Sun Communities
Annual Report 2015

Plain-text annual report

2015 ANNUAL REPORT AND FORM 10K LETTER TO OUR SHAREHOLDERS 2015 represented another significant year in Sun Communities’ ongoing growth and evolution. We continued to fine tune our portfolio from both a quality and geographic perspective by successfully acquiring and integrating thirty-eight high quality communities into our platform and strategically selling twenty communities that no longer fit the long term growth plan for Sun. At the same time, we added over 600 new home sites in communities we already own, and have an additional 7,100 expansion sites available for future growth in our portfolio. Our transformation is largely complete and going forward we expect to trim communities in the platform on a limited basis as we focus on growth both organically through community expansions and through selective attractive acquisitions. Over the past three transformative years, we have added over 33,200 manufactured home and RV sites, which have taken the company to a new level. As a result of the accretive acquisition of the American Land Lease Portfolio, we were able to increase our footprint in the Southeast by almost 75% and have changed the complexion of our demographic mix with the addition of over 14,000 age-restricted sites which now comprise 26% of our total portfolio. We believe that we have the best institutional portfolio of Manufactured Housing and Recreational Vehicle communities in the country, providing us with diversified exposure both geographically and demographically across multiple age groups. This improved diversification should help drive consistent performance across varying economic cycles. Our exceptional 2015 results support our thesis. Our consistent application of best in class asset management and operational practices translated to superior metrics and financial results in 2015, a number of which marked new records for the company. Demand for our MH communities and RV parks is evident given the over 47,000 applications we received to live in our communities and a 30% increase at our call center, which manages bookings for our highly amenitized RV parks. Again, pointing to the desirability, value and quality that Sun offers in its communities, the company achieved record 2,483 total home sales marking an increase of 26% over 2014. All of this has translated into a great year for our shareholders, with the company delivering a total return of 18%, not only an impressive return n its own, but a significantly better return than the RMS which returned 2.5% and the S&P 500 which returned 1.4% to investors. We achieved revenue growth of 39.3%, same site revenue growth of 7.6%, and same site net operating income growth of 9.1%-our ninth consecutive quarter of high single-digit net operating income growth. These inspiring results were aided by the achievement of a 95% occupancy, our highest level since June 2000, and our seventh consecutive year of occupancy gains. The company’s history is with Manufactured Housing, having been a MH owner and operator since our founding in the 1970’s. Our diversification into RV parks, which began in earnest approximately 4 years ago, has been extremely successful. Our total same site RV revenues were up 10.2% for the year spurred by high demand, a 3.6% occupancy gain, a 5.4% increase in average daily rate and the conversion of 480 transient sites to permanent. As we look ahead to 2016, we are highly encouraged by our prospects to continue delivering value to our shareholders. We have strong organic growth opportunities built into our portfolio as we continue to drive rate and open new expansion sites. Our balance sheet is well positioned and has a strong cash balance that provides us with the capacity to pursue additional strategic acquisitions, expansions or debt retirement. We thank the Sun Communities team for their hard work and commitment – without their efforts, our industry leading total returns would not have been possible. And we thank you for your continued interest and support in Sun. Gary A. Shiffman chairman and chief executive officer UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 Commission file number 1-12616 SUN COMMUNITIES, INC. (Exact Name of Registrant as Specified in its Charter) Maryland (State of Incorporation) 27777 Franklin Rd. Suite 200 Southfield, Michigan (Address of Principal Executive Offices) 38-2730780 (I.R.S. Employer Identification No.) 48034 (Zip Code) (248) 208-2500 (Registrant’s telephone number, including area code) Common Stock, Par Value $0.01 per Share New York Stock Exchange Securities Registered Pursuant to Section 12(b) of the Act Name of each exchange on which registered 7.125% Series A Cumulative Redeemable Preferred Stock, Par Value $0.01 per Share New York Stock Exchange Securities Registered Pursuant to Section 12(b) of the Act Name of each exchange on which registered Securities Registered Pursuant to Section 12(g) of the Act: 6.50% Series A-4 Cumulative Convertible Preferred Stock, par value $0.01 per Share Indicate 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 12 months (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 and posted 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 and post 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’s knowledge, 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. [ ] 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, 2015, the aggregate market value of the Registrant’s stock held by non-affiliates was approximately $2,887,393,358 (computed by reference to the closing sales price of the Registrant’s common stock as of June 30, 2015). For this computation, the Registrant has excluded the market value of all shares of common stock reported as beneficially 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 the Registrant. Number of shares of common stock, $0.01 par value per share, outstanding as of February 16, 2016: 58,391,880 Documents Incorporated By Reference Unless 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 be filed pursuant to Regulation 14A, with respect to the registrant’s 2015 annual meeting of stockholders. SUN COMMUNITIES, INC. Table of Contents Item Description Part I. Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Item 3. Item 4. Properties Legal Proceedings Mine Safety Disclosures Part II. Item 5. Item 6. Item 7. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures about Market Risk Item 8. Item 9. Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Part III. Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Item 12. Item 13. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accountant Fees and Services Part IV. Item 15. Exhibits and Financial Statement Schedules Page 1 8 21 22 30 30 32 36 37 64 64 64 65 65 66 66 66 66 66 67 SUN COMMUNITIES, INC. PART I ITEM 1. BUSINESS GENERAL Sun Communities, Inc., a Maryland corporation, and all wholly-owned or majority-owned and controlled subsidiaries, including Sun Communities Operating Limited Partnership, a Michigan limited partnership (the “Operating Partnership”), and Sun Home Services, Inc. ("SHS") are referred to herein as the “Company,” “us,” “we,” and “our”. We are a self-administered and self-managed real estate investment trust (“REIT”). We are a fully integrated real estate company which, together with our affiliates and predecessors, have 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, SHS, in the marketing, selling, and leasing of new and pre- owned homes to current and future residents in our communities. 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 ("U.S."). As of December 31, 2015, we owned and operated a portfolio of 231 properties located in 30 states (collectively, the “Properties”), including 185 MH communities, 36 RV communities, and 10 Properties containing both MH and RV sites. As of December 31, 2015, the Properties contained an aggregate of 88,612 developed sites comprised of 69,682 developed MH sites, 9,559 annual RV sites (inclusive of both annual and seasonal usage rights), 9,371 transient RV sites, and approximately 7,181 additional MH and RV sites suitable for development. Our executive and principal property management office is located at 27777 Franklin Road, Suite 200, Southfield, Michigan 48034 and our telephone number 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 1,790 full and part time employees as of December 31, 2015. 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 our Annual 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 with the Securities and Exchange Commission (the "SEC"). STRUCTURE OF THE COMPANY The Operating Partnership is structured as an umbrella partnership REIT, or UPREIT. In 1993, we contributed our net assets to the Operating Partnership in exchange for the sole general partner interest in the Operating Partnership and the majority of all the Operating Partnership’s initial capital. We substantially conduct our operations through the Operating Partnership. The Operating Partnership owns, either directly or indirectly through other 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 to acquire MH and RV communities in transactions that defer some or all of the sellers’ tax consequences. The financial results of the Operating Partnership and our other subsidiaries are consolidated in our Consolidated Financial Statements. The financial results include certain activities that do not necessarily qualify as REIT activities under the Internal Revenue Code of 1986, as amended (the “Code”). We have formed taxable REIT subsidiaries, as defined in the Code, to engage in such activities. We use taxable REIT subsidiaries to offer certain services to our residents and engage in activities that would not otherwise be permitted 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. 1 SUN COMMUNITIES, INC. Under the partnership agreement, the Operating Partnership is structured to make distributions with respect to certain of the Operating Partnership units ("OP units") at the same time that distributions are made to our common stockholders. The Operating Partnership is structured to permit limited partners holding certain classes or series of OP units to exchange those OP units for shares of our common stock (in a taxable transaction) and achieve liquidity for their investment. As the sole general partner of the Operating Partnership, we generally have the power to manage and have complete control over the conduct of the Operating Partnership's affairs and all decisions or actions made or taken by us as the general partner pursuant to the partnership agreement are generally binding upon all of the partners and the Operating Partnership. We do not own all of the OP units. As of December 31, 2015, the Operating Partnership had issued and outstanding: • 61,258,247 common OP units; • 1,283,819 preferred OP units ("Aspen preferred OP units"); • 387,981 Series A-1 preferred OP units; • 40,268 Series A-3 preferred OP units; • 2,822,126 Series A-4 preferred OP units; • 3,400,000 7.125% Series A Cumulative Redeemable Preferred OP Units (“7.125% Series A OP units”); • 112,400 Series B-3 preferred OP units; and • 340,206 Series C preferred OP units. As of December 31, 2015, we held: • 58,395,278 common OP units, or approximately 95% of the issued and outstanding common OP units; • 2,067,091 Series A-4 preferred OP units, or approximately 73% 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, Series B-3 preferred OP units, or Series C preferred OP units. Ranking and Priority The 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 the distribution 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 C preferred OP units; • next, the Series B-3 preferred OP units; • next, the Series A-3 preferred OP units; and • finally, the common OP units. Common OP Units Subject 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 common stock. Holders of common OP units are entitled to receive distributions from the Operating Partnership as and when declared by the general partner, provided that all accrued distributions payable on OP units ranking 2 SUN COMMUNITIES, INC. senior to the common OP units have been paid. The holders of common OP units generally receive distributions on the same dates and in amounts equal to the distributions paid to holders of our common stock. Aspen Preferred OP Units Subject 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 preferred OP 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 is greater than $68.00 per share, the number of common OP units determined by dividing (i) the sum of (A) $27.00 plus (B) 25% of the amount by which the market 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 units are entitled to receive distributions not less than quarterly. Distributions on Aspen preferred OP units are generally paid on the same dates as distributions are paid 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 U.S. Treasury bond yield plus 239 basis points; provided, however, that the aggregate distribution 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 been converted 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 a written demand during the existence of certain uncured Aspen preferred OP unit defaults, including our failure to pay distributions on the 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 also redeem Aspen preferred OP units from time to time if we and the holder thereof agree to do so. Series A-1 Preferred OP Units Subject 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 into 2.439 shares of our common stock (which exchange rate is subject to adjustment upon stock splits, recapitalizations, and similar events). The holders of Series A-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 the same 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 equal to 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 on any matter requiring the consent or approval of the Operating Partnership's limited partners. Series A-3 Preferred OP Units Subject 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 into 1.8605 shares of our common stock (which exchange rate is subject to adjustment upon stock splits, recapitalizations, and similar events). The holders of Series 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 distributions in 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 consent rights on any matter requiring the consent or approval of the Operating Partnership's limited partners. Series A-4 Preferred OP Units In connection with the issuance of our 6.50% Series A-4 Cumulative Convertible Preferred Stock (the "Series A-4 Preferred Stock”) in November 2014, the Operating 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 and preferences substantially similar to those of the Series A-4 Preferred Stock, including rights to receive distributions at the same time and in the same amounts as 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 or common OP units (which exchange rate is subject to adjustment upon stock splits, recapitalizations, and similar 3 SUN COMMUNITIES, INC. events). The Operating Partnership issued Series A-4 preferred OP units to us in connection with our acquisition of the American Land Lease ("ALL") portfolio of MH communities from Green Courte Real Estate Partners, LLC, Green Courte Real Estate Partners II, LLC, Green Courte Real Estate Partners III, LLC and certain of their affiliated entities (collectively, the "Green Courte parties" or the "Green Courte entities"). In 2014, we issued 669,449 Series A-4 preferred OP units to the sellers as consideration for the ALL acquisition. In January 2015, we issued 200,000 Series A-4 Preferred OP units in a private placement in connection with the ALL acquisition. In June 2015, we issued 34,219 Series A-4 preferred OP units to GCP Fund III Ancillary Holding, LLC. In July 2015, we repurchased 4,066,586 Series A-4 preferred OP units. At December 31, 2015 we hold 2,067,091 Series A-4 preferred OP units. The rights of the 2,067,091 Series A-4 preferred OP units held by us 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 apply to the Series A-4 preferred OP units held by us. If certain change of control transactions occur or if our common stock ceases to be listed or quoted on an exchange or quotation system, then at any time after November 26, 2019, we or the holders of shares of Series A-4 Preferred Stock and Series A-4 preferred OP units may cause all or any of those shares or units to be redeemed for cash at a redemption price equal to the sum of (i) the greater of (x) the amount that the redeemed shares of Series A-4 Preferred Stock and Series A-4 preferred OP units would have received in such transaction if they had been converted into shares of our common stock immediately prior to such transaction, or (y) $25.00 per share, plus (ii) any accrued and unpaid distributions thereon to, but not including, the redemption date. 7.125% Series A OP Units In connection with the issuance of our 7.125% Series A Cumulative Redeemable Preferred Stock ("Series A Preferred Stock") in November 2012, the Operating 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 and they have rights, preferences, and other terms substantially similar to the Series A Preferred Stock, including rights to receive distributions at the same time and 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 in consideration 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 Units Series B-3 preferred OP units are not convertible. The holders of Series B-3 preferred OP units generally receive distributions on the same dates as distributions 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 product of $100.00 multiplied by an annual rate equal to 8.0%. As of December 31, 2015, there were outstanding 36,700 Series B-3 preferred OP units which were issued 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 were issued on January 5, 2004. Subject to certain limitations, (x) during the 90-day period beginning on each of the tenth through fifteenth anniversaries of the issue 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 preferred OP 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 may require us to redeem such holder's Series B- 3 preferred OP units at the 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 units we 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 preferred OP units do not have any voting or consent rights on any matter requiring the consent or approval of the Operating Partnership's limited partners. Series C Preferred OP Units Subject to certain limitations, the holder of each Series C preferred OP unit at its option may exchange such Series C preferred OP unit at any time into 1.11 shares of our common stock (which exchange rate is subject to adjustment upon stock splits, recapitalizations, and similar events). The holders of Series C preferred OP units are entitled to receive distributions not less 4 SUN COMMUNITIES, INC. than quarterly. Each Series C preferred OP unit is entitled to receive distributions in an amount equal to the product of $100.00 multiplied by an annual rate equal to (i) 4.0% until April 1, 2016, (ii) 4.5% from April 1, 2016 until April 1, 2019, and (c) 5.0% after April 1, 2019. Series C preferred OP units do not have any voting or consent rights on any matter requiring the consent or approval of the Operating Partnership's limited partners. REAL PROPERTY OPERATIONS Properties are designed and improved for several home options of various sizes and designs and consist of both MH communities and RV communities. A MH community is a residential subdivision designed and improved with sites for the placement of manufactured homes, related improvements, and amenities. 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 contain improvements similar to other garden-style residential developments, including centralized entrances, paved streets, curbs and gutters, and parkways. In addition, these communities also often provide a number of amenities, such as a clubhouse, a swimming pool, shuffleboard courts, tennis courts, and laundry facilities. A 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 provide vacation rental homes. RV communities include a number of amenities, such as restaurants, golf courses, swimming pools, tennis courts, 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 of the Properties provide water and sewer service through public or private utilities, while others provide these services to residents from on-site facilities. Each owner of a home within our Properties is responsible for the maintenance of the home and leased site. As a result, our capital expenditure needs tend to be less significant relative to multi-family rental apartment complexes. PROPERTY MANAGEMENT Our property management strategy emphasizes intensive, hands-on management by dedicated, on-site district and community managers. We believe that this on-site focus enables us to continually monitor and address resident concerns, the performance of competitive properties, and local market conditions. As of December 31, 2015, we employed 1,790 full and part time employees, of which 1,511 were located on-site as property managers, support staff, or maintenance personnel. Our community managers are overseen by John B. McLaren, our President and Chief Operating Officer, who has been in the manufactured housing industry since 1995, four Senior Vice Presidents of Operations and Sales, five Division Vice Presidents and 25 Regional Vice Presidents. The Regional Vice Presidents are responsible for semi-annual market surveys of competitive communities, interaction with local manufactured home dealers, regular property inspections, and 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 address tenant 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 effectively and professionally. All of our property management personnel participate in on-going training to ensure that changes to management policies and 5 SUN COMMUNITIES, INC. procedures are implemented consistently. We offer 145 courses for our team members through our Sun University, which has led to increased knowledge and accountability for daily operations and policies and procedures. HOME SALES AND RENTALS SHS is engaged in the marketing, selling and leasing of new and pre-owned homes to current and future residents in our communities. Since tenants often purchase a home already on-site within a community, such services enhance occupancy and property performance. Additionally, because many of the homes on the Properties are sold through SHS, better control of home quality in our communities can be maintained than if sales services were conducted solely through third-party brokers. SHS also leases homes to prospective tenants. At December 31, 2015, SHS had 10,685 occupied leased homes in its portfolio. New homes are also purchased for the Rental Program. Leases associated with the Rental Program generally have a term of one year. The Rental Program requires intensive management 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 47,000 applications during 2015 to live in our Properties, providing a significant "resident boarding" system allowing us to market purchasing a home to the best applicants and to rent to the remainder of approved applicants. Through the Rental Program we are able to demonstrate our product and lifestyle to the renters, while monitoring their payment history and converting qualified renters to owners. REGULATIONS AND INSURANCE General MH and RV community properties are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities such as swimming pools, clubhouses, and other common areas. We believe that each Property has the necessary operating permits and approvals. Insurance Our management believes that the Properties are covered by adequate fire, flood (where appropriate), property, and business interruption insurance provided by reputable companies with commercially reasonable deductibles and limits. We maintain a blanket policy that covers all of our Properties. We have obtained title insurance insuring fee title to the Properties in an aggregate amount which we believe to be adequate. Claims made to our insurance carriers that are determined to be recoverable are classified in other receivables as incurred. SITE LEASES OR USAGE RIGHTS The 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 both parties, 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 it relates to rent increase. Generally, market rate adjustments are made on an annual basis. These leases are cancelable for non-payment of rent, violation of community rules and regulations or other specified defaults. During the five calendar years ended December 31, 2015, on average 2.4% of the homes in our communities have been removed by their owners and 5% of the homes have been sold by their owners to a new owner who then assumes rental obligations as a community resident. The cost to move a home is approximately $4,000 to $10,000. The average resident remains in our communities for approximately 12 years, while the average home, which gives rise to the rental stream, remains in our communities for approximately 50 years. Please see the Risk Factors at Item 1A, and financial statements and related notes beginning on page F-1 of this Annual Report on Form 10-K for more detailed information. 6 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS SUN COMMUNITIES, INC. This Annual Report on Form 10-K contains various “forward-looking statements” within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and we intend that such forward-looking statements 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 facts are 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-looking statements, although not all forward-looking statements contain these words. These forward-looking statements reflect our current views with respect to future events 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-looking statements. 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, such risks and uncertainties include but are not limited to: 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; availability of capital; increases in interest rates and operating costs, including insurance premiums and real property taxes; risks related to natural disasters; • 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; • • our ability to maintain rental rates and occupancy levels; • our failure to maintain effective internal control over financial reporting and disclosure controls and procedures; • • • 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. We undertake no obligation to publicly update or revise any forward-looking statements included or incorporated by reference into this filing, whether as a result of 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 entirety by these cautionary statements. 7 ITEM 1A. RISK FACTORS SUN COMMUNITIES, INC. Our prospects are subject to certain uncertainties and risks. Our future results could differ materially from current results, and our actual results could differ materially from those projected in forward-looking statements as a result of certain risk factors. These risk factors include, but are not limited to, those set forth below, other one-time events, and important factors disclosed previously and from time to time in our other filings with the SEC. REAL ESTATE RISKS General economic conditions and the concentration of our properties in Florida, Michigan, Texas, and Arizona may affect our ability to generate sufficient revenue. The market and economic conditions in our current markets generally, and specifically in metropolitan areas of our current markets, may significantly affect manufactured home occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our revenues, and if our communities do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay or refinance our debt obligations could be adversely affected. We derive significant amounts of our rental income from properties located in Florida, Michigan, Texas, and Arizona. As of December 31, 2015, 61 Properties, representing approximately 30.5% of developed sites, are located in Florida; 65 Properties, representing approximately 27.2% of developed sites, are located in Michigan; 16 Properties, representing approximately 7.2% of developed sites, are located in Texas; and 10 Properties, representing approximately 5.0% of developed sites, are located in Arizona. As a result of the geographic concentration of our Properties in Florida, Michigan, Texas, and Arizona, we are exposed to the risks of downturns in the local economy or other local real estate market conditions 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 to promptly 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 than expected rates, then our business and results of operations could be adversely affected. In addition, certain expenditures associated with each Property (such as real estate taxes and maintenance costs) generally are not reduced when circumstances cause a reduction in income from the Property. Furthermore, real estate investments are relatively illiquid and, therefore, will tend to limit our ability to vary our portfolio promptly in response to changes in economic or other 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; 8 • • zoning or other regulatory restrictions; SUN COMMUNITIES, INC. competition from other available MH and RV communities and alternative forms of housing (such as apartment buildings and site-built single-family homes); • our ability to provide adequate management, maintenance and insurance; • • 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 community properties 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 newly acquired properties. We may be competing with others with greater resources and whose officers and directors have more experience than our officers and directors. In addition, other forms of multi-family residential properties, such as private and federally funded or assisted multi-family housing projects and single-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 home sales. 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. 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 the following risks: • we may be unable to acquire a desired property because of competition from other well capitalized real estate investors, including both publicly traded 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 due diligence investigations to our satisfaction, which may not be satisfied; 9 • even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price; SUN COMMUNITIES, INC. • 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 local economy, 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 existing operations. 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 a result, 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 could adversely affect our cash flow. Increases in taxes and regulatory compliance costs may reduce our net income. Costs resulting from changes in real estate laws, income taxes, service or other taxes, generally are not passed through to tenants under leases and may adversely affect our funds from operations and our ability to pay or refinance our debt. Similarly, changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures, 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 engage in the development and construction business in the future. Our construction and development pipeline may be exposed to the following risks which are in addition 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 the development; • we may be unable to obtain, or face delays in obtaining, necessary zoning, building and other governmental permits and authorizations, which could result in increased costs and delays, and even require us to abandon development of the community entirely if we are unable to obtain such permits 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 in connection 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 construction costs; 10 SUN COMMUNITIES, INC. • we may incur construction and development costs for a community which exceed our original estimates due to increased materials, labor or other costs, which could make completion of the community uneconomical and we may not be able to increase rents to compensate for the increase in development 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; and • 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 of capital improvements. Enactment of such laws has been considered from time to time in other jurisdictions. Certain Properties are located, and we may purchase 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 of certain hazardous substances at, on, under or in such property. Such laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous substances. The presence of such substances, or the failure to properly remediate such substances, may adversely 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 arrange for 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 treatment facility owned or operated by another person. In addition, certain environmental laws impose liability for the management and disposal of asbestos-containing materials and for the release of such materials into the air. These laws may provide for third parties to seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials. In connection with the ownership, operation, management, and development of real properties, we may be considered an owner or operator of such properties and, therefore, are potentially liable for removal or remediation costs, and also may be liable for governmental fines and injuries to persons and property. When we arrange for the treatment or disposal of hazardous substances 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 water analysis) completed by independent environmental consultants. These environmental audits have not revealed any significant environmental liability that would have a material adverse effect on our business. These audits cannot reflect conditions arising after the studies were completed, and no assurances can be given that existing environmental studies reveal all environmental liabilities, that any prior owner or operator of a property or neighboring owner or operator did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any one 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), property, and business interruption insurance provided by reputable companies with commercially reasonable deductibles and limits. Certain types of losses, however, may be either uninsurable or not economically insurable, such as losses due to earthquakes, riots, or acts of war. In the event an uninsured loss 11 occurs, we could lose both our investment in and anticipated profits and cash flow from the affected property. Any loss could adversely affect our ability to repay our debt. SUN COMMUNITIES, INC. FINANCING AND INVESTMENT RISKS Our 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, 2015, we had approximately $2.3 billion of total debt outstanding, consisting of approximately $2.2 billion in debt that is collateralized by mortgage liens on 160 of the Properties, $140.4 million that is secured by collateralized receivables, and $45.9 million that is unsecured debt. As of December 31, 2015, we had $25.0 million outstanding on our senior revolving credit facility. If we fail to meet our obligations under our secured debt, the lenders would be entitled to foreclose on all or some of the collateral securing such debt which could have a material adverse effect on us and our ability to make expected distributions, and could threaten our continued viability. We are subject to the risks normally associated with debt financing, including the following risks: • 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 flow to 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 incurring additional 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 greater portion 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 the risk of a default on our indebtedness. TAX RISKS We 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 qualify for 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 to operate 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 qualify or remain so qualified. Qualification as a REIT involves the satisfaction of numerous requirements (some on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and involves 12 the determination of various factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation, which require us to continually monitor our tax status. SUN COMMUNITIES, INC. 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 regular corporate rates (including any applicable alternative minimum tax). 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 treatment would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability to us for the years involved. In addition, 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 the Operating Partnership is deemed to be a “publicly traded partnership,” it will be treated as a corporation instead of a partnership for federal income tax purposes 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 as specified types of real property rents, dividends, and interest. We believe that the Operating Partnership has and will continue to meet this 90% test, but we cannot 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 would fail to qualify as a REIT for federal income tax purposes, and our ability to raise additional capital could be significantly impaired. Our 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 for dividends paid and excluding net capital gain) and to avoid federal income taxation, our distributions must not be less than 100% of our REIT taxable income, including capital gains. As a result of the distribution requirements, we do not expect to accumulate significant amounts of cash. Accordingly, these distributions 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 not comparable to similar arrangements between unrelated parties. The Internal Revenue Service may successfully assert that the economic arrangements of any of 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%. Dividends payable by REITs, however, are generally not eligible for this reduced rate. Although this rule does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular qualified corporate dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less competitive than investments in stock of non-REIT corporations that pay dividends, which could adversely 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 other things, the sources of our income, the nature and diversification of our assets, the amounts we 13 SUN COMMUNITIES, INC. distribute to our stockholders and the ownership of our stock. In order to meet these tests, we may be required to forego or limit attractive business or investment opportunities and distribute all of our net earnings rather than invest in attractive opportunities or hold larger liquid reserves. Therefore, compliance with the REIT requirements may hinder our ability to operate solely 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 taxable income 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 equity ownership 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 changes in 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 to offset taxable income for U.S. federal income tax purposes. BUSINESS RISKS 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 approximately 19.3% of the outstanding shares of Origen Financial, Inc. ("Origen") common stock and Shiffman Origen LLC (which is owned by Gary A. Shiffman (our Chairman and Chief Executive Officer), and members of Mr. Shiffman's family and related trusts) owns approximately 3.9% of the outstanding shares of Origen common stock. Gary A. Shiffman is a member of the Board of Directors of Origen, and one of our directors, Arthur A. Weiss, was the trustee of a Shiffman family trust that beneficially owned Origen common stock. Ronald A. Klein, one of our directors, is the Chief Executive Officer and a director of Origen. Mr. Klein owns approximately 1.8% of the outstanding shares of Origen common stock. Mr. Shiffman, Mr. Weiss and Brian M. Hermelin, another of our directors, each beneficially owns less than 1% of the outstanding shares of Origen common stock. Accordingly, in all transactions involving Origen, Mr. Shiffman, Mr. Weiss, Mr. Hermelin or Mr. Klein may have a conflict of interest with respect 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 16% equity interest in American Center LLC, the entity 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 indirect interest in American Center LLC. Under this lease agreement, we lease approximately 62,900 rentable square feet. The initial term of the lease is until October 31, 2026, and the base rent is $16.95 per square foot (gross) until October 31, 2016, with graduated rental increases thereafter. 