Sun Communities
Annual Report 2019

Plain-text annual report

2019 Annual Report And Form 10-K VIZCAYA LAKES- FLORIDA RIVER RUN - COLORADO CAROLINA PINES - SOUTH CAROLINA OCEAN BREEZE - FLORIDA WINE COUNTRY - CALIFORNIA billion in capital to acquire operating properties and fully zoned and entitled land parcels, and the construction of expansion and ground-up development sites. The largest of these capital commitments was the purchase of the Jensen Portfolio, completed in October. This predominantly age-restricted portfolio consisted of over 5,200 sites and nearly 470 expansion sites spread across eight states. Through our expansion and ground-up development activities, we completed 1,200 expansion sites spread across 16 existing communities and constructed 1,100 ground-up development sites that debuted in four newly developed communities and one redeveloped community. We are particularly proud of our new communities which afford us the opportunity to stay on the forefront of new trends and amenities. We are equally proud of having formalized our environmental, social, and governance (ESG) initiatives with our inaugural corporate responsibility report. The formal implementation of our ESG program is important for all of our stakeholders including our team members, residents and guests, the broader communities where we operate and of course, our stockholders. We look forward to sharing results and incremental initiatives annually in our corporate responsibility report. Reflecting on the 2019 year, I am incredibly fortunate to work with such a talented and passionate team. Their hard work has positioned Sun as an industry leader. We are encouraged in what we have been able to accomplish, and despite the current global uncertainty, we remain optimistic in our goals over the long term. Together, we look forward to perpetuating our tradition of industry leading growth. Thank you for your confidence in us. Gary A. Shiffman chairman and chief executive officer LETTER TO OUR STOCKHOLDERS 2019 proved to be an exceptional year for Sun Communities. Through the disciplined and consistent execution of our four core strategies, the Company once again delivered superior growth across our business lines. These included a 12.2 percent increase in total revenues, a 39.5 percent increase in net income per share- and a 7.4 percent increase in Core FFO per share. Our track record for delivering strong organic growth was sustained in 2019 with same community net operating income growing by more than seven percent. These superior same community results, along with our acquisition, expansion and development activity allowed us to deliver another year of industry leading growth for our stockholders. The strength of our 2019 performance and the sound prospects for future growth were key determinants in allowing us to raise our common stock dividend for the fourth consecutive year. We operate in an industry supported by a compelling consumer proposition and favorable demographics. The lifestyle and attractive locations our communities offer to our residents and guests are rare at the price point we compete in. This value proposition keeps our communities substantially full and primed for expansion. In 2019, we once again had an overwhelming amount of applications to live in a Sun Community; in fact, over the last five years, we have averaged over 47,000 applications per year. This demand is an important factor in having over 70 percent of our manufactured housing communities enjoying occupancies of 98 percent or greater, and portfolio-wide occupancy of 96.4 percent at year-end. With respect to our recreational vehicle parks business, over the last decade, our RV resort communities have become an integral part of our strategy and now account for 34 percent of our total sites, the vast majority of which are in irreplaceable locations. For 2019, our recreational resorts achieved an over 12 percent increase in annual revenue and an over 21 percent increase in transient revenue. As part of our strategy to foster growth and increase the durability of our cash flows across our holdings, we have been actively converting our transient sites to annual sites. These conversions can boost revenue on a per-site basis by 40 to 60 percent; and in 2019, we completed over 1,100 conversions. In the midst of the current global pandemic, the world is facing disruption and uncertainty. While Sun anticipates some near and medium term challenges related to this situation, there are a few important items to keep in mind. First, remember that the pandemic is not a permanent condition, but a point in time and we believe that with time, this disruption will cease. Furthermore, we firmly believe that the fundamental thesis of manufactured housing communities and recreational vehicle resorts remains unchanged. We offer unparalleled value to our residents and guests in housing and vacationing options. Our thoughtful capital deployment activity is a vital part of our business. It allows us to grow our revenue base, refresh our communities and provides us with levers for sustaining near and long-term growth. Throughout 2019, Sun deployed $1.2 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, 2019 Commission file number 1-12616 SUN COMMUNITIES INC. (Exact Name of Registrant as Specified in its Charter) Maryland (State of Incorporation) 1-12616 Commission file number 38-2730780 (I.R.S. Employer Identification No.) 27777 Franklin Rd, Suite 200, Southfield, Michigan (Address of Principal Executive Offices) 48034 (Zip Code) (248) 208-2500 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $0.01 par value Trading Symbol(s) SUI Name of each exchange on which registered New York Stock Exchange Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes 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 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 No Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company 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 As of June 30, 2019, the aggregate market value of the Registrant’s stock held by non-affiliates was $11,363,494,077 (computed by reference to the closing sales price of the Registrant’s common stock as of June 30, 2019). 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 13, 2020: 93,319,200 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 2020 annual meeting of stockholders. SUN COMMUNITIES, INC. Table of Contents Description Page Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures 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 Quantitative and Qualitative Disclosures about Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information 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 Exhibits and Financial Statement Schedules Form 10-K Summary 1 8 19 20 31 31 32 35 36 53 54 54 54 54 55 55 55 55 55 56 56 Item Part I. Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. Part II. Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B. Part III. Item 10. Item 11. Item 12. Item 13. Item 14. Part IV. Item 15. Item 16. 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, 2019, we owned, operated or had an interest in a portfolio of 422 properties in 33 states and Ontario, Canada (collectively, the “Properties” or “Communities”), including 266 MH communities, 122 RV communities, and 34 Properties containing both MH and RV sites. As of December 31, 2019, the Properties contained an aggregate of 141,293 developed sites comprised of 93,821 developed MH sites, 26,056 annual RV sites (inclusive of both annual and seasonal usage rights), and 21,416 transient RV sites. There are approximately 10,300 additional MH and RV sites suitable for development. We also own a 50 percent interest in a joint venture formed to establish and grow a manufactured housing community development program in Australia. 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 3,146 full and part time employees as of December 31, 2019. 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. 1 SUN COMMUNITIES, INC. We do not own all of the OP units. As of December 31, 2019, the Operating Partnership had issued and outstanding: • • • • • • 1,283,819 preferred OP units (“Aspen preferred OP units”); 309,234 Series A-1 preferred OP units; 310,424 Series C preferred OP units; 488,958 Series D preferred OP units; 40,268 Series A-3 preferred OP units; 95,600,640 common OP units. As of December 31, 2019, we held: • • no Aspen preferred OP units, Series A-1 preferred OP units, Series C preferred OP units, Series D preferred OP units, or Series A-3 preferred OP units; 93,180,481 common OP units, or approximately 97.5 percent of the issued and outstanding common OP units; In January 2019, we redeemed all 26,750 outstanding Series B-3 preferred OP units. The weighted average redemption price per unit, which included accrued and unpaid distributions, was $100.153424. In the aggregate, we paid $2.7 million to redeem all of the Series B-3 OP units. In December 2019, we converted all outstanding shares of our 6.50 percent Series A-4 Cumulative Convertible Preferred Stock and Series A-4 preferred OP units into common stock and common OP units, respectively. All 1,031,747 shares of Series A-4 preferred stock were converted into 458,541 shares of common stock (net of fractional shares paid in cash) and all 405,656 Series A-4 preferred OP units were converted into 180,277 common OP units (net of fractional shares paid in cash). On January 9, 2020, the Operating Partnership created a new class of OP units named Series E Preferred OP Units in conjunction with the acquisition of a MH community in East Falmouth, Massachusetts. As of February 13, 2020, 90,000 Series E Preferred OP Units were outstanding. 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, 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 D preferred OP units; next, the Series E 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 (or prior to January 1, 2034 with respect to the extended units discussed below), 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 2 SUN COMMUNITIES, INC. 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. Except for Extended Units as discussed below, each Aspen preferred OP unit is entitled to receive distributions in an amount equal to the product of (x) its original per unit issuance price of $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, (or on January 2, 2034, with respect to the Extended Units described below), 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. On January 13, 2020, at the election of certain Aspen preferred OP unit holders, the Operating Partnership extended the automatic redemption date and reduced the annual distribution rate for 270,000 of the Aspen preferred OP units (the “Extended Units”). The Extended Units may be converted at the holder’s election into common OP units at any time before January 1, 2034 using the same formula as for the other Aspen Units. All Extended Units then outstanding must be redeemed by the Operating Partnership on January 2, 2034 at the same redemption price as for the other Aspen preferred OP units. The Extended Units receive annual distributions at a rate of 3.8 percent on their original $27.00 per unit issuance price. As of February 13, 2020, 270,000 of the Extended Units and 1,013,813 other Aspen preferred OP units were outstanding. 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 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 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 percent per year until January 31, 2021, and 4.0 percent 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. 3 SUN COMMUNITIES, INC. Series E Preferred OP Units Subject to certain limitations, each Series E Preferred Unit is exchangeable at any time after the first anniversary of its issuance date into that number of shares of the Company’s common stock equal to the quotient obtained by dividing $100.00 by $145.00 (which ratio is subject to adjustment for certain capital events). The Series E Preferred Units provide for quarterly distributions of 5.25 percent per year until the second anniversary of their issuance date and 5.50 percent per year thereafter. The Series E 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 site within the community. Manufactured homes are available in a wide array of designs, providing owners with a level of customization generally unavailable in 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. Renters at our Properties lease the site on which a manufactured home, vacation rental home, or RV 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 eight of our 422 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. We compete with other available MH and RV communities, and alternative forms of housing (such as on-site constructed homes, condominiums and townhouses) as they provide housing alternatives to potential tenants of MH and RV communities. PROPERTY MANAGEMENT Our property management strategy emphasizes intensive, hands-on management by dedicated, on-site 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, 2019, we employed 3,146 full and part time employees, of which 2,742 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, 10 Divisional Vice Presidents and 36 Regional Vice Presidents. Each Regional Vice President is responsible for regular property inspections, and oversight of property operations and sales functions, semi- annual market surveys of competitive communities, and interaction with local manufactured home dealers for eight to fifteen 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. 4 SUN COMMUNITIES, INC. 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, 2019, SHS had 11,325 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 46,400 applications during 2019 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. Our home sales and leasing operations compete with other local and national MH dealers and MH community 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. 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. SITE LEASES OR USAGE RIGHTS Typical tenant leases for MH sites are year-to-year or month-to-month, 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, 2019, on average 2.2 percent of the homes in our communities have been removed by their owners and 6.5 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 is approximately $7,000. On average, our residents remain in our communities for approximately 12 years, while homes, which give rise to the rental stream, remain for over 40 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. ACQUISITIONS For the year ended December 31, 2019, the Company acquired 47 communities, totaling over 10,000 developed sites and over 900 sites available for expansion, for a total purchase price of approximately $815.2 million. 5 SUN COMMUNITIES, INC. EXPANSION / DEVELOPMENT For the year ended December 31, 2019, the Company completed the construction of approximately 1,230 expansion sites in 16 existing communities. For the year ended December 31, 2019, the Company completed the construction of approximately 1,100 sites at four ground-up developments and one redevelopment community. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The persons listed below are our executive officers. Name Gary A. Shiffman John B. McLaren Karen J. Dearing Jonathan M. Colman Age 65 49 55 64 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. 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 over seven years of experience as the Financial Controller of a privately-owned automotive supplier and over four 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. 6 SUN COMMUNITIES, INC. 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” in this Annual Report on Form 10-K and our other filings with the SEC, such risks and uncertainties include, but are not limited to: • • • • • • • • • • • • • • • • • • • changes in general economic conditions, the real estate industry, and the markets in which we operate; difficulties in our ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully; 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, changes in our expectations or otherwise, except as required by law. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements. 7 SUN COMMUNITIES, INC. 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, 2019, 125 properties, representing approximately 31.6 percent of developed sites, are located in Florida; 72 properties, representing approximately 20.2 percent of developed sites, are located in Michigan; 23 properties, representing approximately 6.5 percent of developed sites, are located in Texas; and 31 properties, representing approximately 5.6 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: • • • • • • • • • 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; zoning or other regulatory restrictions; competition from other available MH and RV communities and alternative forms of housing (such as apartment buildings and site-built single-family homes); 8 SUN COMMUNITIES, INC. • • • our ability to effectively manage, maintain and insure our 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 communities. The number of competitive MH and RV communities in a particular area could have a material adverse effect on our ability to lease sites and increase rents charged at our Properties or at any newly acquired properties. We may be competing with others with greater resources and whose officers and directors have more experience than our officers and directors. In addition, other forms of multi family residential properties, such as private and federally funded or assisted multi-family housing projects and single family housing, provide housing alternatives to potential tenants of MH and RV communities. Our ability to sell or lease manufactured homes may be affected by various factors, which may in turn adversely affect our profitability. SHS operates in the manufactured home market offering manufactured home sales and leasing services to tenants and prospective tenants of our communities. The market for the sale and lease of manufactured homes may be adversely affected by the following factors: • • • • downturns in economic conditions which adversely impact the housing market; an oversupply of, or a reduced demand for, manufactured homes; the difficulty facing potential purchasers in obtaining affordable financing as a result of heightened lending criteria; and an increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to new manufactured home sales. Any of the above listed factors could adversely impact our rate of manufactured home sales and leases, which would result in a decrease in profitability. The cyclical and seasonal nature of the RV industries may lead to fluctuations in our operating results. The RV markets can experience cycles of growth and downturn due to seasonality patterns. In the RV market, certain Properties maintain higher occupancy during the summer months, while 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; • • 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; • we may be unable to finance acquisitions on favorable terms; • acquired properties may fail to perform as expected; 9 SUN COMMUNITIES, INC. • 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 we may be left with no, or limited, recourse, with respect to unknown liabilities. As a result, we may have to pay substantial sums to settle any liabilities asserted against us based upon ownership of newly acquired properties, 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 • 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. 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 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. 10 SUN COMMUNITIES, INC. 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 to affordable 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 permit 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. We subject our Properties 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: • • • • • • • 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. 11 SUN COMMUNITIES, INC. We are dependent on continuous access to the internet to use our cloud-based applications. Damage to, or failure of 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 the 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 us 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. 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, 2019, we had approximately $3.4 billion of total debt outstanding, consisting of approximately $3.2 billion in debt that is collateralized by mortgage liens on 188 of the Properties, $183.9 million on our lines of credit, $35.2 million of mandatorily redeemable interest, and $34.7 million that is preferred OP units - mandatorily redeemable. 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. 12 SUN COMMUNITIES, INC. We are subject to the risks normally associated with debt financing, including the following risks: • • • our cash flow may be insufficient to meet required debt payments, or we may need to dedicate a substantial portion of our cash flow to pay 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 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. The phase out of the London Interbank Offered Rate (LIBOR), or the replacement of LIBOR with a different reference rate, may adversely affect interest rates. On July 27, 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced that it would phase out LIBOR by the end of 2021. Many of our Property-level real estate loans have fixed interest rates which will not be impacted by any change in LIBOR. Certain of our other loans, including a majority of the borrowings under our $750.0 million senior credit facility, have interest rates based on LIBOR. Our senior credit facility provides that we and the administrative agent for the lenders will negotiate an interest rate to replace the current LIBOR-based rate, and if the parties do not negotiate a replacement interest rate, the new rate will be based on the prime rate. The replacement of LIBOR with an alternative rate or benchmark may adversely affect our interest rates and result in higher borrowing costs. This could materially and adversely affect our results of operations, cash flows and liquidity. 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 qualify as a REIT. 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. 13 SUN COMMUNITIES, INC. 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. 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. The Tax Cut and Jobs Act (the “Tax Act”) was enacted into law in December 2017. 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. Partnership tax audit rules could have a material adverse effect on us. The Bipartisan Budget Act of 2015 changed the rules applicable to U.S. federal income tax audits of partnerships. Under the rules, effective for taxable years beginning in 2018, among other changes and subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and a partner’s allocable share thereof) is determined, and taxes, interest, and penalties attributable thereto are assessed and collected, at the partnership level. Unless the partnership makes an election permitted under the new law or takes certain steps to require the partners to pay their tax on their allocable shares of the adjustment, it is possible that partnerships in which we directly or indirectly invest, including the Operating Partnership, would be required to pay additional taxes, interest and penalties as a result of an audit adjustment. We, as a direct or indirect partner of the Operating Partnership and other partnerships, could be required to bear the economic burden of those taxes, interest, and penalties even though the Company, as a REIT, may not otherwise have been required to pay additional corporate-level tax. The changes created by these rules are significant for collecting tax in partnership audits and, accordingly, there can be no assurance that these rules will not have a material adverse effect on us. 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. This would result in unexpected tax liability which would adversely affect our cash flows. 14 SUN COMMUNITIES, INC. 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. 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 initial term of the lease is until October 31, 2026, and the average gross base rent is $18.95 per square foot until October 31, 2020 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 2017-2019, 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 $11.1 million, $7.1 million and $5 million in the years ended December 31, 2019, 2018 and 2017, respectively. Use of Airplane. Gary A. Shiffman is the beneficial owner of an airplane that we use from time to time for business purposes. During the year ended December 31, 2019, we paid $0.4 million for the use of the airplane. Mr. Shiffman may have a conflict of interest with respect to his obligations as our officer and director and his ownership interest in the airplane. Telephone Services. Brian M. Hermelin is a principal and a beneficial owner of an entity that installs and maintains emergency telephone systems at our Properties. During the year ended December 31, 2019, we paid $0.2 million for these services. Mr. Hermelin may have a conflict of interest with respect to his obligations as our director and his position with and ownership interest in the provider of these services. 15 SUN COMMUNITIES, INC. 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 than 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. 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: (a) deter tender offers for the common stock, which offers may be advantageous to stockholders; and (b) 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, none of which is currently outstanding, 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. 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. 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. 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. 16 SUN COMMUNITIES, INC. 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 into 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 or issuances of our common or preferred 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 13, 2020, in the future we may issue to the limited partners of the Operating Partnership, up to approximately 4.4 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 13, 2020, options to purchase 1,500 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 1,041,758 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 13, 2020, 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. 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. 17 SUN COMMUNITIES, INC. 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, 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: (a) its net earnings for the fiscal year in which the distribution is made; (b) its net earnings for the preceding fiscal year; or (c) 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, if any, currently outstanding preferred stock. We may not be able to pay distributions upon events of default under our financing documents. Some of our financing documents contain restrictions on distributions upon the occurrence of events of default thereunder. If such an event of default occurs, such as our failure to pay principal at maturity or interest when due for a specified period of time, we would be prohibited from making payments on our common stock and preferred stock. 18 SUN COMMUNITIES, INC. 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 New York Stock Exchange (“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. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 19 SUN COMMUNITIES, INC. ITEM 2. PROPERTIES As of December 31, 2019, the Properties were located throughout the US and in Ontario, Canada and consisted of 266 MH communities, 122 RV communities, and 34 properties containing both MH and RV sites. As of December 31, 2019, the Properties contained an aggregate of 141,293 developed sites comprised of 93,821 developed manufactured home sites, 26,056 annual RV sites (inclusive of both annual and seasonal usage rights), and 21,416 transient RV sites. There are approximately 10,300 additional MH and RV sites suitable for development. Most of the Properties include amenities oriented toward family and retirement living. Of the 422 Properties, 194 each 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, 2019, the Properties had an occupancy rate of 96.4 percent excluding transient RV sites. Since January 1, 2019, the Properties have averaged an aggregate annual turnover of homes (where the home is moved out of the community) of approximately 2.8 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 7.0 percent. The average renewal rate for residents in our Rental Program was 63.2 percent for the year ended December 31, 2019. 