2021 Annual Report
And Form 10-K
River Run - Colorado
Sun Outdoors San Diego Bay- California
Sun Retreats Gun Lake - Michigan
Palm Creek - Arizona
Sun Outdoors Cape Cod - Massachusetts
LETTER TO OUR SHAREHOLDERS
2021 was a year of meaningful growth and evolution at Sun Communities. Sun is
the largest owner and operator of Manufactured Housing communities, RV resorts
and Marinas, and our strong results reflect the resilience, desirability and favorable
positioning of our best-in-class portfolio. While the pandemic and its related
impact brought many unprecedented challenges to the world, it also illuminated
base. Across each of our platforms, demand is at record levels from applications to
live in a Sun Community to new RV bookings to marina slip and storage demand.
We aspire to create additional value using our proprietary technologies and
building scale with our marketing and booking platforms including Campspot.
We are excited about the launch of our new branding for our RV resorts, Sun
Outdoors, which invites guests to “explore their sunnier side” and encourages
interactions with both returning and new Sun customers in much deeper and
several sustaining tailwinds for us that we believe will continue for years to come.
more engaging ways.
The demand for attainable housing and outdoor vacationing and leisure activities
have become abundantly clear, and Sun is uniquely positioned to meet these
customer needs across all of our platforms.
Our portfolio continues to deliver stable earnings growth, as demonstrated by our
11.2 percent growth in same community net operating income (NOI) in 2021.
We also benefited from the contribution of our strategic acquisitions and growth
initiatives. During the year, we expanded our portfolio to include more than
204,000 sites, wet slips and dry storage spaces across 602 properties, representing
9 percent growth from the end of the prior year. The net result was an incredibly
strong 27.9 percent year over year increase in Core Funds from Operations (Core
FFO) per share.
This performance reflects the successful execution of our investment strategy, built
on our proven platform that we have continually refined and improved. Today,
the number of investment opportunities available to Sun and its shareholders is
more exciting than ever. Our four core investment priorities include: 1) pursuing
accretive acquisitions; 2) reinvesting in our communities; 3) completing highly
profitable community expansions; and 4) selective greenfield developments.
During the year, we successfully executed on each of these as we completed $1.4
billion of high-quality acquisitions across our manufactured housing communities,
RV resorts and marinas, as well as opening four new ground-up development
Our operational performance was complemented by Sun’s strategic balance
sheet management. In addition to completing equity raises to secure capital to
fund our growing acquisition pipeline and other opportunities, in 2021, we also
completed a well-received inaugural unsecured bond issuance where we received
investment grade ratings from both S&P and Moody’s. Going forward, we will
look for opportunities to enhance our credit metrics. With our solid investment
grade ratings, we now have greater access to the bond market, providing us with
enhanced financial flexibility and an additional tool to fund our investment
activities. We have a healthy pipeline of internal and external opportunities, and
our priority is to maintain a strong balance sheet to support continued growth
across all Sun platforms.
In 2021, we also accelerated our commitment to promoting ESG principles
throughout all areas of our business. Sun’s core success attributes of Commitment,
Intensity, Empowerment, Accountability and Service, have always been a
foundational piece of Sun, and we are pleased with the strong steps taken to
formalize this commitment. A few highlights include: the launch of a new
partnership with the National Park Foundation in support of the Foundation’s
Outdoor Exploration program to connect people with the social, mental,
and physical health benefits of national parks and outdoor discovery; a broad
assessment of the current state of inclusion, diversity, equity and accessibility at
Sun and developing an organization-wide strategy to create positive change; and
the enhancement of our ESG disclosures and the establishment of a baseline from
which to demonstrate improvements. We recently published our annual ESG
report, where we outlined three voluntary frameworks we undertook in 2021.
Sun is committed to continual improvement in these areas and we look forward to
providing ongoing updates on our progress.
properties. We also continued to grow our pipeline for future growth with land
For more than 20 years, Sun has delivered consistent and cycle-tested organic cash
purchases for greenfield development and site expansions.
We reached another exciting milestone as we announced the acquisition of Park
Holidays UK for approximately $1.3 billion which we expect to close in April 2022.
Park Holidays is the second largest owner and operator of holiday parks in the UK,
with 40 owned, and two managed, communities. With a nearly identical business
model to Sun’s manufactured housing platform, this transaction allows us to apply
our proven expertise and track record to a fragmented market, further expanding
our opportunities and accelerating our growth potential.
Sun has a strong cycle-tested record of operating, expanding and acquiring MH and
RV communities dating back to 1975. Throughout our history, we have maintained
an unparalleled focus on delivering the best customer experience and on optimizing
our operating platform. To achieve this, we have assembled an incomparable team
and have established a culture of accountability and empowerment. Our team takes
pride in providing the highest level of service by executing on a playbook which
serves our customers, guests and residents in a way that creates a sticky customer
flow growth, supported by favorable demand drivers, high barriers to entry, and
Sun’s investment and operational prowess. We are proud that, in every individual
year, or rolling 4-quarter period, over this same time period, we have recorded
positive same community NOI growth. This is an exceptional track record and
one that could not have been achieved without the extraordinary commitment of
each and every Sun team member. And finally, we, at Sun, want to thank all of our
stakeholders for their ongoing support.
Gary A. Shiffman
chairman and chief
executive officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
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 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. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☒
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, 2021, the aggregate market value of the registrant’s stock held by non-affiliates was $19,529,836,028 (computed by
reference to the closing sales price of the registrant’s common stock as of June 30, 2021). 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 15, 2022: 115,961,958
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 2022 annual
meeting of stockholders.
SUN COMMUNITIES, INC.
Table of Contents
Item
Description
Page
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.
Exhibits
Signatures
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
[Reserved]
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
14
30
31
48
48
49
52
53
81
82
82
82
82
83
83
83
83
83
84
84
85
87
Index to the Consolidated Financial Statements and Financial Statement Schedule
F-1
[This page intentionally left blank]
SUN COMMUNITIES, INC.
PART I
ITEM 1. BUSINESS
GENERAL OVERVIEW
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"), Sun Home Services, Inc.,
a Michigan corporation ("SHS") and Safe Harbor Marinas, LLC ("Safe Harbor") are referred to herein as the "Company," "us," "we,"
and "our."
We are a fully integrated real estate investment trust ("REIT"). We own manufactured housing ("MH") communities and recreational
vehicle ("RV") resorts throughout the United States and in Ontario, Canada. We self-administer, self-manage, and operate or hold an
interest in, and develop the majority of our MH communities and RV resorts. A select number of our communities and resorts are
operated by independent third party contractors on our behalf under a management agreement. Others are operated by a lessee under a
ground lease arrangement. Through Safe Harbor, we own, operate, develop and manage marinas throughout the United States ("U.S.")
and Puerto Rico, with the majority of such marinas concentrated in coastal regions and others located in various inland regions. We
are a fully-integrated real estate company which, together with our affiliates and predecessors, has been in the business of acquiring,
operating, developing and expanding MH communities and RV resorts since 1975 and marinas since 2020. We lease individual
parcels of land, or sites, with utility access for the placement of manufactured homes and RVs to our MH and RV customers. Our MH
communities are designed to offer affordable housing to individuals and families, while also providing certain amenities. Our RV
resorts are designed to offer affordable vacation opportunities to individuals and families complemented by a diverse selection of high-
quality amenities. Our marina offerings include wet slip and dry storage space leases, end-to-end service (such as routine maintenance,
repair and winterization), fuel sales and other high-end amenities. These services and amenities offer convenience and resort-quality
experiences.
As of December 31, 2021, we owned and operated, directly or indirectly, or had an interest in, a portfolio of 602 MH communities,
RV resorts and marinas (collectively, the "properties") located in 39 states, Ontario, Canada and Puerto Rico, including 284 MH
communities, 160 RV resorts, 33 properties containing both MH and RV sites, and 125 marinas. As of December 31, 2021, the
properties contained an aggregate of 204,163 developed sites comprised of 98,621 developed MH sites, 30,540 annual RV sites
(inclusive of both annual and seasonal usage rights), 29,847 transient RV sites, and 45,155 wet slips and dry storage spaces.
Additionally, there are nearly 11,000 additional MH and RV sites suitable for development.
We are engaged through SHS, a taxable REIT subsidiary, 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.
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. Our Safe Harbor marina segment principal office is located in Dallas, Texas. We have
regional property management offices throughout the United States. We employed an aggregate of 5,961 full and part time employees
as of December 31, 2021.
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"). Additionally, the SEC
maintains a website at https://www.sec.gov, that contains reports, proxy information statements and other information about Sun.
1
SUN COMMUNITIES, INC.
STRUCTURE OF THE COMPANY
The Operating Partnership is structured as an umbrella partnership REIT, or UPREIT. We conduct substantially all of our operations
through the Operating Partnership. The Operating Partnership owns, either directly or indirectly through other subsidiaries,
substantially 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 communities, RV resorts and marinas 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 our 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.
2
SUN COMMUNITIES, INC.
We do not own all of the OP units. The following table sets forth:
•
•
•
•
•
The various series of OP units and the number of units of each series outstanding as of December 31, 2021;
The relative ranking of the various series of OP units 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;
The number of shares of our common stock issuable upon the exchange of each OP unit of the applicable series;
The annual distribution rate on each series of OP Units; and
Information regarding the terms of redemption rights for each series of OP units, as applicable.
Ranking
Description
OP Units
Outstanding at
December 31, 2021
Exchange
Rate(1)
Annual
Distribution
Rate(2)
Cash
Redemption(3)
Redemption Period
1
1
2
3
4
5
6
7
8
Preferred OP units (or
"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
1,283,819(4) Variable(5)
2.439
275,024
306,163
488,958
90,000
1.11
0.8
0.6897
Variable(6) Mandatory
6.0 % N/A
Variable(8) N/A
Variable(9) Holder's Option
Variable(10) N/A
Series F preferred OP units
90,000
0.625
3.0 % Holder's Option
Series G preferred OP units
240,710
0.6452
3.2 % Holder's Option
Series H preferred OP units
581,407
0.6098
3.0 % Holder's Option
Series I preferred OP units
922,000
0.6098
3.0 % Holder's Option
Variable(7)
N/A
N/A
Any time after earlier of January
31, 2024 or death of holder
N/A
Any time after earlier of May 14,
2025 or death of holder
Any time after earlier of September
30, 2025 or death of holder
Any time after earlier of October
30, 2025 or death of holder
Any time after earlier of December
31, 2025 or death of holder
During the 30-day period following
a change of control of the Company
or any time after April 21, 2026.
9
10
Series J preferred OP units
Series A-3 preferred OP units
240,000
40,268
0.6061
1.8605
11
Common OP units
118,514,363(11)
1.0
2.85 % Holder's Option
4.5 % N/A
N/A
Same distribution
rate for common
stock and common
OP units
N/A
N/A
(1) Exchange rates are subject to adjustment upon stock splits, recapitalizations and similar events. The exchange rates of certain series of OP units are approximated to
four decimal places.
(2) Except for common OP units, distributions are payable on the issue price of each OP unit, which is $27.00 per unit for all Aspen preferred OP units and $100.00 per
unit for all other preferred OP units.
(3) The redemption price for each OP unit redeemed will be equal to its issue price plus all accrued but unpaid distributions.
(4) Of the outstanding Aspen preferred OP units, 270,000 are designated as "Aspen 2034 Units."
(5) At any time prior to January 1, 2024 (or prior to January 1, 2034 with respect to the Aspen 2034 Units), at the holder's option, each Aspen preferred OP unit may be
exchanged into: (a) if the average closing price of our common stock for the preceding ten trading days is $68.00 per share or less, 0.397 common OP units, or (b) if
the average closing price of our common stock for the preceding ten trading days is greater than $68.00 per share, the number of common OP units determined by
dividing (i) the sum of (A) $27.00 plus (B) 25 percent of the amount by which the average closing price of our common stock for the preceding ten trading days
exceeds $68.00 per share, by (ii) the average closing price of our common stock for the preceding ten trading days.
(6) The annual distribution rate for Aspen 2034 Units is 3.8 percent. The annual distribution rate on all other Aspen preferred OP units is equal to the 10-year U.S.
Treasury bond yield plus 239 basis points; provided, however, that such aggregate distribution rate shall not be less than 6.5 percent nor more than 9.0 percent.
(7) We are required to redeem all outstanding Aspen preferred OP units other than the Aspen 2034 Units on January 2, 2024. We are required to redeem all outstanding
Aspen 2034 Units on January 2, 2034. In addition, we are required to redeem the Aspen preferred OP units (including Aspen 2034 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.
(8) 4.5 percent until April 1, 2020 and 5.0 percent thereafter.
(9) 3.75 percent until January 31, 2021 and 4.0 percent thereafter.
(10) 5.25 percent until January 9, 2022 and 5.5 percent thereafter.
(11) Of the 118,514,363 common OP units, 115,976,408, or 97.9 percent were held by us, and 2,537,955, or 2.1 percent were owned by the limited partners.
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SUN COMMUNITIES, INC.
REAL PROPERTY OPERATIONS
MH communities and RV resorts
An MH community is a residential subdivision 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, basketball courts, shuffleboard courts,
tennis courts and laundry facilities.
An RV resort is a resort with sites for the placement of RVs for varied lengths of time. RV resorts may also provide vacation rental
homes and may include a number of amenities such as restaurants, golf courses, swimming pools, water parks, tennis courts, fitness
centers, planned activities and spacious social facilities.
Renters at our MH and RV properties lease the site on which a manufactured home, RV or vacation rental home is located. We
typically own the underlying land, utility connections, streets, lighting, driveways, common area amenities, and other capital
improvements and are responsible for enforcement of community guidelines and maintenance. In certain MH and RV properties, 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 companies, 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.
In 2021, we began to rebrand certain of our RV resorts under the "Sun Outdoors" umbrella. Sun Outdoors offers tent camping, RV
sites and vacation rentals with world-class amenities throughout the U.S. and in Ontario, Canada. We believe this rebranding under the
Sun Outdoors umbrella will allow us to gain a competitive advantage in the outdoor recreation market. We are in the process of
implementing the Sun Outdoors brand at certain of our RV resorts and expect implementation to be substantially completed by the end
of 2022. Implementation consists of conversion of digital presence (Website, Facebook, Rezplot reservation software and other
internal systems) and signage replacement at the resorts.
We compete with other available MH communities and RV resorts, and alternative forms of housing (such as on-site constructed
homes, apartments, condominiums and townhouses) as they provide housing alternatives to potential tenants of MH communities and
RV resorts.
Marina
A marina is a specially-designed harbor that can be located on oceans, lakes, bays or rivers and typically includes dry storage systems
that provide storage solutions for the placement of vessels ranging in size from small boats to super yachts for varied lengths of time.
Dry storage systems also allow for the required maintenance to the vessels that we store. Marinas also provide ancillary services, such
as fuel stations, ship stores, restaurants, swimming pools, cabin and lodging rentals, boat rentals, tennis courts, fitness centers, shower
and laundry facilities, planned activities and other services to create a robust member experience.
Renters at our marinas lease the wet slip or dry storage space on which the vessel is stored. We typically own the underlying land,
building improvements, dock improvements, site improvements and other on-site amenity structures. Because we own the facilities
and improvements on the land or submerged land at those marinas, we are responsible for the capital improvements and maintenance.
In certain marinas, we do not own all of the underlying land and operate the marinas pursuant to ground leases.
We compete with other available marinas in the U.S. and Puerto Rico.
PROPERTY MANAGEMENT
Our property management strategy emphasizes intensive, detail-oriented, hands-on management by dedicated, on-site community,
resort and marina managers. We believe our focus on creating an exceptional resident, guest and member experience creates a
competitive advantage. It enables us to continually monitor and address concerns, the performance of competitive properties and local
market conditions. As of December 31, 2021, of our 5,961 employees, 4,145 were located on-site as property managers, support staff
or maintenance personnel, and of those, approximately 83.0 percent were full-time employees.
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SUN COMMUNITIES, INC.
Our MH and RV property managers are overseen by John B. McLaren, our President and Chief Operating Officer, who has been in the
MH industry since 1995, Bruce Thelen, our Executive Vice President of Operations and Sales, who has led our manufactured home
sales and leasing subsidiary, SHS, since January 2018, three Senior Vice Presidents of Operations and Sales, 11 Divisional Vice
Presidents and 45 Regional Vice Presidents. Each Regional Vice President oversees one to 16 properties and is responsible for regular
property inspections, oversight of property operations and sales functions, semi-annual market surveys of competitive communities
and interaction with local manufactured home dealers.
Each property manager performs regular inspections in order to monitor the physical condition of properties and to effectively address
tenant concerns. In addition to an on-site 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 policies and procedures
are executed effectively and professionally. All of our property management personnel participate in on-going training to ensure that
changes to policies and procedures are implemented consistently. Our internal training program has led to increased knowledge and
accountability for daily operations and policies and procedures.
Our marina business is overseen by Baxter Underwood, the Chief Executive Officer of Safe Harbor, who has been in the marina
business since 2006, two Chief Operating Officers and 17 Regional Vice Presidents who are responsible for regular marina inspections
and oversight of operations.
HOME SALES AND RENTALS
SHS is engaged in the marketing, selling and leasing of new and pre-owned homes to 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, 2021, SHS had 9,870 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 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 55,500 applications during 2021 to live in our MH
and RV properties, providing a significant "resident onboarding" system that allows us to market the purchase of a home to qualified
applicants. Through the Rental Program we 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.
MARINA MEMBER BASE
We are engaged in the marketing and leasing of wet slips and dry storage spaces and have approximately 45,000 members throughout
our marina network as of December 31, 2021.
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
cancellable for non-payment of rent, violation of community rules and regulations or other specified defaults. During the five calendar
years ended December 31, 2021, on average less than 1.0 percent of the homes in our MH 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 14 years.
Typical resident agreements for RV sites are year-to-year or from move-in date until the end of the current calendar year. Generally,
increases and market rate adjustments are made on an annual basis. These agreements are cancellable for non-payment of rent,
violation of resort rules and regulations or other specified defaults.
Leases for wet slips and dry storage spaces at our marinas are year-to-year, season-to-season, month-to-month, or transient by night,
renewable upon the consent of both parties. On average, our members maintain leases in our marinas for approximately eight years.
5
SUN COMMUNITIES, INC.
ACQUISITIONS
During the year ended December 31, 2021, we acquired 35 MH communities and RV resorts, totaling 9,277 sites and 19 marinas
totaling 6,539 wet slips and dry storage spaces for a total purchase price of approximately $1.4 billion.
On November 13, 2021, we entered into an agreement to acquire Tiger Topco 1 Limited (together with its subsidiaries, "Park
Holidays"), an owner and operator of holiday communities in the United Kingdom. The transaction values Park Holidays at an
enterprise value of £950 million (or approximately $1.3 billion). We anticipate that the acquisition of Park Holidays will close within
the three months ending March 31, 2022. However, the closing is subject to the approval of the UK Financial Conduct Authority,
which regulates certain loan brokering activities of Park Holidays.
We are also currently pursuing additional significant acquisition opportunities outside the United States, including in the United
Kingdom and Europe.
EXPANSION / DEVELOPMENT
During the year ended December 31, 2021, we completed the construction of over 1,030 sites in eight ground-up developments and re-
developments, and nearly 580 expansion sites in six MH communities and five RV resorts.
REGULATIONS AND INSURANCE
General
MH, RV and marina 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.
HUMAN CAPITAL
Human capital management is key to our success and focuses on diversity, equity and inclusion, employee retention and talent
development practices. We are committed to building an equitable and inclusive culture that inspires and supports the growth of our
employees, serves our communities and shapes a more sustainable business. The most significant measures and objectives that we
focus on in managing our business and our related human capital initiatives include the following:
CULTURE
We are taking deliberate actions to foster a growth culture that is grounded in our vision and culture statements: We are an inspired,
engaged and collaborative team committed to providing extraordinary service to our residents, customers and team members. Together
as one team, we embrace the following seven key behaviors that make our company a great place to work:
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Live the Golden Rule: Treat others the way you want to be treated;
Do the right thing;
• We over me;
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Nothing changes if nothing changes;
• Mindset is everything;
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Keep it simple; and
Be yourself and thrive.
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LEADERSHIP, TALENT, TRAINING AND DEVELOPMENT
We expect our leaders to be role models and lead in a way that enables our organization to achieve success. Our strategy is anchored
in promoting the right internal talent and hiring the right external talent for career opportunities across our organization. We are
focused on hiring and developing talent that mirrors the markets we serve, and investing in learning opportunities and capabilities that
equip our workforce with the skills they need while improving engagement and retention.
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Our internal training program, Sun University, offers over 100 courses to our MH and RV team members on a range of
topics, including leadership, communications, inclusion and diversity, software and operations. Our internal training program
has led to increased knowledge and accountability for daily operations and policies and procedures. In 2021, team members
logged 52,506 learning hours;
• We hold mandatory ongoing training sessions for all property management personnel to ensure that policies and procedures
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are executed effectively, professionally and consistently; and
New team members are required to complete information security training, and safety and compliance-related training, with
routine refreshers at least annually on critical topics.
We are dedicated to the attraction, development and retention of our talent, focusing our efforts on ensuring that the returning seasonal
team member pipeline remains robust each year and our annual talent management processes focus on the professional development of
salaried team members. As of December 31, 2021, nearly 10 percent of our employees had over 10 years tenure.
Our compensation philosophy, aimed to apply merit-based, equitable compensation practices, is designed to attract and retain top
talent. For eligible team members, we offer competitive salary, health, welfare, retirement and pet insurance benefits, tuition
reimbursement and rent / vacation discounts at our properties.
DIVERSITY, EQUITY AND INCLUSION ("DEI")
We make it a priority to recognize and appreciate the diverse characteristics that make individuals unique in an atmosphere that
promotes and celebrates individual and collective achievement. We believe it's not just about gender or race, but about being diverse in
thoughts, life and work experiences. Our inclusive environment challenges, inspires, rewards, and transforms our team to be the best.
We do not tolerate harassing, discriminatory, or retaliatory conduct as such conduct is prohibited and inconsistent with our policies,
practices and philosophy. We continue to put our resources and energy into strategies and initiatives to create a more equitable
environment.
Workforce Diversity
We believe we are a stronger organization when our workforce represents a diversity of ideas and experiences. We value and embrace
diversity in our employee recruiting, hiring and development practices. As of December 31, 2021, 41 percent of our employees were
female, 21 percent of our employees were racially or ethnically diverse, and 47 percent of our employees were aged 50 years and
older, with approximately 24 percent being aged 60 years and older.
Training and Resources
We offer trainings and resources on diversity, equity and inclusion to our employees. Diversity education and training programs for
our team focus on unconscious bias, gender identity and transitions, generational differences, religion in the workplace, and self-
awareness and self-assessments.