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 and his ownership interest in American Center LLC. Legal Counsel. During 2015, Jaffe, Raitt, Heuer, & Weiss, Professional Corporation acted as our general counsel and represented us in various matters. Arthur A. 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 $4.6 million, $7.5 million and $3.2 million in the years ended December 31, 2015, 2014 and 2013, respectively. Tax Consequences Upon Sale of Properties. Gary A. Shiffman holds limited partnership interests in the Operating Partnership which were received in connection with the contribution of properties from partnerships previously affiliated with him. Prior to any redemption of these limited partnership interests for our common stock, Mr. Shiffman will have tax consequences different from those on us and our public stockholders upon the sale of any of these partnerships. Therefore, we and Mr. Shiffman may have different objectives regarding the appropriate pricing and timing of any sale of those properties. 14 We rely on key management. SUN COMMUNITIES, INC. 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 services of one or more of these executive officers could have a temporary adverse effect on our operations. We do not currently maintain or contemplate obtaining any “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 be owned, 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 outstanding shares of our capital stock by any single stockholder has been restricted, with certain exceptions, for the purpose of maintaining our qualification as a REIT under the Code. Such restrictions in our charter do not apply to Milton M. Shiffman, Gary A. Shiffman, and Robert B. Bayer; trustees, personal representatives and 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 preferences over 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 be advantageous to stockholders; and (2) limit the opportunity for stockholders to receive a premium for their common stock that might otherwise exist if an investor 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 the Company. Preferred Stock. Our charter authorizes the Board of Directors to issue up to 20,000,000 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. Our charter designates 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. Our charter designates 6,364,770 shares of preferred stock as 6.50% Series A-4 Cumulative Convertible Preferred Stock, $0.01 par value per share of which 2,067,091 shares were issued and outstanding as of December 31, 2015. The power to issue preferred stock could have the effect of delaying or preventing a change in control of the Company even if a change in control were in the stockholders' interest. Upon 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 or surviving entity (or ADRs representing such securities) are not listed on the New York Stock Exchange (“NYSE”), the NYSE MKT or NASDAQ or listed or quoted 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 will have 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 equivalent value of alternative consideration) and under these circumstances we will also have a special optional redemption right to redeem the shares of Series A Preferred 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 common stock. 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 will receive 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 than the liquidation preference of the Series A Preferred Stock. Subject to certain limitations, upon written notice to us, each holder of shares of Series A-4 Preferred 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 the quotient 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-4 Preferred Stock is convertible into approximately 0.4444 shares of common stock. The conversion price is subject to adjustment upon various events. At our option, instead of issuing the shares of common stock to the converting 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 Series A-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, the volume weighted average of the daily volume weighted average price of a share of our common stock on the NYSE 15 SUN COMMUNITIES, INC. equals or exceeds 115.5% of the then prevailing 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 the holders thereof, we may convert each outstanding share of Series A-4 Preferred Stock into that number of shares of common stock equal to the quotient obtained 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 acquisition proposal for the Company or of delaying, deferring or preventing a change of control of the Company under circumstances that otherwise could provide the holders of our common stock and preferred stock with the opportunity to realize a premium over the then-current market price or that stockholders may otherwise believe is in 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 greater interest 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 plan could 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 if a 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 other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest. Certain provisions of the Maryland General Corporation Law, ("MGCL"), may have the effect of inhibiting a third-party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our capital stock with the opportunity to realize a 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 or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or supermajority and stockholder voting requirements on these combinations; and “control share” provisions that provide that “control shares” of our company (defined as shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights 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 the matter, excluding all interested shares. The provisions of the MGCL relating to business combinations do not apply, however, to business combinations that are approved or exempted by our Board of Directors prior to the time that the interested stockholder becomes an interested stockholder. As permitted by the statute, our Board of Directors has by resolution exempted Milton M. Shiffman, Robert B. Bayer, and Gary A. Shiffman, their affiliates and all persons acting in concert or as a group with the foregoing, from the business combination provisions of the MGCL and, consequently, the five-year prohibition and the supermajority vote requirements will not 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 may not be in the best interests of our stockholders without compliance by our Company with the supermajority vote requirements and the other provisions of the statute. 16 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, our Board of Directors may by amendment to our bylaws opt in to the control share provisions of the MGCL at any time in the future. SUN COMMUNITIES, INC. Additionally, Subtitle 8 of Title 3 of the MGCL permits our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring or preventing 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 our stockholders' best interests. These provisions include a classified board; two-thirds vote to remove a director; that the number of directors may only be fixed by 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 be filled 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 vacancy occurred; and a majority requirement for the calling by stockholders of special meetings. Other than a classified board, the filling of vacancies as a result of the removal of a director and a majority requirement for the calling by stockholders of special meetings, we are already subject to these provisions, either by provisions 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, our Board 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, REIT status, and operating policies, are determined by our Board of Directors. Although the Board of Directors has no present intention to do so, these policies may be 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, stockholders may 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 that such sales could occur or the availability of future issuances of shares of our common stock, preferred stock, OP units or other securities convertible into or exchangeable or exercisable for our common stock or preferred stock, could materially and adversely affect the market price of our common stock or preferred stock 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 our common 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 other reasons. Based on the applicable conversion ratios then in effect, as of February 16, 2016, in the future we may issue to the limited partners of the Operating Partnership, up to approximately 2.8 million shares of our common stock in exchange for their OP units. The limited partners may sell such shares pursuant to registration rights, if available, or an available exemption from registration. As of February 16, 2016, options to purchase 24,500 shares of our common stock were outstanding under our equity incentive plans. We currently have the authority to issue restricted stock awards or options to purchase up to an additional 1,799,874 shares of our common stock pursuant to our equity incentive plans. In addition, we entered into an At the Market Offering Sales Agreement in June 2015 to issue and sell shares of common stock. As of February 16, 2016, our Board of Directors had authorized us to sell approximately an additional $207.0 million of common stock under this agreement. No prediction can be made regarding the effect that future sales of shares of our common stock or our other securities will have on the market price of shares. 17 An increase in interest rates may have an adverse effect on the price of our common stock. SUN COMMUNITIES, INC. 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 the prevailing market price of the common stock. An increase in market interest rates may tend to make the common stock less attractive relative to other investments, 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. The U.S. rate environment, monetary policy change in China, Japan and the Euro area, falling oil prices, and turmoil in emerging markets have created uncertainty and volatility in the U.S. and global economies. Continued economic uncertainty, both nationally and internationally, causes increased volatility in investor confidence thereby creating similar volatility in the availability of both debt and equity capital in the financial markets. The other risk factors presented in this Annual Report on 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 such volatility is experienced in future periods, 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 our common 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 will depend 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 future borrowings 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 indebtedness or 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 future distributions, will be at the sole discretion of our Board of Directors in light of conditions 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. 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 corporation generally 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 the usual 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 provides otherwise, the amount that would be needed, if the corporation were dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution, provided, however, that a Maryland corporation may make 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) the sum 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 able to pay our debts as they become due in the usual course 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 total liabilities plus, unless the terms of such class or series of stock provide otherwise, the amount that would be needed to satisfy the preferential rights upon dissolution of the holders of 18 shares of any class or series of stock then outstanding, if any, with preferential rights upon dissolution senior to those of our common stock or currently outstanding preferred stock. SUN COMMUNITIES, INC. 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 our common 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 volume fluctuations. As a result, the market price of our common stock and preferred stock could be similarly volatile, and investors in our common stock and preferred stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. The price of our 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; 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; • • our operating performance and the performance of other similar companies; • our ability to maintain compliance with covenants contained in our debt facilities; • • • • 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 and our 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. • • • • Many of the factors listed above are beyond our control. Those factors may cause the market price of our common stock or preferred stock to decline significantly, regardless of our financial condition, results of operations and prospects. It is impossible to provide any assurance that the market price of our common 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 prices they find attractive, or at all. In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock 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 more rating 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 the Series 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-4 Preferred Stock, which could adversely affect the market price of such preferred stock. Ratings only reflect the views of the rating agency or agencies issuing the ratings and such ratings could be revised downward, placed on a watch list or withdrawn entirely at the discretion of the 19 issuing rating agency if in its judgment circumstances so warrant. Any such downward revision, placing on a watch list or withdrawal of a rating could have an adverse effect on the market price of the Series A Preferred Stock or Series A-4 Preferred Stock. SUN COMMUNITIES, INC. Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer. In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our tenants and clients and personally identifiable information of our employees, in our facility and on our network. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our network and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, disrupt our operations, damage our reputation, and cause a loss of confidence, which could adversely affect our business. 20 ITEM 1B. UNRESOLVED STAFF COMMENTS SUN COMMUNITIES, INC. None. 21 ITEM 2. PROPERTIES SUN COMMUNITIES, INC. As of December 31, 2015, the Properties were located in 30 states and consisted of 185 MH communities, 36 RV communities, and 10 properties containing both MH and RV sites. As of December 31, 2015, the Properties contained an aggregate of 88,612 developed sites comprised of 69,682 developed manufactured home sites, 9,559 annual RV sites (inclusive of both annual and seasonal usage rights), 9,371 transient RV sites, and approximately 7,181 additional MH and RV sites suitable for development. Most of the Properties include amenities oriented toward family and retirement living. Of the 231 Properties, 114 have more than 300 developed sites, with the largest having 1,109 developed manufactured home sites. See "Real Estate and Accumulated Depreciation, Schedule III", included in our Consolidated Financial Statements, for detail on Properties that are encumbered. As of December 31, 2015, the Properties had an occupancy rate of 95.0% excluding transient RV sites. Since January 1, 2015, the Properties have averaged an aggregate annual turnover of homes (where the home is moved out of the community) of approximately 2.0% 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 5.9%. The average renewal rate for residents in our Rental Program was 62.1% for the year ended December 31, 2015. We believe that our Properties’ high amenity levels contribute to low turnover and generally high occupancy rates. All of the Properties provide residents with attractive amenities with most offering a clubhouse, a swimming pool, and laundry facilities. Many of the Properties offer additional amenities such as sauna/whirlpool spas, tennis, shuffleboard, basketball courts, and/or exercise rooms. Many RV communities offer incremental amenities including golf, pro shops, restaurants, zip lines, waterparks, watersports, and thematic experiences. We have concentrated our communities within certain geographic areas in order to achieve economies of scale in management and operation. The Properties are principally concentrated in the Midwestern, Southern, Northeastern and Southeastern U.S. We believe that geographic diversification helps to insulate the portfolio from regional economic influences. The following tables set forth certain information relating to the properties owned as of December 31, 2015. The occupancy percentage includes MH sites and annual RV sites, and excludes transient RV sites. Property MH/ RV City State MH and Annual RV Sites as of 12/31/15 Transient RV Sites as of 12/31/15 Occupancy as of 12/31/15 Occupancy as of 12/31/14 Occupancy as of 12/31/13 MIDWEST Michigan Academy/West Pointe (1) Allendale Meadows Mobile Village Alpine Meadows Mobile Village MH Grand Rapids MI MH Allendale MH Canton MI MI Apple Carr Village MH Muskegon Brentwood Mobile Village MH Kentwood Brookside Village MH Kentwood MI MI MI Byron Center Mobile Village MH Byron Center MI Camelot Villa Cider Mill Crossings Cider Mill Village Continental North MH Macomb MH Fenton MI MI MH Middleville MI MH Davison MI MI Country Acres Mobile Village MH Cadillac Country Hills Village MH Hudsonville MI 22 441 352 403 529 195 196 143 712 262 258 474 182 239 — — — — — — — — — — — — — 97 % 96 % 99 % 99 % 90 % 100 % 100 % 98 % 95 % 98 % 96 % 62 % 91 % 96 % 99 % 87 % 99 % 99 % 99 % 86 % 91 % 89 % 56 % 98 % 100 % 100 % 92 % 89 % 98 % 83 % 97 % 100 % 94 % 79 % 72 % 83 % 54 % 95 % 98 % SUN COMMUNITIES, INC. Property Country Meadows Mobile Village Country Meadows Village Creekwood Meadows MH/ RV City State MH Flat Rock MH Caledonia MH Burton MI MI MI Cutler Estates Mobile Village MH Grand Rapids MI MI MI MI MI MI Dutton Mill Village East Village Estates Egelcraft MH Caledonia MH Washington Twp. MH Muskegon Fisherman’s Cove MH Flint Frenchtown Villa/Elizabeth Woods Grand Mobile Estates Hamlin MH Newport MH Grand Rapids MI MH Webberville MI Hickory Hills Village MH Battle Creek MI Hidden Ridge RV Resort Holiday West Village Holly Village / Hawaiian Gardens Hunters Crossing Hunters Glen Kensington Meadows RV Hopkins MH Holland MH Holly MH Capac MH Wayland MH Lansing MI MI MI MI MI MI Kings Court Mobile Village MH Traverse City MI Knollwood Estates Lafayette Place Lakeview Leisure Village Lincoln Estates Meadow Lake Estates Meadowbrook Estates MH Allendale MH Warren MH Ypsilanti MH Belmont MH Holland MI MI MI MI MI MH White Lake MI MH Monroe MI MI MI Meadowlands of Gibraltar MH Rockwood Northville Crossings MH Northville Oak Island Village Pinebrook Village Presidential Estates Mobile Village Richmond Place River Haven Village Rudgate Clinton Rudgate Manor Scio Farms Estates Sheffield Estates MH East Lansing MI MH Grand Rapids MI MH Hudsonville MI MH Richmond MI MH Grand Haven MI MH MH Clinton Township Sterling Heights MH Ann Arbor MI MI MI MH Auburn Hills MI 23 MH and Annual RV Sites as of 12/31/15 Transient RV Sites as of 12/31/15 Occupancy as of 12/31/15 Occupancy as of 12/31/14 Occupancy as of 12/31/13 577 307 336 259 307 708 458 162 1,060 219 209 283 130 341 425 114 280 290 639 161 254 392 238 191 425 453 320 756 250 185 364 117 721 667 931 913 228 — — — — — — — — — — — — 147 — — — — — — — — — — — — — — — — — — — — — — — — 96 % 99 % 88 % 98 % 100 % 99 % 96 % 96 % 78 % 95 % 91 % 97 % 100 % 79 % 95 % 99 % 99 % 95 % 96 % 73 % 84 % 91 % 98 % 100 % 100 % (3) 100 % (3) 99 % 99 % 97 % 93 % 100 % 97 % 99 % 97 % 87 % (1) 97 % 100 % 100 % 97 % 80 % 99 % 96 % 74 % 97 % 97 % 95 % 76 % 95 % 98 % 99 % N/A 94 % N/A 76 % 87 % 98 % 100 % (3) 99 % 96 % 90 % 79 % (1) 98 % 99 % 94 % 71 % 97 % 100 % 100 % 100 % 100 % 96 % 94 % 84 % 99 % 98 % 99 % 99 % 86 % 70 % 97 % 98 % 93 % N/A 100 % 99 % 99 % 98 % 80 % 67 % 98 % 97 % 99 % 99 % 97 % 99 % 99 % 96 % 98 % 95 % 94 % N/A 91 % 97 % 92 % 97 % 86 % 64 % 96 % 96 % 98 % 92 % SUN COMMUNITIES, INC. Property Silver Springs MH/ RV MH City State Clinton Township MI Southwood Village MH Grand Rapids MI St. Clair Place Sunset Ridge Sycamore Village Tamarac Village Tamarac Village Timberline Estates MH St. Clair MH Portland MH Mason MH Ludington RV Ludington MI MI MI MI MI MH Coopersville MI Town & Country Mobile Village MH Traverse City MI Warren Dunes Village Waverly Shores Village West Village Estates White Lake Mobile Home Village Windham Hills Estates Windsor Woods Village Woodhaven Place Michigan Total MH Bridgman MH Holland MH Romulus MI MI MI MH White Lake MI MH Jackson MH Wayland MI MI MH Woodhaven MI Indiana Brookside Mobile Home Village MH Goshen Carrington Pointe MH Ft. Wayne Clear Water Mobile Village MH South Bend Cobus Green Mobile Home Park MH Osceola Deerfield Run Four Seasons Lake Rudolph RV Campground & RV Resort Liberty Farms Pebble Creek Pine Hills Roxbury Park Indiana Total MH Anderson MH Elkhart RV Santa Claus MH Valparaiso MH Greenwood MH Middlebury MH Goshen IN IN IN IN IN IN IN IN IN IN IN Ohio Apple Creek Manufactured Home Community and Self Storage East Fork Indian Creek RV & Camping Resort Oakwood Village Orchard Lake Westbrook Senior Village MH Amelia MH Batavia RV Geneva on the Lake OH OH OH MH Miamisburg OH MH Milford MH Toledo OH OH 24 MH and Annual RV Sites as of 12/31/15 Transient RV Sites as of 12/31/15 Occupancy as of 12/31/15 Occupancy as of 12/31/14 Occupancy as of 12/31/13 547 394 100 190 396 298 104 296 192 188 326 628 315 402 314 220 23,966 570 320 227 386 175 218 — 220 257 129 398 2,900 176 350 358 511 147 112 — — — — — — 13 — — — — — — — — — 160 — — — — — — 501 — — — — 501 — — 210 — — — 98 % 100 % 78 % 98 % 100 % 99 % 99 % 75 % 98 % 99 % 99 % 99 % 100 % (3) 100 % (3) 99 % 98 % 99 % 100 % 99 % 99 % 100 % 100 % 98 % 99 % 97 % 95 % 98 % 93 % 95 % 77 % 93 % 94 % 89 % 87 % 92 % 96 % 93 % 96 % 91 % 92 % 74 % 87 % 92 % 90 % 78 % 95 % N/A (3) N/A (3) 96 % 98 % 97 % 99 % 99 % 91 % 98 % 91 % 98 % 75 % 96 % 99 % 74 % 95 % 99 % 99 % 100 % (3) 94 % 100 % 95 % 100 % 100 % 96 % 85 % 90 % 96 % 88 % 71 % 82 % 92 % 78 % 73 % 92 % N/A 98 % 93 % 90 % 99 % 71 % 96 % 85 % (2) 93 % 74 % (2) 93 % 90 % 100 % (3) 100 % (3) 98 % 97 % 100 % (3) 98 % 98 % 99 % 96 % 96 % 99 % 96 % Branch Creek Estates MH Austin Chisholm Point Estates MH Pflugerville Property Westbrook Village Willowbrook Place Woodside Terrace Ohio Total SOUTH Texas Blazing Star Boulder Ridge Comal Farms La Hacienda RV Resort Oak Crest Pecan Branch Pine Trace River Ranch River Ridge Saddlebrook Stonebridge Summit Ridge Sunset Ridge Woodlake Trails Texas Total SOUTHEAST Florida Arbor Terrace RV Park Ariana Village Mobile Home Park Blue Heron Pines Blueberry Hill Brentwood Estates Buttonwood Bay Buttonwood Bay Carriage Cove Club Naples Cypress Greens Deerwood Fairfield Village Forest View Gold Coaster Grand Lakes SUN COMMUNITIES, INC. MH/ RV MH Toledo City MH Toledo MH Holland State OH OH OH MH and Annual RV Sites as of 12/31/15 344 266 439 2,703 Transient RV Sites as of 12/31/15 — — — 210 Occupancy as of 12/31/15 95 % Occupancy as of 12/31/14 94 % Occupancy as of 12/31/13 94 % 97 % 91 % 95 % 95 % 91 % 88 % 94 % 87 % 89 % RV San Antonio MH Pflugerville MH New RV Austin Braunfels MH Austin MH Georgetown MH Houston MH Austin MH Austin MH San Marcos MH San Antonio MH Converse MH Kyle MH San Antonio TX TX TX TX TX TX TX TX TX TX TX TX TX TX TX TX RV Bradenton FL MH Lakeland MH Punta Gorda RV Bushnell MH Hudson MH Sebring RV Sebring MH Sanford RV Naples MH Lake Alfred MH Orlando MH Ocala MH Homosassa MH Homestead RV Citra FL FL FL FL FL FL FL FL FL FL FL FL FL FL 25 89 526 392 417 355 — 433 69 680 748 515 562 335 446 171 227 5,965 148 207 387 200 190 407 371 464 182 259 569 293 304 481 217 173 — — — — 241 — — — — — — — — — — 414 100 % (3) 100 % (3) 99 % 99 % 100 % (3) 99 % 100 % 100 % 98 % 98 % (2) 98 % 98 % (2) N/A (3) N/A 98 % 99 % 94 % 92 % (2) 90 % (2) 99 % 61 % (2) 97 % 93 % 99 % 91 % (2) 93 % 96 % 83 % 99 % (2) 99 % 98 % 99 % 98 % 100 % 98 % 97 % 100 % 99 % 99 % N/A 100 % 94 % 99 % 73 % (1) 100 % 99 % 98 % 91 % 100 % 98 % 96 % 213 100 % (3) 100 % (3) 100 % (3) — — 205 — — 161 — 123 — — — — 64 187 96 % 95 % 94 % N/A 96 % 100 % (3) 100 % (3) 85 % N/A 100 % 100 % 100 % (3) 100 % (3) 97 % 100 % (3) 100 % (3) 96 % N/A 95 % 92 % 97 % N/A N/A N/A 92 % 100 % (3) 100 % (3) 100 % (3) 100 % (3) N/A 100 % (3) N/A 100 % 100 % (3) N/A 100 % (3) N/A N/A N/A N/A 98 % (3) 100 % (3) Lake San Marino RV Park RV Naples Property Groves RV Resort Gulfstream Harbor The Hamptons Holly Forest Estates Indian Creek Park Indian Creek Park Island Lakes Kings Lake King's Pointe La Costa Village Lake Juliana Landings Lake Pointe Village Lakeshore Landings Lakeshore Villas Lamplighter Meadowbrook Village Naples RV Resort North Lake Orange City RV Resort Orange City RV Resort Orange Tree Village Palm Key Village Park Place Park Royale Pelican Bay Plantation Landings Rainbow RV Resort Rainbow RV Resort The Ridge Riverside Club Saddle Oak Club Savanna Club Serendipity Siesta Bay RV Park Southport Springs Stonebrook Sundance SUN COMMUNITIES, INC. MH and Annual RV Sites as of 12/31/15 186 974 829 402 Transient RV Sites as of 12/31/15 83 — — — Occupancy as of 12/31/15 Occupancy as of 12/31/14 100 % (3) 100 % (3) 90 % N/A 99 % 99 % N/A 99 % Occupancy as of 12/31/13 100 % (3) N/A N/A 99 % 353 — 100 % 100 % 100 % 966 301 245 226 658 274 362 218 306 282 260 257 98 197 4 250 246 204 475 309 216 394 37 346 481 728 80 864 395 376 1,068 338 719 544 216 332 112 — — — — — — 189 — — — — 67 75 — 271 — — — — — — — 116 — 311 — — — — — 78 — — — 100 % (3) 100 % (3) 100 % 100 % 100 % (3) 100 % 100 % 100 % 98 % 100 % 97 % N/A N/A 97 % N/A 99 % 100 % (3) 100 % (3) 97 % 95 % 96 % 97 % N/A N/A 100 % 99 % 100 % (3) 100 % (3) 100 % (3) 100 % (3) 100 % 100 % (3) 100 % (3) 100 % 100 % 100 % 96 % 87 % 96 % 84 % 99 % N/A N/A N/A N/A N/A 100 % 100 % 100 % (3) 100 % (3) 93 % N/A N/A 76 % 100 % (3) N/A 100 % 100 % 74 % N/A 100 % 100 % 97 % N/A N/A 92 % 100 % (3) 100 % (3) 98 % N/A 89 % 100 % N/A N/A 100 % N/A N/A 97 % N/A 100 % (3) N/A N/A N/A 100 % 100 % (3) 100 % (3) 100 % 100 % (3) 100 % N/A N/A N/A N/A N/A 100 % 100 % (3) N/A N/A N/A 100 % N/A 99 % N/A N/A 100 % (3) N/A N/A N/A MH/ RV City RV Ft. Myers MH Orlando MH Auburndale MH Holly Hill MH RV Ft. Myers Beach Ft. Myers Beach State FL FL FL FL FL FL MH Merritt Island FL MH DeBary MH Lake Alfred MH Port Orange MH Auburndale MH Mulberry MH Orlando MH Tampa MH Port Orange MH Tampa RV Naples FL FL FL FL FL FL FL FL FL FL FL RV Moore Haven FL MH Orange City RV Orange City MH Orange City MH Davenport MH Sebastian FL FL FL FL FL MH Pinellas Park FL MH Micco MH Haines City MH Frostproof RV Frostproof MH Davenport MH Ruskin FL FL FL FL FL FL FL FL FL MH Ocala MH Port St. Lucie FL MH North Fort Myers RV Ft. Myers MH Zephyrhills MH Homosassa MH Zephyrhills FL FL FL FL FL 26 Rock Crusher Canyon RV Park RV Crystal River FL Royal Country MH Miami Royal Palm Village MH Haines City SUN COMMUNITIES, INC. Property Sunlake Estates Tampa East Tampa East Three Lakes Vizcaya Lakes Walden Woods MH/ RV City MH Grand Island FL State MH Dover RV Dover RV Hudson FL FL FL MH Port Charlotte FL MH Homosassa Water Oak Country Club Estates MH Lady Lake Westside Ridge Windmill Village MH Auburndale MH Davenport Woodlands at Church Lake MH Groveland Florida Total SOUTHWEST Arizona Blue Star/Lost Dutchman Blue Star/Lost Dutchman Brentwood West Desert Harbor Fiesta Village La Casa Blanca Mountain View MH RV Apache Junction Apache Junction MH Mesa MH Apache Junction MH Mesa MH Apache Junction MH Mesa FL FL FL FL FL AZ AZ AZ AZ AZ AZ AZ Palm Creek Golf & RV Resort MH Casa Grande AZ Palm Creek Golf & RV Resort RV Casa Grande AZ Rancho Mirage MH Apache Junction AZ Reserve at Fox Creek MH Bullhead City AZ Sun Valley Arizona Total Colorado Cave Creek Eagle Crest The Grove at Alta Ridge North Point Estates Skyline MH Evans MH Firestone MH Thornton MH Pueblo MH Fort Collins Swan Meadow Village MH Dillon Timber Ridge Colorado Total MH Ft. Collins MH and Annual RV Sites as of 12/31/15 416 31 217 191 113 426 1,109 219 509 290 24,216 Transient RV Sites as of 12/31/15 — 452 116 — — — — — — 2,823 Occupancy as of 12/31/15 91 % Occupancy as of 12/31/14 N/A Occupancy as of 12/31/13 N/A 100 % 100 % 100 % (3) 100 % (3) 100 % (3) 100 % (3) 72 % N/A 100 % N/A 100 % 100 % 100 % 98 % 67 % 96 % N/A N/A N/A 99 % 100 % 100 % (3) 100 % (3) N/A N/A 99 % N/A N/A N/A 99 % — 82 % 100 % N/A 100 % (3) N/A (3) 97 % 95 % 100 % 100 % 78 % 74 % 98 % 99 % 99 % 98 % 73 % (2) 58 % (2) 100 % (3) 100 % (3) N/A N/A N/A N/A N/A N/A 94 % 100 % (3) 189 5 350 205 158 198 170 263 871 312 312 182 — — 10 — — 895 — — 99 % 91 % 88 % 93 % 98 % 89 % 88 % 91 % N/A N/A N/A 99 % 98 % 99 % N/A 95 % N/A N/A 100 % 99 % CO CO CO CO CO CO CO 447 441 409 108 170 175 585 2,335 — — — — — — — — 98 % 99 % 77 % (2) 100 % 100 % 99 % 99 % 99 % 99 % 100 % 98 % 99 % 100 % 100 % 99 % 95 % 27 MH Apache Junction AZ 268 3,301 — 1,087 SUN COMMUNITIES, INC. GA GA IA IL IL IL IL ME ME ME ME Property MH/ RV City State OTHER Oak Creek Vines RV Resort MH Coarsegold CA RV Paso Robles CA Wine Country RV Resort RV Paso Robles CA Seaport RV Resort High Pointe Sea Air Village Sea Air Village Countryside Atlanta Countryside Gwinnett Countryside Lake Lanier Autumn Ridge RV Old Mystic MH Frederica MH RV Rehoboth Beach Rehoboth Beach CT DE DE DE MH Lawrenceville GA MH Buford MH Buford MH Ankeny Candlelight Village MH Sauk Village Maple Brook Oak Ridge Wildwood Community MH Matteson MH Manteno MH Sandwich Peter's Pond RV Resort RV Sandwich MA Castaways RV Resort & Campground Fort Whaley Frontier Town Maplewood Manor Merrymeeting RV Berlin MD RV Whaleyville MD RV Ocean City MD MH Brunswick MH Brunswick Saco/Old Orchard Beach KOA RV Saco Town & Country Village MH Lisbon Wagon Wheel RV Resort & Campground Wild Acres RV Resort & Campground Southern Hills/Northridge Place MH Stewartville MN Old Orchard Beach Old Orchard Beach ME ME RV RV Pin Oak Parc Southfork Countryside Village Glen Laurel Meadowbrook MH O’Fallon MH Belton MH Great Falls MH Concord MH Charlotte Big Timber Lake RV Resort RV Cape May Driftwood Camping Resort RV Clermont Lake Laurie RV & Camping Resort Seashore Campsites RV Park and Campground Sun Villa Estates RV Cape May RV Cape May MH Reno MO MO MT NC NC NJ NJ NJ NJ NV 28 MH and Annual RV Sites as of 12/31/15 Transient RV Sites as of 12/31/15 Occupancy as of 12/31/15 Occupancy as of 12/31/14 Occupancy as of 12/31/13 198 — — 40 409 372 125 271 331 548 413 309 441 426 476 308 7 — — 296 43 — 144 189 245 404 502 474 226 260 321 283 608 — 130 166 101 — — 10 — — — — — — — — 98 386 210 584 — — 127 — 97 % 97 % N/A (3) N/A N/A (3) N/A 100 % (3) 100 % (3) 97 % 98 % N/A N/A N/A 100 % (3) 96 % 98 % 99 % 99 % 100 % (3) 100 % (3) 100 % (4) 100 % (4) 99 % 99 % 100 % (3) 100 % (4) 99 % 99 % 99 % 95 % 99 % 99 % 97 % 100 % 100 % 87 % 86 % 92 % 99 % 97 % N/A N/A 100 % 100 % (3) 100 % (3) 98 % N/A 100 % (3) 100 % (3) 100 % (3) N/A (3) N/A N/A (3) N/A 96 % 98 % 72 % 81 % N/A (3) N/A (3) 92 % 81 % N/A N/A N/A N/A N/A N/A N/A 92 100 % (3) 100 % (3) 100 % (3) 385 — — — — — — 245 99 100 % (3) 100 % (3) 93 % 85 % 100 % (3) N/A 92 % 65 % 97 % 90 % 64 % 98 % 99 % 99 % 82 % (2) 99 % 100 % (3) 100 % (3) 100 % (4) 100 % (4) 86 % 62 % N/A 88 % (1) 59 % 100 % (3) N/A 325 394 100 % (3) 100 % (3) 100 % (3) 433 324 243 — 100 % (3) 100 % (3) 99 % 99 % N/A 97 % The Villas at Calla Pointe MH Cheektowaga NY Forest Meadows MH Philomath SUN COMMUNITIES, INC. MH and Annual RV Sites as of 12/31/15 Transient RV Sites as of 12/31/15 City State Occupancy as of 12/31/15 Occupancy as of 12/31/14 Occupancy as of 12/31/13 Greenfield Park NY 72 203 100 % (3) 100 % (3) 100 % (3) MH/ RV RV RV North Java NY MH Cheektowaga NY MH Cheektowaga NY MH Eugene MH Mckean RV Narvon MH Lancaster MH Conway MH Clarksville RV Gwynn RV New Point OR OR PA PA PA SC TN VA VA MH Prince George VA MH Sturgeon Bay WI RV Glenbeulah WI 5 156 522 116 75 398 304 275 553 419 237 98 190 245 226 296 — — — — — — 145 — — — 19 133 — — 100 % (3) 100 % (3) 100 % 100 % 91 % 99 % 90 % 100 % 100 % 100 % 100 % 100 % 94 % 98 % 100 % (3) 100 % (3) 100 % 100 % 89 % 98 % N/A 99 % 100 % (3) 100 % (3) 100 % (3) 100 % (3) 97 % 97 % N/A N/A N/A N/A 100 % 100 % N/A 100 % (3) 100 % N/A 90 % 100 % (3) 100 % (3) 98 % 93 % 87 % N/A 213 13,855 110 4,176 100 % (3) 100 % (3) 100 % (3) 96 % 94 % 91 % Property Jellystone Park(TM) at Birchwood Acres Jellystone Park(TM) of Western New York Parkside Village Sky Harbor Woodland Park Estates Countryside Estates Lake In Wood Pheasant Ridge Lakeside Crossing Bell Crossing Gwynn's Island RV Resort & Campground New Point RV Resort Pine Ridge Thunderhill Estates Westward Ho RV Resort & Campground Other Total TOTAL / AVERAGE 79,241 9,371 95 % 93 % 90 % (1) Occupancy in these Properties reflects the fact that these communities are ground-up developments and have not reached full occupancy. (2) Occupancy in these Properties reflects the fact that these communities are in a lease-up phase following an expansion. (3) 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 is occupied 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 utility access which is zoned and licensed (if required) for use as a home site. (4) The number of developed sites and occupancy percentage at this Property includes sites that have been covered under our comprehensive insurance coverage (subject to deductibles and certain limitations) for both property damage and business interruption from a flood that caused substantial damage to this Property. 29 ITEM 3. LEGAL PROCEEDINGS SUN COMMUNITIES, INC. We are involved in various legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to have a material adverse impact on our results of operations or financial condition. ITEM 4. MINE SAFETY DISCLOSURES None. 30 EXEUTIVE OFFICERS OF THE REGISTRANT The persons listed below are our executive officers. SUN COMMUNITIES, INC. Name Gary A. Shiffman John B. McLaren Karen J. Dearing Jonathan M. Colman Age 61 45 51 60 Title Chairman and Chief Executive Officer President and Chief Operating Officer Executive Vice President, Treasurer, Chief Financial Officer and Secretary Executive Vice President Gary A. Shiffman is our Chairman and Chief Executive Officer and has been a director and an executive officer since our inception in 1993. He is a member of our Executive Committee. He has been actively involved in the management, acquisition, construction and development of manufactured housing communities and has developed an extensive network of industry relationships over the past thirty years. He has overseen the acquisition, rezoning, development, expansion and marketing of numerous manufactured home communities, as well as recreational vehicle communities. Additionally, Mr. Shiffman, through his family related interests, has had significant direct holdings in various real estate asset classes, which include office, multi- family, industrial, residential and retail. Mr. Shiffman is an executive officer and a director of SHS and all of our other corporate subsidiaries. Mr. Shiffman is also a director of Origen Financial, Inc. ("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 Operating Officer since February 2008. From February 2008 to February 2014, he served as an Executive Vice President of the Company. From August 2005 to February 2008, he was Senior Vice President of SHS with overall responsibility for home sales and leasing. Mr. McLaren spent approximately three years as Vice President of Leasing & Service for SHS with responsibility for developing and leading our Rental Program and also has experience in the multi-family REIT segment and the chattel lending industry. Karen J. Dearing joined us in October 1998 as the Director of Finance where she worked extensively with accounting and finance matters related to our ground up developments and expansions. Ms. Dearing became our Corporate Controller in 2002, a Senior Vice President in 2006, and Executive Vice President and Chief Financial Officer in February 2008. She is responsible for the overall management of our information technology, accounting, tax and finance departments, and all internal and external financial reporting. Prior to working for us, Ms. Dearing had eight years of experience as the Financial Controller of a privately-owned automotive supplier and five years' experience as a certified public accountant with Deloitte & Touche LLP. Jonathan M. Colman joined us in 1994 as Vice President-Acquisitions and became a Senior Vice President in 1995 and an Executive Vice President in March 2003. A certified public accountant, Mr. Colman has over thirty years of experience in the manufactured housing community industry. He has been involved in the acquisition, financing and management of over 75 manufactured housing communities for two of the 10 largest manufactured housing community owners, including Uniprop, Inc. during its syndication of over $90.0 million in public limited partnerships in the late 1980s. Mr. Colman is also a Vice President of all of our corporate subsidiaries. 31 SUN COMMUNITIES, INC. PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our 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 low sales 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 each period: Year Ended December 31, 2015 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Ended December 31, 2014 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter High 71.40 $ 67.35 $ 70.56 $ 72.92 $ Low 60.74 $ 60.29 $ 61.61 $ 61.65 $ Distributions 0.65 0.65 0.65 0.65 (1) High 48.70 $ 50.84 $ 55.00 $ 64.22 $ Low 41.65 $ 42.97 $ 49.36 $ 50.25 $ Distributions 0.65 0.65 0.65 0.65 (2) $ $ $ $ $ $ $ $ (1) Paid on January 15, 2016, to stockholders of record on December 31, 2015 (2) Paid on January 16, 2015, to stockholders of record on December 31, 2014 On February 16, 2016, the closing share price of our common stock was $65.86 per share on the NYSE, and there were 220 holders of record for the 58,391,880 million outstanding shares of common stock. On February 16, 2016, the Operating Partnership had (i) 2,862,969 common OP units issued and outstanding, 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 and outstanding which were exchangeable for 509,676 shares of our common stock, (iii) 387,981 Series A-1 preferred OP units issued and outstanding which were exchangeable for 946,293 shares of our common stock, (iv) 40,268 Series A-3 preferred OP units issued and outstanding which were exchangeable for 74,919 shares of our common stock, (v) 754,035 Series A-4 preferred OP units issued and outstanding, not held by us, which were exchangeable for 335,127 shares of our common stock, and (vi) 640,206 Series C preferred OP units issued and outstanding which were exchangeable for 377,969 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 make distributions 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-3 preferred OP units, Series A-4 preferred OP units, Series B-3 preferred OP units and Series C preferred OP units. See “Structure of the Company” under Part I, Item 1 of this Annual Report on Form 10- K. Our ability to make distributions on our common and preferred stock and OP units, payments on our indebtedness, and to fund planned capital expenditures will 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 units in 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 of conditions then existing, including our earnings, financial condition, capital requirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions, general overall economic conditions, and other factors. 32 Securities Authorized for Issuance Under Equity Compensation Plans SUN COMMUNITIES, INC. The following table reflects information about the securities authorized for issuance under our equity compensation plans as of December 31, 2015. Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Plan Category (a) (b) Equity compensation plans approved by shareholders Equity compensation plans not approved by shareholders Total 24,500 $ — 24,500 $ 29.11 — 29.11 Issuer Purchases of Equity Securities Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a) (c) 1,799,874 — 1,799,874 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 shares remaining in the repurchase program. No common shares were repurchased under this program during 2015. There is no expiration date specified for the repurchase program. Recent Sales of Unregistered Securities From 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 in accordance with the terms and provisions of the limited partnership agreement of the Operating Partnership. Such shares are issued based on the exchange ratios and formulas described in “Structure of the Company” under Part I, Item 1 of this Annual Report on Form 10-K. Holders of common OP units have converted 99,849 units, 9,110 units and zero units to common stock for the years ended December 31, 2015, 2014, and 2013, respectively. Holders of Series A-1 preferred OP units converted 41,116 units into 100,277 shares of common stock during the year ended December 31, 2015, and 26,379 units into 64,335 shares of common stock during the year ended December 31, 2014. No Series A-1 preferred OP units were converted into common stock during 2013. Holders of Series A-4 preferred OP units converted 114,414 units into 50,848 shares of common stock during the year ended December 31, 2015. No Series A-4 preferred OP units were converted into common stock during 2014. Holders of Series A-4 preferred stock converted 231,093 shares into 102,708 shares of common stock during the year ended December 31, 2015. No Series A-4 preferred stock were converted into common stock during 2014. All of the securities described above were issued in private placements in reliance on Section 4(a)(2) of the Securities Act, including Regulation D promulgated thereunder, based on certain investment representations made by the parties to whom the securities were issued. No underwriters were used in connection with any of such issuances. 33 Performance Graph SUN COMMUNITIES, INC. Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on our common stock against the cumulative total return of a broad market index composed of all issuers listed on the NYSE and an industry index comprised of fifteen publicly traded residential real estate investment trusts, for the five year period ending on December 31, 2015. This line graph assumes a $100 investment on December 31, 2010, a reinvestment of distributions and actual increase of the market value of our common stock relative to an initial investment of $100. The comparisons in this table are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock. Index Sun Communities, Inc. SNL US REIT Residential NYSE Market Index SUI Peer Group 2015 Index(1) SUI Peer Group 2014 Index(2) As of December 31, 2010 2011 2012 2013 2014 2015 $ 100.00 $ 119.66 $ 138.64 $ 156.60 $ 233.58 $ 275.27 $ 100.00 $ 114.55 $ 121.88 $ 118.45 $ 162.09 $ 188.59 $ 100.00 $ 96.33 $ 111.89 $ 141.41 $ 151.12 $ 145.12 $ 100.00 $ 115.48 $ 125.08 $ 115.41 $ 159.75 $ 181.45 $ 100.00 $ 115.12 $ 124.79 $ 115.25 $ 159.28 $ 181.76 (1) Includes American Campus Communities, Inc., American Capital Agency Corp., Apartment Investment and Management Company, AvalonBay Communities, Inc., Camden Property Trust, Education Realty Trust, Inc., Equity Lifestyles Properties, Inc., Equity Residential, Essex Property Trust, Inc., MAA, Senior Housing Properties Trust and UDR, Inc. (2) Includes the same companies as SUI Peer Group 2015 Index, with the exception of Associated Estates Realty Corporation, and Home Properties, Inc. in 2014. 34 The information included under the heading “Performance Graph” is not to be treated as “soliciting material” or as “filed” with the SEC, and is not incorporated 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 of this Annual Report on Form 10-K. SUN COMMUNITIES, INC. 35 ITEM 6. SELECTED FINANCIAL DATA SUN COMMUNITIES, INC. The following table sets forth selected financial and operating information on a historical basis. The historical financial data has been derived from our historical financial statements. The following information should be read in conjunction with the information included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the Consolidated Financial Statements and the Notes thereto. $ $ $ OPERATING DATA: Revenues Net income attributable to Sun Communities, Inc. common stockholders Earnings per share - basic Earnings per share - diluted Cash distributions declared per common share (2) BALANCE SHEET DATA: Investment property before accumulated depreciation Total assets Total debt and lines of credit Total stockholders’ equity (deficit) OTHER FINANCIAL DATA: Net operating income (NOI) (3) from: Real property operations Home sales and home rentals Funds from operations (FFO) (3) Adjustments to FFO FFO excluding certain items Year Ended December 31, 2015 2014 (1) 2012 (1) 2013 (1) (In thousands, except for share related data) 2011 (1) $ 674,731 $ 484,259 $ 422,713 $ 341,400 $ 290,592 $ 137,325 $ 2.53 $ 2.52 $ 22,376 $ 0.54 $ 0.54 $ 10,610 $ 0.31 $ 0.31 $ $ 4,958 0.19 $ 0.18 $ (1,086 ) (0.05 ) (0.05 ) 2.60 $ 2.60 $ 2.52 $ 2.52 $ 3.15 $ 2,489,119 $ 2,177,30 $ 1,794,60 $ 3,363,91 $ 4,573,52 5 7 2 5 $ 1,367,97 $ 1,754,62 $ 1,994,90 $ 2,937,69 $ 4,190,55 4 8 4 2 1 $ 1,397,22 $ 1,453,50 $ 1,492,82 $ 1,832,08 $ 2,345,04 9 5 1 0 7 $ 907,820 $ 383,541 $ 199,457 $ (114,188 ) $ 1,536,58 1 $ 335,567 $ 232,478 $ 203,176 $ 167,715 $ 146,876 18,677 $ 12,954 $ 42,067 $ 26,620 $ 29,341 $ $ 192,128 $ 134,549 $ 117,583 $ 3,928 13,807 $ 210,559 $ 148,356 $ 121,511 $ 18,431 92,409 $ 73,691 1,564 4,296 96,705 $ 75,255 FFO per share excluding certain items - fully diluted $ 3.63 $ 3.37 $ 3.22 $ 3.19 $ 3.13 (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 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION SUN COMMUNITIES, INC. The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this Annual Report on Form 10-K. EXECUTIVE SUMMARY 2015 Accomplishments: • Completed acquisitions of 34 MH communities and 4 RV communities, which included the final purchase of communities from the $1.3 billion ALL transaction. • Closed on the disposition of 17 MH communities, and 3 MH and RV combined communities for $224.5 million in gross proceeds. • Achieved Same Site Net Operating Income ("NOI") (3) growth of 9.1%. • Closed an underwritten registered public offering for 3.7 million shares of common stock with net proceeds of approximately $233.1 million after deducting offering related expenses. • Gained 1,905 revenue producing sites, a new single year record. • Sold 2,483 homes, a new single year record, and an increase of 26%. Property Operations: Occupancy in our Properties as well as our ability to increase rental rates directly affects revenues. Our revenue streams are predominantly derived from customers renting our sites on a long-term basis. Our Same Site properties continue to achieve revenue and occupancy increases which drive continued NOI(3) growth. Home sales are at their historical high, and we expect to continue to increase the number of homes sold in our communities. Portfolio Information: Year Ended December 31, 2015 2014 2013 Occupancy % - Total Portfolio - MH and annual RV(1) Occupancy % - Same Site - MH and annual RV(1)(2) Funds from operations excluding certain items(3) NOI(3) - Total Portfolio NOI(3) - Same Site Homes Sold $ $ $ 95.0 % 95.9 % 3.63 335,567 220,470 2,483 10,685 $ $ $ 92.6 % 93.2 % 3.37 232,478 202,069 1,966 10,973 $ $ $ 89.7 % 91.5 % 3.22 203,176 191,938 1,929 9,726 Number of Occupied Rental Homes (1) Occupancy % includes MH and annual RV sites, and exclude transient RV sites. (2) Occupancy % excludes recently completed but vacant expansion sites. (3) Refer to Supplemental Measures within this Item, for information regarding the presentation of the NOI financial measure and funds from operations excluding certain items financial measure. 37 Acquisition and Disposition Activity: SUN COMMUNITIES, INC. During the past three years, we have completed acquisitions of 90 properties with over 33,184 sites located in high growth areas and retirement and vacation destinations such as Florida, California, and Eastern coastal areas such as Old Orchard Beach, Maine; Cape May, New Jersey; Chesapeake Bay, Virginia; and Cape Cod, Massachusetts. The following graph depicts our acquisitions during 2015 and 2014: During 2015, we completed 38 acquisitions consisting of 34 MH communities, and 4 RV communities. The following table is a list of our acquisitions for 2015, excluding the second phase of the ALL acquisition: Property/Portfolio Location Type Meadowlands MH Berger (Multiple properties) Various Cities in FL MH Rockwood, MI Lakeside Crossing Conway, SC MH La Hacienda Frontier Town Fort Whaley Rock Crusher Austin, TX Ocean City, MD Whaleyville, MD Crystal River, FL RV RV RV RV Total Consideration 2,550 95,344 32,518 27,275 62,196 5,704 6,072 $ $ $ $ $ $ $ Number of sites - MH/Annual 321 3,136 419 — — — 80 Number of sites - Transient — — — 241 584 210 311 Expansion Sites — 380 300 — 200 90 — During 2014, we announced our acquisition of the ALL properties for a purchase price of $1.3 billion, which is our largest acquisition to date. The ALL 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 increased our overall geographic diversification and the size of our age-restricted portfolio with additional exposure in the sought after Florida and Arizona markets. Approximately 56% of the communities are located in Florida 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 operate as 32 communities, in November 2014, and we acquired the remaining 26 properties in January 2015. We continue to experience an active pipeline of acquisition opportunities and will seek to enhance the growth of the Company through continued selective acquisitions. 38 SUN COMMUNITIES, INC. We continually review the properties in our portfolio to ensure that they fit our business objectives. During 2015, we sold 17 MH and 3 MH and RV combined communities for gross proceeds of $224.5 million, which were primarily located in lower growth markets and no longer meet our strategic objectives. A gain of $125.4 million is recorded in "Gain on disposition of properties, net" in our Consolidated Statements of Operations. The number of disposal properties by state for our MH communities and RV communities during 2015 and 2014 are shown below: Expansion Activity: We have been focused on expansion opportunities adjacent to our existing communities, and we have developed nearly 1,500 sites over the past three years. We expanded 646 sites at four properties in 2015. The total cost to construct the sites was approximately $17.5 million. We continue to expand our properties utilizing our inventory of owned and entitled land (approximately 7,200 to be developed sites) and expect to construct over 1,000 additional sites in 2016. Capital Activity: We closed an underwritten registered public offering during 2015 totaling 3.7 million shares of common stock with net proceeds of approximately $233.1 million after deducting offering related expenses. Proceeds from the capital were used to pay down our revolving line of credit allowing us to reduce our leverage levels as well as providing liquidity for future acquisitions. 39 Markets SUN COMMUNITIES, INC. The following table identifies the Company's largest markets by number of sites: Major Market Number of Properties Total Sites Percentage of Total Sites Florida Michigan Texas Arizona Indiana Ohio New Jersey Colorado Illinois Maine New York Pennsylvania Maryland Georgia Missouri Delaware Virginia North Carolina Wisconsin California Oregon South Carolina Iowa Massachusetts Minnesota Nevada Tennessee Montana Connecticut TOTAL 61 65 16 10 11 9 4 7 4 6 5 3 3 3 2 2 3 2 2 3 2 1 1 1 1 1 1 1 1 231 27,039 24,126 6,379 4,388 3,401 2,913 2,630 2,335 1,652 1,521 1,370 1,277 1,187 1,150 976 916 685 581 549 494 473 419 413 406 404 324 237 226 141 88,612 30.5 % 27.2 % 7.2 % 5.0 % 3.8 % 3.3 % 3.0 % 2.6 % 1.9 % 1.7 % 1.5 % 1.4 % 1.3 % 1.3 % 1.1 % 1.0 % 0.8 % 0.7 % 0.6 % 0.6 % 0.5 % 0.5 % 0.5 % 0.5 % 0.5 % 0.4 % 0.3 % 0.3 % 0.2 % A large geographic concentration of our properties are in Florida, Michigan, Texas and Arizona. As a result of our recent acquisitions, we have increased the concentration of our properties located in other areas of the U.S., predominantly in high growth areas and retirement and vacation destinations, such as California and the Northeastern coastal areas. Several of our acquisitions in these areas have been RV communities. Through our expansion into RV communities, we have experienced strong revenue growth. The age demographic of RV communities is attractive, as the population of retirement age baby boomers in the U.S. is growing. RV communities have become a trending vacation opportunity not only for the retiree population, but as an affordable vacation alternative for families. 40 SUPPLEMENTAL MEASURES SUN COMMUNITIES, INC. In addition to the results reported in accordance with generally accepted accounting principles in the U.S. ("GAAP"), we have provided information regarding NOI in the following tables. NOI is derived from revenues minus property operating and maintenance expenses and real estate taxes. We use NOI as the primary basis to evaluate the performance of our operations. A reconciliation of NOI to net income attributable to Sun Communities, Inc. common stockholders is included 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 of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense, and non-property specific expenses such as general and administrative expenses, all of which are significant costs, and therefore, NOI is a measure of the operating performance of our properties rather than of the Company overall. We believe that these costs included in net income often have no effect on the market 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 and therefore 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 net income 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 measures reported by other companies. We also provide information regarding Funds From Operations (“FFO”). We consider FFO an appropriate supplemental measure of the financial and operational performance of an equity REIT. Under the National Association of Real Estate Investment Trusts (“NAREIT”) definition, FFO represents net income (loss) (computed in accordance with GAAP), excluding extraordinary 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 excluding certain items, a non-GAAP financial measure, which excludes certain gain and loss items that management considers unrelated to the operational and financial performance of our core business. We believe that this provides investors with another financial measure of our operating performance that is more comparable when evaluating period over period results. A discussion of FFO, FFO excluding certain items, a reconciliation of FFO to net income, and FFO to FFO excluding certain items are included in the presentation of FFO in our “Results of Operations" below. 41 RESULTS OF OPERATIONS SUN COMMUNITIES, INC. We 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 U.S. and is in the business of acquiring, operating, and expanding MH and RV communities. The Home Sales and Rentals segment offers manufactured home sales and leasing services to tenants and prospective tenants of our communities. We evaluate segment operating performance based on NOI and gross profit. COMPARISON OF THE YEARS ENDED DECEMBER 31, 2015 AND 2014 REAL PROPERTY OPERATIONS – TOTAL PORTFOLIO The following tables reflect certain financial and other information for our Total Portfolio as of and for the years ended December 31, 2015 and 2014: Year Ended December 31, Financial Information (in thousands) Income from Real Property Property operating expenses: Payroll and benefits Legal, taxes, and insurance Utilities Supplies and repair Other Real estate taxes Property operating expenses Real Property NOI Other Information Number of properties Overall occupancy (1) 2015 2014 $ 506,078 $ 357,793 $ 148,285 Change % Change 40,207 7,263 53,112 19,075 16,140 34,714 170,511 10,100 2,174 11,837 5,540 5,012 10,533 45,196 $ 335,567 $ 232,478 $ 103,089 30,107 5,089 41,275 13,535 11,128 24,181 125,315 41.4 % 33.5 % 42.7 % 28.7 % 40.9 % 45.0 % 43.6 % 36.1 % 44.3 % As of December 31, 2015 231 2014 217 Change 14 % Change 6.5 % 95.0 % 92.6 % 2.4 % Sites available for development 7,181 6,987 194 Monthly base rent per site - MH Monthly base rent per site - RV (2) Monthly base rent per site - Total (1) Occupied sites and occupancy % include MH and annual RV sites, and exclude transient RV sites, which are included in total developed sites. (2) Monthly base rent pertains to annual RV sites and excludes transient RV sites. $ $ $ $ $ $ $ $ $ 464 409 456 484 423 477 20 14 21 2.8 % 4.3 % 3.4 % 4.6 % The 44.3% growth in Real Property NOI consists of $87.8 million from newly acquired properties and $18.4 million from our Same Site properties as detailed below, which is offset by a $3.1 million reduction for disposed properties. 42 REAL PROPERTY OPERATIONS – SAME SITE SUN COMMUNITIES, INC. A key management tool used when evaluating performance and growth of our properties is a comparison of Same Site communities. Same Site communities consist of properties owned and operated throughout 2015 and 2014. 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 which we have owned and operated continuously since January 1, 2014. In order to evaluate the growth of the Same Site communities, management has classified certain items differently than our GAAP statements. The reclassification difference between our GAAP statements and our Same Site portfolio is the reclassification of water and sewer revenues from income from real property to utilities. A significant portion of our water and sewer utility charges are re-billed to our residents. We reclassify these amounts to reflect the utility expenses associated with our Same Site portfolio net of recovery. The following tables reflect certain financial and other information for our Same Site communities as of and for the years ended December 31, 2015 and 2014: Financial Information (in thousands) Income from Real Property Property operating expenses: Payroll and benefits Legal, taxes, and insurance Utilities Supplies and repair Other Real estate taxes Property operating expenses Real Property NOI Other Information (1) Number of properties Overall occupancy (2) (3) Year Ended December 31, 2015 2014 Change % Change $ 312,117 $ 290,012 $ 22,105 7.6 % 26,108 5,090 18,349 11,986 8,789 21,325 91,647 24,609 4,461 17,513 11,433 8,951 20,976 87,943 $ 220,470 $ 202,069 $ 1,499 629 836 553 (162 ) 349 3,704 18,401 6.1 % 14.1 % 4.8 % 4.8 % (1.8 )% 1.7 % 4.2 % 9.1 % As of December 31, 2015 157 2014 157 Change — % Change — % 95.9 % 93.2 % (5) 2.7 % Sites available for development 5,229 6,003 (774 ) (12.9 )% Monthly base rent per site - MH Monthly base rent per site - RV (4) Monthly base rent per site - Total (1) 465 409 457 Excludes 18 properties that were disposed during 2015 (refer to Note 2 to our Consolidated Financial Statements). 481 421 472 $ $ $ $ $ $ $ $ $ 16 12 15 3.4 % 2.9 % 3.3 % (2) Occupancy % includes MH and annual/seasonal RV sites, and excludes recently completed but vacant expansion sites and transient RV sites. (3) Occupancy % for 2014 has been adjusted to reflect incremental growth year over year from filled expansion sites and the conversion of transient RV sites to annual / seasonal RV sites.. (4) Monthly base rent pertains to annual RV sites and excludes transient RV sites. (5) Occupancy reflects current year gains from expansion sites and the conversion of transient RV guests to annual/seasonal RV contracts as vacant in 2014. 43 SUN COMMUNITIES, INC. The 9.1% growth in NOI is primarily due to increased revenues of $22.1 million partially offset by a $3.7 million increase in expenses. Income from real property revenue consists of MH and RV site rent, and miscellaneous other property revenues. The 7.6% growth in income from real property was due to a combination of factors. Revenue from our MH and RV portfolio increased $18.3 million due to average rental rate increases of 3.3% a 2.7% increase in occupancy and the increased number of occupied home sites. Additionally, other revenues increased $1.8 million primarily due to increases in month to month fees, utilities income, trash income and cable television royalties. Property operating expenses increased approximately $3.7 million, or 4.2%, compared to 2014. Of that increase, supplies and repair expense increased $0.6 million primarily related to higher landscaping and tree trimming. Utilities increased $0.8 million primarily as a result of increased electric and trash removal costs. Legal, taxes, and insurance expenses increased $0.6 million primarily related to increased property and casualty insurance. HOME SALES AND RENTALS We purchase new homes and acquire pre-owned and repossessed manufactured homes, generally located within our communities, from lenders, dealers, and former residents to lease or sell to current and prospective residents. The following table reflects certain financial and statistical information for our Home Sales Program for the years ended December 31, 2015 and 2014 (in thousands, except for average selling prices and statistical information): Financial Information New home sales Pre-owned home sales Revenue from homes sales New home cost of sales Pre-owned home cost of sales Cost of home sales NOI / Gross profit Gross profit – new homes Gross margin % – new homes Average selling price – new homes Gross profit – pre-owned homes Gross margin % – pre-owned homes Average selling price – pre-owned homes Statistical Information Home sales volume: New home sales Pre-owned home sales Total homes sold Year Ended December 31, 2015 $ 22,208 57,520 79,728 18,620 40,321 58,941 $ 20,787 $ 2014 9,464 44,490 53,954 7,977 32,579 40,556 $ 13,398 Change $ 12,744 13,030 25,774 10,643 7,742 18,385 7,389 $ % Change 134.7 % 29.3 % 47.8 % 133.4 % 23.8 % 45.3 % 55.2 % $ $ 3,588 16.2 % $ 1,487 15.7 % 2,101 141.3 % 0.5 % $ 81,346 $ 83,750 $ (2,404 ) (2.9 )% $ 17,199 $ 11,911 $ 5,288 44.4 % 29.9 % 26.8 % 3.1 % $ 26,027 $ 24,010 $ 2,017 8.4 % 273 2,210 2,483 113 1,853 1,966 160 357 517 141.6 % 19.3 % 26.3 % 44 Home Sales Gross profit increased $2.1 million on new home sales and increased $5.3 million on pre-owned home sales. The increased profit on new and pre-owned home sales is primarily due to increases in volume of both new and pre-owned home sales during the year. SUN COMMUNITIES, INC. The following table reflects certain financial and other information for our Rental Program as of and for the years ended December 31, 2015 and 2014 (in thousands, except for statistical information): Financial Information Rental home revenue Site rent from Rental Program (1) Rental Program revenue Expenses Commissions Repairs and refurbishment Taxes and insurance Marketing and other Rental Program operating and maintenance Rental Program NOI Other Information Number of occupied rentals, end of period Investment in occupied rental homes, end of period Number of sold rental homes Year Ended December 31, $ 2015 46,236 $ 61,952 108,188 2014 39,213 $ 54,289 93,502 3,216 12,326 5,638 3,776 24,956 83,232 $ 2,607 11,068 5,286 4,309 23,270 70,232 $ $ 10,685 10,973 $ 448,837 $ 429,605 $ 908 858 $ 799 822 $ Change % Change 7,023 7,663 14,686 609 1,258 352 (533 ) 1,686 13,000 (288 ) 19,232 109 36 17.9 % 14.1 % 15.7 % 23.4 % 11.4 % 6.7 % (12.4 )% 7.2 % 18.5 % (2.6 )% 4.5 % 13.6 % 4.4 % Weighted average monthly rental rate, end of period $ (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. For purposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the Rental Program, and assess the overall growth and performance of Rental Program and financial impact to our operations. The 18.5% growth in NOI is primarily a result of increased rental income throughout the year. While the number of occupied rentals as of December 31, 2015, reflects a decline due to the 20 disposed communities during 2015, the rental income associated with the majority of those communities was earned through November. We renew approximately 60% of our rental home leases primarily at current market rates or above existing rates. The $1.7 million increase in operating and maintenance expenses was primarily a result of a $1.3 million increase in repair and refurbishment expenses, of which $0.7 million was due to increased refurbishment costs related to occupant turnover and $0.5 million was due to increased repair costs on occupied home rentals. In addition, insurance and personal property and use taxes increased by $0.4 million. 45 OTHER INCOME STATEMENT ITEMS SUN COMMUNITIES, INC. The following table summarizes other income and expenses for the years ended December 31, 2015 and 2014 (amounts in thousands): Year Ended December 31, 2015 2014 Change % Change Ancillary revenues, net Interest income Brokerage commissions and other revenues Real property general and administrative Home sales and rentals general and administrative Transaction costs Depreciation and amortization Asset impairment charge Interest expense Gain on disposition of properties, net Gain on settlement Distributions from affiliates Preferred stock redemption costs $ $ $ $ $ $ $ $ $ $ $ $ $ 7,013 $ 15,938 $ 2,219 $ 40,235 $ $ 14,696 17,803 $ 177,637 $ — $ 110,878 $ 125,376 $ — $ 7,500 $ 4,328 $ 5,217 $ 14,462 $ 1,036 $ 31,769 $ $ 10,853 18,259 $ 133,726 $ 837 $ 76,981 $ 17,654 $ 4,452 $ 1,200 $ — $ 1,796 1,476 1,183 8,466 3,843 (456 ) 43,911 (837 ) 33,897 107,722 (4,452 ) 6,300 4,328 34.4 % 10.2 % 114.2 % 26.6 % 35.4 % (2.5 )% 32.8 % (100.0 )% 44.0 % 610.2 % (100.0 )% 525.0 % N/A Ancillary revenues, net increased during the year ended December 31, 2015, by $1.8 million, from the year ended December 31, 2014, primarily due to increased vacation rental income of $1.7 million. Interest income increased during the year ended December 31, 2015, by $1.5 million, from the year ended December 31, 2014, primarily due to an increase in interest income from collateralized receivables of $1.5 million related to an increase in our note portfolio. Brokerage commissions and other revenues increased during the year ended December 31, 2015, by $1.2 million, from the year ended December 31, 2014, primarily due to an increase in the number of brokered homes sold. Real property general and administrative expenses increased during the year ended December 31, 2015, by $8.5 million, from the year ended December 31, 2014, primarily due to increased expenses related to salaries, wages and related taxes of $3.5 million as a result of our acquisitions and increased headcount year over year, increased deferred compensation of $2.2 million, increased training, travel, and office expenses of $0.9 million, increased expenses for software support and maintenance, director fees, and regulatory fees of $0.7 million, increased consulting costs of $0.5 million, increased corporate insurance of $0.4 million, and increased other miscellaneous expenses of $0.3 million. Home sales and rentals general and administrative expenses increased during the year ended December 31, 2015, by $3.8 million, from the year ended December 31, 2014, primarily due to increased expenses related to salaries, wages, and related taxes of $2.5 million, increased commissions on home sales of $1.0 million, and increased advertising expenses of $0.3 million. Depreciation and amortization expenses increased during the year ended December 31, 2015, by $43.9 million, from the year ended December 31, 2014, primarily a result of additional depreciation and amortization of $33.3 million primarily related to our newly acquired properties (See Note 2 in our Consolidated Financial Statements), an additional $4.6 million related to depreciation on investment property for use in our rental program, an additional $1.6 million related to depreciation on investment property for our vacation rental property, and an additional $4.4 million related to the amortization of in-place leases and promotions. 46 Asset impairment charge of $0.8 million during the year ended December 31, 2014, was a result of an impairment loss recorded on a long-lived asset for our MH and RV community in La Feria, Texas during 2014. We did not recognize any impairment charge during the year ended December 31, 2015. SUN COMMUNITIES, INC. Interest expense on debt, including interest on mandatorily redeemable preferred OP units, increased during the year ended December 31, 2015, by $33.9 million, from the year ended December 31, 2014, primarily as a result of a $25.2 million increase in mortgage interest due to the acquisition of the ALL and Berger properties, increased interest on miscellaneous other long- term debt of $15.6 million, increased interest expense associated with our secured borrowing arrangements of $1.5 million, and increased other interest expenses of $0.5 million primarily related to deferred financing costs. The increases in interest expense were partially offset by $8.9 million of mark to market adjustments on assumed debt. Gain on disposition of properties, net increased during the year ended December 31, 2015, by $107.7 million to $125.4 million from $17.7 million for the year ended December 31, 2014, primarily as a result of the sale of 20 properties during the year ended December 31, 2015, compared to the sale of 10 properties during the year ended December 31, 2014 (see Note 2 in our Consolidated Financial Statements). Gain on settlement of $4.5 million in 2014 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 2015. Distributions from affiliate increased during the year ended December 31, 2015, by $6.3 million, from the year ended December 31, 2014, as we received a $7.5 million distribution from Origen in 2015 as part of its dissolution. Preferred stock redemption costs increased during the year ended December 31, 2015, by $4.3 million, from the year ended December 31, 2014, as a result of a repurchase agreement with certain holders of the Company's Series A-4 Preferred Stock (see Note 9 in our Consolidated Financial Statements). 47 COMPARISON OF THE YEARS ENDED DECEMBER 31, 2014 AND 2013 SUN COMMUNITIES, INC. REAL PROPERTY OPERATIONS – TOTAL PORTFOLIO The following tables reflect certain financial and other information for our Total Portfolio as of and for the years ended December 31, 2014 and 2013: Financial Information (in thousands) Income from Real Property Property operating expenses: Payroll and benefits Legal, taxes, and insurance Utilities Supplies and repair Other Real estate taxes Property operating expenses Real Property NOI Other Information Number of properties Overall occupancy (1) Year Ended December 31, 2014 2013 Change % Change $ 357,793 $ 313,097 $ 44,696 14.3 % 30,107 5,089 41,275 13,535 11,128 24,181 125,315 26,750 4,769 36,071 11,213 8,834 22,284 109,921 $ 232,478 $ 203,176 $ 3,357 320 5,204 2,322 2,294 1,897 15,394 29,302 12.5 % 6.7 % 14.4 % 20.7 % 26.0 % 8.5 % 14.0 % 14.4 % As of December 31, 2014 217 2013 188 Change 29 % Change 15.4 % 92.6 % 89.7 % 2.9 % Sites available for development 6,987 6,339 648 10.2 % Monthly base rent per site - MH Monthly base rent per site - RV (2) Monthly base rent per site - Total (1) Occupied sites and occupancy % include MH and annual RV sites and excludes transient RV sites, which are included in total developed sites. (2) Monthly base rent pertains to annual RV sites and excludes transient RV sites. $ $ $ $ $ $ $ $ $ 464 409 456 445 376 436 19 33 20 4.3 % 8.8 % 4.6 % The 14.4% growth in Real Property NOI was primarily due to $14.5 million from newly acquired properties and $14.8 million from Same Site properties as detailed below. 48 REAL PROPERTY OPERATIONS – SAME SITE SUN COMMUNITIES, INC. The Same Site information in this comparison of the years ended December 31, 2014 and 2013 includes all properties which we have owned and operated continuously since January 1, 2013. Financial Information (in thousands) Income from Real Property Property operating expenses: Payroll and benefits Legal, taxes, and insurance Utilities Supplies and repair Other Real estate taxes Property operating expenses Real Property NOI Other Information Number of properties Overall occupancy (1) (2) (3) Year Ended December 31, 2014 2013 Change % Change $ 291,720 $ 273,574 $ 18,146 6.6 % 22,585 4,630 16,593 11,396 8,354 21,418 84,976 22,918 4,390 15,620 10,222 7,610 20,876 81,636 $ 206,744 $ 191,938 $ (333 ) 240 973 1,174 744 542 3,340 14,806 (1.5 )% 5.5 % 6.2 % 11.5 % 9.8 % 2.6 % 4.1 % 7.7 % As of December 31, 2014 163 2013 163 Change — % Change — % 92.6 % 89.6 % 3.0 % Sites available for development 5,823 6,339 (516 ) (8.1 )% Monthly base rent per site - MH (4) Monthly base rent per site - RV (4) Monthly base rent per site - Total (1) Occupied sites and occupancy % include MH and annual RV sites, and excludes transient RV sites. (2) Occupancy % includes MH and annual/seasonal RV sites, and excludes recently completed but vacant expansion sites and transient RV sites. (3) Occupancy % for 2014 has been adjusted to reflect incremental growth year over year from filled expansion sites and the conversion of transient RV sites 446 405 442 461 413 456 15 8 14 3.4 % 3.2 % 2.0 % $ $ $ $ $ $ $ $ $ to annual / seasonal RV sites. (4) Monthly base 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 real property was due to a combination of factors. Revenue from our MH and RV portfolio increased $17.1 million due to weighted average rental rate increases of 3.2% and the increased number of occupied home sites. Additionally, other revenues increased $1.1 million primarily due to increases in late fees and insufficient 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, of which approximately $0.5 million was primarily related to weather related maintenance and repair 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 services and tree trimming and removal and $0.2 million was related to general community maintenance and vehicle maintenance. Utilities increased $1.0 million primarily as a result of increased gas, electric and trash removal costs. Real estate taxes increased by $0.5 million, and other expenses increased by $0.7 million primarily due to increases in bad debt expense and miscellaneous expenses such as software maintenance expense and bank service and credit card processing charges. 49 HOME SALES AND RENTALS SUN COMMUNITIES, INC. The following table reflects certain financial and statistical information for our Home Sales Program for the years ended December 31, 2014 and 2013 (in thousands, except for average selling prices and statistical information): Financial Information New home sales Pre-owned home sales Revenue from homes sales New home cost of sales Pre-owned home cost of sales Cost of home sales NOI / Gross profit Gross profit – new homes Gross margin % – new homes Average selling price – new homes Gross profit – pre-owned homes Gross margin % – pre-owned homes Average selling price – pre-owned homes Statistical Information Home sales volume: New home sales Pre-owned home sales Total homes sold Year Ended December 31, $ 2014 9,464 44,490 53,954 7,977 32,579 40,556 $ 13,398 $ 2013 6,645 48,207 54,852 5,557 34,740 40,297 $ 14,555 Change $ 2,819 (3,717 ) (898 ) 2,420 (2,161 ) 259 $ (1,157 ) % Change 42.4 % (7.7 )% (1.6 )% 43.5 % (6.2 )% 0.6 % (7.9 )% 36.7 % $ $ 1,487 15.7 % $ 1,088 16.4 % 399 (0.7 )% $ 83,750 $ 78,179 $ 5,571 7.1 % $ 11,911 $ 13,467 $ (1,556 ) (11.6 )% 26.8 % 27.9 % (1.1 )% $ 24,010 $ 26,142 $ (2,132 ) (8.2 )% 113 1,853 1,966 85 1,844 1,929 28 9 37 32.9 % 0.5 % 1.9 % Home Sales Gross profit increased $0.4 million on new home sales and decreased $1.6 million on pre-owned home sales. The increased profit on new home 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 unit selling prices in 2014. 50 The following table reflects certain financial and other information for our Rental Program as of and for the years ended December 31, 2014 and 2013 (in thousands, except for statistical information): SUN COMMUNITIES, INC. Financial Information Rental home revenue Site rent from Rental Program (1) Rental Program revenue Expenses Commissions Repairs and refurbishment Taxes and insurance Marketing and other Rental Program operating and maintenance Rental Program NOI Other Information Number of occupied rentals, end of period Investment in occupied rental homes, end of period Number of sold rental homes Year Ended December 31, $ 2014 39,213 $ 54,289 93,502 2013 32,500 $ 46,416 78,916 2,607 11,068 5,286 4,309 23,270 70,232 $ 2,507 9,411 4,446 4,071 20,435 58,481 $ $ 10,973 9,726 $ 429,605 $ 355,789 $ 799 822 $ 924 796 $ Change % Change 6,713 7,873 14,586 100 1,657 840 238 2,835 11,751 1,247 73,816 (125 ) 26 20.7 % 17.0 % 18.5 % 4.0 % 17.6 % 18.9 % 5.8 % 13.9 % 20.1 % 12.8 % 20.7 % (13.5 )% 3.3 % Weighted average monthly rental rate, end of period $ (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. For purposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the Rental Program, and assess the overall growth and performance of Rental Program and financial impact to our operations. The 20.1% growth in NOI is primarily as a result of the increased number of residents participating in the Rental Program and from increased monthly rental rates 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 $2.8 million was primarily a result of increased repair and refurbishment expenses of $1.7 million, of which $0.9 million was due to increased refurbishment costs related to occupant turnover and $0.8 million was due to increased repair costs on occupied home rentals. In addition, insurance and personal property and use taxes increased $0.8 million due to the additional number of homes in the Rental Program and bad debt expense increased $0.6 million, partially offset by a decrease in advertising expense of $0.4 million. 51 OTHER INCOME STATEMENT ITEMS SUN COMMUNITIES, INC. The 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 % Change Ancillary revenues, net Interest income Brokerage commissions and other revenues Real property general and administrative Home sales and rentals general and administrative Transaction costs Depreciation and amortization Asset impairment charge Interest expense Gain on disposition of properties, net Gain on settlement Distributions from affiliates $ $ $ $ $ $ $ $ $ $ $ $ 5,217 $ 14,462 $ 1,036 $ 31,769 $ $ 10,853 18,259 $ 133,726 $ 837 $ 76,981 $ 17,654 $ 4,452 $ 1,200 $ 1,151 $ 13,073 $ 549 $ 25,941 $ $ 9,913 3,928 $ 110,078 $ — $ 76,577 $ — $ — $ 2,250 $ 4,066 1,389 487 5,828 940 14,331 23,648 837 404 17,654 4,452 (1,050 ) 353.3 % 10.6 % 88.7 % 22.5 % 9.5 % 364.8 % 21.5 % N/A 0.5 % N/A N/A (46.7 )% Ancillary revenues, net increased $4.1 million primarily related to increased vacation rental income of $3.2 million and increased merchandise income. The increased merchandise income was primarily a result of our acquisition of six RV communities during 2014 and a full year of activity for the 14 RV communities 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 a result of our acquisition and increased headcount year over year, increased deferred compensation of $1.7 million due to awards of restricted stock to our executives and key employees, increased legal expense of $0.7 million and increased other expenses of $1.2 million primarily related to increased consulting fees, 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 ALL acquisition (see Note 2 of our Consolidated Financial Statements). Depreciation and amortization expenses increased as a result of additional depreciation and amortization of $16.2 million primarily related to our newly acquired properties (See Note 2 of our Consolidated Financial Statements), $5.7 million related to depreciation on investment property for use in our rental program, $2.3 million related to depreciation on investment property for our vacation rental property, and $1.7 million related to the amortization of in place leases and promotions, 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, Texas during 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 of our Consolidated Financial Statements). We did not dispose of any properties in 2013. 52 SUN COMMUNITIES, INC. 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. Distributions from affiliate decreased $1.1 million. We suspended equity accounting in 2010 on our affiliate, Origen, as our investment balance is zero. The income recorded in 2014 is distribution income. The amount of the distribution is determined by Origen on a quarterly basis. See Note 7 of our Consolidated Financial Statements. 