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, 2019. The occupancy percentage includes MH sites and annual RV sites and excludes transient RV sites. Property UNITED STATES MIDWEST Michigan Academy / West Point Allendale Meadows Mobile Village Alpine Meadows Mobile Village Apple Carr Village Arbor Woods Brentwood Mobile Village Broadview Estates Brookside Village Byron Center Mobile Village Camelot Villa Cider Mill Crossings Cider Mill Village Country Acres Mobile Village Country Hills Village Country Meadows Mobile Village Country Meadows Village Creekwood Meadows Cutler Estates Mobile Village Dutton Mill Village East Village Estates MH /RV City State MH and Annual RV Sites as of 12/31/19 Transient RV Sites as of 12/31/19 Occupancy as of 12/31/19 Occupancy as of 12/31/18 MH Canton MH Allendale MH Grand Rapids MH Muskegon MH Ypsilanti MH Kentwood MH Davison MH Kentwood MH Kentwood MH Macomb MH Fenton MH Middleville MH Cadillac MH Hudsonville MH Flat Rock MH Caledonia MH Burton MH Grand Rapids MH Caledonia MH Washington Twp. 20 MI MI MI MI MI MI MI MI MI MI MI MI MI MI MI MI MI MI MI MI 441 352 403 716 458 195 474 196 143 712 621 258 182 239 577 395 336 259 307 708 — 98.2% — 98.9% — 98.3% — 78.5% (1) — 99.1% — 97.4% — 82.3% — 100.0% — 97.9% — 99.0% — 74.6% (1) — 98.4% — 95.1% — 99.6% — 97.7% — 99.5% — 94.0% — 98.8% — 99.7% — 98.6% 97.5% 94.9% 98.0% 79.4% (1) 96.1% 98.5% 77.6% 99.0% 98.6% 98.6% 67.5% (1) 98.4% 99.5% 98.3% 96.9% 98.5% 97.6% 98.1% 99.0% 99.4% Property 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 King's Court Mobile Village 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 Shelby Forest Shelby West Silver Creek RV Resort (2) Silver Springs Southwood Village St. Clair Place Sunset Ridge Sycamore Village Tamarac Village Tamarac Village RV Resort (2) Timberline Estates Town & Country Mobile Village Warren Dunes Village Waverly Shores Village West Village Estates SUN COMMUNITIES, INC. MH and Annual RV Sites as of 12/31/19 458 162 1,140 219 230 283 188 341 425 114 396 290 387 802 161 254 392 256 191 425 453 320 756 250 48 3 185 364 117 721 667 931 913 228 664 644 157 547 394 100 388 396 301 109 296 192 314 415 628 Transient RV Sites as of 12/31/19 Occupancy as of 12/31/19 — 97.4% — 97.5% — 94.6% — 96.8% — 95.7% — 97.5% 100.0% 147 — 100.0% — 96.2% — 98.2% — 97.2% — 94.8% — 98.4% — 90.6% — 97.5% — 96.9% — 98.5% — 98.4% — 99.5% — 98.6% — 96.5% — 100.0% — 99.1% — 97.6% 100.0% 162 N/A 149 — 97.8% — 97.8% — 94.9% — 90.7% — 98.4% — 97.6% — 98.9% — 98.2% — 99.1% — 98.9% 107 100.0% — 98.7% — 99.0% — 90.0% — 78.1% (1) — 98.7% — 99.7% 5 100.0% — 96.6% — 99.0% — 89.2% (1) — 100.0% — 99.0% Occupancy as of 12/31/18 96.9% 95.7% 88.9% (1) 96.3% 98.7% 97.5% 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% 99.0% 99.1% 95.4% 99.7% 99.7% 98.4% 100.0% N/A 100.0% 98.1% 95.7% 85.4% 99.0% 97.9% 99.5% 100.0% N/A (5) N/A (5) 100.0% 99.5% 98.0% 97.0% 65.7% (1) 99.7% 98.7% 100.0% 98.3% 99.0% 87.6% (1) 96.4% 99.4% State 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 MI MI MI MI MI MI MI MI MI MI MI MI MI MI MI City MH /RV 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 Traverse City 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 MH Clinton Township MH Sterling Heights MH Ann Arbor MH Auburn Hills MH Shelby Twp. MH Shelby Twp. RV Mears MH Clinton Township MH Grand Rapids MH St. Clair MH Portland MH Mason MH Ludington RV Ludington MH Coopersville MH Traverse City MH Bridgman MH Holland MH Romulus 21 Property White Lake Mobile Home Village 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 Four Seasons Lake Rudolph Campground & RV Resort (2) Liberty Farm 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) 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 SUN COMMUNITIES, INC. MH and Annual RV Sites as of 12/31/19 315 469 314 220 27,905 State MI MI MI MI Transient RV Sites as of 12/31/19 Occupancy as of 12/31/19 — 98.7% — 95.5% — 99.7% — 98.6% 96.0% 570 Occupancy as of 12/31/18 98.4% 88.9% (1) 98.4% 95.5% 94.6% IN IN IN IN IN IN IN IN IN IN IN OH OH OH OH OH OH OH OH OH TX TX TX TX TX TX TX TX TX TX TX TX TX TX TX 570 468 227 386 175 218 — 220 296 129 398 3,087 176 350 425 511 147 112 344 266 439 2,770 50 126 1,220 400 427 367 27 — — — 654 229 680 848 515 — 95.6% — 93.3% — 95.2% — 96.6% — 93.7% — 95.0% 534 N/A — 95.9% — 93.2% — 98.4% — 98.2% 93.9% 534 — 98.3% — 99.4% 150 100.0% — 98.2% — 97.3% — 100.0% — 98.8% — 98.1% — 93.8% 98.1% 150 93.0% 73.5% (1) 97.8% 93.8% 86.3% 93.6% N/A 95.9% 80.5% (1) 93.8% 97.2% 89.7% 98.9% 99.1% 100.0% 99.0% 95.9% 98.2% 95.6% 97.4% 91.6% 97.2% 100.0% 100.0% 107 136 — 78.9% (1) — 98.0% — 97.7% — 99.7% 100.0% 342 N/A 250 N/A 175 244 N/A — 76.3% (1) — 78.6% (1) — 98.4% — 98.5% — 99.4% 100.0% 100.0% 80.2% (1) 100.0% 100.0% 99.5% 100.0% N/A N/A N/A 99.1% 49.3% (1) 98.8% 99.3% 99.2% City MH /RV MH White Lake MH Jackson MH Wayland MH Woodhaven MH Goshen MH Fort Wayne MH South Bend MH Osceola MH Anderson MH Elkhart RV Santa Claus MH Valparaiso MH Greenwood MH Middlebury MH Goshen MH Amelia MH Batavia RV Geneva on the Lake MH Miamisburg MH Milford MH Toledo MH Toledo MH Toledo MH Holland RV Austin 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 22 Property Saddlebrook Sandy Lake Sandy Lake RV Resort (2) Stonebridge Summit Ridge Sunset Ridge Travelers World Travelers 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 Big Tree RV Resort Blue Heron Pines Blue Jay Blue Jay RV Resort (2) Blueberry Hill (2) Brentwood Estates Buttonwood Bay Buttonwood Bay RV Resort Candlelight Manor Carriage Cove Central Park Central Park Resort 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) Goldcoaster SUN COMMUNITIES, INC. MH and Annual RV Sites as of 12/31/19 562 54 108 335 446 171 8 24 48 316 7,615 Transient RV Sites as of 12/31/19 Occupancy as of 12/31/19 — 97.9% — 98.1% 100.0% 112 — 96.7% — 96.2% — 98.2% — 100.0% 100.0% 131 126 100.0% — 82.0% (1) 1,623 92.0% Occupancy as of 12/31/18 87.7% (1) 100.0% 100.0% 98.8% 97.3% 97.7% 100.0% 100.0% 100.0% 72.2% (1) 92.9% State 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 FL FL FL FL FL FL FL FL FL FL FL FL FL FL FL FL FL FL FL FL 227 207 251 279 367 408 206 32 279 191 407 365 128 467 113 187 136 234 478 383 — 97 25 259 150 569 195 146 42 4 293 300 52 161 522 100.0% 134 — 98.6% — 99.6% 73 100.0% 100.0% 44 — 97.1% — 99.5% 100.0% 23 126 100.0% — 99.0% — 99.5% 100.0% 167 — 96.1% — 99.6% — 90.3% 100.0% 178 100.0% 46 70 100.0% — 99.8% — 98.4% 175 N/A — 97.9% — 100.0% — 98.1% 82 100.0% — 99.5% 44 100.0% 100.0% 48 — 92.9% 155 100.0% — 98.6% — 98.7% — 98.1% 57 100.0% — 99.8% 100.0% 97.1% 99.2% 100.0% 100.0% 96.3% 98.5% 100.0% 100.0% 97.9% 99.8% 100.0% 94.5% 99.1% 92.6% 100.0% 100.0% 100.0% 98.5% 97.7% N/A 90.7% 100.0% 96.5% 100.0% 98.9% 100.0% 100.0% 88.1% 100.0% 98.3% 97.0% 100.0% 100.0% 94.9% City MH /RV 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 Brandenton 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 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 MH Panama City Beach RV Panama City Beach MH Ocala MH Homosassa MH Zephyrhills RV Zephyrhills MH Homestead 23 Property Goldcoaster RV Resort (2) Grand Bay Grand Lakes RV Resort (2) Grove Ridge RV Resort (2) Groves RV Resort (2) Gulfstream Harbor Hacienda Del Rio 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 Kings Manor King’s Pointe Kissimmee Gardens Kissimmee South Kissimmee South RV Resort (2) La Costa Village Lake Josephine RV Resort (2) Lake Juliana Landings Lake Pointe Village 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 SUN COMMUNITIES, INC. City MH /RV RV Homestead MH Dunedin RV Citra RV Dade City RV Fort Myers MH Orlando MH Edgewater RV Riverview MH Holly Hill RV Homosassa Springs RV Bradenton MH Ft. Myers Beach RV Ft. Myers Beach MH Merrit Island MH DeBary MH Lakeland MH Lake Alfred MH Kissimmee MH Davenport RV Davenport MH Port Orange RV Sebring MH Auburndale MH Mulberry 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 Moor Haven MH Arcatia 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 24 State 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 FL FL FL FL FL FL MH and Annual RV Sites as of 12/31/19 11 135 319 161 236 974 730 185 402 104 340 353 975 301 245 239 226 239 142 112 658 111 274 362 264 196 306 280 260 207 221 257 34 133 108 94 209 119 47 — 244 77 4 345 246 188 204 146 475 Transient Occupancy RV Sites as of as of 12/31/19 12/31/19 12 100.0% — 99.3% 100.0% 90 100.0% 85 33 100.0% — 99.2% — 98.9% 128 98.6% — 100.0% 100.0% 120 100.0% 136 — 99.7% 102 100.0% — 100.0% — 100.0% — 95.8% — 98.7% — 100.0% — 91.5% 89 100.0% — 100.0% 100.0% 67 — 98.2% — 99.4% 100.0% 143 100.0% 35 — 99.3% — 99.6% — 99.2% 100.0% 47 80 100.0% — 100.0% — 91.2% 100.0% 23 59 100.0% — 97.9% 63 100.0% — 100.0% — — — 76.2% (1) 100.0% 168 — 100.0% 176 100.0% — 100.0% — 79.3% — 100.0% — 100.0% — 94.9% 8.5% (1) —% Occupancy as of 12/31/18 100.0% 98.5% 100.0% 100.0% 100.0% 97.5% N/A (5) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 99.7% 100.0% 92.5% 99.6% 99.6% 90.1% 100.0% 99.8% 100.0% 98.2% 99.2% 100.0% 100.0% 99.3% 98.6% 96.5% 100.0% 100.0% 100.0% 96.9% 100.0% 100.0% 97.9% 100.0% 99.2% —% (4) —% (4) 64.0% (1) 100.0% 100.0% 100.0% 99.6% 78.7% 99.5% 97.9% 94.7% Property 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 Saddle Oak Club San Pedro Marina San Pedro RV Resort & Marina Saralake Estates Savanna Club Seabreeze Seabreeze 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 Southern Pines Southport Springs Golf & Country Club 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 SUN COMMUNITIES, INC. MH and Annual RV Sites as of 12/31/19 309 15 216 71 394 281 37 396 267 334 103 502 391 23 728 169 864 395 376 — — 202 1,069 — — 338 303 215 130 54 154 738 1 403 107 547 56 235 215 1,018 173 332 408 77 212 273 31 434 829 Transient RV Sites as of 12/31/19 Occupancy as of 12/31/19 — 100.0% 226 N/A — 98.6% 15 100.0% — 99.2% 60 100.0% — 100.0% 100.0% 66 100.0% 42 48 100.0% — 92.2% 415 100.0% — 98.2% 17 100.0% — 84.2% 226 100.0% — 99.9% — 84.3% — 99.7% —% — — —% — 100.0% — 98.4% —% — — —% — 97.9% 75 100.0% — 73.0% (1) — 70.0% — 98.1% 100.0% 31 59 100.0% — 100.0% 100.0% 93 — 97.2% — 98.9% — 87.5% 100.0% 44 — 92.1% 501 100.0% — 98.8% — 100.0% — 96.1% — 98.7% 79 100.0% — 95.6% — 100.0% 235 100.0% — 98.6% Occupancy as of 12/31/18 99.7% N/A 99.5% 100.0% 99.2% 100.0% 100.0% 100.0% 100.0% 100.0% 92.2% 100.0% 97.4% 100.0% 82.6% 100.0% 99.8% 86.1% 99.5% —% (4) —% (4) 100.0% 98.0% —% (4) —% (4) 97.0% 100.0% 99.4% 61.5% 100.0% 100.0% 100.0% 100.0% 100.0% 96.3% 98.9% 91.1% 100.0% 92.1% 100.0% 98.8% 99.7% 94.7% 98.7% 100.0% 95.2% 96.8% 100.0% 98.4% State 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 FL FL FL FL FL FL City MH /RV MH Pinellas Park RV Jacksonville MH Micco RV Marathon MH Haines City RV Jacksonville 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 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 Fort Myers MH Zephyrhills RV Zephyrhills MH Bradenton MH Zephyrhills MH Thontosassa RV Thontosassa 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 25 Property 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) 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) Chula Vista 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 Palos Verdes Shores MH & Golf Community Pembroke Downs Pismo Dunes RV Resort (2) 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) SUN COMMUNITIES, INC. City MH /RV 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 MH Auburndale MH Davenport MH Groveland RV Plymouth MH Rancho Cucamonga MH Cathedral City RV Paso Robles RV San Diego 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 San Pedro MH Chino RV Pismo Beach MH San Juan Capistrano MH Riverside MH Cathedral City RV Cathedral City MH Oxnard RV Desert Hot Springs MH Newbury Park MH Victorville RV Paso Robles 26 State FL FL FL FL FL FL FL FL FL FL FL FL FL FL FL CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA MH and Annual RV Sites as of 12/31/19 13 97 481 148 237 136 32 108 213 213 1,310 140 219 509 291 39,230 Transient RV Sites as of 12/31/19 Occupancy as of 12/31/19 — 84.6% — 100.0% — 99.0% — 100.0% 70 100.0% — 97.8% 100.0% 8 — 91.7% — 100.0% — 99.1% — 91.9% (1) 77 100.0% — 99.5% — 99.6% — 78.4% 97.7% 5,465 51 296 118 — — 330 289 222 157 196 158 — 295 220 231 257 198 130 242 163 330 132 303 439 38 150 244 303 287 — 275 100.0% — 99.3% — 98.3% N/A 332 237 N/A — 99.7% — 98.6% — 100.0% — 100.0% — 100.0% 100.0% 144 360 N/A — 100.0% — 98.6% — 99.6% — 100.0% — 98.0% — 99.2% — 100.0% — 100.0% 1 100.0% — 100.0% — 100.0% — 95.7% — 100.0% — 100.0% 270 100.0% — 100.0% — 99.0% N/A 130 Occupancy as of 12/31/18 92.3% 99.0% 99.2% 100.0% 100.0% 96.3% 100.0% 86.7% 100.0% 99.1% 89.5% (1) 100.0% 99.1% 98.8% 73.9% 97.3% 100.0% 99.7% 99.2% N/A N/A 99.7% 97.2% 100.0% 100.0% 100.0% 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% 100.0% 100.0% 99.0% N/A Property Vista del Lago Wine Country RV Resort (2) California Total Arizona Blue Star / Lost Dutchman Blue Star / Lost Dutchman RV Resort (2) Brentwood West Buena Vista 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 River Run Ranch River Run Ranch RV Resort (2) Skyline Smith Creek Crossing Swan Meadow Village The Grove at Alta Ridge Timber Ridge Colorado Total OTHER Pandion Ridge RV Resort (2) Beechwood Cedar Springs Forest Hill Grove Beach Hillcrest Lakeside Lakeview CT Laurel Heights Marina Cove Millwood SUN COMMUNITIES, INC. MH /RV MH Scotts Valley RV Paso Robles City State CA CA MH Apache Junction RV Apache Junction MH Mesa MH Buckeye 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 Lakespur MH Pueblo MH Granby RV Granby MH Fort Collins MH Granby MH Dillon MH Thornton MH Fort Collins RV Orange Beach MH Killingworth MH Southington MH Southington MH Westbrook MH Uncasville MH Terryville MH Danbury MH Uncasville MH Uncasville MH Uncasville 27 AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ AZ CO CO CO CO CO CO CO CO CO CO CO AL CT CT CT CT CT CT CT CT CT CT MH and Annual RV Sites as of 12/31/19 202 — 5,981 175 97 350 400 205 154 2 198 — 170 506 926 312 311 268 189 4,263 447 441 — 108 36 — 170 52 175 409 585 2,423 — 297 190 188 136 208 76 179 49 25 45 Transient RV Sites as of 12/31/19 Occupancy as of 12/31/19 — 100.0% N/A 203 99.3% 1,952 Occupancy as of 12/31/18 100.0% N/A 99.3% — 96.6% 100.0% 103 — 99.1% — 75.5% — 99.5% — 85.1% 8 100.0% — 100.0% 377 N/A — 97.6% — 60.7% (1) 909 100.0% — 100.0% — 99.0% — 95.9% — 87.8% 91.3% 1,397 95.9% 100.0% 98.9% N/A (5) 99.5% 83.8% 100.0% 100.0% N/A 99.4% 57.0% (1) 100.0% 100.0% 97.7% 94.0% 93.1% 92.4% — 98.9% — 99.5% — N/A — 99.1% 2.8% (1) — N/A 291 — 97.6% — — 100.0% — 99.5% — 99.5% 95.8% 291 5.8% (1) 98.7% 99.8% N/A 97.2% —% N/A 100.0% —% 99.4% 99.5% 99.7% 99.4% 142 N/A — 98.7% — 90.0% — 97.9% — 97.8% — 98.1% — 93.4% — 86.6% — 98.0% — 80.0% — —% (1) N/A N/A (5) N/A (5) N/A (5) N/A (5) N/A (5) N/A (5) N/A (5) N/A (5) N/A (5) N/A (5) Property New England Village Oak Grove Rolling Hills Seaport RV Resort (2) Three Gardens Yankee Village High Point Park Leisure Point Resort Leisure Point RV Resort (2) Massey’s Landing RV Resort (2) Sea Air Village Sea Air Village RV Resort (2) Countryside Village of Atlanta Countryside Village of Gwinnett Countryside Village of Lake Lanier Wymberly Autumn Ridge Candlelight Village Maple Brook Oak Ridge Sunset Lakes RV Resort (2) Wildwood Community Reunion Lake RV Resort (2) Campers Haven RV Resort (2) Peter's Pond RV Resort (2) Castaways RV Resort & Campground (2) Fort Whaley RV Resort & Campground (2) Frontier Town RV Resort & Campground (2) Hyde Park Jellystone Park™ at Maryland (2) Southside Landing Hid'n Pines RV Resort (2) Maplewood Manor 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 Coastal Plantation Fort Tatham RV Resort & Campground (2) Glen Laurel Jellystone Park™ at Golden Valley (2) Meadowbrook Brook Ridge Crestwood SUN COMMUNITIES, INC. City MH /RV MH Westbrook MH Plainville MH Storrs RV Old Mystic MH Southington MH Old Saybrook MH Frederica MH Millsboro RV Millsboro RV Millsboro MH Rehoboth Beach RV Rehoboth Beach MH Lawrenceville MH Buford MH Buford MH Martinez MH Ankeny MH Sauk Village MH Matteson MH Manteno RV Hillsdale MH Sandwich RV Ponchatoula RV Dennisport RV Sandwich RV Berlin RV Whaleyville RV Berlin MH Easton RV Williamsport MH Cambridge RV Old Orchard Beach MH Brunswick MH Brunswick RV Saco MH Lisbon RV Old Orchard Beach RV Old Orchard Beach MH Stewartville MH O'Fallon MH Belton MH Great Falls MH Hampstead RV Sylva MH Concord RV Bostic MH Charlotte MH Hooksett MH Concord 28 State CT CT CT CT CT CT DE DE DE DE DE DE GA GA GA GA IA IL IL IL IL IL LA MA MA MD MD MD MD MD MD ME ME ME ME ME ME ME MN MO MO MT NC NC NC NC NC NH NH MH and Annual RV Sites as of 12/31/19 60 45 200 36 135 23 409 201 277 — 373 119 261 331 548 215 413 309 441 426 225 476 — 224 328 1 — — 240 — 96 66 296 43 — 144 237 314 475 502 474 226 101 59 260 — 321 91 320 Transient RV Sites as of 12/31/19 Occupancy as of 12/31/19 — 100.0% — 100.0% — 79.5% 113 100.0% — 89.6% — 100.0% — 97.3% — 90.0% 100.0% 24 291 —% — 99.2% 15 100.0% — 100.0% — 99.1% — 99.8% — 99.5% — 97.1% — 92.2% — 99.3% — 95.1% 273 100.0% — 98.7% —% 201 100.0% 41 100.0% 78 100.0% 392 N/A 183 685 N/A — 98.3% N/A 228 — 81.3% 255 100.0% — 98.3% — 100.0% 191 N/A — 97.9% 100.0% 49 100.0% 316 — 98.5% — 99.2% — 67.7% — 94.7% — 100.0% 31 100.0% — 100.0% N/A 182 — 100.0% — 100.0% — 98.4% Occupancy as of 12/31/18 N/A (5) N/A (5) N/A (5) 100.0% N/A (5) N/A (5) 96.3% N/A (5) —% —% 100.0% 100.0% 87.4% (1) 98.2% 99.5% N/A (5) 96.6% 93.2% 99.5% 93.2% 100.0% 99.2% —% 100.0% 100.0% 100.0% N/A N/A N/A (5) N/A N/A (5) N/A 99.7% 93.0% N/A 95.8% 100.0% 100.0% 98.1% (1) 98.0% 68.6% 97.3% N/A (5) 100.0% 99.2% N/A 99.7% N/A (5) N/A (5) Property Farmwood Village Glen Ellis Family Campground (2) Hannah Village Hemlocks Mi-Te-Jo Campground (2) River Pines Strafford / Lake Winnipesaukee South KOA Westward Shores Cottages & RV Resort (2) Big Timber Lake RV Camping Resort Cape May Crossing Deep Run Driftwood RV Resort & Campground (2) Lake Laurie RV and Camping Resort 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) Cherrywood 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 Country Village Estates Forest Meadows Oceanside RV Resort & Campground (2) Woodland Park Estates Countryside Estates Jellystone Park™ at Quarryville (2) Lake in Wood RV Resort (2) Pheasant Ridge Carolina Pines RV Resort (2) Country Lakes Crossroads Crossroads RV Resort (2) Lakeside Crossing Ocean Pines Southern Palms Bell Crossing Jellystone Park™ at Memphis (2) River Plantation RV Resort (2) Archview RV Resort & Campground (2) Canyonlands RV Resort & Campground (2) Moab Valley RV Resort & Campground (2) Pony Express RV Resort & Campground (2) SUN COMMUNITIES, INC. City MH State /RV NH MH Dover NH RV Glen NH MH Lebanon NH MH Tilton NH RV Milton NH MH Nashua NH RV Strafford RV West Ossipee NH RV Cape May Court House NJ NJ MH Cape May NJ MH Cream Ridge NJ RV Clemont NJ RV Cape May NJ RV Barnegat NJ RV Cape May NJ MH Galloway Twp. NJ RV Galloway Twp. NV MH Reno NY RV Gansevoort NY MH Clinton NY MH Greenfield Park NY RV Greenfield Park NY RV Gardiner RV North Java MH Cheektowaga MH Cheektowaga MH Cheektowaga MH Oregon City MH Philomath RV Coos Bay MH Eugene MH Mckean RV Quarryville RV Narvon MH Lancaster RV Conway MH Little River MH Aiken RV Aiken MH Conway MH Garden City MH Ladson MH Clarksville RV Horn Lake RV Sevierville RV Moab RV Moab RV Moab RV North Salt Lake 29 NY NY NY NY OR OR OR OR PA PA PA PA SC SC SC SC SC SC SC TN TN TN UT UT UT UT MH and Annual RV Sites as of 12/31/19 159 40 81 103 107 480 — 386 325 28 243 630 374 170 434 39 52 324 302 176 1 103 — 15 156 522 116 518 75 — 398 304 — 276 553 75 136 171 17 688 579 194 237 — — — — — — Transient RV Sites as of 12/31/19 Occupancy as of 12/31/19 — 98.7% 238 100.0% — 100.0% — 99.0% 117 100.0% — 98.8% N/A — 100.0% 114 203 100.0% — 100.0% — 100.0% 100.0% 77 100.0% 255 44 100.0% 100.0% 242 — 100.0% 43 100.0% — 99.7% 100.0% 40 — 80.7% — 100.0% 100.0% 201 N/A 338 344 100.0% — 100.0% — 98.3% — 100.0% — 99.8% — 100.0% N/A 86 — 100.0% — 95.4% N/A 256 100.0% 145 — 100.0% 420 100.0% — 95.6% — 25.7% 5 100.0% — 76.6% (1) — 99.5% — 100.0% — 98.7% N/A 155 N/A 308 N/A 113 N/A 131 N/A 131 N/A 185 Occupancy as of 12/31/18 N/A (5) N/A (5) N/A (5) N/A (5) 100.0% N/A (5) N/A 100.0% 100.0% 100.0% N/A (5) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 99.7% 100.0% N/A (5) 100.0% 100.0% N/A 100.0% 100.0% 96.7% 98.3% N/A (5) 98.7% N/A 99.7% 98.0% N/A 100.0% 100.0% —% N/A (5) N/A (5) —% 82.7% (1) N/A (5) N/A (5) 97.5% N/A N/A N/A N/A N/A N/A SUN COMMUNITIES, INC. Property Slickrock RV Resort & Campground (2) Chincoteague Island KOA RV Resort (3) Gwynn's Island RV Resort & Campground (2) 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) Other Total City MH /RV RV Moab RV Chincoteague RV Gwynn RV East Luray RV New Point MH Prince George RV Cape Charles MH Sturgeon Bay RV Glenbeulah MH and Annual RV Sites as of 12/31/19 — — 107 — 277 376 — 266 225 22,572 Occupancy as of 12/31/19 N/A N/A 100.0% N/A 100.0% Transient RV Sites as of 12/31/19 193 — 22 255 47 — 90.2% (1) N/A — — 98.5% 100.0% 97 96.0% 8,495 Occupancy as of 12/31/18 N/A N/A 100.0% N/A 100.0% 82.4% (1) N/A 93.6% 100.0% 96.7% State UT VA VA VA VA VA VA WI WI US TOTAL / AVERAGE 115,846 20,477 96.3% 96.0% 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 (2) Hidden Valley RV Resort & Campground (2) 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) Trailside RV Resort & Campground (2) Willow Lake RV Resort & Campground (2) Willowood RV Resort & Campground (2) Woodland Lake RV Resort & Campground (2) CANADA TOTAL / AVERAGE RV Allenford RV Clarksburg RV Huntsville RV Cayuga RV Millgrove RV Normandale RV Tiny RV Cherry Valley RV Napanee RV Sherkston RV Lambton Shores RV Seguin RV Scotland RV Amherstburg RV Bornholm ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON 166 85 179 234 198 204 210 124 148 1,454 133 197 371 139 189 4,031 100.0% 23 100.0% 26 100.0% 62 44 100.0% — 100.0% 100.0% 41 100.0% 53 100.0% 12 100.0% 61 100.0% 327 100.0% 29 100.0% 40 100.0% 2 100.0% 188 100.0% 31 100.0% 939 100.0% 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 119,877 21,416 96.4% 96.1% (1) Occupancy in these Properties reflects the fact that these communities are in a lease-up phase following an expansion, redevelopment or initial construction. (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, Strafford, and Chincoteague Island, but do not maintain and operate the property. (4) Occupancy in these Properties at 12/31/2019 reflects redevelopment following asset impairments resulting from Hurricane Irma in September 2017. (5) No occupancy in 2018 as communities were acquired in 2019. 30 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. 31 SUN COMMUNITIES, INC. PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been listed on the NYSE since December 8, 1993, and traded under the symbol “SUI”. On February 13, 2020, the closing share price of our common stock was 165.97 per share on the NYSE, and there were 283 holders of record for the 93,319,200 outstanding shares of common stock. On February 13, 2020, the following OP units of the Operating Partnership were outstanding: OP Units OP units issued and outstanding Exchangeable shares of common stock Aspen preferred OP units Series A-1 preferred OP units Series C preferred OP units Series D preferred OP units Series E preferred OP units Series A-3 preferred OP units Common OP units 1,283,819 307,634 310,424 488,958 90,000 40,268 2,408,210 4,929,313 399,872 750,327 344,571 391,166 62,069 74,917 2,408,210 4,431,132 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 Aspen preferred OP units, Series A-1 preferred OP units, Series C preferred OP units, Series D preferred OP units, Series E preferred OP units, and Series A-3 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 stock and preferred 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, 2019: 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 1,500 $ — 1,500 37.35 — — 974,864 — 974,864 32 SUN COMMUNITIES, INC. Recent Sales of Unregistered Securities From time to time, we may issue shares of common stock in exchange for OP units that may be tendered to the Operating Partnership for redemption in accordance with the terms and provisions of the limited partnership agreement of the Operating Partnership. Such shares are issued based on the exchange ratios and formulas described in “Structure of the Company” under Part I, Item 1 of this Annual Report on Form 10-K. Below is the activity of conversions for the quarter and year ended December 31, 2019: OP units Common OP units Series A-1 preferred OP units Series A-4 preferred OP units Series A-4 preferred stock Series C preferred OP units Three Months Ended December 31, 2019 Year Ended December 31, 2019 Conversion Rate Units / Shares Common Stock Units / Shares Common Stock 1.0000 2.4390 0.4444 0.4444 1.1100 42,471 6,975 — 42,471 17,007 — 485,629 22,707 4,708 1,051,501 467,320 1,062,789 — — 4,014 485,629 55,370 2,092 472,366 4,455 In addition to the shares of common stock issued pursuant to OP unit conversions above, we issued 1,972,876 shares of common stock on October 30, 2019 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 13 publicly traded REITs, for the five year period ending on December 31, 2019. This line graph assumes a $100 investment on December 31, 2014, 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 2019, we updated our peer group, as shown in the “SUI New Peer Group” caption in the table below. 33 SUN COMMUNITIES, INC. Index December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 Sun Communities, Inc. SNL U.S. REIT Residential Index $ $ 100.00 100.00 $ $ 117.89 116.35 $ $ 136.51 122.15 $ $ 170.55 132.87 $ $ 192.54 135.24 $ $ 290.57 172.60 Year Ended $ $ $ $ 95.91 100.00 NYSE Composite Index SUI New Peer Group (1) SUI Old Peer Group (2) 146.89 $ (1) SUI new peer group includes: American Campus Communities, Inc., Apartment Investment and Management Company, AvalonBay Communities, Inc., Camden Property Trust, CubeSmart, Equity Lifestyles Properties, Inc., Essex Property Trust, Inc., Extra Space Storage Inc., Federal Realty Investment Trust, Invitation Homes, Inc., Mid- America Apartment Communities, Inc., The Macerich Company, and UDR, Inc. (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., Federal Realty Investment Trust, Kimco Realty Corp., The Macerich Company, Mid-America Apartment Communities, Inc., UDR, Inc., and Weingarten Realty Investors. 100.00 100.00 116.06 127.46 128.53 118.97 120.98 145.66 107.36 159.20 117.98 120.65 117.90 114.52 127.38 $ $ $ $ $ $ $ $ $ $ $ $ $ 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. 34 SUN COMMUNITIES, INC. 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 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 funds from operations (“FFO”) as a supplemental performance measure. Refer to Non-GAAP Financial Measures in Item 7 below for additional information. Year Ended Financial Information Total revenues Net income Net Income attributable to Sun Communities Inc. common stockholders Basic earnings per share Diluted earnings per share Cash distributions declared per common share FFO common stockholders and dilutive convertible securities Core FFO common stockholders and dilutive convertible securities FFO common stockholders and dilutive convertible securities per share - fully diluted Core FFO common stockholders and dilutive convertible securities per share - fully diluted Balance Sheets Total assets Total debt $ $ $ $ $ $ $ $ $ $ $ $ December 31, 2019 December 31, 2018 (1) December 31, 2017 (1) (In thousands, except for share related data) December 31, 2016 (1) 1,264,037 177,379 160,265 1.80 1.80 $ $ $ $ $ 1,126,825 120,158 105,493 1.29 1.29 $ $ $ $ $ 982,570 81,819 65,021 0.85 0.85 $ $ $ $ $ 833,778 31,471 17,369 0.27 0.26 $ $ $ $ $ 3.00 $ 2.84 $ 2.68 $ 2.60 $ 440,687 456,932 4.75 4.92 7,802,060 3,434,402 $ $ $ $ $ $ 385,615 394,369 4.48 4.58 6,710,026 3,124,303 $ $ $ $ $ $ 320,119 337,384 3.95 4.17 6,111,957 3,079,238 $ $ $ $ $ $ 225,653 266,131 3.22 3.79 5,870,776 3,110,042 3,441,605 $ $ $ $ $ $ $ December 31, 2015 (1) 674,731 170,473 137,325 2.53 2.52 2.60 192,128 210,559 3.31 3.63 4,181,799 2,336,297 2,562,421 Total liabilities (1) Financial information has been revised to reflect certain reclassifications in prior periods to conform to current period presentation. 3,479,112 3,848,104 3,405,204 $ $ $ $ 35 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, 2019, we owned and operated or held an interest in a portfolio of 422 developed properties located in 33 states throughout the United States and one province in Canada, including 266 MH communities, 122 RV communities, and 34 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 2019 Accomplishments • Total revenues for 2019 increased 12.2 percent to $1.3 billion. • Core FFO for 2019 was $4.92 per diluted share and OP unit, an increase of 7.4 percent over 2018. • Achieved Same Community NOI growth of 7.3 percent. • Gained 2,674 revenue producing sites. • Reached Same Community occupancy of 98.4 percent. • Brokered homes sales increased by 3.9 percent to 2,231 in 2019 as compared to 2,147 in 2018. • Achieved 1-year, 3-year and 5-year total shareholder return of 50.9 percent, 112.8 percent and 190.2 percent, respectively, outperforming the MSCI US REIT, Russell 1000, U.S. REIT Residential, and S&P 500 indexes. • Delivered 1,230 expansion sites in 16 communities. • Completed the construction of approximately 1,100 sites at four ground-up developments and one re-development community. • Acquired the Jensen Portfolio containing 31 MH communities in desirable areas along the Atlantic Coast. • Including the Jensen Portfolio, acquired 47 communities, totaling over 10,000 sites, for a total purchase price of $815.2 million. Property Operations Occupancy in our Properties, as well as our ability to increase rental rates, directly affect 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 $ $ $ 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. 