• We launched our formal initiative for Inclusion, Diversity, Equity and Accountability ("IDEA") focused on enhancing
diversity through education, awareness and outreach throughout our company, communities and resorts;
• We engaged a third-party DEI consultant who conducted a company-wide training on DEI-related key foundational terms and
helped develop an organization-wide IDEA strategy for Sun; and
• We set the foundation with senior leaders at our 2021 Elevate conference where we held break out sessions on allyship with
inclusion and belonging, continuing the IDEA conversation, inclusive leadership, introduction to IDEA, and workplace
microaggressions and unconscious bias.
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SUN COMMUNITIES, INC.
In order to implement and sustain this initiative, in 2021:
• We created our IDEA council to help implement Sun's IDEA Strategy;
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Our Chief Executive Officer signed a pledge for the CEO Action for Diversity & Inclusion, a commitment to advance
diversity and inclusion within the workplace;
• We made Juneteenth an annual company holiday to celebrate the end of slavery in the United States;
• We launched an anti-racism resource center for employees inclusive of videos, podcasts, articles, books, films and television
series; and
• We implemented "Job Analyzer" in our applicant tracking system to proactively identify and address gender bias in job
postings.
EQUITY PAY
We are committed to providing a total compensation package that is market-based, performance driven, fair and internally equitable.
Our goal is to be competitive both within the general employment market as well as with our competitors in the real estate industry,
with our strongest performers being paid more.
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Compensation for each position is determined by utilizing reliable third-party compensation surveys to obtain current market
data. Additionally, position descriptions and compensation are routinely reviewed for market competitiveness.
On an annual basis, the performance of all team members is evaluated and merit increases are allocated based on
performance. This process ensures equitable performance review and corresponding pay practices that attract, retain, and
reward top talent.
In 2021, we conducted an analysis on data related to open positions, retention, market compensation pay gaps, and internal
equity, and remediated any identified pay gaps. A total of 3,300 team members received some level of pay increase apart
from their normal merit-based increase.
BUSINESS INTEGRITY
Our Code of Conduct and Business Ethics is grounded in our commitment to do the right thing. It serves as the foundation of our
approach to ethics and compliance, and our anti-corruption compliance program is focused on conducting business in a fair, ethical
and legal manner.
WORKPLACE HEALTH AND SAFETY
Sun actively seeks opportunities to minimize health, safety and environmental risks to our team members, residents, and guests we
serve in our communities and resorts by utilizing safe operating procedures and practices:
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As part of our commitment to safety, Sun oversees annual safety training programs for all employees to provide tools and
safeguards for accident prevention. Our managers are responsible for ensuring that team members receive the appropriate
training to perform their jobs safely;
All team members participate in safety training during the onboarding process, and thereafter, team members in the field
complete an annual safety training course;
• We work hard to uphold a safe workplace by complying with safety and health laws and regulations, maintaining internal
requirements and remediating risks. Each community is regularly inspected to ensure safety standards are being met, with
comprehensive safety inspections completed annually; and
Our COVID-19 Response and Action Plan, described below, continues to serve as a guideline for the safe operation of our
communities, resorts and main office.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")
We uphold a company-wide commitment to ESG goals through various programs and everyday business practices. We are fully
committed to reducing our environmental impact across the scope of our operations and through the services we deliver to our
residents and guests. We continue to identify opportunities to invest in energy-efficient technology, water efficiency and waste
reduction strategies throughout our communities, resorts and corporate headquarters. By conserving natural resources, reducing our
carbon footprint and participating in efforts to protect the environment through our Sun Unity program, we are striving to achieve our
environmental sustainability goals.
We recognize the important opportunity of providing access to affordable and sustainable housing. Our business contributes to a
vitally important function in our economy by providing high-quality, yet affordable, housing for both all-age and age-restricted needs.
Manufactured homes cost approximately 52 percent less per square foot than conventional site-built homes, expanding the opportunity
for residents to own their home, despite an ever-increasing housing affordability gap. Our homes provide more space at less cost per
square foot compared to other options.
As a nationwide provider of affordable housing, and a leader in the marina business, we believe we have a responsibility not only to
our residents, guests and team members, but also to the communities in which we live and work. These social responsibility efforts are
initiated through our Sun Unity program, so we can join together as a team and give back to these communities to achieve goals like
promotion, education and waste reduction.
COVID-19 RELIEF AND SUPPORT
The health and safety of our residents, guests and team members is our top priority. In 2020, at the height of the COVID-19 pandemic,
we instituted our COVID-19 Response and Action Plan which established guidelines for safe operations of our communities, resorts
and our main office. We continue to revise our guidelines to be in line with revised government and regulatory mandates. Content
contained within this plan includes:
• Methods for preventing and reducing exposure and transmission of COVID-19 among individuals;
• Methods for identification and isolation of sick persons;
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Operational protocols for social distancing, including reduced occupancy requirements;
Sanitation policies and procedures, including cleaning, disinfecting and decontamination;
Communications and training for team members and leaders that are necessary to implement the plan; and
Procedures to ensure effective ongoing implementation of the plan.
Temporary relief measures extended to residents and guests include:
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Enhanced cleaning procedures, as well as additional signage, and changes to policies and procedures further promoting social
distancing.
Amenity kits are being provided to guests upon check-in which include hand sanitizer, face masks and sanitation wipes.
Contactless processes are put in place for rent collection, lease renewals, reservations and guest check-ins.
Large quantities of personal protection equipment and cleaning products are distributed to all of Sun's locations.
While COVID-19 had a material effect on our employees, residents and guests during 2021, it did not materially impact our financial
performance.
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COMMITMENT TO A SUSTAINABLE FUTURE
While the pandemic has been the defining issue of the last two years, climate change is the challenge of our lifetime. Climate change
poses a clear threat and challenge to the real estate sector, as buildings contribute up to 30 percent of global annual greenhouse gas
(“GHG”) emissions. Climate change impacts are material to our overall value as well as our ability to serve our residents, guests,
employees, investors and other stakeholders. We are committed to reducing our GHG emissions and working to improve upon the
environmental performance of the communities and properties within our portfolio. We are at the very beginning of this process with a
focus on expanding our climate analysis to be more comprehensive and integrated into our overall business strategy. Some of our
accomplishments include:
Climate Risk Assessment - In 2021, we performed an analysis of the climate risk impact on our properties. Various models were used
to determine risks related to the sea-level rise, flooding, wildfire, water scarcity, cold waves and heat waves across three timeframes
(2020, 2030 and 2050). We reviewed the results of this assessment and are using them to develop our risk mitigation and resilience
(climate change adaptation) strategies. We are now integrating a climate risk analysis in the due diligence process during acquisitions
of properties.
Greenhouse Gas Emissions - We created a framework to track the GHG emissions across our portfolio. We are implementing GHG
emissions-reduction strategies where feasible to reduce emissions and their negative impact on climate change. The framework allows
us to track, monitor and evaluate current performance, and make adjustments to our GHG emissions-reduction strategies.
Please see the Risk Factors in Item 1A, and our accompanying Consolidated Financial Statements and related notes thereto beginning
on page F-1 of this Annual Report on Form 10-K for more detailed information.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains various "forward-looking statements" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and we intend that such
forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this filing
that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar
expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as "forecasts,"
"intends," "intend," "intended," "goal," "estimate," "estimates," "expects," "expect," "expected," "project," "projected," "projections,"
"plans," "predicts," "potential," "seeks," "anticipates," "anticipated," "should," "could," "may," "will," "designed to," "foreseeable
future," "believe," "believes," "scheduled," "guidance," "target" 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 in our other filings with the SEC, such risks and uncertainties include, but are not
limited to:
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Outbreaks of disease, including the COVID-19 pandemic, and related stay-at-home orders, quarantine policies and
restrictions on travel, trade and business operations;
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 and our senior unsecured notes;
Availability of capital;
Changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar, Australian
dollar and British pound;
Our ability to maintain rental rates and occupancy levels;
Our ability 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, droughts and wildfires;
General volatility of the capital markets and the market price of shares of our capital stock;
Our ability 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 purchasers of manufactured homes and boats to obtain financing; and
The level of repossessions by manufactured home and boat 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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The summary of risks below provides an overview of the principal risks that could affect our business, financial condition, results of
operations, cash flows and / or prospects. This summary does not contain all of the information that may be important to you, and you
should read the more detailed discussion of risks that follows this summary.
SUMMARY OF RISK FACTORS
MATERIAL RISKS RELATING TO OUR MH, RV AND MARINA BUSINESSES
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The geographic concentration of our properties in specific regions exposes us to the risks of downturns in local economies or
other local real estate market conditions;
• We build and develop new MH communities, RV resorts and marinas and expand our existing properties, which exposes us
to risks relating to zoning and permit laws, construction delays, unexpected development costs and fluctuations in occupancy
rates at our newly developed properties;
The industries in which we operate are highly-fragmented and we are subject to competition with national and regional
players that may have greater resources than us;
The cyclical and seasonal nature of the RV and marina industries lead to fluctuations in our operating results;
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Our continued growth is subject to our ability to successfully integrate and finance our acquisitions on favorable terms.
The successful operation of our marinas depends on our ability to retain key employees with experience in the marina
business, including Baxter R. Underwood, who is the Chief Executive Officer of Safe Harbor;
• Many of our properties are in areas that experience extreme weather conditions like floods, hurricanes, wildfires, sea-level
rises or earthquakes and climate change could exacerbate these weather conditions;
• Marinas are specific-use properties and may contain features or assets that have limited alternative uses;
• Many of our marinas are situated on land controlled by governmental bodies and we must lease this land from them. These
governmental authorities may terminate, fail to renew, or interpret in ways unfavorable to us, any of the permits, licenses,
leases and approvals necessary for the operation of our marinas;
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Our properties are subject to various federal, state, local and foreign environmental laws and we may incur liability under
these environmental laws for remediation and disposal of hazardous materials located on our properties;
• We may not complete our previously announced acquisition of Park Holidays and, even if we complete the acquisition, we
may not realize the intended benefits of the Park Holidays acquisition;
• We will be subject to additional legal, regulatory, tax, supply chain, political and economic risks as we continue to expand
our international investments;
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The ongoing COVID-19 pandemic may materially and adversely impact our financial condition, results of operations, cash
flows and performance in unanticipated ways; and
State and local rent control laws may inhibit our ability to increase rents to recover increases in our operating expenses.
RISKS RELATED TO OUR DEBT FINANCINGS
• We have a significant amount of debt which could limit our operational flexibility or otherwise adversely affect our financial
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condition;
Any failure to meet our obligations on our secured debt could result in foreclosure on the collateral securing the debt; and
Increases in market interest rates could materially increase our costs associated with existing and future debt. We mitigate the
risks underlying increases in interest rates through hedging activities, but no hedging activity can protect us completely.
TAX RISKS RELATED TO OUR STATUS AS A REIT
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If we fail to qualify as a REIT our taxable income would be subject to federal income tax at a regular corporate rate which
would materially and adversely affect our financial condition;
The Operating Partnership could be classified as a "publicly traded partnership" which would subject it to taxation as a
corporation and lead to substantial tax liabilities; and
Compliance with the complex requirements and tests that are applied to REITs may hinder our ability to operate solely to
maximize profits.
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RISKS RELATED TO RELATED PARTY TRANSACTIONS AND OUR STRUCTURE
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Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other
business interests;
Our governing documents prohibit, with limited exceptions, a single stockholder from owning more than 9.8 percent of our
capital stock, which may discourage a change of control of the Company; and
Certain provisions of Maryland law may discourage third parties from conducting a tender offer or otherwise acquiring us via
a change of control transaction that could be beneficial to our stockholders.
GENERAL RISK FACTORS
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Our share price is subject to fluctuations that could be caused by a wide range of factors that could ultimately lead to a
complete loss on our shareholders' investment;
The sale or issuance of substantial amounts of our common or preferred stock could materially and adversely affect the
market price of our common or preferred stock;
• We may not generate cash flows in an amount sufficient enough to make distributions on our stock, to pay our indebtedness,
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or to fund our other liquidity needs;
A failure to maintain an effective system of internal controls may cause our financial reports to become inaccurate which
could harm our reputation and have a material adverse effect on our operating results;
Our, or our third party vendors', networks could become compromised, and the information stored there could be accessed,
publicly disclosed, lost or stolen;
• We may experience losses in excess of our insurance coverages;
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Adverse content about us on social media platforms could result in damage to our reputation or brand; and
• We may be adversely impacted by fluctuations in foreign currency exchange rates.
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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.
MATERIAL RISKS RELATING TO OUR MH, RV AND MARINA BUSINESSES
General economic conditions and the concentration of our MH, RV and Marina properties in certain geographic areas 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 occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our revenues, and if our
properties 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.
As of December 31, 2021, 152 MH and RV properties, representing 25.5 percent of developed sites, are located in Florida; 90
properties, representing 17.8 percent of developed sites, are located in Michigan; 33 properties, representing 6.3 percent of developed
sites, are located in Texas; and 45 properties, representing 6.3 percent of developed sites, are located in California. As of December
31, 2021, we have revenue concentrations of marinas in Florida, Rhode Island and California of approximately 22.6 percent, 8.0
percent and 6.5 percent, respectively. As a result of the geographic concentration of our MH and RV properties in Florida, Michigan,
Texas and California, and geographic concentration of our marinas in Florida, Rhode Island 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 properties:
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Outbreaks of disease, including the COVID-19 pandemic, and related stay-at-home orders, quarantine policies and
restrictions on travel, trade and business operations;
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;
A decrease in the number of people interested in the RV lifestyle or boating;
Changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar, the
Australian dollar and the British pound;
The number of repossessed homes in a particular 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;
An increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to
new manufactured home sales;
The lack of an established MH dealer network;
The housing 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 MH properties and the
neighborhoods where they are located;
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Zoning or other environmental regulatory restrictions;
Competition from other available MH communities and RV resorts and alternative forms of housing (such as apartment
buildings and site-built single-family homes) and from other marinas;
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.
We may not be able to integrate or finance our expansion and development activities.
We build and develop new MH communities, RV resorts and marinas and we expand existing communities and marinas. 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 communities, RV resorts and marinas:
• We may not be able to obtain financing with favorable terms for 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 property
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 property on schedule resulting in increased debt service
expense and construction costs;
• We may incur construction and development costs for a property which exceed our original estimates due to increased
materials, labor or other costs, which could make completing the development 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;
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Occupancy rates and rents at a newly developed property may fluctuate depending on several factors, including market and
economic conditions, which may result in the property not being profitable; and
Climate change may cause new marina developments to be paused or restricted.
If any of the above risks occur, our business and results of operations could be adversely affected.
Competition affects occupancy levels and rents, which could adversely affect our revenues.
The MH, RV and marina industries are highly-fragmented. There is competition within the MH, RV and marina markets we currently
serve and in new markets that we may enter. We have both national and regional competitors in the MH, RV and marina markets. Our
properties are located in developed areas that include other MH communities, RV resorts and marinas. The number of competitive MH
communities, RV resorts and marinas 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. 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 communities and RV resorts.
The cyclical and seasonal nature of the RV and marina industries may lead to fluctuations in our operating results.
The RV and marina industries can experience cycles of growth and downturn due to seasonality patterns. Results of operations in any
one period may not be indicative of results in future periods. 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. In the marina market, demand for wet slip storage increases during the summer months as customers contract for the
summer boating season, which also drives non-storage revenue streams such as service, fuel and on-premise restaurants or
convenience storage. Demand for dry storage increases during the winter season as seasonal weather patterns require boat owners to
store their vessels on dry docks and within covered racks. Our results on a quarterly basis can fluctuate due to this cyclicality and
seasonality.
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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, RV and marina 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,
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including both publicly traded REITs and institutional investment funds;
Even if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing,
including completion of due diligence investigations to our satisfaction, which may not be satisfied;
Even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the
purchase price;
• We may be unable to finance acquisitions on favorable terms;
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Acquired properties may fail to perform as expected;
Acquired properties may be located in new markets where we face risks associated with a lack of market knowledge or
understanding of the local economy, lack of business relationships in the area, and unfamiliarity with local governmental and
permitting procedures; and
• We may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties,
into our existing operations.
If any of the above risks occur, our business and results of operations could be adversely affected.
In addition, we may acquire properties subject to liabilities and 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.
We depend on Safe Harbor's management to operate our marina business, and our acquisition of Safe Harbor presents us with
new risks.
Before we acquired Safe Harbor in October 2020, we did not own or operate any marinas. Safe Harbor's operations are separate from
our other operations. The successful operation of our marinas depends on our ability to retain key employees with experience in the
marina business, including Baxter R. Underwood, who is the Chief Executive Officer of Safe Harbor. The loss of services of Mr.
Underwood or other key employees could have a materially adverse effect on our ability to operate Safe Harbor. Although Mr.
Underwood has entered into an employment and non-competition agreement, upon certain events he will have the option to eliminate
the non-competition covenant by foregoing certain compensation and other benefits.
We do not currently maintain or contemplate obtaining any "key-man" life insurance on any of the key employees of Safe Harbor. Our
entry into the marina business also subjects us to new laws and regulations and may lead to increased litigation and regulatory risk
including but not limited to statutes and government regulations that govern the use of, and construction on, rivers, lakes and other
waterways. Exposure to the marina industry may expose us to certain weather events and risks to which we have not previously been
exposed. Additionally, the marina business may be affected in different ways or to a greater extent than our existing MH and RV
business by the COVID-19 pandemic with respect to infection control, facility and work-site access, or other related issues.
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.
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SUN COMMUNITIES, INC.
Many of our properties are located in areas that experience extreme weather conditions and natural disasters and climate change
may adversely affect our business.
Extreme weather or weather-related conditions and other natural disasters, including hurricanes, flash floods, sea-level rise, tornadoes,
wildfires or earthquakes, may interrupt our operations, damage our properties and reduce the number of customers who utilize our
properties in the affected areas. Many of our properties are on coastlines that are subject to hurricane seasons, flash flooding and sea-
level rise; in areas adversely affected by wildfires, such as the western United States; and in earthquake-prone areas, such as the West
Coast. If there are prolonged disruptions at our properties due to extreme weather or natural disasters, our results of operations and
financial condition could be materially adversely affected.
While we maintain insurance coverage that may cover certain of the costs and loss of revenue associated with the effect of extreme
weather and natural disasters at our properties, our coverage is subject to deductibles and limits on maximum benefits. We cannot
assure you that we will be able to fully collect, if at all, on any claims resulting from extreme weather or natural disasters.
If any of our properties are damaged or if their operations are disrupted as a result of extreme weather or natural disasters, or if
extreme weather or natural disasters adversely impact general economic or other conditions in the areas in which our properties are
located or from which they draw their tenants and customers, our business, financial condition and results of operations could be
materially adversely affected.
Significant changes in the climate could exacerbate extreme weather conditions or natural disasters that may occur in areas where our
properties are located, all of which may result in additional physical damage to, or a decrease in demand for, properties located in
these areas or affected by these conditions. If the impact of climate change is 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, local and foreign 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.
Marinas may not be readily adaptable to other uses.
Marinas are specific-use properties and may contain features or assets that have limited alternative uses. These properties may also
have distinct operational functions that involve specific procedures and training. If the operations of any of our marinas become
unprofitable due to industry competition, operational execution or otherwise, then it may not be feasible to operate the property for
another use, and the value of certain features or assets used at the property, or the property itself, may be impaired. Should any of these
events occur, our financial condition, results of operations and cash flows could be adversely impacted.
We may be unable to obtain, renew or maintain permits, licenses and approvals necessary for the operation of our marinas.
The U.S. Army Corps of Engineers, the Coast Guard and other governmental bodies control much of the land located beneath and
surrounding many of our marinas and lease such land to Safe Harbor under leases that typically range from five to 50 years. As a
result, it is unlikely that we can obtain fee-simple title to the land on or near these marinas. If these governmental authorities terminate,
fail to renew, or interpret in ways that are materially less favorable any of the permits, licenses and approvals necessary for operation
of these properties, then our financial condition, results of operations and cash flows could be adversely impacted.
Some marinas must be dredged from time to time to remove silt and mud that collect in harbor-areas in order to assure that boat traffic
can safely enter the harbor. Dredging and disposing of the dredged material can be very costly and require permits from various
governmental authorities. If the permits necessary to dredge marinas or dispose of the dredged material cannot be timely obtained after
the acquisition of a marina, or if dredging is not practical or is exceedingly expensive, the operations of such property would be
materially and adversely affected.
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SUN COMMUNITIES, INC.
We may incur liability under environmental laws arising from conditions at properties we acquire or operations at the properties
we own and operate.
Under various federal, state, local and foreign 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 hazardous substances may be
used at or located on our properties, especially our marinas. 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 result in fines or penalties and may permit third parties to seek recovery from
owners or operators of real properties for personal injury associated with asbestos-containing materials.
As the purchaser of properties we acquire or in connection with the operation of properties we own or manage, we may be liable for
removal or remediation costs, 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 assessment as well as limited compliance evaluations (which involve
general inspections without soil sampling or ground water analysis) completed by independent environmental and engineering
consultants. In some cases, where these evaluations have recommended further, invasive investigations, those have also been
conducted. These environmental evaluations 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.
Moreover, we cannot be sure that: (a) future laws, ordinances or regulations will not impose any material environmental liability; or
(b) the current environmental condition of our properties will not be affected by tenants and occupants of the properties, by the
condition of land or operations in the vicinity of our properties (such as the presence of underground storage tanks), or by unrelated
third parties. Environmental liabilities that we may incur could have an adverse effect on our financial condition, results of operations
and cash flows.
We may not complete our previously-announced acquisition of Park Holidays.
In November 2021, we entered into an agreement to acquire Park Holidays which owns, operates and manages 42 holiday
communities in the United Kingdom. The acquisition values Park Holidays at an enterprise value of £950 million (or approximately
$1.3 billion). While we anticipate that the Park Holidays acquisition will close in the first quarter of 2022, the closing is subject to the
approval of the UK Financial Conduct Authority, which regulates certain loan brokering activities of Park Holidays. If this condition
is not satisfied or waived, or if the Park Holidays purchase agreement is otherwise terminated in accordance with its terms, then we
will not complete the Park Holidays acquisition. If we do not complete the acquisition, our common stock will not reflect any interest
in Park Holidays; if the closing is delayed, this interest will not be reflected during the period of delay; and if the acquisition is
restructured, it is uncertain as to whether this interest will be adversely affected. In addition, the price of our common stock may
decline to the extent that the current market price of our common stock reflects a market assumption that the acquisition will be
completed and that we will realize certain anticipated benefits of acquiring Park Holidays.
The closing of the Proposed Loan Amendment is subject to, among other things, the closing of our acquisition of Park Holidays.
Therefore, if we are unable to complete the acquisition of Park Holidays then we will be unable to complete the Proposed Loan
Amendment. Refer to Note 19, "Subsequent Events," in our accompanying Consolidated Financial Statements for additional
information about the Proposed Loan Amendment.
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SUN COMMUNITIES, INC.
The intended benefits of the Park Holidays acquisition may not be realized.
