2018 Annual Report
And Form 10-K
CAVA ROBLES RV RESORT - CALIFORNIA
RANCHO MIRAGE - ARIZONA
ARCHVIEW RV RESORT & CAMPGROUND - UTAH
HID’N PINES RV RESORT - MAINE
PARK PLACE - FLORIDA
LETTER TO OUR SHAREHOLDERS
During 2018, we demonstrated the sustained strength of the Sun Communities
platform, providing affordable housing and vacationing solutions to a broad
spectrum of consumers. Our focus of owning superior quality communities,
characterized by our hallmark of high-levels of customer service, continued to
drive strong demand. In 2018, we built on our track record of industry leading
performance with 9.8 percent Core FFO per share growth for the year and a 5.6
percent increase to our dividend to $3.00 per share. These results directly reflect
the 6.7 percent growth in same community net operating income, the addition
of 2,600 revenue producing sites, the conversion of more than 1,150 RV sites to
annual from transient, and the deployment of approximately $585 million of capital
for acquisitions, expansions and development. We have consistently grown same
community net operating income, net asset value, FFO per share and dividends,
which reflects our dedication to creating value for all of our stakeholders. This level
of performance could not be possible without our 40-year history of unwavering
commitment to delivering quality and value to our residents and guests.
Total Portfolio
As of 12/31/18
yield expansion as they are integrated into our platform; 3) capital investments in
the expansion of existing communities to provide outsized occupancy and revenue
growth opportunities at attractive returns; and, 4) capital allocation to ground-up
developments to provide the opportunity to build the highest quality communities
and achieve higher incremental returns in locations where purchasing an existing
operating property would prove too costly. We are hard at work to continue growth
for the long term.
In 2018, our capital deployment comprised the acquisition of 20 operating
properties valued at $364 million, $14 million in fully zoned and entitled land
parcels and $153 million of capital into the construction of expansion sites and
ground-up development projects. The year also afforded us the unique opportunity
to make a $54 million strategic investment in Ingenia Communities Group – a
leading owner, operator and developer of manufactured home communities and
RV resorts headquartered in Australia. Like the USA, Australia has high demand for
affordable housing and we believe the opportunity to invest early in the MH and RV
growth cycle should prove to provide excellent returns for our shareholders. Our
investment which equates to a roughly 9.9 percent stake in Ingenia also includes
the formation of a 50/50 joint venture where Sun will participate side by side in
the development of manufactured home communities in Australia. We expect this
investment to be highly profitable over time.
We have often referred to the favorable positioning of the manufactured housing
sector. This sector provides a vitally important function in our economy, with
high quality, yet affordable housing for both families and seniors. Indeed, our
communities also offer desirable locations and amenities not typically found
in comparably priced housing. This value proposition is driving demand for our
product. In 2018, we had approximately 48,000 applications for our available
home sites and enjoyed an occupancy of 98 percent or greater in 40 percent of our
total communities. During the year we were able to achieve an overall portfolio
occupancy of 95 percent for our manufactured home communities. We expect our
pipeline of expansion sites, supplemented by accretive acquisitions, will allow Sun
to continue to benefit from the industry’s tailwinds.
Our recreational vehicle resort communities are also enjoying a high level of
demand. RV shipments in the United States saw positive growth as more young
families and retirees continued to take to the road. Like our manufactured home
communities, Sun offers exceptional RV destinations including beaches, lake
fronts, mountains, vineyards and national parks. Our growing portfolio of 44,026
RV sites offers a complementary revenue stream to our manufactured home
communities. The opportunity to grow our transient revenues through rate and
occupancy increases, along with conversions of transient sites to annual over time,
is expected to add to the stability and durability of our cash flows. In 2018, we
converted more than 1,150 sites from transient to annual. Given the high-quality
of our resorts and their irreplaceable locations, we are well positioned to capture
market share.
Our capital deployment strategy supports the growth of both our manufactured
home community and RV resort portfolios, reflecting Sun’s commitment to
building a sustainable business model. Our four core investment strategies are
comprised of: 1) the continual reinvestment in the maintenance and beautification
of our existing operating portfolio providing value to our residents and guests
while allowing us to capture steady, annual rental increases and achieve low
annual turn-over through resident satisfaction; 2) the acquisition of operating
properties to supplement core revenue and earnings while also offering accretive
Sun and its shareholders have enjoyed a strong run of share price appreciation,
which has been bolstered by our well-covered dividend which we raised for the
third consecutive year. Our multifaceted platform has produced generous total
returns for our shareholders over the last ten years of approximately 1,320 percent
as compared to the S&P 500 at 232 percent and the MSCI US REIT Index at 226
percent. From a capital perspective, our balance sheet is stronger than ever, which
we believe will allow us to execute on our growth initiatives.
We look back to 2018 with pride. We set out to accomplish industry leading results
and achieved our goals. We’d like to commend our team for their hard work and
dedication. We are excited about what lies ahead and look forward to sharing our
journey with you during 2019. Thank you for your confidence in us.
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, 2018
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
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 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 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. [ X ]
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. (Check one):
Large accelerated filer [ X ]
Smaller reporting company [ ]
Accelerated filer [ ]
Non-accelerated filer [ ]
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
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, 2018, the aggregate market value of the Registrant’s stock held by non-affiliates was $7,693,151,783 (computed by reference to
the closing sales price of the Registrant’s common stock as of June 30, 2018). 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 14, 2019: 86,380,502
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 2019 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.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
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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., a Michigan corporation (“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, or have an interest in a portfolio of MH and RV communities. As of December 31, 2018, we owned, operated
or had an interest in a portfolio of 371 properties in 31 states and Ontario, Canada (collectively, the “Properties” or “Communities”),
including 230 MH communities, 110 RV communities, and 31 Properties containing both MH and RV sites. As of December 31,
2018, the Properties contained an aggregate of 128,454 developed sites comprised of 84,428 developed MH sites, 24,535 annual
RV sites (inclusive of both annual and seasonal usage rights), and 19,491 transient RV sites. There are approximately 11,000
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; Grand
Rapids, Michigan; Denver, Colorado; Ft. Myers, Florida; and Orlando, Florida; and we employed an aggregate of 2,784 full and
part time employees as of December 31, 2018.
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 Reports 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 conduct substantially all of 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.
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.
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SUN COMMUNITIES, INC.
We do not own all of the OP units. As of December 31, 2018, the Operating Partnership had issued and outstanding:
•
•
•
•
•
•
•
89,082,937 common OP units;
1,283,819 preferred OP units (“Aspen preferred OP units”);
331,941 Series A-1 preferred OP units;
40,268 Series A-3 preferred OP units;
1,473,153 Series A-4 preferred OP units;
26,750 Series B-3 preferred OP units; and
314,438 Series C preferred OP units.
As of December 31, 2018, we held:
•
•
•
86,357,426 common OP units, or approximately 96.9 percent of the issued and outstanding common OP units;
1,062,789 Series A-4 preferred OP units, or approximately 72.1 percent of the issued and outstanding Series A-4
preferred 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 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 D 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 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 average closing price of our common stock for the preceding ten trading days
is $68.00 per share or less, 0.397 common OP units, or (b) if the average closing price of our common stock for the preceding ten
trading days 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 percent of the amount by which the average closing price of our common stock for the preceding ten trading days
exceeds $68.00 per share, by (ii) the average closing price of our common stock for the preceding ten trading days. 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 percent nor more than 9 percent. 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.
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SUN COMMUNITIES, INC.
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 approximately 2.4390 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 last day of each quarter. 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 percent. 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 approximately 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 percent. 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 6.5% 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 events). The Operating Partnership
issued Series A-4 preferred OP units to us in connection with our acquisition of a portfolio of MH communities from Green Courte
Real Estate Partners, LLC and certain of their affiliated entities (collectively, the “Green Courte parties” or the “Green Courte
entities”).
During the year ended December 31, 2018 and 2017, we repurchased zero and 438,448 Series A-4 preferred OP units, respectively.
At December 31, 2018, we held 1,062,789 Series A-4 preferred OP units. The rights of the 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.
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 last day of each quarter. 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 percent.
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.
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SUN COMMUNITIES, INC.
During the year ended December 31, 2018, we redeemed a total of 41,051 Series B-3 preferred OP units. In January 2019, we
redeemed the remaining 26,750 Series B-3 preferred OP units.
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 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) 4.5 percent until April 1, 2020, and (ii) 5.0 percent after April 2, 2020. 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.
Series D Preferred OP Units
On January 31, 2019, the Operating Partnership created a new class of OP units named Series D preferred OP units. As of February
14, 2019, 488,958 Series D preferred units were outstanding.
Subject to certain limitations, each Series D preferred OP unit is exchangeable at any time after the first anniversary of its issuance
date into 0.8 shares of the Company’s common stock (as such ratio is subject to adjustment for certain capital events). The Series
D preferred OP units provide for quarterly distributions on the $100 per unit issue price of 3.75% per year until January 31, 2021,
and 4.0% per year thereafter. Subject to certain limitations, the Series D preferred OP unit holders may cause the Operating
Partnership to redeem all or a portion of their Series D preferred OP units for $100 per unit (plus any accrued but unpaid distributions)
any time after the earlier of: (i) the fifth anniversary of the issuance of the Series D preferred OP units, or (ii) the Operating
Partnership’s notice of the death of the principal of the initial holder of the Series D preferred OP units. The Series D preferred
OP units have no voting rights.
REAL PROPERTY OPERATIONS
Properties are designed and improved for several home options of various sizes and designs that consist of both MH communities
and RV communities.
An 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 MH communities contain improvements similar to other garden style residential developments, including centralized
entrances, paved streets, curbs, 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.
An RV community is a resort or park designed and improved with sites for the placement of RVs for varied lengths of time.
Properties may also 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 typically 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. In six of our 371 communities, we do not own all of the underlying land
and operate the communities pursuant to ground leases. Certain 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.
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SUN COMMUNITIES, INC.
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, 2018, we employed 2,784 full and part time employees,
of which 2,393 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 MH
industry since 1995, three Senior Vice Presidents of Operations and Sales, nine Divisional Vice Presidents and thirty seven Regional
Vice Presidents. Each Regional Vice President is 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 six to fourteen 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 procedures are
implemented consistently. We offer approximately 350 trainings including books, online courses, webinars, and live sessions 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.
Because 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, 2018, SHS had 10,994 occupied leased homes in its portfolio.
New and pre-owned homes are 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 48,000 applications
during 2018 to live in our Properties, providing a significant “resident boarding” system that allows us to market the purchase of
a home to the qualified 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, property, business interruption, general liability, and
(where appropriate) flood and earthquake 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.
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SUN COMMUNITIES, INC.
SITE LEASES OR USAGE RIGHTS
Typical tenant leases for MH sites are 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 at our Florida and California properties, are tied to the consumer
price index or other indices as they relate to rent increases. 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, 2018, on average 2.2 percent of the homes in our communities have been
removed by their owners and 6.2 percent of the homes have been sold by their owners to a new owner who then assumes rental
obligations as a community resident. The average cost to move a home ranges from $4,000 to $10,000. On average, our residents
remain in our communities for approximately 12 years, while homes, which give rise to the rental stream, remain for over 45 years.
Please see the Risk Factors in Item 1A, and our accompanying Consolidated Financial Statements and related notes thereto beginning
on page F-1 of this Annual Report on Form 10-K for more detailed information.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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:
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changes in general economic conditions, the real estate industry, and the markets in which we operate;
difficulties in our ability to evaluate, finance, complete and integrate acquisitions, developments and expansions
successfully;
our liquidity and refinancing demands;
our ability to obtain or refinance maturing debt;
our ability to maintain compliance with covenants contained in our debt facilities;
availability of capital;
changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar and the
Australian dollar;
our ability to maintain rental rates and occupancy levels;
our failure to maintain effective internal control over financial reporting and disclosure controls and procedures;
increases in interest rates and operating costs, including insurance premiums and real property taxes;
risks related to natural disasters such as hurricanes, earthquakes, floods and wildfires;
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, and 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.
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ITEM 1A. RISK FACTORS
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 AND OPERATIONS RISKS
General economic conditions and the concentration of our properties in Florida, Michigan, Texas, and California 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 California.
As of December 31, 2018, 124 properties, representing approximately 34.1 percent of developed sites, are located in Florida; 70
properties, representing approximately 21.1 percent of developed sites, are located in Michigan; 23 properties, representing
approximately 6.8 percent of developed sites, are located in Texas; and 30 properties, representing approximately 6.0 percent of
developed sites, are located in California. As a result of the geographic concentration of our Properties in Florida, Michigan, Texas,
and California, we are exposed to the risks of downturns in local economies or other local real estate market conditions which
could adversely affect occupancy rates, rental rates, and property values in these markets.
Our revenue 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:
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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;
changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar and
Australian dollar;
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;
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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 effectively manage, maintain and insure the Properties;
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.
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:
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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.
The cyclical and seasonal nature of the MH and the RV industries may lead to fluctuations in our operating results.
The MH and RV markets can experience cycles of growth and downturn due to seasonality patterns. In the MH market, certain
properties maintain higher occupancy during the summer months, while certain other properties maintain higher occupancy during
the winter months. The RV market typically shows a decline in demand over the winter months, yet usually produces higher growth
in the spring and summer months due to higher use by vacationers. Our results on a quarterly basis can fluctuate due to this
cyclicality and seasonality.
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 selectively acquire MH and RV properties. 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 REITs and institutional investment funds;
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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;
even if we are able to acquire a desired property, competition from other real estate investors may significantly increase
the purchase price;
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• we may be unable to finance acquisitions on favorable terms;
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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 risks occur, 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 results of operations.
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 results of operations and financial condition. 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.
We engage in the construction and development of new communities or expansion of existing communities, and intend to 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;
• 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
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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 risks occur, our business and results of operations could be adversely affected.
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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.
Legislative requirements can limit accessibility of affordable financing for potential manufactured home buyers.
Legislation impacting third party loan originators, consumer protection laws and lender requirements to investigate a borrower's
creditworthiness may restrict access of affordable chattel financing to potential manufactured home buyers.
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 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 the
property, to borrow using the property as collateral or to develop the 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 our 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.
Cybersecurity breaches and other disruptions could compromise our information and expose us to liability, which would cause
our business and reputation to suffer.
We rely intensively on information technology to account for tenant transactions, manage the privacy of tenant data, communicate
internally and externally, and analyze our financial and operating results. In the ordinary course of our business, we collect and
store sensitive data, including our proprietary business information and that of our tenants, clients, vendors and employees in our
facilities and on our network. In addition, we engage third party service providers that may have access to such information in
connection with providing necessary information technology and security and other business services to us. This information may
include personally identifiable information such as social security numbers, banking information and credit card information.
We address potential breaches or disclosure of this confidential information by implementing a variety of security measures intended
to protect the confidentiality and security of this information including (among others) engaging reputable, recognized firms to
help us design and maintain our information technology and data security systems, including testing and verification of their proper
and secure operations on a periodic basis. We also maintain cyber risk insurance to provide some coverage for certain risks arising
out of data and network breaches.
Despite our security measures, our information technology and infrastructure, as well as that of our third-party vendors, may be
vulnerable to attacks by hackers (including through malware, ransomware, computer viruses, and email phishing schemes) or
breached due to employee error, malfeasance, fire, flood or other physical event, or other disruptions. Any such breach or disruption
could compromise our or a third-party vendor’s network and the information stored there could be accessed, publicly disclosed,
lost or stolen. Any such access, disclosure or other loss of information could:
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result in legal claims or proceedings,
disrupt our operations, including our ability to service our tenants and our ability to analyze and report our financial and
operating results,
decrease our revenues,
damage our reputation,
cause a loss of confidence,
increase our insurance premiums, or
have other material adverse effects on our business.
We are dependent on continuous access to the Internet to use our cloud-based applications. Damage or failure to our information
technology systems, including as a result of any of the reasons described above, could adversely affect our results of operations
as we may incur significant costs or data loss. We continually assess new and enhanced information technology solutions to manage
risk of system failure or interruption.
Expanding social media platforms present new challenges.
Social media outlets continue to grow and expand, which presents us with new risks. Adverse content about the Company and our
Properties on social media platforms could result in damage to our reputation or brand. Improper posts by employees or others
could result in disclosure of confidential or proprietary information regarding our operations.
Losses in excess of our insurance coverage or uninsured losses could adversely affect our operating results and cash flow.
We have a significant concentration of properties in Florida and California, where natural disasters or other catastrophic events
such as hurricanes, earthquakes, floods and wildfires could negatively impact our operating results and cash flows. We maintain
comprehensive liability, fire, property, business interruption, general liability, and (where appropriate) flood and earthquake
insurance, provided by reputable companies with commercially reasonable deductibles and limits. We believe the policy
specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage and industry
practice. However, certain types of losses including, but not limited to, riots or acts of war, may be either uninsurable or not
economically insurable. In the event an uninsured loss occurs, we could lose both our investment in and anticipated profits and
cash flow from the affected property. We would also continue to be obligated to repay any mortgage indebtedness or other obligations
related to the community. If an uninsured liability to a third party were to occur, we would incur the cost of defense and settlement
with, or court ordered damages to, that third party. A significant uninsured property or liability loss could have a material adverse
effect on our business and our financial condition and results of operations.
Investments through joint ventures involve risks not present for Properties in which we are the sole owner.
We have invested and may continue to invest as a joint venture partner in joint ventures. These investments involve risks, including,
but not limited to, the possibility the other joint venture partner may have business goals which are inconsistent with ours, possess
the ability to take or force action or withhold consent contrary to our requests, fail to provide capital or fulfill its obligations, or
become insolvent and require us to assume and fulfill the joint venture’s financial obligations. Conflicts arising between us and
our joint venture partners may be difficult to manage or resolve and it could be difficult to manage or otherwise monitor the existing
business arrangements. We and our joint venture partners may each have the right to initiate a buy-sell arrangement, which could
cause us to sell our interest, or acquire a joint venture partner’s interest, at a time when we otherwise would not have entered into
such a transaction. Each joint venture agreement is individually negotiated, and our ability to operate, finance, or dispose of a
Property in our sole discretion may be limited to varying degrees depending on the terms of the applicable joint venture agreement.
Climate change may adversely affect our business.
To the extent that significant changes in the climate occur in areas where our Properties are located, we may experience extreme
weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in demand for
properties located in these areas or affected by these conditions. Should the impact of climate change be material in nature, including
significant property damage to or destruction of our Properties, or occur for lengthy periods of time, our financial condition or
results of operations may be adversely affected. In addition, changes in federal, state and local legislation and regulation based on
concerns about climate change could result in increased capital expenditures on our Properties (for example, to improve their
energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts
to our net income.
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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, 2018, we had approximately $3.1 billion of total debt outstanding,
consisting of approximately $2.8 billion in debt that is collateralized by mortgage liens on 185 of the Properties, $107.7 million
that is secured by collateralized receivables, $128.0 million on our lines of credit, $35.3 million of mandatorily redeemable interest,
and $37.3 million that is unsecured debt. If we fail to meet our obligations under our secured debt, the lenders would be entitled
to foreclose on all or some of 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:
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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 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.
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. 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.
Federal, state and foreign income tax laws governing REITs and related interpretations may change at any time, and any such
legislative or other actions affecting REITs could have a negative effect on us.
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Federal, state and foreign income tax laws governing REITs or the administrative interpretations of those laws may be amended
at any time. Federal, state, and foreign tax laws are under constant review by persons involved in the legislative process, at the
Internal Revenue Service and the U.S. Department of the Treasury, and at various state and foreign tax authorities. Changes to tax
laws, regulations, or administrative interpretations, which may be applied retroactively, could adversely affect us. We cannot predict
whether, when, in what forms, or with what effective dates, the tax laws, regulations, and administrative interpretations applicable
to us may be changed. Accordingly, we cannot assert that any such change will not significantly affect either our ability to qualify
for taxation as a REIT or the income tax consequences to us.
Outside of the U.S. federal tax legislation enacted into law on December 22, 2017 informally titled the Tax Cut and Jobs Act (the
“Tax Act”), there has been no new major changes to the taxation of individuals and businesses in 2018. However, the overall impact
of the Tax Act is uncertain. In addition, there are a significant number of technical issues clarified with respect to the interpretation
and application of the Tax Act which may or may not be clarified by future guidance. It is not possible to predict whether such
clarifications will result in adverse consequences to the Company or its stockholders. Stockholders are urged to consult their tax
advisors with respect to the effects of the Tax Act and any other potential amendments to relevant tax laws.
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 percent 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 percent
test are similar in most respects. Qualifying income for the 90 percent 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 percent 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 percent 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 percent 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 percent 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 percent. Dividends payable by REITs, however, are generally not eligible for this reduced rate, although the new Tax
Act permits a 20 percent deduction equal to the amount of qualifying REIT dividends received, thus bringing the maximum federal
tax rate on qualifying REIT dividends to 29.6 percent. While 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.
Prospective investors should consult their own tax advisors regarding the effect of this change on their effective tax rate with
respect to REIT dividends.
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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
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 percent
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.
Lease of Executive Offices. Gary A. Shiffman, together with certain of his family members, indirectly owns an equity interest of
approximately 28.1 percent in American Center LLC, the entity from which we lease office space for our principal executive
offices. Each of Brian M. Hermelin, Ronald A. Klein and Arthur A. Weiss indirectly owns a less than one percent interest in
American Center LLC. Mr. Shiffman is our Chief Executive Officer and Chairman of the Board. Each of Mr. Hermelin, Mr. Klein
and Mr. Weiss is a director of the Company. Under this agreement, we lease approximately 103,100 rentable square feet of permanent
space. The term of the lease is until October 31, 2026, and the average gross base rent is $18.55 per square foot until October 31,
2019 with graduated rental increases thereafter. Each of Mr. Shiffman, Mr. Hermelin, Mr. Klein and Mr. Weiss 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 2015-2018, Jaffe, Raitt, Heuer, & Weiss, Professional Corporation acted as our general counsel and
represented us in various matters. Arthur A. Weiss is the Chairman of the Board of Directors and a shareholder of such firm. We
incurred legal fees and expenses owed to Jaffe, Raitt, Heuer, & Weiss of approximately $7.1 million, $5.0 million and $8.0 million
in the years ended December 31, 2018, 2017 and 2016, 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.
We rely on key management.
We are dependent on the efforts of our executive officers, Gary A. Shiffman, John B. McLaren, Karen J. Dearing, and Jonathan
M. Colman. The loss of 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 percent Ownership Limit. In order to qualify and maintain our qualification as a REIT, not more than 50 percent 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
percent, 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.
15
SUN COMMUNITIES, INC.
The 9.8 percent 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 percent 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 6,364,770 shares of preferred stock as 6.50% Series A-4 Cumulative Convertible Preferred Stock (“Series
A-4 preferred stock”), $0.01 par value per share of which 1,062,789 shares were issued and outstanding as of December 31, 2018.
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.
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 New
York Stock Exchange (“NYSE”) equals or exceeds 115.5 percent 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-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.
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 percent 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 percent 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.
16
SUN COMMUNITIES, INC.
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.
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.
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.
Our Board of Directors has power to adopt, alter or repeal any provision of our bylaws or make new bylaws, provided, however,
that our stockholders may alter or repeal any provision of our bylaws and adopt new bylaws if any such alteration, repeal or
adoption is approved by the affirmative vote of a majority of all votes entitled to be cast on the matter.
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 14, 2019, in the future we may issue to the limited partners
of the Operating Partnership, up to approximately 2.7 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 14, 2019, options to purchase 3,000 shares of our common stock were outstanding under our equity incentive plans,
and we currently have the authority to issue restricted stock awards or options to purchase up to an additional 1,330,668 shares of
our common stock pursuant to our equity incentive plans. In addition, we entered into an At-the-Market Offering Sales Agreement
in July 2017 to issue and sell shares of common stock. As of February 14, 2019, our Board of Directors had authorized us to sell
an additional $286.3 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
SUN COMMUNITIES, INC.
An increase in interest rates may have an adverse effect on the price of our common stock.
One of the factors that may influence the price of our common stock in the public market will be the annual distributions to
stockholders relative to 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.
We may be adversely impacted by fluctuations in foreign currency exchange rates.
Our current and future investments in and operations of Canadian and Australian properties are or will be exposed to the effects
of changes in the Canadian dollar and Australian dollar, respectively, against the U.S. dollar. Changes in foreign currency exchange
rates cannot always be predicted; as a result, substantial unfavorable changes in exchange rates could have a material adverse
effect on our financial condition and results of operations.
The volatility in economic conditions and the financial markets may adversely affect our industry, business and financial
performance.
The U.S. interest rate environment, oil price fluctuations, uncertain tax and economic plans in the U.S. executive and legislative
branches, 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 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.
18
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, 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;
our operating performance and the performance of other similar companies;
our ability to maintain compliance with covenants contained in our debt facilities;
actual or anticipated variations in our operating results, funds from operations, cash flows or liquidity;
changes in expectations of future financial performance or changes in our earnings estimates or those of analysts;
changes in our distribution policy;
publication of research reports about us or the real estate industry generally;
increases in market interest rates that lead purchasers of our common stock and preferred stock to demand a
higher dividend yield;
changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar and
the Australian dollar;
changes in market valuations of similar companies;
adverse market reaction to the amount of our debt outstanding at any time, the amount of our debt maturing in the
near-term 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.
19
SUN COMMUNITIES, INC.
Our Series A-4 preferred stock has not been rated.
We have not sought to obtain a rating for our 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-4 preferred stock. In addition, we may elect in the future to obtain a rating of the 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 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-4 preferred stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
20
SUN COMMUNITIES, INC.
ITEM 2. PROPERTIES
As of December 31, 2018, the Properties were located throughout the US and in Ontario, Canada and consisted of 230 MH
communities, 110 RV communities, and 31 properties containing both MH and RV sites. As of December 31, 2018, the Properties
contained an aggregate of 128,454 developed sites comprised of 84,428 developed manufactured home sites, 24,535 annual RV
sites (inclusive of both annual and seasonal usage rights), and 19,491 transient RV sites. There are approximately 11,300 additional
MH and RV sites suitable for development. Most of the Properties include amenities oriented toward family and retirement living.
Of the 371 Properties, 182 have more than 300 developed sites, with the largest having 2,341 developed MH and RV 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, 2018, the Properties had an occupancy rate of 96.1 percent excluding transient RV sites. Since January 1,
2018, the Properties have averaged an aggregate annual turnover of homes (where the home is moved out of the community) of
approximately 2.4 percent 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 7.2 percent. The average renewal rate for residents
in our Rental Program was 62.3 percent for the year ended December 31, 2018.
We believe that our Properties’ high amenity levels, customer service loyalty, and customer retention program 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 courts, 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.
The Properties are principally located in the Midwestern, Southern, Northeastern, Southeastern regions of the U.S., and Ontario,
Canada. We believe that geographic diversification helps to insulate the portfolio from regional economic influences. We have
concentrated our properties within certain areas of the regions in order to achieve economies of scale in management and operation.
The following tables set forth certain information relating to the Properties as of December 31, 2018. 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
12/31/18
Transient
RV Sites
as of
12/31/18
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
UNITED STATES
MIDWEST
Michigan
Academy / West Point
Allendale Meadows Mobile Village
MH Canton
MH Allendale
Alpine Meadows Mobile Village
MH Grand Rapids
Apple Carr Village
Arbor Woods
Brentwood Mobile Village
Brookside Village
MH Muskegon
MH Ypsilanti
MH Kentwood
MH Kentwood
Byron Center Mobile Village
MH Byron Center
Camelot Villa
Cider Mill Crossings
Cider Mill Village
Continental North
Country Acres Mobile Village
Country Hills Village
Country Meadows Mobile Village
Country Meadows Village
MH Macomb
MH Fenton
MH Middleville
MH Davison
MH Cadillac
MH Hudsonville
MH Flat Rock
MH Caledonia
21
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
441
352
403
680
458
195
196
143
712
570
258
474
182
239
577
395
— 97.5%
— 94.9%
— 98.0%
— 79.4% (1)
— 96.1%
— 98.5%
— 99.0%
97.5%
96.9%
97.5%
84.4% (1)
75.3%
97.4%
99.0%
— 98.6%
100.0%
— 98.6%
— 67.5% (1)
— 98.4%
— 77.6%
— 99.5%
99.3%
74.0% (1)
98.1%
73.4%
98.4%
— 98.3%
100.0%
— 96.9%
— 98.5%
95.5%
91.4% (1)
King’s Court Mobile Village
MH Traverse City
Property
Creekwood Meadows
Cutler Estates Mobile Village
Dutton Mill Village
East Village Estates
Egelcraft
Fisherman’s Cove
Frenchtown Villa / Elizabeth Woods
Grand Mobile Estates
Hamlin
Hickory Hills Village
Hidden Ridge RV Resort (2)
Holiday West Village
Holly Village / Hawaiian Gardens
Hunters Crossing
Hunters Glen
Kensington Meadows
Kimberly Estates
Knollwood Estates
Lafayette Place
Lakeview
Leisure Village
Lincoln Estates
Meadow Lake Estates
Meadowbrook Estates
Meadowlands of Gibraltar
Northville Crossing
Oak Island Village
Petoskey KOA RV Resort (2)
Petoskey RV Resort (2)
Pinebrook Village
Presidential Estates Mobile Village
Richmond Place
River Haven Village
Rudgate Clinton
Rudgate Manor
Scio Farms Estates
Sheffield Estates
Silver Creek RV Resort (2)
Silver Springs
Southwood Village
St. Clair Place
Sunset Ridge
MH and
Annual
RV Sites
as of
12/31/18
Transient
RV Sites
as of
12/31/18
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
City
State
SUN COMMUNITIES, INC.
MH/
RV
MH Burton
MH Grand Rapids
MH Caledonia
MH Washington Twp
MH Muskegon
MH Flint Twp.
MH Newport
MH Grand Rapids
MH Webberville
MH Battle Creek
RV Hopkins
MH Holland
MH Holly
MH Capac
MH Wayland
MH Lansing
MH Newport
MH Allendale
MH Warren
MH Ypsilanti
MH Belmont
MH Holland
MH White Lake
MH Monroe
MH Gibraltar
MH Northville
MH East Lansing
RV Petoskey
RV Petoskey
MH Kentwood
MH Hudsonville
MH Richmond
MH Grand Haven
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MH Clinton Township MI
MH Sterling Heights
MH Ann Arbor
MH Auburn Hills
RV Mears
MI
MI
MI
MI
MH Clinton Township MI
MH Grand Rapids
MH St. Clair
MH Portland
MI
MI
MI
22
336
259
307
708
458
162
1,140
219
230
283
177
341
425
114
396
290
387
802
161
254
392
256
191
425
453
320
756
250
51
—
185
364
117
721
667
931
913
228
159
547
394
100
388
— 97.6%
— 98.1%
— 99.0%
— 99.4%
— 96.9%
— 95.7%
— 88.9% (1)
— 96.3%
— 98.7%
— 97.5%
98.5%
98.5%
97.4%
99.4%
97.6%
91.4%
84.7% (1)
96.8%
95.7% (1)
98.6%
158
100.0%
100.0%
— 99.7%
— 94.4%
— 99.1%
— 89.9% (1)
— 96.9%
— 98.7%
— 84.4% (1)
— 96.9%
— 97.2%
— 98.7%
— 94.9% (1)
— 99.0%
— 99.1%
— 95.4%
— 99.7%
— 99.7%
— 98.4%
159
152
100.0%
N/A
— 100.0%
— 98.1%
— 95.7%
— 85.4%
— 99.0%
— 97.9%
— 99.5%
— 100.0%
105
100.0%
— 99.5%
— 98.0%
99.7%
94.6%
99.1%
76.5% (1)
96.6%
94.8%
78.8% (1)
92.6%
94.9%
98.2%
100.0%
99.5%
97.9%
96.3%
96.9%
99.5%
97.6%
N/A
N/A
98.9%
98.9%
94.9%
78.8%
97.3%
97.3%
98.4%
99.6%
N/A
99.5%
98.7%
— 97.0%
— 65.7% (1)
96.0%
92.0% (1)
Property
Sycamore Village
Tamarac Village
Tamarac Village RV Resort (2)
Timberline Estates
Town & Country Mobile Village
Warren Dunes Village
Waverly Shores Village
West Village Estates
MH/
RV
MH Mason
MH Ludington
RV Ludington
MH Coopersville
MH Traverse City
MH Bridgman
MH Holland
MH Romulus
White Lake Mobile Home Village
MH White Lake
Windham Hills Estates
Windsor Woods Village
Woodhaven Place
Michigan Total
Indiana
Brookside Mobile Home Village
Carrington Pointe
Clear Water Mobile Village
Cobus Green Mobile Home Park
Deerfield Run
MH Jackson
MH Wayland
MH Woodhaven
MH Goshen
MH Ft. Wayne
MH South Bend
MH Osceola
MH Anderson
Four Seasons
Lake Rudolph Campground & RV Resort (2) RV Santa Claus
MH Valparaiso
Liberty Farm
MH Elkhart
MH Greenwood
MH Middlebury
MH Goshen
Pebble Creek
Pine Hills
Roxbury Park
Indiana Total
Ohio
Apple Creek
East Fork Crossing
Indian Creek RV & Camping Resort (2)
Oakwood Village
Orchard Lake
Westbrook Senior Village
Westbrook Village
Willowbrook Place
Woodside Terrace
Ohio Total
SOUTH
Texas
Austin Lone Star RV Resort (2)
SUN COMMUNITIES, INC.
MH and
Annual
RV Sites
as of
12/31/18
Transient
RV Sites
as of
12/31/18
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
City
State
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
396
301
112
296
192
314
415
628
315
469
314
220
— 99.7%
— 98.7%
2
100.0%
— 98.3%
— 99.0%
— 87.6% (1)
— 96.4% (1)
— 99.4%
— 98.4%
— 88.9% (1)
— 98.4%
— 95.5%
26,504
576
94.6%
570
468
227
386
175
218
—
220
298
129
398
— 93.0%
— 73.5% (1)
— 97.8%
— 93.8%
— 86.3%
— 93.6%
519
N/A
— 95.9%
— 80.5% (1)
— 93.8%
— 97.2%
3,089
519
89.7%
98.5%
98.7%
100.0%
98.7%
99.5%
72.3% (1)
78.8% (1)
99.4%
96.8%
85.5% (1)
98.4%
96.4%
93.3%
89.1%
98.4%
96.5%
96.4%
91.4%
95.4%
N/A
96.8%
95.3%
98.5%
97.7%
95.0%
MH Amelia
MH Batavia
OH
OH
RV Geneva on the Lake OH
MH Miamisburg
MH Milford
MH Toledo
MH Toledo
MH Toledo
MH Holland
OH
OH
OH
OH
OH
OH
176
350
425
511
147
112
344
266
439
2,770
— 98.9%
— 99.1%
150
100.0%
— 99.0%
— 95.9%
— 98.2%
— 95.6%
— 97.4%
— 91.6%
97.2%
150
97.7%
98.9% (1)
100.0%
98.8%
98.0%
99.1%
94.2%
94.0%
93.4%
97.0%
RV Austin
TX
17
137
100.0%
100.0%
23
SUN COMMUNITIES, INC.