36 December 31, 2019 Year Ended December 31, 2018 December 31, 2017 96.4% 98.4% 4.92 597,406 558,296 3,439 11,325 $ $ $ 96.1% 98.0% 4.58 533,321 539,511 3,629 10,994 $ $ $ 95.8% 97.3% 4.17 479,662 386,807 3,282 11,074 SUN COMMUNITIES, INC. Acquisition Activity During the past three years, we have completed acquisitions of over 75 properties with approximately 18,000 sites located in high growth areas and retirement and vacation destinations such as California, Florida, Texas, Arizona and the Eastern United States coastal areas. During 2019, we acquired 47 (1) communities, as detailed below: Community Name Type Sites Development Sites State Month Acquired Slickrock Campground Pandion Ridge Jensen Portfolio (2) Glen Ellis Leisure Point Resort (3) Reunion Lake River Plantation Massey’s Landing RV Shelby Properties (4) Buena Vista Country Village Estates (5) Hid’n Pines RV Hacienda del Rio RV RV MH RV MH / RV RV RV RV MH MH MH RV MH (Age-Restricted) Total 193 142 5,230 244 502 202 309 291 1,308 400 518 321 730 10,390 — UT 351 AL December November 466 Various October 40 NH — DE 69 LA — TN — DE — MI — AZ — OR — ME — FL 926 September September July May February February February January January January (1) Refer to Note 3, “Acquisitions” for information on the Chula Vista, Chincoteague Island KOA RV Resort, and Strafford/Lake Winnipesaukee South KOA RV Resort ground leases not included in the table above. (2) Contains 31 communities located in CT, GA, MD, NH, NJ, NY, NC and SC. In conjunction with the acquisition, we issued 1,972,876 shares of common stock, net of fractional shares paid in cash. (3) Contains 201 MH sites and 301 RV sites. (4) Contains two MH communities. (5) In conjunction with the acquisition, we issued Series D Preferred OP units. As of December 31, 2019, 488,958 Series D Preferred OP units were outstanding. Construction Activity Ground-up Developments - During the year ended December 31, 2019, we constructed nearly 1,100 sites at four ground-up development communities and one re-development located in Colorado, Florida, North Carolina and South Carolina. We expect to construct 550 - 750 sites in 2020. Expansions - We have been focused on expansion opportunities adjacent to our existing communities, and we have developed over 4,600 sites within the past three years. We have expanded approximately 1,230 sites at 16 communities in 2019. We continue to expand our Properties utilizing our inventory of owned and entitled land (approximately 10,300 sites available for development in 84 communities) and expect to construct 1,000 - 1,200 additional expansion sites in 2020. Markets Our Properties are largely concentrated in Florida, Michigan, Texas and California. We have expanded our market share in multiple states through recent acquisitions and increased our property holdings in 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 and millennials. 37 SUN COMMUNITIES, INC. The following table identifies our markets by total sites: Major Market Number of Properties Total Sites % of Total Sites Number of Properties Total Sites % of Total Sites December 31, 2019 December 31, 2018 Florida Michigan Texas California Arizona Ontario, Canada Indiana New Jersey Ohio Colorado New York South Carolina New Hampshire Illinois Connecticut Maine Maryland Delaware Pennsylvania Georgia Virginia Oregon Missouri North Carolina Utah Tennessee Massachusetts Wisconsin Minnesota Iowa Nevada Montana Louisiana Alabama 124 70 23 30 12 15 11 7 9 8 7 1 2 5 1 6 4 2 4 3 5 3 2 3 4 2 2 2 1 1 1 1 — — 371 43,791 27,080 34.1% 21.1% 8,674 7,706 5,259 4,891 3,608 2,916 2,920 2,472 2,118 588 682 2,150 149 1,595 1,382 916 1,519 1,140 1,031 561 976 671 562 392 679 588 475 413 324 226 — — 128,454 6.8% 6.0% 4.1% 3.8% 2.8% 2.3% 2.3% 1.9% 1.6% 0.5% 0.5% 1.6% 0.1% 1.2% 1.1% 0.7% 1.2% 0.9% 0.8% 0.4% 0.8% 0.5% 0.4% 0.3% 0.5% 0.5% 0.4% 0.3% 0.3% 0.2% —% —% 125 72 23 31 13 15 11 8 9 10 8 6 10 5 16 7 6 4 4 4 6 4 2 5 5 3 2 2 1 1 1 1 1 1 44,695 28,475 31.6% 20.2% 9,238 7,933 5,660 4,970 3,621 3,159 2,920 2,714 2,314 2,285 2,236 2,150 2,005 1,911 1,825 1,709 1,534 1,355 1,084 1,077 976 954 753 700 671 588 475 413 324 226 201 142 6.5% 5.6% 4.0% 3.5% 2.6% 2.2% 2.1% 1.9% 1.6% 1.6% 1.6% 1.5% 1.4% 1.4% 1.3% 1.2% 1.1% 1.0% 0.8% 0.8% 0.7% 0.7% 0.5% 0.5% 0.5% 0.4% 0.3% 0.3% 0.2% 0.2% 0.1% 0.1% 422 141,293 38 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 is a non-GAAP financial measure that we believe is helpful to investors as a supplemental measure of operating performance because it is an indicator of the return on property investment and provides a method of comparing property performance over time. We use NOI as a key measure 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 our properties rather than of the Company overall. We believe that GAAP net income (loss) is the most directly comparable measure to NOI. NOI should not be considered to be an alternative to GAAP net income (loss) as an indication of our financial performance or GAAP cash flow from operating activities as a measure of our liquidity; nor is it indicative of funds available for our cash needs, including our ability to make cash distributions. Because of the inclusion of items such as interest, depreciation, and amortization, the use of GAAP 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. FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as GAAP net income (loss), 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. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of our operating performance. 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 GAAP net income (loss). Management believes 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. We also use 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 Core FFO provides enhanced comparability for investor evaluations of period-over-period results. We believe that GAAP net income (loss) is the most directly comparable measure to FFO. The principal limitation of FFO is that it does not replace GAAP net income (loss) as a performance measure or GAAP cash flow from operations as a liquidity measure. Because FFO excludes significant economic components of GAAP net income (loss) including depreciation and amortization, FFO should be used as a supplement to GAAP net income (loss) and not as an alternative to it. Further, 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 is calculated in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that interpret the NAREIT definition differently. 39 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, 2019, 2018, and 2017 (in thousands): Year Ended December 31, 2019 December 31, 2018 December 31, 2017 Net Income attributable to Sun Communities, Inc. common stockholders $ 160,265 $ 105,493 $ Other revenues Home selling expenses General and administrative expenses Catastrophic weather related charges, net Depreciation and amortization Loss on extinguishment of debt Interest expense (Gain) / loss on remeasurement of marketable securities Other (income) / expense, net Income from nonconsolidated affiliates Current tax expense Deferred tax benefit Preferred return to preferred OP units / equity Amounts attributable to noncontrolling interests Preferred stock distribution NOI / Gross Profit Real Property NOI Home Sales NOI / Gross Profit Rental Program NOI Ancillary NOI / Gross Profit Site rent from Rental Program (included in Real Property NOI) (1) (31,984) (27,057) 14,690 93,964 1,737 328,067 16,505 137,851 (34,240) (3,457) (1,374) 1,095 (222) 6,058 9,768 1,288 15,722 81,429 92 287,262 1,190 134,250 3,639 6,453 (790) 595 (507) 4,486 8,443 1,736 65,021 (24,874) 12,457 83,973 8,352 261,536 4,676 131,585 — (8,982) — 446 (582) 4,581 5,055 7,162 $ 700,011 $ 622,436 $ 550,406 Year Ended December 31, 2019 December 31, 2018 December 31, 2017 $ 597,406 $ 533,321 $ 479,662 47,579 104,382 19,449 (68,805) 42,698 95,968 16,064 32,294 92,222 10,061 (65,615) (63,833) NOI / Gross Profit (1) The renter’s monthly payment includes the site rent and an amount attributable to the home lease. The site rent is reflected in Real Property Operations’ segment revenue. For purposes of management analysis, site rent is included in Rental Program revenue to evaluate the incremental revenue gains associated with the implementation of the Rental Program, and to assess the overall growth and performance of the Rental Program and financial impact on the Company’s operations. 700,011 550,406 622,436 $ $ $ 40 SUN COMMUNITIES, INC. Comparison of the Years Ended December 31, 2019, 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, 2019, 2018 and 2017: Financial Information (in thousands) December 31, 2019 December 31, 2018 Change % Change December 31, 2018 December 31, 2017 Change % Change Income from real property $ 925,664 $ 825,973 $ 99,691 12.1% $ 825,973 $ 742,228 $ 83,745 11.3% Year Ended Year Ended Property operating expenses Payroll and benefits Legal, taxes, and insurance Utilities Supplies and repairs Other Real estate taxes Property operating expenses 88,085 10,778 101,910 34,663 30,942 61,880 328,258 74,653 13,432 9,524 93,205 28,594 30,121 56,555 1,254 8,705 6,069 821 5,325 18.0% 13.2% 9.3% 21.2% 2.7% 9.4% 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 35,606 12.2% 292,652 262,566 30,086 Real Property NOI $ 597,406 $ 533,321 $ 64,085 12.0% $ 533,321 $ 479,662 $ 53,659 11.3% 31.1% 11.6% 10.5% 13.6% 8.2% 11.5% 11.2% Other Information Number of properties As of As of December 31, 2019 December 31, 2018 422 371 Change 51 December 31, 2018 December 31, 2017 371 350 Change 21 MH occupancy RV occupancy MH & RV blended occupancy (1) 95.5% 100.0% 96.4% 96.1 % 0.3 % 96.1% 95.8 % 0.3 % Sites available for development 10,293 11,258 (965) 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. (3) Canadian currency figures included within the year ended December 31, 2018 and 2017 have been translated at 2019 and 2018 average exchange rates, respectively. 532 532 458 571 485 554 551 512 533 554 435 455 27 21 20 20 19 17 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ (3) (3) (3) (3) The $64.1 million increase in Real Property NOI from 2018 to 2019 consists of $38.0 million from Same Communities as detailed below and $26.1 million from recently acquired properties in the year ended December 31, 2019 as compared to 2018. The $53.7 million increase in Real Property NOI from 2017 to 2018 consists of $35.6 million from Same Communities as detailed below and $18.1 million from recently acquired properties in the years ended December 31, 2018 as compared to 2017. 41 SUN COMMUNITIES, INC. Real Property Operations - Same Communities A key management tool used when evaluating performance and growth of our properties is a comparison of Same Communities. The Same Community data may change from time-to-time depending on acquisitions, dispositions, management discretion, significant transactions, or unique situations. 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. Year Ended Year Ended December 31, 2019 December 31, 2018 Change % Change December 31, 2018 December 31, 2017 Change % Change $ 805,982 $ 758,853 $ 47,129 6.2 % $ 770,470 $ 724,196 $ 46,274 6.4% Financial Information (in thousands) Income from real property (1) Property operating expenses Payroll and benefits Legal, taxes, and insurance Utilities Supplies and repairs (2) Other Real estate taxes 72,519 9,579 58,044 30,025 19,966 57,553 68,630 9,212 57,309 27,158 20,535 55,667 3,889 367 735 2,867 (569) 1,886 9,175 5.7 % 4.0 % 1.3 % 10.6 % (2.8)% 3.4 % 3.8 % 66,502 9,026 54,949 26,476 19,908 54,098 65,524 7,152 51,480 25,347 19,091 51,695 978 1,874 3,469 1,129 817 2,403 230,959 220,289 10,670 1.5% 26.2% 6.7% 4.5% 4.3% 4.6% 4.8% 7.1% Property operating expenses 247,686 238,511 Real Property NOI $ 558,296 $ 520,342 $ 37,954 7.3 % $ 539,511 $ 503,907 $ 35,604 Other Information Number of properties MH occupancy (3) RV occupancy (3) MH & RV blended occupancy (3) As of As of December 31, 2019 December 31, 2018 345 345 Change — December 31, 2018 December 31, 2017 336 336 Change — 97.9% 100.0% 98.4% 96.2 % (4) 2.2 % 97.4% 100.0% 98.0% 95.8 % (4) 2.2 % Sites available for development 6,314 7,348 (1,034) 7,348 5,087 2,261 Monthly base rent per site - MH $ 577 $ 554 $ 23 $ 554 $ 533 $ 21 Monthly base rent per site - RV (5) Monthly base rent per site - Total (1) The Company adopted ASC 842, the new lease accounting standard, as of January 1, 2019 which required the reclassification of bad debt expense from Property operating expense to Income from real property. To assist with comparability within Same Community results, bad debt expense has been reclassified to be shown as a reduction of Income from real property for all periods presented. 455 431 461 533 511 532 489 557 21 24 28 24 $ $ $ $ $ $ $ $ $ $ $ $ (2) For the comparative periods December 31, 2019 and 2018, the year ended 2018 excludes $0.7 million of expenses incurred for recently acquired properties to bring the properties up to our operating standards. For the comparative periods December 31, 2018 and 2017, the year ended 2017 excludes $2.6 million of expenses incurred for recently acquired properties to bring the properties up to our operating standards. These costs did not meet the Company’s capitalization policy. (3) The occupancy percentages include MH and annual RV sites and exclude recently completed but vacant expansion sites and transient RV sites. (4) The occupancy percentages for 2018 and 2017 have been adjusted to reflect incremental growth period-over-period from filled MH expansion sites and the conversion of transient RV sites to annual RV sites. (5) Monthly base rent pertains to annual RV sites and excludes transient RV sites. 42 SUN COMMUNITIES, INC. Year ended December 31, 2019 and 2018 The Same Community data includes all properties which we have owned and operated continuously since January 1, 2018, exclusive of properties under construction. The amounts in the table above reflect constant currency for comparative purposes. Canadian currency figures included within the year ended December 31, 2018 have been translated at 2019 average exchange rates. We have reclassified $34.7 million and $32.7 million for the years ended December 31, 2019 and 2018, respectively, to reflect the utility expenses associated with our Same Community portfolio net of recovery. The 7.3 percent growth in NOI is primarily due to increased Income from real property of $47.1 million, or 6.2 percent. The 6.2 percent increase is primarily attributable to a 2.2 percent increase in MH & RV blended occupancy and a 4.5 percent increase in total monthly base rent per site when compared to 2018. The increase in Income from real property was partially offset by a $9.2 million, or 3.8 percent, increase in Property operating expenses, primarily attributable to increases in payroll and benefits, supplies and repairs and real estate taxes. Year ended December 31, 2018 and 2017 The Same Community data includes all properties which we have owned and operated continuously since January 1, 2017, exclusive of properties under construction. The amounts in the table above 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. 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 7.1 percent growth in NOI is primarily due to a 6.4 percent increase in Income from real property. The 6.4 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 4.8 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. 43 SUN COMMUNITIES, INC. Home Sales Summary 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, 2019, 2018 and 2017 (in thousands, except for average selling prices and statistical information): Financial Information New homes New home sales New home cost of sales NOI / Gross Profit – new homes Gross margin % – new homes Average selling price – new homes Pre-owned homes Pre-owned home sales Pre-owned home cost of sales NOI / Gross Profit – pre-owned homes Gross margin % – pre-owned homes Average selling price – pre-owned homes Total home sales Revenue from home sales Cost of home sales NOI / Gross Profit – home sales Statistical Information New home sales volume Pre-owned home sales volume Total home sales volume Year Ended Year Ended December 31, 2019 December 31, 2018 Change % Change December 31, 2018 December 31, 2017 Change % Change $ $ $ $ $ $ $ $ 71,760 61,557 10,203 $ $ 59,578 51,913 $ 12,182 20.4 % $ 9,644 18.6 % 59,578 51,913 7,665 $ 2,538 33.1 % $ 7,665 $ $ 36,915 31,578 $ 22,663 20,335 61.4% 64.4% 5,337 $ 2,328 43.6% 14.2% 12.9% 1.3% 12.9% 14.5% (1.6)% 125,674 $ 113,266 $ 12,408 11.0 % $ 113,266 $ 101,975 $ 11,291 11.1% 110,176 $ 106,453 $ 3,723 3.5 % $ 106,453 $ 90,493 $ 15,960 17.6% 72,800 71,420 1,380 1.9 % 71,420 63,536 7,884 12.4% 37,376 $ 35,033 $ 2,343 6.7 % $ 35,033 $ 26,957 $ 8,076 30.0% 33.9% 32.9% 1.0% 32.9% 29.8% 3.1 % 38,416 $ 34,306 $ 4,110 12.0 % $ 34,306 $ 30,991 $ 3,315 10.7% 181,936 134,357 47,579 $ $ 166,031 123,333 $ 15,905 11,024 9.6 % $ 8.9 % 166,031 123,333 42,698 $ 4,881 11.4 % $ 42,698 $ $ 127,408 $ 38,623 95,114 28,219 30.3% 29.7% 32,294 $ 10,404 32.2% 571 2,868 3,439 526 3,103 3,629 45 8.6 % (235) (190) (7.6)% (5.2)% 526 3,103 3,629 362 2,920 3,282 164 183 347 45.3% 6.3% 10.6% Gross Profit - new homes - For the year ended December 31, 2019, the $2.5 million, or 33.1 percent, increase in gross profit is primarily the result of a 8.6 percent increase in new home sales volume coupled with a 11.0 percent increase in the average selling price, as compared to 2018. For the year ended December 31, 2018, the $2.3 million, or 43.6 percent, increase in gross profit is primarily the result of a 45.3 percent increase in new home sales volume coupled with a 11.1 percent increase in the average selling price, as compared to 2017. Gross Profit - pre-owned homes - For the year ended December 31, 2019, the $2.3 million, or 6.7 percent, increase in gross profit is primarily the result of a 12.0 percent increase in the average selling price, which is partially offset by a 7.6 percent decrease in pre-owned home sales volume, as compared to 2018. For the year ended December 31, 2018, the $8.1 million, or 30.0 percent, increase in gross profit is primarily the result of a 10.7 percent increase in the average selling price coupled with a 6.3 percent increase in pre-owned home sales volume as compared to 2017. 44 SUN COMMUNITIES, INC. Rental Program Summary The following table reflects certain financial and other information for our Rental Program for the years ended December 31, 2019, 2018 and 2017 (in thousands, except for statistical information): Financial Information Revenues Year Ended Year Ended December 31, 2019 December 31, 2018 Change % Change December 31, 2018 December 31, 2017 Change % Change Rental home revenue $ 57,572 $ 53,657 $ 3,915 7.3 % $ 53,657 $ 50,549 $ 3,108 6.1 % Site rent from Rental Program (1) Rental Program revenue Expenses Repairs and refurbishment Taxes and insurance Other Rental Program operating and maintenance 68,805 126,377 12,591 7,488 1,916 21,995 65,615 119,272 10,456 6,425 6,423 3,190 7,105 2,135 1,063 4.9 % 6.0 % 20.4 % 16.5 % (4,507) (70.2)% 23,304 (1,309) (5.6)% Rental Program NOI $ 104,382 $ 95,968 $ 8,414 8.8 % $ 65,615 119,272 63,833 114,382 1,782 4,890 10,456 6,425 6,423 23,304 95,968 9,864 6,149 6,147 592 276 276 22,160 92,222 1,144 $ 3,746 $ 2.8 % 4.3 % 6.0 % 4.5 % 4.5 % 5.2 % 4.1 % Other Information Number of sold rental homes 1,140 1,122 18 1.6 % 1,122 1,168 (46) (3.9)% Number of occupied rentals, end of period Investment in occupied rental homes, end of period 11,325 10,994 331 3.0 % 10,994 11,074 (80) (0.7)% $ 584,771 $ 530,006 $ 54,765 10.3 % $ 530,006 $ 494,945 $ 35,061 7.1 % Weighted average monthly rental rate, end of period 5.3 % 48 (1) The renter’s monthly payment includes the site rent and an amount attributable to the home lease. The site rent is reflected in Real Property Operations’ segment revenue. For purposes of management analysis, site rent is included in Rental Program revenue to evaluate the incremental revenue gains associated with the implementation of the Rental Program, and to assess the overall growth and performance of the Rental Program and financial impact on the Company’s operations. 5.1 % $ 949 949 901 997 48 $ $ $ $ $ For the year ended December 31, 2019, Rental Program NOI increased $8.4 million, or 8.8 percent, as compared to 2018. The increase is primarily due to (a) an increase in Rental Program revenue of $7.1 million, or 6.0 percent, primarily attributable to a 5.1 percent increase in the weighted average monthly rental rate and a 3.0 percent increase in the number of occupied rentals, and (b) a decrease in Rental Program operating and maintenance expenses of $1.3 million, or 5.6 percent, resulting primarily from the capitalization of commission expenses under ASC 842 in the year ended December 31, 2019 as compared to 2018. For the year ended December 31, 2018, Rental Program NOI increased $3.7 million, or 4.1 percent, as compared to 2017. The increase is primarily due to (a) an increase in Rental Program revenue of $4.9 million, or 4.3 percent, primarily attributable to a 5.3 percent increase in weighted average monthly rental rates, partially offset by (b) an increase in Rental Program operating and maintenance expenses of $1.1 million, or 5.2 percent, primarily due to higher repairs and refurbishment expense in 2018 as compared to 2017. 45 SUN COMMUNITIES, INC. Other Items - Statements of Operations (1) The following table summarizes other income and expenses for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands): Year Ended Year Ended December 31, 2019 December 31, 2018 Change % Change December 31, 2018 December 31, 2017 Change % Change 16,064 $ 3,385 21.1 % $ 20,852 $ (2,995) (14.4)% $ 6,205 $ 7,922 127.7 % $ 15,722 $ (1,032) (6.6)% $ 16,064 20,852 6,205 15,722 81,429 $ 12,535 15.4 % $ 81,429 92 $ 1,645 1,788.0 % $ 92 287,262 $ 40,805 14.2 % $ 287,262 1,190 $ 15,315 1,287.0 % $ 1,190 134,250 $ 3,601 2.7 % $ 134,250 $ $ $ $ $ $ $ $ $ 10,061 21,179 3,695 12,457 $ $ $ $ 6,003 (327) 2,510 3,265 59.7 % (1.5)% 67.9 % 26.2 % 83,973 $ (2,544) (3.0)% 8,352 $ (8,260) (98.9)% 261,536 $ 25,726 9.8 % 4,676 $ (3,486) (74.6)% 131,585 $ 2,665 2.0 % (3,639) $ 37,879 (1,040.9)% $ (6,453) $ 9,910 (153.6)% $ (3,639) $ (6,453) $ — $ (3,639) N/A 8,982 $ (15,435) (171.8)% 19,449 17,857 14,127 14,690 93,964 1,737 328,067 16,505 137,851 34,240 3,457 1,374 $ $ $ $ $ $ $ $ $ $ $ $ Ancillary revenues, net Interest income Brokerage commissions and other revenues, net Home selling expenses General and administrative expenses Catastrophic weather related charges, net Depreciation and amortization $ $ $ $ $ $ $ Loss on extinguishment of debt $ Interest expense (2) Gain / (loss) on remeasurement of marketable securities $ $ Other income / (expense), net Income from nonconsolidated affiliates Current tax expense Deferred tax benefit Preferred return to preferred OP units / equity Amounts attributable to noncontrolling interests $ $ $ $ $ $ 790 $ 584 73.9 % $ 84.0 % $ (56.2)% $ (500) (285) (1,095) $ (595) $ 222 6,058 9,768 $ $ $ 507 4,486 8,443 $ $ $ 1,572 35.0 % $ 4,486 1,325 15.7 % $ 790 $ (595) $ — $ 790 N/A (446) $ (149) 33.4 % 507 8,443 1,736 $ $ $ $ 582 4,581 5,055 $ $ $ (75) (12.9)% (95) (2.1)% 3,388 67.0 % 7,162 $ (5,426) (75.8)% Preferred stock distribution (1) Only items judgmentally determined by management to be material are explained. (2) Includes interest expense and interest on mandatorily redeemable preferred OP units / equity. 1,736 1,288 (448) $ $ $ (25.8)% $ Ancillary revenues, net - for the year ended December 31, 2019, increased primarily due to increases in golf course, restaurant, and resort activity revenues as compared to 2018. For the year ended December 31, 2018, the increase is 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 as compared to 2017. Interest income - for the year ended December 31, 2019, decreased primarily due to lower balances on our notes receivable and derecognition of collateralized notes receivable in 2019 as we satisfied the criteria of paragraph ASC 860-10-40-5 to be accounted for as a sale. Refer to Note 4, “Collateralized Receivables and Transfers of Financial Assets,” in our accompanying Consolidated Financial Statements for additional information. Brokerage commissions and other revenues, net - for the year ended December 31, 2019, increased primarily due to a $3.1 million increase in brokerage commissions, and a $1.8 million increase in dividend income from our investment in marketable securities, as compared to 2018. For the year ended December 31, 2018, the increase is primarily due to a higher number of broker homes sold during the year as compared to 2017, in addition to a $1.9 million insurance proceeds from business interruption related to Hurricane Irma. Home selling expenses - for the year ended December 31, 2018, increased primarily due to higher commissions driven by a higher home sales volume for the year as compared to 2017. General and administrative expenses - for the year ended December 31, 2019, increased primarily due to an increase in wages and incentives driven by growth in acquisitions and the Company’s performance as compared to 2018. Catastrophic weather related charges, net - for the year ended December 31, 2019, increased primarily due to estimated damage losses for recent weather events. For the year ended December 31, 2018, the decrease is primarily due to a smaller impact from Hurricanes Florence and Michael as compared to a larger impact from Hurricane Irma in 2017. 46 SUN COMMUNITIES, INC. Depreciation and amortization - for the year ended December 31, 2019, increased as a result of our recent property acquisitions and ongoing expansion and development activities. Refer to Note 3, “Real Estate Acquisitions” of our accompanying Consolidated Financial Statements for additional information. Loss on extinguishment of debt - for the year ended December 31, 2019, increased primarily due to higher prepayment penalties related to debt and financing activity as compared to 2018. For the year ended December 31, 2018, the decrease is 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. Gain / (loss) on remeasurement of marketable securities - for the year ended December 31, 2019, increased primarily due to a $34.2 million gain on the remeasurement of our investment in marketable securities as compared to a $3.6 million remeasurement loss in 2018. For the year ended December 31, 2018, the decrease is primarily due to a $3.6 million loss on the remeasurement of our investment in marketable securities. Other income / (expense), net - for the year ended December 31, 2019, increased primarily due to a $4.5 million foreign currency translation gain as compared to a $8.4 million loss in 2018, partially offset by a $3.8 million decrease resulting from a $1.5 million loss on the remeasurement of contingent liability in 2019 as compared to a $2.3 million gain in 2018. For the year ended December 31, 2018, the decrease is primarily due to an $8.4 million foreign currency translation loss as compared to a $5.9 million gain in 2017. Preferred return to preferred OP units / equity - for the year ended December 31, 2019 increased primarily as a result of issuing 488,958 Series D Preferred OP units in conjunction with an acquisition in January 2019. Refer to Note 3, “Acquisitions,” and Note 10, “Equity and Temporary Equity,” of our accompanying Consolidated Financial Statements for additional information. Amounts attributable to noncontrolling interests - for the year ended December 31, 2019 increased primarily as a result of increased performance in our Sun NG Resorts portfolio as compared to 2018. For the year ended December 31, 2018, the increase is due to the acquisition of our Sun NG Resorts portfolio in June 2018 as compared to 2017. Preferred stock distributions - for the year ended December 31, 2018 distributions decreased as compared to 2017 as a result of the redemption of 3.4 million outstanding shares of our 7.125% Series A Cumulative Redeemable Preferred Stock in November 2017. 47 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, 2019, 2018, and 2017 (in thousands, except per share amounts): December 31, 2019 Year Ended December 31, 2018 December 31, 2017 Net income attributable to Sun Communities, Inc. common stockholders $ 160,265 $ 105,493 $ 65,021 Adjustments Depreciation and amortization (Gain) / loss on 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 (4) Adjustments: Transaction costs (1) Other acquisition related costs (2) (Gain) / loss on extinguishment of debt Catastrophic weather related charges, net Loss of earnings - catastrophic weather related (3) Other (income) / expense, net Other adjustments (4) 328,646 (34,240) 8,474 2,610 1,288 288,206 262,211 3,639 7,740 2,206 1,737 — 4,535 2,320 2,107 (26,356) (23,406) (16,075) $ 440,687 $ 385,615 $ 320,119 — 1,146 16,505 1,737 — (3,457) 314 — 1,001 1,190 92 (292) 6,453 310 9,801 2,810 4,676 8,352 292 (8,982) 316 Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (5) $ 456,932 $ 394,369 $ 337,384 Weighted average common shares outstanding - basic 88,460 81,387 76,084 Add Common stock issuable upon conversion of stock options Restricted stock Common stock issuable upon conversion of Series A-4 preferred stock Common stock issuable upon conversion of Series A-4 preferred OP units Common OP units Common stock issuable upon conversion of Series A-3 preferred OP units Common stock issuable upon conversion of Series A-1 preferred OP units Weighted average common shares outstanding - fully diluted 1 454 423 172 2,448 75 784 92,817 2 651 472 — 2,733 75 821 86,141 2 625 585 — 2,756 75 869 80,996 FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per share - fully diluted $ 4.75 $ 4.48 $ 3.95 Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per share - fully diluted (1) 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. 4.58 4.92 4.17 $ $ $ (2) 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. (3) 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. (4) Other adjustments include early retirement compensation expense, ground lease intangible write-off, and deferred tax benefits. (5) The effect of certain anti-dilutive convertible securities is excluded from these items. 