The Park Holidays acquisition poses risks for our ongoing operations, including, among others:
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That senior management's attention may be diverted from the management of daily operations in our U.S. and Canadian
properties to the integration of the Park Holidays properties;
Costs and expenses associated with any undisclosed or potential liabilities that are not covered by our transaction insurance;
That the Park Holidays properties may not perform as well as anticipated; and
Unforeseen difficulties may arise in integrating operations in the United Kingdom into our company.
As a result of the foregoing, we cannot assure you that the Park Holidays acquisition will be accretive to us in the near term or at all.
Furthermore, if we fail to realize the intended benefits of the Park Holidays properties, the market price of our common stock could
decline to the extent that the market price reflects those benefits.
We will be subject to additional risks from our investment in Park Holidays and any other international investments.
Park Holidays will be our first major investment in the United Kingdom. We are also pursuing other significant acquisition
opportunities outside the United States, including in the United Kingdom and elsewere in Europe, although there can be no assurances
that we will be successful in completing any of these prospective acquisitions. These investments may expose us to a variety of risks
that are different from and in addition to those commonly found in our current markets. Our ownership of Park Holidays and any other
international investments will subject us to additional risks, including:
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the laws, rules and regulations applicable in such jurisdictions outside of the United States, including those related to property
ownership by foreign entities, consumer and data protection, privacy, network security, encryption, payments and restricting
us from removing profits earned from activities within the country to the United States (i.e., nationalization of assets located
within a country);
complying with a wide variety of foreign laws;
fluctuations in exchange rates between foreign currencies and the U.S. dollar, and exchange controls;
limited experience with local business and cultural factors that differ from our usual standards and practices;
changes in the availability, cost and terms of mortgage funds and other borrowings resulting from varying national economic
policies or changes in interest rates;
reliance on local management;
challenges in establishing effective controls and procedures to regulate operations in different regions and to monitor and
ensure compliance with applicable regulations, such as applicable laws related to corrupt practices, employment, licensing,
construction, climate change or environmental compliance;
unexpected changes in regulatory requirements, tax, tariffs, trade barriers and other laws within jurisdictions outside the
United States or between the United States and such jurisdictions;
potentially adverse tax consequences with respect to our properties;
the impact of regional or country-specific business cycles and economic instability, including deterioration in political
relations with the United States, instability in, or further withdrawals from, the European Union or other international trade
alliances or agreements;
the impact of extreme weather or weather-related conditions and other natural disasters that may affect specific locations in
which our properties are located, including hurricanes, flash floods, sea-level rise and coastal erosion, that may affect Park
Holidays' properties;
the impact of disruptions in global, regional or local supply chains, including disruptions occurring during and after the
COVID-19 pandemic; and
political instability, uncertainty over property rights, civil unrest, drug trafficking, political activism or the continuation or
escalation of terrorist activities.
If we are unable to adequately address these risks, they could have a significant adverse effect on our operations.
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SUN COMMUNITIES, INC.
The United Kingdom's departure from the European Union could increase volatility in the financial markets and currency
exchange rates, including the British pound.
The United Kingdom's exit from the European Union, commonly referred to as "Brexit," has created an uncertain political and
economic environment in the United Kingdom and elsewhere. The consequences of Brexit, and continuing uncertainties related to
Brexit, could negatively affect taxes and costs of business, diminish travel to and from the United Kingdom, cause volatility in
currency exchange rates, interest rates, and European, United Kingdom or worldwide political, regulatory, economic or market
conditions, and contribute to instability in political institutions, regulatory agencies, and financial markets. Brexit could also lead to
legal uncertainty arising from divergence of the laws of the United Kingdom from those of the European Union. Any of these effects
of Brexit, and others that cannot be anticipated, could adversely effect our existing and planned expansion in the United Kingdom and
elsewhere, and therefore, could have a material adverse effect on us.
The current pandemic of the coronavirus, or COVID-19, may materially and adversely impact and disrupt our financial condition,
results of operations, cash flows and performance.
The COVID-19 pandemic at times has had, and in the future it could continue to have, or a future pandemic could have, material and
adverse effects on our ability to successfully operate, and on our financial condition, results of operations and cash flows, including in
the following possible ways, among others:
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A downturn in the economy may affect the ability of the residents or customers in our MH communities and marinas to pay
their rent.
Travel restrictions may affect the ability of potential guests to travel to and use our RV resorts and marinas. A downturn in
the economy may independently reduce demand for our RV resorts and marinas, and our RV revenue may decrease if we
cannot convert as many transient RV sites to annual RV sites as planned.
Certain properties may be subject to government restrictions which limit the ability to operate or provide certain amenities.
• We may have difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability
in the global financial markets or deterioration in credit and financing conditions may result in insufficient liquidity or affect
our access to capital necessary to fund and grow our business and address maturing liabilities on a timely basis. As of
December 31, 2021, we had drawn $1.0 billion on our senior credit facility, of which the total capacity, excluding the
unexercised accordion feature, is $2.0 billion.
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The financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of
our debt agreements and result in a default and potentially an acceleration of indebtedness, which non-compliance could
negatively impact our ability to make additional borrowings under our senior credit facility.
Our ground up development and expansion activities, and conversions of transient RV sites to annual RV sites may be
disrupted, and we may be delayed in our current projects and timelines, the magnitude of which will depend, in part, on the
length and severity of the current governmental restrictions or limitations implemented in the future.
The ancillary revenue from amenities at our properties, such as restaurants, golf courses, resort and marina activities, may
decrease.
The operation of our marinas may be disrupted by the COVID-19 pandemic with respect to infection control, facility and
work-site access, or other related issues. As result, we may experience delays in our current projects and timelines, the
magnitude of which will depend on governmental restrictions or limitations implemented in the future.
Negative impacts on our results of operations and our access to capital could cause us to eliminate or reduce the amount of
our distributions to stockholders, or to pay some or all of our distributions in common stock rather than cash.
A general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to
acquire additional properties.
A recession or additional market corrections resulting from the spread of COVID-19 could affect the value of our common
stock. We expect our stock price to continue to be volatile.
Governmental agencies that permit and approve our projects, suppliers, homebuilders, and other business partners and third
parties may be prevented from conducting business activities in the ordinary course for an indefinite period of time, which
could in turn negatively affect our business.
Disruptions in the global supply-chain could negatively impact our ability to secure the volume of homes and vacation rentals
we need to meet market demand. These disruptions also could drive up costs across our business including capital
expenditures, homes, home setups, and general property operations.
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SUN COMMUNITIES, INC.
The extent to which the COVID-19 pandemic impacts our operations, financial condition and financial results will depend on future
developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the
pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the
pandemic and containment measures, among others. The rapid development and fluidity of this situation precludes any prediction as to
the full adverse impact of the COVID-19 pandemic. Nevertheless, the COVID-19 pandemic presents material uncertainty and risk
with respect to our performance, financial condition, results of operations, cash flows and performance. Moreover, many risk factors
set forth in this Annual Report on Form 10-K should be interpreted as heightened risks as a result of the impact of the COVID-19
pandemic.
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 at our MH properties 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.
RISKS RELATED TO OUR DEBT FINANCINGS
Our significant amount of debt could limit our operational flexibility or otherwise adversely affect our financial condition, and we
may incur more debt in the future.
We have a significant amount of debt. As of December 31, 2021, we had approximately $5.7 billion of total debt outstanding,
consisting of approximately $3.4 billion in debt that is secured by mortgage liens on 190 of our properties, $1.2 billion of senior
unsecured notes, $1.0 billion on our line of credit and other debt, $35.2 million of mandatorily redeemable preferred equity and $34.7
million of preferred OP units that are 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.
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.
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.
Covenants in our credit agreements and senior unsecured note indentures could limit our flexibility and adversely affect our
financial condition.
The terms of our financing agreements and other indebtedness require us to comply with a number of customary financial and other
covenants. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under
the instruments governing the applicable indebtedness even if we have satisfied our payment obligations. Our financing agreements
contain certain cross-default provisions that could be triggered in the event that we default on our other indebtedness. These cross-
default provisions may require us to repay or restructure our senior credit facility in addition to any mortgage or other debt that is in
default. If our properties were foreclosed upon, or if we are unable to refinance our indebtedness at maturity or meet our payment
obligations, the amount of our distributable cash flows and our financial condition would be adversely affected.
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SUN COMMUNITIES, INC.
Our senior credit facility contains various restrictive corporate covenants including: minimum fixed charge coverage ratio, maximum
leverage ratio, maximum dividend payout ratio and maximum secured leverage ratio. In addition to our senior credit facility, our
senior unsecured notes also contain various covenants including: aggregate debt test, debt service test, maintenance of total
unencumbered assets and a secured debt test. These covenants may restrict our ability to pursue certain business initiatives or certain
transactions that might otherwise be advantageous. Furthermore, failure to meet certain of these financial covenants could cause an
event of default under and / or accelerate some or all of such indebtedness which could have a material adverse effect on us.
An increase in market interest rates could raise our interest costs on existing and future debt or adversely affect our stock price,
and a decrease in interest rates may lead to additional competition for the acquisition of real estate or adversely affect our results
of operations.
Our interest costs for any new debt and our current debt obligations may rise if interest rates increase. This increased cost could make
the financing of any new acquisition more expensive as well as lower our current period earnings. Rising interest rates could limit our
ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing. In addition, an increase in
interest rates could decrease the access third parties have to credit, thereby decreasing the amount they are willing to pay to lease our
assets and limit our ability to reposition our portfolio promptly in response to changes in economic or other conditions. An increase in
market interest rates may lead prospective purchasers of our common stock to expect a higher dividend yield, which could adversely
affect the market price of our common stock. Decreases in interest rates may lead to additional competition for the acquisition of real
estate due to a reduction in desirable alternative income-producing investments. Increased competition for the acquisition of real estate
may lead to a decrease in the yields on real estate targeted for acquisition. In such circumstances, if we are not able to offset the
decrease in yields by obtaining lower interest costs on our borrowings, our results of operations may be adversely affected.
Our hedging strategies may not be successful in mitigating our risks associated with interest rates and could reduce the overall
returns on your investment.
We use various derivative financial instruments to provide a level of protection against interest rate risks, but no hedging strategy can
protect us completely. These instruments involve risks, such as the risk that the counterparties may fail to honor their obligations under
these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, that a court could
rule that such agreements are not legally enforceable and that we may have to post collateral to enter into hedging transactions, which
we may lose if we are unable to honor our obligations. These instruments may also generate income that may not be treated as
qualifying REIT income for purposes of the REIT income tests. In addition, the nature and timing of hedging transactions may
influence the effectiveness of our hedging strategies. Poorly designed strategies or improperly executed transactions could actually
increase our risk and losses. Moreover, hedging strategies involve transaction and other costs. We cannot assure you that our hedging
strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that our hedging transactions will not
result in losses that may reduce the overall return on your investment.
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.
The Financial Conduct Authority ("FCA"), the authority that regulates LIBOR, ceased publishing one-week and two-month LIBOR
rates after December 31, 2021. All other LIBOR settings will effectively cease after June 30, 2023, and it is expected that LIBOR will
no longer be used after this date. Many of our property-level real estate loans have fixed interest rates that will not be impacted by any
change in LIBOR. Certain of our other loans, including our borrowings under our $2.0 billion senior credit facility, have interest rates
based on LIBOR. Our senior credit facility provides that the administrative agent in consultation with us will endeavor to determine an
interest rate to replace the current LIBOR based rate, and until the parties agree on a successor LIBOR rate we can continue to borrow
under the senior credit facility using 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.
A downgrade in our credit ratings could have material adverse effects on our business and financial condition.
We intend to manage our operations to maintain our investment grade credit ratings from S&P Global and Moody's. These ratings are
based on a number of factors, which include assessments of our financial strength, liquidity, capital structure, asset quality, and
sustainability of cash flow and earnings. Changes in these factors could lead to a downgrade of our ratings, leading to an adverse
impact on our cost and availability of capital, which could in turn have a material adverse impact on our financial condition, results of
operations and liquidity.
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SUN COMMUNITIES, INC.
TAX RISKS RELATED TO OUR STATUS AS A REIT
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 monitor our tax status continually.
If we fail to qualify as a REIT in any taxable year, our taxable income could be subject to U.S. federal income tax at regular corporate
rates. Moreover, unless entitled to relief under certain statutory provisions, we also would be disqualified from treatment as a REIT for
the four taxable years following the year during which qualification was lost. This treatment would reduce our net earnings available
for investment or distribution to stockholders because of the additional tax liability to us for the years involved. In addition,
distributions to stockholders would no longer be required to be made.
Federal, state and foreign income tax laws governing REITs and related interpretations may change at any time, and any such
legislative or other actions affecting REITs could have a negative effect on us.
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.
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, distributions 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.
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SUN COMMUNITIES, INC.
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.
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 Tax Cut and Jobs
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.
24
SUN COMMUNITIES, INC.
RISKS RELATED TO RELATED PARTY TRANSACTIONS AND OUR STRUCTURE
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 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 lease
agreement includes annual graduated rent increases through the initial end date of October 31, 2026. As of December 31, 2021, the
average gross base rent was $19.95 per square foot. 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 years ended December 31, 2021, 2020 and 2019, we paid $0.7 million, $0.3 million and $0.4 million for the use of the airplane,
respectively. 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 years ended December 31, 2021 and 2020, we paid $0.2 million for these services,
respectively. 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.
Legal Counsel - During 2019-2021, 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 $10.3 million, $13.3 million and $11.1 million
in the years ended December 31, 2021, 2020 and 2019, 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.
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.
25
SUN COMMUNITIES, INC.
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. 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.
26
SUN COMMUNITIES, INC.
GENERAL RISK FACTORS
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:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Outbreaks of disease, including the COVID-19 pandemic, and related stay-at-home orders, quarantine policies and
restrictions on travel, trade and business operations;
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 and our senior unsecured notes;
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, the
Australian dollar and the British pound;
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.
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.
27
SUN COMMUNITIES, INC.
Based on the applicable conversion ratios then in effect, as of February 15, 2022, in the future we may issue to the limited partners of
the Operating Partnership, up to approximately 5.7 million shares of our common stock in exchange for their OP units. The limited
partners may sell such shares pursuant to registration rights, if available, or an available exemption from registration. As of
February 15, 2022, there were no outstanding options to purchase shares of our common stock under our equity incentive plans, and
we currently have the authority to issue restricted stock awards or options to purchase up to an additional 614,662 shares of our
common stock pursuant to our equity incentive plans. In addition, we have entered into an At-the-Market Offering Sales Agreement to
sell shares of common stock. As of December 31, 2021, we have remaining capacity to sell up to an additional $1.25 billion 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.
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.
We rely on key management.
We depend on the efforts of our executive officers, Gary A. Shiffman, John B. McLaren, Karen J. Dearing, Bruce Thelen, Aaron
Weiss and Baxter R. Underwood. 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 our executive officers.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results, which could
result in a loss of investor confidence and adversely affect the market price of our common stock.
We are required to establish and maintain internal control over financial reporting and disclosure controls and procedures. 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 in accordance with generally accepted accounting principles. Disclosure controls and
procedures are processes designed to ensure that information required to be disclosed is communicated to management and reported in
a timely manner. We cannot be certain that we will be successful in continuing to maintain adequate control over our financial
reporting and disclosure controls and procedures. Deficiencies, including any material weakness, in our internal control over financial
reporting that may occur could result in misstatements or restatements of our financial statements or a decline in the price of our
securities. In addition, as our business continues to grow, and as we continue to make significant acquisitions, our internal controls
will become more complex and may require significantly more resources to ensure that our disclosure controls and procedures remain
effective. Acquisitions can pose challenges in implementing the required processes, procedures and controls in the operations of the
companies that we acquire. Companies that are acquired by us may not have disclosure controls and procedures or internal control
over financial reporting that are as thorough or effective as those required by the securities laws that currently apply to us. Moreover,
the existence of any material weakness or significant deficiency in our internal controls and procedures would require management to
devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and
management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. If we cannot
provide reliable financial reports, our reputation and operating results could be materially adversely affected, which could also cause
investors to lose confidence in our reported financial information, which in turn could result in a reduction in the trading price of our
common stock.
28
SUN COMMUNITIES, INC.
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. Our senior leadership regularly updates the Board of Directors on security matters and meets at least annually to
review program progress and plans, incidents if any, and emerging risks.
Despite our security measures, our information technology and infrastructure, as well as that of our third-party vendors, may be
vulnerable to attacks by hackers (including through malware, ransomware, computer viruses and email phishing schemes) or breached
due to employee error, malfeasance, fire, flood or other physical event, or other disruptions. Any such breach or disruption could
compromise our or a third-party vendor's network and the information stored there could be accessed, publicly disclosed, lost or
stolen. Any such access, disclosure or other loss of information could:
•
•
•
•
•
•
•
Result in legal claims or proceedings,
Disrupt our operations, including our ability to service our tenants and our ability to analyze and report our financial and
operating results,
Decrease our revenues,
Damage our reputation,
Cause a loss of confidence,
Increase our insurance premiums, or
Have other material adverse effects on our business.
We depend 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.
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 MH and RV properties in Florida and California and marinas on coastlines, where natural
disasters or other catastrophic events such as hurricanes, flash floods, sea-level rise, tornadoes, wildfires and earthquakes 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, and other lines of insurance we have determined to be
appropriate for our business, 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.
29
SUN COMMUNITIES, INC.
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.
Our operations are subject to regulation under various federal, state, local and foreign laws and regulations that may expose us to
significant costs and liabilities.
Our properties and the operations at them are subject to regulation under various federal, state, local and foreign laws and regulations.
Compliance with laws and regulations that govern our operations may require expenditures and modifications of development plans
and operations that could have a detrimental effect on the operations of our properties and our financial condition, results of operations
and cash flows. There can be no assurance that the application of laws, regulations or policies, or changes in such laws, regulations
and policies, will not occur in a manner that could have a detrimental effect on any property.
We may be adversely impacted by fluctuations in foreign currency exchange rates.
Our current and future investments in and operations of Canadian, Australian and United Kingdom properties are or will be exposed to
the effects of changes in the Canadian dollar, Australian dollar and British pound, 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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
30
SUN COMMUNITIES, INC.
ITEM 2. PROPERTIES
As of December 31, 2021, our properties were located throughout the United States, and in Ontario, Canada and Puerto Rico and
consisted of 284 MH communities, 160 RV resorts, 33 properties containing both MH and RV sites, and 125 marinas.
As of December 31, 2021, our properties contained an aggregate of 204,163 developed sites comprised of 98,621 developed MH sites,
30,540 annual RV sites (inclusive of both annual and seasonal usage rights), 29,847 transient RV sites and 45,155 wet slips and dry
storage spaces. There are 10,672 additional MH and RV sites suitable for development. Most of our properties include amenities
oriented toward family and retirement living. Of our 602 properties, 218 each have 300 or more 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, 2021, our MH and RV properties had an occupancy rate of 97.4 percent excluding transient RV sites. Since
January 1, 2021, the MH and RV properties have averaged an aggregate annual turnover of homes (where the home is moved out of
the community) of approximately 2.6 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 7.1 percent. The average renewal rate
for residents in our Rental Program was 73.5 percent for the year ended December 31, 2021.
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 resorts offer incremental amenities including golf, pro
shops, restaurants, zip lines, waterparks, watersports and thematic experiences.
Our MH and RV properties are principally located in the midwestern, southern and southeastern regions of the U.S., and Ontario,
Canada. Our marinas are principally located in the northeastern, southern, mid-Atlantic, western and midwestern regions of the U.S.,
with the majority of such marinas concentrated in coastal regions, others located in various inland regions, and Puerto Rico. 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 our MH and RV properties as of December 31, 2021. The occupancy
percentage includes MH sites and annual RV sites and excludes transient RV sites.
Property Name
UNITED STATES
MIDWEST
Michigan
Academy / West Point
Allendale Meadows Mobile Village
Alpine Meadows Mobile Village
Andover
Apple Carr Village
Arbor Woods
Brentwood Mobile Village
Broadview Estates
Brookside Village
Byron Center Mobile Village
Camelot Villa
Charlevoix Estates
Cider Mill Crossings
Cider Mill Village
Country Acres Mobile Village
Country Hills Village
Country Meadows Mobile Village
MH
/RV
City
State
MH and
Annual RV
Sites as of
12/31/2021
Transient
RV Sites as
of
12/31/2021
Occupancy
as of
12/31/2021
Occupancy
as of
12/31/2020
MH Canton
MH Allendale
MH Grand Rapids
MH Grass Lake
MH Muskegon
MH Ypsilanti
MH Kentwood
MH Davison
MH Kentwood
MH Byron Center
MH Macomb
MH Charlevoix
MH Fenton
MH Middleville
MH Cadillac
MH Hudsonville
MH Flat Rock
31
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
441
352
403
125
713
458
195
474
196
143
712
183
621
258
182
239
577
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
98.4 %
99.4 %
98.5 %
100.0 %
92.8 % (1)
98.9 %
97.9 %
88.2 %
98.5 %
99.3 %
99.0 %
98.9 %
94.8 % (1)
98.4 %
98.9 %
99.2 %
99.7 %
98.0 %
99.1 %
97.3 %
N/A (4)
86.5 % (1)
99.1 %
99.5 %
87.1 %
100.0 %
98.6 %
98.6 %
N/A (4)
87.6 % (1)
98.4 %
95.1 %
99.6 %
98.8 %
Property Name
Country Meadows Village
Creekwood Meadows
Cutler Estates Mobile Village
Dutton Mill Village
East Village Estates
Egelcraft
Fisherman's Cove
Frenchtown Villa / Elizabeth Woods
Grand Mobile Estates
Haas Lake Park RV Campground(2)
Hamlin
Hickory Hills Village
Highland Greens Estates
Holiday West Village
Holly Village / Hawaiian Gardens
Hunters Crossing
Hunters Glen
Huntington Run
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
Meadowstone
Northville Crossing
Oak Island Village
Petoskey KOA RV Resort(2)
Pinebrook Village
Pineview Estates
Presidential Estates Mobile Village
Richmond Place
River Haven Village
River Ridge
Rudgate Clinton
Rudgate Manor
Scio Farms Estates
Sheffield Estates
Shelby Forest
Shelby West
Silver Springs
Southwood Village
St. Clair Place
Stonebridge
Sun Outdoors Petoskey Bay Harbor(2)
Sun Retreats Gun Lake(2)
SUN COMMUNITIES, INC.