Property
Blazing Star (2)
Boulder Ridge
Branch Creek Estates
Chisholm Point Estates
Comal Farms
Hill Country Cottage and RV Resort (2)
Jellystone Park™ at Guadalupe River (2)
Jellystone Park™ at Hill Country (2)
La Hacienda RV Resort (2)
Oak Crest
Pecan Branch
Pine Trace
River Ranch
River Ridge Estates
Saddlebrook
Sandy Lake
Sandy Lake RV Resort (2)
Stonebridge
Summit Ridge
Sunset Ridge
Traveler’s World
Traveler’s World RV Resort (2)
Treetops RV Resort (2)
Woodlake Trails
Texas Total
SOUTHEAST
Florida
Arbor Terrace RV Park (2)
Ariana Village
Bahia Vista Estates
Baker Acres RV Resort (2)
Big Tree RV Resort (2)
Blue Heron Pines
Blue Jay
Blue Jay RV Resort (2)
Blueberry Hill (2)
Brentwood Estates
Buttonwood Bay
Buttonwood Bay RV Resort (2)
Candlelight Manor
Carriage Cove
Central Park
MH/
RV
City
RV San Antonio
MH Pflugerville
MH Austin
MH Pflugerville
MH New Braunfels
RV New Braunfels
RV Kerrville
RV Canyon Lake
RV Austin
MH Austin
MH Georgetown
MH Houston
MH Austin
MH Austin
MH San Marcos
MH Carrollton
RV Carrollton
MH San Antonio
MH Converse
MH Kyle
MH San Antonio
RV San Antonio
RV Arlington
MH San Antonio
RV Bradenton
MH Lakeland
MH Sarasota
RV Zephyrhills
RV Arcadia
MH Punta Gorda
MH Dade City
RV Dade City
RV Bushnell
MH Hudson
MH Sebring
RV Sebring
MH South Daytona
MH Sanford
MH Haines City
24
MH and
Annual
RV Sites
as of
12/31/18
Transient
RV Sites
as of
12/31/18
State
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
125
896
392
417
367
17
—
—
—
433
229
680
848
515
562
54
39
335
446
171
8
26
29
316
137
100.0%
— 80.2% (1)
— 100.0%
— 100.0%
— 99.5%
347
261
173
244
100.0%
N/A
N/A
N/A
— 99.1%
— 49.3% (1)
— 98.8%
— 99.3%
— 99.2%
— 87.7% (1)
— 100.0%
100.0%
95.4% (1)
100.0%
98.8%
97.0% (1)
100.0%
N/A
N/A
N/A
96.8%
37.6% (1)
98.4% (1)
97.3% (1)
98.5%
83.8% (1)
100.0%
180
100.0%
100.0%
— 98.8%
— 97.3%
— 97.7%
— 100.0%
129
100.0%
144
100.0%
— 72.2% (1)
97.9%
97.1%
98.8%
100.0%
100.0%
100.0%
70.9% (1)
93.2%
6,922
1,752
92.9%
205
207
251
278
367
408
206
34
275
191
407
365
128
467
108
156
100.0%
100.0%
— 97.1%
— 99.2%
96.1%
98.8%
74
100.0%
100.0%
44
100.0%
— 96.3% (1)
— 98.5%
100.0%
96.1% (1)
99.5%
21
100.0%
130
100.0%
— 97.9%
— 99.8%
100.0%
100.0%
96.9%
99.8%
167
100.0%
100.0%
— 94.5%
— 99.1%
— 92.6%
90.6%
98.5% (1)
90.9%
Property
Central Park RV Resort (2)
Citrus Hill RV Resort (2)
Club Naples (2)
Club Wildwood
Colony in the Wood
Compass RV Resort (2)
Country Squire
Country Squire RV Resort (2)
Cypress Greens
Daytona Beach RV Resort (2)
Deerwood
Dunedin RV Resort (2)
Ellenton Gardens RV Resort (2)
Emerald Coast
Emerald Coast RV Resort (2)
Fairfield Village
Forest View
Glen Haven
Glen Haven RV Resort (2)
Gold Coaster
Gold Coaster RV Resort (2)
Grand Bay
Grand Lakes RV Resort (2)
Grove Ridge RV Resort (2)
Groves RV Resort (2)
Gulfstream Harbor
Hidden River RV Resort (2)
Holly Forest Estates
Homosassa River RV Resort (2)
Horseshoe Cove RV Resort (2)
Indian Creek Park
Indian Creek RV Park (2)
Island Lakes
King’s Lake
King’s Pointe
Kings Manor
Kissimmee Gardens
Kissimmee South
Kissimmee South RV Resort (2)
La Costa Village
Lake Josephine RV Resort (2)
Lake Juliana Landings
Lake Pointe Village
SUN COMMUNITIES, INC.
MH/
RV
City
RV Haines City
RV Dade City
RV Naples
MH Hudson
MH Port Orange
RV St. Augustine
MH Paisley
RV Paisley
MH Lake Alfred
RV Port Orange
MH Orlando
RV Dunedin
RV Ellenton
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
MH Panama City Beach FL
RV Panama City Beach FL
MH Ocala
MH Homosassa
MH Zephyrhills
RV Zephyrhills
MH Homestead
RV Homestead
MH Dunedin
RV Citra
RV Dade City
RV Ft. Myers
MH Orlando
RV Riverview
MH Holly Hill
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
RV Homosassa Springs FL
RV Bradenton
MH Ft. Myers Beach
RV Ft. Myers Beach
MH Merritt Island
MH DeBary
MH Lake Alfred
MH Lakeland
MH Kissimmee
MH Davenport
RV Davenport
MH Port Orange
RV Sebring
MH Auburndale
MH Mulberry
25
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
MH and
Annual
RV Sites
as of
12/31/18
Transient
RV Sites
as of
12/31/18
State
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
189
143
220
478
383
—
97
20
259
134
569
190
147
42
5
293
300
52
158
532
8
135
305
159
223
974
195
402
95
344
353
973
301
245
226
239
239
142
102
658
112
274
362
180
100.0%
39
84
100.0%
100.0%
— 98.5%
— 97.7%
175
N/A
— 90.7%
5
100.0%
— 96.5%
98
100.0%
— 98.9%
49
47
100.0%
100.0%
— 88.1%
154
100.0%
— 98.3%
— 97.0%
— 100.0%
60
100.0%
— 94.9%
5
100.0%
— 98.5%
99
87
46
100.0%
100.0%
100.0%
— 97.5%
118
100.0%
— 100.0%
128
132
100.0%
100.0%
— 100.0%
104
100.0%
— 99.7%
— 100.0%
— 99.6%
— 92.5%
— 99.6%
— 90.1%
98
100.0%
— 99.8%
66
100.0%
— 98.2%
— 99.2%
100.0%
100.0%
100.0%
98.7%
95.0%
N/A
90.7%
100.0%
95.4%
100.0%
98.1%
100.0%
100.0%
100.0%
100.0%
97.6%
96.7%
100.0%
100.0%
98.2%
100.0%
96.3%
100.0%
100.0%
100.0%
95.3%
100.0%
99.8%
100.0%
100.0%
99.7%
100.0%
100.0%
100.0%
100.0%
82.9%
99.2%
90.9%
100.0%
99.7%
100.0%
97.5%
99.2%
SUN COMMUNITIES, INC.
MH and
Annual
RV Sites
as of
12/31/18
Transient
RV Sites
as of
12/31/18
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
City
State
Property
Lake San Marino RV Park (2)
Lakeland RV Resort (2)
Lakeshore Landings
Lakeshore Villas
Lamplighter
Majestic Oaks RV Resort (2)
Marco Naples RV Resort (2)
Meadowbrook Village
Mill Creek
Mill Creek RV Resort (2)
Naples RV Resort (2)
New Ranch
North Lake Estates (2)
Oakview Estates
Ocean Breeze
Ocean Breeze RV Resort
Ocean Breeze Jensen Beach
Ocean Breeze Jensen Beach RV Resort (2)
Orange City
Orange City RV Resort (2)
Orange Tree Village
Paddock Park South
Palm Key Village
Palm Village
Park Place
Park Royale
Pecan Park RV Resort (2)
Pelican Bay
Pelican RV Resort & Marina (2)
Plantation Landings
Pleasant Lake RV Resort (2)
Rainbow
Rainbow RV Resort (2)
Rainbow Village of Largo (2)
Rainbow Village of Zephyrhills (2)
Red Oaks
Red Oaks RV Resort (2)
Regency Heights
Riptide RV Resort & Marina (2)
Riverside Club
Rock Crusher Canyon RV Resort (2)
Royal Country
Royal Palm Village
MH/
RV
RV Naples
RV Lakeland
MH Orlando
MH Tampa
MH Port Orange
RV Zephyrhills
RV Naples
MH Tampa
MH Kissimmee
RV Kissimmee
RV Naples
MH Clearwater
RV Moore Haven
MH Arcadia
MH Marathon
RV Marathon
MH Jensen Beach
RV Jensen Beach
MH Orange City
RV Orange City
MH Orange City
MH Ocala
MH Davenport
MH Bradenton
MH Sebastian
MH Pinellas Park
RV Jacksonville
MH Micco
RV Marathon
MH Haines City
RV Bradenton
MH Frostproof
RV Frostproof
RV Largo
RV Zephyrhills
MH Bushnell
RV Bushnell
MH Clearwater
RV Key Largo
MH Ruskin
RV Crystal River
MH Miami
MH Haines City
26
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
253
190
306
280
260
208
210
257
32
102
106
94
204
119
—
—
236
42
4
315
246
188
204
146
475
309
—
216
75
394
280
37
376
257
336
103
485
391
23
728
153
864
395
154
100.0%
41
100.0%
— 99.3%
— 98.6%
— 96.5%
45
82
100.0%
100.0%
— 100.0%
— 96.9%
54
61
100.0%
100.0%
— 97.9%
68
100.0%
— 99.2%
—
—%
—%
—
— 64.0% (1)
100.0%
211
100.0%
100.0%
100.0%
97.5%
97.3%
100.0%
100.0%
99.2%
100.0%
100.0%
100.0%
97.9%
100.0%
99.2%
—% (4)
—% (4)
63.1% (1)
100.0%
— 100.0%
206
100.0%
— 99.6%
78.7%
— 99.5%
— 97.9%
— 94.7%
— 99.7%
183
N/A
— 99.5%
11
100.0%
— 99.2%
61
100.0%
— 100.0%
86
52
46
100.0%
100.0%
100.0%
— 92.2%
432
100.0%
— 97.4%
17
100.0%
— 82.6%
242
100.0%
— 99.8%
— 86.1%
100.0%
100.0%
100.0%
76.1%
100.0%
98.0%
93.3%
99.7%
N/A
92.6%
100.0%
99.2%
100.0%
100.0%
100.0%
100.0%
100.0%
92.2%
100.0%
95.4%
100.0%
78.7%
100.0%
99.9%
82.3%
SUN COMMUNITIES, INC.
MH and
Annual
RV Sites
as of
12/31/18
Transient
RV Sites
as of
12/31/18
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
City
State
Property
Saddle Oak Club
San Pedro Marina
San Pedro RV Resort & Marina
Saralake Estates
Savanna Club
Sea Breeze
Sea Breeze RV Resort
Serendipity
Settler’s Rest RV Resort (2)
Shadow Wood Village
Shady Road Villas
Shell Creek Marina
Shell Creek RV Resort & Marina (2)
Siesta Bay RV Park (2)
Southern Charm
Southern Charm RV Resort (2)
Southern Pines
MH/
RV
MH Ocala
MH Islamorada
RV Islamorada
MH Sarasota
MH Port St Lucie
MH Islamorada
RV Islamorada
MH North Fort Myers
RV Zephyrhills
MH Hudson
MH Ocala
MH Punta Gorda
RV Punta Gorda
RV Ft. Myers
MH Zephyrhills
RV Zephyrhills
MH Bradenton
Southport Springs Golf & Country Club
MH Zephyrhills
Spanish Main
Spanish Main RV Resort (2)
Stonebrook
Sun N Fun RV Resort (2)
Suncoast Gateway
Sundance
Sunlake Estates
Sunset Harbor at Cow Key Marina
Sweetwater RV Resort (2)
Tallowwood Isle
Tampa East
Tampa East RV Resort (2)
The Hamptons Golf & Country Club
The Hideaway
The Hills
The Ridge
The Valley
Three Lakes (2)
Vista Del Lago
Vista Del Lago RV Resort (2)
Vizcaya Lakes
Walden Woods
Walden Woods II
Water Oak Country Club Estates
Waters Edge RV Resort (2)
MH Thonotosassa
RV Thonotosassa
MH Homosassa
RV Sarasota
MH Port Richey
MH Zephyrhills
MH Grand Island
MH Key West
RV Zephyrhills
MH Coconut Creek
MH Dover
RV Dover
MH Auburndale
MH Key West
MH Apopka
MH Davenport
MH Apopka
RV Hudson
MH Bradenton
RV Bradenton
MH Port Charlotte
MH Homosassa
MH Homosassa
MH Lady Lake
RV Zephyrhills
27
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
376
—
—
202
1,069
—
—
338
310
157
130
54
139
734
1
401
107
547
56
202
215
957
173
332
408
77
212
273
31
324
829
13
97
481
148
226
136
27
113
213
213
1,317
144
— 99.5%
99.5%
—
—
—%
—%
— 100.0%
— 98.0%
—
—
—%
—%
— 97.0%
68
100.0%
— 99.4%
— 61.5%
— 100.0%
46
63
100.0%
100.0%
— 100.0%
95
100.0%
— 96.3%
— 98.9%
— 91.1%
74
100.0%
— 92.1%
562
100.0%
— 98.8%
— 99.7%
— 94.6%
— 98.7%
79
100.0%
— 95.2%
— 96.8%
345
100.0%
— 98.4%
— 92.3%
— 99.0%
— 99.2%
— 100.0%
81
100.0%
— 96.3%
13
100.0%
— 86.7%
— 100.0%
—% (4)
—% (4)
100.0%
97.6% (1)
—% (4)
—% (4)
98.5%
100.0%
99.4%
62.3%
100.0%
100.0%
100.0%
100.0%
100.0%
95.3%
98.4% (1)
91.1%
100.0%
90.7%
100.0%
98.3%
100.0%
93.4%
97.4%
100.0%
95.6%
100.0%
100.0%
98.8%
84.6%
95.0%
98.3%
99.3%
100.0%
95.6%
100.0%
79.7%
100.0%
— 99.1%
— 89.5% (1)
100.0%
73
98.6%
95.3% (1)
100.0%
SUN COMMUNITIES, INC.
MH/
RV
City
MH Auburndale
MH Davenport
MH Groveland
State
FL
FL
FL
MH and
Annual
RV Sites
as of
12/31/18
Transient
RV Sites
as of
12/31/18
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
219
509
291
— 99.1%
— 98.8%
— 73.9%
37,874
5,917
97.3%
99.1%
99.2%
70.5%
97.1%
RV Plymouth
CA
MH Rancho Cucamonga CA
MH Cathedral City
RV Paso Robles
MH La Habra
MH Modesto
MH Simi Valley
MH West Covina
MH Temecula
RV Indio
RV Lodi
MH Lakeside
MH Arcata
MH Ventura
MH Napa
MH Coarsegold
MH McKinleyville
MH Chino
RV Pismo Beach
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
MH San Juan Capistrano CA
MH Riverside
MH Cathedral City
RV Cathedral City
MH Oxnard
CA
CA
CA
CA
RV Desert Hot Springs CA
MH Newbury Park
MH Victorville
RV Paso Robles
MH Scotts Valley
RV Paso Robles
CA
CA
CA
CA
CA
32
295
118
—
330
289
222
157
196
147
—
295
220
231
257
198
130
242
163
331
132
303
439
38
150
234
303
287
—
202
293
100.0%
— 99.7%
— 99.2%
331
N/A
— 99.7%
— 97.2%
— 100.0%
— 99.4%
— 100.0%
169
359
100.0%
N/A
— 99.7%
— 99.1%
— 100.0%
— 100.0%
— 97.0%
— 97.7%
— 100.0%
— 100.0%
— 100.0%
— 99.2%
— 99.7%
— 99.6%
— 100.0%
— 100.0%
280
100.0%
— 100.0%
— 99.0%
130
N/A
100.0%
100.0%
97.5%
N/A
100.0%
94.5%
100.0%
99.4%
100.0%
100.0%
N/A
100.0%
100.0%
100.0%
100.0%
95.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.7%
96.8%
100.0%
100.0%
N/A
100.0%
97.2%
N/A
— 100.0%
100.0%
—
5,941
203
1,765
N/A
99.3%
N/A
99.1%
Property
Westside Ridge
Windmill Village
Woodlands at Church Lake
Florida Total
SOUTHWEST
California
49’er Village RV Resort (2)
Alta Laguna
Caliente Sands
Cava Robles RV Resort (2)
Friendly Village of La Habra
Friendly Village of Modesto
Friendly Village of Simi
Friendly Village of West Covina
Heritage
Indian Wells RV Resort (2)
Jellystone Park™ at Tower Park (2)
Lakefront
Lazy J Ranch
Lemon Wood
Napa Valley
Oak Creek
Ocean West
Pembroke Downs
Pismo Dunes RV Resort
Rancho Alipaz
Rancho Caballero
Royal Palms
Royal Palms RV Resort
The Colony
The Sands RV & Golf Resort (2)
Vallecito
Victor Villa
Vines RV Resort (2)
Vista Del Lago
Wine Country RV Resort (2)
California Total
Arizona
Palos Verdes Shores MH & Golf Community MH San Pedro
Blue Star / Lost Dutchman
Blue Star / Lost Dutchman RV Resort (2)
MH Apache Junction
RV Apache Junction
AZ
AZ
169
88
— 95.9%
118
100.0%
93.5%
100.0%
28
Property
Brentwood West
Desert Harbor
Fiesta Village
Fiesta Village RV Resort (2)
La Casa Blanca
Leaf Verde RV Resort (2)
Mountain View
Palm Creek Golf
Palm Creek Golf & RV Resort (2)
Rancho Mirage
Reserve at Fox Creek
Sun Valley
Verde Plaza
Arizona Total
Colorado
Cave Creek
Eagle Crest
Jellystone Park™ at Larkspur (2)
North Point Estates
Skyline
Swan Meadow Village
The Grove at Alta Ridge
Timber Ridge
Colorado Total
OTHER
Seaport RV Resort (2)
High Point Park
Sea Air Village
Sea Air Village RV Resort (2)
Countryside Village of Atlanta
Countryside Village of Gwinnett
Countryside Village of Lake Lanier
Autumn Ridge
Candlelight Village
Maple Brook
Oak Ridge
Sunset Lakes RV Resort (2)
Wildwood Community
Campers Haven RV Resort (2)
Peter’s Pond RV Resort (2)
Castaways RV Resort & Campground (2)
SUN COMMUNITIES, INC.
MH and
Annual
RV Sites
as of
12/31/18
Transient
RV Sites
as of
12/31/18
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
City
State
MH/
RV
MH Mesa
MH Apache Junction
MH Mesa
RV Mesa
MH Apache Junction
RV Buckeye
MH Mesa
MH Casa Grande
RV Casa Grande
MH Apache Junction
MH Bullhead City
MH Apache Junction
MH Tucson
MH Evans
MH Firestone
RV Larkspur
MH Pueblo
MH Fort Collins
MH Dillon
MH Thornton
MH Ft. Collins
RV Old Mystic
MH Frederica
MH Rehoboth Beach
RV Rehoboth Beach
MH Lawrenceville
MH Buford
MH Buford
MH Ankeny
MH Sauk Village
MH Matteson
MH Manteno
RV Hillsdale
MH Sandwich
RV Dennisport
RV Sandwich
RV Berlin
29
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
CO
CO
CO
CO
CO
CO
CO
CO
CT
DE
DE
DE
GA
GA
GA
IA
IL
IL
IL
IL
IL
MA
MA
MD
— 97.7%
— 94.0%
— 93.1%
3,836
1,423
92.4%
350
205
154
2
198
—
170
505
915
312
311
268
189
447
441
—
108
170
175
409
585
— 98.9%
— 99.5%
— 83.8%
8
100.0%
— 100.0%
376
N/A
— 99.4%
— 57.0% (1)
100.0%
921
99.1%
99.0%
79.9%
100.0%
100.0%
N/A
99.4%
52.1% (1)
100.0%
— 100.0%
100.0%
95.2%
91.8%
90.0%
91.0%
99.1%
100.0%
N/A
99.1%
99.4%
99.8%
99.5%
99.6%
— 98.7%
— 99.8%
137
N/A
— 97.2%
— 100.0%
— 99.5%
— 99.7%
— 99.4%
100.0%
2,335
137
99.4%
44
409
373
120
261
331
548
413
309
441
426
225
476
230
329
1
105
100.0%
100.0%
— 96.3%
— 100.0%
96.6%
98.4%
14
100.0%
— 87.4% (1)
— 98.2%
100.0%
65.0% (1)
99.1%
— 99.5%
— 96.6%
— 93.2%
— 99.5%
— 93.2%
100.0%
273
— 99.2%
43
77
100.0%
100.0%
392
100.0%
98.7%
97.1%
97.1%
99.6%
93.0%
100.0%
99.4%
100.0%
100.0%
100.0%
Property
Fort Whaley RV Resort & Campground (2)
Frontier Town RV Resort & Campground (2) RV Berlin
Jellystone Park™ at Maryland (2)
Maplewood Manor
RV Williamsport
MH/
RV
City
RV Whaleyville
SUN COMMUNITIES, INC.
State
MD
MD
MD
ME
ME
ME
ME
MH Brunswick
MH Brunswick
RV Saco
MH Lisbon
RV Old Orchard Beach ME
RV Old Orchard Beach ME
MH Stewartville
MH O’Fallon
MH Belton
MH Great Falls
RV Sylva
MH Concord
MH Charlotte
RV Milton
RV West Ossipee
Cape May Court
House
RV
MH Cape May
RV Cape May
RV Clermont
RV Barnegat
RV Cape May
MN
MO
MO
MT
NC
NC
NC
NH
NH
NJ
NJ
NJ
NJ
NJ
NJ
MH Galloway Township NJ
RV Galloway Township NJ
MH Reno
RV Gansevoort
MH Greenfield Park
RV Greenfield Park
RV Gardiner
RV North Java
MH Cheektowaga
MH Cheektowaga
MH Cheektowaga
MH Philomath
RV Coos Bay
MH Eugene
MH Mckean
RV Quarryville
RV Narvon
30
NV
NY
NY
NY
NY
NY
NY
NY
NY
OR
OR
OR
PA
PA
PA
MH and
Annual
RV Sites
as of
12/31/18
Transient
RV Sites
as of
12/31/18
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
—
—
—
296
43
—
144
231
309
475
502
474
226
56
260
321
106
322
322
28
367
621
167
433
39
55
324
293
1
95
—
10
156
522
116
75
—
398
304
—
278
179
584
226
N/A
N/A
N/A
— 99.7%
— 93.0%
196
N/A
— 95.8%
55
100.0%
N/A
N/A
N/A
99.3%
100.0%
N/A
99.3%
100.0%
321
100.0%
— 98.1% (1)
— 98.0%
100.0%
92.8% (1)
96.6%
— 68.6%
— 97.3%
34
100.0%
— 99.2%
— 99.7%
118
136
100.0%
100.0%
206
100.0%
— 100.0%
262
100.0%
86
47
100.0%
100.0%
243
100.0%
— 100.0%
40
100.0%
— 99.7%
47
100.0%
— 100.0%
65.0%
98.7%
100.0%
98.5%
100.0%
N/A
N/A
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
97.5%
100.0%
99.7%
100.0%
100.0%
100.0%
100.0%
209
320
349
N/A
100.0%
— 100.0%
— 96.7%
— 98.3%
— 98.7%
88
N/A
— 99.7%
— 98.0%
N/A
243
141
N/A
100.0%
100.0%
94.8%
100.0%
100.0%
N/A
100.0%
98.7%
N/A
100.0%
100.0%
Merrymeeting
Saco / Old Orchard Beach KOA (2)
Town & Country Village
Wagon Wheel RV Resort & Campground (2)
Wild Acres RV Resort & Campground (2)
Southern Hills / Northridge Place
Pin Oak Parc
Southfork
Countryside Village
Fort Tatham RV Resort & Campground (2)
Glen Laurel
Meadowbrook
Mi-Te-Jo Campground (2)
Westward Shores Cottages & RV Resort (2)
Big Timber Lake RV Camping Resort (2)
Cape May Crossing
Cape May KOA (2)
Driftwood RV Resort & Campground (2)
Long Beach RV Resort & Campground (2)
Seashore Campsites & RV Resort (2)
Shady Pines
Shady Pines RV Resort (2)
Sun Villa Estates
Adirondack Gateway RV Resort &
Campground (2)
Jellystone Park™ at Birchwood Acres
Jellystone Park™ at Birchwood Acres RV
Resort (2)
Jellystone Park™ at Gardiner (2)
Jellystone Park™ of Western New York (2)
Parkside Village
Sky Harbor
The Villas at Calla Pointe
Forest Meadows
Oceanside RV Resort & Campground (2)
Woodland Park Estates
Countryside Estates
Jellystone Park™ at Quarryville (2)
Lake in Wood RV Resort (2)
SUN COMMUNITIES, INC.
Property
Pheasant Ridge
Lakeside Crossing
MH/
RV
MH Lancaster
City
MH Conway
MH Clarksville
RV Horn Lake
RV Moab
RV Moab
Bell Crossing
Jellystone Park™ at Memphis (2)
Archview RV Resort & Campground (2)
Canyonlands RV Resort & Campground (2)
Moab Valley RV Resort & Campground (2)
Pony Express RV Resort & Campground (2)
Gwynn’s Island RV Resort & Campground (2) RV Gwynn
Jellystone Park™ at Luray (2)
New Point RV Resort (2)
Pine Ridge
Sunset Beach RV Resort (3)
Thunderhill Estates
Westward Ho RV Resort & Campground (2)
RV Moab
RV East Luray
RV New Point
MH Prince George
RV Cape Charles
MH Sturgeon Bay
RV Glenbeulah
RV North Salt Lake
Other Total
US TOTAL / AVERAGE
RV Cayuga
RV Allenford
RV Millgrove
RV Huntsville
RV Clarksburg
CANADA
Arran Lake RV Resort & Campground (2)
Craigleith RV Resort & Campground (2)
Deer Lake RV Resort & Campground (2)
Grand Oaks RV Resort & Campground (2)
Gulliver’s Lake RV Resort & Campground
Hidden Valley RV Resort & Campground (2) RV Normandale
Lafontaine RV Resort & Campground (2)
Lake Avenue RV Resort & Campground (2)
Pickerel Park RV Resort & Campground (2)
Sherkston Shores Beach Resort &
Campground (2)
Silver Birches RV Resort & Campground (2) RV Lambton Shores
Trailside RV Resort & Campground (2)
Willow Lake RV Resort & Campground (2)
Willowood RV Resort & Campground (2)
Woodland Lake RV Resort & Campground (2) RV Bornholm
RV Cherry Valley
RV Amherstburg
RV Sherkston
RV Scotland
RV Napanee
RV Seguin
RV Tiny
CANADA TOTAL / AVERAGE
MH and
Annual
RV Sites
as of
12/31/18
Transient
RV Sites
as of
12/31/18
State
Occupancy as
of 12/31/18
Occupancy as
of 12/31/17
PA
SC
TN
TN
UT
UT
UT
UT
VA
VA
VA
VA
VA
WI
WI
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
— 100.0%
— 82.7% (1)
— 97.5%
99.8%
76.0% (1)
99.2%
155
114
131
131
186
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
27
100.0%
100.0%
255
N/A
N/A
77
100.0%
— 82.4% (1)
—
N/A
100.0%
90.9% (1)
N/A
553
588
237
—
—
—
—
—
102
—
247
323
—
266
226
— 93.6%
96
100.0%
99.1%
100.0%
96.0%
15,847
6,206
96.7%
105,118
18,445
96.0%
95.6%
149
68
168
230
199
203
187
115
148
40
43
72
40
100.0%
100.0%
100.0%
100.0%
— 100.0%
42
76
12
61
100.0%
100.0%
100.0%
100.0%
1,419
296
100.0%
132
185
365
116
161
30
52
8
100.0%
100.0%
100.0%
211
100.0%
63
100.0%
3,845
1,046
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
COMPANY TOTAL / AVERAGE
108,963
19,491
96.1%
95.8%
(1) Occupancy in these Properties reflects the fact that these communities are in a lease-up phase following an expansion.
(2) 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.
(3) We have an ownership interest in Sunset Beach, but do not maintain and operate the property.
(4) Occupancy in these Properties for 12/31/2018 reflects redevelopment following asset impairments resulting from Hurricane Irma in September 2017.
31
SUN COMMUNITIES, INC.
ITEM 3. LEGAL PROCEEDINGS
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.
32
SUN COMMUNITIES, INC.
EXECUTIVE OFFICERS OF THE REGISTRANT
The persons listed below are our executive officers.
Name
Gary A. Shiffman
John B. McLaren
Karen J. Dearing
Jonathan M. Colman
Age
64
48
54
63
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.
John B. McLaren has been in the manufactured housing industry since 1995. He has served as our President since 2014 and as
our Chief Operating Officer since 2008. From 2008 to 2014, he served as an Executive Vice President of the Company. From 2005
to 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 has served as our Chief Financial Officer and Executive Vice President since 2008. She joined us in 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 and Senior Vice President in 2006. 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 7.5 years of experience as the Financial Controller of a privately-
owned automotive supplier and 4.5 years of experience as a certified public accountant with Deloitte.
Jonathan M. Colman has served as an Executive Vice President since March 2003. He joined us in 1994 as Vice President-
Acquisitions and became a Senior Vice President in 1995. A certified public accountant, Mr. Colman has over thirty-five years of
experience in the manufactured housing community industry. Prior to joining Sun, he was 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.
33
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”.
On February 14, 2019, the closing share price of our common stock was $113.68 per share on the NYSE, and there were 238
holders of record for the 86,380,502 outstanding shares of common stock. On February 14, 2019, the Operating Partnership had
(i) 2,720,427 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 435,222 shares
of our common stock, (iii) 328,991 Series A-1 preferred OP units issued and outstanding which were exchangeable for 802,417
shares of our common stock, (iv) 40,268 Series A-3 preferred OP units issued and outstanding which were exchangeable for 74,917
shares of our common stock, (v) 410,364 Series A-4 preferred OP units issued and outstanding, not held by us, which were
exchangeable for 182,384 shares of our common stock, (vi) 314,438 Series C preferred OP units issued and outstanding which
were exchangeable for 349,026 shares of our common stock, and (vii) 488,958 Series D preferred OP units issued and outstanding
which were exchangeable for 391,166 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-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 C preferred OP units and Series D 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.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table reflects information about the securities authorized for issuance under our equity compensation plans as of
December 31, 2018:
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
Number of shares of
common stock
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column a)
Plan Category
(a)
(b)
(c)
Equity compensation plans approved by stockholders
Equity compensation plans not approved by stockholders
Total
3,000
—
3,000
$
$
33.45
—
—
1,136,194
—
1,136,194
Issuer Purchases of Equity Securities
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
2018 or 2017. 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.
34
SUN COMMUNITIES, INC.
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. Below is the activity of conversions during 2018, 2017, and 2016:
Year Ended
December 31, 2018
Year Ended
December 31, 2017
Year Ended
December 31, 2016
Series
Common OP unit
Series A-1 preferred OP unit
Series A-4 preferred OP unit
Series A-4 preferred stock
Series C preferred OP unit
Conversion
Rate
Units /
Shares
Common
Stock
Units /
Shares
Common
Stock
Units/
Shares
Common
Stock
1
2.439
0.4444
0.4444
1.11
20,608
13,430
13,765
22,576
1,919
20,608
32,752
6,116
10,033
2,130
36,055
21,919
10,000
158,036
16,806
36,055
53,456
4,440
70,238
18,651
104,106
104,106
20,691
120,906
385,242
7,043
50,458
53,733
171,218
7,815
In addition to the shares of common stock issued pursuant to OP unit conversions above, we issued 298,900 shares of common
stock totaling $26.4 million on July 27, 2017 in connection with an acquisition.
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.
Performance Graph
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 fourteen publicly traded REITs, for the five year period ending on December 31, 2018. This line graph assumes a
$100 investment on December 31, 2013, 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.
Peer Group
We utilize peer group data for quantitative benchmarking against external market participants. We select our peer group based on
a number of quantitative and qualitative factors including, but not limited to, revenues, total assets, market capitalization, industry,
sub-industry, location, total shareholder return history, executive compensation components, and peer decisions made by other
companies. From time to time, we update our peer group based on analysis of the aforementioned factors and application of
judgment. During 2018, we updated our peer group, as shown in the “SUI New Peer Group” caption in the table below.
35
SUN COMMUNITIES, INC.
Index
Sun Communities, Inc.
SNL U.S. REIT Residential Index
NYSE Composite Index
SUI New Peer Group (1)
SUI Old Peer Group (2)
Period Ending
12/31/13
12/31/14
12/31/15
12/31/16
12/31/17
12/31/18
$
$
$
$
$
100.00 $
100.00 $
100.00 $
100.00 $
100.00 $
149.16 $
136.85 $
106.75 $
138.90 $
137.53 $
175.79 $
159.22 $
102.38 $
159.06 $
158.50 $
203.42 $
167.16 $
114.61 $
163.79 $
167.15 $
254.12 $
181.83 $
136.07 $
167.48 $
174.93 $
286.81
184.77
123.89
163.60
175.02
(1) SUI new peer group includes: American Campus Communities, Inc., Apartment Investment and Management Company, AvalonBay Communities, Inc.,
Brandywine Realty Trust, Camden Property Trust, CubeSmart, Equity Lifestyles Properties, Inc., Essex Property Trust, Inc., Mid-America Apartment Communities,
Inc., Macerich Company, Kimco Realty Corp., UDR, Inc., Federal Realty Investment Trust, and Weingarten Realty Investors.
(2) SUI old peer group included: American Campus Communities, Inc., Apartment Investment and Management Company, AvalonBay Communities, Inc.,
Brandywine Realty Trust, Camden Property Trust, CubeSmart, Equity Lifestyles Properties, Inc., Essex Property Trust, Inc., Mid-America Apartment Communities,
Inc., Tanger Factory Outlet Centers, Inc., Taubman Centers, Inc., UDR, Inc., and Weingarten Realty Investors.
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.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial 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
36
SUN COMMUNITIES, INC.
in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the Consolidated Financial
Statements and the Notes thereto. In addition to the results presented in accordance with GAAP below, we have provided net
operating income (“NOI”) and funds from operations (“FFO”) as supplemental performance measures. Refer to Non-GAAP
Financial Measures in Item 7 below for additional information.