53 The following table is a summary of our consolidated financial results which are discussed in more detail in the following paragraphs (in thousands): SUN COMMUNITIES, INC. Real Property NOI Rental Program NOI Home Sales NOI/Gross profit Ancillary NOI/Gross profit Site rent from Rental Program (included in Real Property NOI) (1) NOI/Gross profit Adjustments to arrive at net income: Other revenues General and administrative Transaction costs Depreciation and amortization Asset impairment charge Extinguishment of debt Interest expense Gain on disposition of properties, net Gain on settlement Provision for state income taxes Income tax expense - reduction of deferred tax asset Distributions from affiliate Net income Less: Preferred return to Series A-1 preferred OP units Less: Preferred return to Series A-3 preferred OP units Less: Preferred return to Series A-4 preferred OP units Less: Preferred return to Series C preferred OP units Less: Amounts attributable to noncontrolling interests Net income attributable to Sun Communities, Inc. Less: Preferred stock distributions Less: Preferred stock redemption costs $ Year Ended December 31, 2015 335,567 $ 83,232 20,787 7,013 (61,952 ) 384,647 2014 232,478 $ 70,232 13,398 5,217 (54,289 ) 267,036 18,157 (54,931 ) (17,803 ) (177,637 ) — (2,800 ) (110,878 ) 125,376 — (158 ) (1,000 ) 7,500 170,473 2,431 181 1,340 1,021 10,054 155,446 13,793 4,328 137,325 $ 15,498 (42,622 ) (18,259 ) (133,726 ) (837 ) — (76,981 ) 17,654 4,452 (219 ) — 1,200 33,196 2,654 181 100 — 1,752 28,509 6,133 — 22,376 $ 2013 203,176 58,481 14,555 1,151 (46,416 ) 230,947 13,622 (35,854 ) (3,928 ) (110,078 ) — — (76,577 ) — — (234 ) — 2,250 20,148 2,598 166 — — 718 16,666 6,056 — 10,610 Net income attributable to Sun Communities, Inc. common stockholders $ (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. For purposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the Rental Program, and to assess the overall growth and performance of Rental Program and financial impact on our operations. 54 FUNDS FROM OPERATIONS SUN COMMUNITIES, INC. We provide information regarding FFO as a supplemental measure of financial and operating performance. FFO is defined by NAREIT as net income (loss) (computed in accordance with GAAP), excluding extraordinary items (as defined under GAAP), and gain (loss) on sales of depreciable operating property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and joint ventures. Due to the variety among owners of identical assets in similar condition (based on historical cost accounting and useful life estimates), we believe excluding gains and losses related to sales of previously depreciated operating real estate assets, excluding impairment charges and excluding real estate asset depreciation and amortization, provides a better indicator of our operating performance. FFO is a useful supplemental measure of our operating performance because it reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from net income (loss). Management believes that the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. 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 to net 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 as defined 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 by operating 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 other cash requirements, nor as a measure of working capital. FFO only provides investors with an additional performance measure. FFO is compiled in accordance with its interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. 55 The following table reconciles net income to FFO data for diluted purposes for the years ended December 31, 2015, 2014 and 2013 (in thousands): SUN COMMUNITIES, INC. Net income attributable to Sun Communities, Inc. common stockholders Adjustments: Preferred return to Series A-1 preferred OP units Preferred return to Series A-3 preferred OP units Amounts attributable to noncontrolling interests Preferred distribution to Series A-4 Preferred Stock Preferred return to Series A-4 preferred OP units Depreciation and amortization Asset impairment charge Gain on disposition of properties, net Gain on disposition of assets FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) Adjustments: Transaction costs Distribution from affiliate Gain on settlement Preferred stock redemption costs Extinguishment of debt Income tax expense - reduction of deferred tax asset Year Ended December 31, 2015 $ 137,325 $ 2014 22,376 $ 2013 10,610 2,431 181 9,644 — — 178,048 — (125,376 ) (10,125 ) — 181 1,086 76 100 134,252 837 (17,654 ) (6,705 ) 2,598 166 718 — — 111,083 — — (7,592 ) $ 192,128 $ 134,549 $ 117,583 17,803 (7,500 ) — 4,328 2,800 1,000 18,259 — (4,452 ) — — — 3,928 — — — — — FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items (1) $ 210,559 $ 148,356 $ 121,511 Weighted average common shares outstanding: Add: Common stock issuable upon conversion of stock options Restricted stock Series A-4 Preferred Stock Common OP units Common stock issuable upon conversion of Series A-4 preferred OP units Common stock issuable upon conversion of Series A-3 preferred OP units Common stock issuable upon conversion of Series A-1 preferred OP units Weighted average common shares outstanding - fully diluted 53,686 41,337 34,228 16 411 — 2,803 — 75 988 57,979 16 237 215 2,114 28 75 — 44,022 15 167 — 2,069 — 67 1,111 37,657 FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per Share - fully diluted FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per Share excluding certain items - fully diluted $ $ 3.31 $ 3.06 $ 3.12 3.63 $ 3.37 $ 3.22 (1) The effect of certain anti-dilutive convertible securities is excluded from these items. 56 LIQUIDITY AND CAPITAL RESOURCES SUN COMMUNITIES, INC. Our principal liquidity demands have historically been, and are expected to continue to be, distributions to our stockholders and the unit holders of the Operating Partnership, capital improvement of properties, the purchase of new and pre-owned homes, property acquisitions, development and expansion of properties, and debt repayment. Subject to market conditions, we intend to continue to look for opportunities to expand our development pipeline and acquire existing communities. We also intend to continue to strengthen our capital and liquidity positions by continuing to focus on our core fundamentals, which are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our liquidity requirements through available cash balances, cash flows generated from operations, draws on our credit facility, and the use of debt and equity offerings under our shelf registration statement. We acquired 38 communities in 2015, 34 MH communities and 4 RV communities. See Note 2 in our Consolidated Financial Statements for details on the acquisitions, and Note 8 in our Consolidated Financial Statements for related debt transactions. We will continue to evaluate acquisition opportunities that meet our criteria for acquisition. Should additional investment opportunities arise in 2016, we intend to finance the acquisitions through available cash, secured financings, draws on our credit facilities, the assumption of existing debt on the properties, and the issuance of certain equity securities. During the year ended December 31, 2015, we invested $40.9 million in the acquisition of homes intended for the Rental Program net of proceeds from third-party financing from homes sales. Expenditures for 2016 will depend upon the condition of the markets for repossessions and new home sales, as well as rental homes. We have the ability to finance new home purchases with a $12.0 million manufactured home floor plan facility. Our ability to purchase homes for sale or rent may be limited by cash received from third party financing of our home sales, available manufactured home floor plan financing, and working capital available on our lines of credit. Our cash flow activities are summarized as follows (in thousands): Net Cash Provided by Operating Activities Net Cash Used in Investing Activities Net Cash Provided by Financing Activities Year Ended December 31, 2015 2014 2013 $ $ $ 182,263 $ (413,184 ) $ 192,548 $ 133,320 $ (550,705 ) $ 496,091 $ 114,683 (352,412 ) 212,974 Cash and cash equivalents decreased by $38.4 million from $83.5 million as of December 31, 2014, to $45.1 million as of December 31, 2015. Operating Activities Net cash provided by operating activities increased by $49.0 million from $133.3 million for the year ended December 31, 2014 to $182.3 million for the year ended December 31, 2015. Our net cash provided by operating activities may be adversely impacted by, among other things: (a) the market and economic conditions in our current markets generally, and specifically in metropolitan areas of our current markets; (b) lower occupancy and rental rates of our properties; (c) increased operating costs, such as wage and benefit costs, insurance premiums, real estate taxes and utilities, that cannot be passed on to our tenants; (d) decreased sales of manufactured homes; and (e) current volatility in economic conditions and the financial markets. See Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. 57 Investing Activities SUN COMMUNITIES, INC. Net cash used for investing activities was $413.2 million for the year ended December 31, 2015, compared to $550.7 million for the year ended December 31, 2014. The decrease is primarily related to decreased cash invested in acquisitions during 2015 as compared to 2014, as well as a decrease in payments for deposits for acquisitions. Additionally, we generated increased proceeds related to the disposition of 17 MH communities and 3 MH and RV combined communities (see Note 2 in our Consolidated Financial Statements). These items are partially offset by our increase in cash used for investments in properties. Financing Activities Net cash provided by financing activities was $192.5 million for the year ended December 31, 2015, compared to $496.1 million for the year ended December 31, 2014. The decrease is primarily related to a single equity offering in 2015 compared with two larger equity offerings in 2014. We also used cash for the redemption of the Series A-4 preferred stock in 2015 with no redemption occurring in 2014. Lastly, more cash was used in 2015 for distributions to stockholders, OP unit holders and preferred OP unit holders than in the prior year. We continually evaluate our debt maturities, and, based on management's current assessment, believe we have viable financing and refinancing alternatives that will not materially adversely impact our expected financial results. We pursue borrowing opportunities with a variety of different lending institutions and are assessing our debt maturities and financing needs in 2016 and beyond to try to best position the Company if current credit market conditions change. Financial Flexibility In August 2015 we amended and restated our senior revolving credit facility with Citibank, N.A. and certain other lenders in the amount of $450.0 million, comprised of a $392.0 million revolving loan and $58.0 million term loan (the "Facility"). The Facility has a four year term ending August 19, 2019, which can be extended for two additional six-month periods at our option, subject to the satisfaction of certain conditions as defined in the credit agreement. The credit agreement also provides for, subject to the satisfaction of certain conditions, additional commitments in an amount not to exceed $300.0 million. If additional borrowings are made pursuant to any such additional commitments, the aggregate borrowing limit under the Facility may be increased up to $750.0 million. The Facility bears interest at a floating rate based on the Eurodollar rate plus a margin that is determined based on our leverage ratio calculated in accordance with the credit agreement, which can range from 1.40% to 2.25% for the revolving loan and 1.35% to 2.20% for the term loan. As of December 31, 2015, the margin on our leverage ratio was 1.45% and 1.40% on the revolving and term loans, respectively. We had no borrowings on the revolving loan and $25.0 million on the term loan totaling $25.0 million in borrowings as of December 31, 2015, with a weighted average interest rate of 1.62%. As of December 31, 2014, there was no amount outstanding under our previous credit facility. The 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 line of credit, but it does reduce the borrowing amount available. At December 31, 2015, we had outstanding letters of credit to back standby letters of credit totaling approximately $3.4 million. 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 most restrictive financial covenants for the Facility are as follows: Covenant Requirement As of 12/31/15 Maximum Leverage Ratio Minimum Fixed Charge Coverage Ratio Minimum Tangible Net Worth Maximum Dividend Payout Ratio < 65.0% > 1.40 41.4% 2.32 $1,911,350 $2,477,436 < 95.0% 74.8% 58 Market and Economic Conditions SUN COMMUNITIES, INC. U.S. rate environment, monetary policy change in China, Japan and the Eurozone, falling oil prices, and turmoil in emerging markets are factors that are influencing financial markets as we move into 2016. Questions still exist on whether the U.S. economy will sustain the growth indicators it has reported and whether or when the U.S. Federal Reserve will further increase interest rates during 2016 due to economic uncertainties, as well as how Japan and the Eurozone will recover amidst easing monetary policy. The possible negative effects on the world economy of the recent Chinese stock market decline and additional global turmoil keep economic outlooks tempered. While the U.S. economy looks poised for self-sustaining growth, the global economy is seeing modest improvement led by developed countries. Continued economic uncertainty, both nationally and internationally, causes increased volatility in investor confidence thereby creating similar volatility in the availability of both debt and equity capital. If such volatility is experienced in future periods, our industry, 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 unit redemptions through the issuance of certain debt or equity securities and/or the collateralization of our properties. At December 31, 2015, we had 73 unencumbered properties with an estimated market value of $963.4 million. 63 of these unencumbered properties support the borrowing base for our $450.0 million line 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 sell selected assets. Our ability to finance our long-term liquidity requirements in such a manner will be affected by numerous economic factors affecting the manufactured housing community industry at the time, including the availability and cost of mortgage debt, our financial condition, the operating history of the properties, the state of the debt and equity markets, and the general national, regional, and local economic conditions. When it becomes necessary for us to approach the credit markets, the volatility in those markets could make borrowing more difficult to secure, more expensive, or effectively unavailable. See “Risk Factors” in Part I, Item 1A in this Annual Report on Form 10-K. If we are unable to obtain additional debt or equity financing on acceptable terms, our business, results of operations and financial condition would be adversely impacted. Contractual Cash Obligations Our primary long-term liquidity needs are principal payments on outstanding indebtedness. As of December 31, 2015, our outstanding contractual obligations, including interest expense, were as follows: Payments Due By Period (In thousands) Contractual Cash Obligations (1) Total Due <1 year Collateralized term loans - FNMA Collateralized term loans - FMCC Collateralized term loans - Life Company Collateralized term loans - CMBS Preferred OP units - mandatorily redeemable Lines of credit Secured borrowing Total principal payments $ 759,017 $ 197,418 498,680 636,874 45,903 25,000 140,440 2,303,332 18,196 $ — 11,378 108,560 11,240 — 5,398 154,772 1-3 years 100,756 $ 6,769 22,810 87,470 — — 12,387 230,192 3-5 years 136,237 $ 7,387 33,944 17,510 — 25,000 14,663 234,741 After 5 years 503,828 183,262 430,548 423,334 34,663 — 107,992 1,683,627 Interest expense (2) Operating leases Total contractual obligations 800,365 13,285 $ 3,116,982 $ 120,377 1,072 276,221 $ 177,967 2,238 410,397 $ 157,381 2,364 344,640 7,611 394,486 $ 2,035,878 (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, 2015 (excluding secured borrowings), and actual payments required in future periods may be different than the amounts included above. 59 SUN COMMUNITIES, INC. As of December 31, 2015, our net debt to enterprise value approximated 34.0% (assuming conversion of all common OP units, Series A-1 preferred OP units, Series A-3 preferred OP units, Series A-4 preferred OP units, and Series C preferred OP units to shares of common stock). Our debt has a weighted average maturity of approximately 8.4 years and a weighted average interest rate of 5.0%. Capital expenditures for the years ended December 31, 2015 and 2014 included recurring capital expenditures of $20.3 million and $10.2 million, respectively. We are committed to the continued upkeep of our properties and therefore do not expect a decline in our recurring capital expenditures during 2016. 60 CRITICAL ACCOUNTING POLICIES AND ESTIMATES SUN COMMUNITIES, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing these financial statements, management has made its best estimate and judgment of 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 of our Consolidated Financial Statements: Investment Property Investment property is recorded at cost, less accumulated depreciation. We review the carrying value of long-lived assets to be held and used for impairment quarterly or whenever events or changes in circumstances indicate a possible impairment. Our primary indicator for potential impairment is based on NOI trends period over period. Circumstances that may prompt a test of recoverability may also include a significant decrease in the anticipated market price, an adverse 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 the value 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. Forecasting cash flows requires management to make estimates and assumptions about such variables as the estimated holding period, rental rates, occupancy, development, and operating expenses during the holding period, as well as disposition proceeds. Management uses its best judgment when developing these estimates and assumptions, but the development of the projected future cash flows is based on subjective variables. Future events could occur which would cause us to conclude that impairment indicators exist, and significant adverse changes in national, regional, or local market conditions or trends may cause us to change the estimates and assumptions used in our impairment analysis. The results of an impairment analysis could be material to our financial statements. We periodically receive offers from interested parties to purchase certain of our properties. These offers may be the result of an active program initiated by us to sell the property, or from an unsolicited offer to purchase the property. The typical sale process involves a significant negotiation and due diligence period between 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 to purchase 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 significant contingencies 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 fair values for purposes of allocating purchase price, we utilize an independent third-party to value the net tangible and identified intangible assets in connection with the acquisition of the respective property. We provide historical and pro forma financial information obtained about each property, as well as any other information needed in order for the third-party to ascertain the fair value of the tangible and intangible assets (including in-place leases) acquired. Capitalized Costs We capitalize certain costs incurred in connection with the development, redevelopment, capital enhancement and leasing of our properties. Management is required to use professional judgment in determining whether such costs meet the criteria for immediate expense or capitalization. The amounts are dependent on the volume and timing of such activities and the costs associated with such activities. Maintenance, repairs and minor improvements to properties are expensed when incurred. Renovations and improvements to properties are capitalized and depreciated over their estimated useful lives and construction costs related to the development of new community or expansion sites are capitalized until the property is substantially 61 SUN COMMUNITIES, INC. complete. Costs incurred to initially renovate pre-owned and repossessed homes that we acquire for our Rental Program are capitalized and costs incurred to refurbish the homes at turnover and repair the homes while occupied are expensed. Certain expenditures to dealers and residents related to obtaining lessees in our communities are capitalized and amortized over a seven year period based on the anticipated term of occupancy of a resident. Costs associated with implementing our computer systems are capitalized and amortized over the estimated useful lives of the related software and hardware. Costs incurred to obtain new financing are capitalized and amortized over the terms of the related loan agreement using the straight-line method (which approximates the effective interest method). Notes and Other Receivables We make financing available to purchasers of manufactured homes generally located in our communities. The notes are collateralized by the underlying manufactured home sold. Notes receivable include both installment loans purchased by the Company as well as transferred loans that have not met the requirements for sale accounting which are presented herein as collateralized receivables. For purposes of accounting policy, all notes receivable are considered one homogeneous segment, as the notes are typically underwritten using the same requirements and terms. Notes receivable are reported at their outstanding unpaid principal balance adjusted for an allowance for loan loss. Interest income is accrued 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, we stop accruing interest on the note receivable. The interest on nonaccrual loans is accounted for on the cash basis until qualifying for return to accrual. Loans are returned to accrual when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. Loans on a nonaccrual status were immaterial at December 31, 2015 and 2014. The ability to collect our notes receivable is measured based on current and historical information and events. We consider numerous factors including: length of delinquency, estimated costs to lease or sell, and repossession history. Our experience supports a high recovery rate for notes receivable; however there is some degree of uncertainty about the recoverability of our investment in these notes receivable. We are generally able to recover our recorded investment in uncollectible notes receivable by repossessing the homes on the notes retained by us and repurchasing the homes on the collateralized receivables, and subsequently selling or leasing these homes to potential residents in our communities. We have established a loan loss reserve based on our estimated unrecoverable costs associated with repossessed/repurchased homes. We estimate our unrecoverable costs to be the repurchase price of the home collateralizing the note receivable plus repair and remarketing costs in excess of the estimated selling price of the home being repossessed. A historical average of this excess cost is calculated based on prior repossessions/repurchases and is applied to our estimated annual future repossessions to create the allowance for both installment and collateralized notes receivable. We evaluate the collectability of a loan based on our ability to collect the scheduled payments of principal and interest when due according to the contractual 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 scheduled payment is delinquent more than five to seven days, dependent on state law, we begin the repossession and eviction process simultaneously. This process generally 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. No loans were considered impaired as of December 31, 2015 and 2014. 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 credit quality of the applicant - rental payment history; home debt to income ratio; loan value to the collateralized asset; total debt to income ratio; length of employment; 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 end and various other miscellaneous receivables. Accounts receivable from residents are typically due within 30 days and stated at amounts due from residents net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. We evaluate the recoverability of our receivables whenever events occur or there are changes in circumstances such that management believes it is probable that it 62 will be unable to collect all amounts due according to the contractual terms of the loan and lease agreements. Receivables related to community rents are reserved when we believe that collection is less than probable, which is generally after a resident balance reaches 60 to 90 days past due. SUN COMMUNITIES, INC. Revenue Recognition Rental income attributable to site and home leases is recorded on a straight-line basis when earned from tenants. Leases entered into by tenants are generally for 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, as provided by state statute. Revenue from the sale of manufactured homes is recognized upon transfer of title at the closing of the sales transaction. Interest income 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 to taxing authorities in revenue. Refer to Note 1 to our Consolidated Financial Statements for additional information on certain critical accounting policies and estimate. Impact of New Accounting Standards See Note 17 to our Consolidated Financial Statements, "Recent Accounting Pronouncements" within this Annual Report on Form 10-K. Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements with any unconsolidated entities that it believes have or are reasonably likely to have a material effect on its financial condition, results of operations, liquidity, or capital resources. 63 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK SUN COMMUNITIES, INC. Our principal market risk exposure is interest rate risk. We mitigate this risk by maintaining prudent amounts of leverage, minimizing capital costs, and interest 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 that interest rate changes could 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 $160.1 million as of December 31, 2015. The first interest rate cap agreement has a cap rate of 9.00%, a notional amount of $150.1 million, and a termination date of April 2018. The second interest rate cap 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 $183.3 million and $166.4 million as of December 31, 2015 and 2014, respectively, which bear interest at Prime or various LIBOR rates. If Prime or LIBOR increased or decreased by 1.0% during the year ended December 31, 2015 and 2014, we believe our interest expense would have increased or decreased by approximately $2.2 million and $2.8 million based on the $223.2 million and $279.1 million average balances outstanding under our variable rate debt facilities for the years ended December 31, 2015 and 2014, respectively. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial statements and supplementary data are filed herewith under Item 15. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 64 ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures SUN COMMUNITIES, INC. Our management is responsible for establishing and maintaining disclosure controls and procedures as defined in the rules promulgated under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer, Gary A. Shiffman, and Chief Financial Officer, Karen J. Dearing, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2015. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2015, to ensure that information we are required to disclose in our filings with the SEC under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and to ensure that information we are required to disclose in the reports that we file under the Exchange Act is accumulated and communicated to our management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Design and Evaluation of Internal Control Over Financial Reporting Pursuant 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 our internal controls as part of this Annual Report on Form 10-K for the fiscal year ended December 31, 2015. 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’s attestation report are included in our 2015 financial statements under the captions entitled “Management’s Report on Internal Control Over Financial Reporting” and “Report of Independent Registered Public Accounting Firm”. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting during the period ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. 65 PART III SUN COMMUNITIES, INC. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Pursuant 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 this Form 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 by reference to the applicable information in the proxy statement for our 2016 annual meeting, including the information set forth under the captions "Board of Directors 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 Directors and Corporate Governance - Consideration of Director Nominees." ITEM 11. EXECUTIVE COMPENSATION Unless provided in an amendment to this Annual Report on Form 10-K, the information required by this Item is incorporated by reference to the applicable information in the proxy statement for our 2016 annual meeting, including the information set forth under the captions "Management and Executive Compensation," "Board of Directors and Coprorate Governance - Director Compensation Table," "Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report." The information in the section of an amending to this Annual Report on Form 10-K or the proxy statement for our 2015 annual meeting captioned "Compensation Committee Report" is incorporated by reference herein but shall be deemed furnished, not filed, 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 of 1034. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Unless provided in an amendment to this Annual Report on Form 10-K, the information required by this Item is incorporated by reference to the applicable information in the proxy statement for our 2016 annual meeting, including the information set forth under the captions "Security Ownership of Certain Beneficial Owners and Management" and "Securities Authorized for Issuance under Equity Compensation Plans." ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Unless provided in an amendment to this Annual Report on Form 10-K, the information required by this Item is incorporated by reference to the proxy statement for our 2016 annual meeting, including the information set forth under the captions "Certain Relationships and Related Transactions and Director Independence," "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 SERVICES Unless provided in an amendment to this Annual Report on Form 10-K, the information required by this Item is incorporated by reference to the proxy statement for our 2016 annual meeting, including the information set forth under the caption "Ratification of Selection of Grant Thornton LLP." 66 PART IV SUN COMMUNITIES, INC. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The 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 and Financial Statement Schedules” filed herewith. 2. Financial Schedules A 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 Financial Statements 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. 67 SIGNATURES SUN COMMUNITIES, INC. Pursuant 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 its behalf by the undersigned, thereunto duly authorized. February 23, 2016 By /s/ Gary A. Shiffman Gary A. Shiffman Chief Executive Officer SUN COMMUNITIES, INC. (Registrant) Pursuant 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 of the registrant and in the capacities and on the dates indicated. Name Capacity /s/ Gary A. Shiffman Gary A. Shiffman Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) Date February 23, 2016 /s/ /s/ /s/ /s/ /s/ /s/ /s/ /s/ /s/ /s/ Karen J. Dearing Karen J. Dearing Executive Vice President, Chief Financial Officer, Treasurer, Secretary (Principal Financial Officer and Principal Accounting Officer) February 23, 2016 February 23, 2016 February 23, 2016 February 23, 2016 February 23, 2016 February 23, 2016 February 23, 2016 February 23, 2016 February 23, 2016 February 23, 2016 Stephanie W. Bergeron Director Stephanie W. Bergeron James R. Goldman Director James R. Goldman Brian M. Hermelin Director Brian M. Hermelin Ronald A. Klein Ronald A. Klein Director Paul D. Lapides Director Paul D. Lapides Clunet R. Lewis Director Clunet R. Lewis Ronald L. Piasecki Director Ronald L. Piasecki Randall K. Rowe Randall K. Rowe Director Arthur A. Weiss Director Arthur A. Weiss 68 EXHIBIT INDEX SUN COMMUNITIES, INC. Exhibit Number 2.1 Description Method of Filing Omnibus 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., Sun Communities, 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 filed August 5, 2014 2.2 Contribution Agreement, dated July 30, 2014, by and between Green Courte Real Estate Partners, LLC and Sun Communities Operating Limited Partnership* Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed August 5, 2014 2.3 Contribution Agreement, dated July 30, 2014, by and between Green Courte Real Estate Partners, LLC and Sun Communities Operating Limited Partnership* Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed August 5, 2014 2.4 Contribution Agreement, dated July 30, 2014, by and between Green Courte Real Estate Partners, LLC and Sun Communities Operating Limited Partnership* Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed August 5, 2014 2.5 Contribution Agreement, dated July 30, 2014, by and between Green Courte Real Estate Partners, LLC and Sun Communities Operating Limited Partnership* Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed August 5, 2014 2.6 Membership 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 filed August 5, 2014 2.7 Membership Interest Purchase Agreement, dated July 30, 2014, between GCP REIT III and Sun Communities Operating Limited Partnership* Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed August 5, 2014 2.8 Merger Agreement, dated July 30, 2014, by and between Sun Communities, Inc., Sun Maryland, Inc. and GCP REIT II* Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed August 5, 2014 2.9 Merger Agreement, dated July 30, 2014, by and between Sun Communities, Inc., Sun Maryland, Inc. and GCP REIT III* Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed August 5, 2014 2.10 Subscription Agreement, dated July 30, 2014, by and among Green Courte Real Estate Partners III, LLC, Sun Communities, Inc. and Sun Communities Operating Limited Partnership Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed August 5, 2014 2.11 Contribution 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 filed December 10, 2014 2.12 Contribution 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 filed December 10, 2014 69 SUN COMMUNITIES, INC. 2.13 Contribution Agreement (Hamptons) dated December 4, 2014, by and among Hamptons Sponsor, LLC, Hamptons Holding, LLC, Hamptons Park, LLC and Sun Communities Operating Limited Partnership* Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed December 10, 2014 2.14 Contribution 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 Limited Partnership* Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed December 10, 2014 2.15 Contribution Agreement dated December 4, 2014, by and among 481 Associates, Route 27 Associates, Ltd. and Sun Communities Operating Limited Partnership* Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed December 10, 2014 2.16 Contribution 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 Limited Partnership* Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed December 10, 2014 2.17 Contribution 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 filed December 10, 2014 3.1 Amended and Restated Articles of Incorporation of Sun Communities, Inc. Incorporated by reference to Sun Communities, Inc.'s Registration Statement No. 33 69340 3.2 Articles Supplementary of Board of Directors of Sun Communities, Inc. Designating a Series of Preferred Stock Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed October 15, 1999 3.3 Articles Supplementary, dated October 16, 2006 3.4 Articles Supplementary of Board of Directors Classifying and Designating a Series of Preferred Stock as Junior Participating Preferred Stock and Fixing Distribution and Other Preferences and Rights of Such Series 3.5 Articles of Amendment dated June 13, 1997 3.6 Articles Supplementary designating 7.125% Series A Cumulative Redeemable Preferred Stock dated November 9, 2012 3.7 Articles Supplementary canceling and reclassifying 9.125% Series A Cumulative Redeemable Perpetual Preferred Stock dated November 9, 2012 Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed October 19, 2006 Incorporated by reference to Sun Communities, Inc.'s Registration Statement on Form 8-A filed June 3, 2008 Incorporated by reference to Sun Communities, Inc.’s Registration Statement on Form 8-A filed November 19, 2012 Incorporated by reference to Sun Communities, Inc.'s Registration Statement on Form 8-A filed November 19, 2012 Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed November 19, 2012 70 SUN COMMUNITIES, INC. 3.8 Articles of Amendment dated July 24, 2013 Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed July 29, 2013 3.9 Articles Supplementary designating 6.50% Series A-4 Cumulative Convertible Preferred Stock dated November 25, 2014 Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed December 2, 2014 3.10 Articles of Amendment dated July 22, 2015 3.11 Second Amended and Restated Bylaws 4.1 Rights Agreement, dated as of June 2, 2008, between Sun Communities, Inc. and Computershare Trust Company, N.A., as Rights Agent 4.2 Sun Communities, Inc. 2015 Equity Incentive Plan# 4.3 Form of certificate evidencing common stock 4.4 Form of certificate evidencing 7.125% Series A Cumulative Redeemable Preferred Stock 4.5 Registration Rights Agreement dated February 8, 2013 among Sun Communities, Inc., and the holders of Series A-3 Preferred Units that are parties thereto Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed July 22, 2015 Incorporated by reference to Sun Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 Incorporated by reference to Sun Communities, Inc.'s Registration Statement on Form 8-A filed June 3, 2008 Incorporated by reference to Sun Communities, Inc.'s Proxy Statement dated April 29, 2015 for the Annual meeting of Stockholders held July 20, 2015 Incorporated by reference to Sun Communities, Inc.'s Registration Statement on Form 8-A filed November 9, 2012 Incorporated by reference to Sun Communities, Inc.'s Registration Statement on Form 8-A filed November 9, 2012 Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed February 12, 2013 4.6 First Amendment to Rights Agreement, dated July 30, 2014, by and between Sun Communities, Inc. and Computershare Trust Company, N.A. Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K Filed August 5, 2014 4.7 Registration Rights Agreement dated November 26, 2014, among Sun Communities, Inc. and the holders of Registrable Shares Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed December 2, 2014 4.8 Form of certificate evidencing 6.50% Series A-4 Cumulative Convertible Preferred Stock Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed December 2, 2014 71 SUN COMMUNITIES, INC. 10.1 Form of Stock Option Agreement between Sun Communities, Inc. and certain directors, officers and other individuals# 10.2 Amended and Restated 1993 Non-Employee Director Stock Option Plan# 10.3 Form of Non-Employee Director Stock Option Agreement between Sun Communities, Inc. and certain directors# 10.4 Long Term Incentive Plan# 10.5 Second Amended and Restated 1993 Stock Option Plan# 10.6 Lease, dated November 1, 2002, by and between the Operating Partnership as Tenant and American Center LLC as Landlord 10.7 Form of Restricted Stock Award Agreement# 10.8 Restricted Stock Award Agreement between Sun Communities, Inc. and Karen J. Dearing, dated February 5, 2008# Incorporated by reference to Sun Communities, Inc.'s Registration Statement No. 33 69340 Incorporated by reference to Sun Communities, Inc.'s Registration Statement No. 33 80972 Incorporated by reference to Sun Communities, Inc.'s Registration Statement No. 33 80972 Incorporated by reference to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997 Incorporated by reference to Sun Communities, Inc.'s Proxy Statement, filed April 28, 1999 Incorporated by reference to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, December 31, 2002, as amended Incorporated by reference to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004 Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed February 7, 2008 10.9 Employment Agreement dated May 19, 2015 among Sun Communities, Inc., Sun Communities Operating Limited Partnership and John B. McLaren# Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed May 20, 2015 10.10 Employment Agreement July 16, 2015 among Sun Communities, Inc., Sun Communities Operating Limited Partnership and Karen J. Dearing# 10.11 Third Lease Modification dated October 31, 2011 by and between the Operating Partnership as Tenant and American Center LLC as Landlord 10.12 First Amended and Restated 2004 Non-Employee Director Option Plan# Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed July 17, 2015 Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 10-K for the year ended December 31, 2011 Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed July 25, 2012 72 SUN COMMUNITIES, INC. 10.13 Amended and Restated Credit Agreement, dated August 19, 2015, among Sun Communities Operating Limited Partnership, as Borrower, Citibank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Citigroup Global markets, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, and BMO Capital Markets, as Joint Lead Arrangers and Joint Book Running Managers, Bank of America, N.A. and Bank of Montreal, as Co-Syndication Agent, Fifth Third Bank, an Ohio Banking Corporation and Regions Bank, as Co-Documentation Agents Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed August 24, 2015 10.14 At the Market Offering Sales Agreement, dated June 17, 2015, among Sun Communities, Inc., Sun Communities Operating Limited Partnership, BMO Capital Markets Corp., Merrill Lynch, Pierce, Fenner and Smith Incorproated and Citigroup Global Markets Inc. Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K file June 17, 2015 10.15 Employment Agreement dated June 20, 2013 among Sun Communities, Inc., Sun Communities Operating Limited Partnership and Gary A. Shiffman# Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed June 24, 2013 10.16 Third 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 filed June 23, 2014 10.17 First Amendment to Employment Agreement among Sun Communities, Inc., Sun Communities Operating Limited Partnership and Gary A. Shiffman dated July 15, 2014# Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed July 15, 2014 10.18 First Amendment to Employment Agreement among Sun Communities, Inc., Sun Communities Operating Limited Partnership and John B. McLaren dated July 15, 2014# Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed July 15, 2014 10.19 First Amendment to Employment Agreement among Sun Communities, Inc., Sun Communities Operating Limited Partnership and Karen J. Dearing dated July 15, 2014# Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed July 15, 2014 10.20 First Amendment to Restricted Stock Award Agreement between Sun Communities, Inc. and Gary A. Shiffman dated July 15, 2014# Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed July 15, 2014 10.21 Amendment No. 2 dated November 26, 2014, to the Third Amended and Restated Agreement of Limited Partnership of Sun Communities Operating Limited Partnership Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed December 2, 2014 10.22 Amendment No. 7, dated April 1, 2015, to the Third Amended and Restated Agreement of Limited Partnership of Sun Communities Operating Limited Partnership 10.23 Amendment No. 8, dated April 22, 2015, to the Third Amended and Restated Agreement of Limited Partnership of Sun Communities Operating Limited Partnership 10.24 Repurchase Agreement dated July 29, 2015, by and among Green Courte Real Estate Partners II, LLC, GCP Fund II REIT, LLC, GCP Fund II Ancillary Holdings, LLC and Sun Communities, Inc. Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed April 2, 2015 Incorporated by reference to Sun Communities, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 30, 2015 73 SUN COMMUNITIES, INC. 10.25 Sun Communities, Inc. Executive Compensation "Clawback" Policy# Incorporated by reference to Sun Communities, Inc.'s Current Report on Form 8-K filed July 15, 2014 21.1 List of Subsidiaries of Sun Communities, Inc. Filed herewith 23.1 Consent of Grant Thornton LLP Filed herewith 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished herewith 101.1 The following Sun Communities, Inc. financial information, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2014 and 2013, (ii) Consolidated Statements of Operations 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) Consolidated Statements of Cash Flows, for the Years Ended December 31, 2014, 2013 and 2012; (v) Notes to Consolidated Financial Statements, and (vi) Schedule III - Real Estate and Accumulated Depreciation Filed 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 is material 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 Securities and Exchange Commission upon request by the Commission. Management contract or compensatory plan or arrangement. 74 SUN COMMUNITIES, INC. INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE Management’s Report on Internal Control Over Financial Reporting Reports of Independent Registered Public Accounting Firm Financial Statements: Consolidated Balance Sheets as of December 31, 2015 and 2014 Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 and 2013 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2015, 2014 and 2013 Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2015, 2014 and 2013 Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013 Notes to Consolidated Financial Statements Real Estate and Accumulated Depreciation, Schedule III Page F-2 F-3 F-5 F-6 F-7 F-8 F-9 F-11 F-49 F - 1 Management’s Report on Internal Control Over Financial Reporting SUN COMMUNITIES, INC. Management 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 provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally 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 generally accepted 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 a material 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 the objectives 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 of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Even those systems determined to be effective can provide 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, 2015. In making this assessment, management used the criteria for effective internal control over financial reporting set forth in “Internal Control – Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management determined that, as of December 31, 2015, our internal control 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 of December 31, 2015, and their report is included herein. F - 2 Report of Independent Registered Public Accounting Firm SUN COMMUNITIES, INC. Board of Directors and Stockholders Sun Communities, Inc. We have audited the accompanying consolidated balance sheets of Sun Communities, Inc. (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2015. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. 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 that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide 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, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information 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 control over financial reporting as of December 31, 2015, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 23, 2016 expressed an unqualified opinion. /s/ GRANT THORNTON LLP GRANT THORNTON LLP Southfield, Michigan February 23, 2016 F - 3 Report of Independent Registered Public Accounting Firm SUN COMMUNITIES, INC. Board of Directors and Stockholders Sun Communities, Inc. We have audited the internal control over financial reporting of Sun Communities, Inc. (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2015, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial 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 that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary 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 reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely 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 of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with 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, 2015, based on criteria established 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 financial statements of the Company as of and for the year ended December 31, 2015, and our report dated February 23, 2016 expressed an unqualified opinion on those financial statements. /s/ GRANT THORNTON LLP GRANT THORNTON LLP Southfield, Michigan February 23, 2016 F - 4 SUN COMMUNITIES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) ASSETS Land Land improvements and buildings Rental homes and improvements Furniture, fixtures, and equipment Land held for future development Investment property Accumulated depreciation Investment property, net (including $92,009 and $94,230 for consolidated variable interest entities at December 31, 2015 and December 31, 2014; see Note 7) Cash and cash equivalents Inventory of manufactured homes Notes and other receivables, net Collateralized receivables, net Other assets, net TOTAL ASSETS LIABILITIES Mortgage loans payable (including $64,082 and $65,849 for consolidated variable interest entities at December 31, 2015 and December 31, 2014; see Note 7) Secured borrowings on collateralized receivables Preferred OP units - mandatorily redeemable Lines of credit Distributions payable Other liabilities (including $4,091 and $1,139 for consolidated variable interest entities at December 31, 2015 and December 31, 2014; see Note 7) TOTAL LIABILITIES Commitments and contingencies Series A-4 preferred stock, $0.01 par value. Issued and outstanding: 2,067 shares at December 31, 2015 and 483 shares at December 31, 2014 Series A-4 preferred OP units STOCKHOLDERS’ EQUITY Series A preferred stock, $0.01 par value. Issued and outstanding: 3,400 shares at December 31, 2015 and December 31, 2014 Common stock, $0.01 par value. Authorized: 180,000 shares; Issued and outstanding: 58,395 shares at December 31, 2015 and 48,573 shares at December 31, 2014 Additional paid-in capital Distributions in excess of accumulated earnings Total Sun Communities, Inc. stockholders' equity Noncontrolling interests: Common and preferred OP units Consolidated variable interest entities Total noncontrolling interests As of December 31, 2015 2014 $ 451,340 $ 3,535,909 460,480 102,746 23,047 4,573,522 (852,407 ) 3,721,115 45,086 14,828 47,972 139,768 221,782 4,190,551 $ $ 2,133,706 140,440 45,903 25,000 41,265 184,859 2,571,173 $ $ 309,386 2,509,827 439,163 81,586 23,955 3,363,917 (795,753 ) 2,568,164 83,459 8,860 51,895 122,962 102,352 2,937,692 1,656,740 123,650 45,903 5,794 35,084 130,369 1,997,540 61,732 21,065 13,610 18,722 34 34 584 2,319,314 (864,122 ) 1,455,810 82,538 (1,767 ) 80,771 1,536,581 4,190,551 $ 486 1,741,154 (863,545 ) 878,129 30,107 (416 ) 29,691 907,820 2,937,692 TOTAL STOCKHOLDERS’ EQUITY TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ See accompanying Notes to Consolidated Financial Statements. F - 5 SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) $ REVENUES Income from real property Revenue from home sales Rental home revenue Ancillary revenues Interest Brokerage commissions and other income, net Total revenues COSTS AND EXPENSES Property operating and maintenance Real estate taxes Cost of home sales Rental home operating and maintenance Ancillary expenses General and administrative - real property General and administrative - home sales and rentals Transaction costs Depreciation and amortization Asset impairment charge Extinguishment of debt Interest Interest on mandatorily redeemable preferred OP units Total expenses Income before other gains (losses) Gain on disposition of properties, net Gain on settlement Provision for state income taxes Income tax expense - reduction of deferred tax asset Distributions from affiliate Net income Less: Preferred return to Series A-1 preferred OP units Less: Preferred return to Series A-3 preferred OP units Less: Preferred return to Series A-4 preferred OP units Less: Preferred return to Series C preferred OP units Less: Amounts attributable to noncontrolling interests Net income attributable to Sun Communities, Inc. Less: Preferred stock distributions Less: Preferred stock redemption costs Net income attributable to Sun Communities, Inc. common stockholders $ Year Ended December 31, 2015 2014 2013 506,078 $ 79,728 46,236 24,532 15,938 2,219 674,731 135,797 34,714 58,941 24,956 17,519 40,235 14,696 17,803 177,637 — 2,800 107,659 3,219 635,976 38,755 125,376 — (158 ) (1,000 ) 7,500 170,473 2,431 181 1,340 1,021 10,054 155,446 13,793 4,328 137,325 $ 357,793 $ 53,954 39,213 17,801 14,462 1,036 484,259 101,134 24,181 40,556 23,270 12,584 31,769 10,853 18,259 133,726 837 — 73,771 3,210 474,150 10,109 17,654 4,452 (219 ) — 1,200 33,196 2,654 181 100 — 1,752 28,509 6,133 — 22,376 $ 313,097 54,852 32,500 8,642 13,073 549 422,713 87,637 22,284 40,297 20,435 7,491 25,941 9,913 3,928 110,078 — — 73,339 3,238 404,581 18,132 — — (234 ) — 2,250 20,148 2,598 166 — — 718 16,666 6,056 — 10,610 Weighted average common shares outstanding: Basic Diluted Earnings per share (See Note 13): Basic Diluted 53,686 53,702 41,337 41,805 34,228 34,410 $ $ 2.53 $ 2.52 $ 0.54 $ 0.54 $ 0.31 0.31 See accompanying Notes to Consolidated Financial Statements. F - 6 SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Net income Unrealized gain on interest rate swaps Total comprehensive income Less: Comprehensive income attributable to the noncontrolling interests Comprehensive income attributable to Sun Communities, Inc. $ Year Ended December 31, $ 2015 170,473 $ — 170,473 2014 33,196 $ 97 33,293 2013 20,148 362 20,510 10,054 160,419 $ 1,483 31,810 $ 750 19,760 See accompanying Notes to Consolidated Financial Statements. F - 7 SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) 7.125% Series A Cumulative Redeemable Preferred Stock Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Accumulated Earnings Non- Controlling Interests Total Stockholders' Equity Balance as of December 31, 2012, revised $ 34 $ 298 $ 876,620 $ (696 ) $ (695,923 ) $ 19,124 $ 199,457 — — — — — — — 34 — — — — — — — — — 34 — — — — Issuance of common stock from exercise of options, net Issuance and associated costs of common stock, net Issuance of preferred OP units Share-based compensation - amortization and forfeitures Net income Unrealized gain on interest rate swaps Distributions Balance as of December 31, 2013, revised Issuance of common stock from exercise of options, net Issuance, conversion of OP units and associated costs of common stock, net Issuance of preferred OP units Issuance of common OP units Share-based compensation - amortization and forfeitures Net income Settlement of membership interest Unrealized gain on interest rate swaps Distributions Balance at December 31, 2014 Issuance of common stock from exercise of options, net Issuance, conversion of OP units and associated costs of common stock, net Conversion of Series A-4 preferred stock Preferred stock redemption costs Share-based compensation - amortization and forfeitures Net income Distributions Balance at December 31, 2015 $ — 63 — — — — — 201 261,697 — 3,072 — — — 361 1,141,590 — 127 125 594,940 — — — — — — — — — 4,706 — (209 ) — — 486 1,741,154 — 98 — — 95 564,260 6,900 — 6,905 — — 2,319,314 $ — — — 34 $ — — — 584 $ — — — — — 330 — (366 ) — — — — — — — 366 — — — — — — — — — 127 19,430 — (96,935 ) (773,301 ) — — — — 173 31,444 — — (121,861 ) (863,545 ) — — — (4,328 ) — — 201 261,760 3,463 3,463 — 718 32 (8,114 ) 3,199 20,148 362 (105,049 ) 15,223 383,541 — 127 (2,638 ) 592,427 100 24,064 — 1,782 (4 ) (269 ) (8,567 ) 100 24,064 4,879 33,226 (213 ) 97 (130,428 ) 29,691 907,820 — 95 52,921 617,279 — — 6,900 (4,328 ) — — — — $ 203 160,418 (156,870 ) (864,122 ) $ — 9,185 (11,026 ) 80,771 $ 7,108 169,603 (167,896 ) 1,536,581 See accompanying Notes to Consolidated Financial Statements. F - 8 SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: Gain on disposition of assets Gain on disposition of properties, net Asset impairment charges Share-based compensation Depreciation and amortization Income tax expense - reduction of deferred tax asset Amortization of below market lease intangible Amortization of debt premium intangible Amortization of deferred financing costs Distributions from affiliate Change in notes receivable from financed sales of inventory homes, net of repayments Change in inventory, other assets and other receivables, net Change in other liabilities NET CASH PROVIDED BY OPERATING ACTIVITIES INVESTING ACTIVITIES: Investment in properties Acquisitions of properties Payments for deposits on acquisitions Investment in note receivable of acquired properties Proceeds related to affiliate dividend distribution Proceeds related to disposition of land Proceeds related to disposition of assets and depreciated homes, net Proceeds related to the disposition of properties Issuance of notes and other receivables Payments for purchase of non-wholly owned subsidiary interests Repayments of notes and other receivables NET CASH USED FOR INVESTING ACTIVITIES FINANCING ACTIVITIES: Issuance and associated costs of common stock, OP units, and preferred OP units, net Net proceeds from stock option exercise Borrowings on lines of credit Proceeds from issuance of other debt Proceeds received from return of prepaid deferred financing costs Redemption of Series A-4 Preferred Stock Distributions to stockholders, OP unit holders, and preferred OP unit holders Preferred stock redemption costs Payments to retire preferred OP units Payments on lines of credit Payments on other debt Payments for deferred financing costs NET CASH PROVIDED BY FINANCING ACTIVITIES Net change in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period F - 9 Year Ended December 31, 2014 2015 2013 $ 170,473 $ 33,196 $ 20,148 (5,051 ) (125,376 ) — 7,108 174,589 1,000 (5,073 ) (10,483 ) 1,936 (2,748 ) (17,654 ) 837 4,879 131,003 — — — 1,056 (867 ) — — 3,199 105,210 — — — 2,713 (7,500 ) (1,200 ) (2,250 ) (9,270 ) (14,618 ) 4,528 182,263 (208,427 ) (309,274 ) (2,260 ) — 7,500 — 6,848 94,522 (1,755 ) (2,102 ) 1,764 (413,184 ) 310,301 95 421,184 377,041 6,852 (121,445 ) (162,491 ) (4,328 ) — (401,978 ) (225,677 ) (7,006 ) 192,548 (38,373 ) 83,459 45,086 $ $ (15,300 ) (11,144 ) 10,395 133,320 (177,866 ) (426,591 ) (17,064 ) — 1,200 221 3,312 59,706 297 — 6,080 (550,705 ) 572,171 127 526,546 323,241 2,384 — (121,377 ) — (1,119 ) (702,135 ) (95,269 ) (8,478 ) 496,091 78,706 4,753 83,459 $ (6,228 ) (1,441 ) (5,801 ) 114,683 (179,413 ) (122,176 ) — (49,441 ) 2,250 — (1,017 ) — (3,841 ) — 1,226 (352,412 ) 261,760 201 415,410 175,507 — — (100,403 ) — (300 ) (263,808 ) (269,400 ) (5,993 ) 212,974 (24,755 ) 29,508 4,753 SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED (In thousands) SUPPLEMENTAL INFORMATION: Cash paid for interest (net of capitalized interest of $608, $464 and $678, respectively) $ Cash paid for interest on mandatorily redeemable debt Cash paid for state income taxes Noncash investing and financing activities: Unrealized gain on interest rate swaps Reduction in secured borrowing balance Change in distributions declared and outstanding Conversion of common and preferred OP units Conversion of Series A-4 Preferred Stock Proceeds related to the disposition of properties held in escrow Settlement of membership interest Noncash investing and financing activities at the date of acquisition: Acquisitions - Series A-3 preferred OP units issued Acquisitions - Series A-4 preferred OP units issued Acquisitions - Series A-4 Preferred Stock issued Acquisitions - Common stock and OP units issued Acquisitions - Series C preferred OP units issued Acquisitions - debt assumed Acquisitions - other liabilities Acquisitions - release of note receivable and accrued interest Year Ended December 31, 2015 2014 2013 $ 99,989 3,222 $ 310 $ $ 60,289 3,225 $ 314 $ 61,268 3,238 155 $ $ $ $ $ — $ 26,293 $ 6,744 $ 5,491 $ 6,900 $ $ $ 126,339 $ 2,786 $ $ $ 97 $ 21,812 $ 9,051 $ 1,707 $ — $ — $ 213 $ $ — $ — $ 18,852 $ 1,000 $ $ 13,610 $ $ 175,613 $ 44,321 $ $ 278,955 $ — $ 33,154 $ $ $ 380,043 $ 209,658 $ 4,221 $ $ — $ — $ — $ $ 362 17,906 4,646 — — — — 3,463 — — — — — — 49,441 See accompanying Notes to Consolidated Financial Statements. F - 10 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Business Sun Communities, Inc., a Maryland corporation, and all wholly-owned or majority-owned and controlled subsidiaries, including Sun Communities Operating Limited Partnership (the "Operating Partnership"), and Sun Home Services, Inc. ("SHS") are referred to herein as the “Company,” “us,” “we,” and “our”. We are a self-administered and self-managed real estate investment trust (“REIT”). We own, operate, and develop manufactured housing ("MH") and recreational vehicle ("RV") communities throughout the United States ("U.S."). As of December 31, 2015, we owned and operated a portfolio of 231 properties located in 30 states (collectively the “Properties”), including 185 MH communities, 36 RV communities, and 10 Properties containing both MH and RV sites. As of December 31, 2015, the Properties contained an aggregate of 88,612 developed sites comprised of 69,682 developed MH sites, 9,559 annual RV sites (inclusive of both annual and seasonal usage rights), 9,371 transient RV sites, and approximately 7,181 additional MH and RV sites suitable for development. Principles of Consolidation The accompanying financial statements include our accounts and all majority-owned and controlled subsidiaries, including entities in which we have a controlling interest or have been determined to be the primary beneficiary of a variable interest entity ("VIE"). All inter-company transactions have been eliminated 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 the subsidiaries’ financial results. This allocation is recorded as the noncontrolling interest in our Consolidated Financial Statements. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the U.S. (“GAAP”) requires management to make 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. Investment Property Investment property is recorded at cost, less accumulated depreciation. We review the carrying value of long-lived assets to be held and used for impairment quarterly or whenever events or changes in circumstances indicate a possible impairment. Our primary indicator for potential impairment is based on NOI trends period over period. Circumstances that may prompt a test of recoverability may include a significant decrease in the anticipated market price, an adverse 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 the value 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. Forecasting cash flows requires management to make estimates and assumptions about such variables as the estimated holding period, rental rates, occupancy, development, and operating expenses during the holding period, as well as disposition proceeds. Management uses its best judgment when developing these estimates and assumptions, but the development of the projected future cash flows is based on subjective variables. Future events could occur which would cause us to conclude that impairment indicators exist, and significant adverse changes in national, regional, or local market conditions or trends may cause us to change the estimates and assumptions used in our impairment analysis. The results of an impairment analysis could be material to our financial statements. F - 11 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We periodically receive offers from interested parties to purchase certain of our properties. These offers may be the result of an active program initiated by us to sell the property, or from an unsolicited offer to purchase the property. The typical sale process involves a significant negotiation and due diligence period between 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 to purchase 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 significant contingencies 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 fair values for purposes of allocating purchase price, we utilize an independent third-party to value the net tangible and identified intangible assets in connection with the acquisition of the respective property. We provide historical and pro forma financial information obtained about each property, as well as any other information needed in order for the third-party to ascertain the fair value of the tangible and intangible assets (including in-place leases) acquired. Capitalized Costs We capitalize certain costs incurred in connection with the development, redevelopment, capital enhancement and leasing of our properties. Management is required to use professional judgment in determining whether such costs meet the criteria for immediate expense or capitalization. The amounts are dependent on the volume and timing of such activities and the costs associated with such activities. Maintenance, repairs and minor improvements to properties are expensed when incurred. Renovations and improvements to properties are capitalized and depreciated over their estimated useful lives and construction costs related to the development of new community or expansion sites are capitalized until the property is substantially complete. Costs incurred to initially renovate pre-owned and repossessed homes that we acquire for our Rental Program are capitalized and costs incurred to refurbish the homes at turnover and repair the homes while occupied are expensed. Certain expenditures to dealers and residents related to obtaining lessees in our communities are capitalized and amortized over a seven year period based on the anticipated term of occupancy of a resident. Costs associated with implementing our computer systems are capitalized and amortized over the estimated useful lives of the related software and hardware. Costs incurred to obtain new financing are capitalized and amortized over the terms of the related loan agreement using the straight-line method (which approximates the effective interest method). Cash and Cash Equivalents We 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 maximum amount of credit risk arising from cash deposits in excess of federally insured amounts was approximately $41.4 million and $80.7 million as of December 31, 2015 and 2014, respectively. Inventory Inventory of manufactured homes is stated at lower of specific cost or market based on the specific identification method. Investments in Affiliates Investments in affiliates in which we do not have a controlling direct or indirect voting interest, but can exercise significant influence over the entity with respect to its operations and major decisions, are accounted for using the equity method of accounting. The carrying value of our investment is adjusted for our proportionate share of the affiliate’s net income or loss and reduced by distributions received. We review the carrying value of our investment in affiliates for other than temporary impairment whenever events or changes in circumstances indicate a possible impairment. Financial condition, operational performance, and other economic trends are some of the factors we consider when we evaluate the existence of impairment F - 12 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS indicators. When we have a carrying 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 the share of net losses not recognized during the time in which the equity method of accounting was suspended. See Note 6 for additional information. Notes and Other Receivables We provide financing to purchasers of manufactured homes generally located in our communities. The notes are collateralized by the underlying manufactured home sold. Notes receivable include both installment loans purchased by the Company as well as transferred loans that have not met the requirements for sale accounting which are presented herein as collateralized receivables. For purposes of accounting policy, all notes receivable are considered one homogenous segment, as the notes are typically underwritten using the same requirements and terms. Notes receivable are reported at their outstanding unpaid principal balance adjusted for an allowance for loan loss. Interest income is accrued 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, we stop accruing interest on the note receivable. The interest on nonaccrual loans is accounted for on the cash basis until qualifying for return to accrual. Loans are returned to accrual when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. Loans on a nonaccrual status were immaterial at December 31, 2015 and 2014. The ability to collect our notes receivable is measured based on current and historical information and events. We consider numerous factors including: length of delinquency, estimated costs to lease or sell, and repossession history. Our experience supports a high recovery rate for notes receivable; however, there is some degree of uncertainty about the recoverability of our investment in these notes receivable. We are generally able to recover our recorded investment in uncollectible notes receivable by repossessing the homes on the notes retained by us and repurchasing the homes on the collateralized receivables, and subsequently selling or leasing these homes to potential residents in our communities. We have established a loan loss reserve based on our estimated unrecoverable costs associated with repossessed/repurchased homes. We estimate our unrecoverable costs to be the repurchase price of the home collateralizing the note receivable plus repair and remarketing costs in excess of the estimated selling price of the home being repossessed. A historical average of this excess cost is calculated based on prior repossessions/repurchases and is applied to our estimated annual future repossessions to create the allowance for both installment and collateralized notes receivable. We evaluate the collectability of a loan based on our ability to collect the scheduled payments of principal and interest when due according to the contractual 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 scheduled payment is delinquent more than five to seven days, dependent on state law, we begin the repossession and eviction process simultaneously. This process generally 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. No loans were considered impaired as of December 31, 2015 and 2014. 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 credit quality of the applicant - rental payment history; home debt to income ratio; loan value to the collateralized asset; total debt to income ratio; length of employment; 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 end and various other miscellaneous receivables. Accounts receivable from residents are typically due within 30 days and stated at amounts due from residents net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. We evaluate the recoverability of our receivables whenever events occur or there are changes in circumstances such that management believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan and lease agreements. Receivables F - 13 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS related to community rents are reserved when we believe that collection is less than probable, which is generally after a resident balance reaches 60 to 90 days past due. Restricted Cash Restricted cash consists of amounts held in deposit for tax, insurance and repair escrows held by lenders in accordance with certain debt agreements. At December 31, 2015 and 2014, $140.7 million and $11.8 million of restricted cash, respectively, was included as a component of Other assets, net on the Consolidated Balance Sheets. Identified Intangible Assets The Company amortizes identified intangible assets that are determined to have finite lives over the period the assets are expected to contribute directly or indirectly to the future cash flows of the property or business. At December 31, 2015 and 2014, the carrying amounts of the identified intangible assets are included in Other assets, net on the Consolidated Balance Sheets. See Note 5 for additional information on our intangible assets. Deferred Tax Assets We are subject to certain state taxes that are considered to be income taxes and have certain subsidiaries that are taxed as regular corporations. Deferred tax assets or liabilities are recognized for temporary differences between the tax basis of assets and liabilities and their carrying amounts in the financial statements and net operating loss carryforwards. Deferred tax assets and liabilities are measured using currently enacted tax rates. A valuation allowance is established 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. See Note 12 for additional information. Deferred Financing Costs Deferred 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 of mortgage debt, unamortized deferred financing costs are accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 470-50-40, "Modifications and Extinguishments". At December 31, 2015 and 2014, deferred financing costs are included as a component of Other assets, net on the Consolidated Balance Sheets. Share-Based Compensation Share-based compensation cost for service vesting restricted stock awards is measured based on the closing share price of our common stock on the date of grant. Share-based compensation for restricted stock awards with performance conditions is measured based on an estimate of shares expected to vest. If it is not probable that the performance conditions will be satisfied, we do not recognize compensation expense. We measure the fair value of awards with performance conditions using the closing price of our common stock as of the grant date to calculate compensation cost. Each reporting period, we reevaluate our estimate of the number of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditions using 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, dividend yield, and interest rates. See Note 10 for additional information. F - 14 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair Value of Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts and notes receivable, accounts payable, derivative instruments, and debt. We utilize fair 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 16 for additional information regarding the estimates and assumptions used to estimate the fair value of each class of financial instrument. Revenue Recognition Rental income attributable to site and home leases is recorded on a straight-line basis when earned from tenants. Leases entered into by tenants are generally for 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, as provided by state statute. Revenue from the sale of manufactured homes is recognized upon transfer of title at the closing of the sales transaction. Interest income 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 to taxing authorities in revenue. Advertising Costs Advertising costs are expensed as incurred. As of December 31, 2015, 2014 and 2013, we had advertising costs of $3.9 million, $3.2 million and $2.9 million, respectively. Depreciation and Amortization Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets. Useful lives are 30 years for land improvements and buildings, 10 years for rental homes, seven to 15 years for furniture, fixtures and equipment, four to seven years for computer hardware and software, and seven to 15 years for intangible assets. Derivative Instruments and Hedging Activities We do not enter into derivative instruments for speculative purposes. We adjust our balance sheet on a quarterly basis to reflect the current fair market value of 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 market value of our derivatives. Changes in the fair value of derivatives are recorded in earnings or comprehensive income, as appropriate. The ineffective portion of the 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 the instrument being hedged. The effective portion of the hedge is recorded in accumulated other comprehensive income. We use standard market conventions to determine 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 15 for additional information. F - 15 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. Real Estate Acquisitions and Dispositions American Land Lease (“ALL”) First Phase During the fourth quarter of 2014, we completed the first phase of the acquisition of the ALL properties. We acquired 32 MH communities with over 9,000 developed sites in 11 states. Included in the total consideration paid for the first phase was the issuance of 361,797 shares of common stock, 501,130 common OP units, 483,317 shares of 6.50% Series A-4 Cumulative Convertible Preferred Stock ("Series A-4 Preferred Stock) and 669,449 Series A-4 preferred OP units. Second Phase In January 2015, we completed the final phase of the acquisition of the ALL properties. We acquired the remaining 26 communities comprised of over 10,000 sites. Included in the total consideration paid for the second phase was the issuance of 4,377,073 shares of common stock and 5,847,234 shares of Series A-4 Preferred Stock. In addition, one of the seller's funds purchased 150,000 shares of our common stock and 200,000 Series A-4 preferred OP units, for an aggregate purchase price of $12.5 million. In August 2015, the Company repurchased 4,066,586 shares of the Series A-4 Preferred Stock. The following tables summarize the fair value of the assets acquired and liabilities assumed at the acquisition dates and the consideration paid (in thousands): At Acquisition Date Investment in property Notes receivable Other (liabilities) assets In-place leases and other intangible assets Below market lease intangible Assumed debt Total identifiable assets and liabilities assumed Consideration Common OP units (1) Series A-4 preferred OP units (2) Common stock Series A-4 Preferred Stock(2) Consideration from new mortgages Cash consideration transferred Total consideration transferred First Phase Second Phase Total 656,543 $ 5,189 (1,705 ) 12,870 (10,820 ) (199,300 ) 462,777 $ 24,064 $ 18,852 20,427 13,697 100,700 285,037 462,777 $ 818,109 $ 850 7,405 15,460 (54,580 ) (201,466 ) 585,778 $ — $ 1,000 259,133 175,527 90,794 59,324 585,778 $ 1,474,652 6,039 5,700 28,330 (65,400 ) (400,766 ) 1,048,555 24,064 19,852 279,560 189,224 191,494 344,361 1,048,555 $ $ $ $ (1) To estimate the fair value of the common OP units at the valuation date, we utilized the market approach, observing the public price of our common stock. (2) To estimate the fair value of the Series A-4 preferred OP units and the Series A-4 Preferred Stock at the valuation date, we utilized an income approach. Under this approach, we used the Binomial Lattice Method of the income approach. F - 16 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The amount of revenue and net income included in the Consolidated Statements of Operations related to the ALL properties for the years ended December 31, 2015 and 2014 and is set forth in the following table (in thousands): Revenue Net income 2015 Other Acquisitions: Year Ended December 31, 2015 Year Ended December 31, 2014 (unaudited) (unaudited) $ $ 137,035 $ 14,374 $ 6,515 (6,744 ) In August 2015, we acquired Rock Crusher Canyon RV Resort ("Rock Crusher"), a recreational vehicle ("RV") resort with 391 sites located in Crystal Lake, Florida. In July 2015, we acquired Frontier Town RV Resort ("Frontier Town"), an RV resort with 584 developed sites and expansion potential of 200 sites, located in Berlin, Maryland. We also acquired Fort Whaley RV Resort ("Fort Whaley"), an RV resort with 210 developed sites and expansion potential of nearly 90 sites, located in Whaleyville, Maryland. In May 2015, we acquired La Hacienda RV Resort ("La Hacienda"), an RV resort with 241 sites located in Austin, Texas. We also acquired Lakeside Crossing, an MH community with 419 sites and expansion potential of nearly 300 sites, located near Myrtle Beach, South Carolina. In April 2015, we acquired the Berger portfolio ("Berger"), which consisted of six MH communities with over 3,130 developed sites and expansion potential of approximately 380 sites. Included in the total consideration paid was 371,808 common OP units and 340,206 Series C preferred OP units. In March 2015, we acquired Meadowlands Gibraltar ("Meadowlands"), an MH community with 321 sites located in Gibraltar, Michigan. F - 17 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes the fair value of the assets acquired and liabilities assumed (excluding ALL) at the acquisition date and the consideration paid for other