MH and
Annual RV
Sites as of
12/31/2021
Transient
RV Sites as
of
12/31/2021
395
336
259
307
708
458
162
1,140
219
210
230
283
879
341
425
114
396
175
290
387
802
161
254
392
256
191
425
453
320
231
756
250
50
185
1,011
364
117
721
288
667
931
913
228
664
644
547
394
100
—
13
232
—
—
—
—
—
—
—
—
—
282
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
239
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
140
103
Occupancy
as of
12/31/2021
99.7 %
97.6 %
97.7 %
99.7 %
98.4 %
98.9 %
98.8 %
99.3 %
99.1 %
100.0 %
98.3 %
98.9 %
64.6 %
99.4 %
98.4 %
100.0 %
98.0 %
98.9 %
97.9 %
98.2 %
99.5 %
96.3 %
96.9 %
97.7 %
99.6 %
98.4 %
98.8 %
98.7 %
99.7 %
94.4 %
99.7 %
97.6 %
100.0 %
98.9 %
71.1 %
97.3 %
98.3 %
99.2 %
100.0 %
98.7 %
98.0 %
98.8 %
100.0 %
98.9 %
99.4 %
99.3 %
99.0 %
97.0 %
N/A (1)
100.0 %
100.0 %
Occupancy
as of
12/31/2020
100.0 %
99.1 %
98.8 %
99.3 %
99.9 %
97.8 %
98.1 %
99.2 %
98.2 %
N/A (4)
98.7 %
99.6 %
56.5 %
99.7 %
97.9 %
100.0 %
98.7 %
N/A (4)
96.2 %
98.2 %
99.0 %
96.9 %
99.2 %
99.0 %
99.6 %
98.4 %
99.3 %
99.1 %
99.4 %
N/A (4)
99.7 %
100.0 %
100.0 %
98.9 %
N/A (4)
99.2 %
100.0 %
96.1 %
N/A (4)
99.3 %
98.8 %
99.1 %
99.1 %
99.5 %
99.7 %
100.0 %
99.7 %
97.0 %
N/A (1)
100.0 %
100.0 %
City
MH
/RV
MH Caledonia
MH Burton
MH Grand Rapids
MH Caledonia
MH Washington Twp.
MH Muskegon
MH Flint Twp.
MH Newport
MH Grand Rapids
RV New Hudson
MH Webberville
MH Battle Creek
MH Highland
MH Holland
MH Holly
MH Capac
MH Wayland
MH Kalamazoo
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 Hastings
MH Northville
MH East Lansing
RV Petoskey
MH Kentwood
MH Flint
MH Hudsonville
MH Richmond
MH Grand Haven
MH Saline
MH Clinton Township
MH Sterling Heights
MH Ann Arbor
MH Auburn Hills
MH Shelby Twp.
MH Shelby Twp.
MH Clinton Township
MH Grand Rapids
MH St. Clair
MH Richfield Twp.
RV Petoskey
RV Hopkins
32
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
MI
MI
Property Name
Sun Retreats Silver Lake(2)
Sunset Ridge
Sycamore Village
Sylvan Crossing
Sylvan Glen Estates
Tamarac Village
Tamarac Village RV Resort(2)
Tanglewood Village
Timberline Estates
Town & Country Mobile Village
Troy Villa
Warren Dunes Village
Waverly Shores Village
West Village Estates
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
Four Seasons
Jellystone Park™ at Barton Lake(2)
Liberty Farm
Pebble Creek
Pine Hills
Roxbury Park
Sun Outdoors Lake Rudolph(2)
The Willows
Indiana Total
Ohio
Apple Creek
East Fork Crossing
Oakwood Village
Orchard Lake
Sun Retreats Geneva on the Lake(2)
Westbrook Senior Village
Westbrook Village
Willowbrook Place
Woodside Terrace
Ohio Total
SOUTH
Texas
Austin Lone Star RV Resort(2)
Bluebonnet Lake
SUN COMMUNITIES, INC.
MH and
Annual RV
Sites as of
12/31/2021
Transient
RV Sites as
of
12/31/2021
City
MH
/RV
RV Mears
MH Portland
MH Mason
MH Chelsea
MH Brighton
MH Ludington
RV Ludington
MH Brownstown
MH Coopersville
MH Traverse City
MH Troy
MH Bridgman
MH Holland
MH Romulus
MH White Lake
MH Jackson
MH Wayland
MH Woodhaven
MH Goshen
MH Fort Wayne
MH South Bend
MH Osceola
MH Elkhart
RV Fremont
MH Valparaiso
MH Greenwood
MH Middlebury
MH Goshen
RV Santa Claus
MH Goshen
State
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
IN
OH
MH Amelia
OH
MH Batavia
OH
MH Miamisburg
MH Milford
OH
RV Geneva on the Lake OH
OH
MH Toledo
OH
MH Toledo
OH
MH Toledo
OH
MH Holland
161
388
396
185
476
302
111
247
296
192
282
314
415
628
315
469
314
220
32,257
570
468
227
386
218
87
220
296
130
398
—
174
3,174
176
350
511
147
451
112
344
266
439
2,796
Occupancy
as of
12/31/2021
100.0 %
95.1 %
98.7 %
74.6 % (1)
94.7 %
98.7 %
100.0 %
98.8 %
98.6 %
97.9 %
85.8 %
99.7 %
100.0 %
100.0 %
96.8 %
98.7 %
99.7 %
95.5 %
96.3 %
Occupancy
as of
12/31/2020
100.0 %
87.6 % (1)
99.0 %
N/A (4)
N/A (4)
98.3 %
100.0 %
N/A (4)
98.3 %
99.0 %
86.9%
98.7 %
100.0 %
98.9 %
98.4 %
98.3 %
99.7 %
100.0 %
96.6 %
103
—
—
—
—
—
2
—
—
—
—
—
—
—
—
—
—
—
869
—
—
—
—
—
468
—
—
—
—
534
—
1,002
97.5 %
90.2 % (1)
98.2 %
98.4 %
99.5 %
100.0 %
96.8 %
99.0 %
98.5 %
96.2 %
N/A
83.3 % (1)
96.0 %
—
—
—
—
129
—
—
—
—
129
96.6 %
99.4 %
99.4 %
99.3 %
100.0 %
100.0 %
98.5 %
97.4 %
97.0 %
98.7 %
97.2 %
85.5 % (1)
97.4 %
98.2 %
98.2 %
N/A
95.9 %
98.6 %
98.4 %
97.7 %
N/A
N/A (4)
95.6 %
99.4 %
99.7 %
98.6 %
97.3 %
100.0 %
100.0 %
98.3 %
99.2 %
96.8 %
98.7 %
RV Austin
MH Austin
TX
TX
56
—
101
—
100.0 %
N/A
100.0 %
N/A (4)
33
SUN COMMUNITIES, INC.
MH and
Annual RV
Sites as of
12/31/2021
Property Name
Boulder Ridge
Branch Creek Estates
Camp Fimfo(2)
Chisholm Point Estates
Comal Farms
Coyote Ranch Resort(2)
Creeks Crossing
Jellystone Park™ at Guadalupe River(2)
Jellystone Park™ at Hill Country(2)
Jellystone Park™ at Whispering Pines(2)
Jetstream RV Resort at NASA(2)
Lone Star Jellystone Park(2)
Oak Crest
Pearwood RV Resort(2)
Pecan Branch
Pine Trace
River Ranch
River Ridge Estates
Saddlebrook
Sandy Lake
Sandy Lake RV Resort(2)
Stonebridge
Summit Ridge
Sun Outdoors Lake Travis(2)
Sun Outdoors San Antonio West(2)
Sun Outdoors Texas Hill Country(2)
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(2)
Big Tree RV Resort(2)
Blue Heron Pines
Blue Jay
Blue Jay RV Resort(2)
Blueberry Hill(2)
Brentwood Estates
Buttonwood Bay
Buttonwood Bay RV Resort(2)
Candlelight Manor
Carriage Cove
Central Park
Central Park Resort RV Resort(2)
MH
City
/RV
MH Pflugerville
MH Austin
RV New Braunfels
MH Pflugerville
MH New Braunfels
RV Wichita Falls
MH Kyle
RV Kerrville
RV Canyon Lake
RV Tyler
RV Houston
RV Waller
MH Austin
RV Pearland
MH Georgetown
MH Houston
MH Austin
MH Austin
MH San Marcos
MH Carrollton
RV Carrollton
MH San Antonio
MH Converse
RV Austin
RV San Antonio
RV New Braunfels
MH Kyle
MH San Antonio
RV San Antonio
RV Arlington
MH San Antonio
RV Bradenton
MH Lakeland
MH Sarasota
RV Zephyrhills
RV Arcadia
MH Punta Gorda
MH Dade City
RV Dade City
RV Bushnell
MH Hudson
MH Sebring
RV Sebring
MH South Daytona
MH Sanford
MH Haines City
RV Haines City
34
Transient
RV Sites as
of
12/31/2021
—
—
319
—
—
165
—
256
185
131
139
345
—
103
—
—
—
—
—
—
39
—
—
166
161
253
—
—
130
83
—
2,576
Occupancy
as of
12/31/2021
98.5 %
99.8 %
N/A
98.6 %
99.5 %
N/A
94.3 % (1)
N/A
N/A
N/A
100.0 %
N/A
97.6 %
100.0 %
96.1 %
97.8 %
98.5 %
99.2 %
99.1 %
100.0 %
100.0 %
99.7 %
99.1 %
100.0 %
100.0 %
100.0 %
75.9 % (1)
100.0 %
100.0 %
100.0 %
93.7 % (1)
97.7 %
Occupancy
as of
12/31/2020
97.1 %
100.0 %
N/A (4)
99.3 %
98.6 %
N/A (4)
N/A
N/A
N/A
N/A (4)
N/A (4)
N/A
94.2 % (1)
N/A (4)
86.0 % (1)
98.5 %
97.6 %
99.2 %
99.1 %
100.0 %
100.0 %
99.1 %
99.1 %
N/A
100.0 %
100.0 %
97.1 %
100.0 %
100.0 %
100.0 %
90.5 % (1)
97.5 %
102
—
—
66
56
—
—
11
83
—
—
179
—
—
—
137
100.0 %
99.0 %
99.6 %
100.0 %
100.0 %
99.5 %
99.5 %
100.0 %
100.0 %
99.5 %
99.3 %
100.0 %
100.0 %
99.6 %
90.4 %
100.0 %
100.0 %
98.6 %
99.6 %
100.0 %
100.0 %
98.3 %
99.5 %
100.0 %
100.0 %
98.4 %
99.0 %
100.0 %
99.2 %
100.0 %
90.4 %
100.0 %
1,220
400
—
427
367
—
106
—
—
—
63
—
654
41
229
680
848
515
561
54
181
335
446
78
101
116
274
8
25
91
316
8,192
269
207
251
286
355
408
207
41
322
191
407
353
128
467
114
227
State
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
SUN COMMUNITIES, INC.
MH and
Annual RV
Sites as of
12/31/2021
Property Name
Citrus Hill RV Resort(2)
Club Naples(2)
Club Wildwood
Colony in the Wood
Country Squire
Country Squire RV Resort(2)
Cypress Greens
Daytona Beach RV Resort(2)
Deerwood
Dunedin RV Resort(2)
Ellenton Gardens RV Resort(2)
Fairfield Village
Flamingo Lake RV Resort(2)
Forest View
Glen Haven
Glen Haven RV Resort(2)
Goldcoaster
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
Kings 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
Lazy Lakes RV Resort(2)
Majestic Oaks RV Resort(2)
Marco Naples RV Resort(2)
Meadowbrook Village
Mill Creek
City
MH
/RV
RV Dade City
RV Naples
MH Hudson
MH Port Orange
MH Paisley
RV Paisley
MH Lake Alfred
RV Port Orange
MH Orlando
RV Dunedin
RV Ellenton
MH Ocala
RV Jacksonville
MH Homosassa
MH Zephyrhills
RV Zephyrhills
MH Homestead
RV Homestead
MH Dunedin
RV Citra
RV Dade City
RV Ft. Myers
MH Orlando
MH Edgewater
RV Riverview
MH Holly Hill
RV Homosassa Springs
RV Bradenton
MH Ft. Myers Beach
RV Ft. Myers Beach
MH Merritt 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 Summerland Key
RV Zephyrhills
RV Naples
MH Tampa
MH Kissimmee
35
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
FL
FL
Transient
RV Sites as
of
12/31/2021
51
59
—
—
—
1
—
85
—
43
41
—
Occupancy
as of
12/31/2021
100.0 %
100.0 %
100.0 %
100.0 %
99.0 %
100.0 %
98.5 %
100.0 %
99.5 %
100.0 %
100.0 %
100.0 %
342 100.0%
98.7 %
100.0 %
100.0 %
99.2 %
100.0 %
99.3 %
100.0 %
100.0 %
100.0 %
99.9 %
99.5 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
97.1 %
99.1 %
99.6 %
91.5 %
100.0 %
100.0 %
100.0 %
98.2 %
99.4 %
100.0 %
100.0 %
99.3 %
98.2 %
99.6 %
N/A
100.0 %
100.0 %
100.0 %
94.1 %
—
—
45
—
8
—
92
80
37
—
—
93
—
89
143
—
104
—
—
—
—
—
—
57
—
59
—
—
155
25
—
—
—
99
23
94
—
—
Occupancy
as of
12/31/2020
100.0 %
100.0 %
100.0 %
99.0 %
99.0 %
100.0 %
98.5 %
100.0 %
98.1 %
100.0 %
100.0 %
99.7 %
N/A
98.7 %
100.0 %
100.0 %
99.6 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
99.6 %
98.8 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
96.7 %
99.6 %
100.0 %
90.8 %
100.0 %
100.0 %
100.0 %
98.2 %
99.4 %
100.0 %
100.0 %
100.0 %
98.6 %
100.0 %
N/A (4)
100.0 %
100.0 %
100.0 %
88.2 %
131
246
478
383
97
24
259
148
569
196
153
293
80
300
52
173
531
6
134
316
166
232
974
730
208
402
135
333
353
973
301
245
239
226
240
142
144
658
119
274
362
252
206
307
280
259
—
231
207
257
34
SUN COMMUNITIES, INC.
MH and
Annual RV
Sites as of
12/31/2021
Property Name
Mill Creek RV Resort(2)
Naples RV Resort(2)
New Ranch
North Lake Estates(2)
Oakview Estates
Ocean Breeze - Jensen Beach
Ocean Breeze - Jensen Beach RV Resort(2)
Ocean Breeze - Marathon
Ocean Breeze - Marathon RV Resort
Orange City
Orange City RV Resort(2)
Orange Tree Village
Paddock Park South
Palm Key Village
Palm Village
Park Place
Park Royale
Pecan Park RV Resort(2)
Pelican Bay
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
Riverside Club
Riverside Village
Rock Crusher Canyon RV Resort(2)
Royal Country
Royal Palm Village
Saddle Oak Club
Saralake Estates
Savanna Club
Serendipity
Settler's Rest RV Resort(2)
Shadow Wood Village
Shady Road Villas
Shell Creek Marina
Shell Creek RV Resort & Marina(2)
Siesta Bay RV Park(2)
Southern Charm
Southern Charm RV Resort(2)
Southern Leisure RV Resort(2)
Southern Pines
Southport Springs Golf & Country Club
Spanish Main
Spanish Main RV Resort(2)
Stonebrook
Sun Outdoors Islamorada
City
MH
/RV
RV Kissimmee
RV Naples
MH Clearwater
RV Moore Haven
MH Arcadia
MH Jensen Beach
RV Jensen Beach
MH Marathon
RV Marathon
MH Orange City
RV Orange City
MH Orange City
MH Ocala
MH Davenport
MH Bradenton
MH Sebastian
MH Pinellas Park
RV Jacksonville
MH Micco
RV Bradenton
MH Frostproof
RV Frostproof
RV Largo
RV Zephyrhills
MH Bushnell
RV Bushnell
MH Clearwater
MH Ruskin
MH Jensen Beach
RV Crystal River
MH Miami
MH Haines City
MH Ocala
MH Sarasota
MH Port St. Lucie
MH North Fort Myers
RV Zephyrhills
MH Hudson
MH Ocala
MH Punta Gorda
RV Punta Gorda
RV Ft. Myers
MH Zephyrhills
RV Zephyrhills
RV Chiefland
MH Bradenton
MH Zephyrhills
MH Thontosassa
RV Thontosassa
MH Homosassa
MH Islamorada
36
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
FL
FL
Transient
RV Sites as
of
12/31/2021
21
45
—
81
—
—
83
—
—
—
104
—
—
—
—
—
—
274
—
45
—
48
50
35
—
405
—
—
—
167
—
—
—
—
—
—
77
—
—
—
30
46
—
93
330
—
—
—
47
—
—
Occupancy
as of
12/31/2021
100.0 %
100.0 %
98.9 %
100.0 %
100.0 %
77.3 % (1)
100.0 %
74.5 % (1)(5)
— % (5)
Occupancy
as of
12/31/2020
100.0 %
100.0 %
97.9 %
100.0 %
100.0 %
73.6 % (1)
100.0 %
31.9 % (1)(5)
— % (5)
100.0 %
100.0 %
100.0 %
80.3 %
100.0 %
100.0 %
96.8 %
99.0 %
100.0 %
99.5 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
93.2 % (1)
100.0 %
98.7 %
89.8 %
N/A (1)
100.0 %
99.8 %
87.3 %
99.7 %
99.5 %
98.5 %
97.3 %
100.0 %
78.8 % (1)
87.6 %
98.1 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
96.3 %
99.1 %
91.1 %
100.0 %
94.0 % (1)
— % (5)
100.0 %
100.0 %
99.2 %
79.8 %
100.0 %
100.0 %
96.2 %
100.0 %
100.0 %
99.1 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
93.2 % (1)
100.0 %
99.0 %
86.4 %
N/A (4)
100.0 %
99.9 %
86.1 %
99.7 %
99.5 %
98.5 %
97.9 %
100.0 %
87.0 % (1)
85.4 %
98.1 %
100.0 %
100.0 %
100.0 %
100.0 %
N/A (4)
96.3 %
99.3 %
87.5 %
100.0 %
93.5 % (1)
— % (5)
135
122
94
191
119
309
97
47
—
4
417
246
188
204
146
476
309
67
216
296
37
414
259
347
103
512
391
728
71
228
864
395
376
202
1,069
338
301
260
129
54
155
751
1
403
167
107
547
56
232
215
—
SUN COMMUNITIES, INC.
Property Name
Sun Outdoors Islamorada RV Resort
Sun Outdoors Key Largo(2)
Sun Outdoors Marathon(2)
Sun Outdoors Orlando Champions Gate
Sun Outdoors Orlando Champions Gate RV
Resort(2)
Sun Outdoors Panama City Beach
Sun Outdoors Panama City Beach RV Resort(2)
Sun Outdoors Sarasota(2)
Sun Outdoors St. Augustine(2)
Suncoast Gateway
Sundance
Sunlake Estates
Sunset Harbor at Cow Key Marina
Sweetwater RV Resort(2)
Tallowwood Isle
Tampa East
Tampa East RV Resort(2)
The Hamptons Golf & Country Club
The Hideaway
The Hills
The Landings at Lake Henry
The Ridge
The Valley
ThemeWorld RV Resort(2)
Three Lakes(2)
Tranquility MHC
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
Woodsmoke Camping Resort(2)
Florida Total
Virginia
Chincoteague Island KOA RV Resort(3)
Gwynn's Island RV Resort & Campground(2)
Jellystone Park™ at Luray(2)
Jellystone Park™ at Natural Bridge(2)
New Point RV Resort(2)
Pine Ridge
Shenandoah Acres Family Campground(2)
Sun Outdoors Cape Charles(2)
Sun Outdoors Chincoteague Bay
Sunset Beach RV Resort(3)
City
MH
/RV
RV Islamorada
RV Key Largo
RV Marathon
MH Davenport
RV Davenport
MH Panama City Beach
RV Panama City Beach
RV Sarasota
RV St. Augustine
MH Port Richey
MH Zephyrhills
MH Grand Island
MH Key West
RV Zephyrhills
MH Coconut Creek
MH Dover
RV Dover
MH Auburndale
MH Key West
MH Apopka
MH Haines City
MH Davenport
MH Apopka
RV Davenport
RV Hudson
MH Bushnell
MH Bradenton
RV Bradenton
MH Port Charlotte
MH Homosassa
MH Homosassa
MH Lady Lake
RV Zephyrhills
MH Auburndale
MH Davenport
MH Groveland
RV Fort Myers
RV Chincoteague
RV Gwynn
RV East Luray
Natural Bridge
RV
Station
RV New Point
MH Prince George
RV Stuarts Draft
RV Cape Charles
RV Chincoteague
RV Cape Charles
37
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
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
MH and
Annual RV
Sites as of
12/31/2021
Occupancy
as of
12/31/2021
— % (5)
Occupancy
as of
12/31/2020
— % (5)
Transient
RV Sites as
of
12/31/2021
—
21
58
—
200
—
159
440
175
—
—
—
—
80
—
—
110
—
—
—
—
—
—
50
53
—
—
5
—
—
—
—
75
—
—
—
84
5,950
100.0 %
100.0 %
75.0 %
100.0 %
97.6 %
— % (1)
100.0 %
N/A
98.8 %
100.0 %
97.1 %
98.7 %
100.0 %
97.1 %
100.0 %
100.0 %
99.5 %
100.0 %
99.0 %
99.2 %
99.4 %
100.0 %
100.0 %
100.0 %
23.1 %
100.0 %
100.0 %
96.3 %
100.0 %
100.0 %
93.2 %
100.0 %
99.5 %
99.8 %
85.2 %
100.0 %
98.1 %
360
13
255
230
11
—
113
663
—
296
N/A
100.0 %
N/A
100.0 %
100.0 %
99.5 %
100.0 %
N/A
N/A (1)
N/A
—
17
27
44
60
42
—
1,079
—
173
332
408
77
211
274
31
559
829
13
97
394
481
148
98
254
26
136
35
108
213
213
1,341
142
219
509
291
216
40,783
—
116
—
69
313
376
379
—
—
—
100.0 %
100.0 %
97.7 %
100.0%
95.2 %
N/A
100.0 %
N/A
98.8 %
100.0 %
97.1 %
98.7 %
100.0 %
95.6 %
100.0 %
100.0 %
99.0 %
92.3 %
100.0 %
99.7 %
99.4 %
100.0 %
N/A (4)
100.0 %
N/A (4)
99.3 %
100.0 %
92.6 %
100.0 %
100.0 %
93.6 %
100.0 %
99.1 %
99.6 %
81.8 %
100.0 %
98.1 %
N/A
100.0 %
N/A
100.0 %
100.0 %
98.9 %
100.0 %
N/A (4)
N/A (4)
N/A
Property Name
Tall Pines Harbor Campground(2)
Virginia Total
SOUTHWEST
California
49'er Village RV Resort(2)
Alta Laguna
Caliente Sands
Cava Robles RV Resort(2)
Cisco Grove Campground & RV
El Capitan Canyon(2)
Forest Springs
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
Lakeview Mobile Estates
Lazy J Ranch
Lemon Wood
Menifee Development
Moreno 66 Development
Napa Valley
Oak Creek
Ocean Mesa RV Resort(2)
Ocean West
Palos Verdes Shores MH & Golf Community
Pembroke Downs
Pismo Dunes RV Resort
Rancho Alipaz
Rancho Caballero
Royal Palms
Royal Palms RV Resort
Sun Outdoors San Diego Bay
Sun Outdoors San Diego Bay RV Resort(2)
The Colony
The Sands RV & Golf Resort(2)
Vallecito
Victor Villa
Vines RV Resort(2)
Vista del Lago
Wine Country RV Resort(2)
California Total
Arizona
Blue Star
Blue Star(2)
Brentwood West
SUN COMMUNITIES, INC.