FINANCIAL INFORMATION
Total revenues
Net income
Net income attributable to Sun Communities, Inc.
common stockholders
Earnings per share - basic
Earnings per share - diluted
Cash distributions declared per common share
FFO attributable to Sun Communities, Inc. common
stockholders and dilutive convertible securities
Core FFO attributable to Sun Communities, Inc.
common stockholders and dilutive convertible
securities
FFO attributable to Sun Communities, Inc. common
stockholders and dilutive convertible securities per
share - fully diluted
Core FFO attributable to Sun Communities, Inc.
common stockholders and dilutive convertible
securities per share - fully diluted
BALANCE SHEETS
Total assets
Total debt
Total liabilities
Year Ended December 31,
2018
2017 (1)
2016 (1)
2015 (1)
2014 (1)
(In thousands, except for share related data)
$ 1,126,825 $
120,158 $
$
982,570 $
81,819 $
833,778 $
31,471 $
674,731 $
170,473 $
484,259
33,196
$
$
$
$
105,493 $
1.29 $
65,021 $
0.85 $
1.29
$
0.85
$
17,369 $
0.27 $
$
0.26
137,325 $
2.53 $
$
2.52
22,376
0.54
0.54
2.84 $
2.68 $
2.60 $
2.60 $
2.60
$
385,615 $
320,119 $
225,653 $
192,128 $
134,549
$
394,369 $
337,384 $
266,131 $
210,559 $
148,356
$
$
4.48 $
3.95 $
3.22 $
3.31 $
3.06
4.58 $
4.17 $
3.79 $
3.63 $
3.37
$ 6,710,026 $ 6,111,957 $ 5,870,776 $ 4,181,799 $ 2,925,546
$ 3,124,303 $ 3,079,238 $ 3,110,042 $ 2,336,297 $ 1,819,941
$ 3,479,112 $ 3,405,204 $ 3,441,605 $ 2,562,421 $ 1,997,540
(1) Financial information has been revised to reflect certain reclassifications in prior periods to conform to current period presentation.
37
SUN COMMUNITIES, INC.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
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 accompanying footnotes thereto included in this Annual Report on Form 10-K.
In addition to the results presented in accordance with GAAP below, we have provided NOI and FFO as supplemental performance
measures. Refer to Non-GAAP Financial Measures in this Item 7 for additional information.
OVERVIEW
We are a fully integrated, self-administered and self-managed REIT. As of December 31, 2018, we owned and operated, or had
an interest in, a portfolio of 371 properties located throughout the United States and Ontario, Canada, including 230 MH
communities, 110 RV communities, and 31 properties containing both MH and RV sites. We have been in the business of acquiring,
operating, developing, and expanding MH and RV communities since 1975. We lease individual sites with utility access for
placement of manufactured homes and RVs to our customers. We are also engaged through 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.
EXECUTIVE SUMMARY
2018 Accomplishments:
• Total revenues for 2018 increased 14.7 percent to $1.1 billion.
• Core FFO for 2018 was $4.58 per diluted share and OP unit, an increase of 9.8 percent over 2017.
• Achieved Same Community NOI growth of 6.7 percent.
• Gained 2,600 revenue producing sites.
• Reached Same Community occupancy of 98.0 percent, excluding approximately 2,100 recently completed, but vacant
expansion sites.
Sold 3,629 homes, an increase of 10.6 percent over 2017.
•
• Brokered homes sales increased by 7.0 percent to 2,147 in 2018 as compared to 2,006 in 2017.
• Achieved 1-year, 3-year and 5-year total shareholder return of 14.2 percent, 66.9 percent and 191.3 percent, respectively,
outperforming the MSCI US REIT, Russell 1000, U.S. REIT Residential, and S&P 500 indexes.
• Delivered approximately 1,300 expansion sites in 13 communities.
• Acquired 20 communities for total consideration of $349.1 million.
• Entered into a strategic investment with Ingenia Communities Group (“Ingenia”) along with a development joint venture.
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 Community properties continue to achieve
revenue and occupancy increases which drive continued NOI growth. We continue to sell homes at a high level in our communities
and expect this trend to continue.
Portfolio Information:
Occupancy % - Total Portfolio - MH and RV blended (1)
Occupancy % - Same Community - MH and RV blended (1)(2)(3)
Core FFO
NOI - Total Portfolio (in thousands)
NOI - Same Community (in thousands)
Homes Sold
$
$
$
96.1%
98.0%
4.58
533,321
512,357
3,629
$
$
$
Number of Occupied Rental Homes
(1) Occupancy percent includes annual RV sites, and excludes transient RV sites.
(2) Occupancy percent excludes recently completed but vacant expansion sites.
(3) Same community is based on the as reported year end same community count for each respective year.
10,994
38
Year Ended December 31,
2018
2017
2016
95.8%
97.3%
4.17
479,662
382,210
3,282
11,074
$
$
$
96.2%
96.6%
3.79
403,337
332,919
3,172
10,733
SUN COMMUNITIES, INC.
Acquisition Activity:
During the past three years, we have completed acquisitions of over 130 properties with over 36,000 sites located in high growth
areas and retirement and vacation destinations such as California, Florida, Arizona, and Utah along with Eastern coastal areas and
Ontario, Canada.
During 2018, we acquired 20 communities, as detailed in the table below:
Property/Portfolio
State
Type
Total
Consideration (in
thousands)
Number of sites
Expansion Sites
Leaf Verde RV Resort
Arizona
Archview RV Resort & Campground Utah
Petoskey KOA RV Resort
The Sands RV & Golf Resort
Sun NG RV Resorts LLC (1)(2)
Silver Creek RV Resort
Highway West (1)
Compass RV Resort
Total
$
RV
RV
RV
RV
RV
RV
RV
11,647
14,550
9,000
14,250
241,878
7,250
36,500
376
114
210
507
2,700
264
536
—
50
—
—
940
176
—
Michigan
California
Various
Michigan
Utah and Oregon
14,000
349,075
(1) Highway West and Sun NG RV Resorts LLC are comprised of 4 RV and 10 RV resorts, respectively.
(2) Refer to Note 8, “Consolidated Variable Interest Entities,” Note 9, “Debt and Lines of Credit,” and Note 10, “Equity and Mezzanine Securities” in our
—
1,166
175
4,882
Florida
RV
$
accompanying Consolidated Financial Statements for additional information.
In 2018, we acquired the following land for expansion / development:
Name
Ocean West
Location
McKinleyville, CA
Water Oak Country Club Estates Lady Lake, FL
Oak Crest
Pecan Park RV Resort
Smith Creek Crossing
Apple Carr
River Run Ranch
Austin, TX
Jacksonville, FL
Granby, CO
Egelston, MI
Granby, CO
Expansion Activity:
Type
MH
MH
MH
RV
MH
MH
MH / RV
Total
Expansion /
Development
Sites
Cost
(millions)
Month
Acquired
26
296
220
158
310
121
1,144
2,275
$
$
$
$
$
$
$
$
0.2 December
1.9 November
4.2 October
1.3 September
0.9 September
0.2 May
5.3 May
14.0
We have been focused on expansion opportunities adjacent to our existing communities, and we have developed over 3,500 sites
within the past three years. We have expanded approximately 1,300 sites at 13 communities in 2018. The total cost to construct
the sites was $56.7 million. We continue to expand our Properties utilizing our inventory of owned and entitled land (approximately
11,300 sites available for development) and expect to construct over 1,600 additional expansion sites in 2019.
39
SUN COMMUNITIES, INC.
Markets:
Our Properties are largely concentrated in Florida, Michigan, Texas and California. We have expanded our market share in California
through recent acquisitions and increased our property holdings in other high growth areas of the U.S. including retirement and
vacation destinations.
We have also experienced strong revenue growth through recent acquisitions of RV communities. 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.
The following table identifies our markets by total sites:
Major Market
Florida
Michigan
Texas
California
Arizona
Ontario, Canada
Indiana
Ohio
New Jersey
Colorado
Illinois
New York
Maine
Pennsylvania
Maryland
Georgia
Virginia
Missouri
Delaware
New Hampshire
Massachusetts
North Carolina
South Carolina
Wisconsin
Utah
Oregon
Minnesota
Iowa
Tennessee
Nevada
Montana
Connecticut
December 31, 2018
December 31, 2017
Number of
Properties
Total Sites
% of Total
Sites
Number of
Properties
Total Sites
% of Total
Sites
124
70
23
30
12
15
11
9
7
8
5
7
6
4
4
3
5
2
2
2
2
3
1
2
4
3
1
1
2
1
1
1
43,791
27,080
34.1%
21.1%
8,674
7,706
5,259
4,891
3,608
2,920
2,916
2,472
2,150
2,118
1,595
1,519
1,382
1,140
1,031
976
916
682
679
671
588
588
562
561
475
413
392
324
226
149
6.8%
6.0%
4.1%
3.8%
2.8%
2.3%
2.3%
1.9%
1.6%
1.6%
1.2%
1.2%
1.1%
0.9%
0.8%
0.8%
0.7%
0.5%
0.5%
0.5%
0.5%
0.5%
0.4%
0.4%
0.4%
0.3%
0.3%
0.3%
0.2%
0.1%
123
68
21
27
11
15
11
9
7
8
5
6
6
3
3
3
4
2
2
—
2
3
1
2
—
2
1
1
1
1
1
1
43,328
26,137
35.5%
21.4%
7,974
6,498
4,882
4,882
3,420
2,904
2,917
2,481
2,150
1,757
1,595
1,277
1,156
1,139
718
976
916
—
680
672
588
548
—
473
475
413
237
324
226
149
6.5%
5.3%
4.0%
4.0%
2.8%
2.4%
2.4%
2.0%
1.8%
1.4%
1.3%
1.1%
1.0%
0.9%
0.6%
0.8%
0.8%
—%
0.6%
0.6%
0.5%
0.4%
—%
0.4%
0.4%
0.3%
0.2%
0.3%
0.2%
0.1%
371
128,454
350
121,892
40
SUN COMMUNITIES, INC.
NON-GAAP FINANCIAL MEASURES
In addition to the results reported in accordance with GAAP in our “Results of Operations” below, we have provided information
regarding NOI and FFO as supplemental performance measures. We believe NOI and FFO are appropriate measures given their
wide use by and relevance to investors and analysts following the real estate industry. NOI provides a measure of rental operations
and does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses.
FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of GAAP
depreciation/amortization of real estate assets. In addition, NOI and FFO are commonly used in various ratios, pricing multiples/
yields and returns and valuation calculations used to measure financial position, performance and value.
NOI is derived from revenues minus property operating expenses and real estate taxes. NOI does not represent cash generated
from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined
in accordance with GAAP) as an indication of the Company’s financial performance or to be an alternative to cash flow from
operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity; nor is it indicative of funds
available for the Company’s cash needs, including its ability to make cash distributions. The Company believes that net income
(loss) is the most directly comparable GAAP measurement to NOI. Because of the inclusion of items such as interest, depreciation,
and amortization, the use of net income (loss) as a performance measure is limited as these items may not accurately reflect the
actual change in market value of a property, in the case of depreciation and in the case of interest, may not necessarily be linked
to the operating performance of a real estate asset, as it is often incurred at a parent company level and not at a property level. The
Company believes that NOI is helpful to investors 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. The Company uses 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. Therefore, NOI is a measure of the operating performance of the
properties of the Company rather than of the Company overall.
FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as net income (loss) computed in
accordance with GAAP, excluding gains or losses from sales of depreciable operating property, plus real estate-related depreciation
and amortization, and after adjustments for unconsolidated partnerships and joint ventures. The Company considers FFO to be a
useful measure for reviewing comparative operating and financial performance because, by excluding gains and losses related to
sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization
(which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates).
FFO provides a performance measure that, when compared period over period, 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. FFO is computed in accordance with the Company’s
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 than
the Company. The Company also uses FFO excluding certain gain and loss items that management considers unrelated to the
operational and financial performance of our core business (“Core FFO”). We believe that this provides investors with another
financial measure of our operating performance that is more comparable when evaluating period over period results.
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 that, when combined with
measures computed in accordance with GAAP such as net income (loss), cash flow from operating activities, investing activities
and financing activities, provide investors with an indication of our ability to service debt and to fund acquisitions and other
expenditures. Other REITs may use different methods for calculating FFO, accordingly, our FFO may not be comparable to other
REITs.
41
SUN COMMUNITIES, INC.
RESULTS OF OPERATIONS
We report operating results under two segments: Real Property Operations and Home Sales and Rentals. The Real Property
Operations segment owns, operates, develops, or has an interest in, a portfolio of MH and RV communities throughout the U.S.
and in Canada, and is in the business of acquiring, operating, and expanding MH and RV communities. The Home Sales and
Rentals segment offers MH and RV park model sales and leasing services to tenants and prospective tenants of our communities.
We evaluate segment operating performance based on NOI and gross profit. Refer to Note 12, “Segment Reporting,” in our
accompanying Consolidated Financial Statements for additional information.
SUMMARY STATEMENTS OF OPERATIONS
The following tables reconcile the Net income attributable to Sun Communities, Inc. common stockholders to NOI and summarize
our consolidated financial results for the years ended December 31, 2018, 2017, and 2016 (in thousands):
Net income attributable to Sun Communities, Inc. common stockholders
$
Other revenues
Home selling expenses
General and administrative
Transaction costs
Catastrophic weather related charges, net
Depreciation and amortization
Loss on extinguishment of debt
Interest expense
Remeasurement of marketable securities
Other expense / (income), net
Current tax expense
Deferred tax benefit
Income from nonconsolidated affiliates
Preferred return to preferred OP units
Amounts attributable to noncontrolling interests
Preferred stock distribution
NOI/Gross Profit
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
Years Ended
2018
2017
2016
$
105,493
(27,057)
15,722
81,438
472
92
287,262
2,657
132,783
3,639
6,453
595
(507)
(646)
4,486
8,443
1,736
$
65,021
(24,874)
12,457
74,232
9,801
8,352
261,536
6,019
130,242
—
(8,982)
446
(582)
—
4,581
5,055
7,162
17,369
(21,150)
9,744
63,662
31,914
1,172
221,770
1,127
122,315
—
4,676
683
(400)
(500)
5,006
150
8,946
$
623,061
$
550,466
$
466,484
Years Ended
2018
2017
2016
$
533,321
$
479,662
$
403,337
96,173
42,698
16,484
(65,615)
623,061
$
92,268
32,294
10,075
(63,833)
550,466
$
85,019
30,087
9,641
(61,600)
466,484
$
(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.
42
SUN COMMUNITIES, INC.
COMPARISON OF THE YEARS ENDED DECEMBER 31, 2018 AND 2017
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,
2018 and 2017:
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
MH occupancy
RV occupancy
MH & RV blended occupancy (1)
Year Ended December 31,
2018
2017
Change
% Change
$ 825,973
$ 742,228
$
83,745
11.3%
74,653
9,524
93,205
28,594
30,121
56,555
67,075
7,264
83,550
25,871
26,518
52,288
7,578
2,260
9,655
2,723
3,603
4,267
292,652
262,566
30,086
$ 533,321
$ 479,662
$
53,659
11.3%
31.1%
11.6%
10.5%
13.6%
8.2%
11.5%
11.2%
As of December 31,
2018
371
2017
Change
350
21
95.0%
100.0%
96.1%
95.8%
0.3%
Sites available for development
11,258
9,617
1,641
Monthly base rent per site - MH
Monthly base rent per site - RV (2)
Monthly base rent per site - Total
(1) Overall occupancy percentage includes MH and annual RV sites, and excludes transient RV sites.
(2) Monthly base rent pertains to annual RV sites and excludes transient RV sites.
$
$
$
554
455
532
$
$
$
533
435
512
$
$
$
21
20
20
The $53.7 million increase in Real Property NOI consists of $21.5 million from recently acquired properties and $32.2 million
from our Same Community properties as detailed below.
43
REAL PROPERTY OPERATIONS – SAME COMMUNITY
SUN COMMUNITIES, INC.
A key management tool used when evaluating performance and growth of our properties is a comparison of Same Communities.
Same Communities consist of properties owned and operated throughout 2018 and 2017. The Same Community data may change
from time-to-time depending on acquisitions, dispositions, management discretion, significant transactions, or unique situations.
The Same Community data in this Form 10-K includes all properties which we have owned and operated continuously since
January 1, 2017.
In order to evaluate the growth of the Same Communities, management has classified certain items differently than our GAAP
statements. The reclassification difference between our GAAP statements and our Same Community portfolio is the reclassification
of water and sewer revenues from income from real property to utilities. A significant portion of our utility charges are re-billed
to our residents. We have reclassified $32.2 million and $30.6 million for the years ended December 31, 2018 and 2017, respectively,
to reflect the utility expenses associated with our Same Community portfolio net of recovery.
The following tables reflect certain financial and other information for our Same Communities as of and for the years ended
December 31, 2018 and 2017. The amounts in the table below reflect constant currency for comparative purposes. Canadian
currency figures included within the year ended December 31, 2017 have been translated at 2018 average exchange rates:
Financial Information (in thousands)
Income from Real Property
Property operating expenses:
Payroll and benefits
Legal, taxes, and insurance
Utilities
Supplies and repair(1)
Other
Real estate taxes
Property operating expenses
Real Property NOI
Other Information
Number of properties
MH occupancy (2)
RV occupancy (2)
MH & RV blended occupancy (2)
Year Ended December 31,
2018
$ 746,360
2017
$ 703,272
66,502
9,026
54,949
26,476
22,952
54,098
234,003
$ 512,357
65,524
7,152
51,480
25,347
21,960
51,695
223,158
$ 480,114
Change
$ 43,088
% Change
6.1%
978
1,874
3,469
1,129
992
2,403
10,845
$ 32,243
1.5%
26.2%
6.7%
4.5%
4.5%
4.6%
4.9%
6.7%
As of December 31,
2018
336
2017
336
Change
—
97.4%
100.0%
98.0%
95.8% (3)
2.2%
Sites available for development
7,348
5,087
2,261
Monthly base rent per site - MH
Monthly base rent per site - RV (4)
Monthly base rent per site - Total
$
$
$
554
455
532
$
$
$
533
431
511
$
$
$
21
24
21
(1) Year ended December 31, 2017 excludes $2.6 million of expenses incurred for recently acquired properties to bring the properties up to Sun’s operating standards.
These costs did not meet the Company’s capitalization policy.
(2) The Same Community occupancy percentage for 2018 is derived from 104,059 developed sites, of which 101,988 were occupied. The number of developed
sites excludes RV transient sites and approximately 2,100 recently completed but vacant MH expansion sites.
(3) The Same Community occupancy percentage for 2017 has been adjusted to reflect incremental growth period-over-period from filled expansion sites and the
conversion of transient RV sites to annual RV sites.
(4) Monthly base rent pertains to annual RV sites and excludes transient RV sites.
The 6.7 percent growth in NOI is primarily due to a 6.1 percent increase in Income from real property. The 6.1 percent increase
in Income from real property is primarily due to a 2.2 percent increase in MH & RV blended occupancy and a 4.1 percent increase
in total monthly base rent per site. The increase in Income from real property was partially offset by a 4.9 percent increase in
Property operating expenses compared to 2017, which was primarily due to higher utilities, real estate taxes, and legal, taxes, and
insurance in 2018.
44
SUN COMMUNITIES, INC.
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, 2018 and 2017 (in thousands, except for average selling prices and statistical information):
Financial Information
Revenue:
New home sales
Pre-owned home sales
Revenue from homes sales
Expenses:
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
New home sales volume
Pre-owned home sales volume
Total homes sold
Year Ended December 31,
2018
2017
Change
% Change
$ 59,578
$ 36,915
$ 22,663
106,453
166,031
90,493
127,408
15,960
38,623
51,913
71,420
31,578
63,536
123,333
$ 42,698
95,114
$ 32,294
20,335
7,884
28,219
$ 10,404
61.4%
17.6%
30.3%
64.4%
12.4%
29.7%
32.2%
$
7,665
$
5,337
$ 2,328
43.6%
12.9%
14.5%
(1.6)%
$ 113,266
$ 101,975
$ 11,291
11.1%
$ 35,033
$ 26,957
$ 8,076
30.0%
32.9%
29.8%
3.1 %
$ 34,306
$ 30,991
$ 3,315
10.7%
526
3,103
3,629
362
2,920
3,282
164
183
347
45.3%
6.3%
10.6%
Gross profit for new and pre-owned home sales increased $2.3 million and $8.1 million, respectively, in 2018 as compared to
2017. The increases for both new and pre-owned home sales are primarily the result of higher home sales volumes combined with
higher average selling prices in 2018 as compared to 2017.
45
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, 2018 and 2017 (in thousands, except for statistical information):
Financial Information
Revenues:
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
Weighted average monthly rental rate, end of period
Year Ended December 31,
2018
2017
Change
% Change
$
53,657
$
50,549
$
65,615
119,272
63,833
114,382
3,108
1,782
4,890
6.1 %
2.8 %
4.3 %
2,291
10,312
6,364
4,132
23,099
2,734
9,864
6,102
3,414
22,114
(443)
448
262
718
985
$
96,173
$
92,268
$
3,905
10,994
11,074
$ 530,006
$ 494,945
1,122
$
949
$
1,168
901
$
$
(80)
35,061
(46)
48
(16.2)%
4.5 %
4.3 %
21.0 %
4.5 %
4.2 %
(0.7)%
7.1 %
(3.9)%
5.3 %
(1) The renter’s monthly payment includes the site rent and an amount attributable to the rental home lease. 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.
Rental Program NOI increased by 4.2 percent compared to 2017. The increase is due to a 4.3 percent increase in Rental Program
revenue which is primarily attributable to a 5.3 percent increase in weighted average monthly rental rates.
The 4.5 percent increase in Rental Program operating and maintenance expenses is primarily due to higher Marketing and other
expenses, driven by higher utility and bad debt expenses in 2018 as compared to 2017, partially offset by the decrease in commission
expenses due to a decrease in the number of sold rental homes in 2018 as compared to 2017.
46
SUN COMMUNITIES, INC.
OTHER INCOME STATEMENT ITEMS
The following table summarizes other income and expenses for the years ended December 31, 2018 and 2017 (amounts in
thousands):
Year Ended December 31,
2018
2017
Change
% Change
Ancillary revenue, net
Interest income
Brokerage commissions and other revenues, net
Home selling expenses
General and administrative expenses
Transaction costs
Catastrophic weather related charges, net
Depreciation and amortization
Loss on extinguishment of debt
Interest expense
Remeasurement of marketable securities
Other (expense) / income, net
Income from nonconsolidated affiliates
Current tax expense
Deferred tax benefit
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
16,484
20,853
6,204
15,722
81,438
472
92
287,262
2,657
$
$
$
$
$
$
$
$
$
132,783
$
(3,639) $
(6,453) $
$
646
(595) $
$
507
10,075
21,180
3,694
12,457
74,232
9,801
8,352
261,536
6,019
$
$
$
$
$
$
$
$
$
130,242
$
— $
8,982
$
— $
(446) $
$
582
6,409
(327)
2,510
3,265
7,206
(9,329)
(8,260)
25,726
(3,362)
2,541
(3,639)
(15,435)
646
(149)
(75)
63.6 %
(1.5)%
67.9 %
26.2 %
9.7 %
(95.2)%
(98.9)%
9.8 %
(55.9)%
2.0 %
N/A
(171.8)%
N/A
(33.4)%
(12.9)%
Ancillary revenue, net - increased primarily due to RV vacation home rental income as a result of acquisition activities, in addition
to an increase in golf course, restaurant, and resort activity net profit during the year ended December 31, 2018 as compared to
the same period in 2017.
Brokerage commissions and other revenues, net - increased primarily due to a higher number of broker homes sold during the
year ended December 31, 2018 as compared to the same period in 2017, in addition to $1.9 million in business interruption insurance
proceeds related to Hurricane Irma.
Home selling expenses - increased as a result of higher commissions due to a higher volume of home sales for the year ended
December 31, 2018 as compared to the same period in 2017.
General and administrative expenses - increased primarily due to employee related costs including salaries, incentive
compensation, and deferred compensation amortization, in addition to higher software support and maintenance fees during the
year ended December 31, 2018 as compared to the same period in 2017.
Transaction costs - for the year ended December 31, 2018, decreased by $9.3 million as compared to the same period in 2017.
Beginning January 2018, only direct acquisition related costs are capitalized as part of the purchase price. Acquisition costs that
do not meet the criteria for capitalization are expensed as incurred.
Catastrophic weather related charges, net - decreased primarily due to a smaller impact from Hurricanes Florence and Michael
for the year ended December 31, 2018 as compared to a larger impact from Hurricane Irma in the same period in 2017.
Depreciation and amortization - increased as a result of our recent property acquisitions and our ongoing expansion and
development activities. Refer to Note 3, “Real Estate Acquisitions,” in our accompanying Consolidated Financial Statements for
additional information.
Loss on extinguishment of debt - decreased $3.4 million primarily due to lower prepayment penalties related to debt and financing
activity as compared to 2017. Refer to Note 9, “Debt and Lines of Credit,” in our accompanying Consolidated Financial Statements
for additional information.
47
SUN COMMUNITIES, INC.
Interest expense - for the year ended December 31, 2018, increased $2.5 million as compared to the same period in 2017, primarily
due to entering into two collateralized term loans totaling $249.7 million. Refer to Note 9, “Debt and Lines of Credit,” in our
accompanying Consolidated Financial Statements for additional information.
Remeasurement of marketable securities - was $3.6 million in 2018, primarily due to the change in the fair value of exchange
traded marketable securities. Refer to Note 7, “Investment in Nonconsolidated Affiliates,” in our accompanying Consolidated
Financial Statements for additional information.
Other (expense) / income, net - for the year ended December 31, 2018, was primarily comprised of foreign currency translation
loss of $8.4 million, and $0.4 million in other expenses, partially offset by contingent liability remeasurement gain of $2.3 million
compared to 2017 which consisted of foreign currency translation gains of $5.9 million and a contingent liability remeasurement
gain of $3.0 million.
Income from nonconsolidated affiliates - was $0.6 million in 2018, primarily due to equity earnings from our investments in
GTSC and Origen Financial Services, LLC. Refer to Note 7, “Investment in Nonconsolidated Affiliates,” in our accompanying
Consolidated Financial Statements for additional information.
48
SUN COMMUNITIES, INC.
COMPARISON OF THE YEARS ENDED DECEMBER 31, 2017 AND 2016
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, 2017 and 2016:
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
MH occupancy
RV occupancy
MH & RV blended occupancy (1)
Year Ended December 31,
2017
2016
Change
% Change
742,228
620,917
$ 121,311
19.5%
67,075
7,264
83,550
25,871
26,518
52,288
56,744
5,941
67,495
20,732
22,362
44,306
10,331
1,323
16,055
5,139
4,156
7,982
262,566
$ 479,662
217,580
$ 403,337
$
44,986
76,325
18.2%
22.3%
23.8%
24.8%
18.6%
18.0%
20.7%
18.9%
As of December 31,
2017
350
2016
Change
341
9
94.6%
100.0%
95.8%
96.2%
(0.4)%
Sites available for development
9,617
10,337
(720)
Monthly base rent per site - MH
Monthly base rent per site - RV (2)
Monthly base rent per site - Total
(1) Overall occupancy (percentage) includes MH and annual RV sites, and excludes transient RV sites.
(2) Monthly base rent pertains to annual RV sites and excludes transient RV sites.
$
$
$
533
439
512
$
$
$
515
420
495
$
$
$
18
19
17
The $76.3 million growth in Real Property NOI consists of $51.7 million from newly acquired properties and $24.6 million from
Same Community properties as detailed below.
49
REAL PROPERTY OPERATIONS – SAME COMMUNITY
SUN COMMUNITIES, INC.
The following tables reflect certain financial and other information for our Same Communities, which includes all properties we
have owned and operated continuously since January 1, 2016 as of and for the years ended December 31, 2017 and 2016. We have
reclassified $26.9 million and $25.8 million for the year ended December 31, 2017 and 2016, respectively, to reflect the utility
expenses associated with our Same Community portfolio net of recovery.
Financial Information (in thousands)
Income from Real Property
Property operating expenses:
Payroll and benefits
Legal, taxes, and insurance
Utilities
Supplies and repair (1)
Other
Real estate taxes
Property operating expenses
Real Property NOI
Other Information
Number of properties
MH occupancy (2)
RV occupancy (2)
MH & RV blended occupancy (2)
Year Ended December 31,
2017
$ 533,942
2016
$ 503,770
Change
% Change
$
30,172
6.0 %
45,240
5,562
29,726
19,109
13,696
38,399
151,732
$ 382,210
43,078
5,174
28,475
18,729
13,988
36,708
146,152
$ 357,618
$
2,162
388
1,251
380
(292)
1,691
5,580
24,592
5.0 %
7.5 %
4.4 %
2.0 %
(2.1)%
4.6 %
3.8 %
6.9 %
As of December 31,
2017
231
2016
231
Change
—
96.9%
100.0%
97.3%
95.4% (3)
1.9%
Sites available for development
5,087
6,263
(1,176)
Monthly base rent per site - MH
Monthly base rent per site - RV (4)
Monthly base rent per site - Total
(1) Year ended December 31, 2016 excludes $0.1 million of expenses incurred for recently acquired properties to bring the properties up to Sun’s operating standards.
510
441
492
518
500
459
18
18
18
$
$
$
$
$
$
$
$
$
These costs did not meet the Company’s capitalization policy.
(2) The Same Community occupancy percentage for 2017 is derived from 80,407 developed sites, of which 78,257 were occupied. The number of developed sites
excludes RV transient sites and approximately 1,800 recently completed by vacant MH expansion sites.
(3) The Same Community occupancy percentage for 2016 has been adjusted to reflect incremental growth period-over-period from filled expansion sites and the
conversion of transient RV sites to annual RV sites.
(4) Monthly base rent pertains to annual RV sites and excludes transient RV sites.
The 6.9 percent growth in NOI is primarily due to a 6.0 percent increase in Income from real property. The 6.0 percent increase
in Income from real property is primarily due to a 1.9 percent increase in MH & RV blended occupancy, a 3.6 percent increase in
total monthly base rent per site, and a 0.5 percent increase in transient revenue and other revenue. The increase in Income from
real property was partially offset by a 3.8 percent increase in Property operating expenses compared to 2016, which was primarily
due to higher payroll and benefits, real estate taxes, and utilities in 2017.
50
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, 2017 and 2016 (in thousands, except for average selling prices and statistical information):
Financial Information
Revenue:
New home sales
Pre-owned home sales
Revenue from homes sales
Expenses:
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
New home sales volume
Pre-owned home sales volume
Total homes sold
Year Ended December 31,
2017
2016
Change
% Change
$ 36,915
$ 30,977
$ 5,938
90,493
127,408
79,530
110,507
31,578
63,536
95,114
26,802
53,618
80,420
10,963
16,901
4,776
9,918
14,694
$ 32,294
$ 30,087
$ 2,207
19.2%
13.8%
15.3%
17.8%
18.5%
18.3%
7.3%
$
5,337
$
4,175
$ 1,162
27.8%
14.5%
13.5%
1.0 %
$ 101,975
$ 94,156
$ 7,819
$ 26,957
$ 25,912
$ 1,045
29.8%
32.6%
(2.8)%
8.3%
4.0%
$ 30,991
$ 27,974
$ 3,017
10.8%
362
2,920
3,282
329
2,843
3,172
33
77
110
10.0%
2.7%
3.5%
Gross profit for new and pre-owned home sales increased $1.2 million and $1.0 million, respectively, in 2017 as compared to
2016. The increases for both new and pre-owned home sales are primarily the result of higher volume of home sales combined
with higher average selling prices in 2017 as compared to 2016.
51
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, 2017 and 2016 (in thousands, except for statistical information):
Financial Information
Revenues:
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
Weighted average monthly rental rate, end of period
Year Ended December 31,
2017
2016
Change
% Change
$
50,549
$
47,780
$
63,833
114,382
61,600
109,380
2,734
9,864
6,102
3,414
22,114
92,268
$
$
2,309
12,825
5,734
3,493
24,361
85,019
11,074
10,733
$ 494,945
$ 457,691
1,168
$
901
$
1,089
882
$
$
$
2,769
2,233
5,002
425
(2,961)
368
(79)
(2,247)
7,249
341
37,254
79
19
5.8 %
3.6 %
4.6 %
18.4 %
(23.1)%
6.4 %
(2.3)%
(9.2)%
8.5 %
3.2 %
8.1 %
7.3 %
2.2 %
(1) The renter’s monthly payment includes the site rent and an amount attributable to the rental home lease. 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.
Rental Program NOI increased by 8.5 percent compared to 2016. The increase is due to a 4.6 percent increase in Rental Program
revenue attributable to a 2.2 percent increase in weighted average monthly rental rates and a 3.2 percent increase in the number
of occupied rentals, combined with an overall decrease in Rental Program operating and maintenance expenses.
The 9.2 percent decrease in Rental Program operating and maintenance expenses is primarily due to lower Repairs and refurbishment
expenses in 2017 as compared to 2016.
52
SUN COMMUNITIES, INC.
OTHER INCOME STATEMENT ITEMS
The following table summarizes other income and expenses for the years ended December 31, 2017 and 2016 (amounts in
thousands):
Year Ended December 31,
2017
2016
Change
% Change
Ancillary revenue, net
Interest income
Brokerage commissions and other revenues, net
Home selling expenses
General and administrative expenses
Transaction costs
Catastrophic weather related charges, net
Depreciation and amortization
Loss on extinguishment of debt
Interest expense
Other income / (expense), net
Income from nonconsolidated affiliates
Current tax expense
Deferred tax benefit
$
$
$
$
$
$
$
$
$
$
$
$
$
$
10,075
21,180
3,694
12,457
74,232
9,801
8,352
261,536
6,019
130,242
8,982
$
$
$
$
$
$
$
$
$
$
$
— $
(446) $
$
582
9,641
18,113
3,037
9,744
63,662
31,914
1,172
221,770
1,127
$
$
$
$
$
$
$
$
$
122,315
$
(4,676) $
500
$
(683) $
$
400
434
3,067
657
2,713
10,570
(22,113)
7,180
39,766
4,892
7,927
13,658
(500)
237
182
4.5 %
16.9 %
21.6 %
27.8 %
16.6 %
(69.3)%
612.6 %
17.9 %
434.1 %
6.5 %
292.1 %
(100.0)%
(34.7)%
45.5 %
Interest income - increased primarily due to an increase in our installment notes receivable, partially offset by a decrease in our
collateralized receivables, as compared to December 31, 2016.
Brokerage commissions and other revenues, net - increased due to the sale of 2,006 brokered homes in 2017 as compared to
1,655 in 2016, a 21.2 percent increase.
Home selling expenses - increased primarily due to higher volumes and higher weighted average selling prices for both new and
used homes in 2017, which resulted in higher commissions.
General and administrative expenses - increased primarily due to additional employee related costs as headcount increased in
connection with our growth through acquisitions.
Transaction costs - relate to diligence and other expenses incurred in connection with our acquisitions. These costs were
significantly lower in 2017 as compared to 2016, due to the acquisition of Carefree Communities, Inc. (“Carefree”) in 2016.
Catastrophic weather related charges, net - In September 2017, Hurricane Irma impacted 121 of our communities in Florida
and three in Georgia. We recognized charges totaling $31.7 million comprised of $21.3 million for debris and tree removal, common
area repairs, and minor flooding damage, as well as $10.4 million for impaired assets at the three Florida Keys communities. These
charges were partially offset by estimated insurance recoveries of $23.7 million.
In 2016, Catastrophic weather related charges, net were primarily attributable to debris and tree removal, common area repairs,
and minor flooding damage from hurricanes Hermine and Matthew.
Depreciation and amortization - increased as a result of our acquisition of Carefree in 2016, as well as other properties in the
second half of 2016 and during 2017.
Loss on extinguishment of debt - in 2017 of $6.0 million was recognized in connection with defeasement or repayment of
collateralized term loans totaling $61.4 million. In 2016, the loss on extinguishment of debt of $1.1 million was in connection with
repayment of a total of $79.1 million of collateralized term loans. Refer to Note 9, “Debt and Lines for Credit,” in our accompanying
Consolidated Financial Statements for additional information.