48 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. 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 Temporary Equity” in our accompanying Consolidated Financial Statements for additional information. Capital Expenditures Our capital expenditures include expansion sites and development construction costs, lot modifications, recurring capital expenditures and rental home purchases. For the years ended December 31, 2019 and 2018, expansion and development activities of $281.8 million and $152.7 million, respectively, related to costs consisting primarily of construction of sites and other costs necessary to complete home site improvements. The increase is primarily driven by the ground-up developments and redevelopment at five communities. For the years ended December 31, 2019 and 2018, lot modification expenditures were $31.1 million and $22.9 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, 2019 and 2018, recurring capital expenditures were $30.4 million and $24.3 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 certain of our 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. Cash Flow Activities 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 Changes on Cash, Cash Equivalents and Restricted Cash December 31, 2019 $ $ $ $ 476,734 $ (1,010,457) $ 505,880 411 $ $ Year Ended December 31, 2018 December 31, 2017 363,114 $ (733,743) $ 409,905 $ (523) $ 257,983 (401,642) 141,557 298 Cash, cash equivalents, and restricted cash decreased by approximately by $27.5 million from $62.3 million as of December 31, 2018, to $34.8 million as of December 31, 2019. 49 SUN COMMUNITIES, INC. Operating Activities - Net cash provided by operating activities increased by $113.6 million from $363.1 million for the year ended December 31, 2018 to $476.7 million for the year ended December 31, 2019. 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 $1.0 billion for the year ended December 31, 2019, compared to $733.7 million for year ended December 31, 2018. Refer to Note 3, “Real Estate Acquisitions” in our accompanying Consolidated Financial Statements for additional information. Financing Activities - Net cash provided by financing activities was $505.9 million for the year ended December 31, 2019, compared to $409.9 million for the year ended December 31, 2018. Refer to Note 9, “Debt and Lines of Credit” and Note 10, “Equity and Temporary Equity” in our accompanying Consolidated Financial Statements for additional information. Financial Flexibility In July 2017, we entered into an at the market offering sales agreement (as amended, 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, 2019, we have sold shares of our common stock for gross proceeds of $163.8 million under the Sales Agreement. Refer to Note 10, “Equity and Temporary Equity” in our accompanying Consolidated Financial Statements for additional information. In October 2019, we assumed a term loan facility with Citibank N.A. (“Citibank”), in the amount of $58.0 million. The term loan has a four-year term ending October 29, 2023, and bears interest at a floating rate based on the Eurodollar rate or Prime rate. The outstanding balance was $57.0 million at December 31, 2019. In May 2019, we amended and restated our credit agreement with Citibank, N.A. and certain other lenders. Pursuant to the credit agreement, we entered into a senior credit facility with Citibank and certain other lenders in the amount of $750.0 million, comprised of a $650.0 million revolving loan, with the ability to use up to $100.0 million for advances in Australian dollars, and a $100.0 million term loan (the “A&R Facility”). We have until March 17, 2020 to draw on the term loan. As of December 31, 2019, we had not drawn any funds on the term loan. The credit agreement has a four-year term ending May 21, 2023, which can be extended for two additional six-month periods, subject to the satisfaction of certain conditions as defined in the credit agreement. The credit agreement also provides for, subject to the satisfaction of certain conditions, additional commitments in an amount not to exceed $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 $1.1 billion. The A&R Facility bears interest at a floating rate based on the Eurodollar rate or Bank Bill Swap Bid Rate plus a margin that is determined based on our leverage ratio calculated in accordance with the credit agreement, which margin can range from 1.20 percent to 2.10 percent for the revolving loan and 1.20 percent to 2.05 percent for the term loan. As of December 31, 2019, the margin based on our leverage ratio was 1.20 percent on the revolving loan and 1.20 percent on the term loan. We had $123.6 million and zero of borrowings on the revolving loan and the term loan, respectively, as of December 31, 2019. 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, 2019 and December 31, 2018, approximately $2.8 million and $3.9 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, 2019 Maximum Leverage Ratio Minimum Fixed Charge Coverage Ratio Minimum Tangible Net Worth Maximum Dividend Payout Ratio <65.0% >1.40 >$3,257,121 <95.0% 26.8% 3.52 $5,633,050 58.0% 50 SUN COMMUNITIES, INC. We anticipate meeting our long-term liquidity requirements, such as scheduled debt maturities, large property acquisitions, expansion and development of 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, 2019, we had 234 unencumbered properties, of which 65 support the borrowing base for our $650.0 million revolving loan in our A&R Facility and 31 support the borrowing base for a term loan facility. 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 of 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. As of December 31, 2019, our net debt to enterprise value was approximately 19.0 percent (assuming conversion of all common OP units, Series A-1 preferred OP units, Series A-3 preferred OP units, Series C preferred OP units and Series D preferred OP units to shares of common stock). Our debt has a weighted average maturity of approximately 11.1 years and a weighted average interest rate of 4.0 percent. Off-Balance Sheet Arrangements Our off-balance sheet investments include nonconsolidated affiliates. These investments all have varying ownership structures. Substantially all of our nonconsolidated affiliates are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control, over the operating and financial decisions of these joint venture arrangements. Refer to Note 7,"Investments in Nonconsolidated Affiliates" and Note 9, "Debt and Lines of Credit" in the accompanying consolidated financial statements, for additional information on our off-balance sheet investments. Nonconsolidated Affiliate Indebtedness - During September 2019, GTSC, LLC entered into a warehouse line of credit with a maximum loan amount of $125.0 million. As of December 31, 2019, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by GTSC was approximately $123.4 million (of which our proportionate share is approximately $49.4 million). The debt bears interest at a variable rate based on LIBOR plus 1.65 percent per annum and matures on September 15, 2023. Refer to Note 7,"Investments in Nonconsolidated Affiliates" for additional information on our nonconsolidated affiliates. 51 SUN COMMUNITIES, INC. Contractual Cash Obligations Our primary long-term liquidity needs are principal payments on outstanding indebtedness. As of December 31, 2019, our outstanding contractual obligations, including interest expense, were as follows: Contractual Cash Obligations (1) Collateralized term loans - Life Companies Collateralized term loans - FNMA Collateralized term loans - CMBS Collateralized term loans - FMCC Preferred Equity - Sun NG Resorts - mandatory redeemable Preferred OP units - mandatorily redeemable Lines of credit Total principal payments Interest expense (2) Operating leases Finance lease Payments Due By Period (In thousands) Total Due <1 year 1-3 years 3-5 years $ $ $ $ 1,716,587 697,449 397,963 376,473 35,249 34,663 183,898 3,442,282 1,202,326 45,083 4,540 $ $ $ $ $ 36,319 29,623 8,075 6,502 — — 10,000 90,519 138,025 2,397 120 $ $ $ 93,232 56,375 189,243 13,883 35,249 — 23,293 411,275 250,970 4,929 240 82,444 78,349 198,524 259,317 — 34,663 150,605 803,902 206,271 5,465 4,180 After 5 years 1,504,592 $ 533,102 2,121 96,771 — — — 2,136,586 607,060 32,292 — $ $ Total contractual cash obligations $ 4,694,231 $ 231,061 $ 667,414 $ 1,019,818 $ 2,775,938 (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, 2019 (including finance leases), 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. 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 Nonconsolidated Affiliate Indebtedness - During September 2019, GTSC entered into a warehouse line of credit with a maximum loan amount of $125.0 million. As of December 31, 2019, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by GTSC was approximately $123.4 million (of which our proportionate share is approximately $49.4 million). The debt bears interest at a variable rate based on LIBOR plus 1.65 percent per annum and matures on September 15, 2023. 52 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 $183.9 million and $128.0 million as of December 31, 2019 and 2018, 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 $2.6 million and $2.4 million for the years ended December 31, 2019 and 2018, respectively, based on the $259.4 million and $235.9 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, 2019 and 2018, our stockholder’s equity included $202.5 million and $141.4 million from our Canadian subsidiaries and Australian equity investments, respectively, which represented 5.2 percent and 4.6 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 $20.2 million and $14.1 million to our total stockholder’s equity at December 31, 2019 and 2018, respectively. 53 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, 2019. Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2019. 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, 2019, 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, 2019. Based on management’s assessment, we have concluded that our internal control over financial reporting was effective at December 31, 2019. 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, 2019. ITEM 9B. OTHER INFORMATION None. 54 SUN COMMUNITIES, INC. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Pursuant to the general instructions 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 2020 annual meeting (the “Proxy Statement,”) including the information set forth under the captions “Proposal No.1 Election of Directors - Consideration of Director Nominees,” “Corporate Governance - Board of Directors,” “Corporate Governance - Committees of the Board of Directors,” “Security Ownership Information - Section 16(a) Beneficial Ownership Reporting Compliance,” and “ Information About Executive Officers - Executive Officers Biography.” 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 “Proposal No.1 Election of Directors - Director Compensation,” “Corporate Governance - Compensation Committee Interlocks and Insider Participation,” and “Executive Compensation.” The information in the section captioned “Executive Compensation - 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 Information” 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 “Corporate Governance - Board of Directors,” “Corporate Governance - Committees of the Board of Directors,” “Corporate Governance - Board Leadership Structure and Independence of Non-Employee Directors,” and “Corporate Governance - Certain Relationships and Related Party Transactions.” 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 “ Proposal No.3 - Ratification of Selection of Grant Thornton LLP.” 55 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 filed herewith. ITEM 16. FORM 10-K SUMMARY None. 56 SUN COMMUNITIES, INC. EXHIBITS Exhibit Number Description Method of Filing 2.1 Agreement and Plan of Merger Among Jensen’s, Inc, JSREP, Inc, in its capacity as the Shareholder Representative, Sun Communities, Inc, and Sun Jensen LLC Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on August 22, 2019 3.1 Sun Communities, Inc. Articles of Restatement 3.2 Third Amended and Restated Bylaws 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 4.1 10.8 10.9 Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 Filed herewith 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 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 Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 10-K filed on February 21, 2019 10.10 Fourth Amended and Restated Agreement of Limited Partnership of Sun Communities Operating Limited Partnership, dated January 31, 2019. Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed February 5, 2019 10.11 First Amended and Restated 2004 Non-Employee Director Option Plan# Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 25, 2012 10.12 First Amendment to First Amended and Restated 2004 Non-Employee Director Option Plan# Incorporate by reference to Exhibit A to Sun Communities, Inc.’s Definitive Proxy Statement filed on March 29, 2018 10.13 Sun Communities, Inc. 2015 Equity Incentive Plan# Incorporated by reference to Sun Communities, Inc.’s Proxy Statement dated April 29, 2015 for the Annual meeting of Stockholders held July 20, 2015 10.14 10.15 Form of Stock Option Agreement between Sun Communities, Inc. and certain directors, officers and other individuals# Incorporated by reference to Sun Communities, Inc.’s Registration Statement No. 33 69340 Form of Non-Employee Director Stock Option Agreement between Sun Communities, Inc. and certain directors# Incorporated by reference to Sun Communities, Inc.’s Registration Statement No. 33 80972 10.16 Form of Restricted Stock Award Agreement# Incorporated by reference to Sun Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 First Amendment to Restricted Stock Award Agreement between Sun Communities, Inc. and Gary A. Shiffman dated July 15, 2014# Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 15, 2014 Employment Agreement dated June 20, 2013 among Sun Communities, Inc., Sun Communities Operating Limited Partnership and Gary A. Shiffman# Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed June 24, 2013 First Amendment to Employment Agreement among Sun Communities, Inc., Sun Communities Operating Limited Partnership and Gary A. Shiffman dated July 15, 2014# Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 15, 2014 Second Amendment to Employment Agreement among Sun Communities, Inc., Sun Communities Operating Limited Partnership and Gary A. Shiffman dated March 8, 2017# Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on March 8, 2017 Employment Agreement dated May 19, 2015 among Sun Communities, Inc., Sun Communities Operating Limited Partnership and John B. McLaren# Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed May 20, 2015 First Amendment to Employment Agreement among Sun Communities, Inc. Sun Communities Operating Limited Partnership, and John B. McLaren dated March 8, 2017# Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on March 8, 2017 Employment Agreement July 16, 2015 among Sun Communities, Inc., Sun Communities Operating Limited Partnership and Karen J. Dearing# Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 17, 2015 First Amendment Employment Agreement among Sun Communities, Inc., Sun Communities Operating Partnership, and Karen J. Dearing dated March 8, 2017# Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on March 8, 2017 10.25 Sun Communities, Inc. Executive Compensation “Clawback” Policy# Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 15, 2014 10.29 Third Amended and Restated Credit Agreement, dated May 21, 2019, among Sun Communities Operating Limited Partnership, as Borrower, Citibank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Citibank, N.A., BofA Securities, Inc., and BMO Capital Markets, as Joint Lead Arrangers, and Citibank, N.A., BofA Securities, Inc., 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 Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on May 24, 2019 21.1 List of Subsidiaries of Sun Communities, Inc. 23.1 Consent of Grant Thornton LLP Filed herewith Filed herewith 57 SUN COMMUNITIES, INC. 31.1 31.2 32.1 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 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. 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 58 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 20, 2020 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 Date Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) February 20, 2020 February 20, 2020 February 20, 2020 February 20, 2020 February 20, 2020 February 20, 2020 February 20, 2020 February 20, 2020 Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer) Director Director Director Director Director Director 59 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, 2019 and 2018 Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2018 and 2017 Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2019, 2018 and 2017 Notes to Consolidated Financial Statements Real Estate and Accumulated Depreciation, Schedule III Page F-2 F-5 F-6 F-7 F-8 F-10 F-11 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, 2019 and 2018, 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, 2019, and the related notes and financial statement schedule included under Item 15(a) (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, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, 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, 2019, 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 20, 2020 expressed an unqualified opinion. Change in accounting principle As discussed in Note 17 to the consolidated financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of ASC Topic 842, Leases. 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. Critical audit matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Accounting for Acquisitions The Company's strategy includes growth by acquisition. As described in footnote 3, during 2019, the Company completed forty-four community acquisitions for total consideration of $854 million. The principal considerations for our determination that the accounting for acquisitions is a critical audit matter is that it involves a high degree of subjectivity in evaluating the reasonableness of management's estimates and related assumptions related to the accounting for the recognition of the fair value of assets acquired and liabilities assumed. We performed the following procedures, among others, in connection with forming our overall opinion on the financial statements. We tested management’s controls over the accounting for acquisitions, such as controls over the recognition and measurement of assets acquired, liabilities assumed, and consideration paid. For each of the acquisitions, we read the purchase agreements, evaluated the significant assumptions and methods used in developing the fair value estimates and tested the recognition of the assets acquired and liabilities assumed at fair value. More specifically, for each acquisition, we assessed, through the use of our internal valuation specialist, whether (1) the values assigned to the tangible assets appeared reasonable based on a cost or market approach for similar properties in each geographic area, (2) intangible assets were properly considered and identified, and (3) the significant assumptions used in valuing the assets and liabilities were reasonable F - 2 SUN COMMUNITIES, INC. and (4) if applicable, the value assigned to and accounting for, equity interests in the Company or its subsidiaries that was issued as consideration in the transaction. As described in footnote 10, the purchase consideration for the acquisition of Country Village Estate also reflected, in part, the estimated fair value of preferred equity interests. In testing the valuation of the equity interests, we considered management’s estimated amount that would be paid upon the ultimate redemption of the securities and the discount rate. We also evaluated management's classification of the equity consideration as either debt, temporary equity or equity on the consolidated balance sheet based on the characteristics of the equity instrument. Impairment of Investment Properties As described in footnote 1, the Company reviews the carrying value of investment properties on a quarterly basis or whenever events or changes in circumstances indicate a possible impairment. Events or circumstances that may prompt a review of the carrying value of investment properties may include a significant decrease in the anticipated market price of the investment property, an adverse change to the extent or manner in which an asset may be used, or a significant change in its physical condition or damage due to catastrophic event. The Company reviews its investment properties for potential impairment through an analysis of net operating income trends period over period. In the event that any impairment indicators are present, the Company undertakes additional analyses utilizing expected undiscounted future cash flows and expected disposition proceeds for a given asset. Forecasting of cash flows requires management to make estimates and assumptions about such variables as the anticipated holding period, rental revenues and operating expenses during the holding period, capital expenditures and rates of return. In 2019, the Company’s net operating income trend analysis resulted in 10 properties requiring additional analysis. No impairments were identified as a result of the quarterly analysis nor events occurring in 2019. The principal consideration for our determination that the impairment of investment properties is a critical audit matter is that it involves a high degree of subjectivity in evaluating management's estimates used in determining the undiscounted cash flow estimates. We performed the following procedures, among others, in connection with forming our overall opinion on the financial statements. We tested management’s internal controls over the identification of potential investment property impairments, such as controls over the Company’s quarterly analysis of net operating income trends, as well management review controls to identify potential events which could indicate impairment We examine and evaluate the Company’s net operating income trend analysis and its assessment of other events, and if additional analysis is necessary, we evaluated the significant assumptions and methods used in developing the undiscounted cash flow estimates. More specifically, when the net operating income analysis indicated that additional analysis was required, we assessed whether the significant assumptions, including estimated holding period, rental revenues and operating expenses during the holding period, capital expenditures and rates of return used in determining the future undiscounted cash flows were reasonable. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2003. Southfield, Michigan February 20, 2020 F - 3 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, 2019, 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, 2019, 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, 2019, and our report dated February 20, 2020 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 20, 2020 F - 4 SUN COMMUNITIES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) Assets Land Land improvements and buildings Rental homes and improvements Furniture, fixtures and equipment Investment property Accumulated depreciation Investment property, net (including $344,300 and $308,171 for consolidated VIEs at December 31, 2019 and December 31, 2018; see Note 8) Cash, cash equivalents and restricted cash Marketable securities Inventory of manufactured homes Notes and other receivables, net Collateralized receivables, net Other assets, net (including $23,894 and $19,809 for consolidated VIEs at December 31, 2019 and December 31, 2018; see Note 8) Total Assets Liabilities Mortgage loans payable (including $46,993 and $44,172 for consolidated VIEs at December 31, 2019 and December 31, 2018; see Note 8) Secured borrowings on collateralized receivables Preferred Equity - Sun NG RV Resorts LLC - mandatorily redeemable (fully attributable to consolidated VIEs; see Note 8) Preferred OP units - mandatorily redeemable Lines of credit Distributions payable Advanced reservation deposits and rent Accrued expenses and accounts payable Other liabilities (including $13,631 and $6,914 for consolidated VIEs at December 31, 2019 and December 31, 2018; 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 December 31, 2018 Series A-4 preferred OP units Series D preferred OP units Equity interests - NG Sun LLC and NG Whitewater (fully attributable to consolidated VIEs; see Note 8) Stockholders' Equity Common stock, $0.01 par value. Authorized: 180,000 shares; Issued and outstanding: 93,180 December 31, 2019 and 86,357 December 31, 2018 Additional paid-in capital Accumulated other comprehensive loss 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 Total Liabilities, Temporary Equity and Stockholders' Equity See accompanying Notes to Consolidated Financial Statements. F - 5 As of December 31, 2019 December 31, 2018 $ $ $ $ 1,414,279 6,595,272 627,175 282,874 8,919,600 (1,686,980) 1,201,945 5,586,250 571,661 201,090 7,560,946 (1,442,630) 7,232,620 6,118,316 34,830 94,727 62,061 157,926 — 219,896 62,262 49,037 49,199 160,077 106,924 164,211 7,802,060 $ 6,710,026 3,180,592 $ 2,815,957 — 35,249 34,663 183,898 71,704 133,420 127,289 107,731 35,277 37,338 128,000 63,249 133,698 106,281 81,289 3,848,104 51,581 3,479,112 — — 50,913 27,091 932 5,213,264 (1,331) (1,393,141) 3,819,724 47,686 8,542 56,228 3,875,952 7,802,060 $ $ 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 6,710,026 SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Revenues Income from real property Revenue from home sales Rental home revenue Ancillary revenue Interest income Brokerage commissions and other revenues, net Total Revenues 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 expenses Catastrophic weather related charges, net Depreciation and amortization Loss on extinguishment of debt Interest expense Interest on mandatorily redeemable preferred OP units / equity Total Expenses Income Before Other Items Gain / (loss) on remeasurement of marketable securities Other income / (expense), 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 Net Income attributable to Sun Communities, Inc. common stockholders Weighted average common shares outstanding - basic Weighted average common shares outstanding - diluted Basic earnings per share (see Note 14) Diluted earnings per share (see Note 14) December 31, 2019 Year Ended December 31, 2018 December 31, 2017 $ 925,664 $ 825,973 $ 181,936 57,572 66,881 17,857 14,127 166,031 53,657 54,107 20,852 6,205 1,264,037 1,126,825 266,378 61,880 134,357 21,995 47,432 14,690 93,964 1,737 328,067 16,505 133,153 4,698 1,124,856 139,181 34,240 3,457 1,374 (1,095) 222 177,379 (6,058) (9,768) 161,553 (1,288) 236,097 56,555 123,333 23,304 38,043 15,722 81,429 92 287,262 1,190 130,556 3,694 997,277 129,548 (3,639) (6,453) 790 (595 ) 507 120,158 (4,486) (8,443) 107,229 (1,736) $ $ $ 160,265 $ 105,493 $ 88,460 88,915 81,387 82,040 1.80 1.80 $ $ 1.29 1.29 $ $ 742,228 127,408 50,549 37,511 21,179 3,695 982,570 210,278 52,288 95,114 22,160 27,450 12,457 83,973 8,352 261,536 4,676 128,471 3,114 909,869 72,701 — 8,982 — (446) 582 81,819 (4,581) (5,055) 72,183 (7,162) 65,021 76,084 76,711 0.85 0.85 See accompanying Notes to Consolidated Financial Statements. F - 6 SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Net Income Foreign currency translation gain / (loss) adjustment Total Comprehensive Income Less: Comprehensive Income attributable to noncontrolling interests Comprehensive Income attributable to Sun Communities, Inc. December 31, 2019 Year Ended December 31, 2018 December 31, 2017 $ $ 177,379 3,328 180,707 (9,923) 170,784 $ $ 120,158 (5,878) 114,280 (8,171) 106,109 $ $ 81,819 4,527 86,346 (5,299) 81,047 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: Gain on disposition of assets Unrealized foreign currency translation (gain) / loss 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 Distributions 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 dispositions of assets and depreciated homes, net Issuance of notes and other receivables Repayments of notes and other receivables Investments in nonconsolidated affiliates Distributions from 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 cumulative convertible preferred stock Proceeds received from return of prepaid deferred financing costs Redemption of Series A-4 preferred stock and OP units 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 Cash, cash equivalents and restricted cash, end of period F - 8 Year Ended December 31, 2019 December 31, 2018 December 31, 2017 $ 177,379 $ 120,158 $ 81,819 (11,085) (4,557) (34,240) 1,503 — 17,482 313,966 (222) (7,442) (4,962) 2,988 752 16,505 (1,374) 3,049 2,988 (44,322) 48,326 476,734 (569,261) (472,681) 61,337 (18,122) 4,542 (60,742) 44,470 (1,010,457) 440,782 (2,675) 3,881,543 (3,883,950) 923,721 (552,868) (18,838) — 1,618 — (276,697) (6,756) 505,880 411 (27,432) 62,262 34,830 $ (9,376) 8,234 3,639 (2,336) — 15,066 274,432 (507) (7,399) (6,353) 3,233 1,638 1,190 (790) — (2,299) (39,514) 4,098 363,114 (389,399) (320,268) 55,855 (216) 4,312 (84,997) 970 (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 62,262 $ $ (9,338) (6,146) — (3,035) 742 12,695 256,193 (582) (7,402) (8,205) 2,910 1,914 4,676 — — (26,193) (33,031) (9,034) 257,983 (288,537) (120,377) 8,575 (3,918) 2,615 — — (401,642) 487,677 (4,460) 661,000 (719,536) 185,153 (124,427) (6,019) (85,000) — (24,698) (224,483) (3,650) 141,557 298 (1,804) 25,313 23,509 Year Ended December 31, 2019 December 31, 2018 December 31, 2017 Supplemental Information Cash paid for interest (net of capitalized interest of $7,943, $4,328 and $2,755 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 Acquisitions - Series D preferred interest Acquisitions - Escrow $ $ $ $ $ $ $ $ $ $ $ $ $ $ 134,990 4,698 948 $ $ $ 107,731 8,452 11,310 31,739 $ $ $ $ — $ 313,391 $ — $ — $ $ $ $ 61,900 51,930 392 126,153 2,551 461 $ $ $ 124,046 3,114 (194) $ 21,451 $ 7,889 $ 1,515 $ 675 — $ 21,976 35,277 3,120 — $ $ $ $ — $ — $ 23,449 3,267 3,556 4,720 4,114 28,410 — — 4,592 — — See accompanying Notes to Consolidated Financial Statements. F - 9 SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Stockholders’ Equity 7.125% Series A Cumulative Redeemable Preferred Stock Temporary Equity 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 interest Foreign currency translation gain Net income Distributions — (259) (13,093) (4,720) (5,166) — — — — 205 (845) 34 — — — — — (34) — — — — — Common Stock Additional Paid-in Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Income / (Loss) Non- controlling Interests Total Stockholders’ Equity Total Equity $ 732 $ 3,321,441 $ (1,023,415) $ (3,181) $ 66,616 $ 2,362,227 $ 2,429,171 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 4,849 516,088 259 (3,867) 4,720 (2,571) (85,000) 12,695 (100) 4,527 81,614 516,088 — (16,960) — (7,737) (85,000) 12,695 (100) 4,527 81,819 (11,257) (226,905) (227,750) Balance at December 31, 2017 $ 43,066 $ — $ 797 $ 3,758,533 $ (1,162,001) $ 1,102 $ 65,256 $ 2,663,687 $ 2,706,753 Issuance of common stock and common OP units, net Conversion of OP units Conversion of Series A-4 preferred stock Equity Interests - NG Sun LLC Share-based compensation - amortization and forfeitures 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) 623,540 623,540 342 675 — 15,066 (5,878) 119,917 (250,027) — — 21,976 15,066 (5,878) 120,158 (250,701) Balance at December 31, 2018 $ 63,592 $ — $ 864 $ 4,398,949 $ (1,288,486) $ (4,504) $ 60,499 $ 3,167,322 $ 3,230,914 Issuance of common stock and common OP units, net Conversion of OP units Conversion of Series A-4 preferred stock Equity Interests - NG Sun LLC & Whitewater Share-based compensation - amortization and forfeitures Issuance of Series preferred D OP units Foreign currency translation Net income Distributions — (9,652) (31,739) 4,451 — 51,930 — 1,599 (2,177) — — — — — — — — — 58 5 5 — — — — — — 754,116 11,305 31,734 — 17,160 — — — — — — — (553) 322 — — 167,611 (272,035) — — — — — — 3,173 — — — (1,658) — — — — 155 8,169 (10,937) 754,174 9,652 31,739 (553) 17,482 — 3,328 175,780 (282,972) 754,174 — — 3,898 17,482 51,930 3,328 177,379 (285,149) Balance at December 31, 2019 $ 78,004 $ — $ 932 $ 5,213,264 $ (1,393,141) $ (1,331) $ 56,228 $ 3,875,952 $ 3,953,956 See accompanying Notes to Consolidated Financial Statements. F - 10 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, 2019, we owned, operated or had an interest in a portfolio of 422 developed properties located in 33 states and Ontario, Canada (collectively the “Properties”), including 266 MH communities, 122 RV communities, and 34 communities containing both MH and RV sites. As of December 31, 2019, the Properties contained an aggregate of 141,293 developed sites comprised of 93,821 developed MH sites, 26,056 annual RV sites, and 21,416 transient RV sites. There are approximately 10,300 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” 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. F - 11 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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.” This update clarifies 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. Upon adoption of this standard, substantially all of our 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. Acquisition costs that do not meet the criteria to be capitalized are expensed as incurred and presented as General and administrative costs in our Consolidated Statements of Operations. 