acquisitions completed in 2015 (in thousands): At Acquisition Date Meadowlands (1) Berger (1) Lakeside Crossing (1) La Hacienda (1) Frontier Town (1) Fort Whaley (1) Rock Crusher (1) Total Investment in property $ Inventory of manufactured homes In-place leases and other intangible assets Below market lease intangible Assumed debt 8,313 $ 268,026 $ 35,438 $ 25,895 $ 62,126 $ 5,704 $ 5,962 $ 411,464 285 — — — 270 5,040 520 1,380 — (7,840 ) (6,318 ) (169,882 ) (3,440 ) — — — — 70 — — — — — — — 285 110 7,390 — — (11,280 ) (176,200 ) Total identifiable assets acquired and liabilities assumed Consideration Common OP units Series C preferred OP units Note payable Cash consideration transferred Total consideration transferred $ 2,550 $ 95,344 $ 32,518 $ 27,275 $ 62,196 $ 5,704 $ 6,072 $ 231,659 $ — $ 19,650 $ — $ — $ — $ — $ — $ 19,650 — 2,377 33,154 — — — — — — — — — — — 33,154 2,377 173 42,540 32,518 27,275 62,196 5,704 6,072 176,478 $ 2,550 $ 95,344 $ 32,518 $ 27,275 $ 62,196 $ 5,704 $ 6,072 $ 231,659 (1) The purchase price allocations for Meadowlands, Berger, Lakeside Crossing, La Hacienda, Frontier Town, Fort Whaley, and Rock Crusher 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, 2015 and 2014 as if the properties were acquired on January 1, 2014. The unaudited pro forma results reflect certain adjustments for items that are not expected to have a continuing impact, such as adjustments for transaction costs incurred, management fees and purchase accounting. The information presented below has been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations that would have actually occurred had the acquisitions been consummated on January 1, 2014 (in thousands, except per-share data). Total revenues Net income attributable to Sun Communities, Inc. common shareholders Net income per share attributable to Sun Communities, Inc. common shareholders - basic Net income per share attributable to Sun Communities, Inc. common shareholders - diluted Year Ended December 31, (unaudited) 2015 688,620 $ 158,859 $ 2.96 $ 2.94 $ 2014 623,754 57,779 1.40 1.38 $ $ $ $ F - 18 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2014 Other Acquisitions: In December 2014, we acquired Oak Creek, an 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 Santa Claus, 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 sites located in Clermont, New Jersey, and Seashore Campsites RV and Campground ("Seashore"), an RV community with 685 sites located in Cape May, New Jersey. In January 2014, we acquired Castaways RV Resort & Campground ("Castaways"), an RV community with 369 sites and expansion potential of approximately 25 sites located in Worcester County, Maryland, and Wine Country RV Resort ("Wine Country"), an RV community with 166 sites and expansion potential of approximately 34 sites located in Paso Robles, California. The following tables summarize the fair value of the assets acquired and liabilities assumed (excluding ALL) at the acquisition dates and the consideration paid for other acquisitions completed in 2014 (in thousands): At Acquisition Date Wine Country Castaways Driftwood Seashore Saco Lake Rudolph Oak Creek Total Investment in property In-place leases and other intangible assets Other assets Below market lease and franchise intangibles Other liabilities Assumed debt Total identifiable assets acquired and liabilities assumed Consideration Cash consideration transferred $ 13,250 $ 36,597 $ 31,301 $ 24,258 $ 4,366 $ 30,454 $ 15,944 $ 156,170 — 9 — (60 ) — — 2 — (497 ) — 790 4 — (836 ) — 500 12 — 31 — 64 390 236 1,680 358 — (6 ) — (140 ) (146 ) (1,188 ) — (258 ) — (1,417 ) — (57 ) (4,313 ) (10,358 ) (10,358 ) $ 13,199 $ 36,102 $ 31,259 $ 23,582 $ 4,133 $ 29,101 $ 6,015 $ 143,391 $ 13,199 $ 36,102 $ 31,259 $ 23,582 $ 4,133 $ 29,101 $ 6,015 $ 143,391 F - 19 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma financial information presents the results of our operations for the years ended December 31, 2014 and 2013 as if the properties were acquired on January 1, 2013. The unaudited pro forma results reflect certain adjustments for items that are not expected to have a continuing impact, such as adjustments for transaction costs incurred, management fees and purchase accounting. The information presented below has been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations that would have actually occurred had the acquisitions been consummated on January 1, 2013 (in thousands, except per-share data). Total revenues Net income attributable to Sun Communities, Inc. common shareholders Net income per share attributable to Sun Communities, Inc. common shareholders - basic Net income per share attributable to Sun Communities, Inc. common shareholders - diluted Year Ended December 31, (unaudited) 2014 567,731 $ 83,125 $ 2.01 $ 1.99 $ 2013 539,020 60,985 1.78 1.77 $ $ $ $ The amount of revenue and net income included in the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013 for all acquisitions described above, excluding ALL, is set forth in the following table (in thousands): Revenue Net income Transaction Costs Year Ended December 31, (unaudited) 2015 2014 2013 $ $ 29,367 $ 4,677 $ 42,258 $ 9,214 $ 60,148 5,914 Transaction costs of approximately $17.8 million, $18.3 million, and $3.9 million have been incurred for the years ended December 31, 2015, 2014, and 2013, respectively, and are presented as “Transaction costs” in our Consolidated Statements of Operations. Dispositions During the year ended December 31, 2015, we disposed of 17 MH communities and 3 MH and RV combined communities. Pursuant to Accounting Standards Update ("ASU") 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”(“ASU 2014-08”), the disposals of the communities do not qualify for presentation as a discontinued operation, as the sales do not have a major impact on our operations and financial results and do not represent a strategic shift. A gain of $125.4 million is recorded in "Gain on disposition of properties, net" in our Consolidated Statements of Operations. The table below lists the communities we have disposed of during the year ended December 31, 2015. In addition, we have $126.3 million related to certain of these dispositions held in escrow as a result of an Internal Revenue Code Section 1031 transaction included in Other assets, net. F - 20 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The table below shows our dispositions during the year ended December 31, 2015: Community Silver Star Holiday Village Maplewood Mobile Meadows Valley Brook West Glen Village Woods Edge Edwardsville Candlewick Court College Park Estates Sherman Oaks Village Trails Creekside Colonial Village Valley View Estates Catalina Worthington Arms Casa de Valle Kenwood Snow to Sun State FL IN IN IN IN IN IN KS MI MI MI MI NC NY NY OH OH TX TX TX Number of Sites 406 326 207 330 798 552 598 634 211 230 366 100 45 153 197 462 224 381 280 475 3. Collateralized Receivables and Transfers of Financial Assets We completed various transactions with an unrelated entity involving our notes receivable under which we received cash proceeds in exchange for relinquishing our right, title, and interest in certain notes receivable. We have no further obligations or rights with respect to the control, management, administration, servicing, or collection of the installment notes receivable. However, we are subject to certain recourse provisions requiring us to purchase the underlying homes collateralizing such notes, in the event of a note default and subsequent repossession of the home by the unrelated entity. The recourse provisions are considered to be a form of continuing involvement, and therefore these transferred loans did not meet the requirements for sale accounting. We continue to recognize these transferred loans on our balance sheet and refer to them as collateralized receivables. 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 repurchase the manufactured home. Default is defined as the failure to repay the installment note receivable according to contractual terms. The repurchase price is calculated as a percentage of the outstanding principal balance of the collateralized receivable, plus any outstanding late fees, accrued interest, legal fees, and escrow advances associated with the installment note receivable. The percentage used to determine the repurchase price of the outstanding principal balance on the installment note receivable is based on the number of payments made on the note. In general, the repurchase price is determined as follows: F - 21 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Number of Payments Less than or equal to 15 Greater than 15 but less than 64 Equal to or greater than 64 but less than 120 120 or more Repurchase % 100 % 90 % 65 % 50 % The transferred assets have been classified as Collateralized Receivables, net and the cash proceeds received from these transactions have been classified as a Secured borrowing within the Consolidated Balance Sheets. The balance of the collateralized receivables was $139.8 million (net of allowance of $0.7 million) and $123.0 million (net of allowance of $0.7 million) as of December 31, 2015, and December 31, 2014, respectively. The receivables have a weighted average interest rate and maturity of 10.2% and 15.6 years as of December 31, 2015, and 10.4% and 14.6 years as of December 31, 2014. The outstanding balance on the secured borrowing was $140.4 million and $123.7 million as of December 31, 2015, and December 31, 2014, respectively. The collateralized receivables earn interest income, and the secured borrowings accrue interest expense at the same interest rates. The amount of interest income and expense recognized was $13.2 million, $11.8 million, and $10.6 million for the years ended December 31, 2015, 2014, and 2013, respectively. The balances of the collateralized receivables and secured borrowings fluctuate. The balances increase as additional notes receivable are transferred and exchanged for cash proceeds. The balances are reduced as the related collateralized receivables are collected from the customers, or as the underlying collateral is repurchased. The change in the aggregate gross principal balance of the collateralized receivables is as follows (in thousands): Year Ended December 31, 2015 December 31, 2014 Beginning balance Financed sales of manufactured homes Principal payments and payoffs from our customers Notes sold with dispositions Principal reduction from repurchased homes Total activity Ending balance $ $ $ 123,650 43,083 (10,271 ) (6,889 ) (9,133 ) 16,790 140,440 $ 110,510 34,952 (8,550 ) (3,295 ) (9,967 ) 13,140 123,650 The following table sets forth the allowance for the collateralized receivables as of December 31, 2015 (in thousands): Beginning balance Lower of cost or market write-downs Increase to reserve balance Total activity Ending balance Year ended December 31, 2015 December 31, 2014 (689 ) $ 230 (688 ) $ 447 (431 ) 16 (672 ) $ (229 ) 1 (688 ) $ F - 22 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Notes and Other Receivables The following table sets forth certain information regarding notes and other receivables (in thousands): Installment notes receivable on manufactured homes, net Other receivables, net Total notes and other receivables, net $ Installment Notes Receivable on Manufactured Homes December 31, 2015 $ December 31, 2014 25,884 26,011 51,895 20,418 $ 27,554 47,972 $ The installment notes of $20.4 million (net of allowance of $0.2 million) and $25.9 million (net of allowance of $0.1 million) as of December 31, 2015 and December 31, 2014, respectively, are collateralized by manufactured homes. The notes represent financing provided by us to purchasers of manufactured homes primarily located in our communities and require monthly principal and interest payments. The notes have a net weighted average interest rate (net of servicing costs) and maturity of 8.6% and 10.0 years as of December 31, 2015, and 8.7% and 10.4 years as of December 31, 2014. The change in the aggregate gross principal balance of the installment notes is as follows (in thousands): Year Ended December 31, 2015 26,024 $ 838 850 (4,798 ) December 31, 2014 25,575 946 5,189 (3,590 ) (383 ) (1,921 ) (5,414 ) 20,610 $ (498 ) (1,598 ) 449 26,024 Beginning balance Financed sales of manufactured homes Acquired notes Principal payments and payoffs from our customers Notes sold with dispositions Principal reduction from repossessed homes Total activity Ending balance $ $ F - 23 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Allowance for Losses for Installment Notes Receivable The following table sets forth the allowance change for the installment notes receivable (in thousands): Beginning balance Lower of cost or market write-downs Increase to reserve balance Total activity Ending balance Other Receivables Year Ended December 31, 2015 December 31, 2014 $ $ (140 ) $ 80 (132 ) (52 ) (192 ) $ (104 ) 50 (86 ) (36 ) (140 ) As of December 31, 2015, other receivables were comprised of amounts due from residents for rent, and water and sewer usage of $4.7 million (net of allowance of $0.9 million), home sale proceeds of $10.5 million, insurance receivables of $1.2 million, insurance settlement of $3.7 million, rebates and other receivables of $5.3 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 in year three is indexed to 7.87% plus the one year Federal Reserve treasury constant maturity rate for the remainder of the loan. The note 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, 2014, other receivables were comprised of amounts due from residents for rent, and water and sewer usage of $4.9 million (net of allowance 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 other receivables of $6.8 million and a note receivable of $2.2 million. In March 2015 we issued a note receivable in the amount of $40.2 million. The $40.2 million note was repaid in conjunction with the Berger acquisition in April 2015, which consisted of six MH communities (see Note 2). The note bore interest at 9.6% per annum and was secured by certain assets of the principals of the seller. 5. Intangible Assets Our intangible assets are in-place leases from acquisitions, franchise fees, and other intangible assets. These intangible assets are recorded within Other assets, net on the Consolidated Balance Sheets. The gross carrying amounts and accumulated amortization are as follows (in thousands): Intangible Asset In-place leases Franchise fees Total December 31, 2015 December 31, 2014 Useful Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization 7 years 15 years $ $ 62,981 $ 1,864 64,845 $ (20,245 ) $ (622 ) (20,867 ) $ 41,511 $ 764 42,275 $ (12,107 ) (106 ) (12,213 ) During 2015, in connection with our acquisitions, we purchased in-place leases and other intangible assets valued at approximately $22.9 million with useful lives ranging from seven to 15 years. F - 24 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The aggregate net amortization expenses related to the intangible assets are as follows (in thousands): Intangible Asset In-place leases Franchise fees Total Year Ended December 31, 2015 2014 2013 $ $ 8,299 $ 516 8,815 $ 3,867 $ 77 3,944 $ 3,297 60 3,357 We anticipate the amortization expense for the existing intangible assets to be as follows for the next five years (in thousands): Estimated expense $ 9,127 $ 8,903 $ 8,025 $ 7,109 $ 5,381 2016 2017 Year 2018 2019 2020 6. Investment in Affiliates Origen Financial Services, LLC (“OFS LLC”) At December 31, 2015 and 2014, we had a 22.9% ownership interest in OFS LLC, an entity formed to originate manufactured housing installment contracts. 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 19.3%. We have suspended equity accounting for this investment as the carrying value of our investment was zero. In January 2015, Origen completed the sale of substantially all of its assets to an affiliate of GoldenTree Asset Management, LP and has announced its intention to dissolve and liquidate. During the second quarter of 2015, and as disclosed in a press release on March 30, 2015, Origen made an initial distribution of $1.50 per share to its stockholders of record as of April 13, 2015, retaining approximately $6.2 million for expected dissolution, wind down costs, expenses, and contingencies. Depending on the actual cost of estimated wind down expenses, Origen may make one or more additional interim distributions of excess cash to stockholders prior to completing liquidation. Upon completion of liquidation, Origen will distribute remaining cash, if any, to stockholders. During the second quarter of 2015, we received an initial distribution of $7.5 million from Origen. The following table sets forth certain summarized financial information for Origen, which was determined to be a significant subsidiary in 2013 (in thousands): Revenues Expenses Net loss Year Ended December 31, 2013 $ $ 49,775 (51,912 ) (2,137 ) F - 25 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Consolidated Variable Interest Entities Variable 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 ("Wildwood"). We evaluated our arrangements with these properties under the guidance set forth in FASB Accounting Standard Codification ("ASC") ASC Topic 810 "Consolidation". We concluded that the Rudgate Borrowers and Wildwood qualify as VIEs as we are the primary beneficiary and hold controlling financial interests in these entities due to our power to direct the activities that most significantly impact the economic performance of the entities, as well as our obligation to absorb the most significant losses and our rights to receive significant benefits from these entities. As such, the transactions and accounts of these VIEs are included in the accompanying Consolidated Financial Statements. The following table summarizes the assets and liabilities included in our Consolidated Balance Sheets after appropriate eliminations have been made (in thousands): ASSETS Investment property, net Other assets Total Assets LIABILITIES AND STOCKHOLDERS' EQUITY Debt Other liabilities Noncontrolling interests Total Liabilities and Stockholders' Equity December 31, 2015 December 31, 2014 $ $ $ $ 92,009 $ 3,823 95,832 $ 64,082 $ 4,091 (1,767 ) 66,406 $ 94,230 4,400 98,630 65,849 1,139 (416 ) 66,572 Investment property, net and other assets related to the consolidated VIEs comprised approximately 2.3% and 3.4% of our consolidated total assets at December 31, 2015 and December 31, 2014, respectively. Debt and other liabilities comprised approximately 2.5% and 3.4% of our consolidated total liabilities at December 31, 2015 and December 31, 2014, respectively. Noncontrolling interest related to the consolidated VIEs comprised less than 1.0% of our consolidated total equity at December 31, 2015 and December 31, 2014. F - 26 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. Debt and Lines of Credit The following table sets forth certain information regarding debt (in thousands): Principal Outstanding Weighted Average Years to Maturity Weighted Average Interest Rates Collateralized term loans - CMBS Collateralized term loans - FNMA Collateralized term loans - Life Companies Collateralized term loans - FMCC Secured borrowing Preferred OP units - mandatorily redeemable Total debt Collateralized Term Loans December 31, 2015 642,429 $ 791,304 December 31, 2014 806,840 492,800 December 31, 2015 5.3 5.8 December 31, 2014 5.4 7.1 December 31, 2015 5.3 % 4.6 % December 31, 2014 5.3 % 4.0 % $ 502,555 197,418 140,440 204,638 152,462 123,650 45,903 45,903 $ 2,320,049 $ 1,826,293 14.4 9.0 15.6 6.1 8.4 10.9 9.9 14.6 6.8 7.5 4.1 % 4.0 % 10.2 % 6.9 % 5.0 % 4.3 % 4.0 % 10.4 % 6.9 % 5.1 % In December 2015, we paid off $85.6 million of CMBS debt secured by eight communities. The loans had a stated maturity of July 2016 and an interest rate of 5.32%. In August 2015, we entered into an agreement to borrow $87.0 million in mortgage debt that is secured by five communities at an interest rate of 4.06% for a term of 25 years. This loan closed in two separate closings. We completed the first closing for $51.2 million secured by four communities in September 2015 and the second closing for $35.8 million secured by one community in December 2015. In May 2015, we defeased a total of $70.6 million aggregate principal amount of collateralized term loans with an interest rate of 5.32% that were due to mature on July 1, 2016, releasing 10 communities. As a result of the transaction we recognized a loss on debt extinguishment of $2.8 million that is reflected in our Consolidated Statement of Operations. In April 2015, in relation to the acquisition of the Berger properties (see Note 2), we assumed debt with a fair market value of $169.9 million on the communities with a weighted average interest rate of 5.17% and a weighted average remaining term of 6.3 years. In March 2015, in relation to the acquisition of Meadowlands (see Note 2), we assumed a $6.3 million mortgage with an interest rate of 6.5% and a remaining term of 6.5 years. Also, in relation to this acquisition, we entered into a note payable with the seller for $2.4 million that bears no interest but is payable in three equal yearly installments beginning in March 2016. In January 2015, in relation to the acquisition of the ALL properties (see Note 2), we refinanced approximately $90.8 million of mortgage debt on 10 of the communities (resulting in proceeds of $112.3 million) at a weighted average interest rate of 3.87% per annum and a weighted average term of 14.1. We also assumed approximately $201.4 million of mortgage debt at a weighted average interest rate of 5.74% and a weighted average remaining term of 6.3. In 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%. F - 27 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During the fourth quarter of 2014, in relation to the acquisition of the ALL properties (see Note 2), we refinanced approximately $100.7 million of mortgage 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 a term 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% and a 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 agreement secured 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 Estates upon 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"). The loans have a 10 year term and a blended annual interest rate of 4.56%. 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 on February 13, 2026. We and each of the four borrowers have guaranteed the Loan. The collateralized term loans totaling $2.2 billion as of December 31, 2015, are secured by 160 properties comprised of 65,653 sites representing approximately $2.6 billion of net book value. Secured Borrowing See Note 3, "Collateralized Receivables and Transfers of Financial Assets", for additional information regarding our collateralized receivables and secured borrowing transactions. Preferred OP units Included in preferred OP units is $34.7 million of Aspen preferred OP units issued by the Operating Partnership which are convertible into shares of the Company's common stock. Subject 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 preferred OP unit into: (a) if the market price of our common stock is $68.00 per share of less, 0.397 common OP units, or (b) if the market price of our common stock is greater than $68.00 per share, that the number of common OP units determined by dividing (i) the sum of (A) $27.00 plus (B) 25% of the amount by which the market price of our common stock exceeds $68.00 per share, by (ii) the per-share market price of our common stock. The current preferred rate is 6.5%. On January 2, 2024, we are required to redeem all Aspen preferred OP units that have not been converted to common OP units. Lines of Credit In August, 2015, we amended and restated our senior revolving credit facility with Citibank, N.A. and certain other lenders in the amount of $450.0 million, comprised of a $392.0 million revolving loan and $58.0 million term loan (the "Facility"). The Facility has a four year term ending August 19, 2019, which can be extended for two additional six-month periods at our option, subject to the satisfaction of certain conditions as defined in the credit agreement. The credit agreement also provides for, subject to the satisfaction of certain conditions, additional commitments in an amount not to exceed $300.0 million. If additional borrowings are made pursuant to any such additional commitments, the aggregate borrowing limit under the Facility may be increased up to $750.0 million. The Facility bears interest at a floating rate based on the Eurodollar rate plus a margin F - 28 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS that is determined based on our leverage ratio calculated in accordance with the credit agreement, which can range from 1.40% to 2.25% for the revolving loan and 1.35% to 2.20% for the term loan. As of December 31, 2015, the margin on our leverage ratio was 1.45% and 1.40% on the revolving and term loans, respectively. We had no borrowings on the revolving loan and $25.0 million in borrowings on the term loan totaling $25.0 million in borrowings as of December 31, 2015, with a weighted average interest rate of 1.62%. As of December 31, 2014, there was no amount outstanding under our previous credit facility. The 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 line of credit, but does reduce the borrowing amount available. At December 31, 2015 and December 31, 2014, approximately $3.4 million and $3.2 million, respectively, of availability was used to back standby letters of credit. We have a $12.0 million manufactured home floor plan facility renewable indefinitely until our lender provides us at least a twelve month notice of its intent to terminate the agreement. The interest rate is 100 basis points over the greater of the prime rate as quoted in The Wall Street Journal on the first business day of each month or 6.0%. At December 31, 2015, the effective interest rate was 7.0%. The outstanding balance was $0.0 million and $5.8 million as of December 31, 2015 and December 31, 2014, respectively. Long-term Debt Maturities As of December 31, 2015, the total of maturities and amortization of our debt (excluding premiums and discounts) and lines of credit during the next five years are as follows (in thousands): Maturities and Amortization By Year Lines of credit Mortgage loans payable: Maturities Principal amortization Preferred OP units Secured borrowing Total Covenants Total Due 2016 2017 2018 $ 25,000 $ — $ — $ — $ 2019 2020 — $ 25,000 $ Thereafter — 1,695,080 396,909 45,903 140,440 1,321,942 219,030 34,663 107,991 $ 2,303,332 $ 154,772 $ 138,275 $ 91,918 $ 107,718 $ 127,023 $ 1,683,626 106,830 31,304 11,240 5,398 95,599 36,754 — 5,922 58,078 36,303 — 7,642 48,317 37,136 — 6,465 64,314 36,382 — 7,022 Pursuant to the terms of the Facility, we are subject to various financial and other covenants. The most restrictive of our debt agreements place limitations on secured borrowings and contain minimum fixed charge coverage, leverage, distribution, and net worth requirements. At December 31, 2015, we were in compliance with all covenants. 9. Equity and Mezzanine Securities In November 2015, we closed an underwritten registered public offering of 3,737,500 shares of common stock at a price of $65.00 per share. Net proceeds from the offering were approximately $233.1 million after deducting discounts and expenses related to the offering. We used a portion of the net proceeds of the offering to repay borrowings outstanding under our revolving loan under the Facility, and intend to use the remaining net proceeds for acquisitions of properties, working capital, and general corporate purposes. F - 29 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS At the Company's Annual Meeting of Stockholders on July 20, 2015, the stockholders approved Articles of Amendment to our Amended and Restated Articles of Incorporation, as amended and supplemented, under which the number of authorized shares of our common stock was increased from 90,000,000 to 180,000,000 and the number of authorized shares of our preferred stock was increased from 10,000,000 to 20,000,000. In July 2015, the Company entered into a repurchase agreement with certain holders of shares of Series A-4 Preferred Stock under which, at the holders’ election, the Company was obligated to repurchase up to 5,926,322 shares of the Series A-4 Preferred Stock from the holders of those shares. There were 6,364,770 shares of Series A-4 preferred shares issued and outstanding at the time of the repurchase agreement, and 438,448 shares of Series A-4 Preferred Stock were not subject to the repurchase agreement. Each holder of shares of Series A-4 Preferred Stock subject to the repurchase agreement could have elected to sell its shares of Series A-4 Preferred Stock to the Company. The purchase price was $31.08 per share, which consists of a price per share of $30.90 plus $0.18 for accrued and unpaid distributions from and including June 30, 2015 to, but not including, August 10, 2015. Each share of Series A-4 Preferred Stock had a liquidation preference of $25.00 per share, and was convertible into approximately 0.4444 shares of the Company’s common stock. Pursuant to the repurchase agreement, the Company repurchased 4,066,586 shares of the Series A-4 Preferred Stock. There are 2,067,091 shares of Series A-4 Preferred Stock issued and outstanding as of December 31, 2015. In June 2015, we issued to GCP Fund III Ancillary Holding, LLC (i) 25,664 shares of common stock at an issuance price of $50.00 per share, or $1,283,200 in the aggregate, and (ii) 34,219 shares of Series A-4 Preferred Stock at an issuance price of $25.00 per share, or $855,475 in the aggregate. All of these common shares and preferred shares were issued for cash consideration pursuant to the terms of a Subscription Agreement, dated July 30, 2014, as amended, among the Company, Green Court Real Estate Partners III, LLC, and certain other parties. Also in June 2015, we entered into an At the Market Offering Sales Agreement (the "Sales Agreement") with BMO Capital Markets Corp., Merrill Lynch, Pierce, Fenner and Smith Incorporated and Citigroup Global Markets Inc. (collectively, the "Sales Agents"). Pursuant to the Sales Agreement, we may offer and sell shares of our common stock, having an aggregate offering price of up to $250.0 million, from time to time through the Sales Agents. Each Sales Agent is entitled to compensation in an agreed amount not to exceed 2.0% of the gross sales price per share for any shares sold through it from time to time under the Sales Agreement. Concurrently, the At the Market Offering Sales Agreement dated May 10, 2012, as amended among the Company, the Partnership, BMO Capital Markets Corp. and Liquidnet, Inc., was terminated. Prior to the termination of the At the Market Offering Sales Agreement dated May 10, 2012, during the first quarter of 2015, 342,011 shares of common stock were issued at the prevailing market price of our common stock at the time of each sale with a weighted average sales price of $63.94, and we received net proceeds of approximately $21.5 million. During the third quarter of 2015, under the Sales Agreement, we sold 608,100 common shares at an average sales price of $68.00 for net proceeds of $40.8 million. During the second quarter of 2015, under the Sales Agreement, we sold 26,200 common shares at an average sales price of $65.15 for net proceeds of $1.7 million. In April 2015, in connection with the Berger acquisition, we issued 371,808 common OP units at an issuance price of $61.00 per share and 340,206 newly created Series C preferred OP units at an issuance price of $100.00 per share. The Series C preferred OP unit holders receive a preferred return of 4.0% per year from the closing until the first anniversary of the date of issuance, 4.5% per year during the following three years, and 5.0% per year thereafter. Subject to certain limitations, at the holder’s option, each Series C preferred OP unit is exchangeable into 1.11 shares of the Company’s common stock and holders of Series C preferred OP units do not have any voting or consent rights. F - 30 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In January 2015, in connection with the ALL second closing, we issued 4,377,073 shares of common stock at an issuance price of $50.00 per share (fair value of $58.85 per share) and 5,847,234 shares of Series A-4 Preferred Stock at an issuance price of $25.00 per share (fair value of $30.00 per share). The Series A-4 Preferred Stock stockholders receive a preferred return of 6.5% per year. In addition, one of the sellers purchased 150,000 shares of our common stock and 200,000 Series A-4 preferred OP units for an aggregate purchase price of $12.5 million. As noted above, in August 2015, the Company repurchased 4,066,586 shares of the Series A-4 Preferred Stock. If certain change of control transactions occur or if our common stock ceases to be listed or quoted on an exchange or quotation system, then at any time after November 26, 2019, we or the holders of shares of Series A-4 Preferred Stock and Series A-4 preferred OP units may cause all or any of those shares or units to be redeemed for cash at a redemption price equal to the sum of (i) the greater of (x) the amount that the redeemed shares of Series A-4 Preferred Stock and Series A-4 preferred OP units would have received in such transaction if they had been converted into shares of our common stock immediately prior to such transaction, or (y) $25.00 per share, plus (ii) any accrued and unpaid distributions thereon to, but not including, the redemption date. Accordingly, we have retrospectively reclassified $13.6 million of Series A-4 Preferred Stock and $18.7 million of Series A-4 preferred OP units to temporary equity on our consolidated balance sheet at December 31, 2014. The Series A-4 preferred OP units are inclusive of its pro-rata share of net income of $0.9 million and distributions of $1.3 million for the year ended December 31, 2015. During the fourth quarter of 2014, in connection with the ALL acquisition, we issued 361,797 shares of common stock at an issuance price of $50.00 per 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 per share 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 OP unit 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 adjustment upon 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 includes 900,000 shares sold to the underwriter pursuant to the full exercise of its option to purchase additional shares. Net proceeds from the offering were approximately $348.9 million after deducting expenses related to the offering. We used the majority of the net proceeds of the offering to fund the cash portion 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 proceeds from 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 per share. Net proceeds from the offering were $214.0 million after deducting underwriting discounts and the expenses related to the offering. We used the net proceeds of the offering to repay borrowings outstanding under the Facility, for acquisitions of properties and for working capital and general corporate purposes. 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 shares remaining in the repurchase program. No common shares were repurchased during 2015 or 2014. There is no expiration date specified for the repurchase program. Subject to certain limitations, common OP Unit holders can convert their common OP units into an equivalent number of shares of common stock at any time. During 2015, holders of common OP units converted 99,849 units into common stock. During 2014, 9,110 units were converted into common stock. F - 31 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Subject to certain limitations, Series A-1 preferred OP unit holders can convert each Series A-1 preferred OP unit to 2.439 shares of our common stock at any time. During 2015 and 2014, holders of Series A-1 preferred OP units converted 41,116 units into 100,277 shares of common stock, and 26,379 units into 64,335 shares of common stock, respectively. Subject to certain limitations, Series A-4 preferred OP unit holders may convert their Series A-4 preferred OP units to shares of our common stock at any time. During the year ended December 31, 2015, holders of Series A-4 preferred OP units converted 114,414 units into 50,848 shares of common stock. No such units were converted during the year ended December 31, 2014. Subject to certain limitations, Series A-4 preferred stock holders may convert their Series A-4 preferred stock to shares of our common stock. During the year ended December 31, 2015, holders of Series A-4 preferred stock converted 231,093 shares into 102,708 shares of common stock. No such shares were converted during the year ended December 31, 2014. Cash distributions of $0.65 per share were declared for the quarter ended December 31, 2015. On January 16, 2016, cash payments of approximately $39.8 million for aggregate distributions were made to common stockholders, common OP unit holders and restricted stockholders of record as of December 31, 2015. Cash distributions of $0.4453 per share were declared on the Company's Series A Preferred Stock for the quarter ended December 31, 2015. On January 15, 2016, cash payments of approximately $1.5 million for aggregate distributions were made to the holders of Series A Preferred Stock of record as of January 1, 2016. In addition, cash distributions of $0.4062 per share were declared on the Company's Series A-4 Preferred Stock for the quarter ended December 31, 2015. On December 31, 2015, cash payments of approximately $0.8 million were made to Series A-4 Preferred stockholders of record as of December 18, 2015. During 2015, we made total cash payments of approximately $150.4 million to common stockholders, common OP unitholders and restricted stockholders, $6.0 million to Series A Preferred stock holders and $6.9 million to Series A-4 Preferred stockholders. 10. Share-Based Compensation As of December 31, 2015, we have two share-based compensation plans approved by stockholders: the Sun Communities, Inc. 2015 Equity Incentive Plan (the "2015 Equity Plan") and the First Amended and Restated 2004 Non-Employee Director Option Plan (“Director Plan”). In July 2015, the 2015 Equity Plan replaced the Sun Communities, Inc. 2009 Equity Incentive Plan (the "2009 Equity Plan"). We believe granting equity awards will provide certain executives, key employees and directors additional incentives to promote our financial success, and promote employee and director retention by providing an opportunity to acquire or increase the direct proprietary interest of those individuals in our operations and future. 