Interest expense - increased primarily due to 2017 including a full year of interest expense from incremental borrowings of
53
SUN COMMUNITIES, INC.
$338.0 million, $405.0 million, and $139.0 million in connection with our Fannie Mae Financing, NML Financing, and Freddie
Mac Financing arrangements, respectively. The $338.0 million and $405.0 million borrowings were entered into in June 2016,
and the $139.0 million was entered into in September 2016.
Other income / (expense), net - in 2017 consisted of foreign currency translation gains of $5.9 million and a contingent liability
remeasurement gain of $3.0 million, compared to 2016 which consisted of foreign currency translation losses of $5.0 million and
a contingent liability remeasurement loss of $0.2 million, partially offset by a $0.5 million gain related to the acquisition of a
community.
Income from nonconsolidated affiliates - of $0.5 million in 2016 was due to the sale of our entire interest in Origen Financial,
Inc. Prior to the sale, the carrying value of our investment was zero.
54
SUN COMMUNITIES, INC.
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO SUN COMMUNITIES, INC. COMMON
STOCKHOLDERS TO FFO
The following table reconciles Net income attributable to Sun Communities, Inc. common stockholders to FFO for the years ended
December 31, 2018, 2017, and 2016 (in thousands, except per share amounts):
Net income attributable to Sun Communities, Inc. common stockholders
Adjustments:
Depreciation and amortization
Remeasurement of marketable securities
Amounts attributable to noncontrolling interests
Preferred return to preferred OP units
Preferred distribution to Series A-4 Preferred Stock
Gain on disposition of assets, net
FFO attributable to Sun Communities, Inc. common stockholders and dilutive
convertible securities (1)
Adjustments:
Transaction costs (2)
Other acquisition related costs (3)
Income from nonconsolidated affiliates
Loss on extinguishment of debt
Catastrophic weather related costs, net
Loss of earnings - catastrophic weather related (4)
Other expense / (income), net
Debt premium write-off
Ground lease intangible write-off
Deferred tax benefit
Year Ended December 31,
2018
$ 105,493
2017
65,021
2016
17,369
$
$
288,206
3,639
7,740
2,206
1,737
(23,406)
262,211
—
4,535
2,320
2,107
(16,075)
221,576
—
(41)
2,462
—
(15,713)
$ 385,615
$ 320,119
$ 225,653
—
1,001
—
2,657
92
(292)
6,453
(1,467)
817
(507)
9,801
2,810
—
6,019
8,352
292
(8,982)
(1,343)
898
(582)
31,914
3,328
(500)
1,127
1,172
—
4,676
(839)
—
(400)
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive
convertible securities (1)
$ 394,369
$ 337,384
$ 266,131
Weighted average common shares outstanding - basic:
81,387
76,084
65,856
Add:
Common stock issuable upon conversion of stock options
Restricted stock
Common OP units
Common stock issuable upon conversion of Series A-1 preferred OP units
Common stock issuable upon conversion of Series A-4 preferred stock
Common stock issuable upon conversion of Series A-3 preferred OP units
Weighted average common shares outstanding - fully diluted
2
651
2,733
821
472
75
86,141
2
625
2,756
869
585
75
80,996
8
457
2,844
925
—
75
70,165
FFO attributable to Sun Communities, Inc. common stockholders and dilutive
convertible securities per share - fully diluted
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive
convertible securities per share - fully diluted
$
$
4.48
4.58
$
$
3.95
4.17
$
$
3.22
3.79
(1) The effect of certain anti-dilutive convertible securities is excluded from these items.
(2) In January 2018, we adopted ASU 2017-01. Under previous guidance, substantially all of our property acquisitions were accounted for as business combinations
with acquisition related costs expensed as incurred and reported as Transaction costs. Under ASU 2017-01, direct acquisition related costs are capitalized as
part of the purchase price. Acquisitions costs that do not meet the criteria for capitalization are expensed as incurred.
(3) These costs represent the expenses incurred to bring recently acquired properties up to our operating standards, including items such as tree trimming and
painting costs that do not meet our capitalization policy.
(4) During 2018, the adjustment was for the previously estimated FFO impact of the income related to the loss of earnings in excess of the applicable business
interruption deductible in relation to our Florida Keys communities, impaired by Hurricane Irma, that was not recognized as income in those respective periods.
The income related to the loss of earnings was recognized during the three months ended December 31, 2018 upon notification of payment by the insurance
company. During 2017, the adjustment represented the related estimated loss of earnings in excess of the applicable business interruption deductible.
55
SUN COMMUNITIES, INC.
LIQUIDITY AND CAPITAL RESOURCES
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 identify opportunities to expand our development pipeline and acquire
existing communities. We finance acquisitions through available cash, secured financing, draws on our lines of credit, the assumption
of existing debt on properties, and the issuance of equity securities. We will continue to evaluate acquisition opportunities that
meet our criteria. During the year ended December 31, 2018, we acquired 20 communities. Refer to Note 3, “Real Estate
Acquisitions” in our accompanying Consolidated Financial Statements for information regarding recent community acquisitions.
We also intend to continue to strengthen our capital and liquidity positions by focusing 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 lines of credit, and the use of debt and equity offerings under our shelf registration statement. Refer to Note 9, “Debt and
Lines of Credit” and Note 10, “Equity and Mezzanine Securities” in our accompanying Consolidated Financial Statements for
additional information.
Our capital expenditures include expansion sites and ground-up development construction costs, lot modifications, recurring capital
expenditures and rental home purchases. For the years ended December 31, 2018 and 2017, expansion and development activities
of $152.7 million and $88.3 million, respectively, related to costs consisting primarily of construction of sites and other costs
necessary to complete home site improvements.
For the years ended December 31, 2018 and 2017, lot modification expenditures were $22.9 million and $18.1 million, respectively.
These expenditures improve asset quality in our communities and are incurred when an existing home is removed and the site is
prepared for a new home (more often than not, a multi-sectional home). These activities, which are mandated by strict manufacturer’s
installation requirements and state building codes, include items such as new foundations, driveways, and utility upgrades.
For the years ended December 31, 2018 and 2017, recurring capital expenditures were $24.3 million and $14.2 million, respectively,
related to our continued commitment to the upkeep of our properties.
We invest in the acquisition of homes intended for the Rental Program. Expenditures for these investments depend upon the
condition of the markets for repossessions and new home sales, as well as rental homes. We 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 for Investing Activities
Net Cash Provided by Financing Activities
Effect of exchange rate on cash, cash equivalents and restricted cash
Year Ended December 31,
2018
2017
2016
$
$
$
$
363,114
$
(733,743) $
$
409,905
(523) $
257,983
$
(401,642) $
$
141,557
298
$
241,455
(1,614,512)
1,338,970
(73)
Cash, cash equivalents, and restricted cash increased by $38.8 million from $23.5 million as of December 31, 2017, to $62.3
million as of December 31, 2018.
Operating Activities
Net cash provided by operating activities increased by $105.1 million from $258.0 million for the year ended December 31, 2017
to $363.1 million for the year ended December 31, 2018.
56
SUN COMMUNITIES, INC.
Our net cash flows provided by operating activities from continuing operations 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 “Risk Factors” in Part I, Item 1A in this
Annual Report on Form 10-K.
Investing Activities
Net cash used for investing activities was $733.7 million for the year ended December 31, 2018, compared to $401.6 million for
the year ended December 31, 2017.
Financing Activities
Net cash provided by financing activities was $409.9 million for the year ended December 31, 2018, compared to $141.6 million
for the year ended December 31, 2017. Refer to Note 9, “Debt and Lines of Credit” and Note 10, “Equity and Mezzanine Securities”
in our accompanying Consolidated Financial Statements for additional information.
Financial Flexibility
In July 2017, we entered into a new at the market offering sales agreement (the “Sales Agreement”) with certain sales agents
(collectively, the “Sales Agents”), whereby we may offer and sell shares of our common stock, having an aggregate offering price
of up to $450.0 million, from time to time through the Sales Agents. The Sales Agents are entitled to compensation in an agreed
amount not to exceed 2.0 percent of the gross price per share for any shares sold from time to time under the Sales Agreement.
Through December 31, 2018, we have sold shares of our common stock for gross proceeds of $163.8 million under the Sales
Agreement.
In April 2017, we amended and restated our credit agreement (the “A&R Credit Agreement”) with Citibank, N.A. (“Citibank”)
and certain other lenders. Pursuant to the A&R Credit Agreement, we entered into a senior revolving credit facility with Citibank
and certain other lenders in the amount of $650.0 million, comprised of a $550.0 million revolving loan and a $100.0 million term
loan (the “A&R Facility”). We repaid the term loan in full on September 7, 2018 and are unable to reborrow on the term loan. The
A&R Credit Agreement has a four-year term ending April 25, 2021, which can be extended for two additional six-month periods
at our option, subject to the satisfaction of certain conditions as defined in the A&R Credit Agreement. The A&R Credit Agreement
also provides for, subject to the satisfaction of certain conditions, additional commitments in an amount not to exceed $350.0
million. If additional borrowings are made pursuant to any such additional commitments, the aggregate borrowing limit under the
A&R Facility may be increased up to $900.0 million.
The A&R 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 A&R Credit Agreement, which margin can range from 1.35 percent to 2.20 percent
for the revolving loan. As of December 31, 2018, the margin on our leverage ratio was 1.35 percent on the revolving loan. We had
$128.0 million borrowings on the revolving loan and no borrowings on the term loan as of December 31, 2018.
The A&R 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, 2018 and
December 31, 2017, approximately $3.9 million and $1.3 million of availability was used to back standby letters of credit.
Pursuant to the terms of the A&R 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 A&R Facility are as follows:
Covenant
Requirement
As of December 31, 2018
Maximum Leverage Ratio
Minimum Fixed Charge Coverage Ratio
Minimum Tangible Net Worth (in thousands)
Maximum Dividend Payout Ratio
< 65.0%
> 1.40
> $2,918,046
< 95.0%
31.3%
2.95
$4,677,834
58.7%
57
SUN COMMUNITIES, INC.
We anticipate meeting our long-term liquidity requirements, such as scheduled debt maturities, large property acquisitions,
construction of expansion sites and ground-up development communities, and Operating Partnership unit redemptions through
the issuance of certain debt or equity securities and/or the collateralization of our properties. At December 31, 2018, we had 186
unencumbered properties, of which 61 support the borrowing base for our $650.0 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 MH and RV 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, 2018, our
outstanding contractual obligations, including interest expense, were as follows:
Payments Due By Period
(In thousands)
Contractual Cash Obligations (1)
Collateralized term loans - Life Companies
Collateralized term loans - FNMA
Collateralized term loans - CMBS
Collateralized term loans - FMCC
Secured borrowings
Lines of credit
Preferred Equity - Sun NG Resorts -
mandatorily redeemable
Preferred OP units - mandatorily redeemable
Total Due
$ 1,262,351
762,632
$
<1 year
27,576
16,416
405,864
382,754
107,731
128,000
35,277
37,338
7,890
6,281
5,265
—
—
2,675
1-3 years
75,797
$
3-5 years
62,806
$
After 5 years
$ 1,096,172
221,560
136,570
13,305
11,917
128,000
—
—
223,628
81,619
131,827
12,754
—
35,277
—
301,028
179,785
231,341
77,795
—
—
34,663
Total principal payments
$ 3,121,947
$
66,103
$ 587,149
$ 547,911
$ 1,920,784
Interest expense (2)
Operating leases
Capital lease obligation
Total contractual cash obligations
$
899,780
64,070
$ 129,261
$ 237,145
$ 185,468
$
347,906
3,765
7,530
7,530
45,245
4,660
$ 4,090,457
120
$ 199,249
240
$ 832,064
240
$ 741,149
4,060
$ 2,317,995
(1) Contractual cash obligations in this table exclude debt premiums, discounts and deferred financing costs, as applicable.
(2) Our contractual cash obligations related to interest expense are calculated based on the current debt levels, rates and maturities as of December 31, 2018 (including
capital leases and excluding secured borrowings), and actual payments required in future periods may be different than the amounts included above. Perpetual
securities include one year of interest expense in the “After 5 years” category.
As of December 31, 2018, our net debt to enterprise value approximated 25.2 percent (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 had a weighted average maturity of approximately 9.0 years and a weighted average interest
rate of 4.5 percent.
58
SUN COMMUNITIES, INC.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”),
which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses in
the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable;
however, due to inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring
adjustments to these balances in future periods.
The critical accounting estimates that affect the Consolidated Financial Statements and that use judgments and assumptions are
listed below. In addition, the likelihood that materially different amounts could be reported under varied conditions and assumptions
is discussed.
Refer to Note 1, “Significant Accounting Policies,” in our accompanying Consolidated Financial Statements for information
regarding our critical accounting estimates.
Impact of New Accounting Standards
Refer to Note 17, “Recent Accounting Pronouncements,” in our accompanying Consolidated Financial Statements for information
regarding new accounting pronouncements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements with any unconsolidated entities that we believe have or are reasonably likely
to have a material effect on its financial condition, results of operations, liquidity, or capital resources.
59
SUN COMMUNITIES, INC.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the exposure to loss resulting from changes in market factors such as interest rates, foreign currency exchange rates,
commodity prices, and equity prices.
Interest Rate Risk
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. From time to time,
we 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.
Our variable rate debt totaled $128.0 million and $194.7 million as of December 31, 2018 and 2017, respectively, and bears interest
based on Prime or various LIBOR rates. If Prime or LIBOR increased or decreased by 1.0 percent, our interest expense would
have increased or decreased by approximately $2.4 million and $2.3 million for the years ended December 31, 2018 and 2017,
respectively, based on the $235.9 million and $229.6 million average balances outstanding under our variable rate debt facilities,
respectively.
Foreign Currency Exchange Rate Risk
Foreign currency exchange rate risk is the risk that fluctuations in currencies against the U.S. dollar will negatively impact our
results of operations. We are exposed to foreign currency exchange rate risk as a result of remeasurement and translation of the
assets and liabilities of our Canadian properties, and our Australian equity investment and joint venture into U.S. dollars. Fluctuations
in foreign currency exchange rates can therefore create volatility in our results of operations and may adversely affect our financial
condition.
At December 31, 2018 and 2017, our stockholder’s equity included $141.4 million and $91.5 million from our Canadian subsidiaries
and Australian equity investments, respectively, which represented 4.6 percent and 3.4 percent of total equity, respectively. Based
on our sensitivity analysis, a 10.0 percent strengthening of the U.S. dollar against the Canadian and Australian dollars would have
caused a reduction of $14.1 million and $9.2 million to our total stockholder’s equity at December 31, 2018 and 2017, respectively.
60
SUN COMMUNITIES, INC.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data are filed herewith under Item 15.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
ITEM 9.
None.
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed
in reports filed under the Exchange Act is recorded, processed, summarized and reported within the specified time periods and
accumulated and communicated to our management, including our principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures
(pursuant to Rules 13a-15(e) or 15d-15(e) of the Exchange Act) at December 31, 2018. Based upon this evaluation, our CEO and
CFO concluded that our disclosure controls and procedures were effective as of December 31, 2018.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act. This system is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with
U.S. GAAP. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion
or improper management override of controls, misstatements due to error or fraud may not be prevented or detected on a timely
basis.
Our management performed an assessment of the effectiveness of our internal control over financial reporting at December 31,
2018, utilizing the criteria discussed in the “Internal Control - Integrated Framework (2013)” issued by the Committee of
Sponsoring Organizations of the Treadway Commission. The objective of this assessment was to determine whether our internal
control over financial reporting was effective at December 31, 2018. Based on management’s assessment, we have concluded that
our internal control over financial reporting was effective at December 31, 2018.
The effectiveness of our internal control over financial reporting has been audited by Grant Thornton LLP, an independent registered
public accounting firm, as stated in its report which is included herein.
Changes in Internal Control Over Financial Reporting
There were no material changes in our internal control over financial reporting during the year ended December 31, 2018.
ITEM 9B.
OTHER INFORMATION
None.
61
SUN COMMUNITIES, INC.
PART III
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 2019 annual
meeting (the “Proxy Statement,”) 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, including the information set forth under the captions “Management
and Executive Compensation,” “Board of Directors and Corporate Governance - Director Compensation Table,” “Compensation
Committee Interlocks and Insider Participation” and “Compensation Committee Report.” The information in the section captioned
“Compensation Committee Report” in the Proxy Statement or an amendment to this Annual Report on Form 10-K 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 or the Exchange Act.
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, 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, 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, including the information set forth under the caption “Ratification of Selection of Grant Thornton
LLP.”
62
SUN COMMUNITIES, INC.
PART IV
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 Annual Report on Form 10 K is shown in the “Index
to the Consolidated Financial Statements and Financial Statement Schedules” filed herewith.
2.
Financial Schedule
The financial statement schedule required to be filed as a part of this Annual Report on 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 Annual Report on Form 10-K is
shown on the “Exhibit Index” filed herewith.
ITEM 16. FORM 10-K SUMMARY
None.
63
SUN COMMUNITIES, INC.
EXHIBIT INDEX
Exhibit
Number
Description
Method of Filing
3.1
Sun Communities, Inc. Articles of Restatement
3.2
Third Amended and Restated Bylaws
4.1
4.2
Registration Rights Agreement dated February 8, 2013 among Sun Communities, Inc., and the holders
of Series A-3 Preferred Units that are parties thereto
Form of Registration Rights Agreement between Sun Communities, Inc. and Carefree Communities
Intermediate Holdings, L.L.C.
4.3
Form of certificate evidencing common stock
4.4
Form of certificate evidencing 6.50% Series A-4 Cumulative Convertible Preferred Stock
Master Credit Facility Agreement, dated June 3, 2016, by and among Sun Apple Creek LLC; Sun Bell
Crossing LLC; Sun Boulder Ridge LLC; Aspen-Brentwood Project, LLC; Sun Cave Creek LLC; Sun
Countryside Lake Lanier LLC; Sun Cutler Estates LLC; Aspen-Grand Project, LLC; Sun Hamlin LLC;
Sun Hawaiian Holly LLC; Holiday West Village Mobile Home Park, LLC; Sun Meadowbrook FL LLC;
Sun Oakcrest LLC, Sun Pine Ridge LLC; Sun Scio Farms LLC; Sun Villa MHC LLC; Waverly Shores
Village Mobile Home Park, LLC, as Borrowers, and Regions Bank, as Lender
Master Loan Agreement dated June 9, 2016, by and among Carefree Communities CA LLC, NHC-CA101,
LLC and The Northwestern Mutual Life Insurance Company
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 10-K filed on February 22, 2018
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed on May 12, 2017
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed February 12, 2013
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed March 22, 2016
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 December 2, 2014
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed June 9, 2016
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed June 9, 2016
Promissory Note dated June 9, 2016 in the original principal amount of $162.0 million executed by
Carefree Communities CA LLC and NHC-CA101, LLC in favor of The Northwestern Mutual Life
Insurance Company
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed June 9, 2016
Master Loan Agreement dated June 9, 2016, by and between Carefree Communities CA LLC and The
Northwestern Mutual Life Insurance Company
Promissory Note dated June 9, 2016 in the original principal amount of $163.0 million executed by
Carefree Communities CA LLC in favor of The Northwestern Mutual Life Insurance Company
Amended and Restated Mortgage and Security Agreement dated June 9, 2016, by and between SNF
Property LLC and The Northwestern Mutual Life Insurance Company
Amended and Restated Promissory Note dated June 9, 2016 in the original principal amount of $80.0
million executed by SNF Property LLC in favor of The Northwestern Mutual Life Insurance Company
Lease, dated November 1, 2002, by and between Sun Communities Operating Limited Partnership as
Tenant and American Center LLC as Landlord
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed June 9, 2016
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed June 9, 2016
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed June 9, 2016
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed June 9, 2016
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
Sixth Lease Modification dated June 26, 2018 by and between Sun Communities Operating Limited
Partnership as Tenant and American Center LLC as Landlord
Filed herewith
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
Fourth Amended and Restated Agreement of Limited Partnership of Sun Communities Operating Limited
Partnership, dated January 31, 2019.
10.11
First Amended and Restated 2004 Non-Employee Director Option Plan#
10.12
First Amendment to First Amended and Restated 2004 Non-Employee Director Option Plan#
10.13
Sun Communities, Inc. 2015 Equity Incentive Plan#
10.14
Form of Stock Option Agreement between Sun Communities, Inc. and certain directors, officers and other
individuals#
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed February 5, 2019
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed July 25, 2012
Incorporate by reference to Exhibit A to
Sun Communities, Inc.’s Definitive
Proxy Statement filed on March 29,
2018
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 No. 33 69340
64
SUN COMMUNITIES, INC.
10.15
Form of Non-Employee Director Stock Option Agreement between Sun Communities, Inc. and certain
directors#
10.16
Form of Restricted Stock Award Agreement#
10.17
First Amendment to Restricted Stock Award Agreement between Sun Communities, Inc. and Gary A.
Shiffman dated July 15, 2014#
10.18
10.19
Employment Agreement dated June 20, 2013 among Sun Communities, Inc., Sun Communities Operating
Limited Partnership and Gary A. Shiffman#
First Amendment to Employment Agreement among Sun Communities, Inc., Sun Communities Operating
Limited Partnership and Gary A. Shiffman dated July 15, 2014#
10.20
Second Amendment to Employment Agreement among Sun Communities, Inc., Sun Communities
Operating Limited Partnership and Gary A. Shiffman dated March 8, 2017#
10.21
10.22
Employment Agreement dated May 19, 2015 among Sun Communities, Inc., Sun Communities Operating
Limited Partnership and John B. McLaren#
First Amendment to Employment Agreement among Sun Communities, Inc. Sun Communities Operating
Limited Partnership, and John B. McLaren dated March 8, 2017#
10.23
Employment Agreement July 16, 2015 among Sun Communities, Inc., Sun Communities Operating
Limited Partnership and Karen J. Dearing#
10.24
First Amendment Employment Agreement among Sun Communities, Inc., Sun Communities Operating
Partnership, and Karen J. Dearing dated March 8, 2017#
10.25
Sun Communities, Inc. Executive Compensation “Clawback” Policy#
At the Market Offering Sales Agreement, dated July 28, 2017, among Sun Communities, Inc., Sun
Communities Operating Limited Partnership, BMO Capital Markets Corp., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Citigroup Global Markets Inc., Robert W. Baird & Co. Incorporated, Fifth
Third Securities, Inc., RBC Capital Markets, LLC, BTIG, LLC, Jefferies LLC, Credit Suisse Securities
(USA) LLC and Samuel A. Ramirez & Company, Inc.
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, 2004
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed July 15, 2014
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed June 24, 2013
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed July 15, 2014
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed on March 8, 2017
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed May 20, 2015
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed on March 8, 2017
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 8-K filed on March 8, 2017
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed July 15, 2014
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed on July 28, 2017.
Amendment dated April 26, 2018 to the At the Market Offering Sales Agreement dated July 28, 2017,
among Sun Communities, Inc., Sun Communities Operating Limited Partnership, BMO Capital Markets
Corp., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Robert W.
Baird & Co. Incorporated, Fifth Third Securities, Inc., RBC Capital Markets, LLC, BTIG, LLC, Jefferies
LLC, Credit Suisse Securities (USA) LLC and Samuel A. Ramirez & Company, Inc.
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed on April 26, 2018.
Second Amended and Restated Credit Agreement, dated April 25, 2017 with Citibank, N.A., as
Administrative Agent, Swing Line Lender and L/C Issuer, Citigroup Global Markets Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and BMO Capital Markets, as Joint Lead Arrangers, and Citigroup
Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Joint Bookrunners, and
Bank of America, N.A. and Bank of Montreal, as Co-Syndication Agents and Fifth Third Bank, an Ohio
Banking Corporation, Regions Bank and RBC Capital Markets as Co-Documentation Agents and the
other lenders, PNC Bank, National Association, U.S. Bank National Association, Credit Suisse,
Associated Bank, N.A. and Flagstar Bank, FSB.
Incorporated by reference to Sun
Communities, Inc.’s Current Report on
Form 8-K filed on April 27, 2017
List of Subsidiaries of Sun Communities, Inc.
Consent of Grant Thornton LLP
Filed herewith
Filed herewith
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed herewith
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed herewith
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Furnished herewith
10.26
10.27
10.28
21.1
23.1
31.1
31.2
32.1
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
#
Management contract or compensatory plan or arrangement.
65
The instance document does not appear in
the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL
document.
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
SUN COMMUNITIES, INC.
SIGNATURES
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.
Dated: February 21, 2019
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.
/s/
/s/
/s/
/s/
/s/
/s/
/s/
/s/
Name
Gary A. Shiffman
Gary A. Shiffman
Karen J. Dearing
Karen J. Dearing
Meghan G. Baivier
Meghan G. Baivier
Stephanie W. Bergeron
Stephanie W. Bergeron
Brian M. Hermelin
Brian M. Hermelin
Ronald A. Klein
Ronald A. Klein
Clunet R. Lewis
Clunet R. Lewis
Arthur A. Weiss
Arthur A. Weiss
Capacity
Chief Executive Officer and Chairman of the Board of
Directors (Principal Executive Officer)
Date
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
February 21, 2019
Executive Vice President, Chief Financial Officer,
Treasurer and Secretary (Principal Financial Officer
and Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
66
SUN COMMUNITIES, INC.
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
Reports of Independent Registered Public Accounting Firm
Financial Statements:
Consolidated Balance Sheets as of December 31, 2018 and 2017
Consolidated Statements of Operations for the Years Ended December 31, 2018, 2017, and 2016
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2018, 2017, and
2016
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2018, 2017, and
2016
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017, and 2016
Notes to Consolidated Financial Statements
Real Estate and Accumulated Depreciation, Schedule III
Page
F-2
F-4
F-5
F-6
F-7
F-8
F-10
F-45
F - 1
SUN COMMUNITIES, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Sun Communities, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Sun Communities, Inc. (a Maryland corporation) and subsidiaries
(the “Company”) as of December 31, 2018 and 2017, 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, 2018, and the related notes, and
the financial statement schedule, Real Estate and Accumulated Depreciation, Schedule III (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2018, 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 21, 2019 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2003.
Southfield, Michigan
February 21, 2019
F - 2
SUN COMMUNITIES, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Sun Communities, Inc.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Sun Communities, Inc. (a Maryland corporation) and subsidiaries
(the “Company”) as of December 31, 2018, based on criteria established in the 2013 Internal Control-Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2018, 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)
(“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2018, and our report
dated February 21, 2019 expressed an unqualified opinion on those financial statements.
Basis for opinion
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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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.
Definition and limitations of internal control over financial reporting
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.
/s/ GRANT THORNTON LLP
Southfield, Michigan
February 21, 2019
F - 3
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
Investment property
Accumulated depreciation
As of December 31,
2018
2017
$
1,201,945
$
5,586,250
571,661
201,090
7,560,946
(1,442,630)
1,107,838
5,102,014
528,074
144,953
6,882,879
(1,237,525)
Investment property, net (including $308,171 and $50,193 for consolidated variable interest entities at December 31,
2018 and December 31, 2017; see Note 8)
6,118,316
5,645,354
Cash and cash equivalents
Inventory of manufactured homes
Notes and other receivables, net
Collateralized receivables, net
Other assets, net (including $19,809 and $1,659 for consolidated variable interest entities at December 31, 2018 and
December 31, 2017; see Note 8)
TOTAL ASSETS
LIABILITIES
Mortgage loans payable (including $44,172 and $41,970 for consolidated variable interest entities at December 31, 2018
and December 31, 2017; see Note 8)
Secured borrowings on collateralized receivables
Preferred Equity - Sun NG RV Resorts LLC - mandatorily redeemable (fully attributable to consolidated variable
interest entities at December 31, 2018; See Note 8)
$
$
Preferred OP units - mandatorily redeemable
Lines of credit
Distributions payable
Advanced reservation deposits and rent
Other liabilities (including $6,914 and $1,468 for consolidated variable interest entities at December 31, 2018 and
December 31, 2017; see Note 8)
TOTAL LIABILITIES
Commitments and contingencies (see Note 18)
Series A-4 preferred stock, $0.01 par value. Issued and outstanding: 1,063 shares at December 31, 2018 and 1,085 shares
at December 31, 2017
Series A-4 preferred OP units
Equity Interests - NG Sun LLC (fully attributable to consolidated variable interest entities at December 31, 2018; See
Note 8)
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value. Authorized: 180,000 shares; Issued and outstanding: 86,357 shares at December 31,
2018 and 79,679 shares at December 31, 2017
Additional paid-in capital
Accumulated other comprehensive (loss) income
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
TOTAL STOCKHOLDERS' EQUITY
50,311
49,199
160,077
106,924
225,199
6,710,026
$
2,815,957
$
107,731
35,277
37,338
128,000
63,249
133,698
157,862
3,479,112
31,739
9,877
21,976
864
4,398,949
(4,504)
(1,288,486)
3,106,823
53,354
7,145
60,499
3,167,322
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
6,710,026
$
See accompanying Notes to Consolidated Financial Statements.
10,127
30,430
163,496
128,246
134,304
6,111,957
2,867,356
129,182
—
41,443
41,257
55,225
132,205
138,536
3,405,204
32,414
10,652
—
797
3,758,533
1,102
(1,162,001)
2,598,431
60,971
4,285
65,256
2,663,687
6,111,957
F - 4
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year Ended December 31,
2018
2017
2016
$
825,973
$
742,228
$
REVENUES
Income from real property
Revenue from home sales
Rental home revenue
Ancillary revenue
Interest
Brokerage commissions and other revenues, net
Total Revenues
COSTS AND EXPENSES
Property operating and maintenance
Real estate taxes
Cost of home sales
Rental home operating and maintenance
Ancillary expenses
Home selling expenses
General and administrative
Transaction costs
Catastrophic weather related charges, net
Depreciation and amortization
Loss on extinguishment of debt
Interest
Interest on mandatorily redeemable preferred OP units / equity
Total Expenses
Income Before Other Items
Remeasurement of marketable securities
Other (expense) / income, net
Income from nonconsolidated affiliates
Current tax expense
Deferred tax benefit
Net Income
Less: Preferred return to preferred OP units / equity
Less: Amounts attributable to noncontrolling interests
Net Income Attributable to Sun Communities, Inc.
Less: Preferred stock distribution
210,278
173,274
166,031
53,657
54,107
20,853
6,204
1,126,825
236,097
56,555
123,333
23,099
37,623
15,722
81,438
472
92
287,262
2,657
129,089
3,694
997,133
129,692
(3,639)
(6,453)
646
(595)
507
120,158
(4,486)
(8,443)
107,229
(1,736)
127,408
50,549
37,511
21,180
3,694
982,570
52,288
95,114
22,114
27,436
12,457
74,232
9,801
8,352
261,536
6,019
127,128
3,114
909,869
72,701
—
8,982
—
(446)
582
81,819
(4,581)
(5,055)
72,183
(7,162)
620,917
110,507
47,780
33,424
18,113
3,037
833,778
44,306
80,420
24,361
23,783
9,744
63,662
31,914
1,172
221,770
1,127
119,163
3,152
797,848
35,930
—
(4,676)
500
(683)
400
31,471
(5,006)
(150)
26,315
(8,946)
17,369
65,856
66,321
0.27
0.26
Net Income Attributable to Sun Communities, Inc. Common Stockholders
$
105,493
$
65,021
$
Weighted average common shares outstanding:
Basic
Diluted
Earnings per share (Refer to Note 14):
Basic
Diluted
81,387
82,040
76,084
76,711
$
$
1.29
1.29
$
$
0.85
0.85
$
$
See accompanying Notes to Consolidated Financial Statements.
F - 5
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net Income
Foreign currency translation (loss) / gain
Total Comprehensive Income
Less: Comprehensive income / (loss) attributable to noncontrolling interests
Comprehensive Income Attributable to Sun Communities, Inc.
Year Ended December 31,
2018
2017
2016
120,158
$
81,819
$
(5,878)
114,280
8,171
4,527
86,346
5,299
106,109
$
81,047
$
31,471
(3,401)
28,070
(70)
28,140
$
$
See accompanying Notes to Consolidated Financial Statements.
F - 6
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
Stockholders’ Equity
Temporary
Equity
7.125% Series A
Cumulative
Redeemable
Preferred Stock
Common Stock
Additional
Paid-In Capital
Distributions in
Excess of
Accumulated
Earnings
Accumulated Other
Comprehensive
Income / (Loss)
Non-controlling
Interests
Total Stockholders’
Equity
$
584
$
2,319,314
$
(864,122)
$
— $
80,771
$
1,536,581
—
149
Balance at December 31, 2015
$
82,797
$
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
Share-based compensation - amortization and forfeitures
Foreign currency translation loss
Net income
Distributions
—
(3,248)
(11,503)
—
—
90
(1,192)
Balance at December 31, 2016
$
66,944
$
Issuance of common stock and common OP units, net
Conversion of OP units
Redemption of Series A-4 preferred stock
Conversion of Series A-4 preferred stock
Redemption of Series A-4 preferred OP units
Redemption of Series A Cumulative Convertible Preferred
Stock
Share-based compensation - amortization and forfeitures
Acquisition of noncontrolling interests
Foreign currency translation gain
Net income
Distributions
—
(259)
(13,093)
(4,720)
(5,166)
—
—
—
—
205
(845)
34
—
—
—
—
—
—
—
34
—
—
—
—
—
(34)
—
—
—
—
—
—
144
—
4
—
—
—
149
981,174
11,503
9,301
—
—
—
—
—
—
252
—
31,321
(190,866)
—
—
—
—
(3,181)
—
—
(2,687)
—
—
(220)
60
(11,308)
$
732
$
3,321,441
$
(1,023,415)
$
(3,181)
$
66,616
$
63
1
—
1
—
—
—
—
—
—
—
514,024
3,556
(3,867)
4,719
(2,571)
(84,966)
12,398
(6,201)
—
—
—
—
—
—
—
—
—
297
—
—
76,765
(215,648)
—
—
—
—
—
—
—
—
4,283
—
—
2,001
(3,298)
—
—
—
—
—
6,101
244
4,849
(11,257)
Balance at December 31, 2017
$
43,066
$
— $
797
$
3,758,533
$
(1,162,001)
$
1,102
$
65,256
$
Issuance of common stock and common OP units, net
Conversion of OP units
Conversion of Series A-4 preferred stock
Share-based compensation - amortization and forfeitures
Equity Interest - NG Sun LLC
Foreign currency translation
Net income
Distributions
—
(342)
(675)
—
21,976
—
241
(674)
—
—
—
—
—
—
—
—
66
1
—
—
—
—
—
—
623,474
1,514
675
14,753
—
—
—
—
—
—
—
313
—
—
111,715
(238,513)
—
—
—
—
—
(5,606)
—
—
—
(1,173)
—
—
—
(272)
8,202
(11,514)
978,631
11,503
9,557
(3,401)
31,381
(202,174)
2,362,227
516,088
259
(3,867)
4,720
(2,571)
(85,000)
12,695
(100)
4,527
81,614
(226,905)
2,663,687
623,540
342
675
15,066
—
(5,878)
119,917
(250,027)
Balance at December 31, 2018
$
63,592
$
— $
864
$
4,398,949
$
(1,288,486)
$
(4,504)
$
60,499
$
3,167,322
See accompanying Notes to Consolidated Financial Statements.