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. At December 31, 2019 and 2018, $22.1 million and $50.3 million of Cash and Cash Equivalents, respectively, was included as a component of Cash, cash equivalents and restricted cash on the Consolidated Balance Sheets. The maximum amount of credit risk arising from cash deposits in excess of federally insured amounts was approximately $22.9 million and $49.5 million as of December 31, 2019 and 2018, respectively. Restricted Cash Restricted cash consists of amounts primarily held in deposit for tax, insurance and repair escrows held by lenders in accordance with certain debt agreements. At December 31, 2019 and 2018, $12.7 million and $12.0 million of restricted cash, respectively, was included as a component of Cash, cash equivalents and restricted cash on the Consolidated Balance Sheets 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. Upon adoption of this standard, 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. 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 less than 10 percent ownership in Ingenia Communities Group. The value of marketable securities as of December 31, 2019 was $94.7 million and is disclosed on the Consolidated Balance Sheet. Inventory Inventory of manufactured homes is stated at lower of specific cost or market based on the specific identification method. F - 12 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 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 - 13 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 and discount and premium costs are accounted for in accordance with FASB Accounting Standards Codification (“ASC”) 470-50-40, “Modifications and Extinguishments.” At December 31, 2019 and 2018, $4.5 million and $4.7 million of line of credit deferred financing costs, respectively, were presented as a component of Other asset, net on the Consolidated Balance Sheets. At December 31, 2019 and 2018, $7.9 million and $2.4 million of deferred financing costs and discount and premium costs, respectively, were netted and presented as a component of Mortgage loans payable on the Consolidated Balance Sheets. Temporary Equity Temporary equity includes preferred securities that are redeemable for cash at the option of the holder or upon the occurrence of an event that is not solely within our control based on a fixed or determinable price. These preferred securities are not mandatorily redeemable for cash nor do they contain a fixed maturity date. Temporary equity is classified between Liabilities and Stockholders’ Equity on the Consolidated Balance Sheets. Share-Based Compensation Share-based compensation cost for service vesting restricted stock awards is measured based on the closing share price of our common stock on the date of grant. 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. F - 14 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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,” for additional information. Advertising Costs Advertising costs are expensed as incurred. As of December 31, 2019, 2018 and 2017, we had advertising costs of $6.7 million, $6.2 million and $5.9 million, respectively. Depreciation and Amortization Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets. Useful lives are 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 seven years to twenty 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, 2019, we recorded a foreign currency translation gain of $4.5 million within Other income / (expense), net on our Consolidated Statements of Operations, as compared to a foreign currency translation loss of $8.4 million, for the year ended December 31, 2018 and $5.9 million foreign currency translation gain for the year ended December 31, 2017. Accounting for leases We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for executive office spaces, ground leases at certain communities, and certain equipment leases. The ROU asset and liabilities are included within Other assets, net and Other liabilities on the Consolidated Balance Sheets. For operating leases with a term greater than one year, the company recognizes the ROU assets and liabilities related to the lease payments on the Consolidated Balance Sheets. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The ROU assets represent our right to use the underlying assets for the term of the lease and the lease liabilities represent our obligation to make lease payments arising for the agreements. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus unamortized initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The ROU asset is periodically reduced by impairment losses. As of December 31, 2019, we have not encountered any impairment losses. Variable lease payments, except for the ones that depend on index or rate, are excluded from the calculation of the ROU assets and lease liabilities and are recognized as variable lease expense in the Consolidated Statements of Operations in the period in which they are incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Many of our lessee agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. The lease liability costs are amortized over the straight-line method over the term of the lease. Operating leases with a term of less than one year are recognized as a lease expense over the term of the lease, with no asset or liability recognized on the Consolidated Balance Sheets. F - 15 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Finance leases where we are the lessee are included in Other assets, net and Other liabilities on our Consolidated Balance Sheets. The lease liabilities are initially measured in the same manner as operating leases and are subsequently measured at amortized cost using the effective interest method. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For finance leases the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to us, or we are reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability. ROU assets are periodically reduced by impairment losses. As of December 31, 2019, we have not encountered any impairment losses. Refer to Note 19, “Leases” for information regarding leasing activities. 2. Revenue Disaggregation of Revenue The following table disaggregates our revenue by major source (in thousands): December 31, 2019 Year Ended December 31, 2018 December 31, 2017 Real Property Operations Home Sales and Rentals Consolidated Real Property Operations Home Sales and Rentals Consolidated Real Property Operations Home Sales and Rentals Consolidated Revenues Income from real property Revenue from home sales Rental home revenue Ancillary revenue Interest income Brokerage commissions and other revenues, net $ 925,664 $ — $ 925,664 $ 825,973 $ — $ 825,973 $ 742,228 $ — $ 742,228 — — 66,881 17,857 14,127 181,936 181,936 57,572 57,572 — — 166,031 166,031 53,657 53,657 — — 127,408 127,408 50,549 50,549 — — — 66,881 17,857 54,107 20,852 14,127 6,205 — — — 54,107 20,852 37,511 21,180 — (1) 37,511 21,179 6,205 3,695 — 3,695 Total Revenues $ 1,024,529 $ 239,508 $ 1,264,037 $ 907,137 $ 219,688 $ 1,126,825 $ 804,614 $ 177,956 $ 982,570 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 842 “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 the timing and pattern of 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. 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. Lease revenues for sites and homes fall under the scope of ASC 842, and are accounted for as operating leases with straight-line recognition. Income from real property includes income from site leases for annual MH residents, site leases for annual recreational vehicle RV residents and site rentals to transient RV residents. 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 842. Additionally, we include collections of real estate taxes from residents within Income from real property. F - 16 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenue from home sales - Our taxable REIT subsidiary, SHS, sells manufactured homes 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 842. Ancillary revenue - is primarily composed of proceeds from restaurant, golf, merchandise and other activities at our RV communities and is included in the scope of ASC 606. Revenues are recognized at point of sale when control of the good or service transfers to the customer and our performance obligation is satisfied. In addition, leasing of short-term vacation home rentals is included within Ancillary revenue and falls within the scope of ASC 842. Sales and other taxes that we collect concurrent with revenue-producing activities are excluded from the transaction price. Interest income - is earned primarily on our notes receivables, which includes installment loans for manufactured homes purchased by the Company from loan originators. 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 Note 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 notes receivables are also included herein. Refer to Note 5, “Notes and Other Receivables” for additional information regarding our loan loss reserves. Contract Balances As of December 31, 2019, and December 31, 2018, we had $20.9 million and $16.1 million, respectively, of receivables from contracts with customers. Receivables from contracts with customers are presented as a component of Notes and other receivables, net 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 contracts with customers, we do not have material contract assets or liabilities that fall under the scope of ASC 606. F - 17 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Real Estate Acquisitions 2019 Acquisitions Communities For the year ended December 31, 2019, we acquired the following communities and portfolios: Community Name Type Sites Development Sites State Month Acquired Slickrock Campground Pandion Ridge Jensen Portfolio (1) Glen Ellis Leisure Point Resort (2) Reunion Lake River Plantation Massey’s Landing RV Shelby Properties (3) Buena Vista Country Village Estates (4) Hid’n Pines RV Hacienda del Rio RV RV MH RV MH / RV RV RV RV MH MH MH RV MH (Age-Restricted) Total 193 142 5,230 244 502 202 309 291 1,308 400 518 321 730 10,390 — UT 351 AL December November 466 Various October 40 NH — DE 69 LA — TN — DE — MI — AZ — OR — ME — FL 926 September September July May February February February January January January (1) Contains 31 communities located in CT, GA, MD, NH, NJ, NY, NC and SC. In conjunction with the acquisition, we issued 1,972,876 shares of common stock, net of fractional shares paid in cash. (2) Contains 201 MH sites and 301 RV sites. (3) Contains two MH communities. (4) In conjunction with the acquisition, we issued Series D Preferred OP Units. As of December 31, 2019, 488,958 Series D Preferred OP Units were outstanding. 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 for the year ended December 31, 2019 (in thousands): At Acquisition Date Consideration Investment in property Inventory of manufactured homes In-place leases and other intangible assets Other assets (liabilities), net Total identifiable assets acquired net of liabilities assumed Cash and escrow Debt assumed Temporary and permanent equity Total consideration $ 8,250 $ — $ — $ Slickrock Campground Pandion Ridge Jensen Portfolio Glen Ellis Leisure Point Resort Reunion Lake River Plantation Massey's Landing Shelby Properties Buena Vista Country Village Hid'n Pines 19,070 374,402 5,955 43,632 23,493 22,589 36,250 85,969 20,221 62,784 10,680 Hacienda del Rio 111,971 — 3,605 — 18 — 75 — 2,011 439 — — 15 — 7,752 — 850 — — 220 6,520 1,590 2,020 70 3,280 8 $ (92) $ 3,938 $ (79) (678) (1,153) — (446) (1,015) (93) 31 (233) (237) 8,258 $ 8,258 $ — $ 18,978 389,697 5,876 43,822 22,340 22,664 36,024 93,485 22,157 64,835 10,517 18,978 18,306 1,976 43,822 22,340 22,664 36,024 93,485 22,157 12,905 10,517 115,029 115,029 — 58,000 3,900 — — — — — — — — — — $ — 313,391 — — — — — — — 51,930 — — 8,258 18,978 389,697 5,876 43,822 22,340 22,664 36,024 93,485 22,157 64,835 10,517 115,029 853,682 Total $ 825,266 $ 6,163 $ 22,302 $ (49) $ 853,682 $ 426,461 $ 61,900 $ 365,321 $ As of December 31, 2019, the Company incurred $19.3 million of transaction costs which have been capitalized and allocated among the various categories above. F - 18 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Land for Expansion / Development During the year ended December 31, 2019, the Company acquired four land parcels which are located in New Braunfels, Texas; Petoskey, Michigan; Uhland, Texas and Hudson, Florida for total consideration of $7.7 million. Two of the land parcels are adjacent to existing communities. The land acquired for expansion and development have potential to add approximately 900 usable sites once constructed. Ground Leases In September 2019, the Company entered into a 66-year Temporary Occupancy and Use Permit with the Port of San Diego to construct and operate a new RV resort in Chula Vista. Refer to Note 19, “ Leases” for disclosures on accounting treatment. In August 2019, the Company acquired Chincoteague Island KOA RV Resort (“Chincoteague”), in Chincoteague Island, Virginia for total consideration of $19.5 million. The sellers of Chincoteague continue to operate the property. Refer to Note 19, “Leases” for disclosures on accounting treatment. In April 2019, the Company acquired Strafford/Lake Winnipesaukee South KOA RV Resort ("Strafford") in Strafford, New Hampshire for total consideration of $2.7 million. The sellers of Strafford continue to operate the property. Refer to Note 19, “Leases” for disclosures on accounting treatment. In March 2019, the Company entered into a four-year Temporary Occupancy and Use Permit with the Port of San Diego to operate a RV resort located in Chula Vista, CA until such time as the Company constructs a new RV resort in the area. Concurrent with the transaction, we purchased tangible personal property from the prior owner of the RV resort for $0.3 million. Refer to Note 19. “Leases ” for disclosures on accounting treatment. Refer to Note 21, “Subsequent Events” for information regarding real estate acquisition activity after December 31, 2019. The total amount of revenues and net income included in the Consolidated Statements of Operations for the year ended December 31, 2019 related to the acquisitions completed in 2019 are set forth in the following table (in thousands): Total revenues Net income Year Ended December 31, 2019 (unaudited) $ $ 42,715 10,050 The following unaudited pro forma financial information presents the results of our operations for the years ended December 31, 2019 and 2018, as if the properties acquired in 2019 had been acquired on January 1, 2018. The unaudited pro forma results reflect certain adjustments for items that are not expected to have a continuing impact, such as adjustments for transaction costs incurred, management fees, and purchase accounting. The information presented below has been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations that would have actually occurred had the acquisition been consummated on January 1, 2018 (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 (unaudited) December 31, 2019 December 31, 2018 $ $ $ $ 1,298,096 166,446 1.88 1.87 $ $ $ $ 1,194,093 120,891 1.49 1.47 F - 19 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2018 Acquisitions For the year ended December 31, 2018 we acquired the following communities: Community Name Type Sites Development Sites State Month Acquired Leaf Verde RV Resort Archview Petoskey KOA The Sands RV and Golf Resort Sun NG RV Resorts LLC (1)(2) Silver Creek Highway West (1) Compass RV RV RV RV RV (Age Restricted) RV RV RV RV 376 114 210 507 2,700 264 536 175 — AZ 50 UT — MI — CA 940 Various 176 MI — UT & OR — FL October August August July June June June May Total (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 Temporary Equity” in our accompanying Consolidated Financial Statements for additional information. 4,882 1,166 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 Cash Consideration Preferred Equity - Sun NG Resorts Equity Interests - NG Sun LLC Total consideration Leaf Verde $ 11,587 $ Archview Petoskey KOA Sands 14,550 8,730 13,790 60 — 270 460 $ — $ — $ 11,647 $ 11,647 $ — $ — $ — — — — — — 14,550 9,000 14,250 14,550 9,000 14,250 — — — — — — 11,647 14,550 9,000 14,250 Sun NG Resorts 240,649 16,339 (3,120) (11,990) 241,878 184,625 35,277 21,976 241,878 Silver Creek Highway West Compass Total 7,250 36,500 13,930 — — 70 — — — — — — 7,250 36,500 14,000 7,250 36,500 14,000 — — — — — — 7,250 36,500 14,000 $ 346,986 $ 17,199 $ (3,120) $ (11,990) $ 349,075 $291,822 $ 35,277 $ 21,976 $ 349,075 For the year ended December 31, 2018, we acquired the following land for expansion / development: Location Type Expansion / Development Sites Cost (millions) Month Acquired Name Ocean West McKinleyville, CA Water Oak Country Club Estates Lady Lake, FL Oak Crest Pecan Park Smith Creek Crossing Apple Carr River Run Austin, TX Jacksonville, FL Granby, CO Egelston, MI Granby, CO 26 $ 296 220 158 310 121 1,144 2,275 $ 0.2 December 1.9 November 4.2 October 1.3 0.9 September September 0.2 May 5.3 May 14.0 MH MH MH RV MH MH MH / RV Total F - 20 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Collateralized Receivables and Transfers of Financial Assets Prior to November 2019, we completed various transactions with an unrelated entity involving our notes receivable under which we received cash proceeds in exchange for relinquishing our right, title, and interest in certain notes receivable. We had no further obligations or rights with respect to the control, management, administration, servicing, or collection of the installment notes receivable. However, we were 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 were considered to be a form of continuing involvement which precluded establishing legal isolation, a necessary condition for derecognition of a financial asset, and therefore these transferred loans did not meet the requirements for sale accounting. We continued to recognize these transferred loans and we also recognized the cash proceeds on our Consolidated Balance Sheets and referred to them as collateralized receivables and as secured borrowings on collateralized receivables respectively. In November 2019, the facts and circumstances regarding the recourse provisions, to which we remain subject, evolved such that the purchasers become subject to substantive economic risk. Accordingly, we reassessed the legal isolation analysis in consultation with legal counsel, and concluded that the transaction now achieved the sale accounting requirements for the transferred notes receivable. Following the derecognition guidance, we (a) derecognized the transferred financial assets, (b) applied the guidance in ASC paragraphs 860-20-25-1 and 860-20-30-1 on recognition and measurement of assets obtained and liabilities incurred in the sale, and (c) recognized in earnings a $0.6 million gain on sale. There was no balance of collateralized receivables at December 31, 2019. The balance of the collateralized receivables was $106.9 million (net of allowance of $0.8 million) as of December 31, 2018. The receivables had a weighted average interest rate and maturity of 9.9 percent and 14.1 years as of December 31, 2018. There was no balance of secured borrowing as of December 31, 2019. The balance of the secured borrowing was $107.7 million as of December 31, 2018. The amount of interest income and expense recognized was $8.0 million, $11.2 million and $13.2 million for the years ended December 31, 2019, 2018, and 2017, respectively. The change in the aggregate gross principal balance of the collateralized receivables is as follows (in thousands): Beginning balance Principal payments and payoffs from our customers Principal reduction from repurchased homes Derecognition of collateralized receivables Total activity Ending balance The following table sets forth the allowance for the collateralized receivables (in thousands): Beginning balance Lower of cost or market write-downs (Increase) / decrease to reserve balance Gain on derecognition of collaterized receivables Total activity Ending balance December 31, 2019 December 31, 2018 $ $ $ $ $ 107,731 (11,408 ) (5,973 ) (90,350 ) (107,731 ) — $ 129,182 (12,577) (8,874) — (21,451 ) 107,731 December 31, 2019 December 31, 2018 (807) $ 140 80 587 807 — $ (936) 660 (531) — 129 (807) F - 21 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 Notes receivable from real estate developers Other receivables, net Total notes and other receivables, net Installment Notes Receivable on Manufactured Homes December 31, 2019 December 31, 2018 95,580 $ 112,798 18,960 43,386 157,926 $ — 47,279 160,077 $ $ The installment notes of $95.6 million (net of allowance of $0.6 million) and $112.8 million (net of allowance of $0.7 million) as of December 31, 2019 and December 31, 2018, 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 15.8 years as of December 31, 2019, and 8.0 percent and 16.6 years as of December 31, 2018. 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 Principal payments and payoffs from our customers Principal reduction from repossessed homes Total activity Ending balance Allowance for Losses for Installment Notes Receivable December 31, 2019 December 31, 2018 113,495 $ 116,174 341 (8,710 ) (8,901 ) (17,270 ) 14,237 (8,966) (7,950) (2,679 ) 96,225 $ 113,495 $ $ 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 Notes Receivable from Real Estate Developers December 31, 2019 December 31, 2018 $ $ (697) $ 203 (151) 52 (645) $ (377) 678 (998) (320) (697) As of December 31, 2019, the notes receivables balance of $19.0 million primarily comprise short term construction loans provided to real estate developers. Other Receivables As of December 31, 2019, other receivables were comprised of amounts due from: residents for rent, utility charges, fees and other pass through charges of $7.8 million (net of allowance of $2.2 million); home sale proceeds of $20.9 million; insurance receivables of $9.9 million, and other receivables of $4.8 million. As of December 31, 2018, other receivables were comprised of amounts due from: residents for rent, utility charges, fees and other pass through charges 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. F - 22 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Intangible Assets Our intangible assets include in-place leases, franchise agreements and other intangible assets. These intangible assets are recorded in Other assets, net on the Consolidated Balance Sheets. In accordance with FASB ASC Topic 842, below market leases are now classified as a right of use asset. The gross carrying amounts and accumulated amortization are as follows (in thousands): Intangible Asset In-place leases Useful Life 7 years Franchise agreements and other intangible assets 7 - 20 years Total December 31, 2019 December 31, 2018 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization $ $ 127,313 16,943 144,256 $ $ (73,980) $ (2,760) (76,740) $ 103,547 16,641 120,188 $ $ (59,068) (1,942) (61,010) Total amortization expenses related to our intangible assets are as follows (in thousands): Intangible Asset In-place leases Franchise fees and other intangible assets Total December 31, 2019 Year Ended December 31, 2018 December 31, 2017 $ $ 14,912 818 15,730 $ $ 12,913 507 13,420 $ $ 13,812 301 14,113 We anticipate amortization expense for our intangible assets to be as follows for the next five years (in thousands): Estimated expense $ 15,522 $ 15,130 $ 10,529 $ 7,154 $ 4,791 2020 2021 2022 2023 2024 F - 23 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Investments in Nonconsolidated Affiliates Investments in joint ventures that are not consolidated, nor recorded at cost, are accounted for using the equity method of accounting as prescribed in FASB ASC Topic 323, “Investments - Equity Method and Joint Ventures.” Investments in nonconsolidated affiliates are recorded within Other assets, net on the Consolidated Balance Sheets. Equity income and loss are recorded in the Income / (loss) from nonconsolidated affiliates on the Consolidated Statements of Operations. RezPlot Systems LLC (“Rezplot”) At December 31, 2019, the Company had a 50 percent ownership interest in RezPlot, a RV reservation software technology company, acquired in January 2019. Sungenia JV At December 31, 2019 and December 31, 2018, the Company had a 50 percent interest in Sungenia JV, a joint venture (“JV”) formed between the Company and Ingenia Communities Group in November 2018, to establish and grow a manufactured housing community development program in Australia. GTSC LLC (“GTSC”) At December 31, 2019 and December 31, 2018, the Company had a 40 percent ownership interest in GTSC, which engages in acquiring, holding and selling loans secured, directly or indirectly, by manufactured homes located in communities of Sun Communities. Origen Financial Services, LLC (“OFS”) At December 31, 2019 and December 31, 2018, the Company had a 22.9 percent ownership interest in OFS, an end-to-end online resident screening and document management suite. The investment balance in each nonconsolidated affiliate is as follows (in millions): Investment Investment in RezPlot Investment in Sungenia JV Investment in GTSC (1) Investment in OFS Total December 31, 2019 December 31, 2018 $ $ 4.2 12.0 18.5 0.1 34.8 $ $ — 0.7 29.8 0.1 30.6 (1) The decrease in investment balance is primarily due to return of capital. The year to date Equity income / (loss) from each nonconsolidated affiliate is as follows (in thousands): Equity income RezPlot equity loss Sungenia JV equity loss GTSC equity income OFS equity income Total equity income December 31, 2019 December 31, 2018 $ $ (1,344) $ (290) 2,803 205 1,374 $ — — 604 186 790 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. F - 24 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. Consolidated Variable Interest Entities The Operating Partnership We consolidate the Operating Partnership under the guidance set forth in FASB ASC Topic 810 “Consolidation.” 