2015 Equity Plan At the Annual Meeting of Stockholders held on July 20, 2015, the stockholders approved the 2015 Equity Plan. The 2015 Equity Plan had been adopted by the Board and was effective upon approval by our stockholders. The maximum number of shares of common stock that may be issued under the 2015 Equity Plan is 1,750,000 shares of our common stock, with 1,744,000 shares remaining for future issuance. During the year ended December 31, 2015, we granted 6,000 shares of restricted stock to key employees under our 2015 Equity Plan. The shares had a weighted average fair value of $66.10 per share and will vest as follows: during the second half of 2018: 35%, during the second half of 2019: 35%, during the second half of 2020: 20%, during the second half of 2021: 5%, and during the second half of 2020: 5%. The fair value of issued grants was determined by using the closing price of our common stock on the date the shares were issued. F - 32 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2009 Equity Plan In July 2015, we granted 20,000 shares of restricted stock to an executive officer under to 2009 Equity Plan. The shares had a fair value of $67.57 per share and will vest as follows: July 16, 2018: 35%; July 19, 2019: 35%; July 16, 2020: 20%; July 16, 2021: 5%; and July 16, 2022: 5%. The fair value was determined by using the closing share price of our common stock on the date the shares were issued. In May 2015, we granted 25,000 shares of restricted stock to an executive officer under our 2009 Equity Plan. The shares had a fair value of $62.94 per share and will vest as follows: May 19, 2018: 35%; May 19, 2019: 35%; May 19, 2020: 20%; May 19, 2021: 5%; and May 19, 2022: 5%. The fair value was determined by using the closing share price of our common stock on the date the shares were issued. In April 2015, we granted 145,000 shares of restricted stock to our executive officers under our 2009 Equity Plan. The shares had a fair value of $63.81 per share. Half of the shares will vest as follows: April 14, 2018: 20%; April 14, 2019: 30%; April 14, 2020: 35%; April 14, 2021: 10%; and April 14, 2022: 5%. The remaining 72,500 shares are subject to market and performance conditions with multiple tranches that vest through April 2020. Share-based compensation for restricted stock awards with performance conditions is measured based on an estimate of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. During 2014, the Company and Gary A. Shiffman (the Company's Chairman and Chief Executive Officer) entered into an Amended and Restated Restricted Stock Award Agreement, which amended and restated in its entirety the Restricted Stock Award Agreement dated June 20, 2013, between the Company and Mr. Shiffman. Under the original stock award agreement, the Company granted Mr. Shiffman 250,000 restricted shares of the Company's common stock, of which 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 restricted shares were awarded to induce Mr. Shiffman to execute a new five-year employment agreement. All of these restricted shares were scheduled to vest over time through June 2020. The restated stock award agreement amended the vesting schedule of the restricted shares, of which 100,000 restricted shares are now subject to market and performance conditions and the remaining 150,000 shares will vest over time through June 2020. We accounted for the modification of this 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 the closing 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 using the closing share price of our common stock on the date the shares were issued. Director Plan The Director Plan was approved by our stockholders at the Annual Meeting of Stockholders held on July 19, 2012. The Director Plan amended and restated in 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 to participate 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. F - 33 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In February 2015, we granted 19,800 shares of restricted stock to our non-employee directors under our First Amended and Restated 2004 Non-Employee Director Option Plan. The awards vest on February 11, 2018, and had a fair value of $65.87 per share. The fair value was determined by using the closing share price of our common stock on the date the shares were issued. 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 fair value 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, 2015, 5,584 shares of common stock were issued in connection with the exercise of stock options and the net proceeds received were $0.1 million. Restricted Stock The majority of our share-based compensation is awarded as service vesting restricted stock grants to executives and key employees. We have also awarded restricted 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 the grant 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 had 50,000 shares of restricted stock that was issued to Mr. Shiffman subject to certain Company performance criteria, of which 37,500 shares are still outstanding as of December 31, 2015. The remaining shares will vest in equal shares of 12,500 on March 1 of each 2016, 2017, and 2018. Compensation expense is recognized in accordance with ASC Topic 718 and based on an estimate of shares expected to vest. If it is not probable that the performance conditions will be satisfied, we do not recognize compensation expense. The fair value of these awards was measured using the closing price of our common stock as of the grant modification date to calculate compensation cost. Each reporting period, we reevaluate our estimate of the number of shares expected to vest. The performance conditions were satisfied for the shares vesting on March 1, 2016 and compensation expense was recognized as of December 31, 2015. 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 1 of 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 recognize compensation cost ratably over each tranche of shares based on the fair value estimated by the model. F - 34 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes our restricted stock activity for the years ended December 31, 2015, 2014 and 2013: Unvested restricted shares at January 1, 2013 Granted Vested Forfeited Unvested restricted shares at December 31, 2013 Granted Vested Forfeited Unvested restricted shares at December 31, 2014 Granted Vested Forfeited Unvested restricted shares at December 31, 2015 Number of Shares Weighted Average Grant Date Fair Value 310,507 $ 371,300 $ (37,291 ) $ (12,560 ) $ 631,956 $ 117,250 $ (55,488 ) $ (4,975 ) $ 688,743 $ 216,800 $ (85,021 ) $ (7,262 ) $ 813,260 $ 30.88 47.19 16.87 38.47 41.14 49.97 25.57 38.45 43.87 64.32 31.89 45.94 50.59 Total compensation cost recognized for restricted stock was $7.1 million, $4.9 million, and $3.2 million for the years ended December 31, 2015, 2014, and 2013, respectively. The total fair value of shares vested was $2.7 million, $1.4 million, and $0.6 million for the years ended December 31, 2015, 2014 and 2013, respectively. The remaining net compensation cost related to our unvested restricted shares outstanding as of December 31, 2015 is approximately $27.4 million. That expense is expected to be recognized $7.3 million in 2016, $7.3 million in 2017, $5.5 million in 2018 and $7.3 million thereafter. Options We have granted stock options to certain employees and non-employee directors. Option awards are generally granted with an exercise price equal to the market price of our common stock as of the grant date. Stock options generally vest over a three year period from the date of grant and have a maximum term of 10 years. No grants of options were made in 2015, 2014 or 2013. We issue new shares of common stock 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 options outstanding as of December 31, 2015, consist of 24,500 non-employee director options. There are no employee options outstanding. The compensation expense associated with non-vested stock option awards was not significant for the years ended December 31, 2015, 2014, and 2013. F - 35 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes our option activity during the years ended December 31, 2015, 2014 and 2013: Options outstanding at January 1, 2013 Granted Exercised Forfeited or expired Options outstanding at December 31, 2013 Granted Exercised Forfeited or expired Options outstanding at December 31, 2014 Granted Exercised Forfeited or expired Options outstanding at December 31, 2015 Number of Options Weighted Average Exercise Price (per common share) 29.19 — 21.67 — 30.77 — 33.40 35.44 29.56 — 30.96 — 29.11 $ $ 55,950 — (9,700 ) $ — 46,250 — (12,250 ) $ $ $ $ $ $ (1,500 ) $ 32,500 — (8,000 ) $ — 24,500 $ $ The following table summarizes our options outstanding and options currently exercisable at December 31, 2015: December 31, 2015 Weighted Average Exercise Price (per common share) Weighted Average Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Number of Options Options vested and exercisable 24,500 $ 29.11 3.4 $ 966 Aggregate 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 of options outstanding or exercisable. The aggregate intrinsic value excludes the effect of stock options that have a zero or negative intrinsic value. For the years ended December 31, 2015, 2014 and 2013, the intrinsic value of exercised options was $0.3 million, $0.3 million and $0.2 million, respectively. For the years ended December 31, 2015, 2014 and 2013, the intrinsic value of vested and exercisable options was $1.0 million, $1.0 million and $0.5 million, respectively. 11. Segment Reporting We group our operating segments into reportable segments that provide similar products and services. Each operating segment has discrete financial information evaluated regularly by the Company's chief operating decision maker in evaluating and assessing performance. We have two reportable segments: (i) Real Property Operations and (ii) Home Sales and Rentals. The Real Property Operations segment owns, operates, and develops MH communities and RV communities and is in the business of acquiring, operating, and expanding MH and RV communities. The Home Sales and Rentals segment 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 is approximately $39.7 million for the year ended December 31, 2015. In 2015, transient RV revenue F - 36 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS was recognized 22.5% in the first quarter, 17.7% in the second quarter, 45.2% in the third quarter and 14.6% in the fourth quarter. A presentation of segment financial information is summarized as follows (in thousands): Revenues Operating expenses/Cost of sales Net operating income/Gross profit Adjustments to arrive at net income (loss): Interest and other income, net General and administrative Transaction costs Depreciation and amortization Extinguishment of debt Interest Interest on mandatorily redeemable preferred OP units Gain on disposition of properties, net Provision for state income taxes Income tax expense - deferred Distributions from affiliate Net income (loss) Less: Preferred return to Series A-1 preferred OP units Less: Preferred return to Series A-3 preferred OP units Less: Preferred return to Series A-4 preferred OP units Less: Preferred return to Series C preferred OP units Less: Amounts attributable to noncontrolling interests Net income (loss) attributable to Sun Communities, Inc. Less: Preferred stock distributions Less: Preferred stock redemption costs Net income (loss) attributable to Sun Communities, Inc. common stockholders Year Ended December 31, 2015 Real Property Operations Home Sales and Home Rentals Consolidated $ 530,610 $ 188,030 342,580 125,964 $ 83,897 42,067 18,119 (40,235 ) (17,802 ) (125,297 ) (2,800 ) (107,647 ) (3,219 ) 106,613 (56 ) — 7,500 177,756 2,431 181 1,340 1,021 10,622 162,161 13,793 4,328 38 (14,696 ) (1 ) (52,340 ) — (12 ) — 18,763 (102 ) (1,000 ) — (7,283 ) — — — — (568 ) (6,715 ) — — 656,574 271,927 384,647 18,157 (54,931 ) (17,803 ) (177,637 ) (2,800 ) (107,659 ) (3,219 ) 125,376 (158 ) (1,000 ) 7,500 170,473 2,431 181 1,340 1,021 10,054 155,446 13,793 4,328 $ 144,040 $ (6,715 ) $ 137,325 F - 37 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenues Operating expenses/Cost of sales Net operating income/Gross profit Adjustments to arrive at net income (loss): Interest and other income, net General and administrative Transaction costs Depreciation and amortization Asset impairment charge Interest Interest on mandatorily redeemable preferred OP units Gain (loss) on disposition of properties, net Gain on settlement Provision for state income taxes Distributions from affiliate Net income (loss) Less: Preferred return to Series A-1 preferred OP units Less: Preferred return to Series A-3 preferred OP units Less: Preferred return to Series A-4 preferred OP units Less: Amounts attributable to noncontrolling interests Net income (loss) attributable to Sun Communities, Inc. Less: Preferred stock distributions Net income (loss) attributable to Sun Communities, Inc. common stockholders Year Ended December 31, 2014 Real Property Operations Home Sales and Home Rentals Consolidated $ 375,594 $ 137,899 237,695 93,167 $ 63,826 29,341 15,498 (31,769 ) (18,251 ) (88,695 ) (837 ) (73,752 ) (3,210 ) 17,447 4,452 (219 ) 1,200 59,559 2,654 181 100 3,698 52,926 6,133 — (10,853 ) (8 ) (45,031 ) — (19 ) — 207 — — — (26,363 ) — — — (1,946 ) (24,417 ) — 468,761 201,725 267,036 15,498 (42,622 ) (18,259 ) (133,726 ) (837 ) (73,771 ) (3,210 ) 17,654 4,452 (219 ) 1,200 33,196 2,654 181 100 1,752 28,509 6,133 $ 46,793 $ (24,417 ) $ 22,376 F - 38 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenues Operating expenses/Cost of sales Net operating income/Gross profit Adjustments to arrive at net income (loss): Interest and other income, net General and administrative Transaction costs Depreciation and amortization Interest Interest on mandatorily redeemable preferred OP units Provision for state income taxes Distributions from affiliates Net income (loss) Less: Preferred return to Series A-1 preferred OP units Less: Preferred return to Series A-3 preferred OP units Less: Amounts attributable to noncontrolling interests Net income (loss) attributable to Sun Communities, Inc. Less: Preferred stock distributions Net income (loss) attributable to Sun Communities, Inc. common stockholders Year Ended December 31, 2013 Real Property Operations Home Sales and Home Rentals Consolidated $ 321,739 $ 117,412 204,327 87,352 $ 60,732 26,620 13,622 (25,941 ) (3,928 ) (73,729 ) (73,001 ) (3,238 ) (234 ) 2,250 40,128 2,598 166 2,450 34,914 6,056 — (9,913 ) — (36,349 ) (338 ) — — — (19,980 ) — — (1,732 ) (18,248 ) — 409,091 178,144 230,947 13,622 (35,854 ) (3,928 ) (110,078 ) (73,339 ) (3,238 ) (234 ) 2,250 20,148 2,598 166 718 16,666 6,056 $ 28,858 $ (18,248 ) $ 10,610 December 31, 2015 December 31, 2014 Real Property Operations Home Sales and Home Rentals Consolidated Real Property Operations Home Sales and Home Rentals Consolidated Identifiable assets: Investment property, net Cash and cash equivalents Inventory of manufactured homes Notes and other receivables, net Collateralized receivables, net Other assets, net Total assets $ 3,303,287 $ 417,828 $ 3,721,115 $ 2,207,526 $ 360,638 $ 2,568,164 83,459 8,860 51,895 122,962 102,352 $ 3,740,172 $ 450,379 $ 4,190,551 $ 2,550,588 $ 387,104 $ 2,937,692 45,086 14,828 47,972 139,768 221,782 44,150 — 34,258 139,768 218,709 81,864 — 40,751 122,962 97,485 936 14,828 13,714 — 3,073 1,595 8,860 11,144 — 4,867 F - 39 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. Income Taxes We have elected to be taxed as a real estate investment trust (“REIT”) pursuant to Section 856(c) of the Internal Revenue Code of 1986 (“Code”), as amended. In order for us to qualify as a REIT, at least 95% of our gross income in any year must be derived from qualifying sources. In addition, a REIT must distribute annually at least 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 and complex Code provisions for which there are only limited judicial or administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation which requires us to continually monitor our tax status. We analyzed the various REIT tests and confirmed that we continued to qualify as a REIT for the year ended December 31, 2015. 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 our stockholders 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 regular corporate rates (including any applicable alternative minimum tax). Even if we qualify as a REIT, we may be subject to certain state and local income taxes and 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 ended December 31, 2015, 2014, and 2013, distributions paid per share were taxable as follows (unaudited/rounded): Years Ended December 31, 2015 2014 2013 Ordinary income Capital gain Return of capital Total distributions declared Amount Percentage Amount Percentage Amount Percentage $ $ 1.08 0.78 0.74 2.60 41.7 % $ 30.1 % 28.2 % 100.0 % $ 0.82 0.64 1.14 2.60 31.7 % $ 24.6 % 43.7 % 100.0 % $ 0.87 — 1.65 2.52 34.6 % — % 65.4 % 100.0 % SHS, our taxable REIT subsidiary, is subject to U.S. federal income taxes. Our deferred tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the bases of such assets and liabilities as measured by tax laws. Deferred tax assets are reduced, if necessary, by a valuation allowance to the amount where realization is more likely than not assured after considering all available evidence. Our temporary differences primarily relate to net operating loss carryforwards and depreciation. F - 40 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The deferred tax assets included in the consolidated balance sheets are comprised of the following tax effects of temporary differences (in thousands): Deferred tax assets: Net operating loss carryforwards Real estate assets Amortization of intangibles Gross deferred tax assets Valuation allowance Net deferred tax assets As of December 31, 2015 2014 $ $ 31,096 27,315 $ (128 ) 58,283 (58,283 ) — $ 26,214 29,092 (128 ) 55,178 (54,178 ) 1,000 SHS has operating loss carryforwards of approximately $91.5 million, or $31.1 million after tax, as of December 31, 2015. The loss carryforwards will begin to expire in 2021 through 2034 if not offset by future taxable income. Management concluded in 2015 its net deferred tax asset will not be realized and increased its valuation allowance by $1.0 million. We had no unrecognized tax benefits as of December 31, 2015 and 2014. We expect no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2015. We classify certain state taxes as income taxes for financial reporting purposes. We recorded a provision for state income taxes of approximately 0.2 million for each of the years ended December 31, 2015, 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 the interpretation 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 associated with any unrecognized income tax benefit or provision was accrued, nor was any income tax related interest or penalty recognized during the years ended December 31, 2015, 2014 and 2013. In 2015, SHS underwent an audit by the Internal Revenue Service ("IRS") for the 2013 tax year. Upon conclusion of the audit, no material adjustments were required. F - 41 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Earnings Per Share We have outstanding stock options, unvested restricted shares, Series A Preferred Stock, and Series A-4 Preferred Stock, and our Operating Partnership has outstanding common OP units, Series A-1 preferred OP units, Series A-3 preferred OP units, Series A-4 preferred OP units, Series C preferred OP units, and Aspen preferred OP Units, which if converted or exercised, may impact dilution. Computations of basic and diluted earnings per share were as follows (in thousands, except per share data): Numerator Net income attributable to common stockholders Allocation of income to restricted stock awards Net income attributable to common stockholders after allocation Allocation of income to restricted stock awards Amounts attributable to Series A-4 Preferred Stock Diluted earnings: net income attributable to common stockholders after allocation Denominator Weighted average common shares outstanding Add: dilutive stock options Add: dilutive restricted stock Add: dilutive Series A-4 Preferred Stock Diluted weighted average common shares and securities Earnings per share available to common stockholders after allocation: Basic Diluted Year Ended December 31, 2015 $ 137,325 $ (1,757 ) $ 135,568 $ — — $ 135,568 $ 2014 22,376 $ (127 ) 22,249 $ 127 76 22,452 $ 53,686 16 — — 53,702 41,337 16 237 215 41,805 2013 10,610 (144 ) 10,466 144 — 10,610 34,228 15 167 — 34,410 $ $ 2.53 $ 2.52 $ 0.54 $ 0.54 $ 0.31 0.31 We excluded certain securities from the computation of diluted earnings per share because the inclusion of these securities would have been anti-dilutive for the periods presented. The following table presents the outstanding securities that were excluded from the computation of diluted earnings per share for the years ended December 31, 2015, 2014 and 2013 (amounts in thousands): Restricted Stock Common OP units Series A-1 preferred OP units Series A-3 preferred OP units Series A-4 preferred OP units Series A-4 Preferred Stock Series C preferred OP units Aspen preferred OP units Total securities Year Ended December 31, 2015 2014 2013 813 2,863 388 40 755 2,067 340 1,284 8,550 — 2,561 429 40 669 — — 1,284 4,983 — 2,069 455 40 — — — 1,325 3,889 F - 42 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. Quarterly Financial Information (Unaudited) The following is a condensed summary of our unaudited quarterly results for years ended December 31, 2015 and 2014. Income (loss) per share for the year may not equal the sum of the fiscal quarters' income (loss) per share due to changes in basic and diluted shares outstanding. Total revenues Total expenses 2015 Income before income taxes and distributions from affiliate Distributions from affiliate (1) Gain (loss) on disposition of properties, net Quarters 1st 2nd 3rd 4th (In thousands, except per share amounts) $ 155,200 $ 165,93 8 151,646 154,862 $ 3,554 $ 11,076 $ 185,355 $ 168,238 163,771 165,697 $ 21,584 $ 2,541 — $ 7,500 $ $ 8,769 $ $ — (13 ) $ 18,190 $ 98,430 — $ Net income attributable to Sun Communities, Inc. common stockholders $ 6,869 $ 12,294 $ 28,763 $ 89,399 Earnings per share: Basic Diluted Total revenues Total expenses 2014 Income (loss) before income taxes and distributions from affiliate Distributions from affiliate (1) Gain on disposition of properties, net (2) Gain on settlement Net income (loss) attributable to Sun Communities, Inc. common stockholders Earnings (loss) per share: Basic Diluted $ $ 0.13 $ 0.13 $ 0.23 0.23 $ $ 0.53 $ 0.53 $ 1.57 1.56 $ 111,181 $ 115,38 7 100,651 108,993 $ 10,530 $ 6,394 $ 125,435 $ 119,672 112,655 139,267 $ 12,780 $ (19,595 ) $ $ $ 400 400 $ — $ 885 — $ — — 400 $ $ $ 13,631 $ 3,138 — $ 4,452 $ $ 7,846 $ 4,928 $ 22,671 $ (13,069 ) $ $ 0.21 $ 0.21 $ 0.12 0.12 $ $ 0.54 $ 0.54 $ (0.27 ) (0.27 ) (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 this gain 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 in the 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 and fourth quarter 2014 financial statements. F - 43 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 15. Derivative Instruments and Hedging Activities Our objective in using interest rate derivatives is to manage exposure to interest rate movements thereby minimizing the effect of interest rate changes and the effect it could have on future cash flows. Interest rate caps are used to accomplish this objective. We do not enter into derivative instruments for speculative purposes nor do we have any swaps in a hedging arrangement. The following table provides the terms of our interest rate derivative contracts that were in effect as of December 31, 2015: Type Purpose Cap Cap Cap Floating Rate Cap Floating Rate Maturity Date Effective Date 4/1/2015 $ 10/3/2011 10/3/2016 $ 4/1/2018 Notional (in millions) Based on 150.1 3 Month LIBOR 10.0 3 Month LIBOR Variable Rate 0.3240% 0.3240% Fixed Rate Spread Effective Fixed Rate 9.0000% —% 11.0200% —% N/A N/A In 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" ("ASC 815"), derivative instruments are recorded at fair value in "Other assets, net" or "Other liabilities" on the Consolidated Balance Sheets. As of December 31, 2015 and 2014, the fair value of the derivatives was zero. 16. Fair Value of Financial Instruments Our 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" ("ASC 820"), requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy under which these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumption. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair value hierarchy: 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 significant inputs and significant value drivers are observable in active markets. Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The following methods and assumptions were used in order to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Derivative Instruments The derivative instruments held by us are interest rate cap agreements for which quoted market prices are indirectly available. For those derivatives, we use model-derived valuations in which all significant inputs and significant value drivers are observable in active markets provided by brokers or dealers to determine the fair values of derivative instruments on a recurring basis (Level 2). See Note 15 for Derivative Instruments. F - 44 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Installment Notes Receivable on Manufactured Homes The net carrying value of the installment notes on manufactured homes estimates the fair value as the interest rates in the portfolio are comparable to current prevailing market rates (Level 2). See Note 4 for Installment Notes Receivable. Long Term Debt and Lines of Credit The fair value of long-term debt (excluding the secured borrowing) is based on the estimates of management and on rates currently quoted, rates currently prevailing for comparable loans, and instruments of comparable maturities (Level 2). See Note 8 for Long-Term Debt and Lines of Credit. Collateralized Receivables and Secured Borrowing The fair value of these financial instruments offset each other as our collateralized receivables represent a transfer of financial assets and the cash proceeds received from these transactions have been classified as a secured borrowing on the Consolidated Balance Sheets. The net carrying value of the collateralized receivables estimates the fair value as the interest rates in the portfolio are comparable to current prevailing market rates (Level 2). See Note 3 for Collateralized Receivables and Secured Borrowing. Other Financial Instruments The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair market values due to the short-term nature of these instruments. The table below sets forth our financial assets and liabilities that required disclosure of their fair values on a recurring basis as of December 31, 2015. The table presents the carrying values and fair values of our financial instruments as of December 31, 2015 and December 31, 2014 that were measured using the valuation 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, 2015 December 31, 2014 Financial assets Installment notes receivable on manufactured homes, net Collateralized receivables, net Carrying Value 20,418 $ 139,768 $ $ $ Fair Value Carrying Fair Value Value 25,884 25,884 $ 122,962 $ 122,962 20,418 $ 139,768 $ Financial liabilities Debt (excluding secured borrowing) Secured borrowing Lines of credit 17. Recent Accounting Pronouncements $ 2,179,609 $ 2,181,790 $ 1,702,643 $ 1,752,939 123,650 $ 123,649 $ 5,794 140,440 $ 25,000 $ 140,440 $ 25,000 $ 5,794 $ $ In April 2015, the FASB issued ASU 2015-03 "Interest - Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"). This amendment requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15 "Interest - Imputation of Interest (Subtopic 835-30) Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements" ("ASU 2015- 15"). This amendment provides additional guidance within ASU 2015-03 for debt issuance costs related to line of credit arrangements. These amendments are effective for fiscal years beginning after December 15, 2015, and interim periods within those years, with early adoption permitted. Entities should apply the amendments retrospectively. We are currently evaluating the potential impact these amendments will have on our Consolidated Financial Statements. F - 45 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In February 2015, the FASB issued ASU No. 2015-02 "Consolidation (Topic 810) Amendments to the Consolidation Analysis" ("ASU 2015-02"). This amendment eliminates the deferral of FAS 167, which has allowed entities with interests in certain investment funds to follow the previous consolidation guidance in FIN 46(R), and makes other changes to both the variable interest model and the voting model. While the guidance is aimed at asset managers, it will affect all reporting entities that have variable interests in other legal entities (e.g., limited partnerships, similar entities and certain corporations). In some cases, consolidation conclusions will change. In other cases, reporting entities will need to provide additional disclosures about entities that currently aren’t considered VIEs but will be considered VIEs under the new guidance provided they have a variable interest in those VIEs. These amendments are effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. Entities may apply the amendments using either a modified retrospective approach or retrospectively. We are currently evaluating the potential impact this amendment will have on our Consolidated Financial Statements. In August 2014, the FASB issued ASU 2014-15 "Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern" ("ASU 2014-15"). This amendment requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity's ability to continue as a going concern. This amendment applies to all entities and are effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. We are currently evaluating the potential impact this amendment will have on our quarterly reporting process. In May 2014, the FASB issued ASU 2014-09 "Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"). The objective of this amendment is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry- specific guidance. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying this amendment, companies will perform a five-step analysis of transactions to determine when and how revenue is recognized. This amendment applies to all contracts with customers except those that are within the scope of other topics in the FASB ASC. This amendment is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period; early adoption is not permitted. An entity should apply the amendments using either the full retrospective approach or retrospectively with a cumulative effect of initially applying the amendments recognized at the date of initial application. We are currently evaluating the methods of adoption and the impact that the adoption of ASU 2014-09 may have on our Consolidated Financial Statements. 18. Commitments and Contingencies We are involved in various legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to have a material adverse impact on our results of operations or financial condition. 19. Related Party Transactions We 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 the formation of OFS LLC. OFS LLC purchased the loan origination platform of Origen. The purpose of the venture is to originate manufactured housing installment 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, 2015, we had an ownership interest in the OFS LLC of 22.9%, and the carrying value of our investment was zero. F - 46 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Loan Origination, Sale and Purchase Agreement. As of 2014, our agreement with OFS LLC, in which OFS LLC agreed to fund loans that meet our underwriting guidelines and then transfer those loans to us pursuant to a Loan Origination, Sale and Purchase Agreement, was terminated. In 2013, we paid OFS 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, at par, $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 approximately 19.3% of the outstanding shares of Origen common stock and Shiffman Origen LLC (which is owned by Gary A. Shiffman (our Chairman and Chief Executive Officer, and members of Mr. Shiffman's family and related trusts) owns approximately 3.9% of the outstanding shares of Origen common stock. Gary A. Shiffman is a member of the Board of Directors of Origen, and one of our directors, Arthur Weiss, was the trustee of a Shiffman family trust that beneficially owned Origen common stock. Ronald A. Klein, one of our directors, is the Chief Executive Officer and a director of Origen. Mr. Klein owns approximately 1.8% of the outstanding shares of Origen common stock. Mr. Shiffman, Mr. Weiss and Brian M. Hermelin, another of our directors, each beneficially own less than 1% of the outstanding shares of Origen common stock. We accounted for our investment in Origen using the equity method of accounting which we have since suspended. As of December 31, 2015, the carrying value of our investment in Origen was zero. During the second quarter of 2015, we received an initial distribution of $7.5 million from Origen. 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 16% equity interest in American Center LLC, the entity 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 indirect interest 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 is $16.95 per square foot (gross) until October 31, 2016, with graduated rental increases thereafter. 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 and his ownership interest in American Center LLC. Legal Counsel. During 2013-2015, 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 $4.6 million, $7.5 million and $3.2 million in the years ended December 31, 2015, 2014 and 2013, respectively. Tax Consequences Upon Sale of Properties. Gary A. Shiffman holds limited partnership interests in the Operating Partnership which were received in connection with the contribution of properties from partnerships previously affiliated with him. Prior to any redemption of these limited partnership interests for our common stock, Mr. Shiffman will have tax consequences different from those on us and our public stockholders upon the sale of any of these partnerships. Therefore, we and Mr. Shiffman may have different objectives regarding the appropriate pricing and timing of any sale of those properties. ALL Acquisition In the fourth quarter of 2014 and the first quarter of 2015, we purchased a portfolio of 59 MH communities from the Green Courte parties for aggregate consideration of $1.3 billion. In January 2015, we sold 150,000 shares of our common stock and F - 47 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 200,000 Series A-4 preferred OP units for an aggregate purchase price of $12.5 million to one of the Green Courte parties. Randall K. Rowe and James R. Goldman are beneficial owner and directors and officers of certain of the Green Courte parties. In January 2015, Messrs. Rowe and Goldman were appointed to serve on our Board of Directors. In June 2015, we issued 25,664 shares of common stock and 34,219 shares of Series A-4 Preferred Stock to one of the Green Courte parties in connection with the ALL acquisition. In August 2015, we repurchased from certain of the Green Courte entities and their affiliates an aggregate of 4,066,586 shares of Series A-4 Preferred Stock at a purchase price of $31.08 per share. As part of the aforementioned repurchase, 156,625 shares of Series A-4 Preferred Stock held by Mr. Rowe and his affiliates and 22,577 shares of Series A-4 Preferred Stock held by Mr. Goldman were repurchased. See Note 2, "Real Estate Acquisitions and Dispositions" and Note 9, "Equity and Mezzanine Securities," for additional information regarding these transactions. 20. Subsequent Events We have evaluated our financial statements for subsequent events through the date that this Form 10-K was issued. F - 48 r o ) A ( d e r i u q c A ) C ( d e t c u r t s n o C ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) C ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( 6 9 9 1 7 9 3 , 7 6 9 9 1 1 1 0 2 0 1 0 , 8 7 0 0 , 2 9 9 9 1 6 9 9 1 4 9 9 1 6 9 9 1 9 9 9 1 3 1 0 2 2 1 0 2 5 1 0 2 2 1 0 2 8 9 9 1 5 9 9 1 6 9 9 1 5 1 0 2 4 1 0 2 5 8 9 1 1 1 0 2 1 0 0 2 8 8 4 , 3 8 4 3 , 3 8 3 9 , 1 8 8 9 , 5 7 3 4 , 4 4 9 1 , 2 1 2 0 , 1 5 1 6 1 1 8 5 3 6 , 1 1 2 8 1 , 5 5 3 4 , 3 6 7 1 6 8 2 , 1 4 8 1 , 7 0 5 0 , 1 6 7 7 , 0 1 6 9 9 1 6 5 6 , 2 1 8 5 , 5 1 3 4 3 , 7 1 3 6 7 , 2 1 7 5 1 , 8 2 7 2 , 8 1 4 7 , 3 5 0 8 , 2 1 7 8 3 , 1 1 4 2 6 , 3 2 7 8 2 , 8 8 9 0 , 6 3 1 7 5 , 9 7 5 2 , 9 2 5 3 8 , 9 6 2 5 , 6 7 5 8 , 0 1 7 5 2 , 8 3 7 6 4 , 6 1 4 8 , 5 1 5 0 9 , 5 2 2 1 2 , 5 5 1 2 , 5 1 4 1 6 , 6 1 3 6 9 , 1 1 4 1 6 , 7 6 1 8 , 7 1 0 5 , 3 8 4 9 , 1 1 3 8 6 , 0 1 4 3 0 , 3 2 7 3 5 , 7 8 8 6 , 5 3 1 4 7 , 5 3 3 9 , 4 2 9 3 0 , 9 1 4 1 , 6 7 0 7 , 9 7 3 6 , 4 2 5 9 1 , 5 1 7 9 2 , 6 3 5 9 , 3 2 6 6 3 9 2 7 0 0 8 3 4 5 6 5 4 0 4 2 7 5 8 4 0 7 0 9 5 0 5 7 0 1 4 0 3 8 , 3 4 2 3 , 4 6 9 7 5 8 3 0 5 1 , 1 0 2 6 , 3 1 6 4 6 0 7 1 2 5 9 , 1 9 5 9 , 4 3 5 2 1 3 5 , 1 1 2 2 9 , 9 1 9 7 , 5 4 3 1 , 2 6 0 4 , 3 6 0 3 , 1 4 9 8 , 3 7 6 7 , 8 6 2 7 , 1 4 7 3 , 1 4 9 3 1 0 5 , 2 3 3 4 , 4 2 3 2 3 , 5 9 4 5 , 2 8 4 3 5 3 4 5 1 1 , 4 1 3 3 7 9 5 6 , 5 7 5 5 , 2 — — — — — — ) 3 3 ( ) 3 1 ( — — — — 4 2 3 , 3 — — — — — — — 6 8 3 9 4 - F 4 8 6 , 3 2 9 6 , 6 2 7 1 , 6 0 8 4 , 5 0 1 4 , 4 5 9 1 , 2 4 5 0 , 8 6 1 9 , 1 8 0 3 , 1 2 3 6 1 , 6 4 9 2 , 5 3 0 4 2 , 3 0 0 5 6 1 7 , 3 2 9 5 , 3 9 5 3 , 9 2 0 2 , 4 2 0 8 0 , 1 4 6 5 , 5 4 9 2 , 8 1 6 6 3 9 2 7 0 0 8 3 4 5 6 5 4 0 4 2 0 9 8 7 1 7 0 9 5 0 5 7 0 1 4 0 3 8 , 3 0 0 0 , 1 6 9 7 5 8 3 0 5 1 , 1 0 2 6 , 3 1 0 6 2 0 7 1 2 5 9 , 1 2 0 4 , 2 3 5 2 B B A I M , s d i p a R d n a r G I M , e l a d n e l l A e l i b o M s w o d a e M e n i p l A s w o d a e M e l a d n e l l A e g a l l i V e l i b o M e g a l l i V I M , n o t n a C e t n i o P t s e W / y m e d a c A 0 5 3 , 3 I M , n o g e k s u M e g a l l i V r r a C e l p p A C — 9 0 8 , 5 B C A — 8 1 0 , 9 1 C C B — 5 4 1 , 6 6 5 5 , 7 1 B 0 7 6 , 7 0 5 7 , 5 3 A L F , n o t n e d a r B H O , a i l e m A L F , d n a l e k a L A I , y n e k n A N T , e l l i v s k r a l C X T , o i n o t n A n a S L F , a d r o G a t n u P J N , y a M e p a C X T , e l l i v r e g u l f P L F , l l e n h s u B I M , d o o w t n e K X T , n i t s u A L F , n o s d u H Z A , a s e M I M , d o o w t n e K L F , g n i r b e S N I , n e h s o G I M , r e t n e C n o r y B e m o H d e r u t c a f u n a M f l e S d n a y t i n u m m o C k e e r C e l p p A e g a r o t S k r a P V R e c a r r e T r o b r A e l i b o M e g a l l i V a n a i r A V R e k a L r e b m T g i B i s e n i P n o r e H e u l B l l i H y r r e b e u l B e g d i R r e d l u o B r a t S g n i z a l B t r o s e R s e t a t s E k e e r C h c n a r B e l i b o M d o o w t n e r B e g d i R n m u t u A g n i s s o r C l l e B k r a P e m o H s e t a t s E d o o w t n e r B e g a l l i V e m o H e l i b o M e d i s k o o r B t s e W d o o w t n e r B e g a l l i V e l i b o M r e t n e C n o r y B e g a l l i V e d i s k o o r B y a B d o o w n o t t u B e g a l l i V e t a D 0 0 0 2 9 2 4 , 0 1 $ 2 8 3 , 4 2 $ 7 9 8 , 2 2 $ 5 8 4 , 1 $ 9 1 6 , 8 $ — $ 8 7 2 , 4 1 $ 5 8 4 , 1 $ d e i r r a C t n u o m A s s o r G 5 1 0 2 , 1 3 r e b m e c e D t a d e z i l a t i p a C s t s o C n o i t i s i u q c A o t t n e u q e s b u S ) s t n e m e v o r p m I ( y n a p m o C o t t s o C l a i t i n I d e t a l u m u c c A n o i t a i c e r p e D l a t o T e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e c n a r b m u c n E n o i t a c o L e m a N y t r e p o r P I I I E L U D E H C S , N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R . C N I , S E I T I N U M M O C N U S 5 1 0 2 , 1 3 R E B M E C E D ) s d n a s u o h t n i s t n u o m a ( r o ) A ( d e r i u q c A ) C ( d e t c u r t s n o C ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) C & A ( ) A ( s u o i r a V ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) C ( ) A ( ) A ( d e i r r a C t n u o m A s s o r G 5 1 0 2 , 1 3 r e b m e c e D t a d e z i l a t i p a C s t s o C n o i t i s i u q c A o t t n e u q e s b u S ) s t n e m e v o r p m I ( y n a p m o C o t t s o C l a i t i n I e t a D 3 1 0 2 6 9 9 1 4 1 0 2 7 9 9 1 4 1 0 2 4 0 0 2 5 9 9 1 1 1 0 2 1 1 0 2 6 8 9 1 1 1 0 2 3 9 9 1 0 0 0 2 6 9 9 1 6 9 9 1 1 1 0 2 4 9 9 1 1 1 0 2 4 0 0 2 4 1 0 2 4 0 0 2 4 0 0 2 4 1 0 2 7 9 9 1 6 9 9 1 5 1 0 2 9 2 7 , 2 8 9 6 , 6 0 8 1 , 1 1 2 5 , 5 1 9 5 , 1 4 9 1 , 8 7 2 4 , 6 9 5 0 , 3 8 3 2 , 1 9 1 1 , 3 2 7 1 , 1 5 1 2 , 7 4 1 5 , 4 3 9 2 , 9 7 1 0 , 2 1 4 6 4 , 3 8 4 5 , 1 1 7 1 , 4 1 8 0 7 , 1 5 2 9 , 4 8 4 6 8 3 8 , 5 3 7 3 , 9 5 8 3 6 4 2 , 8 6 1 3 0 8 8 , 5 0 . 