MH
/RV
RV Temperanceville
City
State
VA
MH and
Annual RV
Sites as of
12/31/2021
Transient
RV Sites as
of
12/31/2021
—
1,253
241
2,182
Occupancy
as of
12/31/2021
N/A
99.8 %
Occupancy
as of
12/31/2020
N/A (4)
99.6 %
CA
RV Plymouth
MH Rancho Cucamonga CA
CA
MH Cathedral City
CA
RV Paso Robles
CA
RV Emigrant Gap
CA
RV Goleta
CA
MH Grass Valley
CA
MH La Habra
CA
MH Modesto
CA
MH Simi Valley
CA
MH West Covina
CA
MH Temecula
CA
RV Indio
CA
RV Lodi
CA
MH Lakeside
CA
MH Yucaipa
CA
MH Arcata
CA
MH Ventura
CA
MH Menifee
CA
MH Moreno Valley
CA
MH Napa
CA
MH Coarsegold
CA
RV Goleta
CA
MH McKinleyville
CA
MH San Pedro
CA
MH Chino
RV Pismo Beach
CA
MH San Juan Capistrano CA
CA
MH Riverside
CA
MH Cathedral City
CA
RV Cathedral City
CA
MH San Diego
CA
RV San Diego
CA
MH Oxnard
CA
RV Desert Hot Springs
CA
MH Newbury Park
CA
MH Victorville
CA
RV Paso Robles
CA
MH Scotts Valley
CA
RV Paso Robles
88
296
118
—
18
—
373
330
289
222
157
196
165
—
295
296
220
231
—
—
257
198
—
130
242
163
331
132
303
438
39
49
—
150
269
303
287
—
202
—
6,787
239
—
—
332
—
163
—
—
—
—
—
—
173
361
—
—
—
—
—
—
—
—
104
—
—
—
—
—
—
—
—
—
197
—
245
—
—
130
—
203
2,147
100.0 %
99.7 %
98.3 %
N/A
100.0 %
N/A
89.5 % (1)
100.0 %
99.7 %
100.0 %
100.0 %
99.5 %
100.0 %
N/A
99.0 %
100.0 %
99.1 %
100.0 %
N/A (1)
N/A (1)
100.0 %
99.5 %
N/A
99.2 %
99.6 %
99.4 %
100.0 %
100.0 %
100.0 %
97.7 %
100.0 %
N/A (1)
N/A (1)
100.0 %
100.0 %
100.0 %
99.7 %
N/A
99.0 %
N/A
98.3 %
MH Apache Junction
RV Apache Junction
MH Mesa
AZ
AZ
AZ
4
114
350
—
31
—
100.0 %
100.0 %
99.7 %
38
100.0 %
99.7 %
98.3 %
N/A
N/A (4)
N/A
86.6 % (1)
100.0 %
99.0 %
100.0 %
100.0 %
99.5 %
100.0 %
N/A
100.0 %
100.0 %
99.5 %
99.1 %
N/A (4)
N/A (4)
99.6 %
100.0 %
N/A
99.2 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
97.7 %
100.0 %
N/A (1)
N/A (1)
100.0 %
100.0 %
100.0 %
100.0 %
N/A
99.5 %
N/A
98.9 %
100.0%
100.0%
99.1 %
SUN COMMUNITIES, INC.
MH and
Annual RV
Sites as of
12/31/2021
Property Name
Buena Vista
Desert Harbor
La Casa Blanca
Leaf Verde RV Resort(2)
Lost Dutchman
Lost Dutchman RV Resort(2)
Mountain View
Palm Creek Golf
Palm Creek Golf & RV Resort(2)
Rancho Mirage
Reserve at Fox Creek
Sun Valley
Arizona Total
Colorado
Cave Creek
Eagle Crest
Jellystone Park™ at Larkspur(2)
North Point Estates
River Run
River Run RV Resort(2)
Skyline
Smith Creek Crossing
Swan Meadow Village
The Foothills
The Grove at Alta Ridge
Timber Ridge
Willow Bend
Colorado Total
NORTHEAST
Connecticut
Beechwood
Cedar Springs
Forest Hill
Grove Beach
Hillcrest
Lakeside
Lakeview CT
Laurel Heights
Marina Cove
Millwood
New England Village
Oak Grove
Rolling Hills
Sun Outdoors Mystic(2)
Three Gardens
Yankee Village
Connecticut Total
City
MH
/RV
MH Buckeye
MH Apache Junction
MH Apache Junction
RV Buckeye
MH Apache Junction
RV Apache Junction
MH Mesa
MH Casa Grande
RV Casa Grande
MH Apache Junction
MH Bullhead City
MH Apache Junction
MH Evans
MH Firestone
RV Larkspur
MH Pueblo
MH Granby
RV Granby
MH Fort Collins
MH Granby
MH Dillon
MH Fort Collins
MH Thornton
MH Ft. Collins
MH Fort Lupton
MH Killingworth
MH Southington
MH Southington
MH Westbrook
MH Uncasville
MH Terryville
MH Danbury
MH Uncasville
MH Uncasville
MH Uncasville
MH Westbrook
MH Plainville
MH Storrs
RV Old Mystic
MH Southington
MH Old Saybrook
39
State
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CT
CT
CT
CT
CT
CT
CT
CT
CT
CT
CT
CT
CT
CT
CT
CT
Transient
RV Sites as
of
12/31/2021
—
—
—
264
—
31
—
—
859
—
—
—
1,185
Occupancy
as of
12/31/2021
89.8 %
100.0 %
100.0 %
100.0 %
96.4 %
100.0 %
97.6 %
71.1 % (1)
100.0 %
100.0 %
99.7 %
97.8 %
95.0 %
Occupancy
as of
12/31/2020
84.8 %
100.0 %
100.0 %
100.0 %
98.9 %
100.0 %
98.8 %
66.6 % (1)
100.0 %
100.0 %
99.7 %
97.4 %
93.2 %
—
—
536
—
—
451
—
—
—
—
—
—
—
987
—
—
—
—
—
—
—
—
—
—
—
—
—
103
—
—
103
99.6 %
99.8 %
N/A
99.1 %
100.0 %
N/A
99.4 %
44.5 % (1)
100.0 %
N/A
100.0 %
99.3 %
N/A
95.7 %
98.7 %
96.8 %
97.9 %
98.5 %
99.5 %
100.0 %
93.3 %
95.9 %
76.0 %
4.4 % (1)
100.0 %
97.8 %
78.5 %
100.0 %
90.4 %
100.0 %
92.8 %
99.3 %
99.5 %
N/A
100.0 %
55.6 % (1)
N/A
99.4 %
42.7 % (1)
99.4 %
N/A (4)
100.0 %
99.5 %
N/A (4)
97.0 %
97.3 %
93.2 %
98.4 %
98.5 %
99.5 %
97.4 %
90.5 %
95.9 %
76.0 %
N/A (1)
100.0 %
97.8 %
77.5 %
100.0 %
90.4 %
100.0 %
91.7 %
400
205
198
113
193
3
170
506
976
312
311
268
4,123
447
441
—
108
36
—
170
182
174
—
409
585
—
2,552
297
190
188
136
208
76
179
49
25
45
60
45
200
46
135
23
1,902
SUN COMMUNITIES, INC.
MH
/RV
City
State
MH and
Annual RV
Sites as of
12/31/2021
Transient
RV Sites as
of
12/31/2021
Occupancy
as of
12/31/2021
Occupancy
as of
12/31/2020
ME
MH Augusta
ME
MH Bangor
ME
MH Holden
ME
MH Hancock
ME
MH Bangor
ME
RV North Monmouth
ME
MH Brunswick
ME
MH Brunswick
ME
MH Augusta
RV Saco
ME
RV Old Orchard Beach ME
RV Old Orchard Beach ME
RV Old Orchard Beach ME
ME
MH Lisbon
ME
RV Wells
MH Hooksett
MH Concord
MH Dover
RV Glen
MH Lebanon
MH Tilton
RV Milton
MH Nashua
RV Strafford
RV West Ossipee
MH Cape May
MH Cream Ridge
RV Clermont
RV Cape May
RV Williamstown
RV Barnegat
MH Galloway Twp.
RV Galloway Twp.
Cape May Court
RV
House
RV Cape May
RV Cape May
RV Sussex
NH
NH
NH
NH
NH
NH
NH
NH
NH
NH
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
59
377
155
113
218
204
296
43
163
—
86
326
240
144
—
2,424
91
320
159
16
81
103
68
480
—
430
1,748
28
243
639
—
—
175
39
64
340
435
438
153
2,554
—
—
—
—
—
—
—
—
—
191
235
304
46
—
231
1,007
—
—
—
277
—
—
156
—
147
70
650
—
—
68
310
230
39
—
31
188
240
191
139
1,436
91.5 %
98.9 %
89.7 %
99.1 %
89.0 %
100.0 %
99.0 %
97.7 %
82.2 %
N/A
100.0 %
100.0 %
100.0 %
98.6 %
N/A
96.5 %
100.0 %
99.4 %
99.4 %
100.0 %
97.5 %
100.0 %
100.0 %
99.4 %
N/A
100.0 %
99.5 %
100.0 %
100.0 %
100.0 %
N/A
N/A
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
89.8 %
98.7 %
92.9 %
100.0 %
91.3 %
N/A (4)
99.3 %
100.0 %
85.3 %
N/A
100.0 %
100.0 %
100.0 %
98.6 %
N/A (4)
96.8 %
100.0 %
98.8 %
100.0 %
100.0 %
100.0 %
99.0 %
100.0 %
99.0 %
N/A
100.0 %
99.4 %
100.0 %
100.0 %
100.0 %
N/A (4)
N/A (4)
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
N/A (4)
100.0 %
Property Name
Maine
Augusta Village
Birch Hill Estates
Cedar Haven
Hancock Heights Estates
Holiday Park Estates
Jellystone Park™ Augusta Maine
Maplewood Manor
Merrymeeting
Riverside Drive Park
Saco / Old Orchard Beach KOA(2)
Sun Outdoors Old Orchard Beach Downtown(2)
Sun Retreats at Wild Acres(2)
Sun Retreats Old Orchard Beach(2)
Town & Country Village
Wells Beach Resort Campground(2)
Maine Total
New Hampshire
Brook Ridge
Crestwood
Farmwood Village
Glen Ellis Family Campground(2)
Hannah Village
Hemlocks
Mi-Te-Jo Campground(2)
River Pines
Strafford / Lake Winnipesaukee South KOA(3)
Westward Shores Cottages & RV Resort(2)
New Hampshire Total
New Jersey
Cape May Crossing
Deep Run
Driftwood RV Resort & Campground(2)
Holly Shores Camping Resort(2)
Hospitality Creek Campground(2)
Long Beach RV Resort & Campground(2)
Shady Pines
Shady Pines RV Resort(2)
Sun Retreats Avalon(2)
Sun Retreats Cape May(2)
Sun Retreats Cape May Wildwood(2)
Sun Retreats Pleasant Acres Farm(2)
New Jersey Total
New York
Adirondack Gateway RV Resort & Campground(2)
Cherrywood
Jellystone Park™ at Birchwood Acres
RV Gansevoort
MH Clinton
MH Greenfield Park
NY
NY
NY
323
176
1
19
—
—
100.0 %
88.6 % (1)
100.0 %
100.0 %
83.5 % (1)
100.0 %
40
SUN COMMUNITIES, INC.
MH
/RV
City
Property Name
Jellystone Park™ at Birchwood Acres RV Resort(2) RV Greenfield Park
Jellystone Park™ at Gardiner(2)
Jellystone Park™ of Western New York(2)
Kittatinny Campground & RV Resort(2)
Parkside Village
Sky Harbor
Sun Outdoors Association Island(2)
The Villas at Calla Pointe
RV Gardiner
RV North Java
RV Barryville
MH Cheektowaga
MH Cheektowaga
RV Henderson
MH Cheektowaga
MH and
Annual RV
Sites as of
12/31/2021
Transient
RV Sites as
of
12/31/2021
120
20
22
—
156
522
26
116
1,482
184
318
337
527
—
—
274
—
1,659
State
NY
NY
NY
NY
NY
NY
NY
NY
Occupancy
as of
12/31/2021
100.0 %
100.0 %
100.0 %
N/A
100.0 %
98.7 %
100.0 %
100.0 %
98.2 %
Occupancy
as of
12/31/2020
100.0 %
N/A
100.0 %
N/A
100.0 %
98.1 %
N/A (4)
100.0 %
97.3 %
New York Total
OTHER
Sun Outdoors Orange Beach(2)
Fort Dupont
High Point Park
Leisure Point Resort
Leisure Point RV Resort(2)
Sea Air Village
Sea Air Village RV Resort(2)
Sun Outdoors Rehoboth Bay(2)
Countryside Village of Atlanta
Countryside Village of Gwinnett
Countryside Village of Lake Lanier
Wymberly
Autumn Ridge
Jellystone Park™ of Chicago(2)
Maple Brook
Oak Ridge
Sun Retreats Rock River(2)
Wildwood Community
Jellystone Park™ at Mammoth Cave(2)
Reunion Lake RV Resort(2)
Campers Haven RV Resort(2)
Peter's Pond RV Resort(2)
Sun Outdoors Cape Cod(2)
Hyde Park
Jellystone Park™ at Maryland(2)
Southside Landing
Sun Outdoors Frontier Town(2)
Sun Outdoors Ocean City(2)
Sun Outdoors Ocean City Gateway(2)
Southern Hills / Northridge Place
Jellystone Park™ at Memphis(2)
Rocky Mountain RV Park(2)
Coastal Estates
Fort Tatham RV Resort & Campground(2)
Glen Laurel
Jellystone Park™ at Golden Valley(2)
Meadowbrook
Sun Villa Estates
Country Village Estates
Crown Villa RV Resort(2)
AL
DE
DE
DE
DE
DE
DE
DE
GA
GA
GA
GA
IA
IL
IL
IL
IL
IL
KY
LA
MA
MA
MA
MD
MD
MD
MD
MD
MD
MN
MS
MT
NC
NC
NC
NC
NC
NV
OR
OR
RV Orange Beach
RV Delaware City
MH Frederica
MH Millsboro
RV Millsboro
MH Rehoboth Beach
RV Rehoboth Beach
RV Millsboro
MH Lawrenceville
MH Buford
MH Buford
MH Martinez
MH Ankeny
RV Millbrook
MH Matteson
MH Manteno
RV Hillsdale
MH Sandwich
RV Cave City
RV Ponchatoula
RV Dennisport
RV Sandwich
RV East Falmouth
MH Easton
RV Williamsport
MH Cambridge
RV Berlin
RV Berlin
RV Whaleyville
MH Stewartville
RV Horn Lake
RV Gardiner
MH Hampstead
RV Sylva
MH Concord
RV Bostic
MH Charlotte
MH Reno
MH Oregon City
RV Bend
41
—
—
409
202
299
379
123
—
261
331
548
274
413
144
441
426
243
476
—
—
221
341
56
240
—
96
—
1
—
475
—
—
154
58
260
—
321
324
518
—
167
—
—
—
2
—
11
291
—
—
—
—
—
250
—
—
255
—
315
334
45
65
199
—
228
—
685
392
210
—
155
75
—
32
—
298
—
—
—
123
N/A
N/A
97.6 %
94.1 %
100.0 %
98.9 %
100.0 %
N/A
100.0 %
99.1 %
98.7 %
78.1 % (1)
98.8 %
100.0 %
99.8 %
98.1 %
100.0 %
98.9 %
N/A
N/A
100.0 %
100.0 %
100.0 %
99.2 %
N/A
93.8 %
N/A
100.0 %
N/A
97.5 %
N/A
N/A
72.1 % (1)
100.0 %
98.8 %
N/A
99.7 %
100.0 %
100.0 %
N/A
N/A
N/A (4)
99.3 %
90.6 %
100.0 %
99.2 %
100.0 %
N/A
99.6 %
99.7 %
99.1 %
100.0 %
98.1 %
N/A (4)
99.8 %
96.0 %
100.0 %
98.9 %
N/A (4)
N/A
100.0 %
100.0 %
100.0 %
99.2 %
N/A
88.5 %
N/A
100.0 %
N/A
98.9 %
N/A
N/A (4)
65.6 % (1)
100.0 %
100.0 %
N/A
99.7 %
100.0 %
99.8 %
N/A
SUN COMMUNITIES, INC.
Property Name
Forest Meadows
Oceanside RV Resort & Campground(2)
Pheasant Ridge RV Park(2)
Woodland Park Estates
Countryside Estates
Jellystone Park™ at Quarryville(2)
Pheasant Ridge
River Beach Campsites & RV
Sun Outdoors Lancaster County(2)
Carolina Pines RV Resort(2)
Country Lakes
Crossroads
Crossroads RV Resort(2)
Lakeside Crossing
Ocean Pines
Southern Palms
Bell Crossing
Sun Outdoors Pigeon Forge(2)
Archview RV Resort & Campground(2)
Blue Water Beach Resort(2)
Canyonlands RV Resort & Campground(2)
Moab Valley RV Resort & Campground(2)
Pony Express RV Resort & Campground(2)
Slickrock RV Resort & Campground(2)
47 North
Beachwood Resort(2)
Gig Harbor RV Resort(2)
Fond du Lac East / Kettle Moraine KOA(2)
Thunderhill Estates
Other Total
City
MH
/RV
MH Philomath
RV Coos Bay
RV Wilsonville
MH Eugene
MH Mckean
RV Quarryville
MH Lancaster
RV Milford
RV Narvon
RV Conway
MH Little River
MH Aiken
RV Aiken
MH Conway
MH Garden City
MH Ladson
MH Clarksville
RV Sevierville
RV Moab
RV Garden City
RV Moab
RV Moab
RV North Salt Lake
RV Moab
MH Cle Elum
RV Blaine
RV Gig Harbor
RV Glenbeulah
MH Sturgeon Bay
MH and
Annual RV
Sites as of
12/31/2021
Transient
RV Sites as
of
12/31/2021
—
86
130
—
—
257
—
—
142
671
—
—
2
—
—
—
—
238
113
177
131
131
185
190
—
300
112
94
—
7,091
Occupancy
as of
12/31/2021
100.0 %
N/A
N/A
100.0 %
97.0 %
N/A
100.0 %
N/A (1)
100.0 %
100.0 %
100.0 %
73.2 % (1)
100.0 %
88.4 % (1)
99.8 %
100.0 %
99.2 %
100.0 %
N/A
N/A
N/A
N/A
N/A
N/A
N/A (1)
100.0 %
N/A
100.0 %
96.6 %
97.4 %
Occupancy
as of
12/31/2020
100.0 %
N/A
N/A (4)
100.0 %
96.4 %
N/A
100.0 %
N/A (4)
100.0 %
100.0 %
95.6 %
60.8 % (1)
100.0 %
82.9 % (1)
99.5 %
100.0 %
99.6 %
100.0 %
N/A
N/A (4)
N/A
N/A
N/A
N/A
N/A (4)
N/A (4)
N/A
100.0 %
97.0 %
96.3 %
75
—
—
398
304
—
553
—
280
163
136
168
20
691
579
194
237
70
—
—
—
—
—
—
—
372
—
231
266
12,771
State
OR
OR
OR
OR
PA
PA
PA
PA
PA
SC
SC
SC
SC
SC
SC
SC
TN
TN
UT
UT
UT
UT
UT
UT
WA
WA
WA
WI
WI
US TOTAL / AVERAGE
124,798
28,973
97.3 %
97.3 %
CANADA
Arran Lake RV Resort & Campground(2)
Craigleith RV Resort & Campground(2)
Deer Lake RV Resort & Campground(2)
Grand Oaks RV Resort & Campground(2)
Gulliver's Lake RV Resort & Campground
Hidden Valley RV Resort & Campground(2)
Lafontaine RV Resort & Campground(2)
Lake Avenue RV Resort & Campground(2)
Pickerel Park RV Resort & Campground(2)
Pleasant Beach 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 Sherkston
RV Lambton Shores
RV Seguin
RV Scotland
RV Amherstburg
RV Bornholm
42
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
ON
185
85
210
248
198
205
215
125
167
87
1,575
139
217
369
143
195
4,363
5
26
31
40
—
40
48
11
42
15
360
23
20
4
184
25
874
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
N/A (4)
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
SUN COMMUNITIES, INC.
Property Name
MH
/RV
City
State
MH and
Annual RV
Sites as of
12/31/2021
Transient
RV Sites as
of
12/31/2021
Occupancy
as of
12/31/2021
Occupancy
as of
12/31/2020
COMPANY TOTAL / AVERAGE
129,161
29,847
97.4 %
97.3 %
(1) Occupancy in these properties reflects the fact that these properties 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) No occupancy in these properties for the year ended December 31, 2020 as properties were acquired during the year ended December 31, 2021.
(5) Occupancy in these properties at December 31, 2021 and 2020 reflects the redevelopment following asset impairments resulting from Hurricane Irma in September
2017.
The following tables set forth certain information relating to our Safe Harbor branded marinas as of December 31, 2021.
Marina Property Name
UNITED STATES
NORTHEAST
Connecticut
Bruce & Johnsons
Dauntless(1)
Dauntless Shipyard(1)
Deep River
Essex Island(1)
Ferry Point
Harbor House(2)
Mystic
Pilots Point
Stratford
Yacht Haven(2)
Connecticut Total
Rhode Island
Allen Harbor(3)
Cove Haven
Cowesett(8)
Greenwich Bay
Island Park(4)
Jamestown Boatyard
New England Boatworks
Newport Shipyard
Sakonnet(4)
Silver Spring
Wickford(5)
Wickford Cove(5)
Rhode Island Total
New York
Capri
Gaines
Glen Cove
Greenport(6)
State /
Municipal
Wet Slips and Dry
Storage Spaces
as of 12/31/2021
Wet Slips and Dry
Storage Spaces
as of 12/31/2020
City
CT
CT
CT
CT
CT
CT
CT
CT
CT
CT
CT
RI
RI
RI
RI
RI
RI
RI
RI
RI
RI
RI
RI
NY
NY
NY
NY
Branford
Essex
Essex
Deep River
Essex
Old Saybrook
Stamford
Mystic
Westbrook
Stratford
Stamford
North Kingstown
Barrington
Warwick
Warwick
Portsmouth
Jamestown
Portsmouth
Newport
Portsmouth
South Kingstown
North Kingstown
North Kingstown
Port Washington
Rouses Point
Glen Cove
Greenport
43
664
332
—
310
—
138
—
253
879
210
513
3,299
183
346
1,178
545
—
132
229
75
445
100
—
252
3,485
369
272
540
414
664
332
—
310
—
138
—
253
879
210
513
3,299
N/A
346
1,178
545
—
132
229
75
445
100
—
252
3,302
369
272
540
414
Marina Property Name
Haverstraw
Post Road
Stirling(6)
Willsboro Bay
New York Total
Massachusetts
Edgartown(3)
Fiddler's Cove
Green Harbor
Hawthorne Cove
Marina Bay
Onset Bay
Plymouth
Sunset Bay
Vineyard Haven(3)
Massachusetts Total
Maryland
Annapolis
Bohemia Vista
Carroll Island
Great Oak Landing
Hacks Point
Narrows Point
Oxford
Podickory Point(3)
Zahnisers
Maryland Total
New Jersey
Crystal Point
Manasquan River
New Jersey Total
Maine
Great Island
Rockland
Maine Total
New Hampshire
Wentworth by the Sea(3)
New Hampshire Total
Vermont
Shelburne Shipyard
Vermont Total
SOUTH
Georgia
Aqualand
Bahia Bleu
SUN COMMUNITIES, INC.