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 the Operating Partnership now meets the criteria of 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. Sun NG RV Resorts LLC (“Sun NG Resorts”); Rudgate Village SPE, LLC, Rudgate Clinton SPE, LLC, and Rudgate Clinton Estates SPE, LLC (collectively, “Rudgate”); Sun NG Whitewater RV LLC (“Whitewater Resorts”); We consolidate Sun NG Resorts, Rudgate, and Whitewater Resorts, under the guidance set forth in FASB ASC Topic 810 “Consolidation.” We concluded that each of them is a VIE where we are the primary beneficiary, as we have the 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 Temporary Equity” for additional information on Sun NG Resorts. 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 & NG Whitewater Noncontrolling interests Total Liabilities and Other Equity $ $ $ December 31, 2019 December 31, 2018 344,300 23,894 368,194 $ $ 308,171 19,809 327,980 46,993 $ 35,249 13,631 95,873 27,091 8,542 44,172 35,277 6,914 86,363 21,976 7,145 $ 131,506 $ 115,484 Investment property, net and other assets, net related to the consolidated VIEs, with the exception of SCOLP, comprised approximately 4.7 percent and 4.9 percent of our consolidated total assets at December 31, 2019 and December 31, 2018, respectively. Debt, Preferred Equity and other liabilities comprised approximately 2.5 percent and 2.6 percent of our consolidated total liabilities at December 31, 2019 and December 31, 2018, respectively. Equity Interests and Noncontrolling interests related to the consolidated VIEs, on an absolute basis, comprised approximately less than 1.0 percent of our consolidated total equity at December 31, 2019 and at December 31, 2018. F - 25 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 December 31, 2019 1,710,408 $ December 31, 2018 1,259,158 $ 697,589 397,868 374,727 — 35,249 34,663 183,898 770,417 405,702 380,680 107,731 35,277 37,338 128,000 Weighted Average Years to Maturity Weighted Average Interest Rates December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 17.1 7.0 3.1 4.9 0.0 2.8 4.0 3.5 14.4 5.1 4.1 5.9 14.4 3.8 4.7 2.3 9.0 4.0% 3.7% 5.1% 3.9% —% 6.0% 6.5% 2.7% 4.0% 3.9% 4.4% 5.1% 3.9% 9.9% 6.0% 6.6% 3.8% 4.5% $ 3,434,402 $ 3,124,303 11.1 Collateralized term loans - Life Companies Collateralized term loans - FNMA Collateralized term loans - CMBS Collateralized term loans - FMCC Secured borrowings Preferred equity - Sun NG Resorts - mandatorily redeemable Preferred OP units - mandatorily redeemable Lines of credit Total debt Collateralized Term Loans All of our collateralized term loans are mortgage loans. During the years ended December 31, 2019 and 2018, we repaid the following collateralized term loans: Three months ended Repayment amount (in millions) Fixed Interest rate December 31, 2019 September 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 $ $ $ $ $ $ $ 17.0 127.3 21.5 (1) 134.0 186.8 10.2 30.5 5.62% 5.10% 6.24% (4) 4.3% 3.83% 5.66% 6.34% Maturity date March 1, 2020 November 1, 2021 March 1, 2020 April 1, 2020 May 1, 2023 January 1, 2030 February 28, 2019 March 1, 2019 June 30, 2018 (2) March 31, 2018 (3) (1) Includes four collateralized term loans, three due to mature on March 1, 2020 and one due to mature on April 1, 2020. (2) Includes three collateralized term loans, one due to mature on August 1, 2018 and two due to mature on May 1, 2023. (3) Includes four collateralized term loans, all due to mature on March 1, 2019. (4) The interest rate represents the weighted average interest rate on collateralized term loans. 4.53% (4) 6.36% (4) 177.7 24.4 $ $ March 1, 2019 August 1, 2018 May 1, 2023 (Gain) / loss on extinguishmen t of debt (in millions) Encumbered communities released $ $ $ $ $ $ $ $ $ — 3.2 (0.2) 12.8 0.7 — 0.9 1.5 0.2 — — 3 — — — 1 11 3 During the years ended December 31, 2019 and 2018, we entered into the following collateralized term loans: Three months ended Loan amount (in millions) Term (in years) Interest rate Maturity date December 31, 2019 September 30, 2019 March 31, 2019 December 31, 2018 $ $ $ $ 400.0 (1) 250.0 265.0 21.7 21 10 25 20 September 30, 2018 (1) Includes two collateralized term loans one due to mature on December 15, 2039 and the other on December 1, 2041. 228.0 20 $ 4.026% 2.925% 4.170% 4.100% 4.100% December 15, 2039 December 15, 2041 October 1, 2029 January 15, 2044 August 15, 2038 August 15, 2038 F - 26 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The collateralized term loans totaling $3.2 billion as of December 31, 2019, are secured by 188 properties comprised of 74,170 sites representing approximately $3.3 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 - mandatorily redeemable Preferred OP units at December 31, 2019 and December 31, 2018 include $34.7 million of Aspen preferred OP units issued by the Operating Partnership. As of December 31, 2019, these units are convertible indirectly into 407,190 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. Refer to Note 21, “Subsequent Events,” for additional information regarding revisions to the terms of certain of the Aspen preferred OP units. Preferred OP units also include $2.7 million of Series B-3 preferred OP units at December 31, 2018, which are not convertible. In January 2019, we redeemed all remaining 26,750 Series B-3 preferred OP units. The weighted average redemption price per unit, which included accrued and unpaid distributions, was $100.153424. In the aggregate, we paid $2.7 million to redeem these 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 balance was $35.2 million and $35.3 million at December 31, 2019 and December 31, 2018. Refer to Note 3, “Real Estate Acquisitions,” Note 8, “Consolidated Variable Interest Entities,” and Note 10, “Equity and Temporary Equity” for additional information. Lines of Credit (“LOC”) Credit agreement - In May 2019, we amended and restated our credit agreement with Citibank and certain other lenders. Pursuant to the credit agreement, we entered into a senior credit facility with Citibank and certain other lenders in the amount of $750.0 million, comprised of a $650.0 million revolving loan, with the ability to use up to $100.0 million for advances in Australian dollars, and a $100.0 million term loan (the “A&R Facility”). We have until March 17, 2020 to draw on the term loan. As of December 31, 2019, we had not drawn any funds on the term loan. The credit agreement has a four-year term ending May 21, 2023, which can be extended for two additional six-month periods, subject to the satisfaction of certain conditions as defined in the credit agreement. The credit agreement also provides for, subject to the satisfaction of certain conditions, additional commitments in an amount not to exceed $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 $1.1 billion. The A&R Facility bears interest at a floating rate based on the Eurodollar rate or Bank Bill Swap Bid Rate plus a margin that is determined based on our leverage ratio calculated in accordance with the credit agreement, which margin can range from 1.20 percent to 2.10 percent for the revolving loan and 1.20 percent to 2.05 percent for the term loan. As of December 31, 2019, the margin based on our leverage ratio was 1.20 percent on the revolving loan and 1.20 percent on the term loan. We had $123.6 million and zero of borrowings on the revolving loan and the term loan, respectively, as of December 31, 2019. 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, 2019 and December 31, 2018, approximately $2.8 million and $3.9 million of availability was used to back standby letters of credit. Floor plan - 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, 2019, the effective interest rate was 7.0 percent. The outstanding balance was $3.3 million and zero as of December 31, 2019 and December 31, 2018, respectively. F - 27 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Jensen - In October 2019, we assumed a term loan facility with Citibank N.A. (“Citibank”), in the amount of $58.0 million. The term loan has a four-year term ending October 29, 2023, and bears interest at a floating rate based on the Eurodollar rate or Prime rate. The outstanding balance was $57.0 million at December 31, 2019. 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, 2019, 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. Long-term Debt Maturities As of December 31, 2019, 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): Total Due 2020 2021 2022 2023 2024 Thereafter Maturities and Amortization By Year Mortgage loans payable Maturities $ 2,161,615 $ 19,796 $ 148,378 $ 82,155 $ 185,618 $ 315,331 $ 1,410,337 Principal amortization 1,026,857 60,723 60,873 61,326 60,604 57,082 726,249 Preferred Equity - Sun NG Resorts - mandatorily redeemable Preferred OP units - mandatorily redeemable Lines of credit Total 35,249 34,663 183,898 — — — — 10,000 13,293 35,249 — 10,000 — — 150,605 — 34,663 — — — — $ 3,442,282 $ 90,519 $ 222,544 $ 188,730 $ 396,827 $ 407,076 $ 2,136,586 Off-Balance Sheet Arrangements - Nonconsolidated Affiliate Indebtedness We have a 40 percent investment in GTSC, a nonconsolidated affiliate. During September 2019, GTSC entered into a warehouse line of credit with a maximum loan amount of $125.0 million. As of December 31, 2019, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by GTSC was approximately $123.4 million (of which our proportionate share is approximately $49.4 million). The debt bears interest at a variable rate based on LIBOR plus 1.65 percent per annum and matures on September 15, 2023. 10. Equity and Temporary Equity Public Equity Offerings In May 2019, we closed an underwritten registered public offering of 3,737,500 shares of common stock. Proceeds from the offering were $452.1 million after deducting expenses related to the offering. We used the net proceeds of this offering to repay borrowings outstanding under the revolving loan under our senior credit facility. At the Market Offering Sales Agreement In July 2017, we entered into a new at the market offering sales agreement (as amended, 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, 2019 we have sold shares of our common stock for gross proceeds of $163.8 million under the Sales Agreement. F - 28 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS There was no issuance of common stock under the Sales Agreement in 2019. Issuances of common stock under the Sales Agreement through December 31, 2018, and 2017 were as shown in the table below: 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 $ $ $ Issuances of common stock under our previous at the market offering sales agreement during 2017 were as follows: Quarter Ended June 30, 2017 March 31, 2017 Temporary Equity Common stock issued Weighted average sales price Net proceeds (in millions) 400,000 280,502 $ $ 85.01 76.47 $ $ 39.4 92.6 29.7 33.6 21.2 Equity Interests - NG Sun Whitewater RV LLC - In August 2019, in connection with the investment in land at the property known as Whitewater, NG Sun Whitewater LLC purchased $2.4 million of common equity interest in Sun NG Whitewater RV LLC Resorts (referred to as “Equity Interests - NG Sun Whitewater RV LLC”). The Equity Interests - NG Sun Whitewater RV LLC do not have a fixed maturity date and can be redeemed any time after the last day of the third full year that the RV park has been operated as a recreational vehicle park, or last day of the third full year that the RV park has been operated as a recreational vehicle park after the completion of the development of phase two (the “buy-sell trigger date”). Sun NG LLC, our subsidiary, has the right to terminate the agreement after the buy-sell trigger date. If either party exercises their option, the property management agreement will be terminated, and Sun NG LLC is required to purchase the remaining interests of NG Sun Whitewater LLC and the property management agreement at fair value. Refer to Note 3, “Real Estate Acquisitions,” and Note 8, “Consolidated Variable Interest Entities,” for additional information. Issuance of Series D Preferred OP Units - In February 2019, we issued 488,958 Series D Preferred OP Units in connection with the acquisition of Country Village Estates. The Series D preferred OP units have a stated issuance price of $100.00 per OP Unit and carry a preferred return of 3.75 percent until the second anniversary of the issuance date. Commencing with the second anniversary of the issuance date, the Series D Preferred OP Units carry a preferred return of 4.0 percent. Commencing with the first anniversary of the issuance date, each Series D Preferred OP Unit can be exchanged for 0.8 shares of our common stock at the holder’s option. The holders may require redemption in cash after the fifth anniversary of the Series D issuance date or upon the holder’s death. Refer to Note 3, “Real Estate Acquisitions” for additional information. Equity Interests - NG Sun LLC - 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. Series A-4 Preferred OP Units On December 13, 2019, all outstanding shares of the Company’s 6.50% Series A-4 Cumulative Convertible Preferred Stock, and all of the Operating Partnership’s Series A-4 Preferred OP Units, were converted into common stock and common OP units, respectively. All 1,031,747 shares of Series A-4 preferred stock were converted into 458,541 shares of common stock (net of fractional shares paid in cash). All 405,656 Series A-4 preferred OP units were converted into 180,277 common OP units (net of fractional units paid in cash). The Series A-4 preferred shares and units were issued to the sellers of the American Land Lease portfolio which we acquired in 2014 and 2015. F - 29 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Issuances of Common Stock and Common OP Units In October 2019, in connection with the acquisition of the Jensen Portfolio, we issued 1,972,876 shares of common stock, net of fractional shares paid in cash. Conversions Conversions to Common Stock - 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 2019 and 2018: 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 December 31, 2019 December 31, 2018 Year Ended 1.0000 2.4390 0.4444 0.4444 1.1100 485,629 22,707 4,708 1,062,789 4,014 485,629 55,370 2,092 472,366 4,455 20,608 13,430 13,765 22,576 1,919 20,608 32,752 6,116 10,033 2,130 Conversions to Common OP Units - Subject to certain limitations, holders can convert certain series OP units to other series of OP units. There was no such conversion in 2018. Below is the activity of conversions during 2019: Series Series A-4 preferred OP units Dividends Year Ended December 31, 2019 Units/Shares Common OP units 405,656 180,277 Dividend distributions declared for the quarter ended December 31, 2019 are as follows: Dividend Record Date Payment Date Distribution per Share Total Distribution (in Thousands) Common Stock, Common OP units and Restricted Stock 12/31/2019 1/15/2020 $ 0.75 $ 71,704 11. Share-Based Compensation As of December 31, 2019, 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. F - 30 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 974,864 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. 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 191,774 shares remaining for future issuance. During the year ended December 31, 2019 and 2018, shares were granted as follows: Type Executive Officers Plan 2015 Equity Incentive Plan Shares Granted 44,000 Grant Date Fair Value Per Share $ 115.39 (1) Vesting Type Time Based Vesting Anniversary Percentage 20.0% annually over 5 years Executive Officers 2015 Equity Incentive Plan 66,000 (2) $ 115.39 (2) Market Condition Grant Period 2019 2019 2019 2019 2019 2018 Directors Key Employees 2004 Non-Employee Director Option Plan 2015 Equity Incentive Plan Key Employees 2015 Equity Incentive Plan Key Employees 2015 Equity Incentive Plan 18,000 55,770 6,250 16,500 50,100 60,000 90,000 16,800 $ $ $ $ $ $ $ $ 113.68 (1) Time Based 3rd 3rd 100.0% 100.0% 120.01 (1) 142.48 (1) 88.30 (1) Time Based 20.0% annually over 5 years Time Based 20.0% annually over 5 years Time Based 2nd 3rd 4th 5th 6th 35.0% 35.0% 20.0% 5.0% 5.0% 86.97 (1) 87.24 (1) Time Based 20.0% annually over 5 years Time Based 20.0% annually over 5 years 65.24 (3) Market Condition 85.28 (1) Time Based 3rd 3rd 100.0% 100.0% 2018 2018 2018 2018 Key Employees 2015 Equity Incentive Plan Executive Officers 2015 Equity Incentive Plan Executive Officers 2015 Equity Incentive Plan Directors 2004 Non-Employee Director Option Plan (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 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 $115.39. Based on the Monte Carlo simulation we expect 75.1% of the 66,000 shares to vest. (3) 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. F - 31 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes our restricted stock activity for the years ended December 31, 2019, 2018, and 2017: Unvested restricted shares at January 1, 2017 Granted Vested Forfeited Unvested restricted shares at December 31, 2017 Granted Vested Forfeited Unvested restricted shares at December 31, 2018 Granted Vested Forfeited Unvested restricted shares at December 31, 2019 Number of Shares Weighted Average Grant Date Fair Value 841,634 219,400 $ $ (196,412) $ (4,769) $ 859,853 233,400 $ $ (214,111) $ (8,025) $ 871,117 190,020 $ $ (237,406) $ (10,690) $ 813,041 $ 56.38 79.38 47.60 56.43 64.25 87.12 54.69 72.16 72.65 117.47 64.46 79.58 85.43 Total compensation cost recognized for restricted stock was $17.5 million, $15.1 million, and $12.7 million for the years ended December 31, 2019, 2018, and 2017, respectively. The total fair value of shares vested was $15.3 million, $11.7 million, and $9.3 million for the years ended December 31, 2019, 2018 and 2017, respectively. The remaining share-based compensation cost, net related to our unvested restricted shares outstanding as of December 31, 2019 is approximately $39.0 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 $ 16.6 $ 11.3 $ 7.1 $ 4.0 2020 2021 2022 Thereafter Options During 2019, 1,500 non-employee director options exercised for net proceeds of less than $0.2 million. There were no non-employee director options exercised during 2018. At December 31, 2019, 1,500 fully vested non-employee director options remained outstanding with an intrinsic value of less than $0.1 million. These options had a weighted average exercise price of $37.35 and a weighted average contractual term of approximately 1.6 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, 2019, 2018, or 2017. 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 $132.3 million for the year ended December 31, 2019. In 2019, transient RV revenue was recognized 19.8 percent in the first quarter, 23.1 percent in the second quarter, 41.0 percent in the third quarter, and 16.1 percent in the fourth quarter. F - 32 A presentation of our segment financial information is summarized as follows (amounts in thousands): SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2019 Year Ended December 31, 2018 Real Property Operations Home Sales and Rentals Consolidated Real Property Operations Home Sales and Rentals Consolidated Real Property Operations December 31, 2017 Home Sales and Rentals Consolidated Revenues $ 992,545 $ 239,508 $ 1,232,053 $ 880,080 $ 219,688 $ 1,099,768 $ 779,739 $ 177,957 $ 375,690 616,855 156,352 83,156 532,042 700,011 330,695 549,385 146,637 73,051 477,332 622,436 290,016 489,723 117,274 60,683 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 expenses Catastrophic weather related charges, net Depreciation and amortization Loss on extinguishment of debt Interest on mandatorily redeemable preferred OP units / equity Interest expense Gain / (loss) on remeasurement of marketable securities Other income / (expense), net Income from nonconsolidated affiliates Current tax expense Deferred tax benefit Net income / (loss) Less: Preferred return to preferred OP units / equity 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 31,984 — (82,320) (1,729) (250,686) (16,505) (4,698) (133,125) 34,240 3,604 — (746) 222 — (14,690) (11,644) (8) (77,381) — — (28) — (147) 1,374 (349) — 31,984 (14,690) (93,964) (1,737) (328,067) (16,505) (4,698) (133,153) 34,240 3,457 1,374 (1,095) 222 27,057 — (70,512) 140 (218,617) (1,190) (3,694) (130,535) (3,639) (6,414) — (372) 507 — (15,722) (10,917) (232) 27,057 (15,722) (81,429) (92) (68,645) (287,262) — — (21) — (39) 790 (223) — (1,190) (3,694) (130,556) (3,639) (6,453) 790 (595) 507 24,875 — (74,548) (7,856) (199,960) (4,676) (3,114) (128,456) — 8,983 — (62) 582 957,696 407,290 550,406 24,874 (12,457) (83,973) (8,352) (1) (12,457) (9,425) (496) (61,576) (261,536) — — (15) — (1) — (384) — (4,676) (3,114) (128,471) — 8,982 — (446) 582 197,096 (19,717) 177,379 142,116 (21,958) 120,158 105,491 (23,672) 81,819 (6,058) (10,659) 180,379 (1,288) — 891 (18,826) — (6,058) (9,768) 161,553 (1,288) (4,486) — (4,486) (4,581) — (4,581) (9,512) 1,069 (8,443) (6,319) 1,264 (5,055) 128,118 (1,736) (20,889) — 107,229 (1,736) 94,591 (7,162) (22,408) — 72,183 (7,162) $ 179,091 $ (18,826) $ 160,265 $ 126,382 $ (20,889) $ 105,493 $ 87,429 $ (22,408) $ 65,021 F - 33 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Real Property Operations December 31, 2019 Home Sales and Rentals Consolidated Real Property Operations December 31, 2018 Home Sales and Rentals Consolidated Identifiable assets Investment property, net $ 6,651,275 $ 581,345 $ 7,232,620 $ 5,586,444 $ 531,872 $ 6,118,316 Cash, cash equivalents and restricted cash Marketable securities Inventory of manufactured homes Notes and other receivables, net Collateralized receivables, net Other assets, net Total assets 13. Income Taxes (8,346) 94,727 — 142,509 — 167,804 43,176 — 62,061 15,417 — 52,092 34,830 94,727 62,061 157,926 — 219,896 36,294 49,037 — 145,673 106,924 128,076 25,968 — 49,199 14,404 — 36,135 62,262 49,037 49,199 160,077 106,924 164,211 $ 7,047,969 $ 754,091 $ 7,802,060 $ 6,052,448 $ 657,578 $ 6,710,026 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, 2019. 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. However, we did incur $0.2 million of withholding taxes on distributions from our investment in Ingenia Communities Group. 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, 2019, 2018, and 2017, distributions paid per share were taxable as follows (unaudited / rounded): Ordinary income (1) Capital gain Return of capital December 31, 2019 Year Ended December 31, 2018 December 31, 2017 Amount Percentage Amount Percentage Amount Percentage $ 1.66 — 1.30 56.0% $ —% 44.0% 1.58 0.13 1.09 56.4% $ 4.8% 38.8% 0.83 — 1.83 31.2% —% 68.8% Total distributions declared 100.0% (1) 98.8276%% of the ordinary taxable dividend qualifies as Section 199A dividend for 2019 and 1.1724% of the ordinary taxable dividend qualifies as a Qualified Dividend 100.0% $ 100.0% $ 2.96 2.66 2.80 $ for 2019. 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,” we recognized 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. F - 34 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The components of our provision / (benefit) for income taxes attributable to continuing operations for the year ended December 31, 2019 and 2018 are as follows (amounts in thousands): Federal Current State and Local Current Deferred Foreign Current Deferred Year Ended December 31, 2019 December 31, 2018 $ (3) $ (102) 919 — 179 (222) 701 11 (4) (518) Total (benefit) / provision $ 873 $ 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, 2019 and 2018 is as follows (amounts in thousands): Pre-tax loss attributable to taxable subsidiaries Federal (benefit) / provision 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 (benefit) / provision Year Ended December 31, 2019 December 31, 2018 $ (4,122) $ (7,299) (866) 42 — (73) 526 — 692 321 552 873 $ 21.0 % (1.0)% — % 1.8 % (12.7)% — % (16.8)% (7.7)% (1,534) 21.0 % — % — % 1.5 % (39.5)% — % 21.6 % 4.6 % — — (112) 2,885 — (1,576) (337) 425 88 $ 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 - 35 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) (1) Net deferred tax liability is included within Other liabilities in our Consolidated Balance Sheets. As of December 31, 2019 December 31, 2018 $ 18,009 $ 28,787 395 47,191 (45,342 ) 1,849 18,071 28,140 784 46,995 (44,817) 2,178 (22,813 ) (22,813 ) (22,406) (22,406) $ (20,964 ) $ (20,228) Our U.S. TRS operating loss carryforwards are $75.3 million, or $15.6 million after tax, including SHS loss carryforwards of $73.0 million, or $15.3 million after tax, as of December 31, 2019. 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 $9.1 million, or $2.4 million after tax, as of December 31, 2019. 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, 2019 and 2018. We expect no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2019. We classify certain state taxes as income taxes for financial reporting purposes. We recorded a provision for state income taxes of $0.9 million for the year ended December 31, 2019, $0.7 million for the year ended December 31, 2018, and $0.7 million for the year ended December 31, 2017. 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, 2019, 2018 and 2017. 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 - 36 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. Earnings Per Share We have outstanding stock options and unvested restricted common shares. Our Operating Partnership has outstanding common OP units, Series A-1 preferred OP units, Series A-3 preferred OP units, Series C preferred OP units, Series D 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 Sun Communities, Inc. common stockholders Less allocation to restricted stock awards Basic earnings - Net income attributable to common stockholders after allocation to restricted stock awards Add allocation to restricted stock awards Diluted earnings - Net income attributable to common stockholders after allocation to restricted stock awards 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 earnings per share Diluted earnings per share December 31, 2019 Year Ended December 31, 2018 December 31, 2017 $ $ $ $ $ 160,265 $ 105,493 $ (1,170) (831) 159,095 $ 104,662 $ 1,170 831 65,021 (455) 64,566 455 160,265 $ 105,493 $ 65,021 88,460 1 454 88,915 81,387 2 651 82,040 1.80 1.80 $ $ 1.29 1.29 $ $ 76,084 2 625 76,711 0.85 0.85 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, 2019, 2018 and 2017 (amounts in thousands): Common OP units Series A-4 preferred stock A-3 preferred OP units A-1 preferred OP units A-4 preferred OP units Aspen preferred OP units Series C preferred OP units Series D preferred OP units Total securities December 31, 2019 Year Ended December 31, 2018 December 31, 2017 2,420 — 40 309 — 1,284 310 489 4,852 2,726 1,063 40 332 410 1,284 314 — 6,169 2,746 1,085 40 345 424 1,284 316 — 6,240 F - 37 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 2019 and 2018 (in thousands, except per share data): 2019 Quarters 2018 Quarters March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019 March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 $ 287,330 $ 312,445 $ 362,443 $ 301,819 $ 257,975 $ 271,434 $ 323,413 $ 274,003 252,759 272,273 305,989 293,835 221,871 245,125 273,119 257,162 $ 34,571 $ 40,172 $ 56,454 $ 7,984 $ 36,104 $ 26,309 $ 50,294 $ 16,841 $ 34,331 $ 40,385 $ 57,002 $ 28,547 $ 29,986 $ 20,408 $ 46,060 $ 9,039 Total Revenues Total Expenses Income Before Other Items Net Income attributable to Sun Communities, Inc. common stockholders Earnings per share (1) Basic earnings per share Diluted earnings per share $ 0.40 $ 0.46 $ 0.63 $ 0.31 $ 0.38 $ 0.25 $ 0.56 $ $ 0.63 (1) Earnings per share for the year may not equal the sum of the fiscal quarters’ earnings per share due to changes in basic and diluted shares outstanding. 0.40 0.56 0.25 0.46 0.38 0.31 $ $ $ $ $ $ $ 0.11 0.11 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 regarding determination of fair value 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: F - 38 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Marketable Securities Marketable securities held by us and 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 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.” Notes Receivable from Real Estate Developers The net carrying value of the notes receivable from real estate developers 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 nonperformance risk over the remaining term of the liability (Level 2). 