1 7 3 7 5 7 , 2 3 7 4 2 , 4 1 5 3 6 , 8 2 1 9 1 , 3 1 9 4 1 , 1 4 7 3 2 , 5 3 8 3 7 , 1 1 6 2 4 , 5 1 3 9 5 , 7 0 0 2 , 7 3 4 6 , 2 1 9 2 3 , 5 1 6 0 9 , 1 1 8 2 2 , 8 1 0 7 6 , 4 2 5 1 4 , 7 3 3 2 , 7 9 7 8 , 7 2 5 5 1 , 9 4 3 0 , 4 1 8 1 0 , 3 1 2 2 9 , 4 1 3 1 8 , 7 2 9 6 9 , 7 0 9 4 , 7 1 9 2 7 , 1 1 9 5 0 , 9 1 7 4 8 , 1 3 7 4 6 , 3 1 5 8 5 , 2 2 5 1 1 , 2 1 9 2 8 , 6 2 6 9 9 , 2 3 9 2 1 , 1 1 6 0 9 , 4 1 3 4 3 , 7 9 5 0 , 7 3 6 8 , 6 7 6 5 , 4 1 1 5 4 , 0 1 9 7 4 , 7 1 0 7 6 , 4 2 5 3 0 , 7 3 9 8 , 6 9 5 6 , 6 2 5 0 6 , 8 0 6 7 , 2 1 8 9 6 , 2 1 8 9 7 , 3 1 7 9 8 , 5 2 9 3 5 , 7 8 7 2 , 6 1 0 8 9 , 0 1 9 9 0 , 8 1 d e t a l u m u c c A n o i t a i c e r p e D l a t o T e l b a i c e r p e D s t e s s A 0 1 9 0 0 6 0 5 0 , 6 6 7 0 , 1 0 2 3 , 4 1 1 4 2 , 2 d n a L 9 0 6 0 2 5 0 5 2 1 4 1 0 8 7 , 5 2 6 7 5 5 4 , 1 9 4 7 — 0 8 3 0 4 3 0 2 2 , 1 0 5 5 4 7 2 , 1 0 2 3 4 2 1 , 1 6 1 9 , 1 0 3 4 2 1 2 , 1 9 4 7 0 6 9 e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e c n a r b m u c n E n o i t a c o L e m a N y t r e p o r P 4 2 0 , 8 0 5 3 , 1 3 8 4 , 8 6 3 6 , 0 1 2 5 5 , 4 3 5 6 , 7 1 3 4 8 , 5 8 3 3 , 3 1 3 5 7 , 3 9 8 7 , 5 1 1 9 , 1 0 3 5 , 7 9 1 7 , 8 0 9 3 , 1 1 0 7 6 , 4 2 0 4 5 , 3 2 3 0 , 3 — — — — — — — — — 1 6 — — — — — — — 0 5 0 , 3 3 0 8 , 1 8 8 0 , 1 9 5 2 , 4 0 4 5 , 9 2 8 3 — — — — — — 6 7 0 , 9 1 6 9 2 5 3 2 , 4 1 4 0 4 1 8 5 9 3 0 , 4 — — 0 5 - F 1 1 2 , 1 2 3 2 6 , 5 5 3 2 , 1 2 2 3 6 , 3 7 7 2 , 2 2 3 4 3 , 5 1 6 8 2 , 5 8 6 5 , 1 0 9 5 , 3 0 7 2 , 1 2 5 9 , 4 7 3 0 , 7 2 3 7 , 1 9 8 0 , 6 — 5 9 4 , 3 1 6 8 , 3 3 8 5 , 7 5 5 5 , 5 7 5 9 , 0 1 0 1 6 , 1 1 9 3 5 , 9 7 5 3 , 6 1 7 5 1 , 7 3 4 0 , 2 1 4 9 , 6 8 1 5 , 7 1 0 1 9 0 0 6 0 5 0 , 6 6 7 0 , 1 9 0 6 0 2 5 0 5 2 0 2 3 , 4 1 1 4 2 , 2 0 8 0 8 7 , 5 2 6 7 5 5 4 , 1 9 4 7 — 0 8 3 0 4 3 4 2 9 0 5 5 4 7 2 , 1 0 2 3 4 2 1 , 1 6 1 9 , 1 0 3 4 8 0 8 9 4 7 0 6 9 A A 2 5 6 , 7 1 B 6 8 1 , 2 2 C B C A B C A C A — A A B C 0 5 9 , 2 1 0 2 0 , 7 4 1 0 , 0 1 0 1 8 , 6 1 3 5 8 , 3 A C 3 9 8 , 7 L I , e g a l l i V k u a S e g a l l i V t h g i l e l d n a C I M , b m o c a M a l l i V t o l e m a C N I , e n y a W . t F L F , d r o f n a S D M , n i l r e B O C , s n a v E & t r o s e R V R s y a w a t s a C e t n i o P n o t g n i r r a C e v o C e g a i r r a C d n u o r g p m a C k e e r C e v a C X T , e l l i v r e g u l f P s e t a t s E t n i o P m l o h s i h C I M , n o t n e F s g n i s s o r C l l i M r e d i C I M , e l l i v e l d d i M N I , d n e B h t u o S L F , s e l p a N X T , s l e f n u a r B w e N N I , a l o e c s O e l i b o M r e t a W r a e l C e g a l l i V l l i M r e d i C s e l p a N b u l C e g a l l i V e l i b o M n e e r G s u b o C s m r a F l a m o C k r a P e m o H I M , d l e i f h t u o S s r e t r a u q d a e H e t a r o p r o C I M , n o s i v a D h t r o N l a t n e n i t n o C I M , c a l l i d a C e l i b o M s e r c A y r t n u o C e g a l l i V I M , e l l i v n o s d u H e g a l l i V s l l i H y r t n u o C I M , k c o R t a l F e l i b o M s w o d a e M y r t n u o C e g a l l i V I M , a i n o d e l a C e g a l l i V s w o d a e M y r t n u o C A G , e l l i v e c n e r w a L A P , n a e k c M A G , d r o f u B a t n a l t A e d i s y r t n u o C s e t a t s E e d i s y r t n u o C t t e n n i w G e d i s y r t n u o C T M , s l l a F t a e r G e g a l l i V e d i s y r t n u o C A G , d r o f u B r e i n a L e k a L e d i s y r t n u o C I M , n o t r u B s w o d a e M d o o w k e e r C I M , s d i p a R d n a r G L F , d e r f l A e k a L e l i b o M s e t a t s E r e l t u C s n e e r G s s e r p y C e g a l l i V I I I E L U D E H C S , N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R . C N I , S E I T I N U M M O C N U S 5 1 0 2 , 1 3 R E B M E C E D ) s d n a s u o h t n i s t n u o m a ( r o ) A ( d e r i u q c A ) C ( d e t c u r t s n o C ) A ( ) A ( ) A ( ) A ( ) A ( ) C ( ) C & A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) C & A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( e t a D 9 9 9 1 5 1 0 2 4 1 0 2 4 1 0 2 1 1 0 2 8 9 9 1 0 0 0 2 2 1 0 2 4 1 0 2 5 1 0 2 4 1 0 2 3 9 9 1 9 9 9 1 5 1 0 2 5 1 0 2 0 0 0 2 4 1 0 2 5 1 0 2 1 0 0 2 7 9 9 1 6 9 9 1 2 1 0 2 4 1 0 2 7 9 9 1 5 1 0 2 3 1 0 2 4 8 9 1 5 1 0 2 1 1 0 2 5 7 6 0 8 7 5 7 1 , 3 9 5 8 , 1 3 5 8 , 1 9 3 7 , 3 1 0 6 1 , 7 3 8 7 , 3 0 5 2 , 1 4 2 3 1 4 2 9 2 1 , 4 7 9 4 , 1 7 8 9 8 3 2 2 5 , 3 5 2 9 , 2 5 8 7 6 4 7 , 5 0 2 2 , 4 8 5 3 , 3 7 3 0 , 1 9 2 9 , 1 2 2 0 , 2 7 9 3 , 1 3 4 2 5 8 1 , 5 6 7 1 , 1 8 8 7 , 1 d e t a l u m u c c A n o i t a i c e r p e D 8 6 7 , 8 5 9 2 , 6 4 9 7 9 , 8 1 l a t o T 6 0 5 , 3 3 2 8 3 , 1 1 7 8 2 , 5 3 7 6 2 , 4 2 7 7 2 , 0 3 7 4 7 , 4 2 3 3 8 , 9 1 6 3 5 , 7 0 6 5 , 7 1 9 7 , 3 3 6 8 , 5 3 8 5 , 8 3 7 4 , 3 2 0 0 0 , 8 5 5 1 7 , 2 6 6 8 5 , 6 1 4 1 9 , 9 6 6 7 , 7 6 1 7 , 2 1 6 8 4 , 2 4 1 1 8 , 5 4 1 1 , 5 9 4 8 9 , 2 3 6 8 , 2 1 7 4 6 , 3 8 0 3 7 , 0 1 d e i r r a C t n u o m A s s o r G 5 1 0 2 , 1 3 r e b m e c e D t a d e z i l a t i p a C s t s o C n o i t i s i u q c A o t t n e u q e s b u S ) s t n e m e v o r p m I ( y n a p m o C o t t s o C l a i t i n I e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e c n a r b m u c n E n o i t a c o L e m a N y t r e p o r P I I I E L U D E H C S , N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R . C N I , S E I T I N U M M O C N U S 5 1 0 2 , 1 3 R E B M E C E D ) s d n a s u o h t n i s t n u o m a ( 8 7 7 , 7 5 7 3 , 9 3 9 3 0 , 5 1 6 5 0 , 2 3 2 1 0 , 1 1 2 7 2 , 3 3 7 8 9 , 2 2 7 6 8 , 8 2 7 5 0 , 4 2 3 7 6 , 8 1 6 0 7 , 4 0 8 1 , 7 0 6 7 , 2 3 5 3 , 5 3 8 0 , 8 3 4 1 , 2 2 0 5 5 , 6 5 5 5 7 , 3 4 5 4 9 , 4 1 6 9 2 , 9 2 9 3 , 7 6 3 4 , 7 6 1 1 , 7 3 2 6 5 , 5 4 0 6 , 0 8 4 2 2 , 2 2 0 2 , 2 1 7 5 7 , 7 6 0 7 9 , 9 0 9 9 0 2 9 , 6 0 4 9 , 3 0 5 4 , 1 0 7 3 5 1 0 , 2 0 8 2 , 1 0 1 4 , 1 0 9 6 0 6 1 , 1 0 3 8 , 2 0 8 3 1 3 0 , 1 0 3 3 , 1 0 1 5 0 0 5 0 5 4 , 1 1 4 6 , 1 0 6 9 , 8 1 8 1 6 4 7 3 0 8 2 , 5 0 7 3 , 5 9 4 2 0 1 5 , 4 1 0 6 7 1 6 6 0 6 7 0 9 8 , 5 1 1 7 1 , 6 2 8 7 , 1 8 4 1 5 0 2 , 2 5 1 0 , 2 2 2 1 , 3 3 5 8 6 , 6 1 4 5 4 , 3 1 6 4 , 1 — 1 3 2 2 4 7 , 3 0 1 7 7 8 9 5 1 2 7 2 , 3 9 8 5 3 2 2 , 4 2 9 4 , 4 1 2 6 0 , 5 5 0 8 , 3 5 3 9 , 2 — 6 6 1 , 3 4 7 6 , 1 9 2 6 , 1 7 2 5 , 0 1 2 0 2 3 7 2 , 2 — — — — — — — — — — — — — — — — — — — — — — — — 2 7 1 — 6 3 5 — — 1 5 - F 7 0 6 , 1 3 9 5 , 7 3 1 9 8 , 4 1 1 5 8 , 9 2 0 5 1 7 9 9 , 8 2 0 3 , 6 3 1 4 , 5 2 6 9 5 , 2 2 3 7 6 , 8 1 5 7 4 , 4 8 3 4 , 3 0 5 0 , 2 4 9 1 , 5 1 1 8 , 4 6 5 0 , 2 2 7 2 3 , 2 5 6 6 1 , 3 4 3 5 4 4 3 2 , 4 7 8 5 , 3 1 0 5 , 4 6 1 1 , 7 3 6 9 3 , 2 0 3 9 , 8 7 5 9 5 5 7 6 , 1 7 9 6 , 7 5 5 5 , 7 6 0 9 9 0 2 9 , 6 0 4 9 , 3 0 5 4 , 1 0 7 3 5 1 0 , 2 0 8 2 , 1 0 1 4 , 1 0 9 6 0 6 1 , 1 0 3 8 , 2 0 8 3 1 3 0 , 1 0 3 3 , 1 0 1 5 0 0 5 0 5 4 , 1 1 4 6 , 1 0 6 9 , 8 1 6 4 4 4 7 3 0 8 2 , 5 0 7 3 , 5 9 4 2 0 1 5 , 4 1 0 6 7 5 2 1 0 6 7 0 9 8 , 5 1 C 9 6 6 , 0 3 0 5 8 , 1 1 4 0 5 , 9 1 A B C 2 7 6 , 0 2 1 6 5 , 2 1 5 0 4 , 1 1 C A A 4 0 4 , 8 C A 5 7 9 , 0 3 C C A — C 0 4 6 , 8 2 A 8 6 1 , 2 3 C — 6 9 0 , 9 4 0 1 1 , 4 Z A , n o i t c n u J e h c a p A N I , n o s r e d n A L F , o d n a l r O J N , t n o m r e l C I M , a i n o d e l a C O C , e n o t s e r i F H O , a i v a t a B g n i p m a C d o o w t f i r D t r o s e R e g a l l i V l l i M n o t t u D t s e r C e l g a E k r o F t s a E n u R d l e i f r e e D d o o w r e e D r o b r a H t r e s e D I M , . p w T n o t g n i h s a W s e t a t s E e g a l l i V t s a E I M , n o g e k s u M L F , a l a c O Z A , a s e M I M , t n i l F R O , h t a m o l i h P L F , a s s a s o m o H D M , e l l i v y e l a h W N I , t r a h k l E D M , y t i C n a e c O L F , d a e t s e m o H C N , d r o c n o C I M , t r o p w e N e g a l l i V d l e i f r i a F e g a l l i V a t s e i F ' e v o C s n a m r e h s i F s w o d a e M t s e r o F t f a r c l e g E w e i V t s e r o F y e l a h W t r o F s n o s a e S r u o F n w o t h c n e r F s d o o W h t e b a z i l E / a l l i V n w o T r e i t n o r F r e t s a o C d l o G l e r u a L n e l G I M , s d i p a R d n a r G s e t a t s E e l i b o M d n a r G O C , n o t n r o h T e g d i R a t l A t a e v o r G e h T L F , a r t i C s e k a L d n a r G L F , s r e y M . t F L F , o d n a l r O t r o s e R V R s e v o r G r o b r a H m a e r t s f l u G t r o s e R V R d n a l s I ' s n n y w G I M , e l l i v r e b b e W L F , e l a d n r u b u A A V , n n y w G d n u o r g p m a C & s n o t p m a H e h T n i l m a H I M , k e e r C e l t t a B e g a l l i V s l l i H y r o k c i H r o ) A ( d e r i u q c A ) C ( d e t c u r t s n o C ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( d e i r r a C t n u o m A s s o r G 5 1 0 2 , 1 3 r e b m e c e D t a d e z i l a t i p a C s t s o C n o i t i s i u q c A o t t n e u q e s b u S ) s t n e m e v o r p m I ( y n a p m o C o t t s o C l a i t i n I e t a D 1 1 0 2 7 9 9 1 1 1 0 2 4 0 0 2 7 9 9 1 2 1 0 2 4 0 0 2 6 9 9 1 3 1 0 2 5 9 9 1 8 8 3 4 6 6 , 5 2 7 6 , 1 6 6 2 , 6 1 5 3 , 5 8 6 2 5 7 6 , 6 9 4 1 , 4 2 8 5 1 , 2 8 3 5 , 4 d e t a l u m u c c A n o i t a i c e r p e D 3 1 0 2 3 8 3 , 1 3 1 0 2 5 9 9 1 6 9 9 1 4 9 9 1 5 1 0 2 1 0 0 2 4 1 0 2 5 1 0 2 5 1 0 2 8 9 9 1 2 1 0 2 4 9 9 1 3 1 0 2 5 1 0 2 8 2 0 , 1 5 2 1 , 6 8 9 7 , 0 1 2 9 2 6 6 0 , 3 2 4 5 , 3 7 4 7 4 8 0 , 1 1 0 5 8 1 8 , 5 6 3 1 , 1 5 0 8 , 2 5 1 5 9 5 3 , 1 4 1 0 2 1 6 4 , 2 5 7 8 , 2 0 6 4 , 4 1 3 3 8 , 9 l a t o T 7 6 1 , 9 1 6 0 1 , 0 1 5 8 4 , 2 6 5 1 , 0 2 7 8 5 , 7 4 4 4 7 , 7 3 7 6 , 4 2 9 4 3 , 2 1 6 9 2 , 0 1 3 9 7 , 1 1 4 3 7 , 5 7 3 3 , 9 1 8 9 3 , 7 1 6 1 2 , 8 8 7 8 , 8 1 2 3 3 , 6 6 5 0 2 , 6 2 7 6 6 , 2 1 5 0 7 , 5 1 0 0 2 , 5 2 9 2 , 3 1 1 6 4 , 0 3 1 4 7 , 3 3 5 3 4 , 2 4 0 6 , 3 1 3 9 4 , 9 3 5 6 , 7 1 6 8 1 , 9 5 5 0 , 2 4 5 0 , 9 1 5 5 7 , 3 4 8 5 2 , 4 2 4 4 0 , 7 9 7 4 , 1 1 6 3 7 , 9 3 4 5 , 1 1 5 7 8 , 7 1 4 5 4 , 5 8 8 8 , 6 1 6 1 8 , 7 8 0 5 , 4 1 2 9 6 , 2 6 5 3 5 , 2 2 8 9 9 , 1 1 5 4 3 , 8 5 6 8 , 4 2 4 6 , 2 1 1 8 9 , 9 2 0 4 4 6 5 8 0 4 3 4 1 5 , 1 0 2 9 0 3 4 2 0 1 , 1 2 3 8 , 3 5 1 4 0 0 7 0 7 8 0 6 5 0 5 2 0 8 2 0 1 5 0 0 4 2 6 4 , 1 0 7 3 , 4 0 4 6 , 3 0 7 6 , 3 9 6 6 0 6 3 , 7 5 3 3 0 5 6 0 8 4 1 0 4 , 1 3 0 4 3 , 2 2 4 5 , 1 3 7 5 , 6 6 2 4 , 1 7 5 0 , 4 0 1 8 3 6 9 8 2 1 , 7 5 9 0 , 9 3 1 6 7 6 4 , 3 5 9 5 , 2 9 0 2 , 4 4 4 8 , 8 3 9 0 , 4 2 1 9 , 2 5 2 1 5 5 7 , 3 6 6 3 7 7 3 0 1 3 9 1 0 , 6 8 4 2 , 1 7 1 8 , 1 6 8 1 6 0 9 , 4 8 8 2 , 3 e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A — ) 2 4 ( d n a L — — — — — — ) 5 ( — — — — ) 1 1 ( — — — — — — — — — — — — 2 5 - F e l b a i c e r p e D s t e s s A d n a L e c n a r b m u c n E n o i t a c o L e m a N y t r e p o r P 3 9 8 1 3 0 , 7 7 6 0 , 8 6 9 5 , 3 1 6 7 3 , 8 2 9 0 , 1 6 2 9 , 1 1 0 6 6 , 4 3 1 9 7 , 0 2 1 3 4 , 6 4 8 8 , 8 7 2 5 , 5 9 9 6 , 2 2 8 7 , 3 1 2 4 5 , 2 3 6 7 , 6 1 1 6 0 , 4 2 4 1 , 4 1 5 1 3 , 2 6 5 2 2 , 2 2 9 7 9 , 5 7 9 0 , 7 8 4 0 , 3 6 3 7 , 7 5 9 7 , 9 2 0 4 4 8 9 8 0 4 3 4 1 5 , 1 0 2 9 0 3 4 2 0 1 , 1 2 3 8 , 3 0 2 4 0 0 7 0 7 8 0 6 5 0 5 2 3 7 4 , 1 0 8 2 0 1 5 0 0 4 0 7 3 , 4 0 4 6 , 3 0 7 6 , 3 9 6 6 0 6 3 , 7 5 3 3 0 5 6 0 8 4 3 1 1 , 8 2 0 4 3 , 2 C 2 8 2 , 7 1 C — B C C 1 8 7 , 7 6 C 6 8 5 , 2 1 5 3 0 , 7 4 1 1 , 4 B B 2 8 6 , 9 4 5 3 , 8 0 2 6 , 2 9 4 4 , 8 3 2 1 , 0 4 C A 0 4 8 , 0 1 A C 4 2 3 , 6 1 7 6 0 , 8 1 I M , s n i k p o H t r o s e R V R e g d i R n e d d i H E D , a c i r e d e r F e t n i o P h g i H I M , d n a l l o H e g a l l i V t s e W y a d i l o H I M , y l l o H n a i i a w a H / e g a l l i V y l l o H s n e d r a G L F , l l i H y l l o H s e t a t s E t s e r o F y l l o H L F , h c a e B s r e y M . t F , e k a L e h t n o a v e n e G H O L F , d n a l s I t t i r r e M I M , d n a l y a W I M , c a p a C Y N , a v a J h t r o N Y N , k r a P d l e i f n e e r G g n i s s o r C s r e t n u H n e l G s r e t n u H & V R k e e r C n a i d n I t r o s e R g n i p m a C k r a P k e e r C n a i d n I s e k a L d n a l s I f o ) M T ( k r a P e n o t s y l l e J k r o Y w e N n r e t s e W t a ) M T ( k r a P e n o t s y l l e J s e r c A d o o w h c r i B I M , g n i s n a L s w o d a e M n o t g n i s n e K I M , y t i C e s r e v a r T L F , d e r f l A e k a L I M , e l a d n e l l A L F , y r a B e D Z A , n o i t c n u J e h c a p A L F , e g n a r O t r o P e l i b o M t r u o C s g n i K e t n i o P s g n i K ' e k a L s g n i K e g a l l i V s e t a t s E d o o w l l o n K a c n a l B a s a C a L e g a l l i V a t s o C a L L F , e l a d n r u b u A s g n i d n a L a n a i l u J e k a L X T , n i t s u A t r o s e R V R a d n e i c a H a L I M , n e r r a W A P , n o v r a N e c a l P e t t e y a f a L d o o W n I e k a L J N , y a M e p a C L F , y r r e b l u M & V R e i r u a L e k a L t r o s e R g n i p m a C e g a l l i V e t n i o P e k a L V R h p l o d u R e k a L N I , s u a l C a t n a S t r o s e R V R & d n u o r g p m a C I I I E L U D E H C S , N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R . C N I , S E I T I N U M M O C N U S 5 1 0 2 , 1 3 R E B M E C E D ) s d n a s u o h t n i s t n u o m a ( r o ) A ( d e r i u q c A ) C ( d e t c u r t s n o C ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) C & A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) C ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( e t a D 6 9 9 1 4 1 0 2 5 1 0 2 5 1 0 2 4 0 0 2 5 1 0 2 1 1 0 2 5 8 9 1 6 9 9 1 4 1 0 2 4 1 0 2 4 1 0 2 4 9 9 1 0 0 0 2 6 8 9 1 4 9 9 1 5 1 0 2 4 1 0 2 4 1 0 2 1 1 0 2 3 1 0 2 1 1 0 2 1 0 0 2 2 1 0 2 4 1 0 2 2 0 0 2 1 1 0 2 4 1 0 2 8 9 9 1 1 1 0 2 4 9 9 1 9 9 9 1 d e i r r a C t n u o m A s s o r G 5 1 0 2 , 1 3 r e b m e c e D t a d e z i l a t i p a C s t s o C n o i t i s i u q c A o t t n e u q e s b u S ) s t n e m e v o r p m I ( y n a p m o C o t t s o C l a i t i n I d e t a l u m u c c A n o i t a i c e r p e D l a t o T e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e c n a r b m u c n E n o i t a c o L e m a N y t r e p o r P 9 9 1 , 4 2 2 0 , 1 2 3 3 7 4 5 7 2 2 8 0 2 , 6 8 2 3 , 1 8 4 4 , 2 6 2 9 , 3 1 6 7 3 1 7 5 4 5 , 2 3 4 2 , 7 4 1 8 , 8 3 0 7 , 3 8 5 3 , 2 1 5 5 8 6 1 5 5 6 8 5 5 4 9 8 9 3 8 7 2 2 , 3 5 1 6 , 5 8 0 6 5 6 1 , 8 5 4 6 , 1 3 2 9 , 1 3 2 4 , 9 7 9 0 , 1 6 6 2 , 2 5 8 3 , 2 5 7 9 , 9 6 3 5 , 2 2 2 8 1 , 2 2 5 8 3 , 5 3 0 5 3 , 7 1 9 8 4 , 4 1 3 4 8 , 8 3 3 5 , 4 2 2 6 , 7 1 1 0 , 1 2 4 5 8 , 7 5 4 7 1 , 6 1 5 0 0 , 2 2 6 6 5 , 4 2 0 6 0 , 7 1 8 8 9 , 5 0 2 7 , 0 1 0 6 6 , 1 4 9 1 , 7 4 2 0 , 8 1 5 2 2 , 0 1 1 8 9 , 8 6 7 9 , 9 7 6 6 , 0 4 0 3 9 , 6 1 1 8 9 , 7 2 7 8 4 , 9 1 4 3 , 9 3 9 5 3 , 2 2 4 8 8 , 7 5 5 8 , 3 3 9 6 , 5 5 2 3 , 9 6 6 9 , 9 1 2 0 1 , 9 1 5 1 6 , 1 3 5 9 1 , 6 1 9 5 1 , 3 1 3 8 4 , 8 1 5 3 , 4 7 6 1 , 7 1 9 8 , 5 1 4 9 3 , 9 4 4 0 4 , 4 1 0 9 6 , 0 2 6 5 2 , 3 2 0 5 2 , 6 1 9 6 4 , 5 0 8 0 , 0 1 0 1 4 , 1 4 3 5 , 2 1 4 5 5 , 3 5 7 6 , 8 1 3 8 , 4 4 9 3 , 8 1 3 4 , 9 3 0 7 1 , 2 1 0 7 6 , 3 2 7 6 1 , 9 1 5 2 , 8 3 5 9 3 , 0 2 4 6 9 , 6 7 5 5 , 3 3 1 3 , 5 0 5 6 0 7 5 , 2 0 8 0 , 3 0 7 7 , 3 5 5 1 , 1 0 3 3 , 1 0 6 3 2 8 1 5 5 4 0 2 1 , 5 0 6 4 , 8 0 7 7 , 1 5 1 3 , 1 0 1 3 , 1 0 1 8 9 1 5 0 4 6 0 5 2 0 9 4 , 5 0 4 6 , 3 0 5 5 , 1 0 5 1 , 4 2 8 5 , 1 6 3 2 , 1 0 6 7 , 4 1 1 3 , 4 0 2 3 0 9 0 , 1 4 6 9 , 1 0 2 9 8 9 2 0 8 3 5 6 5 , 3 5 8 4 9 1 1 — 2 9 2 , 5 3 1 3 4 6 2 0 5 1 , 3 6 6 9 , 2 1 7 1 , 3 9 2 5 2 2 4 , 1 2 9 1 , 9 6 8 6 , 6 1 0 3 9 , 2 1 1 4 7 7 0 4 , 2 0 9 3 9 0 2 4 3 5 , 1 6 1 4 , 3 5 4 3 , 1 7 6 3 , 5 7 6 8 , 9 5 8 9 9 5 0 , 1 1 4 2 3 , 2 0 1 3 , 1 4 9 9 , 3 1 4 2 4 , 1 7 2 0 , 1 8 8 2 , 1 — — — — ) 1 ( — — 6 1 1 — — — — — 7 2 1 9 7 3 — — — — — — — — ) 4 1 ( — — — — — — 5 1 ) 5 1 ( 3 5 - F 0 6 7 , 5 1 8 4 , 9 1 3 8 9 , 8 1 5 1 6 , 1 3 3 0 9 , 0 1 6 4 8 , 2 1 9 1 2 , 8 1 0 2 , 1 1 0 2 , 4 0 2 7 , 2 1 5 6 8 , 8 4 2 8 9 , 2 1 8 9 4 , 1 1 0 7 5 , 6 0 2 3 , 3 8 2 7 , 4 3 7 6 , 7 0 2 0 , 1 0 2 0 , 2 9 5 2 , 5 6 8 4 , 3 7 2 0 , 3 5 2 3 , 2 1 4 6 5 , 9 2 5 8 1 , 1 1 1 1 6 , 2 1 3 4 8 , 6 1 4 9 , 6 3 1 0 4 , 6 0 4 5 , 5 0 3 5 , 2 5 2 0 , 4 0 5 6 0 7 5 , 2 0 8 0 , 3 0 7 7 , 3 6 5 1 , 1 0 3 3 , 1 0 6 3 6 6 5 5 4 0 2 1 , 5 0 6 4 , 8 0 7 7 , 1 8 8 1 , 1 0 1 3 , 1 1 3 4 9 1 5 0 4 6 0 5 2 0 9 4 , 5 0 4 6 , 3 0 5 5 , 1 0 5 1 , 4 2 8 5 , 1 0 5 2 , 1 0 6 7 , 4 1 1 3 , 4 0 2 3 0 9 0 , 1 4 6 9 , 1 0 2 9 3 8 2 5 9 3 A 0 0 0 , 0 1 5 7 8 , 9 3 3 5 , 4 1 C 2 5 7 , 7 C C C 5 6 7 , 6 1 0 3 , 6 2 5 2 3 , 8 B C A — 5 0 8 , 7 C 0 5 1 , 1 1 C C C C 7 0 0 , 0 2 0 5 7 , 9 C 7 7 1 , 3 1 2 1 , 8 1 B C 5 5 5 , 1 1 C L F , o d n a l r O L F , a p m a T C S , y a w n o C I M , i t n a l i s p Y L F , e g n a r O t r o P N I , o s i a r a p l a V I M , t n o m l e B I M , d n a l l o H s g n i d n a L e r o h s e k a L g n i s s o r C e d i s e k a L s a l l i V e r o h s e k a L e g a l l i V e r u s i e L s m r a F y t r e b i L s e t a t s E n l o c n i L r e t h g i l p m a L w e i v e k a L L F , s e l p a N k r a P V R o n i r a M n a S e k a L Z A , n o i t c n u J e h c a p A r a t S e u l B / n a m h c t u D t s o L E M , k c i w s n u r B r o n a M d o o w e l p a M I M , e k a L e t i h W s e t a t s E e k a L w o d a e M L I , n o s e t t a M k o o r B e l p a M C N , e t t o l r a h C I M , e o r n o M L F , a p m a T s e t a t s E k o o r b w o d a e M e g a l l i V k o o r b w o d a e M k o o r b w o d a e M I M , d o o w k c o R r a t l a r b i G f o s d n a l w o d a e M E M , k c i w s n u r B L F , s e l p a N Z A , a s e M t r o s e R V R s e l p a N w e i V n i a t n u o M g n i t e e m y r r e M L F , n e v a H e r o o M e k a L h t r o N A V , t n i o P w e N t r o s e R V R t n i o P w e N I M , e l l i v h t r o N s g n i s s o r C e l l i v h t r o N O C , o l b e u P s e t a t s E t n i o P h t r o N A C , d l o g e s r a o C X T , n i t s u A k e e r C k a O t s e r C k a O I M , g n i s n a L t s a E e g a l l i V d n a l s I k a O H O , g r u b s i m a i M e g a l l i V d o o w k a O L F , y t i C e g n a r O t r o s e R V R y t i C e g n a r O L F , y t i C e g n a r O e g a l l i V e e r T e g n a r O H O , d r o f l i M e k a L d r a h c r O L I , o n e t n a M e g d i R k a O I I I E L U D E H C S , N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R . C N I , S E I T I N U M M O C N U S 5 1 0 2 , 1 3 R E B M E C E D ) s d n a s u o h t n i s t n u o m a ( r o ) A ( d e r i u q c A ) C ( d e t c u r t s n o C ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) C & A ( ) C ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) C & A ( ) A ( ) A ( ) A ( ) A ( d e i r r a C t n u o m A s s o r G 5 1 0 2 , 1 3 r e b m e c e D t a d e z i l a t i p a C s t s o C n o i t i s i u q c A o t t n e u q e s b u S ) s t n e m e v o r p m I ( y n a p m o C o t t s o C l a i t i n I e t a D 2 1 0 2 5 1 0 2 5 1 0 2 5 1 0 2 4 1 0 2 4 1 0 2 0 0 0 2 9 9 9 1 5 1 0 2 3 1 0 2 2 0 0 2 4 9 9 1 0 8 9 1 6 8 9 1 4 0 0 2 1 1 0 2 5 1 0 2 6 9 9 1 2 1 0 2 4 1 0 2 4 1 0 2 8 9 9 1 5 1 0 2 1 0 0 2 0 0 0 2 2 0 0 2 5 1 0 2 5 1 0 2 1 0 0 2 1 3 6 , 1 1 6 7 2 5 3 8 6 0 5 1 4 5 — 3 3 6 , 5 5 7 2 , 2 3 1 2 6 4 8 , 2 2 8 8 , 8 3 6 6 , 6 9 8 0 , 2 5 9 3 , 3 7 5 5 , 8 6 6 2 , 1 1 4 5 8 5 6 , 6 7 7 0 , 1 0 7 1 , 1 0 5 0 , 1 1 9 0 , 2 0 2 6 4 4 9 , 6 1 1 7 , 9 1 6 1 , 1 0 1 1 7 3 0 , 6 9 7 6 , 0 1 8 2 7 , 7 9 2 8 5 , 9 1 8 3 0 , 0 5 6 1 7 , 9 2 4 4 0 , 1 1 5 6 2 , 2 4 3 6 , 2 1 3 5 3 , 6 8 3 2 , 1 1 9 8 8 , 0 3 0 5 8 , 1 2 9 2 9 , 6 1 3 2 1 , 4 6 7 8 , 6 9 5 5 , 7 1 4 6 , 8 3 3 7 2 , 4 3 8 2 6 , 3 1 8 1 8 , 0 1 7 3 3 , 0 3 1 3 4 , 2 2 0 5 7 , 4 2 7 8 , 3 4 3 2 2 , 7 2 2 1 3 , 4 4 2 6 1 , 9 2 7 8 4 , 8 6 5 5 2 , 6 2 6 9 , 4 1 2 9 8 , 5 8 2 4 7 , 5 1 8 7 6 , 8 4 6 4 0 , 9 2 4 9 4 , 0 1 9 6 8 4 0 6 , 1 1 9 3 7 , 4 8 6 7 , 0 1 9 8 1 , 6 2 6 0 8 , 9 1 4 2 4 , 5 1 1 9 9 , 3 1 7 4 , 6 3 9 9 , 5 3 9 2 4 , 7 3 0 2 , 1 3 8 4 9 , 2 1 8 2 9 , 8 7 2 8 , 2 2 1 8 4 , 0 2 9 4 2 , 4 2 2 5 , 5 3 3 2 4 , 5 2 6 2 6 , 9 3 1 6 9 , 5 2 7 8 8 , 6 6 5 3 8 , 5 5 0 9 , 3 1 d e t a l u m u c c A n o i t a i c e r p e D l a t o T e l b a i c e r p e D s t e s s A 0 4 8 , 3 0 6 3 , 1 6 3 8 , 1 1 d n a L 0 7 6 0 5 5 6 9 3 , 1 0 3 0 , 1 4 1 6 , 1 0 7 4 0 0 7 , 4 4 4 0 , 2 5 0 5 , 1 2 3 1 5 0 4 8 4 6 , 2 0 3 1 0 7 0 , 3 0 8 6 0 9 8 , 1 0 1 5 , 7 0 5 9 , 1 1 0 5 0 5 3 , 8 0 0 8 , 1 6 8 6 , 4 1 0 2 , 3 0 0 6 , 1 0 2 4 7 5 0 , 1 e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e c n a r b m u c n E n o i t a c o L e m a N y t r e p o r P 1 8 — — 2 9 9 4 7 , 9 9 6 8 0 3 5 , 6 9 3 7 , 4 5 2 2 9 4 3 , 3 7 2 5 7 4 4 , 3 4 7 0 , 4 4 7 1 , 2 1 7 3 7 , 1 4 2 8 , 8 1 0 3 2 4 3 6 , 6 6 4 2 , 3 9 8 5 7 0 4 9 5 9 0 2 , 2 6 5 4 , 8 3 8 7 , 8 3 1 7 8 , 0 1 0 8 6 3 9 2 5 3 0 , 4 — — — — — — — — — — 5 3 2 0 6 — 7 6 4 ) 9 5 2 ( — — — — — — — — — ) 4 ( — — — — 4 5 - F 3 4 1 , 6 7 1 6 6 , 5 1 8 7 6 , 8 4 6 4 0 , 9 2 2 0 4 , 0 1 — — 4 7 0 , 5 3 4 5 , 0 1 0 4 8 , 2 2 9 7 2 , 9 1 0 5 2 , 3 4 4 5 7 9 3 , 2 9 6 1 , 7 1 2 9 6 , 5 3 7 9 , 0 3 4 1 3 , 6 2 8 6 , 5 8 3 2 , 2 2 4 7 0 , 0 2 0 4 0 , 2 3 6 4 , 5 3 7 6 9 , 6 1 3 4 8 0 9 0 , 5 1 7 0 2 , 6 6 2 4 5 , 5 0 7 8 , 9 6 3 8 , 1 1 0 4 8 , 3 0 6 3 , 1 0 7 6 0 5 5 6 9 3 , 1 0 3 0 , 1 9 7 3 , 1 0 7 4 0 0 7 , 4 4 4 0 , 2 8 3 0 , 1 2 7 5 0 4 7 0 9 , 2 0 3 1 0 7 0 , 3 0 8 6 0 9 8 , 1 0 1 5 , 7 0 5 9 , 1 1 0 5 0 5 3 , 8 0 0 8 , 1 0 9 6 , 4 1 0 2 , 3 0 0 6 , 1 0 2 4 7 5 0 , 1 2 0 9 , 9 3 0 5 8 , 0 1 1 0 6 , 9 1 1 0 4 , 0 1 2 0 0 , 5 — C C 5 6 0 , 4 C A B A — C C 5 0 5 , 3 1 B A 4 8 3 , 3 1 9 8 4 , 2 1 A 7 8 3 , 9 1 C C 3 7 4 , 9 5 5 3 , 6 2 — B Z A , e d n a r G a s a C L F , t r o p n e v a D L F , n a i t s a b e S L F , k r a P s a l l e n i P Y N , a g a w o t k e e h C V R & f l o G k e e r C m l a P e g a l l i V y e K m l a P e g a l l i V e d i s k r a P e l a y o R k r a P e c a l P k r a P t r o s e R A C , s e l b o R o s a P t r o s e R V R s e l b o R o s a P X T , n w o t e g r o e G N I , d o o w n e e r G L F , o c c i M k e e r C e l b b e P h c n a r B n a c e P y a B n a c i l e P A M , h c i w d n a S t r o s e R V R d n o P s ' r e t e P A P , r e t s a c n a L O M , n o l l a F O ' N I , y r u b e l d d i M A V , e g r o e G e c n i r P I M , s d i p a R d n a r G L F , y t i C s e n i a H X T , n o t s u o H I M , e l l i v n o s d u H e g d i R t n a s a e h P c r a P k a O n i P s l l i H e n i P e g d i R e n i P e c a r T e n i P s g n i d n a L n o i t a t n a l P s e t a t s E l a i t n e d i s e r P e g a l l i V e l i b o M e g a l l i V k o o r b e n i P Z A , n o i t c n u J e h c a p A e g a r i M o h c n a R Z A , y t i C d a e h l l u B k e e r C x o F t a e v r e s e R L F , f o o r p t s o r F t r o s e R V R w o b n i a R I M , n e v a H d n a r G e g a l l i V n e v a H r e v i R I M , d n o m h c i R L F , t r o p n e v a D e c a l P d n o m h c i R e g d i R e h T L F , r e v i R l a t s y r C N I , n e h s o G V R n o y n a C r e h s u r C k c o R k r a P y r u b x o R k r a P X T , n i t s u A X T , n i t s u A L F , n i k s u R b u l C e d i s r e v i R h c n a R r e v i R e g d i R r e v i R I I I E L U D E H C S , N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R . C N I , S E I T I N U M M O C N U S 5 1 0 2 , 1 3 R E B M E C E D ) s d n a s u o h t n i s t n u o m a ( r o ) A ( d e r i u q c A ) C ( d e t c u r t s n o C ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) C & A ( ) C ( ) A ( ) C & A ( ) A ( ) A ( d e i r r a C t n u o m A s s o r G 5 1 0 2 , 1 3 r e b m e c e D t a d e z i l a t i p a C s t s o C n o i t i s i u q c A o t t n e u q e s b u S ) s t n e m e v o r p m I ( y n a p m o C o t t s o C l a i t i n I e t a D 4 9 9 1 5 1 0 2 2 1 0 2 2 1 0 2 4 1 0 2 5 9 9 1 2 0 0 2 5 1 0 2 5 9 9 1 7 9 9 1 3 1 0 2 4 1 0 2 5 1 0 2 6 0 0 2 6 9 9 1 2 1 0 2 4 1 0 2 4 1 0 2 7 9 9 1 4 1 0 2 5 1 0 2 1 1 0 2 8 9 9 1 0 0 0 2 8 9 9 1 5 1 0 2 0 0 0 2 4 1 0 2 8 9 9 1 5 8 4 5 3 8 , 3 3 6 0 , 5 9 1 7 , 5 1 5 1 4 5 5 2 , 5 1 0 2 , 8 9 7 3 , 1 2 0 4 0 8 3 , 5 3 5 9 , 0 2 4 3 4 , 1 0 5 4 5 1 1 , 3 6 7 8 , 2 1 7 5 9 , 2 1 9 2 , 1 9 4 6 0 5 1 , 7 2 7 7 2 5 3 5 9 1 , 2 9 8 8 , 1 2 2 7 , 4 — 5 4 2 2 4 9 , 5 7 7 9 8 7 1 , 7 1 1 1 , 5 2 5 5 5 , 9 2 4 6 6 , 0 3 9 3 8 , 0 4 3 3 5 , 6 2 4 8 , 8 3 7 3 , 0 3 7 9 6 , 2 9 8 4 2 , 9 3 7 9 4 , 3 1 0 2 5 , 2 8 4 2 , 6 2 2 6 5 , 5 2 3 9 0 , 0 1 9 4 4 , 4 2 8 7 9 , 1 2 7 5 8 , 7 2 2 8 8 , 4 1 8 6 9 , 6 1 7 7 8 , 5 1 2 4 9 , 2 3 2 8 7 , 3 1 8 1 0 , 4 1 7 1 , 2 1 1 7 2 , 4 9 4 8 , 4 1 6 7 8 , 5 2 8 6 6 , 1 2 1 6 1 , 4 1 1 2 8 , 2 2 5 2 8 , 7 2 4 7 5 , 9 2 9 9 3 , 9 3 3 4 7 , 5 2 1 1 , 8 0 7 6 , 8 2 7 8 8 , 9 7 9 5 9 , 6 3 0 9 2 , 2 1 0 0 4 , 2 8 1 2 , 5 2 2 0 4 , 4 2 5 1 3 , 9 8 9 3 , 2 2 7 1 1 , 1 2 9 3 5 , 5 2 2 2 6 , 2 1 8 6 9 , 5 1 7 1 5 , 5 1 2 8 8 , 7 1 2 8 4 , 3 1 7 1 5 , 3 1 7 2 , 0 1 — 9 9 1 , 4 1 4 4 1 , 4 2 8 1 9 , 8 1 6 7 8 , 2 1 d e t a l u m u c c A n o i t a i c e r p e D l a t o T e l b a i c e r p e D s t e s s A 0 9 2 , 2 0 3 7 , 1 0 9 0 , 1 0 4 4 , 1 0 9 7 0 3 7 3 0 7 , 1 0 1 8 , 2 1 9 8 2 , 2 7 0 2 , 1 0 2 1 d n a L 0 3 0 , 1 0 6 1 , 1 8 7 7 1 5 0 , 2 1 6 8 8 1 3 , 2 0 6 2 , 2 0 0 0 , 1 0 6 3 0 6 0 , 5 1 0 0 3 1 0 5 0 0 9 , 1 1 7 2 , 4 0 5 6 2 3 7 , 1 0 5 7 , 2 5 8 2 , 1 e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e c n a r b m u c n E n o i t a c o L e m a N y t r e p o r P 9 7 3 3 6 0 , 2 0 1 9 , 5 9 8 2 , 8 7 6 1 , 2 9 6 3 , 1 7 2 8 , 6 1 — 1 1 1 , 2 0 1 1 , 2 0 0 3 , 4 1 0 9 9 , 1 0 8 8 0 5 1 , 2 9 4 8 , 3 2 2 5 , 4 6 8 2 , 1 2 0 5 7 5 9 , 6 4 9 7 , 2 3 5 6 5 6 9 , 1 8 8 4 , 1 5 7 1 , 8 — 6 3 1 0 1 5 3 0 1 , 1 2 5 0 , 2 2 — — — — — — — — ) 1 1 ( — — — — — — — — — — — — — — ) 5 1 6 ( 7 2 2 , 2 — ) 3 8 8 ( — ) 0 0 1 , 1 ( 5 5 - F 8 5 7 , 0 2 6 4 4 , 7 2 4 6 6 , 3 2 0 1 1 , 1 3 6 7 5 , 3 3 4 7 , 6 3 4 8 , 1 1 7 8 8 , 9 7 9 5 6 , 2 2 9 7 1 , 0 1 0 9 2 8 2 2 , 3 2 2 2 5 , 3 2 5 6 1 , 7 9 4 5 , 8 1 5 9 5 , 6 1 3 5 2 , 4 2 0 2 1 , 2 1 1 1 0 , 9 3 2 7 , 2 1 9 2 2 , 7 1 7 1 5 , 1 1 — 9 2 0 , 2 6 9 0 , 2 2 9 0 , 2 3 6 0 , 4 1 8 0 4 , 8 1 3 7 7 , 1 1 0 9 2 , 2 0 3 7 , 1 0 9 0 , 1 0 4 4 , 1 0 9 7 0 3 7 3 0 7 , 1 0 1 8 , 2 1 0 0 3 , 2 7 0 2 , 1 0 2 1 0 3 0 , 1 0 6 1 , 1 8 7 7 1 5 0 , 2 1 6 8 8 1 3 , 2 0 6 2 , 2 0 0 0 , 1 0 6 3 0 6 0 , 5 1 0 0 3 1 0 5 5 1 5 , 2 4 4 0 , 2 0 5 6 5 1 6 , 2 0 5 7 , 2 5 8 3 , 2 0 0 0 , 4 5 0 0 9 , 1 1 7 5 3 , 7 2 9 6 3 , 6 1 C B C 9 5 7 , 5 5 — 0 0 0 , 0 2 C 4 9 2 , 7 1 0 8 9 , 0 1 C A 2 1 9 , 7 5 7 5 , 4 1 5 3 4 , 0 1 A 0 0 0 , 8 1 6 6 , 9 1 8 5 3 , 5 A C — 1 6 4 , 4 C 4 5 5 , 9 0 0 3 , 8 1 I M , p i h s n w o T n o t n i l C I M , s t h g i e H g n i l r e t S L F , e i c u L . t S t r o P X T , s o c r a M n a S I M , r o b r A n n A E D , h c a e B h t o b o h e R E M , o c a S L F , a l a c O h c a e B d r a h c r O d l O / o c a S n o t n i l C e t a g d u R r o n a M e t a g d u R b u l C k a O e l d d a S b u l C a n n a v a S k o o r b e l d d a S s e t a t s E s m r a F o i c S e g a l l i V r i A a e S A O K T C , c i t s y M d l O t r o s e R V R t r o p a e S L F , y t i C s e n i a H e g a l l i V m l a P l a y o R L F , i m a i M y r t n u o C l a y o R L F , s r e y M t r o F h t r o N J N , y a M e p a C I M , s l l i H n r u b u A L F , s r e y M . t F I M , p i h s n w o T n o t n i l C Y N , a g a w o t k e e h C O C , s n i l l o C t r o F O M , n o t l e B N M , e l l i v t r a w e t S L F , s l l i h r y h p e Z I M , s d i p a R d n a r G I M , r i a l C . t S I M , . p w T d l e i f h c i R X T , o i n o t n A n a S L F , a s s a s o m o H X T , e s r e v n o C Z A , n o i t c n u J e h c a p A V R s e t i s p m a C e r o h s a e S d n u o r g p m a C d n a k r a P k r a P V R y a B a t s e i S s e t a t s E d l e i f f e h S y t i p i d n e r e S s g n i r p S r e v l i S r o b r a H y k S k r o f h t u o S e n i l y k S e g d i r h t r o N / s l l i H n r e h t u o S s g n i r p S t r o p h t u o S e g a l l i V d o o w h t u o S e c a l P r i a l C . t S e c a l P e g d i r b e n o t S e g d i r b e n o t S k o o r b e n o t S e g d i R t i m m u S y e l l a V n u S V N , o n e R s e t a t s E a l l i V n u S I I I E L U D E H C S , N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R . C N I , S E I T I N U M M O C N U S 5 1 0 2 , 1 3 R E B M E C E D ) s d n a s u o h t n i s t n u o m a ( r o ) A ( d e r i u q c A ) C ( d e t c u r t s n o C ) A ( ) A ( ) C & A ( ) C ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( e t a D 5 1 0 2 5 1 0 2 0 0 0 2 8 9 9 1 4 1 0 2 1 1 0 2 1 1 0 2 5 0 0 2 2 1 0 2 4 1 0 2 6 9 9 1 4 9 9 1 6 9 9 1 4 1 0 2 4 1 0 2 3 1 0 2 5 1 0 2 5 1 0 2 3 1 0 2 1 1 0 2 3 9 9 1 1 1 0 2 2 1 0 2 1 0 0 2 9 9 9 1 5 1 0 2 3 4 4 7 2 4 4 5 4 , 4 5 5 1 , 7 6 9 1 , 1 9 0 9 , 2 8 9 1 , 2 2 8 3 , 3 4 9 7 8 8 4 3 3 4 , 7 3 6 5 , 5 7 4 0 , 3 2 7 2 8 6 5 3 2 7 3 7 9 5 4 8 8 9 5 9 1 , 1 4 6 3 , 7 1 9 4 2 , 1 6 1 0 , 3 1 1 7 , 1 3 5 1 , 7 4 9 1 d e i r r a C t n u o m A s s o r G 5 1 0 2 , 1 3 r e b m e c e D t a d e z i l a t i p a C s t s o C n o i t i s i u q c A o t t n e u q e s b u S ) s t n e m e v o r p m I ( y n a p m o C o t t s o C l a i t i n I d e t a l u m u c c A n o i t a i c e r p e D l a t o T e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e c n a r b m u c n E n o i t a c o L e m a N y t r e p o r P I I I E L U D E H C S , N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R . C N I , S E I T I N U M M O C N U S 5 1 0 2 , 1 3 R E B M E C E D ) s d n a s u o h t n i s t n u o m a ( 9 7 4 , 6 2 6 1 7 , 0 3 6 8 7 , 1 1 0 4 7 , 7 1 9 1 2 , 2 2 2 2 1 , 7 1 3 7 2 , 5 1 8 2 1 , 1 1 0 1 4 , 0 1 1 4 3 , 0 1 1 3 0 , 4 1 5 7 4 , 1 1 8 8 4 , 5 3 3 4 , 6 5 2 4 , 1 1 0 6 7 , 8 1 9 8 , 4 8 7 0 , 8 2 9 4 1 , 1 1 3 2 4 , 5 9 9 7 , 8 3 3 6 0 , 8 8 8 1 , 4 2 9 0 3 , 4 4 0 1 , 6 1 2 5 8 , 1 1 7 6 9 , 8 9 8 5 , 5 2 6 2 4 , 4 2 6 9 5 , 9 5 0 7 , 5 1 9 7 0 , 0 2 2 3 7 , 6 1 8 8 8 , 4 1 4 9 3 , 0 1 0 6 3 , 5 1 0 7 , 9 1 4 0 , 3 1 0 4 9 , 0 1 2 8 0 , 5 3 0 2 , 6 5 4 0 , 1 1 0 7 8 , 7 1 2 2 , 4 8 2 5 , 6 2 3 1 1 , 5 9 5 5 , 0 1 4 6 8 , 5 3 3 2 7 , 7 4 5 9 , 3 4 0 3 , 3 2 4 9 9 , 4 1 2 9 0 , 1 1 7 1 9 , 7 0 9 8 0 9 2 , 6 0 9 1 , 2 5 3 0 , 2 0 4 1 , 2 0 9 3 5 8 3 4 3 7 0 5 0 , 5 0 4 6 0 9 9 5 3 5 6 0 4 0 3 2 0 8 3 0 9 8 0 7 6 0 5 5 , 1 0 9 5 0 1 3 0 4 3 4 8 8 5 5 3 5 3 9 , 2 0 6 7 0 1 1 , 1 0 5 0 , 1 3 8 2 2 4 3 1 2 8 , 6 5 0 7 , 5 1 5 4 3 1 9 3 , 3 0 6 8 , 2 4 8 0 , 4 9 9 9 , 1 3 9 6 0 1 8 , 3 3 7 0 , 6 6 4 3 , 1 4 6 6 , 1 1 3 0 6 7 — 3 5 1 6 5 8 , 2 3 6 7 , 1 — — — ) 9 ( — — 5 8 — — — — — — — — — — — — — 8 5 1 , 9 1 1 0 1 6 5 4 9 3 5 , 3 9 5 6 8 7 3 2 3 5 , 4 5 7 2 , 2 — — — — — — 6 5 - F 6 0 3 , 5 2 4 8 0 , 4 2 5 7 7 , 2 — 4 3 7 , 9 1 1 4 3 , 3 1 8 2 0 , 2 1 0 1 3 , 6 1 6 3 , 3 8 0 0 , 9 1 3 2 , 9 7 6 8 , 4 6 3 7 , 3 9 3 5 , 4 4 1 0 , 1 1 0 1 1 , 7 1 2 2 , 4 5 7 3 , 6 2 3 0 7 , 7 0 5 3 , 3 6 0 7 , 6 1 7 6 2 , 7 5 6 7 , 9 1 5 9 2 , 3 2 6 4 , 0 1 4 1 7 , 0 1 2 4 6 , 5 0 9 8 0 9 2 , 6 0 9 1 , 2 4 4 0 , 2 0 4 1 , 2 0 9 3 0 0 3 4 3 7 0 5 0 , 5 0 4 6 0 9 9 5 3 5 6 0 4 0 3 2 0 8 3 0 9 8 0 7 6 9 1 5 , 3 1 4 7 9 , 0 1 C C 5 2 3 , 4 1 5 7 6 , 5 3 2 2 , 5 A C 5 7 7 , 5 B B A 0 0 7 , 2 4 2 9 , 3 C C 0 5 5 , 1 3 5 9 , 7 1 0 9 5 0 1 3 4 3 8 , 2 0 4 3 4 8 8 5 5 3 0 6 7 0 1 1 , 1 0 5 0 , 1 C C 8 4 6 , 2 5 5 4 8 , 4 6 6 3 , 6 B B 1 7 6 , 7 L F , d n a l s I d n a r G L F , s l l i h r y h p e Z I M , d n a l t r o P X T , e l y K O C , n o l l i D I M , n o s a M I M , n o t g n i d u L L F , n o s d u H L F , r e v o D I W , y a B n o e g r u t S I M , e l l i v s r e p o o C O C , s n i l l o C . t F I M , y t i C e s r e v a r T e g a l l i V w o d a e M n a w S e g a l l i V e r o m a c y S e g a l l i V c a r a m a T t s a E a p m a T s e k a L e e r h T s e t a t s E l l i h r e d n u h T s e t a t s E e n i l r e b m T i e g d i R r e b m T i e l i b o M y r t n u o C & n w o T e g a l l i V s e t a t s E e k a l n u S e c n a d n u S e g d i R t e s n u S e g d i R t e s n u S Y N , a g a w o t k e e h C e t n i o P a l l a C t a s a l l i V e h T E M , n o b s i L e g a l l i V y r t n u o C & n w o T L F , e t t o l r a h C t r o P A C , s e l b o R o s a P L F , a s s a s o m o H , h c a e B d r a h c r O d l O I M , n a m g d i r B E M t r o s e R V R l e e h W n o g a W d n u o r g p m a C & t r o s e R V R s e n i V s e k a L a y a c z i V s d o o W n e d l a W e g a l l i V s e n u D n e r r a W L F , e k a L y d a L b u l C y r t n u o C k a O r e t a W s e t a t s E I M , d n a l l o H e g a l l i V s e r o h S y l r e v a W I M , s u l u m o R s e t a t s E e g a l l i V t s e W H O , o d e l o T e g a l l i V r o i n e S k o o r b t s e W L F , e l a d n r u b u A H O , o d e l o T t r o s e R V R o H d r a w t s e W d n u o r g p m a C & e g d i R e d i s t s e W e g a l l i V k o o r b t s e W 3 1 0 2 1 1 8 C I W , h a l u e b n e l G r o ) A ( d e r i u q c A ) C ( d e t c u r t s n o C d e i r r a C t n u o m A s s o r G 5 1 0 2 , 1 3 r e b m e c e D t a d e z i l a t i p a C s t s o C n o i t i s i u q c A o t t n e u q e s b u S ) s t n e m e v o r p m I ( y n a p m o C o t t s o C l a i t i n I e t a D d e t a l u m u c c A n o i t a i c e r p e D l a t o T e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e l b a i c e r p e D s t e s s A d n a L e c n a r b m u c n E n o i t a c o L e m a N y t r e p o r P I I I E L U D E H C S , N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R . C N I , S E I T I N U M M O C N U S 5 1 0 2 , 1 3 R E B M E C E D ) s d n a s u o h t n i s t n u o m a ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) A ( ) C & A ( ) A ( ) A ( ) A ( 7 9 9 1 1 7 9 , 7 3 1 0 2 4 1 0 2 7 9 9 1 8 9 9 1 5 1 0 2 1 1 0 2 4 1 0 2 8 9 9 1 0 0 0 2 8 9 9 1 5 1 0 2 7 9 9 1 9 9 5 , 3 8 6 9 , 1 9 3 3 , 5 1 6 4 , 8 2 3 6 3 5 7 , 1 5 4 7 4 4 1 , 4 7 8 2 , 3 5 0 8 , 8 1 7 1 7 3 0 , 8 6 7 5 , 6 1 6 5 3 , 2 3 1 1 4 , 0 4 6 7 8 , 1 1 0 2 0 , 2 2 5 5 8 , 3 4 3 8 8 , 9 5 1 2 , 5 1 1 8 6 , 9 1 3 1 , 2 1 2 3 1 , 7 1 3 2 8 , 1 1 6 5 8 , 7 1 4 0 9 , 5 1 2 7 6 6 1 7 , 0 3 1 2 5 , 8 3 5 9 0 , 1 1 7 4 3 , 9 1 5 9 2 , 6 3 3 1 6 , 9 0 8 1 , 9 5 7 4 , 3 1 1 0 0 , 1 1 0 4 5 , 5 1 3 4 3 , 9 3 9 7 , 6 1 0 4 6 , 1 0 9 8 , 1 1 8 7 3 7 6 , 2 0 6 5 , 7 0 7 2 1 0 5 0 4 7 , 1 0 3 1 , 1 2 9 5 , 1 0 8 4 , 2 3 6 0 , 1 5 2 7 , 9 9 8 7 0 3 9 , 3 1 4 0 , 4 3 8 9 , 6 1 1 8 7 7 , 3 5 6 9 , 1 9 3 6 , 4 2 4 1 , 1 4 1 7 , 0 1 1 7 2 8 6 1 , 7 — — — — — — — — — ) 6 5 ( — ) 1 ( — 9 7 1 , 6 2 7 6 6 8 7 , 6 2 2 3 7 , 7 3 4 5 0 , 7 4 6 3 , 2 4 9 2 , 6 3 5 3 8 , 5 0 1 5 , 1 1 1 4 5 , 4 7 8 2 8 9 3 , 4 1 2 7 0 , 9 5 2 6 , 9 0 4 6 , 1 0 9 8 , 1 1 8 7 3 7 6 , 2 0 6 5 , 7 0 7 2 0 4 7 , 1 1 0 5 6 8 1 , 1 2 9 5 , 1 0 8 4 , 2 4 6 0 , 1 7 0 4 , 2 5 8 $ 2 2 5 , 3 7 5 , 4 $ 5 3 1 , 9 9 0 , 4 $ 7 8 3 , 4 7 4 $ 7 6 6 , 1 5 0 , 1 $ 9 1 9 , 5 $ 8 6 4 , 7 4 0 , 3 $ 8 6 4 , 8 6 4 $ B C 5 0 2 , 9 1 B B 0 6 7 , 5 2 C C B C 9 3 1 , 1 8 0 4 , 3 B , h c a e B d r a h c r O d l O & t r o s e R V R s e r c A d l i W E M d n u o r g p m a C I M , e k a L e t i h W e m o H e l i b o M e k a L e t i h W e g a l l i V L I , h c i w d n a S y t i n u m m o C d o o w d l i W H O , o d e l o T I M , n o s k c a J s e t a t s E s l l i H m a h d n i W e c a l P k o o r b w o l l i W L F , t r o p n e v a D e g a l l i V l l i m d n i W I M , d n a l y a W e g a l l i V s d o o W r o s d n i W A C , s e l b o R o s a P t r o s e R V R y r t n u o C e n i W I M , n e v a h d o o W X T , o i n o t n A n a S e c a l P n e v a h d o o W s l i a r T e k a l d o o W R O , e n e g u E s e t a t s E k r a P d n a l d o o W L F , d n a l e v o r G H O , d n a l l o H h c r u h C t a s d n a l d o o W e c a r r e T e d i s d o o W e k a L 7 5 - F . g n i d n a t s t u o n o i l l i m 0 . 5 2 d a h h c i h w , t i d e r c f o e n i l d e r u c e s r u o r o f e s a b g n i w o r r o b e h t t r o p p u s s e i t i n u m m o c e s e h T . t b e d d e r u c e s f o n o i l l i m 9 . 6 3 6 $ e z i l a r e t a l l o c s e i t i n u m m o c e s e h T . t b e d d e r u c e s f o n o i l l i m 0 . 9 5 7 $ e z i l a r e t a l l o c s e i t i n u m m o c e s e h T . t b e d d e r u c e s f o n o i l l i m 7 . 8 9 4 $ e z i l a r e t a l l o c s e i t i n u m m o c e s e h T . t b e d d e r u c e s f o n o i l l i m 4 . 7 9 1 $ e z i l a r e t a l l o c s e i t i n u m m o c e s e h T A B C D E — 0 6 6 , 2 9 1 5 8 9 , 7 1 6 1 9 , 5 4 1 7 2 8 , 8 9 7 5 9 1 , 2 2 9 8 9 , 3 7 1 ) 0 7 8 , 1 ( — 0 6 6 , 8 2 9 3 4 , 5 9 1 2 8 4 , 4 1 2 , 1 , 1 3 r e b m e c e D d e d n E s r a e Y 3 1 0 2 4 1 0 2 5 1 0 2 5 0 3 , 7 7 1 , 2 $ 9 1 1 , 9 8 4 , 2 $ 7 1 9 , 3 6 3 , 3 $ ) 7 4 7 , 4 4 ( ) 3 4 3 , 8 1 1 ( ) 6 7 9 , 8 2 2 ( 9 1 1 , 9 8 4 , 2 $ 7 1 9 , 3 6 3 , 3 $ 2 2 5 , 3 7 5 , 4 $ s t n e m e v o r p m i e t a i d e m m i g n i d u l c n i , s n o i t i s i u q c a d n a l d n a y t i n u m m o C t n e m p o l e v e d d n a n o i s n a p x e y t i n u m m o C e c n a l a b g n i n n i g e B r e h t o , s t n e m e v o r p m I t n e m r i a p m i t e s s A r e h t o d n a s n o i t i s o p s i D e c n a l a b g n i d n E : s w o l l o f s a s i 3 1 0 2 d n a , 4 1 0 2 , 5 1 0 2 , 1 3 r e b m e c e D d e d n e s r a e y e h t r o f n o i t a i c e r p e d d e t a l u m u c c a n i e g n a h c e h T , 1 3 r e b m e c e D d e d n E s r a e Y 3 1 0 2 4 1 0 2 5 1 0 2 — 9 9 4 , 6 9 9 6 1 , 9 5 6 ) 1 0 6 , 1 2 ( 7 6 0 , 4 3 7 $ 7 6 0 , 4 3 7 $ 3 5 7 , 5 9 7 ) 3 3 0 , 1 ( 3 0 1 , 1 2 1 ) 4 8 3 , 8 5 ( — 6 0 7 , 9 5 1 ) 2 5 0 , 3 0 1 ( $ 3 5 7 , 5 9 7 $ 7 0 4 , 2 5 8 $ $ d o i r e p e h t r o f n o i t a i c e r p e D r e h t o d n a s n o i t i s o p s i D t n e m r i a p m i t e s s A e c n a l a b g n i n n i g e B e c n a l a b g n i d n E : s w o l l o f s a s i 3 1 0 2 d n a , 4 1 0 2 , 5 1 0 2 , 1 3 r e b m e c e D d e d n e s r a e y e h t r o f y t r e p o r p t n e m t s e v n i n i e g n a h c e h T I I I E L U D E H C S , N O I T A I C E R P E D D E T A L U M U C C A D N A E T A T S E L A E R . C N I , S E I T I N U M M O C N U S 5 1 0 2 , 1 3 R E B M E C E D ) s d n a s u o h t n i s t n u o m a ( 8 5 - F SHAREHOLDER INFORMATION ANNUAL MEETING The annual meeting of shareholders will be held at 11:00 a .m ., May 23, 2016 at 27777 Franklin Road, Suite 100, Southfield, MI 48034 SEC FORM 10-K A copy of the Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2015 is available at no charge to shareholders who direct a written request to: Investor Relations Department Sun Communities, Inc . 27777 Franklin Road, Suite 200 Southfield, Michigan 48034 Telephone: (248) 208-2500 Web Site: www .suncommunities .com TRANSFER AGENT & DIVIDEND DISBURSING AGENT Computershare Trust Company, N .A . P .O . Box 43010 Providence, Rhode Island 02940-3010 Shareholder Inquiries: (800) 426-5523 INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS Grant Thornton LLP 27777 Franklin Road, Suite 800 Southfield, Michigan 48034 CORPORATE COUNSEL Jaffe Raitt Heuer & Weiss, P .C . 27777 Franklin Road, Suite 2500 Southfield, Michigan 48034 CORPORATE HEADQUARTERS Sun Communities, Inc . 27777 Franklin Road, Suite 200 Southfield, Michigan 48034 Telephone: (248) 208-2500 REGIONAL OFFICES Austin, Texas Charlotte, North Carolina Dayton, Ohio Denver, Colorado Elkhart, Indiana Ft . Myers Beach, Florida Grand Rapids, Michigan Indianapolis, Indiana Orlando, Florida San Antonio, Texas Traverse City, Michigan STOC K TRADING INFORMATION New York Stock Exchange Ticker Symbol – SUI (Common Stock) Ticker Symbol – SUIPRA (Preferred Stock) QUARTERLY STOC K PRICE INFORMATION 2015 First Quarter Second Quarter Third Quarter Fourth Quarter 2014 First Quarter Second Quarter Third Quarter Fourth Quarter HIGH $71 .40 $67 .35 $70 .56 $72 .92 HIGH $48 .70 $50 .84 $55 .00 $64 .22 LOW $60 .74 $60 .29 $61 .61 $61 .65 LOW $41 .65 $42 .97 $49 .36 $50 .25 DISTRIBUTION $0 .65 $0 .65 $0 .65 $0 .65 DISTRIBUTION $0 .65 $0 .65 $0 .65 $0 .65 The Annual CEO Certification was submitted to the NYSE pursuant to NYSE rules and guidelines without qualification on August 6, 2015 . Sun Communities, Inc . has filed, as exhibits to its Annual Report on Form 10-K for the year ended December 31, 2015, the required certifications regarding the quality of its public disclosure under the applicable provisions of the Sarbanes-Oxley Act of 2002 . OFFICERS AND DIRECTORS Gary A. Shiffman . . . . . . . . Chairman, Chief Executive Officer and Director John B. McLaren . . . . . . . . . President and Chief Operating Officer Karen J. Dearing . . . . . . . . . Executive Vice President, Treasurer, Chief Financial Officer and Secretary Jonathan M. Colman . . . . . Executive Vice President Stephanie W. Bergeron . . . Director, President and Chief Executive Officer of Walsh College James R. Goldman . . . . . . . Director, Chief Investment Officer of Green Courte Partners, LLC Brian M. Hermelin . . . . . . . Director, Co-Founder and Managing Partner of Rockbridge Growth Equity LLC Ronald A. Klein . . . . . . . . . . Director, Chief Executive Officer of Origen Financial, Inc . Paul D. Lapides . . . . . . . . . . Director, Director of Corporate Governance Center and Professor of Management and Entrepreneurship, Coles College of Business, Kennesaw State University Clunet R. Lewis . . . . . . . . . . Director, Since 1993 Ronald L. Piasecki . . . . . . . Director, Private Investor Randall K. Rowe . . . . . . . . . Director, Chairman of Green Courte Partners, LLC Arthur A. Weiss . . . . . . . . . . Director, Chairman of the Board and Shareholder of Jaffe Raitt Heuer & Weiss, P .C . NATIONWIDE ARIZONA Apache Junction Bullhead City Casa Grande Mesa CALIFORNIA Paso Robles Coarsegold COLORADO Dillon Evans Firestone Ft. Collins Pueblo Thornton CONNECTICUT Old Mystic DELAWARE Frederica Rehoboth Beach FLORIDA Auburndale Bradenton Bushnell Citra Crystal River Davenport DeBary Dover Frostproof Ft. Myers Ft. Myers Beach Grand Island Groveland Haines City Holly Hill Homestead Homosassa Hudson Lady Lake Lake Alfred Lakeland Merritt Island Miami Micco Moore Haven Mulberry Naples North Fort Myers Ocala Orange City Orlando Pinellas Park Port Charlotte Port Orange Port St. Lucie Punta Gorda Ruskin Sanford Sebastian Sebring Tampa Zephyrhills GEORGIA Buford Lawrenceville ILLINOIS Sauk Village Malteson Manteno Sandwich INDIANA Anderson Elkhart Ft. Wayne Goshen Greenwood Middlebury Osceola South Bend Valparaiso Santa Claus IOWA Ankeny MAINE Brunswick Saco Lisbon Old Orchard Beach MARYLAND Berlin Whaleyville MASSACHUSETTS Sandwich MICHIGAN Allendale Ann Arbor Auburn Hills Battle Creek Belmont Bridgman Burton Byron Center Cadillac Caledonia Canton Capac Clinton Twp. Coopersville Davison East Lansing Fenton Flat Rock Flint Grand Haven Grand Rapids Holland Holly Hopkins Hudsonville Jackson Kentwood Lansing Ludington Macomb Mason Middleville Monroe Muskegon Newport Northville Portland Richmond Romulus St. Clair Sterling Heights Traverse City Warren Washington Twp. Wayland Webberville White Lake Woodhaven Ypsilanti PENNSYLVANIA Lancaster Narvon Mckean SOUTH CAROLINA Conway TENNESSEE Clarksville TEXAS Austin Converse Georgetown Houston Kyle New Braunfels Pflugerville San Antonio San Marcos VIRGINIA Gwynn New Point Prince George WISCONSIN Glenbeulah Sturgeon Bay MINNESOTA Stewartville MISSOURI Belton O’Fallon MONTANA Great Falls NEVADA Reno NEW JERSEY Cape May Cape May Court House Clermont NEW YORK Cheektowaga Greenfield Park North Java NORTH CAROLINA Charlotte Concord OHIO Amelia Batavia Geneva on the Lake Holland Miamisburg Milford Toledo OREGON Eugene Philomath 27777 Franklin Road, Suite 200 • Southfield, Michigan 48034 www.suncommunities.com • NYSE: SUI 

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