F - 7
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:
Year Ended December 31,
2018
2017
2016
$
120,158
$
81,819
$
31,471
Gain on disposition of assets
Gain on acquisition of property
Unrealized foreign currency translation loss / (gain)
Remeasurement of marketable securities
Contingent liability remeasurement (gain) / loss
Asset impairment charges
Share-based compensation
Depreciation and amortization
Deferred tax benefit
Amortization of below market lease
Amortization of debt premium
Amortization of deferred financing costs
Amortization of ground lease intangibles
Loss on extinguishment of debt
Income from nonconsolidated affiliates
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, net of cash acquired
Proceeds from nonconsolidated affiliate transactions
Proceeds from dispositions of assets and depreciated homes, net
Proceeds from disposition of properties
Issuance of notes and other receivables
Repayments of notes and other receivables
Investments in nonconsolidated affiliates
NET CASH USED FOR INVESTING ACTIVITIES
FINANCING ACTIVITIES:
Issuance of common stock, OP units, and preferred OP units, net
Redemption of Series B-3 preferred OP units
Borrowings on lines of credit
Payments on lines of credit
Proceeds from issuance of other debt
Payments on other debt
Prepayment penalty on debt
Redemption of Series A-4 preferred stock and OP units
Redemption of Series A cumulative convertible preferred stock
Distributions to stockholders, OP unit holders, and preferred OP unit holders
Payments for deferred financing costs
NET CASH PROVIDED BY FINANCING ACTIVITIES
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net change in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of period
(9,376)
—
8,234
3,639
(2,336)
—
15,066
274,432
(507)
(7,399)
(7,821)
3,867
1,638
2,024
—
(2,299)
(40,304)
4,098
363,114
(389,399)
(320,268)
—
55,855
—
(216)
4,312
(84,027)
(733,743)
623,540
(4,105)
1,542,677
(1,456,486)
250,000
(298,754)
(2,024)
—
—
(242,813)
(2,130)
409,905
(523)
38,753
23,509
(9,338)
—
(6,146)
—
(3,035)
742
12,695
256,193
(582)
(7,402)
(9,548)
2,910
1,914
6,019
—
(26,193)
(33,031)
(9,034)
257,983
(11,224)
(510)
5,005
—
181
—
9,557
218,669
(400)
(6,570)
(10,693)
2,160
600
1,127
(500)
(20,933)
30,880
(7,365)
241,455
(288,537)
(120,377)
(223,429)
(1,487,593)
—
8,575
—
(3,918)
2,615
—
500
4,709
88,696
(10,633)
13,238
—
(401,642)
(1,614,512)
487,677
(4,460)
661,000
(719,536)
185,153
(124,427)
(6,019)
(24,698)
(85,000)
(224,483)
(3,650)
141,557
298
(1,804)
25,313
750,534
—
580,754
(505,409)
964,252
(230,785)
(1,127)
—
—
(193,740)
(25,509)
1,338,970
(73)
(34,160)
59,473
25,313
Cash, cash equivalents and restricted cash, end of period (See Note 1 and 17)
$
62,262
$
23,509
$
F - 8
SUPPLEMENTAL INFORMATION:
Cash paid for interest (net of capitalized interest of $4,328, $2,755 and $1,595, respectively)
Cash paid for interest on mandatorily redeemable debt
Cash paid (refunds) for income taxes
Noncash investing and financing activities:
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
Capital lease
Noncash investing and financing activities at the date of acquisition:
Acquisitions - Common stock and OP units issued
Acquisitions - Equity Interests - NG Sun LLC (see Note 8)
Acquisitions - Preferred Equity - Sun NG RV Resorts LLC (see Note 8)
Acquisitions - debt assumed
Acquisitions - contingent consideration liability
Year Ended December 31,
2018
2017
2016
$
$
$
$
$
$
$
$
$
$
$
$
$
126,153
2,551
461
21,451
7,889
1,515
675
$
$
$
$
$
$
$
— $
124,046
3,114
(194)
23,449
3,267
3,556
4,720
4,114
— $
28,410
$
$
$
$
$
$
$
$
$
21,976
35,277
3,120
$
$
$
— $
— $
— $
4,592
$
— $
121,480
3,152
452
19,734
9,626
5,933
11,503
—
225,000
—
—
—
9,830
See accompanying Notes to Consolidated Financial Statements.
F - 9
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. 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, a Michigan limited partnership (the “Operating Partnership”), and Sun Home
Services, Inc., a Michigan corporation (“SHS”) are referred to herein as the “Company,” “us,” “we,” and “our”. We are a fully
integrated, self-administered and self-managed real estate investment trust (“REIT”).
We own, operate, or have an interest in a portfolio, and develop manufactured housing (“MH”) and recreational vehicle (“RV”)
communities throughout the United States (“U.S.”). As of December 31, 2018, we owned, operated or had an interest in a portfolio
of 371 developed properties located in 31 states and Ontario, Canada (collectively the “Properties”), including 230 MH communities,
110 RV communities, and 31 communities containing both MH and RV sites. As of December 31, 2018, the Properties contained
an aggregate of 128,454 developed sites comprised of 84,428 developed MH sites, 24,535 annual RV sites, and 19,491 transient
RV sites. There are approximately 11,300 additional MH and RV sites suitable for development.
Principles of Consolidation
We consolidate our majority-owned subsidiaries in which we have the ability to control the operations of our subsidiaries and all
variable interest entities with respect to which we are the primary beneficiary. We also consolidate entities in which we have a
direct or indirect controlling or voting interest. All significant inter-company transactions have been eliminated. Any subsidiaries
in which we have an ownership percentage equal to or greater than 50%, but less than 100%, or considered 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.
Certain prior period amounts have been reclassified on our Consolidated Financial Statements to conform with current year
presentation.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires
management to make estimates and assumptions related to the reported amounts included in our Consolidated Financial Statements
and accompanying footnotes thereto. 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.
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”
F - 10
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
On January 1, 2018, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2017-01,
“Business Combinations (Topic 805): Clarifying the Definition of a Business.” Upon adoption of this standard, substantially all
of our property acquisitions are accounted for as asset acquisitions. Refer to Note 17, “Recent Accounting Pronouncements,” for
additional information regarding adoption of this ASU.
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 real estate project costs related
to the development of new community or expansion sites are capitalized until the property is substantially complete and available
for occupancy. Costs incurred to initially renovate pre-owned and repossessed homes that we acquire for our Rental Program are
capitalized and the majority of costs incurred to refurbish the homes at turnover and repair the homes while occupied are expensed,
unless they extend the life of the home. Certain expenditures to dealers and residents related to obtaining lessees in our communities
are capitalized and amortized 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 debt 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 $49.5 million and $17.7 million as of December 31, 2018 and 2017, respectively.
Marketable Securities
Marketable securities are recorded at fair value with changes in fair value recorded in Remeasurement of marketable securities
within the Consolidated Statement of Operations. We hold a less than 10 percent ownership in Ingenia. The value of marketable
securities as of December 31, 2018 was $49.0 million and is included within Other assets, net on the Consolidated Balance Sheet.
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, 2018 and 2017, $12.0 million and $13.4 million of restricted cash, respectively, was included
as a component of Other assets, net on the Consolidated Balance Sheets.
Inventory
Inventory of manufactured homes is stated at lower of specific cost or market based on the specific identification method.
Investments in Nonconsolidated Affiliates
We apply the equity method of accounting to entities in which we do not have a direct or indirect controlling interest or for variable
interest entities where we are not considered the primary beneficiary, but can exercise influence over the entity with respect to its
operations and major decisions. The cost method is applied when (i) the investment is minimal (typically less than 5.0%) and
(ii) our investment is passive. Our exposure to losses associated with unconsolidated joint ventures is primarily limited to the
F - 11
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
carrying value of these investments. Accordingly, distributions from a joint venture in excess of our carrying value are recognized
in earnings. We review the carrying value of our investments in nonconsolidated 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 among the factors we consider when we evaluate the existence of impairment indicators. Refer to Note
7, “Investments in Nonconsolidated Affiliates,” for additional information.
Notes and Other Receivables
Notes receivable includes both installment loans for manufactured homes 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. The notes are
collateralized by the underlying manufactured home sold. 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. 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 beyond the grace period required by law or by the loan agreement,
notice is given to start the collection process. A specific allowance is estimated on the past due loans based on historical delinquency
data and current delinquency levels.
Credit quality is evaluated at the inception of the receivable. Factors that are considered in order to determine the credit quality
of the applicant include, but are not limited to: 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 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.
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. The carrying amounts of the identified
intangible assets are included in Other assets, net on our Consolidated Balance Sheets. Refer to Note 6, “Intangible Assets,” for
additional information.
F - 12
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred Taxes
We are subject to certain state taxes that are considered to be income taxes and have certain subsidiaries that are taxed as regular
corporations for U.S. (i.e., federal, state, local, etc.) and non-U.S. income tax purposes. 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 in certain subsidiaries, including those domiciled in foreign jurisdictions, which
may be realized in future periods if the respective subsidiary generates sufficient taxable income. 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. Refer to Note 13, “Income
Taxes,” 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 FASB Accounting Standards Codification (“ASC”) 470-50-40, “Modifications and Extinguishments.”
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. We measure the fair value of awards with performance conditions based on an estimate of
shares expected to vest using the closing price of our common stock as of the grant date. If it is not probable that the performance
conditions will be satisfied, we do not recognize compensation expense. 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. Refer to Note 11, “Share-Based Compensation” for
additional information.
Fair Value of Financial Instruments
Our financial instruments consist of cash, cash equivalents and restricted cash, accounts and notes receivable, marketable securities,
accounts payable, debt, and contingent consideration liability. 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.” Refer to Note 16, “Fair Value of Financial Instruments,” for additional information regarding the estimates and
assumptions used to estimate the fair value of each financial instrument class.
Revenue Recognition
Rental income attributable to site and home leases is recorded on a straight-line basis when earned from tenants. The majority of
our 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. A small portion of tenant
leases are for greater than two years. 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 real estate taxes collected from residents and remitted to taxing authorities in revenue. On January 1, 2018, we adopted ASU
2014-09 “Revenue from Contracts with Customers (Topic 606)” and the related updates subsequently issued by the FASB. The
adoption of ASU 2014-09 did not result in any changes to our accounting policies for revenue recognition. Refer to Note 2,
“Revenue Recognition,” for additional information.
Advertising Costs
Advertising costs are expensed as incurred. As of December 31, 2018, 2017 and 2016, we had advertising costs of $6.2 million,
$5.9 million and $4.2 million, respectively.
F - 13
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Depreciation and Amortization
Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets. Useful lives are
thirty years for land improvements and buildings, ten years for rental homes, seven years for furniture, fixtures and equipment,
four years for computer hardware and software, and two years to seventy-five years for intangible assets.
Foreign Currency
The assets and liabilities of our Australian and Canadian operations, where the functional currency is the Australian dollar and
Canadian dollar, are translated into U.S. dollars using the exchange rate in effect as of the balance sheet date. Income statement
amounts are translated at the average exchange rate prevailing during the period. The resulting translation adjustments are recorded
as a component of accumulated other comprehensive income (loss). Foreign currency exchange gains and losses arising from
fluctuations in currency exchange rates on transactions and the effects of remeasurement of monetary balances denominated in
currencies other than the functional currency are recorded in earnings.
For the year ended December 31, 2018, we recorded a foreign currency translation loss of $8.4 million within Other income /
(expense), net on our Consolidated Statements of Operations, as compared to a foreign currency translation gain of $5.9 million,
for the year ended December 31, 2017 and $5.0 million foreign currency translation loss for the year ended December 31, 2016.
F - 14
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Revenue
Disaggregation of Revenue
The following table disaggregates our revenue by major source (in thousands):
Year Ended December 31, 2018
Year Ended December 31, 2017
Year Ended December 31, 2016
Real
Property
Operations
Home
Sales and
Rentals
Consolidated
Real
Property
Operations
Home
Sales and
Rentals
Consolidated
Real
Property
Operations
Home
Sales and
Rentals
Consolidated
REVENUE
Income from
real property
Revenue from
home sales
Rental home
revenue
Ancillary
revenues
Interest
Brokerage
commissions
and other
revenues, net
$ 825,973
$
— $ 825,973
$ 742,228
$
— $ 742,228
$ 620,917
$
— $ 620,917
— 166,031
166,031
— 127,408
127,408
— 110,507
110,507
—
53,657
53,657
—
50,549
50,549
—
47,780
47,780
54,107
20,853
6,204
—
—
—
54,107
20,853
37,511
21,181
—
(1)
37,511
21,180
33,424
18,113
6,204
3,694
—
3,694
3,037
—
—
—
33,424
18,113
3,037
Total revenue $ 907,137
$219,688
$ 1,126,825
$ 804,614
$177,956
$ 982,570
$ 675,491
$158,287
$ 833,778
Revenue Recognition Policies and Performance Obligations
On January 1, 2018, we adopted FASB Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers”
and the other related ASUs and amendments to the codification (collectively “ASC 606”). The core principle of ASC 606 is that
an entity 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. A five-step transactional analysis
is required to determine how and when to recognize revenue. ASC 606 applies to all contracts with customers, except those that
are within the scope of other topics in the FASB accounting standards codification.
As a real estate owner and operator, the majority of our revenue is derived from site and home leases that are accounted for pursuant
to ASC 840 “Leases.” For transactions in the scope of ASC 606, we recognize revenue when control of goods or services transfers
to the customer, in the amount that we expect to receive for the transfer of goods or provision of services. The adoption of ASC
606 did not result in any change to our accounting policies for revenue recognition. Accordingly, retrospective application to prior
periods or a cumulative catch-up adjustment was unnecessary.
Income from real property - Residents in our communities lease the site on which their home is located, and either own or lease
their home. Lease revenues for sites and homes fall under the scope of ASC 840, and are accounted for as operating leases with
straight-line recognition. Resident leases are generally for one-year or month-to-month terms, and are renewable by mutual
agreement from us and the resident, or in some cases, as provided by jurisdictional statute. Non-lease components of our site lease
contracts, which are primarily provision of utility services, are accounted for with the site lease as a single lease under ASC 840.
Additionally, we include collections of real estate taxes from residents within Income from real property.
Revenue from home sales - Our taxable REIT subsidiary, SHS, sells manufactured homes and RV park models to current and
prospective residents in our communities. Prior to adoption of ASC 606, we recognized revenue for home sales pursuant to ASC
605 “Revenue Recognition,” as manufactured homes are tangible personal property that can be located on any land parcel.
Manufactured homes are not permanent fixtures or improvements to the underlying real estate, and were therefore not considered
to be subject to the guidance in ASC 360-20 “Real Estate Sales” by the Company. In accordance with the core principle of ASC
606, we recognize revenue from home sales at the time of closing when control of the home transfers to the customer. After closing
of the sale transaction, we have no remaining performance obligation.
Rental home revenue - is comprised of rental agreements whereby we lease homes to residents in our communities. We account
for these revenues under ASC 840.
F - 15
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Ancillary revenues - are primarily composed of proceeds from restaurant, golf, merchandise and other activities at our RV
communities. Revenues are recognized at point of sale when control of the good or service transfers to the customer and our
performance obligation is satisfied. Sales and other taxes that we collect concurrent with revenue-producing activities are excluded
from transaction price.
Interest income - is earned primarily on our notes and collateralized receivables, which includes installment loans for manufactured
homes purchased by the Company from loan originators and transferred loans that previously did not meet the requirements for
sale accounting. Interest income on these receivables is accrued based on the unpaid principal balances of the underlying loans on
a level yield basis over the life of the loans. Interest income is not in the scope of ASC 606. Refer to notes 4, “Collateralized
Receivables and Transfers of Financial Assets” and 5, “Notes and Other Receivables” for additional information.
Broker commissions and other revenues, net - is primarily comprised of brokerage commissions for sales of manufactured homes,
where we act as agent and arrange for a third party to transfer a manufactured home to a customer within one of our communities.
Brokerage commission revenues are recognized on a net basis at closing, when the transaction is completed and our performance
obligations have been fulfilled. Loan loss reserve expenses for our collateralized receivables and notes receivables are also included
herein. Refer to notes 4, “Collateralized Receivables and Transfers of Financial Assets” and 5, “Notes and Other Receivables” for
additional information regarding our loan loss reserves.
Contract Balances
As of December 31, 2018 and 2017, we had $16.1 million and $13.8 million, respectively, of receivables from contracts with
customers. Receivables from contracts with customers are presented as a component of Notes and other receivables on our
Consolidated Balance Sheets. These receivables represent balances owed to us for previously completed performance obligations
for sales of manufactured homes. Due to the nature of our revenue from contacts with customers, we do not have material contract
assets or liabilities that fall under the scope of ASC 606.
3. Real Estate Acquisitions
2018 Acquisitions
In 2018 we acquired the following communities and portfolios:
Community Name
Type
Sites
Development
Sites
State
Month
Acquired
Leaf Verde RV Resort
Archview RV Resort & Campground
Petoskey KOA RV Resort
The Sands RV & Golf Resort
Sun NG RV Resorts LLC (1)(2)
Silver Creek RV Resort
Highway West (Four Resorts) (1)
Compass RV
RV
RV
RV
RV (Age Restricted)
RV
RV
RV
RV
Total
376
114
210
507
2,700
264
536
175
4,882
— AZ
50 UT
— MI
— CA
940 Various
176 MI
October
August
August
July
June
June
— UT & OR June
— FL
May
1,166
(1) Highway West and Sun NG RV Resorts LLC are comprised of 4 RV and 10 RV resorts, respectively.
(2) Refer to Note 8, “Consolidated Variable Interest Entities,” Note 9, “Debt and Lines of Credit,” and Note 10, “Equity and Mezzanine Securities” in our
accompanying Consolidated Financial Statements for additional information.
F - 16
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the amounts of assets acquired net of liabilities assumed at the acquisition date and the consideration
paid for the acquisitions completed in 2018 (in thousands):
At Acquisition Date
Investment in property
In-place leases and
other intangible assets
Debt assumed
Other liabilities, net
Total identifiable
assets acquired net
of liabilities
assumed
Consideration
Cash
Preferred Equity - Sun
NG Resorts
Equity Interests - NG
Sun LLC
Leaf
Verde
Archview
Petoskey
KOA
Sands
Sun NG
Resorts
Silver
Creek
Highway
West
Compass
Total
$11,587
$ 14,550
$ 8,730
$13,790
$240,649
$ 7,250
$ 36,500
$ 13,930
$ 346,986
60
—
—
—
—
—
270
—
—
460
16,339
(3,120)
—
— (11,990)
—
—
—
—
—
—
70
—
—
17,199
(3,120)
(11,990)
$11,647
$ 14,550
$ 9,000
$14,250
$241,878
$ 7,250
$ 36,500
$ 14,000
$ 349,075
$11,647
$ 14,550
$ 9,000
$14,250
$184,625
$ 7,250
$ 36,500
$ 14,000
$ 291,822
—
—
—
—
—
—
—
—
35,277
21,976
—
—
—
—
—
—
35,277
21,976
Total consideration
$11,647
$ 14,550
$ 9,000
$14,250
$241,878
$ 7,250
$ 36,500
$ 14,000
$ 349,075
In 2018, we acquired the following land for expansion / development:
Name
Ocean West
Location
McKinleyville, CA
Water Oak Country Club Estates
Lady Lake, FL
Oak Crest
Pecan Park RV Resort
Smith Creek Crossing
Apple Carr
River Run Ranch
Austin, TX
Jacksonville, FL
Granby, CO
Egelston, MI
Granby, CO
Type
MH
MH
MH
RV
MH
MH
MH / RV
Total
Expansion /
Development
Sites
Cost
(millions)
Month
Acquired
26
296
220
158
310
121
1,144
2,275
$
$
$
$
$
$
$
$
0.2 December
1.9 November
4.2 October
1.3 September
0.9 September
0.2 May
5.3 May
14.0
Refer to Note 20, “Subsequent Events,” for information regarding real estate acquisition activity after December 31, 2018.
The total amount of revenues and net income included in the Consolidated Statements of Operations for the year ended December
31, 2018 related to the acquisitions completed in 2018 are set forth in the following table (in thousands):
Total revenues
Net income
Year Ended
December 31, 2018
(unaudited)
$
$
41,937
6,718
The following unaudited pro forma financial information presents the results of our operations for the years ended December 31,
2018 and 2017, as if the properties acquired in 2018 had been acquired on January 1, 2017. 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.
F - 17
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 acquisition been consummated
on January 1, 2017 (in thousands, except per-share data):
Total revenues
Net income attributable to Sun Communities, Inc. common stockholders
Net income per share attributable to Sun Communities, Inc. common stockholders - basic
Net income per share attributable to Sun Communities, Inc. common stockholders - diluted
Year Ended December 31,
(unaudited)
2018
2017
$ 1,136,581
$ 1,028,894
$
$
$
103,308
1.27
1.26
$
$
$
75,607
0.99
0.99
Transaction costs of $0.5 million, $9.8 million, and $31.9 million have been incurred for the years ended December 31, 2018,
2017, and 2016, respectively. These costs are presented as Transaction costs in our Consolidated Statements of Operations.
Beginning January 1, 2018, substantially all of our property acquisitions are considered asset acquisitions, and direct acquisition
related costs are capitalized as part of the purchase price. Acquisitions costs that do not meet the criteria for capitalization are
expensed as incurred. Refer to Note 17, “Recent Accounting Pronouncements,” for additional information.
2017 Acquisitions
In 2017, we acquired the following communities:
Community Name
Type
Sites
Development
Sites
State
Month
Acquired
Colony in the Wood
MH (Age Restricted)
Emerald Coast
Lazy J Ranch
Ocean West
Caliente Sands
Pismo Dunes
Arbor Woods
Sunset Lakes
49er Village
MH and RV
MH (Age Restricted)
MH (Age Restricted)
MH (Age Restricted)
RV (Age Restricted)
MH
RV
RV
Total
383
201
220
130
118
331
458
498
328
2,667
— FL
14 FL
— CA
4 CA
— CA
— CA
— MI
— IL
— CA
18
December
November
September
September
September
July
June
May
March
The following table summarizes the amounts of assets acquired net of liabilities assumed at the acquisition date and the consideration
paid for the acquisitions completed in 2017 (in thousands):
F - 18
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At Acquisition Date
Colony in
the Wood
Emerald
Coast
Lazy J
Ranch
Ocean
West
Caliente
Sands
Pismo
Dunes
Arbor
Woods
Sunset
Lakes
49er
Village
Total
Investment in property
$ 31,818 $ 19,400 $13,938 $ 9,453 $ 8,640 $ 21,260 $ 15,725 $ 7,835 $ 12,890 $140,959
Notes receivable
Inventory of
manufactured homes
In-place leases and
other intangible assets
Total identifiable
assets acquired net of
liabilities assumed
Consideration
Cash
Equity
Liabilities assumed
Cash proceeds from
seller
Total consideration
—
—
—
—
—
2
—
—
—
21
—
—
660
100
360
220
210
660
23
465
730
—
—
—
—
23
488
210
110
3,260
$ 32,478 $ 19,500 $14,300 $ 9,673 $ 8,871 $ 21,920 $ 16,943 $ 8,045 $ 13,000 $144,730
$ 32,478 $ 19,500 $14,300 $ 5,081 $ 8,871 $ — $ 14,943 $ 8,045 $ 13,000 $116,218
—
—
—
—
—
—
— 4,592
— 26,410
2,000
—
510
—
—
—
— 28,410
—
5,102
—
— (5,000)
$ 32,478 $ 19,500 $14,300 $ 9,673 $ 8,871 $ 21,920 $ 16,943 $ 8,045 $ 13,000 $144,730
— (5,000)
—
—
—
—
—
In 2017, we acquired the following land for expansion:
Development Name
Location
Type
Development
Sites
Cost
(millions)
Month
Acquired
Carolina Pines
Myrtle Beach, SC
RV
Total
$
841
841
5.9 April
4. Collateralized Receivables and Transfers of Financial Assets
We previously 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 a 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:
Number of Payments
Fewer than or equal to 15
Greater than 15 but fewer than 64
Equal to or greater than 64 but fewer than 120
120 or more
Repurchase Percentage
100%
90%
65%
50%
F - 19
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The transferred assets have been classified as Collateralized receivables, net and the cash proceeds received from these transactions
have been classified as Secured borrowings on collateralized receivables within the Consolidated Balance Sheets. The balance of
the collateralized receivables was $106.9 million (net of allowance of $0.8 million) and $128.2 million (net of allowance of $0.9
million) as of December 31, 2018, and December 31, 2017, respectively. The receivables have a weighted average interest rate
and maturity of 9.9 percent and 14.1 years as of December 31, 2018, and 10.0 percent and 15.3 years as of December 31, 2017.
The outstanding balance on the secured borrowing was $107.7 million and $129.2 million as of December 31, 2018, and
December 31, 2017, 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 $11.2 million, $13.2 million and $14.0 million for the years ended
December 31, 2018, 2017, and 2016, 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):
Beginning balance
Financed sales of manufactured homes
Principal payments and payoffs from our customers
Principal reduction from repurchased homes
Total activity
Ending balance
Year Ended
December 31, 2018
December 31, 2017
$
$
129,182
—
(12,577 )
(8,874 )
(21,451 )
107,731
$
$
144,477
8,153
(12,186)
(11,262)
(15,295 )
129,182
The following table sets forth the allowance for the collateralized receivables (in thousands):
Beginning balance
Lower of cost or market write-downs
Increase to reserve balance
Total activity
Ending balance
Year Ended
December 31, 2018
December 31, 2017
$
$
(936) $
660
(531)
129
(807) $
(607)
1,024
(1,353)
(329 )
(936)
F - 20
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. 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
Year Ended
December 31, 2018
December 31, 2017
$
$
112,798 $
47,279
160,077
$
115,797
47,699
163,496
The installment notes of $112.8 million (net of allowance of $0.7 million) and $115.8 million (net of allowance of $0.4 million)
as of December 31, 2018 and December 31, 2017, respectively, are collateralized by manufactured homes. The notes represent
financing provided to purchasers of manufactured homes primarily located in our communities and require monthly principal and
interest payments. The notes have a weighted average interest rate (net of servicing costs) and maturity of 8.0 percent and 16.6
years as of December 31, 2018, and 8.2 percent and 17.2 years as of December 31, 2017.
The change in the aggregate gross principal balance of the installment notes receivable is as follows (in thousands):
Beginning balance
Financed sales of manufactured homes
Acquired notes
Principal payments and payoffs from our customers
Principal reduction from repossessed homes
Total activity
Ending balance
Allowance for Losses for Installment Notes Receivable
Year Ended
December 31, 2018
December 31, 2017
$
$
116,174 $
14,237
—
(8,966 )
(7,950 )
(2,679 )
59,524
66,104
23
(6,128)
(3,349)
56,650
113,495 $
116,174
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, 2018
December 31, 2017
$
$
(377) $
678
(998)
(320 )
(697) $
(205)
170
(342)
(172)
(377)
As of December 31, 2018, other receivables were comprised of amounts due from residents for rent, and water and sewer usage
of $7.1 million (net of allowance of $1.5 million), home sale proceeds of $16.1 million, and insurance and other receivables of
$24.1 million. As of December 31, 2017, other receivables were comprised of amounts due from residents for rent, and water and
sewer usage of $7.0 million (net of allowance of $1.5 million), home sale proceeds of $13.8 million, insurance and other receivables
of $26.9 million.
F - 21
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Intangible Assets
Our intangible assets include below market ground leases, in-place leases, franchise agreements and other intangible assets. These
intangible assets are recorded in Other assets, net on the Consolidated Balance Sheets.
In June 2018, we acquired 50 percent of a land parcel that was previously subject to a ground lease at one of our California
communities for $8.0 million. As a result of the transaction, we wrote off $1.1 million of the gross carrying amount of the ground
lease intangible and $0.3 million of the related accumulated amortization. The $0.8 million net write off is included within the
Property operating and maintenance expenses in our Consolidated Statements of Operations for the year ended December 31,
2018.
In December 2017, we acquired 25.0 percent of the land that was previously under a ground lease at one of our California
communities for $4.0 million, and amended the ground lease agreement to include an option to purchase an additional 25.0 percent
of the land. As a result of these transactions, we wrote off $1.1 million of the gross carrying amount of the ground lease intangible
and $0.2 million of accumulated amortization. The $0.9 million net write off is included within Property operating and maintenance
expense in our Consolidated Statements of Operations for the year ended December 31, 2017.
The gross carrying amounts and accumulated amortization are as follows (in thousands):
December 31, 2018
December 31, 2017
Intangible Asset
Below market ground leases
In-place leases
Franchise agreements and other intangible assets
7 - 20 years
Total
Useful Life
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
2 - 75 years
$
31,060
$
7 years
103,547
16,641
$
151,248
$
(1,942) $
(59,068)
(1,942)
(62,952) $
32,165
100,843
1,880
134,888
$
Accumulated
Amortization
(1,409)
(45,576)
(1,451)
(48,436)
$
Total amortization expenses related to our intangible assets are as follows (in thousands):
Intangible Asset
Below market ground leases
In-place leases
Franchise fees and other intangible assets
Total
Year Ended December 31,
2018
2017
2016
$
$
821
$
809
$
12,913
507
13,812
301
14,241
$
14,922
$
600
11,559
535
12,694
We anticipate amortization expense for our intangible assets to be as follows for the next five years (in thousands):
Estimated expense
$
14,630
$
12,902
$
12,510
$
7,908
$
4,533
2019
2020
Year
2021
2022
2023
F - 22
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Investments in Nonconsolidated Affiliates
Investments in joint ventures in which we do not have a controlling direct or indirect voting interest, but can exercise significant
influence over the entity with respect to our operations and major decisions, are accounted for using the equity method of accounting
whereby the cost of an investment is adjusted for our share of the equity in net income or loss from the date of acquisition, reduced
by distributions received and increased by contributions made. The income or loss of each entity is allocated in accordance with
the provisions of the applicable operating agreements. The allocation provisions in these agreements may differ from the ownership
interests held by each investor.
Sungenia JV - In November 2018, the Company and Ingenia Communities Group entered into a joint venture (“JV”) to establish
and grow a manufactured housing community development program in Australia. The JV is referred to as “Sungenia JV.” We hold
a 50 percent interest in the JV entity. We account for our interest in the Sungenia JV under the equity method of accounting as
prescribed by FASB ASC Topic 323, “Investments - Equity Method and Joint Ventures,” as neither party of the Sungenia JV has
individual control and we have equal exercise of significant influence. As of December 31, 2018 we had a $0.7 million investment
in the Sungenia JV. During the year ended December 31, 2018, we recognized no equity gain or loss on the Consolidated Statement
of Operations related to our ownership interest.
GTSC LLC (“GTSC”) - In February 2018, we became a noncontrolling member of GTSC. GTSC engages in acquiring, holding
and selling loans secured, directly or indirectly, by manufactured homes located in our communities. At December 31, 2018, we
had a 40 percent ownership interest in GTSC. The remaining 60 percent interest is owned by an unrelated third party. We account
for our interest in GTSC under the equity method of accounting as prescribed by FASB ASC Topic 323 “Investments - Equity
Method and Joint Ventures.” During the year ended December 31, 2018, there was $0.5 million net gain in Income from
nonconsolidated affiliates on the Consolidated Statement of Operations related to our ownership interest. Our investment in GTSC
as of December 31, 2018, is $29.8 million and recorded within Other assets, net on the Consolidated Balance Sheet.
Origen Financial Services, LLC (“OFS LLC”) - At December 31, 2018 and 2017, we had a 22.9 percent ownership interest in
OFS LLC, an entity that specializes in resident screening services. Previously we had suspended equity method accounting as the
carrying value of our investment was zero as prescribed by FASB ASC Topic 323 “Investments - Equity Method and Joint Ventures.”
Subsequently in 2018, we resumed equity method accounting as our unrecorded losses were recovered. As of December 31, 2018
and 2017 our investment in OFS LLC was $0.1 million and zero, respectively and is recorded within Other assets, net on the
Consolidated Balance Sheet. During the year ended December 31, 2018 and 2017, we recognized $0.2 million and zero income,
respectively, in the Income from nonconsolidated affiliates on the Consolidated Statement of Operations.
8. Consolidated Variable Interest Entities
In 2016, we adopted (“ASU 2015-02”) Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02
modified the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities. We evaluated
the application of ASU 2015-02 and concluded that no change was required to our accounting for interests in less than wholly-
owned Joint ventures. However, the Operating Partnership now meets the criteria as a VIE. Our significant asset is our investment
in the Operating Partnership, and consequently, substantially all of our assets and liabilities represent those assets and liabilities
of the Operating Partnership. We are the sole general partner and generally have the power to manage and have complete control
over the Operating Partnership and the obligation to absorb its losses or the right to receive its benefits. Accordingly, we consolidate
the Operating Partnership under this new guidance.
Effective June 1, 2018, we acquired a majority interest in Sun NG RV Resorts LLC (“Sun NG Resorts”), which is comprised of
ten RV resorts and one ground up RV development with 2,700 RV sites and an additional 940 sites available for development. We
purchased an 80 percent interest in Sun NG Resorts for $61.6 million through Sun NG LLC; the remaining 20 percent interest of
$15.4 million is held by an unrelated third party. We paid additional consideration of $123.3 million, consisting of a $1.8 million
preferred equity investment and a $121.5 million temporary loan to Sun NG Resorts.
We consolidate Sun NG Resorts under the guidance set forth in FASB ASC Topic 810 “Consolidation.” We concluded that Sun
NG Resorts is a VIE where we are the primary beneficiary, as we have power to direct the significant activities, absorb the significant
losses and receive the significant benefits from the entity. Refer to Note 3, “Real Estate Acquisitions,” Note 9, “Debt and Lines
of Credit,” and Note 10, “Equity and Mezzanine Securities” for additional information.
We consolidate Rudgate Village SPE, LLC; Rudgate Clinton SPE, LLC; and Rudgate Clinton Estates SPE, LLC (collectively,
“Rudgate”) as a variable interest entity (“VIE”). We evaluated our arrangement with this property under the guidance set forth in
FASB ASC Topic 810 “Consolidation.” We concluded that Rudgate qualified as a VIE where we are the primary beneficiary, as
we have power to direct the significant activities, absorb the significant losses and receive the significant benefits from the entity.
F - 23
SUN COMMUNITIES, INC.
NOTES TO 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 OTHER EQUITY
Debt
Preferred Equity - Sun NG Resorts - mandatorily redeemable
Other liabilities
Total Liabilities
Equity Interest - NG Sun LLC
Noncontrolling interests
Total Liabilities and Other Equity
December 31, 2018
December 31, 2017
$
$
$
$
308,171
19,809
327,980
$
$
44,172
$
35,277
6,914
86,363
21,976
7,145
115,484
$
50,193
1,659
51,852
41,970
—
1,468
43,438
—
4,285
47,723
Investment property, net and other assets, net related to the consolidated VIEs, with the exception of SCOLP, comprised
approximately 4.9 percent and 0.8 percent of our consolidated total assets at December 31, 2018 and December 31, 2017,
respectively. Debt, Preferred Equity and other liabilities comprised approximately 2.6 percent and 1.2 percent of our consolidated
total liabilities at December 31, 2018 and December 31, 2017, respectively. Equity Interests and Noncontrolling interests related
to the consolidated VIEs, on an absolute basis, comprised less than 1.0 percent of our consolidated total equity at December 31,
2018 and December 31, 2017.