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 those instruments. F - 39 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The table below sets forth our financial assets and liabilities that required disclosure of fair value on a recurring basis as of December 31, 2019. The table presents the carrying values and fair values of our financial instruments as of December 31, 2019 and December 31, 2018, that were measured using the valuation techniques described above (in thousands). The table excludes other financial instruments such as cash and cash equivalents, accounts receivable, and accounts payable 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 Notes receivable from real estate developers Total Financial liabilities Debt (excluding secured borrowings) Secured borrowings Lines of credit Other liabilities (contingent consideration) Total 17. Recent Accounting Pronouncements Recent Accounting Pronouncements - Adopted December 31, 2019 December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value $ $ $ $ 94,727 $ 94,727 $ 49,037 $ 95,580 — 18,960 95,580 — 18,960 112,798 106,924 — 49,037 112,798 106,924 — 209,267 $ 209,267 $ 268,759 $ 268,759 3,250,504 $ 3,270,544 $ 2,888,572 $ 2,757,649 — 183,898 6,134 — 183,898 6,134 107,731 128,000 4,640 107,731 128,000 4,640 3,440,536 $ 3,460,576 $ 3,128,943 $ 2,998,020 In February 2016, the FASB issued ASC 2016-02 codified in ASC Topic 842, Leases, which amends the guidance in former ASC Topic 840, Leases. On January 1, 2019, we adopted ASC 2016-02. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right of-use (“ROU”) assets and lease liabilities on the balance sheet for those leases classified as operating leases and disclose key information about leasing arrangements. As amended by ASU 2018-11, comparative reporting periods are presented in accordance with Topic 840, while periods subsequent to the effective date are presented in accordance with Topic 842. The Company elected 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, initial direct costs for any existing leases. The Company elected not to allocate lease obligation between lease and non-lease components of our agreements for both leases where we are a lessor and leases where we are a lessee. The Company did not elect the hindsight practical expedient, which permits the company to use hindsight in determining the lease terms and impairment implications. The Company did not elect to use a portfolio approach in the valuation of ROU assets and corresponding liabilities. Some ROU assets include an extension option, which is included in the ROU assets and liabilities only if we are reasonably certain to exercise. Lessor Accounting Our income from real property and rental home revenue streams are derived from rental agreements where we are the lessor. Our recognition of rental revenue remains mainly consistent with previous guidance, apart from the narrower definition of initial direct costs that can be capitalized. ASC 842 limits the definition of initial direct costs to only the incremental costs of signing a lease. Internal sales employees’ compensation, payroll-related fringe benefits, certain 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 under the new standard, and will be accounted for as general and administrative expense in our consolidated statements of operations. ASC 842 permits the capitalization of direct commission costs. The application of ASC 842 resulted in an immaterial impact on the statement of consolidated operations. Our leases with customers are classified as operating leases. Lease income from tenants is recognized on a straight-line basis over the terms of the relevant lease agreement and is included within income from real property, rental home revenue and ancillary revenue on the Consolidated Statements of Operations. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the resident is placed on non-accrual status and revenue is recognized when cash payments are received. F - 40 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lessee Accounting We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for executive office spaces, ground leases at certain communities, and certain equipment leases. The ROU asset and ROU liabilities are included within Other assets, net and Other liabilities on the Consolidated Balance Sheets. For operating leases with a term greater than one year, the company recognizes the ROU assets and liabilities related to the lease payments on the Consolidated Balance Sheets. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The ROU assets represent our right to use the underlying assets for the term of the lease and the lease liabilities represent our obligation to make lease payments arising for the agreements. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus unamortized initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The ROU asset is periodically reduced by impairment losses. As of December 31, 2019, we have not encountered any impairment losses. Variable lease payments, except for the ones that depend on index or rate, are excluded from the calculation of the ROU assets and lease liabilities and are recognized as variable lease expense in the Consolidated Statements of Operations in the period in which they are incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Many of our lessee agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. The lease liability costs are amortized over the straight-line method over the term of the lease. Operating leases with a term of less than one year are recognized as a lease expense over the term of the lease, with no asset or liability recognized on the Consolidated Balance Sheets. Finance leases where we are the lessee are included in Other assets, net and Other liabilities on our Consolidated Balance Sheets. The lease liabilities are initially measured in the same manner as operating leases and are subsequently measured at amortized cost using the effective interest method. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For finance leases the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to us, or we are reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability. ROU assets are periodically reduced by impairment losses. As of December 31, 2019, we have not encountered any impairment losses. Refer to Note 19, “Leases” for information regarding leasing activities. Recent Accounting Pronouncements - Not Yet Adopted In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” “CECL” 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. As of January 1, 2020, we adopted the fair value option for our installment notes receivable and the notes receivable within the GTSC joint venture which resulted in fair value adjustments of $0.3 million and $0.6 million, respectively. We do not expect the impact of the adoption of CECL on the remaining in scope financial instruments to be material. 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. F - 41 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19. Leases Lessee accounting Future minimum lease payments under non-cancellable leases as of the year ended December 31, 2019 where we are the lessee include: Maturity of lease liabilities (in thousands) 2020 2021 2022 2023 2024 Thereafter Total lease payments Less: Imputed interest Present value of lease liabilities Operating Leases Finance Leases Total $ $ $ 2,397 $ 2,446 2,483 2,572 2,868 32,277 45,043 (20,821) 24,222 $ $ 120 120 120 120 4,060 — 4,540 (459) 4,081 $ $ $ 2,517 2,566 2,603 2,692 6,928 32,277 49,583 (21,280) 28,303 ROU assets and lease liabilities for finance and operating leases as included in our Consolidated Financial Statements are as follows: Lease asset and liabilities (in thousands) Description Lease assets Right-of-use asset obtained in exchange for new finance lease liabilities Right-of-use asset obtained in exchange for new operating lease liabilities Financial Statement Classification Other asset, net Other asset, net Right-of-use asset obtained relative to below market operating lease Other asset, net Lease liabilities Finance lease liabilities Operating lease liabilities Other liabilities Other liabilities December 31, 2019 Description Financial Statement Classification December 31, 2018 $ $ $ $ $ 4,081 Capital lease asset Land $ 4,098 23,751 28,366 4,081 24,222 n/a Below market Lease intangible asset Other Asset, net $ 29,118 Capital lease liabilities Other Liabilities $ 4,098 n/a Lease expense for finance and operating leases as included in our Consolidated Financial Statements are as follows: Lease expense (in thousands) Description Financial Statement Classification Finance lease expense Amortization of right-of-use assets Interest on lease liabilities Operating lease cost Variable lease cost Total lease expense Interest expense Interest expense General and administrative expense, Property operating and maintenance Property operating and maintenance Year Ended December 31, 2019 $ $ 17 103 3,474 1,584 5,178 Description Financial Statement Classification Capital lease expense Amortization of lease Interest on lease liabilities Operating lease expense Interest expense Interest expense General and administrative expense, Property operating and maintenance Below market ground lease amortization expense Property operating and maintenance Total lease expense F - 42 Year Ended December 31, 2018 December 31, 2017 $ $ 16 $ 104 3,310 821 4,251 $ — — 3,303 1,017 4,320 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. Lease term, discount rates and additional information for finance and operating leases are as follows: Lease term and discount rate Weighted-average remaining lease terms (years) Finance lease Operating lease Weighted-average discount rate Finance lease Operating lease Other Information (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating Cash Flow from Operating leases Financing Cash Flow from Finance leases Total Cash paid on lease liabilities December 31, 2019 4.50 27.15 2.50% 4.15% December 31, 2019 Year Ended December 31, 2018 December 31, 2017 $ $ 2,199 120 2,319 $ $ 3,340 120 3,460 $ $ 3,182 121 3,303 As of the year ended December 31, 2019, we have an additional executive office space operating lease for $2.9 million which will commence in January 2020 with a lease term of seven years. Lessor Accounting We are not the lessor for any finance leases as of December 31, 2019. Over 95 percent of our operating leases where we are the lessor are either month to month or for a time period not to exceed one year. As of the reporting date, future minimum lease payments would not exceed twelve months. Similarly, over 95 percent of our investment property, net on the Consolidated Balance Sheets, and related depreciation amounts relate to assets whereby we are the lessor under an operating lease. 20. 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 $18.95 per square foot until October 31, 2020 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. Use of Airplane. Gary A. Shiffman is the beneficial owner of an airplane that we use from time to time for business purposes. During the year ended December 31, 2019, we paid $0.4 million for the use of the airplane. Mr. Shiffman may have a conflict of interest with respect to his obligations as our officer and director and his ownership interest in the airplane. Telephone Services. Brian M. Hermelin is a principal and a beneficial owner of an entity that installs and maintains emergency telephone systems at our Properties. During the year ended December 31, 2019, we paid $0.2 million for these services. Mr. Hermelin may have a conflict of interest with respect to his obligations as our director and his position with and ownership interest in the provider of these services. F - 43 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Legal Counsel. During 2017-2019, 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 $11.1 million, $7.1 million and $5.0 million in the years ended December 31, 2019, 2018 and 2017, 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. 21. Subsequent Events Subsequent to the quarter ended December 31, 2019, we acquired one MH community located in East Falmouth, Massachusetts for $13.5 million, containing 230 RV sites. In conjunction with the acquisition, the Operating Partnership created a new class of OP units named Series E preferred OP units. As of February 13, 2020, 90,000 Series E preferred OP units were outstanding. The Series E preferred OP units provide for quarterly distributions on the $100 per unit issue price of 5.3 percent per year until January 9, 2022, and 5.5 percent per year thereafter. Subject to certain limitations, each Series E Preferred Unit is exchangeable at any time after the first anniversary of its issuance date into that number of shares of the Company’s common stock equal to the quotient obtained by dividing $100.00 by $145.00 (as such ratio is subject to adjustment for certain capital events). On January 13, 2020, the Operating Partnership’s partnership agreement was amended to revise the terms of 270,000 of the operating partnership’s outstanding 1,283,819 Aspen preferred OP units. With respect to those 270,000 units, the automatic redemption date was extended to January 2, 2034 (as compared to January 2, 2024 for the other Aspen preferred OP units) and the annual distribution rate was reduced to 3.8 percent (as compared to a rate determined by a formula, currently 6.5 percent, for the other Aspen preferred OP units). 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, 2019 (amounts in thousands) Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Property Name Location Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets 49’er Village RV Resort Academy / West Point Adirondack Gateway RV Resort & Campground Allendale Meadows Mobile Village 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 Arbor Woods Rancho Cucamonga, CA Muskegon, MI Amelia, OH Bradenton, FL Ypsilanti, MI Archview RV Resort & Campground Moab, UT 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 Beechwood (4) 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 Killingworth, CT 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 Bushnell, FL Pflugerville, TX Austin, TX Hudson, FL Brentwood Mobile Village Kentwood, MI C — — — A D — B C — — D — C D — E C B A — C E — E C B D B E $ — $ 2,180 $ 10,710 $ — — — 10,895 28,090 — 7,582 — — — 5,340 — — 24,344 — 7,218 — 9,425 10,833 — — 18,066 — 6,406 — 26,945 23,249 5,838 10,308 1,485 14,278 620 366 729 1,970 3,684 6,692 23,736 21,088 800 543 456 3,340 6,289 240 1,190 630 890 6,810 2,140 7,897 717 590 1,250 750 410 2,040 5,120 3,830 1,000 796 1,150 385 6,172 5,480 4,410 12,385 8,419 2,195 1,175 7,913 8,054 17,650 11,880 18,400 1,916 21,308 13,534 6,163 35,294 9,679 12,720 3,240 500 3,716 9,359 3,592 F - 45 — — — — — — 336 — — — 5 — (1 ) (28 ) — (3 ) (33 ) — — — (3 ) (13 ) — — — — — — — 3,324 — — — $ 2,252 $ 2,180 $ 9,496 1,485 2,577 10,928 10,072 1,687 18,359 2,901 5,412 11,303 305 1,873 387 2,104 5,835 1,804 2,520 5 8,330 2,195 2,627 1,764 5,043 1,703 5,627 3,646 49,478 7,047 3,049 2,004 620 366 729 23,736 1,136 543 456 3,340 6,294 240 1,162 630 857 6,810 2,140 7,897 704 590 1,250 750 410 2,040 5,120 3,830 4,324 796 1,150 385 12,962 23,774 4,547 14,612 16,764 22,775 24,531 8,381 9,822 23,688 8,724 4,068 1,562 10,017 13,889 19,454 14,400 18,405 10,246 23,503 16,161 7,927 40,337 11,382 18,347 6,886 49,978 10,763 12,408 5,596 Accumulated Depreciation Date 2017 (1,251 ) $ (12,715 ) 2000 (599 ) 2016 (8,782 ) 1996 Acquired (A) or Constructed (C) (A) (A) (A) (A) (10,114 ) 1996 (A&C) (2,768 ) 2016 (5,138 ) 2011 (4,546 ) 1999 (5,142 ) 1996 (2,707 ) 2017 (490 ) 2018 (2,364 ) 1994 (203 ) 2016 (1,257 ) 2016 (7,992 ) 1996 (2,277 ) 2016 (1,743 ) 2016 (307 ) 2019 (A) (A&C) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (6,134 ) 1999 (A&C) (5,827 ) 2013 (1,991 ) 2016 (2,407 ) 2012 (5,829 ) 2015 (1,343 ) 2016 (3,497 ) 2014 (2,285 ) 2012 (13,237 ) 1998 (6,525 ) 1995 (2,035 ) 2015 (3,571 ) 1996 (A) (A) (A) (A&C) (A) (A) (A) (C) (A&C) (A) (A) Total $ 15,142 25,259 5,167 14,978 17,493 46,511 25,667 8,924 10,278 27,028 15,018 4,308 2,724 10,647 14,746 26,264 16,540 26,302 10,950 24,093 17,411 8,677 40,747 13,422 23,467 10,716 54,302 11,559 13,558 5,981 SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Property Name Location Group Amount Land Depreciable Assets Land Depreciable Assets Brentwood West Broadview Estates Brook Ridge (4) Brookside Mobile Home Village Brookside Village Buena Vista (4) Mesa, AZ Davison, MI Hooksett, NH Goshen, IN Kentwood, MI Buckeye, AZ Buttonwood Bay MH & RV Resort Sebring, FL Byron Center Mobile Village Byron Center, MI Caliente Sands Camelot Villa Campers Haven RV Resort Candlelight Manor Candlelight Village Cathedral City, CA Macomb, MI Dennisport, MA South Daytona, FL Sauk Village, IL Canyonlands RV Resort & Campground Moab, UT Cape May Crossing Cape May, NJ Cape May KOA Carolina Pines RV Resort Carriage Cove Carrington Pointe Cape May, NJ Longs, SC Sanford, FL Ft. Wayne, IN Castaways RV Resort & Campground Berlin, MD Cava Robles RV Resort Cave Creek Cedar Springs (4) Central Park MH & RV Resort Cherrywood (4) Chisholm Point Estates Chincoteague Island KOA (2) Chula Vista RV Resort (2) (4) Cider Mill Crossings Cider Mill Village Citrus Hill RV Resort Paso Robles, CA Evans, CO Southington, CT Haines City, FL Clinton, NY Pflugerville, TX Chincoteague, VA Chula Vista, CA Fenton, MI Middleville, MI Dade City, FL D A C — D — D A — A D — A — — C — E — A — B C C C D — — C A C 28,800 4,805 — — 6,886 — 32,107 3,235 — 16,442 16,300 — 7,222 — — — — 16,716 — 20,607 — 24,811 — — — 23,200 — — — 4,590 — 13,620 24,202 749 959 260 170 9,190 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 2,899 2,600 662 609 5,750 — 520 250 1,170 6,089 5,971 1,080 5,564 14,363 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 10,253 10,405 9,629 5,286 13,836 — 1,568 3,590 2,422 F - 46 — — — 386 — — — — — — — — — 1 — — 694 — (3 ) (1 ) — — — — — — — — — — — — 1,052 17,136 — 19,555 392 59 7,341 1,815 640 12,349 8,230 2,650 11,926 519 494 7,950 — 1,977 18,984 5,150 — 9,338 22 3,507 57 6,131 — 1,125 39,810 2,621 1,486 Land 13,620 749 959 646 170 9,190 1,952 253 1,930 910 14,260 3,140 600 3,662 270 650 6,594 6,050 1,075 14,320 1,396 2,241 2,899 2,600 662 609 5,750 — 520 250 1,170 Depreciable Assets Total 25,254 23,225 5,971 20,635 5,956 14,422 25,635 4,217 7,350 33,560 20,145 6,517 17,549 7,934 2,187 15,686 63,828 23,212 22,616 27,427 39,084 24,681 10,275 13,912 9,686 11,417 13,836 1,125 41,378 6,211 3,908 38,874 23,974 6,930 21,281 6,126 23,612 27,587 4,470 9,280 34,470 34,405 9,657 18,149 11,596 2,457 16,336 70,422 29,262 23,691 41,747 40,480 26,922 13,174 16,512 10,348 12,026 19,586 1,125 41,898 6,461 5,078 Accumulated Depreciation Date 2014 (4,911 ) (12,158 ) 1996 (100 ) 2019 Acquired (A) or Constructed (C) (A) (A&C) (A) (10,050 ) 1985 (A&C) (1,650 ) 2011 (313 ) 2019 (14,582 ) 2001 (2,684 ) 1996 (612 ) 2017 (8,482 ) 2013 (1,874 ) 2016 (708 ) 2016 (10,139 ) 1996 (469 ) 2018 (260 ) 2016 (4,287 ) 2013 (966 ) 2017 (4,426 ) 2014 (7,753 ) 1997 (6,131 ) 2014 (2,668 ) 2014 (9,921 ) 2004 (171 ) 2019 (1,525 ) 2016 (160 ) 2019 (6,327 ) 1995 (273 ) 2019 (25 ) 2019 (9,046 ) 2011 (2,283 ) 2011 (431 ) 2016 (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A&C) (A&C) (C) (C) (A) (A) (A) (A&C) (A) (A&C) (A&C) (A) (A) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Location Group Amount Land Depreciable Assets Land Depreciable Assets Property Name Clear Water Mobile Village Club Naples Club Wildwood Coastal Plantation (4) Costa Vista (4) South Bend, IN Naples, FL Hudson, FL Hampstead, NC San Diego, CA Cobus Green Mobile Home Park Osceola, IN Colony in the Wood Comal Farms Compass RV Resort Country Acres Mobile Village Country Hills Village Country Lakes (4) Port Orange, FL New Braunfels, TX St. Augustine, FL Cadillac, MI Hudsonville, MI Little River, SC Country Meadows Mobile Village Flat Rock, MI Country Meadows Village Country Squire MH & RV Resort Country Village Estates (4) Countryside Estates Countryside Village Caledonia, MI Paisley, FL Oregon City, OR Mckean, PA Great Falls, MT Countryside Village of Atlanta Lawrenceville, GA Countryside Village of Gwinnett Countryside Village of Lake Lanier Craigleith RV Resort & Campground Creeks Crossing (4) (5) Creekwood Meadows Crestwood (4) Crossroads (4) Buford, GA Buford, GA Clarksburg, ON Uhland, TX Burton, MI Concord, NH Aiken, SC Cutler Estates Mobile Village Grand Rapids, MI Cypress Greens Daytona Beach RV Resort Deep Run (4) Lake Alfred, FL Port Orange, FL Cream Ridge, NJ Deer Lake RV Resort & Campground Huntsville, ON B C E C — A — C — A A C B C — — E — C A B — — A C C B E C C — 12,249 — 22,629 — — 8,864 — — — 4,309 5,971 — 42,427 — — — 6,648 — — 9,241 27,216 — — 3,124 — — 14,175 7,498 — — — 80 5,780 14,206 3,264 — 762 5,650 1,455 4,151 380 340 1,746 924 550 520 22,020 320 430 1,274 1,124 1,916 420 3,484 808 1,849 822 749 960 2,300 2,020 2,830 61 — — — — — 29 — 2 — — — 296 — — — — — — — — (1 ) (10 ) — 404 — — — — — — (1 ) (67 ) 1,270 4,952 21,275 6,469 — 7,037 26,828 1,732 10,480 3,495 3,861 5,522 7,583 5,555 1,719 42,615 11,610 7,157 10,957 9,539 16,357 705 2 2,043 22,367 3,675 6,941 17,518 7,158 13,053 4,260 F - 47 6,335 3,139 2,133 223 4,777 8,002 2,065 9,458 406 3,652 543 2 20,185 7,440 2,113 36 1,898 987 11,931 1,862 7,921 671 — 14,561 39 69 3,741 2,295 3,930 3 666 Land 141 5,780 14,206 3,264 — 762 5,679 1,455 4,153 380 340 1,746 1,220 550 520 22,020 320 430 1,274 1,124 1,916 410 3,484 1,212 1,849 822 749 960 2,300 2,020 2,763 Depreciable Assets Total 7,605 8,091 23,408 6,692 4,777 15,039 28,893 11,190 10,886 7,147 4,404 5,524 27,768 12,995 3,832 42,651 13,508 8,144 22,888 11,401 24,278 1,376 2 16,604 22,406 3,744 10,682 19,813 11,088 13,056 4,926 7,746 13,871 37,614 9,956 4,777 15,801 34,572 12,645 15,039 7,527 4,744 7,270 28,988 13,545 4,352 64,671 13,828 8,574 24,162 12,525 26,194 1,786 3,486 17,816 24,255 4,566 11,431 20,773 13,388 15,076 7,689 Accumulated Depreciation Date 1986 (4,378 ) (2,694 ) 2011 (2,690 ) 2016 (108 ) 2019 — 2019 (9,274 ) 1993 (1,426 ) 2017 Acquired (A) or Constructed (C) (A) (A) (A) (A) (A) (A&C) (5,422 ) 2000 (A&C) (593 ) 2018 (4,558 ) 1996 (1,208 ) 2011 (92 ) 2019 (A) (A) (A) (A) (17,041 ) 1994 (2,816 ) 2011 (A&C) (A&C) (433 ) 2016 (757 ) 2019 (2,524 ) 2014 (1,556 ) 2014 (6,998 ) 2004 (5,247 ) 2004 (11,963 ) 2004 (118 ) 2016 — 2019 (9,889 ) 1997 (373 ) 2019 (A) (A) (A) (A) (A&C) (A) (A) (A) (C) (C) (A) (210 ) 2019 (A&C) (6,871 ) 1996 (3,021 ) 2015 (1,266 ) 2016 (218 ) 2019 (590 ) 2016 (A) (A) (A) (A) (A) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Property Name Deerfield Run Deerwood Desert Harbor Driftwood RV Resort & Campground 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 Farmwood Village (4) Fiesta Village MH & RV Resort Fisherman’s Cove Forest Hill (4) Forest Meadows Forest View Location Anderson, IN Orlando, FL Apache Junction, AZ Clermont, NJ Dunedin, FL Caledonia, MI Firestone, CO Batavia, OH Washington Twp, MI Muskegon, MI Ellenton, FL Panama City Beach, FL Ocala, FL Dover, NH Mesa, AZ Flint Twp, MI Southington, CT Philomath, OR Homosassa, FL Fort Tatham RV Resort & Campground Sylva, NC Fort Whaley RV Resort & Campground Whaleyville, MD Four Seasons Elkhart, IN Frenchtown Villa / Elizabeth Woods Newport, MI Friendly Village of La Habra Friendly Village of Modesto Friendly Village of Simi Friendly Village of West Covina Frontier Town RV Resort & Campground Glen Ellis Family Campground (4) La Habra, CA Modesto, CA Simi Valley, CA West Covina, CA Berlin, MD Glen, NH Glen Haven RV Resort Zephyrhills, FL Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets Total — D E D E A D C A D E D B C — A C A — — C A E D D D D C D E — 38,125 11,222 17,328 10,051 9,096 32,194 — 19,058 19,195 4,710 15,250 10,714 — — 4,784 — 2,508 — — — 3,984 29,333 33,205 17,244 16,928 13,022 — 3,900 5,322 990 6,920 3,940 1,450 4,400 370 2,015 1,280 1,410 690 2,130 10,330 1,160 1,232 2,830 380 5,170 1,031 1,330 110 510 500 1,450 26,956 6,260 14,906 14,520 18,960 448 1,980 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 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 12,348 4,475 3,438 10,775 2,050 22,056 760 5,194 4,811 52,327 25,202 20,885 15,986 5,221 43,166 5,798 8,373 F - 48 6,918 5,017 350 3,134 2,782 2,035 30,738 18,904 5,245 2,713 2,660 638 749 7 1,523 4,395 17 754 1,239 946 8,817 3,479 28,838 1,403 1,630 975 930 28,633 1,511 1,454 990 6,920 3,940 1,450 4,400 370 2,015 1,280 1,410 690 2,130 10,330 1,160 1,232 2,830 380 5,170 1,031 1,330 110 510 500 1,450 26,956 6,260 14,906 14,520 18,960 448 1,980 8,525 42,610 15,241 32,985 19,705 11,032 30,888 25,206 30,658 25,309 10,415 9,708 19,422 12,355 5,998 7,833 10,792 2,804 23,295 1,706 14,011 8,290 81,165 26,605 22,515 16,961 6,151 71,799 7,309 9,827 9,515 49,530 19,181 34,435 24,105 11,402 32,903 26,486 32,068 25,999 12,545 20,038 20,582 13,587 8,828 8,213 15,962 3,835 24,625 1,816 14,521 8,790 82,615 53,561 28,775 31,867 20,671 90,759 7,757 11,807 Accumulated Depreciation Date 1999 (4,422 ) (6,856 ) 2015 (2,904 ) 2014 (6,962 ) 2014 (2,396 ) 2016 (3,302 ) 2011 (16,620 ) 1998 Acquired (A) or Constructed (C) (A&C) (A) (A) (A) (A) (A) (C) (11,822 ) 2000 (A&C) (8,385 ) 2012 (5,026 ) 2014 (1,268 ) 2016 (886 ) 2017 (3,002 ) 2015 (206 ) 2019 (1,128 ) 2014 (5,276 ) 1993 (180 ) 2019 (1,519 ) 1999 (3,597 ) 2015 (206 ) 2016 (1,479 ) 2015 (4,263 ) 2000 (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (14,657 ) 2014 (A&C) (3,323 ) 2016 (2,645 ) 2016 (2,062 ) 2016 (776 ) 2016 (8,946 ) 2015 (104 ) 2019 (1,248 ) 2016 (A) (A) (A) (A) (A) (A) (A) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Encumbrance Initial Cost to Company Group Amount Land Depreciable Assets Property Name Glen Laurel Location Concord, NC Gold Coaster MH & RV Resort Homestead, FL Grand Bay Grand Lakes RV Resort Grand Mobile Estates Grand Oaks RV Resort & Campground Grove Beach (4) Grove Ridge RV Resort Groves RV Resort Gulfstream Harbor Gulliver’s Lake RV Resort & Campground Gwynn’s Island RV Resort & Campground Hacienda Del Rio (4) Hamlin Hannah Village (4) Hemlocks (4) Heritage Hickory Hills Village Hid'n Pines RV Resort (4) Hidden Ridge RV Resort Hidden River RV Resort Hidden Valley RV Resort & Campground High Point Park Hill Country Cottage and RV Resort Hillcrest (4) Holiday West Village Holly Forest Estates Holly Village / Hawaiian Gardens Homosassa River RV Resort Dunedin, FL Citra, FL Grand Rapids, MI Cayuga, ON Westbrook, CT Dade City, FL Ft. Myers, FL Orlando, FL Millgrove, ON Gwynn, VA Edgewater, FL Webberville, MI Lebanon, NH Tilton, NH Temecula, CA Battle Creek, MI Old Orchard Beach, ME Hopkins, MI Riverview, FL Normandale, ON Frederica, DE New Braunfels, TX Uncasville, CT Holland, MI Holly Hill, FL Holly, MI Homosassa Springs, FL C A B — C — C E A — — C — B C C D — 0 C C — 0 C C B D B C — 13,427 9,580 — — — — 3,331 6,108 — — — — 10,720 — — 13,208 — — — — — — — — 14,109 24,733 19,865 — Costs Capitalized Subsequent to Acquisition (Improvements) 1,641 446 3,460 5,280 374 970 1,221 1,290 249 14,510 453 4,234 6,314 4,501 3,587 4,220 10,225 5,387 2,396 78,930 Land — 172 (3 ) (3 ) (3,086 ) (1,820 ) 4,906 (1 ) (23 ) — — — — 2,950 2,950 (1 ) (70 ) 760 33,309 125 365 1,016 13,200 760 1,956 440 3,950 2,610 898 3,790 10,670 340 920 1,514 1,520 — — 536 — — — — — — — (1 ) (3 ) (62 ) (42 ) — — — — — — 595 80,310 1,675 4,705 7,151 7,877 7,697 10,020 893 6,376 4,170 7,031 27,200 9,607 8,067 8,376 13,596 5,020 F - 49 Depreciable Assets 12,562 6,658 1,466 4,923 4,043 2,396 22 1,926 4,215 5,464 1,044 1,778 437 12,949 — 4 1,090 2,441 215 3,788 2,988 1,763 7,715 3,239 4 556 1,194 7,455 2,693 Gross Amount Carried at December 31, 2019 Land Depreciable Assets Total 1,641 618 374 3,460 5,280 947 1,221 1,290 249 14,510 13,015 10,892 7,780 9,424 7,630 6,616 10,247 7,313 6,611 84,394 2,880 3,994 760 33,309 661 365 1,016 13,200 760 1,956 440 3,950 2,548 856 3,790 10,670 340 920 1,514 2,373 80,747 14,624 4,705 7,155 8,967 10,138 10,235 4,681 9,364 5,933 14,746 30,439 9,611 8,623 9,570 21,051 1,520 7,713 14,656 11,510 8,154 12,884 12,910 7,563 11,468 8,603 6,860 98,904 6,874 3,133 114,056 15,285 5,070 8,171 22,167 10,898 12,191 5,121 13,314 8,481 15,602 34,229 20,281 8,963 10,490 22,565 9,233 Accumulated Depreciation Date 2001 (7,063 ) Acquired (A) or Constructed (C) (A&C) (5,560 ) 1997 (4,127 ) 2016 (1,313 ) 2012 (2,174 ) 1996 (618 ) 2016 (170 ) 2019 (894 ) 2016 (3,179 ) 1997 (13,105 ) 2015 (432 ) 2016 (690 ) 2013 (1,411 ) 2019 (7,220 ) 1984 (78 ) 2019 (119 ) 2019 (1,115 ) 2016 (3,357 ) 2011 (197 ) 2019 (1,209 ) 2011 (1,038 ) 2016 (655 ) 2016 (7,216 ) 1997 (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A&C) (A) (A) (A) (A) (A) (A) (A) (A) (A) (4,246 ) 2016 (A&C) (160 ) 2019 (2,477 ) 2011 (6,623 ) 1997 (9,310 ) 2004 (882 ) 2016 (A) (A) (A) (A) (A) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Property Name Location Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets Total Horseshoe Cove RV Resort Hunters Crossing Hunters Glen Hyde Park (4) Indian Creek Park Indian Creek RV & Camping Resort Indian Wells RV Resort Island Lakes Bradenton, FL Capac, MI Wayland, MI Easton, MD Ft. Myers Beach, FL Geneva on the Lake, OH Indio, CA Merritt Island, FL Jellystone Park™ at Birchwood Acres MH & RV Resort Greenfield Park, NY Jellystone Park™ at Gardiner Gardiner, NY Jellystone Park™ at Golden Valley Bostic, NC Jellystone Park™ at Guadalupe River Kerrville, TX Jellystone Park™ at Hill Country Canyon Lake, TX Jellystone Park™ at Larkspur Jellystone Park™ at Luray Jellystone Park™ at Maryland Jellystone Park™ at Memphis Jellystone Park™ at Quarryville Larkspur, CO East Luray, VA Williamsport, MD Horn Lake, TN Quarryville, PA Jellystone Park™ at Tower Park Lodi, CA Jellystone Park™ of Western New York North Java, NY Kensington Meadows Kimberly Estates Lansing, MI Newport, MI King’s Court Mobile Village Traverse City, MI King’s Lake Kings Manor King’s Pointe Kissimmee Gardens DeBary, FL Lakeland, FL Lake Alfred, FL Kissimmee, FL Kissimmee South MH & RV Resort Davenport, FL Knollwood Estates Allendale, MI E C C C D C D D A — — — — — — — A — — A B C — D — B — — A 19,880 — — — 62,296 — 11,534 11,569 3,821 — — — — — — — 2,830 — — 6,537 17,725 — — 8,899 — 7,847 — — 2,418 9,466 430 1,102 6,585 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 1,473 280 2,270 510 3,270 3,740 400 3,387 1,461 