liability companySun TRS Westward Ho LLC, a Michigan limited liability companySun TRS Wild Acres LLC, a Michigan limited liability companySun TRS Wine Country LLC, a Michigan limited liability companySun Vacation Rentals LLC, a Michigan limited liability companySun Valley Arizona, L.L.C., a Delaware limited liability companySun Village Trails LLC, a Michigan limited liability companySun Villa MHC LLC, a Michigan limited liability companySun Vines RV LLC, a Michigan limited liability companySun Virginia Park RV LLC, a Michigan limited liability companySun Wagon Wheel RV LLC, a Michigan limited liability companySun Water Oak Golf, Inc., a Michigan corporationSun Westward Ho RV LLC, a Michigan limited liability companySun Wild Acres RV LLC, a Michigan limited liability companySun Wine Country RV LLC, a Michigan limited liability companySun Woods Edge LLC, a Michigan limited liability companySun/York L.L.C., a Michigan limited liability companySycamore Village MHP Holding Company #1, LLC, a Michigan limited liability companySycamore Village Mobile Home Park, LLC, a Michigan limited liability companyTamarac Village MHP Holding Company #1, LLC, a Michigan limited liability companyTamarac Village Mobile Home Park, LLC, a Michigan limited liability companyThunderhill Estates, L.L.C., a Delaware limited liability companyVizcaya Lakes Communities, LLC, a Delaware limited liability companyWarren Dunes Village MHP Holding Company #1, LLC, a Michigan limited liability companyWarren Dunes Village MHP, LLC, a Delaware limited liability companyWaverly Shores Village MHP Holding Company #1, LLC, a Michigan limited liability companyWaverly Shores Village Mobile Home Park, LLC, a Michigan limited liability companyWildwood GP, LLC, a Delaware limited liability companyWildwood L.P., an Illinois limited partnershipWildwood Sales TRS, LLC, a Delaware limited liability companyWildwood Titleholder, LLC, a Delaware limited liability companyWindsor Woods Village MHP Holding Company #1, LLC, a Michigan limited liability companyWindsor Woods Village Mobile Home Park, LLC, a Michigan limited liability companyWoodlake Manager LLC, a Michigan limited liability companyWoodlands Church Lake, L.L.C., a Delaware limited liability company1Consent of Independent Registered Public Accounting FirmWe have issued our reports dated March 2, 2015, with respect to the consolidated financial statements, schedule, and internal controlover financial reporting included in the Annual Report of Sun Communities, Inc. on Form 10-K for the year ended December 31,2014. We hereby consent to the incorporation by reference of said reports in the Registration Statements of Sun Communities, Inc. onForms S-3 (File No. 333-181315, effective May 10, 2012; File No. 333-158623, effective May 14, 2009; File No. 333-156618,effective March 31, 2009 and File No. 333-149016, effective March 10, 2008) and on Form S-8 (File No. 333‑162216, effectiveSeptember 30, 2009)./s/ GRANT THORNTON LLPSouthfield, MichiganMarch 2, 2015Exhibit 31.1CERTIFICATIONS(As Adopted Under Section 302 of the Sarbanes-Oxley Act of 2002)I, Gary A. Shiffman, certify that:1.I have reviewed this annual report on Form 10-K of Sun Communities, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Dated: March 2, 2015/s/ Gary A. Shiffman Gary A. Shiffman, Chief Executive OfficerExhibit 31.2CERTIFICATIONS(As Adopted Under Section 302 of the Sarbanes-Oxley Act of 2002)I, Karen J. Dearing, certify that:1.I have reviewed this annual report on Form 10-K of Sun Communities, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.Dated: March 2, 2015/s/ Karen J. Dearing Karen J. Dearing, Chief Financial OfficerExhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350(Adopted Under Section 906 of the Sarbanes-Oxley Act of 2002)The undersigned officers, Gary A. Shiffman and Karen J. Dearing, hereby certify that to the best of their knowledge: (a) this Annual Report on Form 10-K ofSun Communities, Inc., for the period ended December 31, 2014, fully complies with the requirements of Section 13(a) or 15(d) of the Securities ExchangeAct of 1934, as amended; and (b) the information contained in this Form 10-K fairly presents, in all material respects, the financial condition and results ofoperations of the Company.SignatureDate/s/ Gary A. ShiffmanMarch 2, 2015Gary A. Shiffman, Chief Executive Officer /s/ Karen J. DearingMarch 2, 2015Karen J. Dearing, Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to Sun Communities, Inc. and will be retained by Sun Communities,Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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