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
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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.
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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.
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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.
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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.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains various “forward-looking statements” within the meaning of the Securities Act of 1933, as
amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend that such
forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this filing
that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar
expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as “forecasts,”
“intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,”
“plans,” “predicts,” “potential,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,” “will,” “designed to,” “foreseeable
future,” “believe,” “believes,” “scheduled,” “guidance” and similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these words. These forward-looking statements reflect our current views with respect
to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the
matters discussed in this filing. These risks and uncertainties may cause our actual results to be materially different from any future results
expressed or implied by such forward-looking statements. In addition to the risks disclosed under “Risk Factors” in this Annual Report
on Form 10-K and our other filings with the SEC, such risks and uncertainties include, but are not limited to:
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changes in general economic conditions, the real estate industry, and the markets in which we operate;
difficulties in our ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;
our liquidity and refinancing demands;
our ability to obtain or refinance maturing debt;
our ability to maintain compliance with covenants contained in our debt facilities;
availability of capital;
changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar and the
Australian dollar;
our ability to maintain rental rates and occupancy levels;
our failure to maintain effective internal control over financial reporting and disclosure controls and procedures;
increases in interest rates and operating costs, including insurance premiums and real property taxes;
risks related to natural disasters such as hurricanes, earthquakes, floods and wildfires;
general volatility of the capital markets and the market price of shares of our capital stock;
our failure to maintain our status as a REIT;
changes in real estate and zoning laws and regulations;
legislative or regulatory changes, including changes to laws governing the taxation of REITs;
litigation, judgments or settlements;
competitive market forces;
the ability of manufactured home buyers to obtain financing; and
the level of repossessions by manufactured home lenders.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement
was made. We undertake no obligation to publicly update or revise any forward-looking statements included or incorporated by reference
into this filing, whether as a result of new information, future events, changes in our expectations or otherwise, except as required by
law.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. All written and oral forward-looking statements attributable to us or persons acting on
our behalf are qualified in their entirety by these cautionary statements.
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ITEM 1A. RISK FACTORS
Our prospects are subject to certain uncertainties and risks. Our future results could differ materially from current results, and our actual
results could differ materially from those projected in forward-looking statements as a result of certain risk factors. These risk factors
include, but are not limited to, those set forth below, other one-time events, and important factors disclosed previously and from time to
time in our other filings with the SEC.
REAL ESTATE AND OPERATIONS RISKS
General economic conditions and the concentration of our properties in Florida, Michigan, Texas, and California may affect our
ability to generate sufficient revenue.
The market and economic conditions in our current markets generally, and specifically in metropolitan areas of our current markets, may
significantly affect manufactured home occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our
revenues, and if our communities do not generate revenues sufficient to meet our operating expenses, including debt service and capital
expenditures, our cash flow and ability to pay or refinance our debt obligations could be adversely affected. We derive significant amounts
of our rental income from properties located in Florida, Michigan, Texas, and California.
As of December 31, 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:
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the national and local economic climate which may be adversely impacted by, among other factors, plant closings, and industry
slowdowns;
local real estate market conditions such as the oversupply of MH and RV sites or a reduction in demand for MH and RV sites
in an area;
changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar and Australian
dollar;
the number of repossessed homes in a particular market;
the lack of an established dealer network;
the rental market which may limit the extent to which rents may be increased to meet increased expenses without decreasing
occupancy rates;
the perceptions by prospective tenants of the safety, convenience and attractiveness of our Properties and the neighborhoods
where they are located;
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);
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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:
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downturns in economic conditions which adversely impact the housing market;
an oversupply of, or a reduced demand for, manufactured homes;
the difficulty facing potential purchasers in obtaining affordable financing as a result of heightened lending criteria; and
an increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to new
manufactured home sales.
Any of the above listed factors could adversely impact our rate of manufactured home sales and leases, which would result in a decrease
in profitability.
The cyclical and seasonal nature of the 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;
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even if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing, including
completion of due diligence investigations to our satisfaction, which may not be satisfied;
even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the
purchase price;
• we may be unable to finance acquisitions on favorable terms;
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acquired properties may fail to perform as expected;
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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
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occupancy rates and rents at a newly developed community may fluctuate depending on several factors, including market and
economic conditions, which may result in the community not being profitable.
If any of the above risks occur, our business and results of operations could be adversely affected.
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.
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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:
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result in legal claims or proceedings,
disrupt our operations, including our ability to service our tenants and our ability to analyze and report our financial and operating
results,
decrease our revenues,
damage our reputation,
cause a loss of confidence,
increase our insurance premiums, or
have other material adverse effects on our business.
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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.
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We are subject to the risks normally associated with debt financing, including the following risks:
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our cash flow may be insufficient to meet required 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.
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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.
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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.
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27777 Franklin Road, Suite 200 • Southfield, Michigan 48034
www.suncommunities.com • NYSE: SUI