16,790 5 12,720 8,738 4,599 1,020 9,540 3,807 24,740 2,718 821 35,067 1,058 1,486 132 1,297 6,917 6,912 8,932 11,017 17,941 2,943 4,985 517 1,479 4,329 3,472 — — — — — (5 ) (5 ) — — — — (3 ) (3 ) (9 ) (2 ) — — (3 ) (1 ) — 3 — (3 ) (1 ) — — — 269 — — — — — — 32,612 1,092 11,926 18,256 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 13,782 2,542 5,578 16,763 14,402 6,819 4,061 F - 50 9,466 430 1,102 6,585 3,832 415 2,880 700 560 873 4,820 2,517 1,991 1,880 3,163 2,096 892 3,882 2,559 870 250 1,250 1,742 280 2,270 510 3,270 3,740 400 35,999 2,553 28,716 18,261 47,380 29,529 24,069 7,451 15,067 32,213 29,000 26,657 21,530 40,588 30,646 25,223 6,978 35,078 36,736 15,796 11,631 17,177 31,723 5,485 10,563 17,280 15,881 11,148 7,533 45,465 2,983 29,818 24,846 51,212 29,944 26,949 8,151 15,627 33,086 33,820 29,174 23,521 42,468 33,809 27,319 7,870 38,960 39,295 16,666 11,881 18,427 33,465 5,765 12,833 17,790 19,151 14,888 7,933 Accumulated Depreciation Date 2016 (4,464 ) (612 ) 2012 (10,020 ) 2004 (304 ) 2019 (31,761 ) 1996 (6,246 ) 2013 (2,817 ) 2016 (5,495 ) 1995 (3,513 ) 2013 (2,090 ) 2018 Acquired (A) or Constructed (C) (A) (A) (C) (A) (A) (A&C) (A) (A) (A) (A) (1,107 ) 2018 (A&C) (1,761 ) 2018 (1,287 ) 2018 (134 ) 2016 (1,938 ) 2018 (1,655 ) 2018 (447 ) 2018 (2,197 ) 2018 (2,139 ) 2018 (4,306 ) 2013 (A) (A) (A) (A) (A) (A) (A) (A) (A) (7,199 ) 1995 (A&C) (2,788 ) 2016 (A) (13,441 ) 1996 (A&C) (3,641 ) 1994 (1,283 ) 2016 (2,664 ) 2015 (1,918 ) 2016 (1,195 ) 2016 (4,115 ) 2001 (A) (A) (A) (A) (A) (A) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Property Name La Casa Blanca La Costa Village La Hacienda RV Resort Lafayette Place Location Apache Junction, AZ Port Orange, FL Austin, TX Warren, MI Lafontaine RV Resort & Campground Tiny, ON Lake Avenue RV Resort & Campground 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 (4) Lakeside Crossing Lakeview Lakeview CT (4) Lamplighter Laurel Heights (4) Lazy J Ranch Leaf Verde RV Resort Leisure Point Resort (4) Leisure Village Lemon Wood Liberty Farm Lincoln Estates Cherry Valley, ON Narvon, PA Sebring, FL Auburndale, FL Mulberry, FL Santa Claus, IN Naples, FL Lakeside, CA Lakeland, FL Orlando, FL Tampa, FL Terryville, CT Conway, SC Ypsilanti, MI Danbury, CT Port Orange, FL Uncasville, CT Arcata, CA Buckeye, AZ Millsboro, DE Belmont, MI Ventura, CA Valparaiso, IN Holland, MI Long Beach RV Resort & Campground Barnegat, NJ Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets Total Accumulated Depreciation Date Acquired (A) or Constructed (C) B D C A — — A C A D A A D C D — C D — C B C — — — — D C — — 7,758 51,088 — 2,069 — — 10,066 — 7,935 18,211 16,788 9,371 26,751 — 13,395 — — 13,056 — — 7,276 — — — — — 4,370 3,640 3,670 669 1,290 670 7,360 490 335 480 2,340 650 21,556 1,730 2,570 3,080 1,278 3,520 1,156 2,545 1,330 1,678 7,100 3,417 3,628 360 19,434 19,540 — — — 66 455 710 — — — — (1 ) (1 ) (31 ) (16 ) — — — — — — — — — — — — (3 ) (1 ) — — — — 12 — 113 — 116 — — 14,142 62,315 22,225 5,979 2,075 1,290 7,097 2,830 3,048 29,795 28,113 5,760 17,440 5,524 19,481 18,983 3,445 31,615 10,903 8,884 12,846 693 6,838 8,437 41,291 8,219 6,918 1,201 4,201 3,414 F - 51 616 2,025 965 7,864 2,561 725 2,834 1,025 1,880 516 9,197 5,134 1,078 2,889 1,395 1,085 13 13,044 7,594 34 961 — 134 534 17 2,138 1,162 4,168 2,148 1,268 4,370 3,640 3,670 669 1,259 654 7,360 490 335 480 2,340 650 21,556 1,730 2,570 3,080 1,278 3,520 1,155 2,545 1,330 1,678 7,100 3,429 3,628 473 19,540 182 455 710 14,758 64,340 23,190 13,843 4,636 2,015 9,931 3,855 4,928 30,311 37,310 10,894 18,518 8,413 20,876 20,068 3,458 44,659 18,497 8,918 13,807 693 6,972 8,971 41,308 10,357 8,080 5,369 6,349 4,682 19,128 67,980 26,860 14,512 5,895 2,669 17,291 4,345 5,263 30,791 39,650 11,544 40,074 10,143 23,446 23,148 4,736 48,179 19,652 11,463 15,137 2,371 14,072 12,400 44,936 10,830 27,620 5,551 6,804 5,392 (2,821 ) 2014 (9,854 ) 2015 (4,396 ) 2015 (8,178 ) 1998 (386 ) 2016 (242 ) 2016 (2,703 ) 2012 (310 ) 2016 (3,327 ) 1994 (4,642 ) 2015 (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (9,933 ) 2014 (A&C) (6,033 ) 1996 (2,273 ) 2016 (924 ) 2016 (3,987 ) 2014 (3,065 ) 2015 (57 ) 2019 (5,531 ) 2015 (8,868 ) 2004 (148 ) 2019 (2,098 ) 2015 (12 ) 2019 (628 ) 2017 (475 ) 2018 (713 ) 2019 (2,593 ) 2011 (990 ) 2016 (A) (A) (A) (A) (A) (A) (A&C) (A) (A) (A) (A) (A) (A) (A) (A) (A) (2,936 ) 1985 (A&C) (3,910 ) 1996 (548 ) 2016 (A) (A) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Property Name Location Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets Total Majestic Oaks RV Resort Maple Brook Maplewood Manor Marco Naples RV Resort Marina Cove Massey's Landing RV Resort (4) Meadow Lake Estates Meadowbrook Meadowbrook Estates Meadowbrook Village Meadowlands of Gibraltar Merrymeeting Mi-Te-Jo Campground Mill Creek MH & RV Resort Millwood (4) Zephyrhills, FL Matteson, IL Brunswick, ME Naples, FL Uncasville, CT Millsboro, DE White Lake, MI Charlotte, NC Monroe, MI Tampa, FL Gibraltar, MI Brunswick, ME Milton, NH Kissimmee, FL Uncasville, CT Moab Valley RV Resort & Campground Moab, UT Mountain View Napa Valley Naples RV Resort New England Village (4) New Point RV Resort New Ranch North Lake Estates North Point Estates Northville Crossing Oak Creek Oak Crest Oak Grove (4) Oak Island Village Oak Ridge Oakview Estates Oakwood Village Mesa, AZ Napa, CA Naples, FL Westbrook, CT New Point, VA Clearwater, FL Moore Haven, FL Pueblo, CO Northville, MI Coarsegold, CA Austin, TX Plainville, CT East Lansing, MI Manteno, IL Arcadia, FL Miamisburg, OH E D E — C — — C A B A C — — C — B D C C C — C — B B B C — D — B 4,465 41,935 7,884 — — — — — 13,050 11,738 5,087 — — — — — 10,709 19,067 — — — — — — 17,546 8,953 21,917 — — 30,121 — 31,451 3,940 8,460 1,770 2,790 262 2,755 1,188 1,310 431 519 640 250 1,416 1,400 2,425 3,693 5,490 17,740 3,640 4,188 1,550 2,270 4,150 1,582 1,236 4,760 4,311 1,004 320 1,090 850 1,964 28 — — — — — 127 — 379 — — — — — — 1 — — — — — — — 1 — — 4,365 — — — — (3 ) (1 ) 4,725 48,865 12,982 10,458 365 17,948 11,498 6,570 3,320 4,728 7,673 1,020 7,580 4,839 8 8,732 12,325 11,675 2,020 1,444 5,259 2,723 3,486 3,027 29,564 11,185 12,611 1,660 6,843 36,941 3,881 6,401 F - 52 1,972 642 1,798 3,543 — 16,507 7,899 14,017 15,646 1,209 4,739 1,147 1,594 3,815 — 526 451 1,024 2,223 42 4,315 1,486 2,014 4,065 7,235 1,643 15,949 1 3,112 3,762 1,470 13,880 3,968 8,460 1,770 2,790 262 2,755 1,315 1,310 810 519 640 250 1,416 1,400 2,425 3,694 5,490 17,740 3,640 4,188 1,550 2,270 4,150 1,583 1,236 4,760 8,676 1,004 320 1,090 850 1,963 6,697 49,507 14,780 14,001 365 34,455 19,397 20,587 18,966 5,937 12,412 2,167 9,174 8,654 8 9,258 12,776 12,699 4,243 1,486 9,574 4,209 5,500 7,092 36,799 12,828 28,560 1,661 9,955 40,703 5,351 20,281 10,665 57,967 16,550 16,791 627 37,210 20,712 21,897 19,776 6,456 13,052 2,417 10,590 10,054 2,433 12,952 18,266 30,439 7,883 5,674 11,124 6,479 9,650 8,675 38,035 17,588 37,236 2,665 10,275 41,793 6,201 22,244 Accumulated Depreciation Date 2016 (867 ) (9,375 ) 2014 (2,747 ) 2014 (1,601 ) 2016 (6 ) 2019 (321 ) 2019 (14,011 ) 1994 Acquired (A) or Constructed (C) (A) (A) (A) (A) (A) (A) (A) (10,131 ) 2000 (A&C) (11,101 ) 1986 (4,499 ) 1994 (2,353 ) 2015 (432 ) 2014 (599 ) 2018 (975 ) 2016 (A) (A) (A) (A) (A) (A) — 2019 (A&C) (542 ) 2018 (2,456 ) 2014 (1,566 ) 2016 (1,257 ) 2011 (24 ) 2019 (2,602 ) 2013 (431 ) 2016 (1,880 ) 2011 (3,778 ) 2001 (11,335 ) 2012 (2,441 ) 2014 (9,158 ) 2002 (28 ) 2019 (3,061 ) 2011 (7,846 ) 2014 (613 ) 2016 (A) (A) (A) (A) (A) (A) (A) (A) (C) (A) (A) (C) (A) (A) (A) (A) (12,178 ) 1998 (A&C) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Location Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets Total Accumulated Depreciation Date Acquired (A) or Constructed (C) Property Name Ocean Breeze Jensen Beach MH & RV Resort Ocean Breeze MH & RV Resort (6) Ocean Pine (4) Ocean West Jensen Beach, FL Marathon, FL Garden City, SC McKinleyville, CA Oceanside RV Resort & Campground Coos Bay, OR Orange City MH & RV Resort Orange Tree Village Orchard Lake Paddock Park South 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) Pandion Ridge RV Resort (4) Park Place Park Royale Parkside Village Pebble Creek Pecan Branch Pecan Park RV Resort Pelican Bay Pelican RV Resort & Marina Pembroke Downs Peter’s Pond RV Resort Petoskey KOA RV Resort Petoskey RV Resort Pheasant Ridge Pickerel Park RV Resort & Campground Pin Oak Parc Pine Hills Davenport, FL Bradenton, FL San Pedro, CA Orange Beach, AL Sebastian, FL Pinellas Park, FL Cheektowaga, NY Greenwood, IN Georgetown, TX Jacksonville, FL Micco, FL Marathon, FL Chino, CA Sandwich, MA Petoskey, MI Petoskey, MI Lancaster, PA Napanee, ON O’Fallon, MO Middlebury, IN — C C B — C D C — D D — D — D D — C C — D C D C — — A — — A — — — 4,592 — — 10,373 — — 96,555 15,900 — 25,446 — 17,650 15,722 — — — — 6,580 — 10,905 — — — 20,833 — — 2,616 19,026 2,330 7,623 5,040 2,718 920 283 395 630 11,836 3,840 2,970 — 12,719 1,360 670 550 1,030 1,379 2,000 470 4,760 9,560 4,700 214 230 2,044 900 1,038 72 — — — 349 1 — 15 (3 ) (15 ) — — — — — — 67 — — — 235 1,420 — — — — 652 — — (1 ) (21 ) 467 60 13,862 1,770 35,333 4,413 3,244 5,540 2,530 4,025 6,601 76,143 15,661 2,849 21,815 7,515 48,678 29,046 10,402 5,074 — 5,000 10,543 4,742 7,269 22,840 8,676 3,270 19,279 2,125 3,250 544 F - 53 27,223 4,406 1 509 986 3,913 1,300 2,544 1,544 24,577 811 1,716 2,221 — 3,037 384 307 11,486 — 5,872 1,753 1,658 791 4,056 929 4,439 1,083 2,010 16,211 3,473 19,026 2,330 7,623 5,389 2,719 920 298 380 630 41,085 6,176 35,334 4,922 4,230 9,453 3,830 6,569 8,145 11,836 100,720 3,840 2,970 — 12,719 1,427 670 550 1,030 1,614 3,420 470 4,760 9,560 4,700 866 230 2,044 879 1,505 132 16,472 4,565 24,036 7,515 51,715 29,430 10,709 16,560 18,016 10,872 12,296 6,400 8,060 26,896 9,605 7,709 20,362 4,135 19,461 4,017 60,111 8,506 42,957 10,311 6,949 10,373 4,128 6,949 8,775 112,556 20,312 7,535 24,036 20,234 53,142 30,100 11,259 17,590 19,630 14,292 12,766 11,160 17,620 31,596 10,471 7,939 22,406 5,014 20,966 4,149 (3,574 ) 2016 (A&C) (78 ) 2016 (735 ) 2019 (407 ) 2017 (243 ) 2018 (2,356 ) 2011 (2,764 ) 1994 (3,307 ) 1999 (936 ) 2016 (A) (A) (A) (A) (A) (A) (A) (A) (27,933 ) 2012 (A&C) (2,602 ) 2015 (485 ) 2016 (2,818 ) 2016 (146 ) 2019 (7,747 ) 2015 (4,532 ) 2015 (2,021 ) 2014 (7,161 ) 2000 (2,970 ) 1999 (813 ) 2016 (1,896 ) 2015 (877 ) 2016 (927 ) 2016 (7,513 ) 2013 (507 ) 2018 (846 ) 2016 (11,475 ) 2002 (406 ) 2016 (A) (A) (A) (A) (A) (A) (A) (A&C) (C) (A) (A) (A) (A) (A) (A) (A) (A) (A) (9,676 ) 1994 (A&C) (2,415 ) 1980 (A) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Property Name Pine Ridge Pine Trace Pinebrook Village Pismo Dunes RV Resort Plantation Landings Pleasant Lake RV Resort Pony Express RV Resort & Campground Location 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 Reunion Lake RV Resort (4) Richmond Place Riptide RV Resort & Marina River Haven Village River Pines (4) River Plantation RV Resort (4) River Ranch River Ridge Estates River Run Riverside Club Rock Crusher Canyon RV Resort Rolling Hills (4) Roxbury Park Frostproof, FL Largo, FL Zephyrhills, FL San Juan Capistrano, CA Riverside, CA Apache Junction, AZ Bushnell, FL Clearwater, FL Bullhead City, AZ Ponchatoula, LA Richmond, MI Key Largo, FL Grand Haven, MI Nashua, NH Sevierville, TN Austin, TX Austin, TX Granby, CO Ruskin, FL Crystal River, FL Storrs, CT Goshen, IN Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets Total B — — D D E — B A E D D D B — D D — A — — C — C A — D C C — 11,802 — — 19,725 12,314 12,625 — 23,007 4,508 9,070 9,200 12,915 15,626 12,291 — 27,525 15,848 — 1,510 — — — — — 8,745 — 39,768 — — — 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 7,726 501 2,440 1,800 2,739 3,730 4,690 3,201 8,642 1,600 420 3,960 1,057 1 (3 ) (212 ) 22,207 15,896 — — — — 1 — — — — 16,168 — — — — — — (3 ) (31 ) — — — — 182 — 130 — 168 — 1 1,443 1,101 2,419 3,592 66 5,755 4,461 3,431 2,179 891 1,213 947 5,555 2,402 1,386 136 3,482 1,748 15,766 6 225 41,585 8,023 — 7,688 4,046 8 4,643 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 16,146 2,040 991 16,967 37,802 19,736 843 15,090 — 66,207 5,542 3,755 9,870 F - 54 406 2,695 130 11,070 3,070 5,220 3,430 680 1,890 4,420 1,800 16,168 16,560 7,510 5,180 11,330 1,950 7,726 470 2,440 1,800 2,739 3,730 4,872 3,201 8,772 1,600 588 3,960 1,058 24,604 33,065 7,135 11,291 33,392 23,995 4,709 12,069 10,143 15,960 12,063 3,747 13,659 23,185 26,054 18,136 21,460 16,282 5,522 2,739 32,733 37,808 19,961 42,428 23,113 82,667 73,895 9,588 3,763 14,513 25,010 35,760 7,265 22,361 36,462 29,215 8,139 12,749 12,033 20,380 13,863 19,915 30,219 30,695 31,234 29,466 23,410 24,008 5,992 5,179 34,533 40,547 23,691 47,300 26,314 91,439 75,495 10,176 7,723 15,571 Accumulated Depreciation Date 1986 (5,299 ) (14,406 ) 2004 (2,358 ) 2011 (964 ) 2017 (5,048 ) 2015 (2,898 ) 2016 (347 ) 2018 (7,522 ) 1996 (2,905 ) 2012 (2,005 ) 2016 (1,464 ) 2016 (443 ) 2016 (1,588 ) 2016 (4,340 ) 2014 (3,140 ) 2016 (2,035 ) 2016 (4,033 ) 2014 (302 ) 2019 (2,743 ) 1998 (327 ) 2016 (14,666 ) 2001 (630 ) 2019 (366 ) 2019 Acquired (A) or Constructed (C) (A&C) (A&C) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (12,285 ) 2000 (A&C) (12,035 ) 2002 (798 ) 2018 (10,799 ) 2015 (1,394 ) 2015 (63 ) 2019 (7,647 ) 2001 (C) (C) (A) (A) (A) (A) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Property Name Location Group Amount Land Depreciable Assets Land Depreciable Assets 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 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 Shelby Forest (4) Shelby West (4) North Fort Myers, FL Zephyrhills, FL Hudson, FL Galloway Township, NJ Ocala, FL Auburn Hills, MI Shelby Twp, MI Shelby Twp, MI Shell Creek RV Resort & Marina Punta Gorda, FL Sherkston Shores Beach Resort & Campground Siesta Bay RV Park Sherkston, ON Ft. Myers, FL E E — A A C D — — — — D B — — C D B C — — — C — — E — A 58,500 11,305 — 25,221 15,091 — 19,894 — — — — 67,035 56,802 — — — 15,515 10,142 — — — — — — — 6,423 — 30,733 2,290 1,730 20,758 27,446 — 21,660 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 4,050 5,676 2,200 22,750 2,051 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 42,362 38,933 9,662 97,164 18,549 F - 55 — — — — — — — — — — — — (3 ) (11 ) — 2,312 — — — — 664 — — — — — — (1 ) (110 ) 5 2,999 3,559 2,184 9,213 12,629 5,404 1,778 26,740 (1,146 ) 1,605 1,218 373 15,698 2,586 (2,426 ) 2,497 2,951 3,404 1,864 4,103 1,329 1,887 2,204 87 7 2,455 8,899 5,041 Depreciable Assets Total Land 2,290 1,730 23,757 31,005 — 23,844 1,090 1,440 790 730 1,703 3,110 730 6,540 12,810 2,289 1,207 9,702 120 1,030 1,160 1,760 5,184 1,060 450 778 4,050 5,676 2,200 32,877 43,739 8,980 8,521 38,583 1,270 19,442 12,621 80,260 38,357 12,765 2,190 2,787 26,179 26,926 9,549 8,001 5,097 4,706 9,369 42,449 38,940 12,117 Accumulated Depreciation Date 1994 (18,859 ) (4,788 ) 2015 (2,753 ) 2016 (9,065 ) 2012 (11,860 ) 2012 (2,010 ) 2014 (6,322 ) 1995 (12,744 ) 2002 (1 ) 2016 (2,319 ) 2016 (1,519 ) 2016 (12,418 ) 2015 (25,128 ) 1995 (7,032 ) 1997 (3 ) 2016 (1,252 ) 2013 (5,486 ) 2014 (4,289 ) 2015 (1,141 ) 2016 (625 ) 2016 (610 ) 2016 (499 ) 2016 (4,474 ) 2006 (895 ) 2019 (714 ) 2019 (1,366 ) 2016 26,047 32,735 23,844 33,967 45,179 9,770 9,251 40,286 4,380 20,172 19,161 93,070 40,646 13,972 11,892 2,907 27,209 28,086 11,309 13,185 6,157 5,156 10,147 46,499 44,616 14,317 Acquired (A) or Constructed (C) (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) (A) 22,640 2,056 106,063 23,590 128,703 25,646 (12,728 ) 2016 (16,378 ) 1996 SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Property Name Silver Birches RV Resort & Campground Silver Creek RV Resort Silver Springs Sky Harbor Location Lambton Shores, ON Mears, MI Clinton Township, MI Cheektowaga, NY Skyline Slickrock RV Resort & Campground (4) Moab, UT Smith Creek Crossing Granby, CO Fort Collins, CO Southern Charm MH & RV Resort Zephyrhills, FL Southern Hills / Northridge Place Southern Palms (4) Southern Pines Southfork Stewartville, MN Ladson, SC Bradenton, FL Belton, MO Southport Springs Golf & Country Club Zephyrhills, FL Southside Landing (4) Cambridge, MD Southwood Village Grand Rapids, MI Spanish Main MH & RV Resort Thonotasassa, FL St. Clair Place St. Clair, MI Strafford/Lake Winnipesaukee South KOA (2) (4) Stonebridge (MI) Stonebridge (TX) Stonebrook Summit Ridge Sun N Fun RV Resort Sun Valley Sun Villa Estates Suncoast Gateway Sundance Sunlake Estates Sunset Beach RV Resort Strafford, NH 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 Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets Total Accumulated Depreciation Date Acquired (A) or Constructed (C) — — B A E — — E E C — A D C — — A — — C — C D D B — B D — — — — 6,938 13,705 9,882 — — 11,767 7,576 — — 6,894 34,500 — — — 1,647 — — — — — 74,567 12,244 24,565 — 12,700 21,288 — — 880 605 861 2,318 2,260 — 1,395 4,940 360 2,351 1,710 1,000 15,060 1,004 300 2,390 501 — 2,044 2,515 650 2,615 1,540 7,014 16,595 24,253 12,120 — — 17,366 12,723 9,441 3,337 9,011 17,229 2,535 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 18,408 11,773 300 25,306 24,084 24,030 7,636 F - 56 (1 ) (21 ) 3 — — — — 20 — — — — — — — — — — 304 246 (3 ) (615 ) — (3 ) (3 ) (883 ) (138 ) — (1,100 ) (3 ) — — — — — 516 1,062 3,521 6,058 759 8,515 — 2,691 12,551 15 1,323 9,350 3,551 6 1,876 4,663 2,376 2,943 — 6,332 1,006 21,067 8,517 1,933 2,313 818 1,080 2,491 — 1,491 859 608 861 2,318 2,260 — 1,415 4,940 360 2,351 1,710 1,000 15,060 1,004 300 2,390 501 304 2,290 1,900 650 1,732 2,056 8,076 20,116 30,311 12,879 8,515 11,986 20,057 25,274 9,456 4,660 18,361 20,780 2,541 13,393 12,822 4,405 2,943 2,231 8,428 15,069 23,159 2,915 8,684 20,977 32,629 15,139 8,515 13,401 24,997 25,634 11,807 6,370 19,361 35,840 3,545 13,693 15,212 4,906 3,247 4,521 10,328 15,719 24,891 (259 ) 2016 (448 ) 2018 (5,954 ) 2012 (5,427 ) 2014 (2,490 ) 2014 — 2019 (1 ) 2018 (2,482 ) 2016 (4,739 ) 2014 (597 ) 2019 (570 ) 2016 (9,230 ) 1997 (3,110 ) 2015 (42 ) 2019 (3,870 ) 2011 (1,320 ) 2016 (2,313 ) 1998 (52 ) 2019 (61 ) 1998 (4,690 ) 2000 (2,254 ) 2015 (9,639 ) 2000 50,814 125,974 176,788 (16,768 ) 2016 2,750 1,285 594 890 6,290 3,800 8,570 20,341 14,086 1,118 26,386 26,575 24,030 9,127 23,091 15,371 1,712 27,276 32,865 27,830 17,697 (3,776 ) 2014 (8,911 ) 1998 (335 ) 2016 (4,056 ) 2015 (4,032 ) 2015 (2,965 ) 2016 (973 ) 2016 (A) (C) (A) (A) (A) (A) (C) (A) (A&C) (A) (A) (A) (A&C) (A) (A) (A) (A) (A) (C) (A&C) (A) (A&C) (A) (A) (A) (A) (A) (A) (A) (A) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Property Name Location Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets Total 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 Tamarac Village MH & RV Resort Ludington, MI Tampa East MH & RV Resort The Colony (2) The Grove at Alta Ridge The Hamptons Golf & Country Club The Hideaway The Hills The Ridge The Sands RV & Golf Resort The Valley The Villas at Calla Pointe Three Gardens (4) Three Lakes Thunderhill Estates Timber Ridge Timberline Estates Dover, FL Oxnard, CA Thornton, CO Auburndale, FL Key West, FL Apopka, FL Davenport, FL Desert Hot Springs, CA Apopka, FL Cheektowaga, NY Southington, CT 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 Arlington, TX Newbury Park, CA Tucson, AZ — — C E E — C D A — E D — — D — — A C C E D B A E — — C D — — — — 13,566 5,505 — — 19,125 8,400 — 27,122 69,000 — — 37,350 — — 3,690 — — 5,469 39,258 18,812 5,294 2,557 — — — 22,044 — 1,840 2,044 2,190 2,140 1,340 390 13,796 300 734 — 5,370 15,890 2,720 1,790 8,350 3,071 2,530 380 2,031 5,050 640 990 535 406 230 3,690 790 730 25,766 710 — (9 ) (3 ) — — — — — 85 — — — — — — — 1 — — — — 439 — 1 — — (1 ) (87 ) — — — — 5,995 — 2,775 19,734 9,113 13,341 20,797 12,028 6,310 6,437 37,116 67,555 972 3,869 35,463 12,611 5,660 11,014 6,686 3,361 9,008 9,231 4,867 3,736 4,539 3,650 7,952 9,831 9,814 7,069 F - 57 2,777 — 6,987 444 2,090 4,246 1,289 3,809 7,486 959 99 3,040 938 1,269 3,121 1,915 1,666 171 5 3,240 2,568 3,388 4,295 1,860 1,260 853 2,008 1,802 1,138 2,971 1,840 2,035 2,190 2,140 1,340 390 13,796 385 734 — 5,370 15,890 2,720 1,790 8,350 3,072 2,530 380 2,031 5,050 1,079 990 536 406 230 3,603 790 730 25,766 710 8,772 28,713 9,762 20,178 11,203 17,587 22,086 15,837 13,796 7,396 37,215 70,595 1,910 5,138 38,584 14,526 7,326 11,185 6,691 6,601 11,576 12,619 9,162 5,596 5,799 4,503 9,960 11,633 10,952 10,040 10,612 30,748 11,952 22,318 12,543 17,977 35,882 16,222 14,530 7,396 42,585 86,485 4,630 6,928 46,934 17,598 9,856 11,565 8,722 11,651 12,655 13,609 9,698 6,002 6,029 8,106 10,750 12,363 36,718 10,750 Accumulated Depreciation Date 2017 (799 ) (9,623 ) 1998 Acquired (A) or Constructed (C) (A) (C) (4,981 ) 2000 (A&C) (3,478 ) 2014 (1,360 ) 2016 (5,569 ) 2011 (2,568 ) 2016 (4,326 ) 2011 (5,511 ) 2005 (896 ) 2016 (6,978 ) 2014 (10,786 ) 2015 (204 ) 2016 (607 ) 2016 (6,188 ) 2015 (905 ) 2018 (808) 2016 (2,094) 2014 (111) 2019 (2,055) 2012 (2,147) 2014 (8,288) 1996 (5,913) 1994 (3,412) 1996 (1,132 ) 2014 (551 ) 2016 (1,280 ) 2016 (1,413 ) 2016 (1,260 ) 2016 (1,276 ) 2016 (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) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Property Name Location Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets Total Victor Villa Vines RV Resort Vista Del Lago Vista Del Lago MH & RV Resort Vizcaya Lakes Wagon Wheel RV Resort & Campground Walden Woods Warren Dunes Village Water Oak Country Club Estates Waters Edge RV Resort Waverly Shores Village West Village Estates Westbrook Senior Village Westbrook Village Westside Ridge Westward Ho RV Resort & Campground Victorville, CA Paso Robles, CA Scotts Valley, CA Bradenton, FL Port Charlotte, FL Old Orchard Beach, ME Homosassa, FL Bridgman, MI Lady Lake, FL Zephyrhills, FL Holland, MI Romulus, MI Toledo, OH Toledo, OH Auburndale, FL Glenbeulah, WI Westward Shores Cottages & RV Resort West Ossipee, NH White Lake Mobile Home Village White Lake, MI Whitewater RV Resort (4) (5) Wild Acres RV Resort & Campground Wildwood Community Willow Lake RV Resort & Campground Willowbrook Place Mountain View, AR 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 Jackson, MI Davenport, FL Wayland, MI Paso Robles, CA Woodhaven, MI San Antonio, TX D C D E C C D C D E B B D B D C — B — C D — B — — D C C B C 11,977 — 18,129 4,221 — — 19,206 — 46,725 3,670 14,660 5,582 5,852 23,983 8,564 — — 24,178 — — 24,441 — 17,392 — — 46,000 — — 13,700 — 2,510 890 17,830 3,630 670 590 1,550 310 2,834 1,180 340 884 355 1,110 760 1,050 1,901 672 5,163 1,640 1,890 1,260 781 1,160 2,673 7,560 270 1,740 501 1,186 — — — — — — — — 2,666 — 450 — — — — — — 1 15 — — (1 ) (30 ) 1 (1 ) (27 ) — — — — — (3 ) (56 ) 20,408 7,110 9,456 5,329 4,221 7,703 26,375 3,350 16,706 5,450 7,267 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 F - 58 2,107 2,032 1,319 2,007 579 2,833 1,410 11,275 34,141 2,308 6,508 4,154 694 5,301 851 2,590 3,470 11,017 1,842 4,845 1,023 824 5,486 770 21,878 1,880 3,260 3,881 6,648 18,407 2,510 890 17,830 3,630 670 590 1,550 310 5,500 1,180 790 884 355 1,110 760 1,050 1,901 673 5,178 1,640 1,890 1,230 782 1,133 2,673 7,560 270 1,740 501 1,130 22,515 9,142 10,775 7,336 4,800 10,536 27,785 14,625 50,847 7,758 13,775 23,919 3,989 15,763 11,565 8,232 18,796 17,196 1,842 31,631 38,755 3,099 12,540 2,260 24,242 38,174 9,095 15,391 11,189 18,694 25,025 10,032 28,605 10,966 5,470 11,126 29,335 14,935 56,347 8,938 14,565 24,803 4,344 16,873 12,325 9,282 20,697 17,869 7,020 33,271 40,645 4,329 13,322 3,393 26,915 45,734 9,365 17,131 11,690 19,824 Accumulated Depreciation Date 2016 (2,701 ) (2,250 ) 2013 (1,173 ) 2016 (805 ) 2016 (700 ) 2015 (3,120 ) 2013 (4,243 ) 2015 (2,528 ) 2011 (22,950 ) 1993 (937 ) 2016 (2,614 ) 2011 (6,361 ) 2012 (2,271 ) 2001 (9,255 ) 1999 (1,785 ) 2015 (2,208 ) 2013 (938 ) 2018 Acquired (A) or Constructed (C) (A) (A) (A) (A) (A) (A) (A) (A&C) (A&C) (A) (A&C) (A) (A) (A) (A) (A) (A) (10,011 ) 1997 (A&C) — 2019 (9,439 ) 2013 (7,319 ) 2014 (327 ) 2016 (7,005 ) 1997 (278 ) 2016 (C) (A) (A) (A) (A) (A) (11,777 ) 1998 (A&C) (5,949 ) 2015 (3,321 ) 2011 (3,311 ) 2014 (5,611 ) 1998 (5,782 ) 2000 (A) (A) (A&C) (A) (A&C) SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) Property Name Woodland Lake RV Resort & Campground Woodland Park Estates Woodlands at Church Lake Woodside Terrace Wymberly (4) Yankee Village (4) Encumbrance Initial Cost to Company Costs Capitalized Subsequent to Acquisition (Improvements) Gross Amount Carried at December 31, 2019 Location Group Amount Land Depreciable Assets Land Depreciable Assets Land Depreciable Assets Total Accumulated Depreciation Date Acquired (A) or Constructed (C) Bornholm, ON Eugene, OR Groveland, FL Holland, OH Martinez, GA Old Saybrook, CT — — — B C C — — — — 25,076 — — 1,650 1,592 2,480 1,063 3,058 1,552 2,165 14,398 9,072 9,625 14,451 364 (1 ) (47 ) 1 — — — — 562 996 2,812 11,438 5 — 1,603 1,593 2,480 1,063 3,058 1,552 2,727 15,394 11,884 21,063 14,456 364 4,330 16,987 14,364 22,126 17,514 1,916 (339 ) 2016 (10,645 ) 1998 (1,697 ) 2015 (10,972 ) 1997 (241 ) 2019 (6 ) 2019 (A) (A) (A) (A) (A) (A) $ 3,188,472 $ 1,379,317 $ 5,238,831 $ 34,962 $ 1,929,108 $ 1,414,279 $ 7,414,464 $ 8,828,743 $ (1,663,277 ) — — — — 91,589 — 90,857 90,857 (23,703 ) $ 3,188,472 $ 1,379,317 $ 5,238,831 $ 34,962 $ 2,020,697 $ 1,414,279 $ 7,505,321 $ 8,919,600 $ (1,686,980 ) Corporate Headquarters and Other (7) Southfield, MI A These communities collateralize $398.0 million of secured debt. B These communities collateralize $697.4 million of secured debt. C These communities support the borrowing base for our secured line of credit, which had $180.6 million outstanding. D These communities collateralize $1.7 billion of secured debt. E These communities collateralize $376.5 million of secured debt. (1) Gross amount carried at December 31, 2019, 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, 2019 has decreased at this property due to a partial disposition of land or depreciable assets, as applicable. (4) This property was acquired during 2019. (5) This property was not included in our community count as of December 31, 2019 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 - 59 SUN COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III DECEMBER 31, 2019 (amounts in thousands) The change in investment property for the years ended December 31, 2019, 2018, and 2017 is as follows (in thousands): 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, 2019, 2018, and 2017 is as follows (in thousands): December 31, 2019 $ 7,560,946 $ 930,668 281,808 233,984 — (87,806 ) Year Ended December 31, 2018 December 31, 2017 6,882,879 414,840 $ 6,496,339 204,375 152,672 205,006 — (94,451 ) 88,331 168,315 (10,511 ) (63,970 ) $ 8,919,600 $ 7,560,946 $ 6,882,879 December 31, 2019 1,442,630 291,605 — Year Ended December 31, 2018 December 31, 2017 $ 1,237,525 $ 1,026,858 (47,255 ) 1,686,980 $ (48,847 ) 1,442,630 $ 253,952 — 236,422 (405 ) (25,350 ) 1,237,525 Beginning balance Depreciation for the period Asset impairment Dispositions and other Ending balance $ $ F - 60 STOCKHOLDER INFORMATION ANNUAL MEETING Due to the public health impact of the coronavirus (COVID-19) pandemic, to comply with government directives and to support the health and well-being of our stockholders, the 2020 Annual Meeting of stockholders will be conducted in a virtual format only by visiting www.virtualshareholdermeeting.com/SUI2020 on Friday, May 22, 2020 at 2:00 p.m. Eastern Daylight Time. REGIONAL OFFICES Austin, Texas Denver, Colorado Ft. Myers Beach, Florida Grand Rapids, Michigan Orlando, Florida 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, 2019 is available at no charge to stockholders who direct a written request to: STOC K TRADING INFORMATION New York Stock Exchange Ticker Symbol – SUI (Common Stock) QUARTERLY STOC K PRICE INFORMATION 2019 Fourth Quarter Third Quarter Second Quarter First Quarter 2018 Fourth Quarter Third Quarter Second Quarter First Quarter HIGH $166.32 $151.88 $131.00 $121.28 HIGH $108.91 $103.74 $98.99 $92.95 LOW $146.36 $127.16 $115.15 $97.49 LOW $94.63 $95.07 $89.55 $80.12 DISTRIBUTION $0.75 $0.75 $0.75 $0.75 DISTRIBUTION $0.71 $0.71 $0.71 $0.71 Investor Relations Department Sun Communities, Inc. 27777 Franklin Road, Suite 200 Southfield, Michigan 48034 Telephone: (248) 208-2500 Web Site: www.suncommunities.com TRANSFER AGENT & DIVIDEND DISBURSING AGENT Computershare Trust Company, N.A. P.O. Box 43010 Providence, Rhode Island 02940-3010 Shareholder Inquiries: (800) 426-5523 INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS Grant Thornton LLP 27777 Franklin Road, Suite 800 Southfield, Michigan 48034 CORPORATE COUNSEL Jaffe, Raitt, Heuer & Weiss 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 June 14, 2019. Sun Communities, Inc. has filed, as exhibits to its Annual Report on Form 10-K for the year ended December 31, 2019, 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; President and Chief Executive Officer of Bluepoint Partners, LLC Brian M. Hermelin . . . . . . . .Director; Co-Founder and Managing Partner of Rockbridge Growth Equity LLC Ronald A. Klein. . . . . . . . . . .Director; Principal at JK Ventures Clunet R. Lewis. . . . . . . . . . .Director Arthur A. Weiss . . . . . . . . . . . Director; Attorney and Chairman of the Board and Shareholder of Jaffe Raitt Heuer & Weiss, P.C. NATIONWIDE & CANADA ALABAMA ARIZONA MAINE MARYLAND OHIO OREGON CALIFORNIA MASSACHUSETTS PENNSYLVANIA COLORADO MICHIGAN SOUTH CAROLINA CONNECTICUT MINNESOTA TENNESSEE DELAWARE FLORIDA GEORGIA ILLINOIS INDIANA IOWA MISSOURI MONTANA NEVADA TEXAS UTAH VIRGINIA NEW HAMPSHIRE WISCONSIN NEW JERSEY ONTARIO, CANADA NEW YORK LOUISIANA NORTH CAROLINA 27777 Franklin Road, Suite 200 • Southfield, Michigan 48034 www.suncommunities.com • NYSE: SUI 

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