City
West Haverstraw
Mamaroneck
Greenport
Willsboro
State /
Municipal
NY
NY
NY
NY
Edgartown
North Falmouth
Marshfield
Salem
Quincy
Buzzards Bay
Plymouth
Hull
Vineyard Haven
Annapolis
Chesapeake Bay
Baltimore
Chestertown
Earleville
Grasonville
Oxford
Annapolis
Solomons
Point Pleasant
Brick Township
Harpswell
Rockland
MA
MA
MA
MA
MA
MA
MA
MA
MA
MD
MD
MD
MD
MD
MD
MD
MD
MD
NJ
NJ
ME
ME
New Castle
NH
Shelburne
VT
Wet Slips and Dry
Storage Spaces
as of 12/31/2021
Wet Slips and Dry
Storage Spaces
as of 12/31/2020
921
46
—
221
2,783
161
229
203
425
710
231
197
241
149
2,546
391
125
479
391
72
569
135
236
247
2,645
284
234
518
157
13
170
231
231
174
174
921
46
—
221
2,783
N/A
229
203
425
710
231
197
241
N/A
2,236
391
125
479
391
72
569
135
N/A
247
2,409
284
234
518
157
13
170
N/A
N/A
174
174
Flowery Branch
Thunderbolt
GA
GA
1,625
259
1,625
259
44
Marina Property Name
Hideaway Bay
Trade Winds
Georgia Total
Kentucky
Beaver Creek
Burnside
Grider Hill
Jamestown
Wisdom Dock
Kentucky Total
Texas
Emerald Point
Pier 121
Walden
Texas Total
Arkansas
Brady Mountain
Arkansas Total
Tennessee
Eagle Cove
Holly Creek
Tennessee Total
Mississippi
Aqua Yacht
Mississippi Total
Alabama
Sportsman
Alabama Total
Oklahoma
Harbors View
Oklahoma Total
SOUTHEAST
Florida
Angler House(3)
Burnt Store
Calusa Island
Cape Harbour
Emerald Coast(3)
Harborage Yacht Club(3)
Harbortown
Islamorada(3)
Lauderdale Marine Center(3)
Marathon(3)
New Port Cove
SUN COMMUNITIES, INC.
City
Flowery Branch
Appling
State /
Municipal
GA
GA
Monticello
Somerset
Albany
Jamestown
Albany
Austin
Lewisville
Montgomery
Royal
Byrdstown
Celina
Iuka
KY
KY
KY
KY
KY
TX
TX
TX
AR
TN
TN
MS
Orange Beach
AL
Afton
OK
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
Islamorada
Punta Gorda
Goodland
Cape Coral
Niceville
Stuart
Fort Pierce
Islamorada
Fort Lauderdale
Marathon
Riviera Beach
45
Wet Slips and Dry
Storage Spaces
as of 12/31/2021
Wet Slips and Dry
Storage Spaces
as of 12/31/2020
635
314
2,833
356
347
704
707
291
2,405
651
1,082
391
2,124
582
582
78
306
384
587
587
729
729
172
172
22
975
620
256
408
297
350
267
101
153
362
635
314
2,833
356
347
704
707
291
2,405
651
1,082
391
2,124
582
582
78
306
384
587
587
729
729
172
172
N/A
975
620
256
N/A
N/A
350
N/A
N/A
N/A
362
Marina Property Name
North Palm Beach
Old Port Cove
Pier 77
Pineland
Regatta Pointe
Riviera Beach
Siesta Key
South Fork(7)
West Palm Beach
Florida Total
South Carolina
Beaufort
Bristol
Charleston City(9)
City Boatyard
Port Royal(3)
Port Royal Landing
Reserve Harbor
Skull Creek
South Carolina Total
North Carolina
Kings Point
Peninsula Yacht Club
Skippers Landing
South Harbour Village
Westport
North Carolina Total
Virginia
Stingray Point(3)
Virginia Total
MIDWEST
Michigan
Belle Maer
Detroit River(3)
Grand Isle
Great Lakes
Jefferson Beach
Toledo Beach
Michigan Total
Ohio
Lakefront
Sandusky
Ohio Total
WEST
California
Anacapa Isle
SUN COMMUNITIES, INC.
City
North Palm Beach
North Palm Beach
Bradenton
Bokeelia
Palmetto
Riviera Beach
Sarasota
Fort Lauderdale
West Palm Beach
State /
Municipal
FL
FL
FL
FL
FL
FL
FL
FL
FL
Beaufort
Charleston
Charleston
Charleston
Port Royal
Port Royal
Pawleys Island
Hilton Head
Cornelius
Cornelius
Troutman
Southport
Denver
SC
SC
SC
SC
SC
SC
SC
SC
NC
NC
NC
NC
NC
Deltaville
VA
Harrison Township
Detroit
Grand Haven
Muskegon
St. Clair Shores
La Salle Township
Port Clinton
Sandusky
MI
MI
MI
MI
MI
MI
OH
OH
Wet Slips and Dry
Storage Spaces
as of 12/31/2021
Wet Slips and Dry
Storage Spaces
as of 12/31/2020
110
208
199
259
367
20
198
—
61
5,233
124
249
450
213
252
161
239
186
1,874
784
476
389
146
587
2,382
228
228
542
473
450
466
898
363
3,192
477
550
1,027
110
208
199
259
367
20
198
—
61
3,985
124
249
450
213
N/A
161
239
186
1,622
784
476
389
146
587
2,382
N/A
N/A
542
N/A
450
466
898
363
2,719
477
550
1,027
Oxnard
CA
450
450
46
Marina Property Name
Ballena Isle
Cabrillo Isle
Emeryville
Loch Lomond
Shelter Island(3)
South Bay(3)
Sunroad(3)
Ventura Isle
California Total
US TOTAL
PUERTO RICO
Puerto del Rey(3)
PUERTO RICO TOTAL
COMPANY TOTAL
SUN COMMUNITIES, INC.
City
Alameda
San Diego
Emeryville
San Rafael
San Diego
Chula Vista
San Diego
Ventura
State /
Municipal
CA
CA
CA
CA
CA
CA
CA
CA
Fajardo
PR
Wet Slips and Dry
Storage Spaces
as of 12/31/2021
Wet Slips and Dry
Storage Spaces
as of 12/31/2020
414
527
460
529
60
413
643
444
3,940
414
N/A
460
529
N/A
N/A
N/A
444
2,297
43,543
38,739
1,612
1,612
N/A
N/A
45,155
38,739
(1) Wet slips and dry storage spaces from Dauntless Shipyard and Essex Island are grouped into Dauntless.
(2) Wet slips and dry storage spaces from Harbor House are grouped into Yacht Haven.
(3) Property acquired during year ended December 31, 2021.
(4) Wet slips and dry storage spaces from Island Park are grouped into Sakonnet.
(5) Wet slips and dry storage spaces from Wickford are grouped into Wickford Cove.
(6) Wet slips and dry storage spaces from Stirling are grouped into Greenport.
(7) Property currently under development.
(8) Wet slips and dry storage spaces from Apponaug Harbor are grouped into Cowesett.
(9) Wet slips and dry storage spaces from Ashley Fuels are grouped into Charleston City.
47
SUN COMMUNITIES, INC.
ITEM 3. LEGAL PROCEEDINGS
Legal Proceedings Arising in the Ordinary Course of Business
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.
Environmental Matters
Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the
proceedings and such proceedings involve potential monetary sanctions that we reasonably believe will exceed an applied threshold
not to exceed $1.0 million. Applying this threshold, there are no environmental matters to disclose for the year ended December 31,
2021.
ITEM 4. MINE SAFETY DISCLOSURES
None.
48
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 trades under the symbol "SUI." On February 15, 2022,
the closing share price of our common stock was $190.55 per share on the NYSE, and there were 484 holders of record for the
115,961,958 outstanding shares of common stock.
On February 15, 2022, 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 A-3 preferred OP units
Series C preferred OP units
Series D preferred OP units
Series E preferred OP units
Series F preferred OP units
Series G preferred OP units
Series H preferred OP units
Series I preferred OP units
Series J preferred OP units
Common OP units
Total
1,283,819
273,524
40,268
306,013
488,958
85,000
90,000
240,710
581,407
922,000
240,000
2,552,378
7,104,077
388,070
667,132
74,917
339,674
391,166
58,621
56,250
155,297
354,516
562,195
145,455
2,552,378
5,745,671
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, Series F preferred OP units, Series G preferred OP units, Series H
preferred OP units, Series I preferred OP units, Series J 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, 2021:
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
Total
— $
— $
—
—
627,632
627,632
49
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, 2021:
OP Units
Common OP units
Series A-1 preferred OP units
Series C preferred OP units
Three Months Ended
Year Ended
December 31, 2021
December 31, 2021
Conversion
Rate
Units /
Shares
Common
Stock
Units /
Shares
Common
Stock
1.0000
2.4390
1.1100
7,640
414
140
7,640
1,009
155
86,364
19,710
140
86,364
48,067
155
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.
Purchases of Equity Securities
Common stock repurchases during the three months ended December 31, 2021 were:
Period
October 1, 2021 - October 31, 2021
November 1, 2021 - November 30, 2021
December 1, 2021 - December 31, 2021
Total
Total number of
shares purchased
(a)
Average price
paid per share
(b)
4,961 $
783 $
— $
5,744 $
195.04
195.13
—
195.05
Total number of shares
purchased as part of
publicly announced
plans or programs
(c)
Maximum number (or
approximate dollar
value) of shares that
may yet be purchased
under the plans or
programs
(d)
— $
— $
— $
— $
—
—
—
—
During the three months ended December 31, 2021, we withheld 5,744 shares from employees to satisfy estimated statutory income
tax obligations related to vesting of restricted stock awards. The value of the common stock withheld was based on the closing price of
our common stock on the applicable vesting date.
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, 2021. This line graph assumes a $100.00
investment on December 31, 2016, a reinvestment of distributions and actual increase of the market value of our common stock
relative to an initial investment of $100.00. 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.
50
SUN COMMUNITIES, INC.
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.
Index
Sun Communities, Inc.
Dow Jones U.S. Real Estate
Residential Index
NYSE Composite Index
SUI Peer Group(1)
December 31,
2016
December 31,
2017
December 31,
2018
December 31,
2019
December 31,
2020
December 31,
2021
Year Ended
$
$
$
$
100.00 $
124.94 $
141.05 $
212.86 $
220.49 $
310.43
100.00 $
100.00 $
100.00 $
106.44 $
118.73 $
106.93 $
109.94 $
108.10 $
106.28 $
143.84 $
135.68 $
134.00 $
129.07 $
145.16 $
122.70 $
204.42
175.17
204.19
(1) SUI 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.
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.
51
SUN COMMUNITIES, INC.
ITEM 6. [Reserved]
52
SUN COMMUNITIES, INC.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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 REIT. As of December 31, 2021, we owned and operated, directly or indirectly, or had an interest in, a
portfolio of 602 developed properties located in 39 states throughout the United States, Ontario, Canada and Puerto Rico, including
284 MH communities, 160 RV resorts, 33 properties containing both MH and RV sites, and 125 marinas. We have been in the
business of acquiring, operating, developing and expanding MH communities and RV resorts since 1975 and marinas since 2020. We
lease individual sites with utilities access for placement of manufactured homes, RVs or boats to our customers. We are also engaged
in the marketing, selling and leasing of new and pre-owned homes to current and future residents in our MH communities. The Rental
Program operations within our MH communities support and enhance our occupancy levels, property performance and cash flows.
COVID-19 IMPACT
The impact of COVID-19 in 2021 was minimal compared to 2020.
In response to the COVID-19 pandemic, we continue to provide essential services using social distancing techniques and minimal
contact. To promote social distancing, we are encouraging our residents to use our online rent payment portals and other payment
methods. We continue to follow the numerous health and safety measures we previously implemented at our communities and our
main office to keep team members safe. These measures include increased cleaning and sanitation of shared spaces and social
distancing protocols throughout our footprint. We closely monitor and track orders by federal, state and local authorities, provide
status updates to our operations and main office leadership teams, and adjust our operating processes accordingly. We have
implemented and continue to encourage remote working arrangements, wherever possible, to keep our team members safe and to do
our part to promote social distancing.
The extent to which the COVID-19 pandemic impacts our operations, financial condition and financial results will depend on future
developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the
pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the
pandemic and containment measures, among others. The uncertainty of this situation precludes any prediction as to the full impact of
the COVID-19 pandemic.
53
SUN COMMUNITIES, INC.
EXECUTIVE SUMMARY
2021 General Overview
•
•
•
•
•
•
•
Total revenues for 2021 increased 62.5 percent to $2.3 billion.
Core FFO for 2021 was $6.51 per diluted share and OP unit, an increase of 27.9 percent over 2020.
Achieved MH and RV real property Same Community NOI growth of 11.2 percent over 2020.
Attained MH and RV Same Community occupancy of 98.9 percent.
Home sales volume increased 42.6 percent to 4,088 homes in 2021 as compared to 2,866 in 2020.
Brokered homes sales increased by 38.0 percent to 3,528 in 2021 as compared to 2,557 in 2020.
Achieved 1-year, 3-year and 5-year total shareholder return of 40.8 percent, 120.1 percent and 210.3 percent, respectively,
outperforming or in-line with the MSCI US REIT, Russell 1000, U.S. REIT Residential and S&P 500 indexes.
• We acquired 54 properties, totaling over 16,800 sites, wet slips and dry storage spaces, and sites for expansion for a total
•
•
•
•
•
•
•
•
purchase price of $1.4 billion.
Completed the construction of over 1,030 total sites at eight ground-up developments and re-development properties.
Delivered nearly 580 total expansion sites in 11 MH and RV properties.
Successfully integrated Safe Harbor, which contributed 16.5 percent of the real property NOI - Total Portfolio in 2021.
Received investment grade ratings of BBB and Baa3 with a stable outlook from S&P Global and Moody's, respectively,
which provides us with an additional source of financing.
Closed two underwritten senior unsecured note offerings for aggregate net proceeds of approximately $1.2 billion.
Closed an underwritten registered public offering, in which we sold 4,000,000 shares of our common stock and completed a
forward sale agreement for an additional 4,050,000 shares of our common stock, for net proceeds of approximately $1.1
billion.
Completed two forward sale agreements relating to an underwritten registered public offering of 4,025,000 shares of our
common stock at a public offering price of $185.00 per share.
Entered into a definitive agreement to acquire Park Holidays, the second largest owner and operator of holiday communities
in the United Kingdom for approximately £950.0 million, or $1.3 billion.
Property Operations
Occupancy in our MH and annual RV 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. Our home sales in our communities remained strong in
2021 and we expect this trend to continue.
Portfolio Information:
Occupancy % - Total Portfolio - MH and Annual RV blended(1)
Occupancy % - Same Community - Adjusted MH and Annual RV blended(1)(2)(3)
Core FFO per share
Real property NOI - Total Portfolio (in thousands)
Real property NOI - Same Community (in thousands) - MH and RV
Homes sales volume
December 31,
2021
Year Ended
December 31,
2020
December 31,
2019
97.4 %
98.9 %
6.51
982,123
763,389
4,088
$
$
$
97.3 %
97.5 %
5.09
721,302
658,431
2,866
$
$
$
96.4 %
97.0 %
4.92
649,706
630,672
3,439
$
$
$
(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.
54
SUN COMMUNITIES, INC.
Acquisition Activity
During the past three years, we have completed acquisitions of over 225 properties with over 28,500 sites and over 45,000 wet slips
and dry storage spaces located in high growth areas and retirement and vacation destinations such as California, Florida, Texas,
Arizona and coastal areas in the Eastern United States.
During 2021, we acquired 35(1) MH communities and RV resorts, and 19(1) marinas, as detailed below:
MH & RV Property Name(1)
Property Type
Sites, Wet Slips, and
Dry Storage Spaces
State
Month Acquired
Sun Outdoors Association Island
Blue Water Beach Resort
Tranquility MHC
Islamorada and Angler House
Prime Martha's Vineyard
Pleasant Beach Campground
Sun Outdoors Cape Charles
Beachwood Resort
ThemeWorld RV Resort
Sylvan Glen Estates
Shelter Island Boatyard
Lauderdale Marine Center
Apponaug Harbor
Cabrillo Isle
Marathon
Allen Harbor
Cisco Grove Campground & RV(2)
Four Leaf Portfolio(3)
Harborage Yacht Club
Zeman Portfolio
Southern Leisure RV Resort
Sunroad Marina
Lazy Lakes RV Resort
Puerto del Rey
Stingray Point
Detroit River
Jetstream RV Resort at NASA
Beaver Brook Campground(4)
Emerald Coast
Tall Pines Harbor Campground
Wells Beach Resort Campground
Port Royal
Podickory Point
Jellystone Park at Mammoth Cave
South Bay
Wentworth by the Sea
Rocky Mountain RV Park
Haas Lake RV Park Campground
Pearwood RV Resort
Holly Shores Camping Resort
Pheasant Ridge RV Park
Coyote Ranch Resort(5)
Jellystone Park at Whispering Pines
294 NY
177 UT
25 FL
251 FL
395 MA
January
February
February
February
March
102 ON, Canada March
669 VA
672 WA
148 FL
476 MI
52 CA
206 FL
348 RI
476 CA
135 FL
176 RI
18 CA
2,545 MI / IN
IL / NJ
300 FL
686
496 FL
617 CA
99 FL
1,746 Puerto Rico
222 VA
440 MI
202 TX
204 ME
311 FL
241 VA
231 ME
167 SC
209 MD
315 KY
333 CA
155 NH
75 MT
492 MI
144 TX
310 NJ
130 OR
165 TX
131 TX
March
March
April
April
May
May
June
June
June
July
July
July
July
July
August
August
August
September
September
September
September
October
November
November
November
November
December
December
December
December
December
December
December
December
December
December
December
RV
RV
MH
Marina
Marina
RV
RV
RV
RV
MH
Marina
Marina
Marina
Marina
Marina
Marina
RV
MH
Marina
RV
RV
Marina
RV
Marina
Marina
Marina
RV
RV
Marina
RV
RV
Marina
Marina
RV
Marina
Marina
RV
RV
RV
RV
RV
RV
RV
55
SUN COMMUNITIES, INC.
MH & RV Property Name(1)
Hospitality Creek Campground
Property Type
Sites, Wet Slips, and
Dry Storage Spaces
State
Month Acquired
RV
Total
230 NJ
December
15,816
(1) Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional detail on the acquisition of MH, RV and marina properties.
(2) Contains 407 development sites.
(3) Contains 340 development sites.
(4) Contains 150 development sites.
(5) Contains 165 development sites.
Disposition Activity
On July 2, 2021, we sold two MH communities located in Indiana and Missouri, containing a combined 677 sites, for $67.5 million.
The gain from the sale of the property was approximately $49.4 million.
On August 26, 2021, we sold four MH communities located in Arizona, Illinois and Missouri, containing a combined 1,137 sites, for
$94.6 million. The gain from the sale of the property was approximately $58.7 million.
Construction Activity
Ground-up Developments - During the year ended December 31, 2021, we constructed over 1,000 total sites at seven ground-up
development properties and one re-development located in California, Colorado, Texas, Florida, North Carolina and South Carolina.
Expansions - We have been focused on expansion opportunities adjacent to our existing properties, and we have developed over 2,100
sites within the past three years. We have expanded nearly 580 total sites at 11 MH and RV properties in 2021.
We continue to expand our properties utilizing our inventory of owned and entitled land. We have 10,672 MH and RV sites suitable
for future development.
Markets
Our MH and RV properties are largely concentrated in Florida, Michigan, Texas and California, which contain 62.6 percent of our
total MH and RV sites. 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 resorts. The age demographic of RV resorts is
attractive, as the population of retirement age adults in the U.S. is growing. RV resorts have become a trending vacation opportunity
not only for the retiree population, but as an affordable vacation alternative for families and millennials.
56
SUN COMMUNITIES, INC.
The following table identifies our MH and RV markets by total sites:
Major Market
Number of Properties
Total Sites % of Total Sites
Number of Properties
Total Sites % of Total Sites
December 31, 2021
December 31, 2020
Florida
Michigan
Texas
California
Arizona
Ontario, Canada
Indiana
New Jersey
Colorado
Virginia
Maine
New York
Ohio
South Carolina
New Hampshire
Illinois
Connecticut
Maryland
Delaware
Pennsylvania
Georgia
Oregon
North Carolina
Massachusetts
Utah
Washington
Wisconsin
Tennessee
Minnesota
Iowa
Louisiana
Nevada
Kentucky
Alabama
Mississippi
Montana
Missouri
132
84
30
36
12
16
12
11
10
10
15
10
9
6
10
5
16
6
4
5
4
6
5
3
6
2
2
2
1
1
1
1
1
1
1
1
—
46,733
33,126
10,768
8,934
5,308
5,237
4,176
3,990
3,539
3,435
3,431
3,141
2,925
2,624
2,398
2,235
2,005
1,852
1,716
1,536
1,414
1,330
1,123
927
927
784
591
545
475
413
334
324
315
167
155
75
—
29.4 %
20.8 %
128
74
45,814
29,632
30.7 %
19.8 %
6.8 %
5.6 %
3.3 %
3.3 %
2.6 %
2.5 %
2.2 %
2.2 %
2.2 %
2.0 %
1.8 %
1.7 %
1.5 %
1.4 %
1.3 %
1.2 %
1.1 %
1.0 %
0.9 %
0.8 %
0.7 %
0.6 %
0.6 %
0.5 %
0.4 %
0.3 %
0.3 %
0.3 %
0.2 %
0.2 %
0.2 %
0.1 %
0.1 %
— %
— %
24
35
14
15
12
8
10
8
13
9
9
6
10
5
16
6
4
5
4
5
5
3
5
1
2
2
1
1
1
1
—
1
1
—
2
9,576
8,906
5,660
5,056
4,176
3,160
3,415
1,875
2,995
2,841
2,925
2,503
2,237
2,151
2,005
1,852
1,709
1,535
1,355
1,200
1,083
928
750
112
588
545
475
413
226
324
—
142
155
—
976
6.4 %
6.0 %
3.8 %
3.4 %
2.8 %
2.1 %
2.3 %
1.3 %
2.0 %
1.9 %
2.0 %
1.7 %
1.5 %
1.4 %
1.3 %
1.2 %
1.1 %
1.0 %
0.9 %
0.8 %
0.7 %
0.6 %
0.5 %
0.1 %
0.4 %
0.4 %
0.3 %
0.3 %
0.2 %
0.2 %
— %
0.1 %
0.1 %
— %
0.7 %
477
159,008
446
149,295
57
SUN COMMUNITIES, INC.