9. Debt and Lines of Credit
The following table sets forth certain information regarding debt including premiums, discounts, and deferred financing costs (in
thousands):
Carrying Amount
Weighted Average
Years to Maturity
Weighted Average
Interest Rates
December 31,
2018
December 31,
2017
December 31,
2018
December 31,
2017
December 31,
2018
December 31,
2017
Collateralized term loans - Life
Companies
Collateralized term loans - FNMA
Collateralized term loans - CMBS
Collateralized term loans - FMCC
Secured borrowings
Lines of credit
Preferred Equity - Sun NG Resorts -
mandatorily redeemable
Preferred OP units - mandatorily
redeemable
Total debt
$ 1,259,158
770,417
$ 1,044,246
1,026,014
405,702
380,680
107,731
128,000
410,747
386,349
129,182
41,257
35,277
—
37,338
41,443
$ 3,124,303
$ 3,079,238
Collateralized Term Loans
14.4
5.1
4.1
5.9
14.4
2.3
3.8
4.7
9.0
13.9
5.6
5.0
6.9
15.3
3.1
—
5.0
8.9
3.9%
4.4%
5.1%
3.9%
9.9%
3.8%
6.0%
6.6%
4.5%
3.9%
4.4%
5.1%
3.9%
10.0%
2.8%
—%
6.7%
4.5%
During the three months ended December 31, 2018, we repaid a term loan of $10.2 million with an interest rate of 5.66 percent.
The loan was due to mature on February 28, 2019. Concurrently, we entered into a $21.7 million collateralized term loan with a
4.10 fixed interest rate and 20-year term.
F - 24
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the three months ended September 30, 2018, we entered into a $228.0 million collateralized term loan with a 4.10 percent
fixed interest rate and a 20-year term. During the three months ended September 30, 2018, we repaid one collateralized term loan
of $30.5 million with an interest rate of 6.34 percent, releasing one encumbered community, which was due to mature March 1,
2019. We recognized a loss on extinguishment of debt of $0.3 million as a result of the repayment transaction in our Consolidated
Statement of Operations.
During the three months ended June 30, 2018 we repaid three collateralized term loans totaling $177.7 million with a weighted
average interest rate of 4.53 percent, releasing 11 encumbered communities. One loan was due to mature on August 1, 2018 and
two loans were due to mature on May 1, 2023. We recognized a loss on extinguishment of debt of $1.5 million as a result of the
repayment transaction.
During the three months ended March 31, 2018, we repaid four collateralized term loans totaling $24.4 million with a weighted
average interest rate of 6.36 percent, releasing three encumbered communities. The loans were due to mature on March 1, 2019.
We recognized a loss on extinguishment of debt of $0.2 million as a result of the repayment transactions.
In December 2017, we defeased a $38.6 million collateralized term loan with a 5.25 percent fixed interest rate that was due to
mature on June 1, 2022. As a result of the transaction we recognized a loss on extinguishment of debt of $5.2 million in our
Consolidated Statements of Operations. Concurrent with the defeasance, we entered into a new $100.0 million collateralized term
loan, encumbered by the same property, with a 4.25 percent fixed rate of interest and 30-year term.
In September 2017, in connection with the Ocean West acquisition, we assumed a $4.6 million collateralized term loan with
Fannie Mae, with an interest rate of 4.34 percent and a remaining term of 9.8 years.
In June 2017, we entered into a $77.0 million collateralized term loan which bears interest at a rate of 4.16 percent amortizing
over a 25-year term. We also repaid a $3.9 million collateralized term loan with an interest rate of 6.54 percent that was due to
mature on August 31, 2017. As a result of the repayment transaction, we recognized a loss on extinguishment of debt of $0.3
million in our Consolidated Statements of Operations.
During the first quarter of 2017, we defeased an $18.9 million collateralized term loan with an interest rate of 6.49 percent that
was due to mature on August 1, 2017, releasing one encumbered community. As a result of the transaction, we recognized a loss
on extinguishment of debt of $0.5 million in our Consolidated Statements of Operations. In addition, we repaid a $10.0 million
collateralized term loan with an interest rate of 5.57 percent that was due to mature on May 1, 2017, releasing an additional
encumbered community.
The collateralized term loans totaling $2.8 billion as of December 31, 2018, are secured by 185 properties comprised of 72,799
sites representing approximately $3.2 billion of net book value.
Secured Borrowings
See Note 4, “Collateralized Receivables and Transfers of Financial Assets,” for information regarding our collateralized receivables
and secured borrowing transactions.
Preferred OP Units
Preferred OP units at December 31, 2018 and 2017 include $34.7 million of Aspen preferred OP units issued by the Operating
Partnership. As of December 31, 2018, these units are convertible indirectly into 447,049 shares of our 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 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 is determined by
dividing (i) the sum of (A) $27.00 plus (B) 25 percent 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 distribution rate is 6.5 percent.
On January 2, 2024, we are required to redeem all Aspen preferred OP units that have not been converted to common OP units.
Preferred OP units also include $2.7 million and $6.7 million at December 31, 2018 and 2017, respectively, of Series B-3 preferred
OP units, which are not convertible. During the year ended December 31, 2018, we redeemed 41,051 of the Series B-3 preferred
OP units at an average redemption price per unit, which included accrued and unpaid distributions, of $100.065753. In the aggregate,
we paid $4.1 million to redeem these units. In January 2019, we redeemed all remaining 26,750 Series B-3 preferred OP units.
F - 25
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The weighted average redemption price per unit, which included accrued and unpaid distributions, was $100.153425. In the
aggregate, we paid $2.7 million to redeem the Series B-3 preferred OP units.
Preferred Equity - Sun NG Resorts - mandatorily redeemable
In June 2018, in connection with the investment in Sun NG Resorts, $35.3 million of mandatorily redeemable Preferred Equity
(“Preferred Equity - Sun NG Resorts”) was purchased by unrelated third parties. The Preferred Equity - Sun NG Resorts carries
a preferred rate of return of 6.0 percent per annum. The Preferred Equity - Sun NG Resorts has a 7-year term and can be redeemed
in the fourth quarter of 2022 at the holders’ option. The Preferred Equity - Sun NG Resorts as of December 31, 2018 was $35.3
million. Refer to Note 3, “Real Estate Acquisitions,” Note 8, “Consolidated Variable Interest Entities,” and Note 10, “Equity and
Mezzanine Securities” for additional information.
Lines of Credit
In April 2017, we amended and restated our credit agreement (the “A&R Credit Agreement”) with Citibank, N.A. (“Citibank”)
and certain other lenders. Pursuant to the A&R Credit Agreement, we entered into a senior revolving credit facility with Citibank
and certain other lenders in the amount of $650.0 million, comprised of a $550.0 million revolving loan and a $100.0 million term
loan (the “A&R Facility”). We repaid the term loan in full on September 7, 2018. The A&R Credit Agreement has a four-year term
ending April 25, 2021, 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 A&R Credit Agreement also provides for, subject to the satisfaction of
certain conditions, additional commitments in an amount not to exceed $350.0 million. If additional borrowings are made pursuant
to any such additional commitments, the aggregate borrowing limit under the A&R Facility may be increased up to $900.0 million.
The A&R 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 A&R Credit Agreement, which margin can range from 1.35 percent to 2.20 percent
for the revolving loan. As of December 31, 2018, the margin based on our leverage ratio was 1.35 percent on the revolving loan.
We had $128.0 million borrowings on the revolving loan and no borrowings on the term loan as of December 31, 2018.
The A&R 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, 2018 and
December 31, 2017, $3.9 million and $1.3 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 their 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 percent. At December 31, 2018, the effective
interest rate was 7.0 percent. The outstanding balance was zero and $4.0 million as of December 31, 2018 and December 31, 2017,
respectively.
Covenants
Pursuant to the terms of the A&R 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, 2018, we were in compliance with all covenants.
In addition, certain of our subsidiary borrowers own properties that secure loans. These subsidiaries are consolidated within our
accompanying Consolidated Financial Statements, however, each of these subsidiaries’ assets and credit are not available to satisfy
the debts and other obligations of the Company, any of its other subsidiaries or any other person or entity.
F - 26
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Long-term Debt Maturities
As of December 31, 2018, the total of maturities and amortization of our debt (excluding premiums and discounts) and lines of
credit during the next five years were as follows (in thousands):
Maturities and Amortization By Year
Mortgage loans payable:
Maturities
$ 2,078,926
$
— $ 58,078
$ 270,680
$ 82,155
$ 307,465
$ 1,360,548
Total Due
2019
2020
2021
2022
2023
Thereafter
Principal amortization
Secured borrowings
734,675
107,731
58,164
5,265
59,630
5,746
58,843
6,171
Preferred Equity - Sun NG Resorts
- mandatorily redeemable
Preferred OP units - mandatorily
redeemable
Lines of credit
Total
35,277
—
37,338
128,000
2,675
—
—
—
—
—
— 128,000
56,822
6,379
35,277
—
—
53,437
6,374
447,779
77,796
—
—
—
—
34,663
—
$ 3,121,947
$ 66,104
$ 123,454
$ 463,694
$ 180,633
$ 367,276
$ 1,920,786
10. Equity and Mezzanine Securities
Public Equity Offerings
In September 2018, we closed an underwritten registered public offering of 5,060,000 shares of common stock. Proceeds from
the offering were $499.9 million after deducting expenses related to the offering. We used the net proceeds of this offering to repay
borrowings under the revolving loan and the term loan under our senior credit facility. The Company intends to use the remaining
net proceeds of this offering to fund possible future acquisitions and for working capital and general corporate purposes.
In May 2017, we closed an underwritten registered public offering of 4,830,000 shares of common stock. Proceeds from the
offering were $408.9 million after deducting expenses related to the offering, which were used to repay borrowings outstanding
under the revolving loan under our A&R Facility, fund acquisitions, working capital and general corporate purposes.
At the Market Offering Sales Agreement
In July 2017, we entered into a new at the market offering sales agreement (the “Sales Agreement”) with certain sales agents
(collectively, the “Sales Agents”), whereby we may offer and sell shares of our common stock, having an aggregate offering price
of up to $450.0 million, from time to time through the Sales Agents. The Sales Agents are entitled to compensation in an agreed
amount not to exceed 2.0 percent of the gross price per share for any shares sold from time to time under the Sales Agreement.
Through December 31, 2018 we have sold shares of our common stock for gross proceeds of $163.8 million under the Sales
Agreement.
Issuances of common stock under the Sales Agreement through December 31, 2018 were as follows:
Quarter Ended
September 30, 2018
June 30, 2018
December 31, 2017
Common Stock Issued
Weighted Average Sales Price
Net Proceeds (in Millions)
398,516
1,008,699
321,800
$
$
$
100.19
92.98
93.33
$
$
$
39.4
92.6
29.7
F - 27
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Issuances of common stock under our previous at the market offering sales agreement during 2017 and 2016 were as follows:
Quarter Ended
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
Equity Interests - NG Sun LLC
Common Stock Issued
Weighted Average Sales Price
Net Proceeds (in Millions)
400,000
280,502
19,498
620,828
485,000
$
$
$
$
$
85.01
76.47
75.90
76.81
71.86
$
$
$
$
$
33.6
21.2
1.5
47.1
34.4
In June 2018, in connection with the investment in Sun NG Resorts, unrelated third parties purchased $6.5 million of Series B
preferred equity interests and $15.4 million of common equity interest in Sun NG Resorts (herein jointly referred to as “Equity
Interest - NG Sun LLC”). The Series B preferred equity interests carry a preferred return at a rate that, at any time, is equal to the
interest rate on Sun NG Resorts’ indebtedness at such time. The current rate of return is 5.0 percent. The Equity Interests - NG
Sun LLC do not have a fixed maturity date and can be redeemed in the fourth quarter of 2022 at the holders’ option. Sun NG LLC,
our subsidiary, has the right during certain periods each year, with or without cause, or for cause at any time, to elect to buy NG
Sun LLC’s interest. During a limited period in 2022, NG Sun LLC has the right to put its interest to Sun NG LLC. If either party
exercises their option, the property management agreement will be terminated and the Company is required to purchase the
remaining interests of NG Sun LLC and the property management agreement at fair value. Refer to Note 3, “Real Estate
Acquisitions,” Note 8, “Consolidated Variable Interest Entities,” and Note 9, “Debt and Lines of Credit” for additional information.
Issuances of Common Stock and Common OP Units
In July 2017, we issued 298,900 shares of common stock totaling $26.4 million in connection with the acquisition of Pismo Dunes.
In June 2017, we issued a total of 23,311 common OP units for total consideration of $2.0 million in connection with acquisition
activity during the three months ended June 30, 2017.
Conversions
Subject to certain limitations, holders can convert certain series of stock and OP units to shares of our common stock at any time.
Below is the activity of conversions during 2018 and 2017:
Series
Common OP unit
Series A-1 preferred OP unit
Series A-4 preferred OP unit
Series A-4 preferred stock
Series C preferred OP unit
Dividends
Year Ended December 31, 2018 Year Ended December 31, 2017
Conversion
Rate
Units/Shares
Common
Stock
Units/Shares
Common
Stock
1
2.439
0.4444
0.4444
1.11
20,608
13,430
13,765
22,576
1,919
20,608
32,752
6,116
10,033
2,130
36,055
21,919
10,000
158,036
16,806
36,055
53,456
4,440
70,238
18,651
Dividend distributions declared for the quarter ended December 31, 2018 are as follows:
Dividend
Record
Date
Payment
Date
Distribution per
Share
Total Distribution
(in Thousands)
Common Stock, Common OP units and Restricted Stock
12/31/2018
1/15/2019 $
0.71 $
Series A-4 Preferred Stock
12/14/2018
12/31/2018 $
0.40625 $
63,249
432
F - 28
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Redemptions
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.
In November 2017, we redeemed all of the outstanding shares of our 7.125% Series A Cumulative Redeemable Preferred Stock.
Holders received a cash payment of $25.14349 per share which included accrued and unpaid dividends. In the aggregate, we paid
$85.5 million to redeem all of the 3,400,000 outstanding shares.
In June 2017, we redeemed 438,448 shares of Series A-4 Preferred Stock and 200,000 shares of Series A-4 preferred OP units
from Green Courte Real Estate Partners III, LLC, GCP Fund III REIT LLC and GCP Fund III Ancillary Holding, LLC (collectively,
the “Green Courte Entities”) for total consideration of $24.7 million. Accrued dividends totaling $0.2 million were also paid in
connection with the redemptions. The Green Courte Entities were the sellers of the American Land Lease portfolio which we
acquired in 2014 and 2015.
Repurchase Program
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 2018 or 2017. There
is no expiration date specified for the repurchase program.
11. Share-Based Compensation
As of December 31, 2018, we had two share-based compensation plans; the Sun Communities, Inc. 2015 Equity Incentive Plan
(“2015 Equity Incentive Plan”) and the First Amended and Restated 2004 Non-Employee Director Option Plan (“2004 Non-
Employee Director Option 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.
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.
2015 Equity Incentive 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 1,136,194 shares
remaining for future issuance.
2004 Non-Employee Director Option 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. At the Annual Meeting of the
Stockholders held on May 17, 2018, the stockholders approved the First Amendment to Sun Communities, Inc. First Amended
and Restated 2004 Non-Employee Director Option Plan to increase the number of authorized shares under the plan by 200,000
shares.
F - 29
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 375,000 shares, with 209,774 shares remaining for future issuance.
During the year ended December 31, 2018 and 2017, shares were granted as follows:
Award
2018
Type
Key Employees
Plan
2015 Equity
Incentive Plan
Shares
Granted
Grant Date
Fair Value
Per Share
16,500 $
88.30 (1)
Vesting Type
Time Based
Vesting
Anniversary
2nd
3rd
4th
5th
6th
Percentage
35.0%
35.0%
20.0%
5.0%
5.0%
2018
Key Employees
2018 Executive Officers
2018 Executive Officers
2018
Directors
2017
Key Employees
2015 Equity
Incentive Plan
2015 Equity
Incentive Plan
2015 Equity
Incentive Plan
2004 Non-
Employee Director
Option Plan
2015 Equity
Incentive Plan
50,100 $
86.97 (1)
Time Based
20% annually over 5 years
60,000 $
87.24 (1)
Time Based
20% annually over 5 years
90,000 $
65.24 (2)
Market
Condition
16,800 $
85.28 (1)
Time Based
3rd
3rd
2,500 $
84.18 (1)
Time Based
2nd
2017 Executive Officers
2015 Equity
Incentive Plan
100,000 $
79.30 (1)
Time Based
3rd
4th
5th
6th
3rd
4th
5th
6th
7th
2017 Executive Officers
2015 Equity
Incentive Plan
100,000 $
72.39 (3)
Market &
Performance
Conditions
Multiple tranches through
March 2022
2017
Directors
2004 Non-
Employee Director
Option Plan
16,900 $
79.64 (1)
Time Based
3rd
100.0%
(1) Grant date fair value is measured based on the closing price of our common stock on the date(s) shares are issued.
(2) Share-based compensation for restricted stock awards with market 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. At the grant date, our common stock
price was $87.24. Based on the Monte Carlo simulation we expect 74.8% of the 90,000 shares to vest.
(3) Share-based compensation for restricted stock awards with market and 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. At the grant date,
our common stock price was $79.30. Based on the Monte Carlo simulation we expect 91.3% of the 100,000 shares to vest.
F - 30
100.0%
100.0%
35.0%
35.0%
20.0%
5.0%
5.0%
20.0%
30.0%
35.0%
10.0%
5.0%
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes our restricted stock activity for the years ended December 31, 2018, 2017, and 2016:
Unvested restricted shares at January 1, 2016
Granted
Vested
Forfeited
Unvested restricted shares at December 31, 2016
Granted
Vested
Forfeited
Unvested restricted shares at December 31, 2017
Granted
Vested
Forfeited
Unvested restricted shares at December 31, 2018
Number of Shares
Weighted Average
Grant Date Fair
Value
813,260
$
$
227,800
(165,631) $
(33,795) $
$
841,634
$
219,400
(196,412) $
(4,769) $
$
859,853
233,400
$
(214,111) $
(8,025) $
$
871,117
50.59
69.43
45.90
56.49
56.38
79.38
47.60
56.43
64.25
87.12
54.69
72.16
72.65
Total compensation cost recognized for restricted stock was $15.1 million, $12.7 million, and $9.6 million for the years ended
December 31, 2018, 2017, and 2016, respectively. The total fair value of shares vested was $11.7 million, $9.3 million, and $7.6
million for the years ended December 31, 2018, 2017 and 2016, respectively.
The remaining share-based compensation cost, net related to our unvested restricted shares outstanding as of December 31, 2018
is approximately $37.5 million. The following table summarizes our expected share-based compensation cost, net related to our
unvested restricted shares, in millions:
Expected share-based compensation costs, net
$
13.0
$
12.0
$
6.9
$
5.6
2019
2020
2021
Thereafter
Options
During 2018, there were no non-employee director options exercised. At December 31, 2018, 3,000 fully vested non-employee
director options remained outstanding with an intrinsic value of $0.2 million. These options had a weighted average exercise price
of $33.45 and a weighted average contractual term of 2.1 years. No options have been granted, and there has been no compensation
expense associated with non-vested stock option awards for the years ended December 31, 2018, 2017, or 2016.
F - 31
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. 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 our 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, has an interest in a portfolio, 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 the Real Property
Operations segment revenues and is approximately $106.2 million for the year ended December 31, 2018. In 2018, transient RV
revenue was recognized 20.7 percent in the first quarter, 20.3 percent in the second quarter, 42.6 percent in the third quarter,
and 16.4 percent in the fourth quarter.
A presentation of our segment financial information is summarized as follows (amounts in thousands):
Revenues
Operating expenses / Cost of sales
NOI / Gross profit
Adjustments to arrive at net income / (loss):
Interest and other revenues, net
Home selling expense
General and administrative
Transaction costs
Catastrophic weather related charges, net
Depreciation and amortization
Loss on extinguishment of debt
Interest
Interest on mandatorily redeemable preferred OP units
Remeasurement of marketable securities
Other expense, net
Income from nonconsolidated affiliates
Current tax expense
Deferred tax benefit
Net income / (loss)
Less: Preferred return to 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, 2018
Real Property
Operations
Home Sales and
Home Rentals
Consolidated
$
880,080
$
219,688
$
1,099,768
330,275
549,805
27,057
—
(70,042)
(470)
140
(218,617)
(2,657)
(129,068)
(3,694)
(3,639)
(6,414)
—
(372)
507
142,536
4,486
9,532
128,518
1,736
146,432
73,256
—
(15,722)
(11,396)
(2)
(232)
(68,645)
—
(21)
—
—
(39)
646
(223)
—
(22,378)
—
(1,089)
(21,289)
—
476,707
623,061
27,057
(15,722)
(81,438)
(472)
(92)
(287,262)
(2,657)
(129,089)
(3,694)
(3,639)
(6,453)
646
(595)
507
120,158
4,486
8,443
107,229
1,736
$
126,782
$
(21,289) $
105,493
F - 32
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2017
Real Property
Operations
Home Sales and
Home Rentals
Consolidated
Revenues
Operating expenses / Cost of sales
NOI / Gross profit
Adjustments to arrive at net income / (loss):
Interest and other revenues, net
Home selling expenses
General and administrative
Transaction costs
Catastrophic weather related charges, net
Depreciation and amortization
Loss on extinguishment of debt
Interest
Interest on mandatorily redeemable preferred OP units
Other income / (expense), net
Current tax expense
Deferred tax benefit
Net income / (loss)
Less: Preferred return to preferred OP units
Less: Amounts attributable to noncontrolling interests
Net income / (loss) attributable to Sun Communities, Inc.
Less: Preferred stock distribution
Net income / (loss) attributable to Sun Communities, Inc.
common stockholders
$
779,739
$
177,957
$
290,002
489,737
24,875
—
(64,735)
(9,812)
(7,856)
(199,960)
(6,019)
(127,113)
(3,114)
8,983
(62)
582
105,506
4,581
6,319
94,606
7,162
117,228
60,729
(1)
(12,457)
(9,497)
11
(496)
(61,576)
—
(15)
—
(1)
(384)
—
(23,687)
—
(1,264)
(22,423)
—
$
87,444
$
(22,423) $
957,696
407,230
550,466
24,874
(12,457)
(74,232)
(9,801)
(8,352)
(261,536)
(6,019)
(127,128)
(3,114)
8,982
(446)
582
81,819
4,581
5,055
72,183
7,162
65,021
F - 33
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2016
Real Property
Operations
Home Sales and
Home Rentals
Consolidated
Revenues
Operating expenses / Cost of sales
Net operating income / Gross profit
Adjustments to arrive at net income / (loss):
Interest and other revenues, net
Home selling expenses
General and administrative
Transaction costs
Catastrophic weather related charges, net
Depreciation and amortization
Loss on extinguishment of debt
Interest
Interest on mandatorily redeemable preferred OP units
Other expenses, net
Income from nonconsolidated affiliates
Current tax expense
Deferred tax benefit
Net income / (loss)
Less: Preferred return to preferred OP units
Less: Amounts attributable to noncontrolling interests
Net income / (loss) attributable to Sun Communities, Inc.
Less: Preferred stock distribution
Net income / (loss) attributable to Sun Communities, Inc.
common stockholders
$
654,341
$
158,287
$
241,363
412,978
21,150
—
(55,481)
(31,863)
(1,147)
(166,296)
(1,127)
(119,150)
(3,152)
(4,675)
500
(471)
400
51,666
5,006
1,455
45,205
8,946
104,781
53,506
—
(9,744)
(8,181)
(51)
(25)
(55,474)
—
(13)
—
(1)
—
(212)
—
(20,195)
—
(1,305)
(18,890)
—
$
36,259
$
(18,890) $
812,628
346,144
466,484
21,150
(9,744)
(63,662)
(31,914)
(1,172)
(221,770)
(1,127)
(119,163)
(3,152)
(4,676)
500
(683)
400
31,471
5,006
150
26,315
8,946
17,369
December 31, 2018
December 31, 2017
Real
Property
Operations
Home Sales
and Home
Rentals
Consolidated
Real
Property
Operations
Home Sales
and Home
Rentals
Consolidated
Identifiable assets:
Investment property, net
$ 5,586,444
$ 531,872
$ 6,118,316
Cash and cash equivalents
Inventory of manufactured homes
Notes and other receivables, net
Collateralized receivables, net
Other assets, net
Total assets
24,343
—
145,673
106,924
189,064
25,968
49,199
14,404
—
36,135
50,311
49,199
160,077
106,924
225,199
$ 5,172,521
(7,649)
—
149,798
128,246
130,455
$ 472,833
$ 5,645,354
17,776
30,430
13,698
—
3,849
10,127
30,430
163,496
128,246
134,304
$ 6,052,448
$ 657,578
$ 6,710,026
$ 5,573,371
$ 538,586
$ 6,111,957
F - 34
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Income Taxes
We have elected to be taxed as a REIT pursuant to Section 856(c) of the Internal Revenue Code of 1986, as amended (“Code”).
In order for us to qualify as a REIT, at least 95.0 percent of our gross income in any year must be derived from qualifying sources.
In addition, a REIT must distribute annually at least 90.0 percent of its REIT taxable income (calculated without any deduction
for dividends paid and excluding capital gain) to its stockholders and meet other tests.
Qualification as a REIT involves the satisfaction of numerous requirements (on an annual and quarterly basis) established under
highly technical and complex Code provisions for which there are 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, 2018.
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 (“AMT”) in 2017 as AMT
is no longer applicable for years beginning after 2017). Even if we qualify as a REIT, we may be subject to certain state and local
income taxes as well as U.S. federal income and excise taxes on our undistributed income. In addition, taxable income from non-
REIT activities managed through taxable REIT subsidiaries (“TRSs”) is subject to federal, state and local income taxes. The
Company is also subject to income taxes in Canada as a result of the acquisition of Carefree in 2016 and in Australia as a result
of our investment in Ingenia Communities Group in 2018. We do not provide for withholding taxes on our undistributed earnings
from our Canadian subsidiaries as they are reinvested and will continue to be reinvested indefinitely outside the United States.
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, 2018, 2017, and 2016, distributions paid per share were taxable as follows (unaudited / rounded):
Years Ended December 31,
2018
2017
2016
Amount
Percentage
Amount
Percentage
Amount
Percentage
Ordinary income (1)
Capital gain
Return of capital
$
1.58
0.13
1.09
56.4% $
4.8%
38.8%
100.0% $
0.83
—
1.83
2.66
31.2% $
—%
68.8%
100.0% $
0.81
0.51
1.28
2.60
31.2%
19.6%
49.2%
100.0%
Total distributions declared
$
(1) 100% of the ordinary taxable dividend qualifies as Section 199A dividend for 2018.
2.80
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law. Under the Tax Act, the corporate
income tax rate is reduced from a maximum marginal rate of 35.0 percent to a flat 21.0 percent. In accordance with ASC 740,
“Accounting for Income Taxes,” entities are required to recognize the effect of tax law changes in the period of enactment even
though the effective date of most provisions of the Tax Act was January 1, 2018. Although the Staff Accounting Bulletin (“SAB”)
No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act,” allows entities to record provisional amounts during
a measurement period, it is our view that we have obtained the necessary information available to prepare and analyze (including
computations) in reasonable detail the accounting for the change in tax law as noted below.
The components of our provision / (benefit) for income taxes attributable to continuing operations for the year ended December
31, 2018 and 2017 are as follows (amounts in thousands):
F - 35
Federal
Current
State and Local
Current
Deferred
Foreign
Current
Deferred
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended
December 31, 2018
Year Ended
December 31, 2017
$
(102) $
(181)
701
11
(4)
(518)
675
(11)
(48)
(571)
(136)
Total Provision / (Benefit)
$
88
$
A reconciliation of the provision / (benefit) for income taxes with the amount computed by applying the statutory federal income
tax rate to income before provision for income taxes for the year ended December 31, 2018 and 2017 is as follows (amounts in
thousands):
Pre-tax loss attributable to taxable subsidiaries
Federal provision / (benefit) at statutory tax rate
State and local taxes, net of federal benefit
Alternative minimum tax
Rate differential
Change in valuation allowance
Change in deferred tax asset
Others
Tax (benefit) / provision - taxable subsidiaries
Other state taxes - flow through subsidiaries
Total provision / (benefit)
Year Ended
December 31, 2018
(7,299)
$
Year Ended
December 31, 2017
$ (17,404)
(1,534)
—
—
(112)
2,885
—
(1,576)
(337)
425
21.0 %
— %
— %
1.5 %
(39.5)%
— %
21.6 %
4.6 %
$
88
$
34.0 %
— %
— %
(1.8)%
122.5 %
(148.7)%
(2.1)%
3.9 %
(5,918)
(3)
—
318
(21,322)
25,885
360
(680)
544
(136)
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 and basis differences
between tax and U.S. GAAP.
At December 31, 2017, we re-measured the deferred tax assets and liabilities of our U.S. TRSs to reflect the effect of the enacted
change in the tax rate under the Tax Act. We have also considered the new tax rate in assessing the need for and change to our
existing valuation allowance and adjusted accordingly. Since we have recorded a full valuation allowance against substantially all
of our deferred tax assets related to the U.S. TRSs, no material impact on the net deferred tax asset and the provision for income
taxes was noted.
F - 36
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The deferred tax assets and liabilities included in the consolidated balance sheets are comprised of the following tax effects of
temporary differences and based on the Tax Act (amounts in thousands):
Deferred Tax Assets
NOL carryforwards
Depreciation and basis differences
Other
Gross deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred Tax Liabilities
Basis differences - foreign investment
Gross deferred tax liabilities
Net Deferred Tax Liability (1)
As of December 31,
2018
2017
$
18,071 $
28,140
784
46,995
(44,817 )
2,178
19,739
23,523
1,272
44,534
(41,932)
2,602
(22,406 )
(22,406 )
(25,114)
(25,114)
$
(20,228 ) $
(22,512)
(1) Net deferred tax liability is included within Other liabilities in our Consolidated Balance Sheets.
SHS had U.S. operating loss carryforwards of $73.6 million, or $15.6 million after tax, as of December 31, 2018. The loss
carryforwards will begin to expire in 2023 through 2035 if not offset by future taxable income. In addition, our Canadian subsidiaries
have operating loss carryforwards of $9.3 million, or $2.5 million after tax, as of December 31, 2018. The loss carryforwards will
begin to expire in 2033 through 2038 if not offset by future taxable income.
We had no unrecognized tax benefits as of December 31, 2018 and 2017. We expect no significant increases or decreases in
unrecognized tax benefits due to changes in tax positions within one year of December 31, 2018.
We classify certain state taxes as income taxes for financial reporting purposes. We recorded a provision for state income taxes of
$0.7 million for the year ended December 31, 2018, $0.7 million for the year ended December 31, 2017, and $0.4 million for the
year ended December 31, 2016.
As previously noted, certain of 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 application of significant
judgment. 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, 2011 and prior. In addition, our Canadian subsidiaries are subject to taxes in Canada and in the
province of Ontario. We are no longer subject to examination by the Canadian tax authorities for the tax years ended December
31, 2012 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, 2018, 2017 and 2016.
In 2017, SHS underwent an audit by the Internal Revenue Service for the 2015 tax year. Upon conclusion of the audit, no adjustment
was required.
F - 37
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Earnings Per Share
We have outstanding stock options, unvested restricted common shares, 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 to restricted stock awards
Basic earnings: net income attributable to common stockholders after
allocation
Allocation of income to restricted stock awards
Diluted earnings: net income attributable to common stockholders after
allocation
Denominator
Weighted average common shares outstanding
Add: dilutive stock options
Add: dilutive restricted stock
Diluted weighted average common shares and securities
Earnings per share available to common stockholders after allocation:
Basic
Diluted
Year Ended December 31,
2018
2017
2016
$
$
$
$
$
105,493
(831)
104,662
831
$
$
$
$
65,021
(455)
64,566
455
17,369
115
17,484
(115)
105,493
$
65,021
$
17,369
81,387
76,084
65,856
2
651
2
625
8
457
82,040
76,711
66,321
1.29
1.29
$
$
0.85
0.85
$
$
0.27
0.26
We have 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, 2018, 2017 and 2016 (amounts in thousands):
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,
2018
2017
2016
2,726
332
40
410
1,063
314
1,284
6,169
2,746
345
40
424
1,085
316
1,284
6,240
2,759
367
40
634
1,682
333
1,284
7,099
F - 38
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Selected Quarterly Financial Information (Unaudited)
The following is a condensed summary of our unaudited quarterly results for years ended December 31, 2018 and 2017. Income
per share for the year may not equal the sum of the fiscal quarters’ income per share due to changes in basic and diluted shares
outstanding.
2018
Total Revenues
Total Expenses
Income before other items
Quarters
1st
2nd
3rd
4th
(In thousands, except per share amounts)
$257,975 $271,434 $323,412 $ 274,004
221,871
245,091
273,040
257,131
$ 36,104 $ 26,343 $ 50,372 $ 16,873
Net Income Attributable to Sun Communities, Inc. Common Stockholders
$ 29,986 $ 20,408 $ 46,060 $
9,039
Earnings per share:
Basic
Diluted
2017
Total Revenues
Total Expenses
Income before other items
$
$
0.38 $
0.25 $
0.56 $
0.38 $
0.25 $
0.56 $
0.11
0.11
$234,400 $237,899 $268,245 $ 242,026
209,816
222,452
242,751
234,850
$ 24,584 $ 15,447 $ 25,494 $
7,176
Net Income Attributable to Sun Communities, Inc. Common Stockholders
$ 21,104 $ 12,364
$ 24,115 $
7,438
Earnings per share:
Basic
Diluted
$
$
0.29 $
0.29 $
0.16
0.16
$
$
0.31 $
0.31 $
0.09
0.09
F - 39
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Fair Value of Financial Instruments
Our financial instruments consist primarily of cash, cash equivalents and restricted cash, marketable securities, accounts and notes
receivable, accounts payable, and debt.
ASC Topic 820, “Fair Value Measurements and Disclosures,” 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; and
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:
Marketable Securities
In November 2018, we purchased marketable securities on the Australian Securities Exchange (“ASX”) for total consideration of
$54 million US. The marketable securities held by us accounted for under the ASC 321 “Investment Equity Securities” are measured
at fair value. Any change in fair value is recognized in the Consolidated Statement of Operations in Remeasurement of marketable
securities in accordance with ASU 2016-01 “Financial Instruments - Overall (Subtopic 825-10): Recognition and measurement
of financial assets and financial liabilities.” The fair value is measured by the quoted unadjusted share price of which is readily
available in active markets (Level 1).
Installment Notes Receivable on Manufactured Homes
The net carrying value of the installment notes receivable on manufactured homes estimates the fair value as the interest rates in
the portfolio are comparable to current prevailing market rates (Level 2). Refer Note 5, “Notes and Other Receivables.”
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). Refer to Note 9, “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). Refer to Note 4, “Collateralized Receivables and Transfers of Financial
Assets.”
Financial Liabilities
We estimate the fair value of our contingent consideration liability based on discounting of future cash flows using market interest
rates and adjusting for non-performance risk over the remaining term of the liability (Level 2).
F - 40
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2018. The table presents the carrying values and fair values of our financial instruments as of December 31, 2018
and December 31, 2017 that were measured using the valuation techniques described above (in thousands). The table excludes
other financial instruments such as cash, cash equivalents and restricted cash, accounts receivable, and accounts payable as the
carrying values associated with these instruments approximate fair value since their maturities are less than one year.
Financial assets
Marketable securities
Installment notes receivable on manufactured homes, net
Collateralized receivables, net
Financial liabilities
Debt (excluding secured borrowings)
Secured borrowings
Lines of credit
Other liabilities (contingent consideration)
17. Recent Accounting Pronouncements
Recent Accounting Pronouncements - Adopted
December 31, 2018
December 31, 2017
Carrying
Value
$
$
$
49,037
112,798
106,924
Fair Value
$
$
$
49,037
112,798
106,924
$
$
$
Carrying
Value
Fair Value
— $
—
115,797
$ 115,797
128,246
$ 128,246
$ 2,888,572
$ 2,757,649
$ 2,908,799
$ 2,726,770
$
$
$
107,731
128,000
4,640
$
$
$
107,731
128,000
4,640
$
$
$
129,182
$ 129,182
41,257
6,976
$
$
41,257
6,976
On January 1, 2018, we adopted ASU 2014-09 “Revenue from Contracts with Customers (Topic 606).” Refer to Note 2, “Revenue”
for information regarding our adoption of this guidance.
On January 1, 2018 we adopted ASU 2017-09 “Compensation - Stock Compensation (Topic 718): Scope of Modification
Accounting.” This update provided clarity and reduced both diversity in practice and cost and complexity when applying the
guidance in Topic 718, Compensation - Stock Compensation, regarding a change to the terms or conditions of a share-based
payment award. There was no initial impact that resulted from adoption of this guidance; it will be applied should a modification
occur.
On January 1, 2018, we adopted ASU 2017-01 “Business Combinations (Topic 805): Clarifying the Definition of a Business.”
This update clarified the definition of a business with the objective of adding guidance to assist entities with evaluating whether
transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many
areas of accounting including acquisitions, disposals, goodwill, and consolidation.
Under previous guidance, substantially all of our property acquisitions were accounted for as business combinations with identifiable
assets and liabilities measured at fair value, and acquisition related costs expensed as incurred.
With the adoption of ASU 2017-01, substantially all of our future property acquisitions are accounted for as asset acquisitions.
We allocate the purchase price of these properties on a relative fair value basis and capitalize direct acquisition related costs as
part of the purchase price. Acquisitions costs that do not meet the criteria to be capitalized will be expensed as incurred and
presented as General and administrative costs in our Consolidated Statements of Operations.
On January 1, 2018, we adopted ASU 2016-18 “Statement of Cash Flows (Topic 230): Restricted Cash.” This update required
inclusion of restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-
period and end-of-period total amounts shown on the statement of cash flows.
F - 41
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our restricted cash consists of amounts primarily held in deposit for tax, insurance and repair escrows held by lenders in accordance
with certain debt agreements. Restricted cash is included as a component of Other assets, net on the Consolidated Balance Sheets.
Changes in restricted cash are reported in our Consolidated Statements of Cash Flows as operating, investing or financing activities
based on the nature of the underlying activity.
The following table reconciles our beginning-of-period and end-of-period balances of cash, cash equivalents and restricted cash
for the periods shown (in thousands):
Cash and cash equivalents
Restricted cash
Cash, cash equivalents and restricted cash
Recent Accounting Pronouncements - Not Yet Adopted
December 31, 2018
December 31, 2017
December 31, 2016
$
$
50,311
11,951
62,262
$
$
10,127
13,382
23,509
$
$
8,164
17,149
25,313
In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments.” This update replaces the incurred loss impairment methodology in current GAAP with a methodology
that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to
inform credit loss estimates. The amendments in this update are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. We are evaluating how this guidance will impact our accounting policies
regarding assessment of, and allowance for, loan losses.
In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” The core principle of this update is that a lessee should
recognize the right of use (“ROU”) asset and corresponding liabilities in the Consolidated Balance Sheet that arise from lease
agreements. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim
periods within those fiscal years. We will adopt the amendment in the first quarter 2019 using the prospective approach. Our
income from real property and rental home revenue streams is derived from rental agreements where we are the lessor. The new
accounting standard narrowed the definition of initial direct costs which can be capitalized. The new standard defines initial direct
costs as the incremental costs of signing a lease. Employee salaries, legal fees rendered prior to the execution of a lease, negotiation
costs, advertising and other origination effort costs no longer meet the definition of initial direct costs and will not be capitalized.
These costs will be included in general and administrative costs, or property operating and maintenance expense, in our Consolidated
Statement of Operations. Certain commissions will be capitalized as initial direct costs pursuant to adoption of the standard. We
are the lessee in other arrangements, primarily for our executive offices, ground leases at certain communities and certain property.
For leases with a term greater than one year, a ROU asset and corresponding liabilities will be included on the Consolidated Balance
Sheet. The ROU asset and corresponding liabilities are measured as the estimated present value of minimum lease payments at
the commencement of the lease agreement and discounted by our incremental borrowing rate of a collateralized term loan. As of
January 1, 2019, we expect to recognize operating lease ROU assets of $40.0 million to $50.0 million which will include the
present value of minimum lease payments as well as certain existing below market lease intangibles associated with such leases.
Also upon adoption, we expect to recognize operating lease liabilities of $15.0 million to $25.0 million. We will elect certain
practical expedients allowable by the ASU, including the expedient to forego separation of lease and non-lease component of
lessee contracts, resulting in a gross-up effect on the balance sheet assets and liabilities. Additionally for all leases, we will elect
the package of practical expedients, which permits the Company not to reassess expired or existing contracts containing a lease,
the lease classification for expired or existing contracts, and measurement of initial direct costs for any existing leases.
In August 2018, the FASB issued ASU 2018-15 “Intangibles- Goodwill and Other - Internal-Use Software (Topic 350-40):
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” This
update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract
with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software. The amendments
in this update are effective for fiscal years beginning after December 15, 2020. Early adoption of the amendments in this update
is permitted, including adoption in any interim period, for all entities. We are currently evaluating the potential impact of adoption
of this standard on our consolidated financial statements.
F - 42
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Commitments and Contingencies
Legal Proceedings
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.
Catastrophic Weather
In September 2017, our communities in Florida and Georgia sustained damages from Hurricane Irma. We maintain property,
casualty, flood and business interruption insurance for our community portfolio, subject to customary deductibles and limits. The
table below sets forth estimated insurance recoveries (in millions). Actual insurance recoveries could vary significantly from our
estimates. Future changes to estimated insurance recoveries will be recognized in the period(s) in which they are determined.
Total estimated insurance receivable - December 31, 2017
Change in estimated insurance recoveries
Business interruption payment receivable
Advances from insurer
Total estimated insurance receivable - December 31, 2018
Year Ended
December 31, 2018
$
$
23.7
9.2
2.2
(16.4)
18.7
Changes in estimated insurance recoveries for damages during the year ended December 31, 2018, were primarily the result of
incremental invoices for which the total costs exceeded the applicable deductible and confirmation of payment on the business
interruption insurance claim.
We are actively working with our insurer on claims for lost earnings and redevelopment costs greater than the asset impairment
charge for the three Florida Keys communities. The three impaired Florida Keys communities will require redevelopment followed
by a tenant lease-up period. As such, we currently cannot estimate a date when operating results will be restored to pre-hurricane
levels. Our business interruption insurance policy provides for up to 60 months of coverage from the date of restoration.
19. Related Party Transactions
Lease of Executive Offices. Gary A. Shiffman, together with certain of his family members, indirectly owns an equity interest of
approximately 28.1 percent in American Center LLC, the entity from which we lease office space for our principal executive
offices. Each of Brian M. Hermelin, Ronald A. Klein and Arthur A. Weiss indirectly owns a less than one percent interest in
American Center LLC. Mr. Shiffman is our Chief Executive Officer and Chairman of the Board. Each of Mr. Hermelin, Mr. Klein
and Mr. Weiss is a director of the Company. Under this agreement, we lease approximately 103,100 rentable square feet of permanent
space. The initial term of the lease is until October 31, 2026, and the average gross base rent is $18.55 per square foot until October
31, 2019 with graduated rental increases thereafter. Each of Mr. Shiffman, Mr. Hermelin, Mr. Klein and Mr. Weiss 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 2015-2018, Jaffe, Raitt, Heuer, & Weiss, Professional Corporation acted as our general counsel and
represented us in various matters. Arthur A. Weiss is the Chairman of the Board of Directors and a shareholder of such firm. We
incurred legal fees and expenses owed to Jaffe, Raitt, Heuer, & Weiss of approximately $7.1 million, $5.0 million and $8.0 million
in the years ended December 31, 2018, 2017 and 2016, 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.
20. Subsequent Events
F - 43
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Subsequent to the quarter ended December 31, 2018, we acquired seven communities for $324.7 million, containing 2,956 MH
sites and 612 RV sites.
Subsequent to the quarter, we completed a $265.0 million twenty-five year term loan transaction which carries an interest rate of
4.17 percent. Concurrently, we repaid a $187.9 million term loan which was due to mature in January 2030.
On January 31, 2019, the Operating Partnership created a new class of OP units named Series D Preferred OP Units in conjunction
with the acquisition of a MH community in Oregon City, Oregon. As of February 14, 2019, 488,958 Series D Preferred OP Units
were outstanding. The Series D Preferred OP Units provide for quarterly distributions on the $100 per unit issue price of 3.75%
per year until January 31, 2021, and 4.0% per year thereafter.
We have evaluated our Consolidated Financial Statements for subsequent events through the date that this Form 10-K was issued.
F - 44
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Land
Depreciable
Assets
Land
Depreciable
Assets
Land
Depreciable
Assets
Total
Accumulated
Depreciation
$
2,180
$
10,710
$
1,485
14,278
$
14,896
$
(717 )
Date
2017
(12,046 )
2000
(384 )
2016
(8,647 )
1996
Acquired (A) or
Constructed (C)
(A)
(A)
(A)
(A)
Property Name
49’er Village RV Resort
Academy / West Point
Adirondack Gateway RV Resort &
Campground
Allendale Meadows Mobile Village
Location
Plymouth, CA
Canton, MI
Gansevoort, NY
Allendale, MI
Alpine Meadows Mobile Village
Grand Rapids, MI
Alta Laguna
Apple Carr Village
Apple Creek
Arbor Terrace RV Park
Rancho
Cucamonga, CA
Muskegon, MI
Amelia, OH
Bradenton, FL
Arbor Woods
Archview RV Resort & Campground (4) Moab, UT
Ypsilanti, MI
Ariana Village
Lakeland, FL
Arran Lake RV Resort & Campground
Allenford, ON
Austin Lone Star RV Resort
Autumn Ridge
Bahia Vista Estates
Baker Acres RV Resort
Bell Crossing
Big Timber Lake RV Camping Resort
Big Tree RV Resort
Blazing Star
Blue Heron Pines
Blue Jay MH & RV Resort
Austin, TX
Ankeny, IA
Sarasota, FL
Zephyrhills, FL
Clarksville, TN
Cape May Court
House, NJ
Arcadia, FL
San Antonio, TX
Punta Gorda, FL
Dade City, FL
Blue Star / Lost Dutchman MH & RV
Resort
Apache Junction,
AZ
Blueberry Hill
Boulder Ridge
Branch Creek Estates
Brentwood Estates
Brentwood Mobile Village
Brentwood West
Brookside Mobile Home Village
Brookside Village
Bushnell, FL
Pflugerville, TX
Austin, TX
Hudson, FL
Kentwood, MI
Mesa, AZ
Goshen, IN
Kentwood, MI
Encumbrance
—
B
—
—
A
D
—
B
C
—
—
D
—
—
D
—
E
B
A
—
C
E
—
E
C
B
D
E
B
—
B
D
620
366
729
23,736
800
543
456
3,340
6,289
240
1,190
630
890
6,810
2,140
717
590
1,250
750
410
2,040
5,120
3,830
1,000
796
1,150
385
13,620
260
170
1,970
3,684
6,692
21,088
6,172
5,480
4,410
12,385
8,419
2,195
1,175
7,913
8,054
17,650
11,880
1,916
21,308
13,534
6,163
35,294
9,679
12,720
3,240
500
3,716
9,359
3,592
24,202
1,080
5,564
$
2,006
$
2,180
$
8,768
1,485
2,563
10,892
9,893
1,405
13,629
3,058
4,709
10,778
—
1,585
254
2,075
4,908
1,381
1,939
8,364
2,027
2,063
1,733
4,195
1,422
5,946
3,545
32,283
6,151
2,593
2,091
1,070
18,380
323
620
366
729
23,736
1,134
543
456
3,340
6,289
240
1,109
630
857
6,810
2,140
704
590
1,250
750
410
2,040
5,120
3,830
4,324
796
1,150
385
13,620
646
170
12,716
23,046
4,533
14,576
16,585
22,493
19,801
8,538
9,119
23,163
8,419
3,780
1,429
9,988
12,962
19,031
13,819
10,280
23,335
15,597
7,896
39,489
11,101
18,666
6,785
32,783
9,867
11,952
5,683
25,272
19,460
5,887
—
—
—
—
—
—
334
—
—
—
—
—
(1 )
(3 )
(81 )
—
(33 )
—
—
(3 )
(13 )
—
—
—
—
—
—
—
3,324
—
—
—
—
386
—
F - 45
24,531
5,153
14,942
17,314
46,229
20,935
9,081
9,575
26,503
14,708
4,020
2,538
10,618
13,819
25,841
15,959
10,984
23,925
16,847
8,646
39,899
13,141
23,786
10,615
37,107
10,663
13,102
6,068
38,892
20,106
6,057
(9,691 )
1996
(A&C)
(1,953 )
2016
(4,090 )
2011
(4,313 )
1999
(4,718 )
1996
(1,346 )
2017
(156 )
2018
(2,224 )
1994
(125 )
2016
(870 )
2016
(7,521 )
1996
(1,633 )
2016
(1,216 )
2016
(A)
(A&C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(5,798 )
1999
(A&C)
(4,936 )
2013
(1,375 )
2016
(2,096 )
2012
(4,447 )
2015
(936 )
2016
(2,885 )
2014
(1,906 )
2012
(12,231 )
1998
(6,287 )
1995
(1,490 )
2015
(3,527 )
1996
(4,001 )
2014
(9,204 )
1985
(1,496 )
2011
(A)
(A)
(A)
(A&C)
(A)
(A)
(A)
(C)
(A&C)
(A)
(A)
(A)
(A&C)
(A)
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Property Name
Location
Buttonwood Bay MH & RV Resort
Sebring, FL
Encumbrance
D
Byron Center Mobile Village
Caliente Sands
Camelot Villa
Campers Haven RV Resort
Candlelight Manor
Candlelight Village
Canyonlands RV Resort &
Campground (4)
Cape May Crossing
Cape May KOA
Carolina Pines RV Resort (5)
Carriage Cove
Carrington Pointe
Byron Center, MI
Cathedral City, CA
Macomb, MI
Dennisport, MA
South Daytona, FL
Sauk Village, IL
Moab, UT
Cape May, NJ
Cape May, NJ
Longs, SC
Sanford, FL
Ft. Wayne, IN
Castaways RV Resort & Campground
Berlin, MD
Cava Robles RV Resort
Cave Creek
Central Park MH & RV Resort
Chisholm Point Estates
Cider Mill Crossings
Cider Mill Village
Citrus Hill RV Resort
Clear Water Mobile Village
Club Naples
Club Wildwood
Cobus Green Mobile Home Park
Colony in the Wood
Comal Farms
Compass RV Resort (4)
Continental North
Country Acres Mobile Village
Country Hills Village
Paso Robles, CA
Evans, CO
Haines City, FL
Pflugerville, TX
Fenton, MI
Middleville, MI
Dade City, FL
South Bend, IN
Naples, FL
Hudson, FL
Osceola, IN
Port Orange, FL
New Braunfels, TX
St. Augustine, FL
Davison, MI
Cadillac, MI
Hudsonville, MI
Country Meadows Mobile Village
Flat Rock, MI
Country Meadows Village
Caledonia, MI
Country Squire MH & RV Resort
Paisley, FL
A
—
A
—
—
A
—
—
C
—
E
—
A
—
B
—
—
C
A
—
B
C
E
A
—
C
—
A
A
A
B
C
—
Land
1,952
253
1,930
910
14,260
3,140
600
3,661
270
650
5,900
6,050
1,076
14,320
1,396
2,241
2,600
609
520
250
1,170
80
5,780
14,206
762
5,650
1,455
4,151
749
380
340
924
550
520
Depreciable
Assets
Land
Depreciable
Assets
Land
Depreciable
Assets
Total
18,294
2,402
6,710
21,211
11,915
3,867
5,623
7,415
1,693
7,736
—
21,235
3,632
22,277
—
15,343
10,405
5,286
1,568
3,590
2,422
1,270
4,952
21,275
7,037
26,828
1,732
10,480
6,089
3,495
3,861
7,583
5,555
1,719
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
61
—
—
—
16
—
—
—
—
—
296
—
—
F - 46
7,109
2,002
221
11,972
2,395
1,903
11,641
41
476
7,302
10,521
2,341
15,234
5,029
37,097
9,463
1,482
4,354
31,130
2,940
1,268
6,419
2,852
1,005
8,264
445
9,240
37
16,332
3,775
693
19,467
8,218
1,272
1,952
253
1,930
910
14,260
3,140
600
3,661
270
650
5,900
6,050
1,076
14,320
1,396
2,241
2,600
609
520
250
1,170
141
5,780
14,206
762
5,666
1,455
4,151
749
380
340
1,220
550
520
25,403
4,404
6,931
33,183
14,310
5,770
17,264
7,456
2,169
15,038
10,521
23,576
18,866
27,306
37,097
24,806
11,887
9,640
32,698
6,530
3,690
7,689
7,804
22,280
15,301
27,273
10,972
10,517
22,421
7,270
4,554
27,050
13,773
2,991
27,355
4,657
8,861
34,093
28,570
8,910
17,864
11,117
2,439
15,688
16,421
29,626
19,942
41,626
38,493
27,047
14,487
10,249
33,218
6,780
4,860
7,830
13,584
36,486
16,063
32,939
12,427
14,668
23,170
7,650
4,894
28,270
14,323
3,511
Accumulated
Depreciation
(13,596 )
Date
2001
(2,792 )
1996
(358 )
2017
(7,307 )
2013
(1,177 )
2016
(427 )
2016
(9,256 )
1996
(148 )
2018
(185 )
2016
(3,572 )
2013
— 2017
(3,752 )
2014
(6,886 )
1997
(5,015 )
2014
(866 )
2014
(9,209 )
2004
(1,040 )
2016
(5,950 )
1995
(6,890 )
2011
(2,138 )
2011
(297 )
2016
(4,222 )
1986
(2,332 )
2011
(1,886 )
2016
(8,928 )
1993
(466 )
2017
(5,153 )
2000
(193 )
2018
(11,407 )
1996
(4,301 )
1996
(1,286 )
2011
(16,314 )
1994
(2,543 )
2011
(255 )
2016
Acquired (A) or
Constructed (C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A&C)
(A&C)
(C)
(C)
(A)
(A&C)
(A&C)
(A)
(A)
(A)
(A)
(A)
(A)
(A&C)
(A&C)
(A)
(A&C)
(A)
(A)
(A&C)
(A&C)
(A)
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Property Name
Countryside Estates
Countryside Village
Location
Mckean, PA
Great Falls, MT
Countryside Village of Atlanta
Lawrenceville, GA
Countryside Village of Gwinnett
Countryside Village of Lake Lanier
Buford, GA
Buford, GA
Craigleith RV Resort & Campground
Clarksburg, ON
Creekwood Meadows
Burton, MI
Cutler Estates Mobile Village
Grand Rapids, MI
Cypress Greens
Daytona Beach RV Resort
Deer Lake RV Resort & Campground
Deerfield Run
Deerwood
Desert Harbor
Lake Alfred, FL
Port Orange, FL
Huntsville, ON
Anderson, IN
Orlando, FL
Apache Junction,
AZ
Driftwood RV Resort & Campground
Clermont, NJ
Dunedin RV Resort
Dutton Mill Village
Eagle Crest
East Fork Crossing
East Village Estates
Egelcraft
Ellenton Gardens RV Resort
Emerald Coast MH & RV Resort (2)
Fairfield Village
Fiesta Village MH & RV Resort
Fisherman’s Cove
Forest Meadows
Forest View
Dunedin, FL
Caledonia, MI
Firestone, CO
Batavia, OH
Washington Twp,
MI
Muskegon, MI
Ellenton, FL
Panama City
Beach, FL
Ocala, FL
Mesa, AZ
Flint Twp, MI
Philomath, OR
Homosassa, FL
Fort Tatham RV Resort & Campground
Fort Whaley RV Resort & Campground Whaleyville, MD
Four Seasons
Elkhart, IN
Sylva, NC
Frenchtown Villa / Elizabeth Woods
Newport, MI
Friendly Village of La Habra
La Habra, CA
Encumbrance
E
C
C
A
B
—
A
B
E
—
—
C
B
E
D
E
A
D
C
A
D
E
—
B
—
A
A
B
—
C
A
E
D
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Land
Depreciable
Assets
Land
Depreciable
Assets
Land
Depreciable
Assets
Total
320
430
1,274
1,124
1,916
420
808
749
960
2,300
2,830
990
6,920
3,940
1,450
4,400
370
2,015
1,280
1,410
690
2,130
10,330
1,160
2,830
380
1,031
1,330
110
510
500
1,450
26,956
11,610
7,157
10,957
9,539
16,357
705
2,043
6,941
17,518
7,158
4,260
1,607
37,593
14,891
29,851
16,923
8,997
150
6,302
25,413
22,596
7,755
9,070
18,673
4,475
3,438
2,050
22,056
760
5,194
4,811
52,327
25,202
—
—
—
—
—
(1 )
(28 )
404
—
—
—
(1 )
(192 )
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
F - 47
1,534
1,025
9,478
2,418
8,348
458
14,796
3,795
1,882
2,210
358
6,772
4,743
314
2,985
2,370
1,840
30,681
19,369
5,123
2,136
2,121
531
475
1,235
4,369
588
735
788
6,219
3,474
22,607
1,223
320
430
1,274
1,124
1,916
392
1,212
749
960
2,300
2,638
990
6,920
3,940
1,450
4,400
370
2,015
1,280
1,410
690
2,130
10,330
1,160
2,830
380
1,031
1,330
110
510
500
1,450
26,956
13,144
8,182
20,435
11,957
24,705
1,163
16,839
10,736
19,400
9,368
4,618
8,379
42,336
15,205
32,836
19,293
10,837
30,831
25,671
30,536
24,732
9,876
9,601
19,148
5,710
7,807
2,638
22,791
1,548
11,413
8,285
74,934
26,425
13,464
8,612
21,709
13,081
26,621
1,555
18,051
11,485
20,360
11,668
7,256
9,369
49,256
19,145
34,286
23,693
11,207
32,846
26,951
31,946
25,422
12,006
19,931
20,308
8,540
8,187
3,669
24,121
1,658
11,923
8,785
76,384
53,381
Accumulated
Depreciation
(2,042 )
Date
2014
(1,268 )
2014
Acquired (A) or
Constructed (C)
(A)
(A)
(6,080 )
2004
(A&C)
(5,831 )
2004
(11,509 )
2004
(74 )
2016
(9,494 )
1997
(6,665 )
1996
(2,314 )
2015
(845 )
2016
(385 )
2016
(4,135 )
1999
(5,265 )
2015
(2,367 )
2014
(5,689 )
2014
(1,657 )
2016
(2,949 )
2011
(15,698 )
1998
(A)
(A)
(A)
(C)
(A)
(A)
(A)
(A)
(A&C)
(A)
(A)
(A)
(A)
(A)
(C)
(10,734 )
2000
(A&C)
(7,305 )
2012
(4,068 )
2014
(850 )
2016
(518 )
2017
(2,319 )
2015
(868 )
2014
(4,982 )
1993
(1,440 )
1999
(2,748 )
2015
(137 )
2016
(1,077 )
2015
(4,194 )
2000
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(11,053 )
2014
(2,359 )
2016
(A&C)
(A)
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Depreciable
Assets
Land
Depreciable
Assets
Property Name
Friendly Village of Modesto
Friendly Village of Simi
Friendly Village of West Covina
Frontier Town RV Resort &
Campground
Glen Haven RV Resort
Glen Laurel
Location
Modesto, CA
Simi Valley, CA
West Covina, CA
Berlin, MD
Zephyrhills, FL
Concord, NC
Gold Coaster MH & RV Resort
Homestead, FL
Grand Bay
Grand Lakes RV Resort
Grand Mobile Estates
Dunedin, FL
Citra, FL
Grand Rapids, MI
Grand Oaks RV Resort & Campground
Cayuga, ON
Grove Ridge RV Resort
Groves RV Resort
Gulfstream Harbor
Gulliver’s Lake RV Resort &
Campground
Gwynn’s Island RV Resort &
Campground
Hamlin
Heritage
Hickory Hills Village
Hidden Ridge RV Resort
Hidden River RV Resort
Hidden Valley RV Resort &
Campground
High Point Park
Dade City, FL
Ft. Myers, FL
Orlando, FL
Millgrove, ON
Gwynn, VA
Webberville, MI
Temecula, CA
Battle Creek, MI
Hopkins, MI
Riverview, FL
Normandale, ON
Frederica, DE
Hill Country Cottage and RV Resort
New Braunfels, TX
Holiday West Village
Holly Forest Estates
Holland, MI
Holly Hill, FL
Holly Village / Hawaiian Gardens
Holly, MI
Homosassa River RV Resort
Horseshoe Cove RV Resort
Hunters Crossing
Hunters Glen
Homosassa Springs,
FL
Bradenton, FL
Capac, MI
Wayland, MI
Encumbrance
D
D
D
C
E
C
A
—
C
B
—
E
A
—
—
C
B
D
—
C
—
—
—
C
B
D
B
—
E
C
C
Land
6,260
14,906
14,520
20,885
15,986
5,221
18,960
43,166
1,980
1,641
446
3,460
5,280
374
970
1,290
249
14,510
2,950
760
125
13,200
760
440
3,950
2,610
898
3,790
340
920
1,514
1,520
9,466
430
1,102
8,373
453
4,234
6,314
4,501
3,587
4,220
5,387
2,396
78,930
2,950
595
1,675
7,877
7,697
893
6,376
4,170
7,031
27,200
8,067
8,376
13,596
5,020
32,612
1,092
11,926
—
—
—
—
—
—
172
—
—
—
(1 )
(66 )
—
—
—
(1 )
(200 )
—
536
—
—
—
—
(1 )
(3 )
(177 )
(42 )
—
—
—
—
—
—
—
—
F - 48
286
2,750
3,236
5,986
(274 )
2016
Land
6,260
14,906
14,520
18,960
1,980
1,641
618
3,460
5,280
374
904
1,290
249
Depreciable
Assets
Total
22,255
16,890
6,054
62,776
9,663
13,726
10,043
7,180
8,687
7,664
4,876
7,089
6,342
28,515
31,796
20,574
81,736
11,643
15,367
10,661
10,640
13,967
8,038
5,780
8,379
6,591
14,510
84,243
98,753
1,370
904
833
19,610
1,290
13,273
5,809
866
4,186
4,077
656
1,702
3,946
5,313
1,801
13,227
1,017
2,227
3,397
2,459
847
7,433
2,588
866
1,153
5,768
2,019
3,011
1,253
14,989
760
661
13,200
760
440
3,950
2,433
856
3,790
340
920
1,514
1,520
9,466
430
1,102
2,396
14,902
8,894
9,924
4,290
8,835
5,017
14,464
29,788
8,933
9,529
19,364
7,039
35,623
2,345
26,915
3,156
15,563
22,094
10,684
4,730
12,785
7,450
15,320
33,578
9,273
10,449
20,878
8,559
45,089
2,775
28,017
Accumulated
Depreciation
(1,870 )
Date
2016
(1,462 )
2016
(547 )
2016
(6,512 )
2015
(874 )
2016
Acquired (A) or
Constructed (C)
(A)
(A)
(A)
(A)
(A)
(6,996 )
2001
(A&C)
(5,122 )
1997
(596 )
2016
(2,248 )
2012
(3,889 )
1996
(370 )
2016
(607 )
2016
(3,028 )
1997
(10,240 )
2015
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(613 )
2013
(6,811 )
1984
(A&C)
(789 )
2016
(2,950 )
2011
(1,020 )
2011
(709 )
2016
(419 )
2016
(6,972 )
1997
(3,007 )
2016
(2,373 )
2011
(6,307 )
1997
(8,629 )
2004
(652 )
2016
(3,141 )
2016
(490 )
2012
(8,704 )
2004
(A)
(A)
(A)
(A)
(A)
(A)
(A&C)
(A)
(A)
(A)
(A)
(A)
(A)
(C)
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Property Name
Location
Encumbrance
Land
Depreciable
Assets
Land
Depreciable
Assets
Land
Depreciable
Assets
Total
Accumulated
Depreciation
Date
Acquired (A) or
Constructed (C)
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
46,648
50,480
(29,971 )
1996
(A)
Indian Creek Park
Indian Creek RV & Camping Resort
Indian Wells RV Resort
Island Lakes
Ft. Myers Beach,
FL
Geneva on the
Lake, OH
Indio, CA
Merritt Island, FL
Jellystone Park™ at Birchwood Acres
MH & RV Resort
Jellystone Park™ at Gardiner (4)
Jellystone Park™ at Golden Valley (4) (5) Bostic, NC
Jellystone Park™ at Guadalupe River
(4)
Gardiner, NY
Greenfield Park,
NY
Kerrville, TX
Jellystone Park™ at Hill Country (4)
Jellystone Park™ at Larkspur
Jellystone Park™ at Luray(4)
Jellystone Park™ at Maryland (4)
Jellystone Park™ at Memphis (4)
Jellystone Park™ at Quarryville (4)
Jellystone Park™ at Tower Park (4)
Canyon Lake, TX
Larkspur, CO
East Luray, VA
Williamsport, MD
Horn Lake, TN
Quarryville, PA
Lodi, CA
Jellystone Park™ of Western New York North Java, NY
Kensington Meadows
Kimberly Estates
King’s Lake
King’s Pointe
King’s Court Mobile Village
Kings Manor
Kissimmee Gardens
Lansing, MI
Newport, MI
DeBary, FL
Lake Alfred, FL
Traverse City, MI
Lakeland, FL
Kissimmee, FL
Kissimmee South MH & RV Resort
Davenport, FL
Knollwood Estates
La Casa Blanca
La Costa Village
La Hacienda RV Resort
Lafayette Place
Allendale, MI
Apache Junction,
AZ
Port Orange, FL
Austin, TX
Warren, MI
Lafontaine RV Resort & Campground
Tiny, ON
Lake Avenue RV Resort &
Campground
Cherry Valley, ON
D
C
D
D
A
—
—
—
—
—
—
—
A
—
—
A
B
C
D
B
—
—
—
—
A
B
D
C
A
—
—
3,832
420
2,880
700
560
873
4,829
2,519
1,991
1,880
3,164
2,096
889
3,882
2,560
870
250
1,250
280
510
1,473
2,270
3,270
3,740
400
4,370
3,640
3,670
669
1,290
34,660
20,791
19,470
6,431
5,527
28,406
4,260
23,939
20,709
5,521
29,588
23,737
6,846
33,781
29,819
8,884
2,699
6,160
2,542
16,763
13,782
5,578
14,402
6,819
4,061
14,142
62,315
22,225
5,979
2,075
670
1,290
—
(3 )
(5 )
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
269
—
—
—
—
—
—
—
—
(1 )
(1 )
(87 )
(45 )
F - 49
11,988
7,888
3,213
953
7,256
449
9,412
594
74
11,277
476
131
16
59
963
6,801
8,762
10,017
2,808
502
12,730
3,708
1,369
2,763
3,894
592
1,251
926
8,105
1,354
3,832
415
2,880
700
560
873
4,829
2,519
1,991
1,880
3,164
2,096
889
3,882
2,560
870
250
1,250
280
510
1,742
2,270
3,270
3,740
400
4,370
3,640
3,670
669
1,203
28,679
22,683
7,384
12,783
28,855
13,672
24,533
20,783
16,798
30,064
23,868
6,862
33,840
30,782
15,685
11,461
16,177
5,350
17,265
26,512
9,286
15,771
9,582
7,955
14,734
63,566
23,151
14,084
3,429
29,094
25,563
8,084
13,343