Our marinas are largely concentrated in Florida, Connecticut, Rhode Island, Massachusetts, New York, Maryland and California.
The following table identifies our marina markets by total wet slips and dry storage spaces:
December 31, 2021
December 31, 2020
Major Market
Number of
Properties
Wet
Slips
Florida
California
Rhode Island
Connecticut
Michigan
Georgia
New York
Maryland
Massachusetts
Kentucky
North Carolina
Texas
South Carolina
Puerto Rico
Ohio
Alabama
Mississippi
Arkansas
New Jersey
Tennessee
New Hampshire
Virginia
Vermont
Oklahoma
Maine
20
9
12
11
6
4
8
9
9
5
5
3
8
1
2
1
1
1
2
2
1
1
1
1
2
125
2,701
3,884
3,308
3,299
2,637
2,587
2,783
2,156
2,045
2,365
1,081
1,841
1,261
987
888
81
453
582
488
384
231
228
102
172
170
36,714
Dry
Storage
Spaces
2,532
56
177
—
555
246
—
489
501
40
1,301
283
613
625
139
648
134
—
30
—
—
—
72
—
—
8,441
Total Wet
Slips / Dry
Storage
Spaces
% Wet
Slips / Dry
Storage
Spaces
Number of
Properties
Wet
Slips
5,233
3,940
3,485
3,299
3,192
2,833
2,783
2,645
2,546
2,405
2,382
2,124
1,874
1,612
1,027
729
587
582
518
384
231
228
174
172
170
45,155
11.6 %
8.7 %
7.7 %
7.3 %
7.1 %
6.3 %
6.2 %
5.9 %
5.6 %
5.3 %
5.3 %
4.6 %
4.1 %
3.6 %
2.3 %
1.6 %
1.3 %
1.3 %
1.1 %
0.9 %
0.5 %
0.5 %
0.4 %
0.4 %
0.4 %
14
5
11
11
5
4
8
8
7
5
5
3
7
—
2
1
1
1
2
2
—
—
1
1
2
106
2,038
2,297
3,292
3,299
2,268
2,587
2,783
2,022
1,988
2,365
1,081
1,841
1,249
—
888
81
453
582
488
384
—
—
102
172
170
32,430
Dry
Storage
Spaces
1,947
—
10
—
451
246
—
387
248
40
1,301
283
373
—
139
648
134
—
30
—
—
—
72
—
—
6,309
Total Wet
Slips / Dry
Storage
Spaces
% Wet
Slips / Dry
Storage
Spaces
3,985
2,297
3,302
3,299
2,719
2,833
2,783
2,409
2,236
2,405
2,382
2,124
1,622
—
1,027
729
587
582
518
384
—
—
174
172
170
38,739
10.3 %
5.9 %
8.6 %
8.6 %
7.0 %
7.3 %
7.2 %
6.2 %
5.8 %
6.2 %
6.1 %
5.5 %
4.2 %
— %
2.7 %
1.9 %
1.5 %
1.5 %
1.3 %
1.0 %
— %
— %
0.4 %
0.4 %
0.4 %
58
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 net operating income ("NOI") and funds from operations ("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 operating 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, real estate related
impairments, 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.
59
SUN COMMUNITIES, INC.
RESULTS OF OPERATIONS
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, 2021, 2020 and 2019 (in thousands):
December 31,
2021
Year Ended
December 31,
2020
December 31,
2019
Net Income Attributable to Sun Communities, Inc. Common Stockholders
$
380,152 $
131,614 $
Interest income
Brokerage commissions and other revenues, net
General and administrative expense
Catastrophic event-related charges, net
Business combinations
Depreciation and amortization
Loss on extinguishment of debt (see Note 8)
Interest expense
Interest on mandatorily redeemable preferred OP units / equity
Gain on remeasurement of marketable securities (see Note 14)
(Gain) / loss on foreign currency translation
Gain on disposition of property
Other expense, net
(Gain) / loss on remeasurement of notes receivable (see Note 4)
Income from nonconsolidated affiliates (see Note 6)
Loss on remeasurement of investment in nonconsolidated affiliates (see Note 6)
Current tax expense (see Note 12)
Deferred tax (benefit) / expense (see Note 12)
Preferred return to preferred OP units / equity interests
Income attributable to noncontrolling interests
Preferred stock distribution
(12,232)
(30,127)
181,210
2,239
1,362
522,745
8,127
158,629
4,171
(33,457)
3,743
(108,104)
12,122
(685)
(3,992)
160
1,236
91
12,095
21,490
—
NOI
$
1,120,975 $
(10,119)
(17,230)
109,616
885
23,008
376,876
5,209
129,071
4,177
(6,129)
(7,666)
(5,595)
5,188
3,275
(1,740)
1,608
790
(1,565)
6,935
8,902
—
757,110 $
160,265
(17,857)
(14,127)
92,777
1,737
—
328,067
16,505
133,153
4,698
(34,240)
(4,479)
—
1,701
—
(1,374)
—
1,095
(222)
6,058
9,768
1,288
684,813
Real property NOI
Home sales NOI
Service, retail, dining and entertainment expenses NOI
NOI
December 31,
2021
Year Ended
December 31,
2020
December 31,
2019
$
982,123 $
74,382
64,470
721,302 $
28,624
7,184
649,706
32,825
2,282
$
1,120,975 $
757,110 $
684,813
60
SUN COMMUNITIES, INC.
Seasonality of Revenue
The RV and marina industries are seasonal in nature, and the results of operations in any one period may not be indicative of results in
future periods.
In the RV segment, certain properties maintain higher occupancy during the summer months, while other properties maintain higher
occupancy during the winter months. Based on the location of our properties with transient RV sites, our portfolio generally produces
higher revenues between April and September than between October and March. Real property - transient revenue is included in RV
segment revenue. The following table presents the seasonality of real property-transient revenue for the years ended December 31,
2021, 2020 and 2019:
Real property -
transient revenue
(in thousands)
$
$
$
266,641
134,691
121,504
Year
2021
2020
2019
For the Three Months Ended
March 31
June 30
September 30
December 31
Total
11.9 %
18.8 %
20.1 %
27.3 %
15.6 %
23.2 %
44.9 %
44.9 %
40.3 %
15.9 %
20.7 %
16.4 %
100.0 %
100.0 %
100.0 %
In the marina market, demand for wet slip storage increases during the summer months as customers contract for the summer boating
season, which also drives non-storage revenue streams such as service, fuel and on-premise restaurants or convenience stores. Demand
for dry storage increases during the winter season as seasonal weather patterns require boat owners to store their vessels on dry docks
and within covered racks. Seasonal real property revenue was approximately $246.6 million and $24.4 million for the years ended
December 31, 2021 and 2020, respectively. In 2021, seasonal real property revenue was recognized 17.7 percent in the first quarter,
25.0 percent in the second quarter, 29.9 percent in the third quarter and 27.4 percent in the fourth quarter. In 2020, seasonal real
property revenue was recognized 100 percent in the fourth quarter, given that the Safe Harbor acquisition closed during the fourth
quarter.
61
SUN COMMUNITIES, INC.
Comparison of the Years Ended December 31, 2021 and 2020
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,
2021 and 2020 (in thousands, except for statistical information):
Financial Information
Revenue
December 31, 2021
December 31, 2020
Change
% Change
Year Ended
Real property (excluding Transient)
$
1,166,704 $
867,532 $
Real property - transient
Other
Total Operating
Expense
Property Operating
Real Property NOI
Other Information
Number of properties(1)
Wet slips and dry storage spaces
MH occupancy
RV occupancy(2)
MH & RV blended occupancy(3)
281,432
151,720
1,599,856
172,430
90,157
1,130,119
$
617,733
982,123 $
408,817
721,302 $
299,172
109,002
61,563
469,737
208,916
260,821
34.5 %
63.2 %
68.3 %
41.6 %
51.1 %
36.2 %
As of
December 31, 2021 December 31, 2020
602
552
45,155
38,739
Change
50
6,416
96.6 %
100.0 %
97.4 %
97.3 %
0.1 %
Sites available for MH & RV development
10,672
10,025
Monthly base rent per site - MH
Monthly base rent per site - RV(7)
Monthly base rent per site - Total
$
$
$
603
526
585
$
$
$
589
513
571
(8) $
(8) $
(8) $
(1) Includes MH communities, RV resorts and marinas.
(2) Occupancy percentages include annual RV sites and exclude transient RV sites.
(3) Occupancy percentages include MH and annual RV sites, and exclude transient RV sites.
(4) Adjusted occupancy percentages include MH and exclude recently completed but vacant expansion sites.
(5) Adjusted occupancy percentages include annual RV sites, and exclude transient RV sites and recently completed but vacant expansion sites.
(6) Adjusted occupancy percentages include MH and annual RV sites, and exclude transient RV sites and recently completed but vacant expansion sites.
(7) Monthly base rent pertains to annual RV sites and excludes transient RV sites.
(8) Canadian currency figures included within the year ended December 31, 2020 have been translated at 2021 average exchange rates, respectively.
647
14
13
14
The $260.8 million increase in Real property NOI from 2020 to 2021 consists of $76.8 million from Same Community as detailed
below, $148.0 million from the marinas and $36.0 million from recently acquired properties in the year ended December 31, 2021 as
compared to 2020.
62
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R
SUN COMMUNITIES, INC.
Other Information
Number of properties
MH occupancy
RV occupancy(1)
MH & RV blended occupancy(2)
Adjusted MH occupancy(3)
Adjusted RV occupancy(4)
Adjusted MH & RV blended occupancy(5)
As of
As of
December 31,
2021
December 31,
2020
403
403
Change
—
December 31,
2020
December 31,
2019
367
367
Change
—
97.6 %
100.0 %
98.2 %
98.6 %
100.0 %
98.9 %
97.5 % (6)
1.4 %
97.4 %
100.0 %
98.0 %
98.5 %
100.0 %
98.8 %
97.0 % (6)
1.8 %
Sites available for development
6,866
7,332
(466)
6,682
6,314
368
Monthly base rent per site - MH
Monthly base rent per site - RV(7)
Monthly base rent per site - Total
$
$
$
611
537
593
$
$
$
591
512
573
(8) $
(8) $
(8) $
20
25
20
$
$
$
600
514
579
$
$
$
580
488
558
(8) $
(8) $
(8) $
20
26
21
(1) Occupancy percentages include annual RV sites and exclude transient RV sites.
(2) Occupancy percentages include MH and annual RV sites, and exclude transient RV sites.
(3) Adjusted occupancy percentages include MH and exclude recently completed but vacant expansion sites.
(4) Adjusted occupancy percentages include annual RV sites, and exclude transient RV sites and recently completed but vacant expansion sites.
(5) Adjusted occupancy percentages include MH and annual RV sites, and exclude transient RV sites and recently completed but vacant expansion sites.
(6) The occupancy percentages for 2020 and 2019 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.
(7) Monthly base rent pertains to annual RV sites and excludes transient RV sites.
(8) Canadian currency figures included within the year ended December 31, 2020 and 2019 have been translated at 2021 and 2020 average exchange rates, respectively.
Years ended December 31, 2021 and 2020
The Same Community data includes all properties that we have owned and operated continuously since January 1, 2020, exclusive
of ground-up development and redevelopment properties recently completed or under construction, and other properties as
determined by management. We have reclassified $69.0 million and $63.1 million of utilities rebilled for the years ended December
31, 2021 and 2020, respectively, from Income from real property to Property operating expense to reflect the utility expenses
associated with our Same Community portfolio net of resident retail.
The $76.8 million, or 11.2 percent, increase in Total Same Community NOI is due to a $52.0 million, or 28.9 percent, increase in
NOI from the RV segment and $24.8 million, or 4.9 percent, increase in NOI from the MH segment.
The RV segment's $52.0 million, or 28.9 percent, increase in NOI is primarily due to an increase in Real property - transient revenue
of $50.9 million, or 35.8 percent, due to increased transient and vacation rental stays at our resorts. The results of the comparative
2020 period were impacted by the required closure, or delayed opening, of over 40 of our RV resorts due to the COVID-19
pandemic.
The MH segment's $24.8 million, or 4.9 percent, increase in NOI is primarily due to an increase in Real property (excluding
transient) revenue of $29.8 million, or 4.5 percent. Real property (excluding transient) revenue increased due to a 3.4 percent
increase in monthly base rent per MH site and a 1.4 percent increase in occupancy when compared to the same period in 2020.
64
SUN COMMUNITIES, INC.
Years ended December 31, 2020 and 2019
The Same Community data includes all properties which we have owned and operated continuously since January 1, 2019,
exclusive of ground-up development and redevelopment properties recently completed or under construction, and other properties as
determined by management. We have reclassified $37.7 million and $34.7 million of utilities rebilled for the years ended December
31, 2020 and 2019, respectively, from Income from real property to Property operating expense to reflect the utility expenses
associated with our Same Community portfolio net of recovery.
The $27.8 million, or 4.4 percent, growth in Total Same Community NOI is due to a 1.8 percent increase in occupancy and $28.1
million, or 6.1 percent, increase in NOI from the MH segment.
The RV segment NOI remained flat when compared to the same period in 2019.
The MH segment $28.1 million, or 6.1 percent, growth in NOI is primarily due to an increase in Real property (excluding transient)
revenue of $34.4 million, or 5.8 percent. Real property (excluding transient) revenue increased due to a 3.4 percent increase in
monthly base rent per MH site and a 1.8 percent increase in occupancy when compared to the same period in 2019.
65
SUN COMMUNITIES, INC.
Marina Summary
The following table reflects certain financial and other information for our marinas for the year ended December 31, 2021 (in
thousands, except for statistical information):
December 31, 2021
December 31, 2020(a)
Change
% Change
Year Ended
Financial Information
Revenues
Real property (excluding transient)
$
Real property - transient
Other
Total Operating
Expenses
Property Operating(b)
Real Property NOI
Service, retail, dining and entertainment
Revenue
Expense
NOI
Marina NOI
Other Information
Number of properties
Total wet slips and dry storage
$
250,984
14,790
14,053
279,827
117,711
162,116
269,170
219,040
50,130
$
25,632
805
880
27,317
13,175
14,142
19,393
16,061
3,332
225,352
13,985
13,173
252,510
104,536
147,974
249,777
202,979
46,798
$
212,246
$
17,474
$
194,772
N/M
N/M
N/M
N/M
N/M
N/M
N/M
N/M
N/M
N/M
125
45,155
106
38,739
19
6,416
17.9 %
16.6 %
N/M = Percentage change is not meaningful.
(a) Contains two months of activity.
(b) Marina results net $15.0 million for the year ended December 31, 2021 and $4.5 million for the two months ended December 31, 2020 of certain utility revenue
against the related utility expense in property operating and maintenance expense.
66
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,
2021 and 2020 (in thousands, except for average selling prices and statistical information):
Financial Information
New homes
New home sales
New home cost of sales
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
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
Home selling expenses
Home Sales NOI
Statistical Information
New home sales volume
Pre-owned home sales volume
Total home sales volume
Gross Profit - New Homes
December 31, 2021
December 31, 2020
Change
% Change
Year Ended
$
$
$
$
$
$
$
114,852
94,103
20,749
18.1 %
$
79,728
65,533
14,195
35,124
28,570
6,554
17.8 %
0.3 %
156,902
$
139,874
$
17,028
$
165,300
93,024
72,276
43.7 %
$
95,971
66,351
29,620
30.9 %
49,255
$
41,799
$
69,329
26,673
42,656
12.8 %
7,456
280,152
187,127
18,643
74,382
$
$
175,699
131,884
15,191
28,624
$
$
104,453
55,243
3,452
45,758
732
3,356
4,088
570
2,296
2,866
162
1,060
1,222
44.1 %
43.6 %
46.2 %
12.2 %
72.2 %
40.2 %
144.0 %
17.8 %
59.4 %
41.9 %
22.7 %
159.9 %
28.4 %
46.2 %
42.6 %
For the year ended December 31, 2021, the $6.6 million, or 46.2 percent, increase in gross profit is primarily the result of a 28.4
percent increase in new home sales volume, coupled with a 12.2 percent increase in new home average selling price, as compared to
the same period in 2020.
Gross Profit - Pre-owned Homes
For the year ended December 31, 2021, the $42.7 million, or 144.0 percent, increase in gross profit is primarily the result of a 46.2
percent increase in pre-owned home sales volume, coupled with a 12.8 percent increase in gross margin, primarily due to a 17.8
percent increase in the pre-owned home average selling price, as compared to the same period in 2020.
Homes sales NOI
For the year ended December 31, 2021, the $45.8 million, or 159.9 percent, increase in NOI is primarily the result of a 42.6 percent
increase in home sales volume, coupled with an increase in new home and pre-owned home average selling price and pre-owned
home margin, as compared to the same period in 2020.
67
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, 2021 and
2020 (in thousands, except for statistical information):
Financial Information
December 31, 2021
December 31, 2020
Change
% Change
Year Ended
Revenues
Home rent
Site rent
Total
Expenses
Rental Program operating and maintenance
Rental Program NOI
Other Information
Number of sold rental homes
Number of occupied rentals, end of period
Investment in occupied rental homes, end of period
Weighted average monthly rental rate, end of period
$
$
$
$
66,442 $
71,670
138,112
19,725
118,387 $
1,071
9,870
556,342 $
1,110 $
62,546 $
74,823
137,369
20,408
116,961 $
850
11,752
629,162 $
1,042 $
3,896
(3,153)
743
(683)
1,426
221
(1,882)
(72,820)
68
6.2 %
(4.2) %
0.5 %
(3.3) %
1.2 %
26.0 %
(16.0) %
(11.6) %
6.5 %
The Rental Program NOI is included in Real property NOI. The Rental Program NOI is separately reviewed to assess the overall
growth and performance of the Rental Program and its financial impact on our operations.
For the year ended December 31, 2021, Rental Program NOI increased $1.4 million, or 1.2 percent as compared to the same period in
2020. The increase is primarily due to a 6.5 percent increase in weighted average monthly rent, coupled with a 3.3 percent decrease in
expenses, partially offset by a decrease in the number of occupied rental homes as compared to the same period in 2020.
68
SUN COMMUNITIES, INC.
Other Items - Statements of Operations(1)
The following table summarizes other income and expenses for the years ended December 31, 2021 and 2020 (amounts in thousands):
December 31, 2021
December 31, 2020
Change
% Change
Year Ended
Service, retail, dining and entertainment, net
Interest income
Brokerage commissions and other, net
General and administrative expense
Catastrophic event-related charges, net
Business combination expense, net
Depreciation and amortization
Loss on extinguishment of debt (see Note 8)
Interest expense
Interest on mandatorily redeemable preferred OP units / equity
Gain on remeasurement of marketable securities (see Note 14)
Gain / (loss) on foreign currency translation
Gain on dispositions of properties
Other expense, net
Gain / (loss) on remeasurement of notes receivable (see Note 4)
Income from nonconsolidated affiliates (see Note 6)
Loss on remeasurement of investment in nonconsolidated
affiliates (see Note 6)
Current tax expense (see Note 12)
Deferred tax benefit / (expense) (see Note 12)
Preferred return to preferred OP units / equity interests
Income attributable to noncontrolling interests
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
64,470 $
12,232 $
30,127 $
181,210 $
2,239 $
1,362 $
522,745 $
8,127 $
158,629 $
4,171 $
33,457 $
(3,743) $
108,104 $
(12,122) $
685 $
3,992 $
(160) $
(1,236) $
(91) $
12,095 $
21,490 $
7,184 $
10,119 $
17,230 $
109,616 $
885 $
23,008 $
376,876 $
5,209 $
129,071 $
4,177 $
6,129 $
7,666 $
5,595 $
(5,188) $
(3,275) $
1,740 $
(1,608) $
(790) $
1,565 $
6,935 $
8,902 $
57,286
2,113
12,897
71,594
1,354
(21,646)
145,869
2,918
29,558
(6)
27,328
(11,409)
102,509
(6,934)
3,960
2,252
1,448
(446)
(1,656)
5,160
12,588
797.4 %
20.9 %
74.9 %
65.3 %
153.0 %
(94.1) %
38.7 %
56.0 %
22.9 %
(0.1) %
445.9 %
(148.8) %
N/M
133.7 %
120.9 %
129.4 %
90.0 %
56.5 %
(105.8) %
74.4 %
141.4 %
(1) Only items determined by management to be material, of interest, or unique to the periods disclosed above are explained below.
N/M = Percentage change is not meaningful.
Service, retail, dining and entertainment, net - for the year ended December 31, 2021, increased primarily due to the addition of
marina service revenue, driven by a full year of activity from Safe Harbor, and increases in RV resort activity revenues as compared to
2020.
Brokerage commissions and other, net - for the year ended December 31, 2021, increased primarily due to an increase in brokerage
commissions as a result of an increase in the number of brokered home sales, as compared to 2020.
General and administrative expense - for the year ended December 31, 2021, increased primarily due to a full year of activity from
Safe Harbor, and an increase in wages and incentives driven by growth in strategic initiatives and acquisition activity, as compared to
2020.
Business combination expense, net - for the year ended December 31, 2021, decreased due to the prior year acquisition of Safe Harbor.
Refer to Note 3, "Real Estate Acquisitions and Dispositions," of our accompanying Consolidated Financial Statements for additional
information.
Depreciation and amortization - for the year ended December 31, 2021, increased as a result of acquisition, expansion and
development activity driving growth in our portfolio of MH communities, RV resorts and marinas as compared to 2020. Refer to Note
3, "Real Estate Acquisitions and Dispositions," of our accompanying Consolidated Financial Statements for additional information.
Loss on extinguishment of debt - for the year ended December 31, 2021, increased primarily due to the termination of the Safe Harbor
line of credit and financing activities as compared to 2020. Refer to Note 8, "Debt and Line of Credit," in our accompanying
Consolidated Financial Statements for additional information.
69
SUN COMMUNITIES, INC.
Interest expense - for the year ended December 31, 2021, increased primarily due to the higher carrying balance of debt as compared
to the same period in 2020. Refer to Note 8, "Debt and Line of Credit," of our accompanying Consolidated Financial Statements for
additional information.
Gain on remeasurement of marketable securities - for the year ended December 31, 2021, increased due to higher gain on the
remeasurement of our investment in marketable securities as compared to 2020. Refer to Note 15, "Fair Value of Financial
Instruments," in our accompanying Consolidated Financial Statements for additional information.