29,728
18,501
27,052
22,774
18,678
33,228
25,964
7,751
37,722
33,342
16,555
11,711
17,427
5,630
17,775
28,254
11,556
19,041
13,322
8,355
19,104
67,206
26,821
14,753
4,632
(5,188 )
2013
(A&C)
(1,969 )
2016
(5,292 )
1995
(2,851 )
2013
(669 )
2018
(119 )
2018
(555 )
2018
(428 )
2018
(620 )
2016
(645 )
2018
(539 )
2018
(151 )
2018
(726 )
2018
(661 )
2018
(3,537 )
2013
(A)
(A)
(A)
(A)
(A&C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(6,971 )
1995
(A&C)
(1,772 )
2016
(3,478 )
1994
(2,069 )
2015
(A)
(A)
(A)
(12,318 )
1996
(A&C)
(711 )
2016
(1,351 )
2016
(785 )
2016
(4,173 )
2001
(2,300 )
2014
(7,638 )
2015
(3,421 )
2015
(7,711 )
1998
(236 )
2016
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
505
625
1,795
2,420
(155 )
2016
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Depreciable
Assets
Land
Depreciable
Assets
Property Name
Location
Lake in Wood RV Resort
Lake Josephine RV Resort
Lake Juliana Landings
Lake Pointe Village
Lake Rudolph Campground & RV
Resort
Lake San Marino RV Park
Lakefront
Lakeland RV Resort
Lakeshore Landings
Lakeshore Villas
Lakeside Crossing
Lakeview
Lamplighter
Lazy J Ranch
Leaf Verde RV Resort (4)
Leisure Village
Lemon Wood
Liberty Farm
Lincoln Estates
Narvon, PA
Sebring, FL
Auburndale, FL
Mulberry, FL
Santa Claus, IN
Naples, FL
Lakeside, CA
Lakeland, FL
Orlando, FL
Tampa, FL
Conway, SC
Ypsilanti, MI
Port Orange, FL
Arcata, CA
Buckeye, AZ
Belmont, MI
Ventura, CA
Valparaiso, IN
Holland, MI
Long Beach RV Resort & Campground
Barnegat, NJ
Majestic Oaks RV Resort
Maple Brook
Maplewood Manor
Marco Naples RV Resort
Meadow Lake Estates
Meadowbrook
Meadowbrook Estates
Meadowbrook Village
Meadowlands of Gibraltar
Merrymeeting
Mill Creek MH & RV Resort
Mi-Te-Jo Campground (4)
Moab Valley RV Resort &
Campground (4)
Zephyrhills, FL
Matteson, IL
Brunswick, ME
Naples, FL
White Lake, MI
Charlotte, NC
Monroe, MI
Tampa, FL
Gibraltar, MI
Brunswick, ME
Kissimmee, FL
Milton, NH
Moab, UT
Encumbrance
A
Land
7,360
—
A
D
A
A
D
—
D
B
D
C
B
—
—
C
D
C
—
—
E
D
E
—
—
C
A
B
A
C
—
—
—
490
335
480
2,340
650
21,556
1,730
2,570
3,080
3,520
1,156
1,330
7,100
3,417
360
19,540
66
455
710
3,940
8,460
1,770
2,790
1,188
1,310
431
519
640
250
1,400
1,416
3,693
7,097
2,830
3,048
29,795
28,113
5,760
17,440
5,524
19,481
18,983
31,615
10,903
12,846
6,838
8,437
8,219
6,918
1,201
4,201
3,414
4,725
48,865
12,982
10,458
11,498
6,570
3,320
4,728
7,673
1,020
4,839
7,580
8,732
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
113
—
116
—
—
28
—
—
—
127
—
379
—
—
—
—
—
—
F - 50
2,107
838
1,821
444
8,092
4,576
1,050
1,812
1,351
843
8,838
7,166
695
84
—
1,612
1,068
3,630
2,625
1,174
1,984
574
1,513
2,308
8,277
14,531
14,782
1,249
4,913
881
2,530
482
Land
7,360
490
335
480
2,340
650
21,556
1,730
2,570
3,080
3,520
1,156
1,330
7,100
3,417
473
19,540
182
455
710
3,968
8,460
1,770
2,790
1,315
1,310
810
519
640
250
1,400
1,416
Depreciable
Assets
Total
9,204
3,668
4,869
30,239
36,205
10,336
18,490
7,336
20,832
19,826
40,453
18,069
13,541
6,922
8,437
9,831
7,986
4,831
6,826
4,588
6,709
49,439
14,495
12,766
19,775
21,101
18,102
5,977
12,586
1,901
7,369
8,062
8,976
16,564
4,158
5,204
30,719
38,545
10,986
40,046
9,066
23,402
22,906
43,973
19,225
14,871
14,022
11,854
10,304
27,526
5,013
7,281
5,298
10,677
57,899
16,265
15,556
21,090
22,411
18,912
6,496
13,226
2,151
8,769
9,478
12,669
Accumulated
Depreciation
(2,296 )
Date
2012
(176 )
2016
(3,198 )
1994
(3,619 )
2015
(7,922 )
2014
(5,575 )
1996
(1,608 )
2016
(607 )
2016
(3,222 )
2014
(2,363 )
2015
Acquired (A) or
Constructed (C)
(A)
(A)
(A)
(A)
(A&C)
(A)
(A)
(A)
(A)
(A)
(4,162 )
2015
(A&C)
(8,051 )
2004
(1,629 )
2015
(371 )
2017
(1 )
2018
(2,233 )
2011
(692 )
2016
(A)
(A)
(A)
(A)
(A)
(A)
(2,829 )
1985
(A&C)
(4,150 )
1996
(373 )
2016
(571 )
2016
(7,676 )
2014
(2,255 )
2014
(1,104 )
2016
(13,621 )
1994
(9,507 )
2000
(10,729 )
1986
(4,321 )
1994
(1,848 )
2015
(342 )
2014
(632 )
2016
(166 )
2018
(178 )
2018
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A&C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
244
3,693
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Depreciable
Assets
Land
Depreciable
Assets
Property Name
Location
Mountain View
Napa Valley
Naples RV Resort
New Point RV Resort
New Ranch
North Lake Estates
North Point Estates
Northville Crossing
Oak Creek
Oak Crest
Oak Island Village
Oak Ridge
Oakview Estates
Oakwood Village
Ocean Breeze Jensen Beach MH & RV
Resort
Ocean Breeze MH & RV Resort (6)
Ocean West
Oceanside RV Resort &
Campground (4)
Orange City MH & RV Resort
Orange Tree Village
Orchard Lake
Paddock Park South
Mesa, AZ
Napa, CA
Naples, FL
New Point, VA
Clearwater, FL
Moore Haven, FL
Pueblo, CO
Northville, MI
Coarsegold, CA
Austin, TX
East Lansing, MI
Manteno, IL
Arcadia, FL
Miamisburg, OH
Jensen Beach, FL
Marathon, FL
McKinleyville, CA
Coos Bay, OR
Orange City, FL
Orange City, FL
Milford, OH
Ocala, FL
Palm Creek Golf & RV Resort
Casa Grande, AZ
Palm Key Village
Palm Village
Palos Verdes Shores MH & Golf
Community (2)
Park Place
Park Royale
Parkside Village
Pebble Creek
Pecan Branch
Pecan Park RV Resort
Pelican Bay
Davenport, FL
Bradenton, FL
San Pedro, CA
Sebastian, FL
Pinellas Park, FL
Cheektowaga, NY
Greenwood, IN
Georgetown, TX
Jacksonville, FL
Micco, FL
Encumbrance
B
D
C
C
—
C
C
B
B
B
—
D
—
B
—
—
B
—
C
D
C
—
D
B
—
D
D
D
B
C
C
—
D
Land
5,490
17,740
3,640
1,550
2,270
4,150
1,582
1,236
4,760
4,311
320
1,090
850
1,964
12,325
11,675
2,020
5,259
2,723
3,486
3,027
29,564
11,185
12,611
6,843
36,941
3,881
6,401
19,026
13,862
2,330
5,040
2,718
920
283
395
630
11,836
3,840
2,970
—
1,360
670
550
1,030
1,379
2,000
470
1,770
4,413
3,244
5,540
2,530
4,025
6,601
76,143
15,661
2,849
21,815
48,678
29,046
10,402
5,074
—
5,000
10,543
—
—
—
—
—
—
—
—
—
4,365
—
—
—
—
—
—
345
—
—
15
(3 )
(15 )
—
—
—
—
—
67
—
—
—
235
1,417
—
F - 51
Land
5,490
17,740
3,640
1,550
2,270
4,150
1,582
1,236
4,760
8,676
320
1,090
850
1,964
Depreciable
Assets
Total
12,732
12,355
3,978
9,332
3,667
5,287
7,577
37,924
12,668
20,712
9,813
40,196
5,102
20,584
18,222
30,095
7,618
10,882
5,937
9,437
9,159
39,160
17,428
29,388
10,133
41,286
5,952
22,548
Accumulated
Depreciation
(1,998 )
Date
2014
(1,109 )
2016
(1,108 )
2011
(2,186 )
2013
(293 )
2016
(1,631 )
2011
(3,941 )
2001
(10,422 )
2012
(1,967 )
2014
(8,909 )
2002
(2,798 )
2011
(6,291 )
2014
(415 )
2016
Acquired (A) or
Constructed (C)
(A)
(A)
(A)
(A)
(A)
(A)
(C)
(A)
(A)
(C)
(A)
(A)
(A)
(11,699 )
1998
(A&C)
407
680
1,958
4,073
944
1,801
4,550
8,360
1,483
8,101
2,970
3,255
1,221
14,183
22,498
19,026
36,360
55,386
(2,016 )
2016
(A&C)
(150 )
149
54
2,334
1,121
2,168
1,165
23,627
934
1,174
2,043
2,856
372
292
9,182
10,234
1,051
1,646
2,330
5,385
2,718
920
298
380
630
11,836
3,840
2,970
—
1,427
670
550
1,030
1,614
3,417
470
1,620
4,562
3,298
7,874
3,651
6,193
7,766
99,770
16,595
4,023
23,858
51,534
29,418
10,694
14,256
10,234
6,051
12,189
3,950
9,947
6,016
8,794
3,949
6,573
8,396
111,606
20,435
6,993
23,858
52,961
30,088
11,244
15,286
11,848
9,468
12,659
— 2016
(239 )
2017
(73 )
2018
(2,002 )
2011
(2,642 )
1994
(3,059 )
1999
(632 )
2016
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(23,840 )
2012
(A&C)
(2,067 )
2015
(319 )
2016
(1,986 )
2016
(5,975 )
2015
(3,540 )
2015
(1,646 )
2014
(A)
(A)
(A)
(A)
(A)
(A)
(6,632 )
2000
(A&C)
(2,267 )
1999
(493 )
2016
(1,428 )
2015
(C)
(A)
(A)
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Land
Depreciable
Assets
Land
Depreciable
Assets
Land
Depreciable
Assets
Total
Accumulated
Depreciation
Property Name
Pelican RV Resort & Marina
Pembroke Downs
Peter’s Pond RV Resort
Petoskey KOA RV Resort (4)
Petoskey RV Resort
Pheasant Ridge
Pickerel Park RV Resort &
Campground
Pin Oak Parc
Pine Hills
Pine Ridge
Pine Trace
Pinebrook Village
Pismo Dunes RV Resort
Plantation Landings
Pleasant Lake RV Resort
Pony Express RV Resort &
Campground (4)
Location
Marathon, FL
Chino, CA
Sandwich, MA
Petoskey, MI
Petoskey, MI
Lancaster, PA
Napanee, ON
O’Fallon, MO
Middlebury, IN
Prince George, VA
Houston, TX
Kentwood, MI
Pismo Beach, CA
Haines City, FL
Bradenton, FL
North Salt Lake,
UT
Presidential Estates Mobile Village
Hudsonville, MI
Rainbow MH & RV Resort
Rainbow Village of Largo
Rainbow Village of Zephyrhills
Rancho Alipaz (2)
Rancho Caballero
Rancho Mirage
Red Oaks MH & RV Resort (2)
Regency Heights
Reserve at Fox Creek
Richmond Place
Riptide RV Resort & Marina
River Haven Village
River Ranch
River Ridge Estates
River Run Ranch (4) (5)
Frostproof, FL
Largo, FL
Zephyrhills, FL
San Juan
Capistrano, CA
Riverside, CA
Apache Junction,
AZ
Bushnell, FL
Clearwater, FL
Bullhead City, AZ
Richmond, MI
Key Largo, FL
Grand Haven, MI
Austin, TX
Austin, TX
Granby, CO
Encumbrance
—
D
C
—
—
A
—
—
A
B
C
C
—
D
E
—
B
A
E
—
D
D
B
—
—
D
A
—
C
C
A
—
4,760
9,560
4,700
214
230
2,044
900
1,038
72
405
2,907
130
11,070
3,070
5,220
3,429
680
1,890
4,420
1,800
—
16,560
7,510
5,180
11,330
1,950
501
2,440
1,800
4,690
3,201
8,642
4,742
7,269
22,840
8,676
3,270
19,279
2,125
3,250
544
2,397
17,169
5,692
10,190
30,973
20,403
4,643
6,314
5,682
12,529
9,884
2,856
12,446
22,238
20,499
15,734
20,074
2,040
991
16,967
843
15,090
—
—
—
—
—
—
—
(1 )
(61 )
467
60
—
(3 )
(257 )
—
—
—
—
—
—
—
—
—
16,165
—
—
—
—
—
(3 )
(31 )
—
—
182
—
—
F - 52
1,621
757
3,485
11
3,391
878
1,029
15,333
3,394
13,415
17,555
1,583
866
2,069
2,999
5
6,157
4,210
2,979
1,907
861
1,168
921
4,089
1,565
1,250
3,222
1,724
14,422
42,959
8,941
9,153
4,760
9,560
4,700
214
230
2,044
839
1,505
132
405
2,650
130
11,070
3,070
5,220
3,429
680
1,890
4,420
1,800
16,165
16,560
7,510
5,180
11,330
1,950
470
2,440
1,800
4,872
3,201
8,642
6,363
8,026
26,325
8,687
6,661
20,157
3,154
18,583
3,938
15,812
34,724
7,275
11,056
33,042
23,402
4,648
12,471
9,892
15,508
11,791
3,717
13,614
23,159
24,588
17,299
21,324
5,262
2,715
31,389
43,802
24,031
9,153
11,123
17,586
31,025
8,901
6,891
22,201
3,993
20,088
4,070
16,217
37,374
7,405
22,126
36,112
28,622
8,077
13,151
11,782
19,928
13,591
19,882
30,174
30,669
29,768
28,629
23,274
5,732
5,155
33,189
48,674
27,232
17,795
Date
2016
(576 )
(654 )
2016
(6,334 )
2013
(160 )
2018
(502 )
2016
(10,794 )
2002
(233 )
2016
(8,942 )
1994
(2,313 )
1980
(4,460 )
1986
(13,644 )
2004
(2,193 )
2011
(564 )
2017
(3,882 )
2015
(1,988 )
2016
(118 )
2018
(7,600 )
1996
(2,449 )
2012
(1,356 )
2016
(1,007 )
2016
(310 )
2016
(1,120 )
2016
(3,528 )
2014
(2,134 )
2016
(1,421 )
2016
(3,256 )
2014
(2,530 )
1998
(203 )
2016
(13,636 )
2001
(11,408 )
2000
(11,751 )
2002
— 2018
Acquired (A) or
Constructed (C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A&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&C)
(C)
(C)
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Property Name
Riverside Club
Location
Ruskin, FL
Encumbrance
D
Rock Crusher Canyon RV Resort
Crystal River, FL
Roxbury Park
Royal Country
Royal Palm Village
Royal Palms MH & RV Resort (2)
Rudgate Clinton
Rudgate Manor
Saco / Old Orchard Beach KOA
Saddle Oak Club
Saddlebrook
San Pedro RV Resort & Marina (6)
Sandy Lake MH & RV Resort
Saralake Estates
Savanna Club
Scio Farms Estates
Sea Air Village
Sea Breeze MH & RV Resort (6)
Seaport RV Resort
Goshen, IN
Miami, FL
Haines City, FL
Cathedral City, CA
Clinton Township,
MI
Sterling Heights,
MI
Saco, ME
Ocala, FL
San Marcos, TX
Islamorada, FL
Carrolton, TX
Sarasota, FL
Port St. Lucie, FL
Ann Arbor, MI
Rehoboth Beach,
DE
Islamorada, FL
Old Mystic, CT
Seashore Campsites & RV Resort
Cape May, NJ
Serendipity
Settler’s Rest RV Resort
Shadow Wood Village
Shady Pines MH & RV Resort
Shady Road Villas
Sheffield Estates
North Fort Myers,
FL
Zephyrhills, FL
Hudson, FL
Galloway
Township, NJ
Ocala, FL
Auburn Hills, MI
Shell Creek RV Resort & Marina
Punta Gorda, FL
Sherkston Shores Beach Resort &
Campground
Siesta Bay RV Park
Silver Birches RV Resort &
Campground
Sherkston, ON
Ft. Myers, FL
Lambton Shores,
ON
C
B
E
E
—
A
A
C
D
C
—
—
—
D
B
—
—
C
D
B
—
—
—
—
C
E
—
A
—
Initial Cost to Company
Land
Depreciable
Assets
1,600
420
1,057
2,290
1,730
—
1,090
1,440
790
730
1,703
3,110
730
6,540
12,810
2,300
1,207
7,390
120
1,030
1,160
1,760
4,520
1,060
450
778
2,200
22,750
2,051
66,207
5,542
9,870
20,758
27,446
21,660
23,664
31,110
3,576
6,743
11,843
2,416
17,837
11,403
79,887
22,659
10,179
4,616
290
23,228
23,522
7,685
3,898
3,768
2,819
7,165
9,662
97,164
18,549
880
1,540
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Depreciable
Assets
Land
Depreciable
Assets
Total
5,123
3,162
4,204
2,546
3,248
1,364
8,224
11,129
5,361
1,605
23,412
(1,885 )
1,499
1,027
287
15,500
2,492
(3,397 )
2,481
2,735
3,092
1,468
1,525
1,247
1,051
2,196
1,551
1,600
586
1,057
2,290
1,730
—
1,090
1,440
790
730
1,703
3,110
730
6,540
12,810
2,288
1,207
9,701
120
1,030
1,160
1,760
4,520
1,060
450
778
2,200
(2,107 )
21,620
4,963
2,055
Land
—
166
—
—
—
—
—
—
—
—
—
—
—
—
—
(3 )
(12 )
—
2,311
—
—
—
—
—
—
—
—
—
(1,130 )
(1 )
4
(1 )
(60 )
F - 53
71,330
8,704
14,074
23,304
30,694
23,024
72,930
9,290
15,131
25,594
32,424
23,024
Accumulated
Depreciation
(8,321 )
Date
2015
(1,234 )
2015
(7,229 )
2001
(18,076 )
1994
(3,666 )
2015
(1,946 )
2016
31,888
32,978
(7,712 )
2012
42,239
8,937
8,348
35,255
531
19,336
12,430
80,174
38,159
12,671
1,219
2,771
25,963
26,614
9,153
5,423
5,015
3,870
9,361
11,213
95,057
23,512
43,679
9,727
9,078
36,958
3,641
20,066
18,970
92,984
40,447
13,878
10,920
2,891
26,993
27,774
10,913
9,943
6,075
4,320
10,139
13,413
(10,136 )
2012
(1,577 )
2014
(6,101 )
1995
(11,682 )
2002
— 2016
(1,636 )
2016
(1,072 )
2016
(9,659 )
2015
(24,534 )
1995
(6,626 )
1997
— 2016
(1,076 )
2013
(4,473 )
2014
(3,287 )
2015
(782 )
2016
(388 )
2016
(412 )
2016
(304 )
2016
(4,129 )
2006
(938 )
2016
116,677
25,567
(8,503 )
2016
(15,644 )
1996
Acquired (A) or
Constructed (C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(C)
(A)
(A)
(A)
(A&C)
(A&C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
366
820
1,906
2,726
(161 )
2016
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Land
Depreciable
Assets
Land
Depreciable
Assets
Land
Depreciable
Assets
Total
Accumulated
Depreciation
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Property Name
Silver Creek RV Resort (4)
Location
Mears, MI
Encumbrance
—
Silver Springs
Sky Harbor
Skyline
Smith Creek Crossing (4) (5)
Clinton Township,
MI
Cheektowaga, NY
Fort Collins, CO
Granby, CO
Southern Charm MH & RV Resort
Zephyrhills, FL
Southern Hills / Northridge Place
Stewartville, MN
Southern Pines
Southfork
Southport Springs Golf & Country
Club
Southwood Village
Bradenton, FL
Belton, MO
Zephyrhills, FL
Grand Rapids, MI
Spanish Main MH & RV Resort
Thonotasassa, FL
St. Clair Place
Stonebridge (MI) (5)
Stonebridge (TX)
Stonebrook
Summit Ridge
Sun N Fun RV Resort
Sun Valley
Sun Villa Estates
Suncoast Gateway
Sundance
Sunlake Estates
Sunset Beach RV Resort
St. Clair, MI
Richfield Twp, MI
San Antonio, TX
Homosassa, FL
Converse, TX
Sarasota, FL
Apache Junction,
AZ
Reno, NV
Port Richey, FL
Zephyrhills, FL
Grand Island, FL
Cape Charles, VA
Sunset Harbor at Cow Key Marina
Key West, FL
Sunset Lakes RV Resort
Sunset Ridge (MI)
Sunset Ridge (TX)
Swan Meadow Village
Sweetwater RV Resort
Sycamore Village
Tallowwood Isle
Hillsdale, IL
Portland, MI
Kyle, TX
Dillon, CO
Zephyrhills, FL
Mason, MI
Coconut Creek, FL
B
A
E
—
E
E
—
A
B
—
—
A
—
C
—
C
D
D
B
—
B
D
—
—
—
C
C
E
E
—
—
605
861
2,318
2,260
1,395
4,940
360
1,710
1,000
15,060
300
2,390
501
2,044
2,515
650
2,615
7,014
16,595
24,253
12,120
—
17,366
12,723
3,337
9,011
17,229
11,517
8,159
2,029
—
2,096
14,063
2,092
50,952
117,457
2,750
2,385
594
890
6,290
3,800
8,570
1,840
2,044
2,190
2,140
1,340
390
13,796
18,408
11,773
300
25,306
24,084
24,030
7,636
5,995
—
2,775
19,734
9,113
13,341
20,797
—
—
—
—
—
—
—
—
—
—
—
—
—
246
(3 )
(615 )
—
(883 )
(139 )
(3 )
(3 )
—
(1,100 )
(3 )
—
—
—
—
—
—
(3 )
(9 )
—
—
—
—
—
F - 54
139
3,590
5,522
717
614
2,163
11,694
1,117
8,628
3,111
1,792
2,677
2,321
2,195
6,657
790
21,225
605
861
2,318
2,260
1,395
4,940
360
1,710
1,000
15,060
300
2,390
501
2,290
1,900
650
1,732
7,153
7,758
(142 )
Date
2018
20,185
29,775
12,837
614
19,529
24,417
4,454
17,639
20,340
13,309
10,836
4,350
2,195
8,753
14,853
23,317
21,046
32,093
15,097
2,009
24,469
24,777
6,164
18,639
35,400
13,609
13,226
4,851
4,485
10,653
15,503
25,049
(5,194 )
2012
(4,291 )
2014
(2,027 )
2014
— 2018
(1,715 )
2016
(3,463 )
2014
(376 )
2016
(8,722 )
1997
(2,366 )
2015
(3,596 )
2011
(862 )
2016
(2,169 )
1998
— 1998
(4,727 )
2000
(1,747 )
2015
(8,743 )
2000
6,275
50,813
123,732
174,545
(11,798 )
2016
1,602
1,623
788
975
1,743
—
798
2,390
23,838
6,656
461
1,576
4,213
854
2,750
1,285
594
890
6,290
3,800
8,570
1,840
2,035
2,190
2,140
1,340
390
13,796
20,010
13,396
1,088
26,281
25,827
24,030
8,434
8,385
23,838
9,431
20,195
10,689
17,554
21,651
22,760
14,681
1,682
27,171
32,117
27,830
17,004
10,225
25,873
11,621
22,335
12,029
17,944
35,447
(3,052 )
2014
(8,508 )
1998
(286 )
2016
(3,144 )
2015
(3,079 )
2015
(2,120 )
2016
(672 )
2016
(442 )
2017
(8,527 )
1998
(4,687 )
2000
(2,854 )
2014
(932 )
2016
(5,004 )
2011
(1,815 )
2016
Acquired (A) or
Constructed (C)
(C)
(A)
(A)
(A)
(C)
(A)
(A&C)
(A)
(A)
(A&C)
(A)
(A)
(A)
(C)
(A&C)
(A)
(A&C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(C)
(A&C)
(A)
(A)
(A)
(A)
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Property Name
Location
Tamarac Village MH & RV Resort
Ludington, MI
Encumbrance
—
Tampa East MH & RV Resort
The Colony (2)
The Grove at Alta Ridge
Dover, FL
Oxnard, CA
Thornton, CO
The Hamptons Golf & Country Club
Auburndale, FL
The Hideaway
The Hills
The Ridge
The Sands RV & Golf Resort (4)
The Valley
Key West, FL
Apopka, FL
Davenport, FL
Desert Hot Springs,
CA
Apopka, FL
The Villas at Calla Pointe
Cheektowaga, NY
Three Lakes
Thunderhill Estates
Timber Ridge
Timberline Estates
Hudson, FL
Sturgeon Bay, WI
Ft. Collins, CO
Coopersville, MI
Town & Country Mobile Village
Traverse City, MI
Town & Country Village
Trailside RV Resort & Campground
Lisbon, ME
Seguin, ON
Traveler’s World MH & RV Resort
San Antonio, TX
Treetops RV Resort
Vallecito
Verde Plaza
Victor Villa
Vines RV Resort
Vista Del Lago
Arlington, TX
Newbury Park, CA
Tucson, AZ
Victorville, CA
Paso Robles, CA
Scotts Valley, CA
Vista Del Lago MH & RV Resort
Bradenton, FL
Vizcaya Lakes
Wagon Wheel RV Resort &
Campground
Walden Woods
Warren Dunes Village
Water Oak Country Club Estates
Waters Edge RV Resort
Waverly Shores Village
Port Charlotte, FL
Old Orchard Beach,
ME
Homosassa, FL
Bridgman, MI
Lady Lake, FL
Zephyrhills, FL
Holland, MI
A
—
E
B
—
—
B
—
—
A
C
E
D
B
A
E
—
—
—
D
—
D
C
D
E
C
C
B / D
C
D
E
B
Land
300
734
—
5,370
15,890
2,720
1,790
8,350
3,071
2,530
380
5,050
640
990
535
406
230
3,690
790
730
25,766
710
2,510
890
17,830
3,630
670
590
1,550
310
2,834
1,180
340
Depreciable
Assets
Land
Depreciable
Assets
Land
Depreciable
Assets
Total
12,028
6,310
6,437
37,116
67,555
972
3,869
35,463
12,611
5,660
11,014
3,361
9,008
9,231
4,867
3,736
4,539
3,650
7,952
9,831
9,814
7,069
20,408
7,110
9,456
5,329
4,221
7,703
26,375
3,350
16,706
5,450
7,267
85
—
—
—
—
—
—
—
—
—
—
—
425
—
—
—
—
(1 )
(250 )
—
—
—
—
—
—
—
—
—
—
—
—
2,603
—
450
F - 55
3,549
5,393
922
30
2,278
631
1,166
3,019
542
1,264
160
2,922
1,632
3,079
4,685
1,878
1,721
436
1,791
1,629
1,036
2,709
1,684
1,951
1,123
1,819
566
3,080
1,151
10,143
28,532
1,908
7,528
385
734
—
5,370
15,890
2,720
1,790
8,350
3,071
2,530
380
5,050
1,065
990
535
406
230
3,440
790
730
25,766
710
2,510
890
17,830
3,630
670
590
1,550
310
5,437
1,180
790
15,577
11,703
7,359
37,146
69,833
1,603
5,035
38,482
13,153
6,924
11,174
6,283
10,640
12,310
9,552
5,614
6,260
4,086
9,743
11,460
10,850
9,778
22,092
9,061
10,579
7,148
4,787
10,783
27,526
13,493
45,238
7,358
14,795
15,962
12,437
7,359
42,516
85,723
4,323
6,825
46,832
16,224
9,454
11,554
11,333
11,705
13,300
10,087
6,020
6,490
7,526
10,533
12,190
36,616
10,488
24,602
9,951
28,409
10,778
5,457
11,373
29,076
13,803
50,675
8,538
15,585
Accumulated
Depreciation
(3,887 )
Date
2011
(4,949 )
2005
(628 )
2016
(5,703 )
2014
(8,331 )
2015
(135 )
2016
(419 )
2016
(4,718 )
2015
(287 )
2018
(552 )
2016
(1,709 )
2014
(1,757 )
2012
(1,685 )
2014
(7,964 )
1996
(6,107 )
1994
(3,270 )
1996
(1,058 )
2014
(359 )
2016
(888 )
2016
(992 )
2016
(893 )
2016
(815 )
2016
(1,885 )
2016
(1,828 )
2013
(777 )
2016
(555 )
2016
(535 )
2015
(2,783 )
2013
(3,278 )
2015
(1,829 )
2011
(21,286 )
1993
(633 )
2016
(2,110 )
2011
Acquired (A) or
Constructed (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)
(A)
(A)
(A)
(A&C)
(A&C)
(A)
(A&C)
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
Property Name
West Village Estates
Westbrook Senior Village
Westbrook Village
Westside Ridge
Westward Ho RV Resort &
Campground
Westward Shores Cottages & RV
Resort (4)
Location
Romulus, MI
Toledo, OH
Toledo, OH
Auburndale, FL
Glenbeulah, WI
West Ossipee, NH
White Lake Mobile Home Village
White Lake, MI
Wild Acres RV Resort & Campground
Wildwood Community
Willow Lake RV Resort &
Campground
Willowbrook Place
Old Orchard Beach,
ME
Sandwich, IL
Scotland, ON
Toledo, OH
Willowood RV Resort & Campground
Amherstburg, ON
Windham Hills Estates
Windmill Village
Windsor Woods Village
Wine Country RV Resort
Woodhaven Place
Woodlake Trails
Woodland Lake RV Resort &
Campground
Woodland Park Estates
Woodlands at Church Lake
Woodside Terrace
Subtotal of Properties
Corporate Headquarters and Other (7)
Total
Jackson, MI
Davenport, FL
Wayland, MI
Paso Robles, CA
Woodhaven, MI
San Antonio, TX
Bornholm, ON
Eugene, OR
Groveland, FL
Holland, OH
Southfield, MI
Encumbrance
B
D
B
D
C
—
B
C
D
—
B
—
—
B
C
C
B
C
—
—
—
B
—
884
355
1,110
760
1,050
1,901
672
1,640
1,890
1,260
781
1,160
2,673
7,560
270
1,740
501
1,186
1,650
1,592
2,480
1,063
19,765
3,295
10,462
10,714
5,642
15,326
6,179
26,786
37,732
2,275
7,054
1,490
2,364
36,294
5,835
11,510
4,541
287
2,165
14,398
9,072
9,625
—
—
—
—
—
—
—
—
—
(1 )
(85 )
—
(1 )
(78 )
—
—
—
—
—
(3 )
(1 )
(56 )
(112 )
—
—
—
A These communities collateralize $405.9 million of secured debt.
B These communities collateralize $762.6 million of secured debt.
C These communities support the borrowing base for our secured line of credit, which had $128.0 million outstanding.
D These communities collateralize $1.3 billion of secured debt.
E These communities collateralize $382.8 million of secured debt.
F - 56
Initial Cost to Company
Costs Capitalized
Subsequent to Acquisition
(Improvements)
Gross Amount Carried at
December 31, 2018
Land
Depreciable
Assets
Land
Depreciable
Assets
Land
Depreciable
Assets
4,457
665
5,047
734
884
355
1,110
760
24,222
3,960
15,509
11,448
Total
25,106
4,315
16,619
12,208
Accumulated
Depreciation
(5,730 )
Date
2012
(2,128 )
2001
(8,916 )
1999
(1,386 )
2015
2,589
1,050
8,231
9,281
(1,900 )
2013
Acquired (A) or
Constructed (C)
(A)
(A)
(A)
(A)
(A)
(A)
(A&C)
(A)
(A)
(A)
(A)
(A)
(299 )
2018
(9,585 )
1997
(7,989 )
2013
(5,982 )
2014
(206 )
2016
(6,697 )
1997
(163 )
2016
(11,000 )
1998
(A&C)
(4,567 )
2015
(3,110 )
2011
(2,659 )
2014
(5,147 )
1998
(4,862 )
2000
(240 )
2016
(10,152 )
1998
(1,250 )
2015
(10,368 )
1997
(A)
(A)
(A&C)
(A)
(A&C)
(A)
(A)
(A)
(A)
1,536
10,891
4,425
924
560
4,992
409
20,818
1,566
3,445
3,757
6,407
15,848
435
936
1,954
9,929
1,901
672
1,640
1,890
1,175
781
1,082
2,673
7,560
270
1,740
501
1,130
1,538
1,592
2,480
1,063
16,862
17,070
31,211
38,656
2,835
12,046
1,899
23,182
37,860
9,280
15,267
10,948
16,135
2,600
15,334
11,026
19,554
18,763
17,742
32,851
40,546
4,010
12,827
2,981
25,855
45,420
9,550
17,007
11,449
17,265
4,138
16,926
13,506
20,617
$1,171,638
$
4,592,685
$ 30,307
$ 1,685,224
$1,201,945
$
6,277,909
$ 7,479,854
$ (1,422,583 )
—
—
—
81,092
—
81,092
81,092
(20,047 )
$1,171,638
$
4,592,685
$ 30,307
$ 1,766,316
$1,201,945
$
6,359,001
$ 7,560,946
$ (1,442,630 )
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
(1) Gross amount carried at December 31, 2018, at our Canadian properties, reflects the impact of foreign currency translation.
(2) All or part of this property is subject to ground lease.
(3) Gross amount carried at December 31, 2018 has decreased at this property due to a partial disposition of land or depreciable assets, as applicable.
(4) This property was acquired during 2018. The purchase price allocations and related values shown in the table above are preliminary and may be adjusted as final costs and valuations are determined.
(5) This property was not included in our community count as of December 31, 2018 as it was not fully developed.
(6) This property was impaired as a result of Hurricane Irma in September 2017.
(7) Corporate Headquarters and other fixed assets.
F - 57
SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2018
(amounts in thousands)
The change in investment property for the years ended December 31, 2018, 2017, and 2016 is as follows:
Beginning balance
Community and land acquisitions, including immediate improvements
Community expansion and development
Improvements
Asset impairment
Dispositions and other
Ending balance
The change in accumulated depreciation for the years ended December 31, 2018, 2017, and 2016 is as follows:
Beginning balance
Depreciation for the period
Asset impairment
Dispositions and other
Ending balance
Years Ended December 31,
2018
2017
$
6,882,879 $
6,496,339 $
414,840
152,672
205,006
—
(94,451 )
204,375
88,331
168,315
(10,511 )
(63,970 )
2016
4,573,522
1,822,564
47,958
113,803
—
(61,508 )
$
7,560,946 $
6,882,879 $
6,496,339
Years Ended December 31,
2018
2017
2016
1,237,525 $
253,952
—
1,026,858 $
236,422
(405 )
852,407
201,157
—
(48,847 )
1,442,630 $
(25,350 )
1,237,525 $
(26,706 )
1,026,858
$
$
F - 58
SHAREHOLDER INFORMATION
ANNUAL MEETING
The annual meeting of shareholders will be held at 11:00 a.m.,
May 21, 2019 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, 2018 is available at
no charge to shareholders who direct a written request to:
REGIONAL OFFICES
Austin, Texas
Denver, Colorado
Ft. Myers Beach, Florida
Grand Rapids, Michigan
Orlando, Florida
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
STOC K TRADING INFORMATION
New York Stock Exchange
Ticker Symbol – SUI (Common Stock)
QUARTERLY STOC K PRICE INFORMATION
2018
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
2017
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
HIGH
$108.91
$103.74
$98.99
$92.95
HIGH
$96.08
$91.87
$91.37
$83.76
LOW
$94.63
$95.07
$89.55
$80.12
LOW
$85.27
$84.00
$79.41
$75.76
DISTRIBUTION
$0.71
$0.71
$0.71
$0.71
DISTRIBUTION
$0.67
$0.67
$0.67
$0.67
CORPORATE COUNSEL
Jaffe, Raitt, Heuer & Weiss
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
The Annual CEO Certification was submitted to the NYSE pursuant to NYSE rules and guidelines without qualification on May 31, 2018.
Sun Communities, Inc. has filed, as exhibits to its Annual Report on Form 10-K for the year ended December 31, 2018, 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
Meghan G. Baivier . . . . . . . .Director, Executive Vice President, Chief Financial Officer, and Chief Operating
Officer of Easterly Government Properties, Inc.
Stephanie W. Bergeron. . . .Director, and Financial Consultant at Bluepoint Partners, previously the President
and Chief Executive Officer of Walsh College
Brian M. Hermelin . . . . . . . .Director, Co-Founder and Managing Partner of Rockbridge Growth Equity LLC
Ronald A. Klein. . . . . . . . . . .Director, , Principal at JK Ventures and Chief Executive Officer of Origen Financial, Inc.
Clunet R. Lewis. . . . . . . . . . .Director, Since 1993
Arthur A. Weiss . . . . . . . . . . . Director, Chairman of the Board and Shareholder of Jaffe Raitt Heuer & Weiss, P.C.
NATIONWIDE & CANADA
ARIZONA
CALIFORNIA
COLORADO
CONNECTICUT
DELAWARE
FLORIDA
GEORGIA
ILLINOIS
INDIANA
IOWA
MAINE
MARYLAND
MASSACHUSETTS
MICHIGAN
MINNESOTA
MISSOURI
MONTANA
NEVADA
NEW HAMPSHIRE
NEW JERSEY
NEW YORK
NORTH CAROLINA
OHIO
OREGON
PENNSYLVANIA
SOUTH CAROLINA
TENNESSEE
TEXAS
UTAH
VIRGINIA
WISCONSIN
ONTARIO, CANADA
27777 Franklin Road, Suite 200 • Southfield, Michigan 48034
www.suncommunities.com • NYSE: SUI