Gain / (loss) on foreign currency translation - for the year ended December 31, 2021, there was a $3.7 million loss as compared to a
$7.7 million gain in the same period in 2020, primarily due to fluctuations in exchange rates on Canadian and Australian denominated
currencies.
Gain on dispositions of properties - for the year ended December 31, 2021, increased due to a gain resulting from the sale of six MH
communities in various states. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated
Financial Statements for additional information.
Other expense, net - for the year ended December 31, 2021, increased primarily due to an estimated contingent liability related to
potential termination of certain ground leases.
Gain / (loss) on remeasurement of notes receivable - represents the change in fair value of our in-house financing notes receivable
portfolio, for which we elected the fair value option on January 1, 2020. Refer to Note 4, "Notes and Other Receivables," and Note 14,
"Fair Value of Financial Instruments," in our accompanying Consolidated Financial Statements for additional information.
Income from nonconsolidated affiliates - for the year ended December 31, 2021, increased primarily due to increased equity income at
GTSC LLC ("GTSC") and the Sungenia joint venture ("Sungenia JV") as compared to 2020. Refer to Note 6, "Investments in
Nonconsolidated Affiliates," in our accompanying Consolidated Financial Statements for additional information.
Preferred return to preferred OP units / equity interests - for the year ended December 31, 2021 increased primarily as a result of
preferred OP units issued in conjunction with various acquisitions since 2020. Refer to Note 3, "Real Estate Acquisitions and
Dispositions," and Note 9, "Equity and Temporary Equity," of our accompanying Consolidated Financial Statements for additional
information.
Income attributable to noncontrolling interests - for the year ended December 31, 2021, increased as compared to 2020, primarily due
to improved financial performance of the Company and its consolidated VIEs. Refer to Note 7, "Consolidated Variable Interest
Entities," in our accompanying Consolidated Financial Statements for additional information.
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, discussions related to the changes in results of
operations for the year ended December 31, 2020 compared to the year ended December 31, 2019 have been omitted, except for the
Same Community results where the presentation structure has changed consistent with our new segment reporting, and prior year data
differ from amounts previously disclosed in Form 10-K for the year ended December 31, 2020 as a result of prior year reclassification
and site count changes. Such omitted discussion can be found under Item 7 of our Annual Report on Form 10-K for the year ended
December 31, 2020 filed with the Securities and Exchange Commission on February 18, 2021.
70
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, 2021, 2020 and 2019 (in thousands, except per share amounts):
Net Income Attributable to Sun Communities, Inc. Common Stockholders
$
380,152 $
131,614 $
160,265
December 31, 2021 December 31, 2020 December 31, 2019
Year Ended
Adjustments
Depreciation and amortization
Depreciation on nonconsolidated affiliates
Gain on remeasurement of marketable securities
Loss on remeasurement of investment in nonconsolidated affiliates
(Gain) / loss on remeasurement of notes receivable
Income attributable to noncontrolling interests
Preferred return to preferred OP units
Preferred distribution to Series A-4 preferred stock
Interest expense on Aspen preferred OP units
Gain on dispositions of properties
Gain on dispositions of assets, net
521,856
123
(33,457)
160
(685)
14,783
1,888
—
2,056
(108,104)
(60,485)
376,897
66
(6,129)
1,608
3,275
7,881
2,231
—
—
(5,595)
(22,180)
328,646
—
(34,240)
—
—
8,474
2,610
1,288
—
—
(26,356)
FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive
Convertible Securities(1)
Adjustments
$
718,287 $
489,668 $
440,687
Business combination expense and other acquisition related costs(2)
Loss on extinguishment of debt
Catastrophic event-related charges, net
Earnings - catastrophic event-related charges(3)
(Gain) / loss on foreign currency translation
Other adjustments, net(4)
10,005
8,127
2,239
200
3,743
16,139
25,334
5,209
885
—
(7,666)
2,130
1,146
16,505
1,737
—
(4,480)
1,337
Core FFO Attributable to Sun Communities, Inc. Common Stockholders and
Dilutive Convertible Securities(1)
$
758,740 $
515,560 $
456,932
Weighted average common shares outstanding - basic
Add
Common stock issuable upon conversion of stock options
Restricted stock
Common OP units
Common stock issuable upon conversion of certain preferred OP units
112,582
97,521
—
220
2,562
1,151
1
455
2,458
907
Weighted Average Common Shares Outstanding - Fully Diluted
116,515
101,342
FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive
Convertible Securities Per Share - Fully Diluted
Core FFO Attributable to Sun Communities, Inc. Common Stockholders and
Dilutive Convertible Securities Per Share - Fully Diluted
$
$
6.16 $
6.51 $
4.83 $
5.09 $
88,460
1
454
2,448
1,454
92,817
4.75
4.92
(1) The effect of certain anti-dilutive convertible securities is excluded from these items.
(2) These costs represent business combination expenses and 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) Adjustment related to estimated loss of earnings in excess of the applicable business interruption deductible in relation to our three Florida Keys communities that
were impaired by Hurricane Irma which had not yet been received from our insurer.
(4) Other adjustments, net include the change in estimated contingent consideration payments, long term lease termination expense and deferred tax (benefit) / expense
for the years ended December 31, 2021, 2020 and 2019, RV rebranding non-recurring cost for the year ended December 31, 2021, and deferred compensation
amortization upon retirement for the year ended December 31, 2020.
71
SUN COMMUNITIES, INC.
LIQUIDITY AND CAPITAL RESOURCES
Short-term Liquidity
Our principal short-term liquidity demands have historically been, and are expected to continue to be, distributions to our stockholders
and the unit holders of the Operating Partnership, property acquisitions, development and expansion of properties, capital
improvement of properties, the purchase of new and pre-owned homes, and debt repayment. We intend to meet our short-term
liquidity requirements through available cash balances, cash flows generated from operations, draws on our line of credit, and the use
of debt and equity offerings under our shelf registration statement. Refer to Note 8, "Debt and Line of Credit," and Note 9, "Equity and
Temporary Equity," in our accompanying Consolidated Financial Statements for additional information.
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 take a disciplined approach to selecting the optimal mix of financing sources to meet our liquidity demands and minimize
our overall cost of capital. In June 2021, we received investment grade ratings of BBB and Baa3 with a stable outlook from S&P
Global and Moody's, respectively. We plan on leveraging this enhanced strength in the credit markets to utilize a greater proportion of
unsecured debt to lower our cost of capital and increase our financial flexibility.
Acquisitions
Subject to market conditions, we intend to continue to identify opportunities to expand our development pipeline and acquire existing
properties. 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 debt and equity securities. We will continue to evaluate acquisition opportunities that meet our
criteria. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for
information regarding recent property acquisitions.
We anticipate that our acquisition of Park Holidays will close within the three months ending March 31, 2022, subject to the approval
of the UK Financial Conduct Authority. We anticipate that we will need approximately $1.3 billion in cash to fund the acquisition of
Park Holidays.
We have obtained commitments from our lenders to amend, extend and upsize the Senior Credit Facility simultaneously with, and
conditioned on, the closing of the acquisition of Park Holidays. The proposed amendment (the "Proposed Loan Amendment") would
provide for borrowing up to an aggregate of $4.2 billion with the ability to upsize the total borrowing by an additional $800.0 million.
The Proposed Loan Amendment would provide a revolving loan facility of up to $3.05 billion and a term loan facility of $1.15 billion.
We intend to use a portion of the proceeds from the Proposed Loan Amendment to fund the cash purchase price of Park Holidays.
There can be no assurance that we will be able to successfully enter into the Proposed Loan Amendment on the terms described above
or at all. If the Proposed Loan Amendment is not entered into, we may use our previously announced bridge loan, further described
below, to fund all or a portion of the cash purchase price of Park Holidays.
Capital Expenditures
Our capital expenditures include expansion sites and development construction costs, recurring capital expenditures, lot modifications,
growth projects, acquisition-related capital expenditures, rental home purchases and rebranding cost.
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SUN COMMUNITIES, INC.
Our capital expenditure activity is summarized as follows (in thousands):
Year Ended
December 31, 2021
December 31, 2020
Expansion and Development
Recurring Capital Expenditures
Lot Modifications
Growth Projects
Acquisition-related Capital Expenditures
Rental Program
Rebranding
Other
$
201,601 $
64,631
28,802
77,037
176,463
117,371
6,142
524
Total capital expenditures activity
$
672,571 $
248,146
33,472
29,414
28,315
46,739
143,117
N/A
9,320
538,523
Expansion and development expenditures - consist primarily of construction costs such as roads, activities, and amenities, and costs
necessary to complete home and RV site improvements, such as driveways, sidewalks and landscaping at our MH communities and
RV resorts. Expenditures also include costs to rebuild after damage has been incurred at MH, RV or marina properties.
Recurring capital expenditures - relate to our continued commitment to the upkeep of our MH and RV properties and include items
such as dredging, dock repairs and improvements, and equipment maintenance and upgrades at our marinas.
Lot modification capital expenditures - are incurred to modify the foundational structures required to set a new home after a previous
home has been removed. These expenditures are necessary to create a revenue stream from a new site renter and often improve the
quality of the community. Other lot modification expenditures include land improvements added to annual RV sites to aid in the
conversion of transient RV guests to annual contracts.
Growth projects - consist of revenue generating or expense reducing activities at MH communities, RV resorts and marinas. This
includes, but is not limited to, utility efficiency and renewable energy projects, site, slip or amenity upgrades such as the addition of a
garage, shed or boat lift, and other special capital projects that substantiate an incremental rental increase.
Acquisition-related Capital Expenditures - consist of capital improvements identified during due diligence that are necessary to bring
our communities, resorts, and marinas up to our operating standards. These include items such as: upgrading clubhouses; landscaping;
new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance
facilities; lot modifications; and new signage.
Rental Program - investment in the acquisition of homes intended for the Rental Program and the purchase of vacation rental homes at
our RV resorts. Expenditures for these investments depend upon the condition of the markets for repossessions and new home sales,
rental homes and vacation rental homes.
Rebranding costs - includes new signage at our RV resorts and costs of building an RV mobile application and updated website.
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
Year Ended
December 31, 2021
December 31, 2020
December 31, 2019
$
$
$
$
753,572 $
(2,338,249) $
1,570,391 $
(157) $
543,295 $
(2,486,517) $
2,000,844 $
189 $
476,734
(1,010,457)
505,880
411
Cash, cash equivalents, and restricted cash decreased by approximately $14.4 million from $92.6 million as of December 31, 2020, to
$78.2 million as of December 31, 2021.
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SUN COMMUNITIES, INC.
Operating Activities - Net cash provided by operating activities increased $210.3 million to $753.6 million for the year ended
December 31, 2021, compared to $543.3 million for the year ended December 31, 2020. The increase was driven by an increase in net
income from property operations due to the acquisition of Safe Harbor in October 2020 and improved operating performance at our
MH and RV properties.
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; (e) current volatility
in economic conditions and the financial markets; and (f) the effects of the COVID-19 pandemic. Refer to "Risk Factors" in Part I,
Item 1A in this Annual Report on Form 10-K.
Investing Activities - Net cash used for investing activities was $2.3 billion for the year ended December 31, 2021, compared to $2.5
billion for year ended December 31, 2020. The decrease in Net cash used for investing activities was driven by a reduction in cash
outflows to acquire new properties due to the prior year acquisition of Safe Harbor. During the year ended December 31, 2021, net
cash used for investing activities included the following:
•
•
•
•
•
Net cash deployed of $1.6 billion to acquire 54 properties totaling over 16,800 sites, wet slips and dry storage spaces and sites
for expansion, and 11 land parcels approved for development of nearly 4,000 MH sites.
Cash deployed of $672.6 million for capital expenditure activity.
Cash deployed of $242.6 million for issuance of notes receivable to real estate developers and operators.
Proceeds of $162.1 million from the disposition of six MH communities.
Proceeds of $113.8 million from sale of rental homes and equipment.
Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for additional
information.
Financing Activities - Net cash provided by financing activities decreased $430.5 million to $1.6 billion for the year ended December
31, 2021, compared to $2.0 billion for the year ended December 31, 2020. During the year ended December 31, 2021, net cash
provided by financing activities included the following:
•
•
•
•
Proceeds of $1.1 billion from equity issuances, primarily due to the March 2021 underwritten public offering of an aggregate
of 8,050,000 shares at a public offering price of $140.00 per share.
Issuance of an aggregate of $1.2 billion of senior unsecured notes from issuances in June 2021 and October 2021.
Payments of $390.8 million for distributions to holders of common stock and common OP units.
Net payments of $198.9 million under our credit facility agreement, net of proceeds.
Refer to Note 8, "Debt and Line of Credit," and Note 9, "Equity and Temporary Equity," in our accompanying Consolidated Financial
Statements for additional information.
Equity and Debt Activity
Registering of Debt Securities
In March 2020, the SEC adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure
requirements related to certain registered securities. The rule became effective January 4, 2021. In April 2021, we filed a new
universal shelf registration statement on Form S-3 with the SEC registering, among other securities, debt securities of the Operating
Partnership, which are fully and unconditionally guaranteed by us.
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SUN COMMUNITIES, INC.
Public Equity Offerings
Offerings
On November 15 and 16, 2021, we entered into two forward sale agreements relating to an underwritten registered public offering of
4,025,000 shares of our common stock at a public offering price of $185.00 per share. The offering closed on November 18, 2021. We
did not initially receive any proceeds from the sale of shares of our common stock by the forward purchaser or its affiliates. We intend
to use the net proceeds, if any, received upon the future settlement of the forward sale agreements, which we expect to occur no later
than November 18, 2022, to fund a portion of the Park Holidays total consideration, to repay borrowings outstanding under our senior
credit facility, to fund possible future acquisitions of properties and / or for working capital and general corporate purposes.
On March 2, 2021, we priced a $1.1 billion underwritten public offering of an aggregate of 8,050,000 shares at a public offering price
of $140.00 per share, before underwriting discounts and commissions. The offering consisted of 4,000,000 shares offered directly by
us and 4,050,000 shares offered under a forward equity sales agreement. We sold the 4,000,000 shares on March 9, 2021 and received
net proceeds of $537.6 million after deducting expenses related to the offering. In May and June 2021, we completed the physical
settlement of the remaining 4,050,000 shares and received net proceeds of $539.7 million after deducting expenses related to the
offering. Proceeds from the offering were used to acquire assets and pay down borrowings under our revolving line of credit.
On September 30, 2020 and October 1, 2020, we entered into two forward sale agreements (the "September 2020 Forward Equity
Offerings") relating to an underwritten registered public offering of 9,200,000 shares of our common stock at a public offering price of
$139.50 per share. The offering closed on October 5, 2020. On October 26, 2020, we physically settled these forward sales agreements
by the delivery of shares of our common stock. Proceeds from the offering were approximately $1.23 billion after deducting expenses
related to the offering. We used the net proceeds of this offering to fund the cash portion of the acquisition of Safe Harbor, and for
working capital and general corporate purposes.
In May 2020, we closed an underwritten registered public offering of 4,968,000 shares of common stock. Proceeds from the offering
were $633.1 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 Agreements
On December 17, 2021, we entered into an At the Market Offering Sales Agreement with certain sales agents and forward sellers
pursuant to which we may sell, from time to time, up to an aggregate gross sales price of $1.25 billion of our common stock (the
"December 2021 Sales Agreement"), through the sales agents, acting as our sales agents or, if applicable, as forward sellers, or directly
to the sales agents as principals for their own accounts. The sales agents and forward sellers are entitled to compensation in an agreed
amount not to exceed 2.0 percent of the gross price per share for any shares sold under the December 2021 Sales Agreement. We
simultaneously terminated our June 2021 Sales Agreement (as defined below) upon entering into the December 2021 Sales
Agreement.
On June 4, 2021, we entered into an At the Market Offering Sales Agreement with certain sales agents and forward sellers pursuant to
which we could sell, from time to time, up to an aggregate gross sales price of $500.0 million of our common stock (the "June 2021
Sales Agreement"), through the sales agents, acting as our sales agents or, if applicable, as forward sellers, or directly to the sales
agents as principals for their own accounts. The sales agents and forward sellers are entitled to compensation in an agreed amount not
to exceed 2.0 percent of the gross price per share for any shares sold under the Sales Agreement. We simultaneously terminated our
previous At the Market Offering Sales Agreement entered into in July 2017 upon entering into the June 2021 Sales Agreement.
There were no sales of common stock under the December 2021 Sales Agreement as of December 31, 2021. We entered into forward
sale agreements with respect to 1,820,109 shares of common stock under the June 2021 Sales Agreement for $356.5 million during the
year ended December 31, 2021 prior to its termination. These forward sale agreements were not settled as of December 31, 2021 but
we expect to settle them no later than September 2022. There were zero issuances of common stock under the prior At the Market
Offering Sales Agreement entered into in July 2017, during the years ended December 31, 2021, 2020 and 2019, and from inception
through termination of such prior sales agreement, we sold shares of our common stock for gross proceeds of $163.8 million.
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SUN COMMUNITIES, INC.
Senior Unsecured Notes
On October 5, 2021, we issued $450.0 million of senior unsecured notes with an interest rate of 2.3 percent and a seven-year term, due
November 1, 2028 (the "2028 Notes"). Interest on the 2028 Notes is payable semi-annually in arrears on May 1 and November 1 of
each year, beginning on May 1, 2022. In addition, on October 5, 2021, we issued $150 million of senior unsecured notes with an
interest rate of 2.7 percent and a ten-year term due July 15, 2031. These notes are additional notes of the same series as the
$600.0 million aggregate principal amount of 2.7 percent senior unsecured notes due July 15, 2031 that we issued on June 28, 2021,
described below. The net proceeds from the offering were approximately $595.5 million after deducting underwriters' discounts and
estimated offering expenses. The proceeds were used to pay down borrowings under our line of credit.
On June 28, 2021, we issued $600.0 million of senior unsecured notes with an interest rate of 2.7 percent and a ten-year term, due July
15, 2031 (the "2031 Notes"). Interest on the 2031 Notes is payable semi-annually in arrears on January 15 and July 15 of each year,
beginning on January 15, 2022. The net proceeds from the offering were approximately $592.4 million, after deducting underwriters'
discounts and estimated offering expenses. The proceeds were used to pay down borrowings under our line of credit.
The total outstanding balance on senior unsecured notes was $1.2 billion at December 31, 2021.
The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on the 2031 and 2028 Notes are
guaranteed on a senior basis by Sun Communities, Inc. The guarantee is full and unconditional, and the Operating Partnership is a
consolidated subsidiary of the Company. Under Rule 3-10 of Regulation S-X, as amended, subsidiary issuers of obligations
guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated
into the parent company's consolidated financial statements, the parent guarantee is "full and unconditional" and, subject to certain
exceptions, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized
financial information. Accordingly, separate consolidated financial statements of the Operating Partnership have not been presented.
Furthermore, as permitted under Rule 13-01(a)(4)(vi), we have excluded the summarized financial information for the Operating
Partnership as the assets, liabilities and results of operations of the Operating Partnership are not materially different from the
corresponding amounts presented in our consolidated financial statements and management believes such summarized financial
information would be repetitive and not provide incremental value to investors.
Line of Credit
On June 14, 2021, we entered into a new senior credit agreement (the "Credit Agreement") with certain lenders. The Credit Agreement
combined and replaced our prior $750.0 million credit facility, which was scheduled to mature on May 21, 2023, (the "A&R
Facility"), and the $1.8 billion credit facility between Safe Harbor and certain lenders, which was scheduled to mature on October 11,
2024 (the "Safe Harbor Facility"). The Safe Harbor Facility was terminated in connection with the execution of the Credit Agreement.
We repaid all amounts due and outstanding under the Safe Harbor Facility on or prior to June 14, 2021. We recognized a Loss on
extinguishment of debt in our Consolidated Statement of Operations related to the termination of the A&R Facility and the Safe
Harbor Facility of $0.2 million and $7.9 million, respectively.
Pursuant to the Credit Agreement, we may borrow up to $2.0 billion under a revolving loan (the "Senior Credit Facility"). The Senior
Credit Facility is available to fund all of the Company's businesses, including its marina business conducted by Safe Harbor. The
Credit Agreement also permits, subject to the satisfaction of certain conditions, additional borrowings (with the consent of the lenders)
in an amount not to exceed $1.0 billion with the option to treat all, or a portion, of such additional funds as an incremental term loan.
The Senior Credit Facility has a four-year term ending June 14, 2025, and, at our option, the maturity date may be extended for two
additional six-month periods, subject to the satisfaction of certain conditions. However, the maturity date with respect to
$500.0 million of available borrowing under the Senior Credit Facility is October 11, 2024, which, under the terms of the Senior
Credit Agreement, may not be extended. The Senior Credit Facility bears interest at a floating rate based on the Adjusted
Eurocurrency rate or BBSY rate, plus a margin that is determined based on the Company's credit ratings calculated in accordance with
the Senior Credit Agreement, which can range from 0.725 percent to 1.4 percent. As of December 31, 2021, the margin based on our
credit ratings was 0.85 percent on the Senior Credit Facility.
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SUN COMMUNITIES, INC.
At the lenders' option, the Senior Credit Facility will become immediately due and payable upon an event of default under the Credit
Agreement. We had $1.0 billion of borrowings on the Senior Credit Facility as of December 31, 2021, all scheduled to mature June
14, 2025. As of December 31, 2020, we had $40.4 million of borrowings on the revolving loan and no borrowings on the term loan
under our A&R Facility, respectively. As of December 31, 2020, we had $652.0 million and $500.0 million of borrowings under the
revolving loan and term loan under the Safe Harbor Facility, respectively. These balances are recorded in the Unsecured debt line item
on the Consolidated Balance Sheets.
The Senior Credit Facility provides us with the ability to issue letters of credit. Our issuance of letters of credit does not increase our
borrowings outstanding under the Senior Credit Facility, but does reduce the borrowing amount available. At December 31, 2021 and
2020, we had approximately $2.2 million and $2.4 million (including none and $0.3 million associated with the Safe Harbor Facility)
of outstanding letters of credit, respectively.
We have obtained commitments from our lender group to amend the Senior Credit Facility in connection with the acquisition of Park
Holidays. Refer to Note 19, "Subsequent Events," in our accompanying Consolidated Financial Statements for additional information
about the Proposed Loan Amendment.
Potential Bridge Loan
On November 13, 2021, we entered into a commitment letter with Citigroup Global Markets, Inc. ("Citigroup"), pursuant to which,
and subject to certain terms and conditions (including the closing of the acquisition of Park Holidays), Citigroup (on behalf of its
affiliates) committed to lend us up to £950.0 million, or approximately $1.3 billion converted at the December 31, 2021 exchange rate,
under a new senior unsecured bridge loan (the "Bridge Loan"). If we enter into the Bridge Loan, the proceeds of the Bridge Loan will
be used to finance a portion of the cash consideration payable for the acquisition of Park Holidays. As of December 31, 2021, we did
not have any borrowings outstanding under the Bridge Loan.
Financial Covenants
Pursuant to the terms of the Senior Credit Facility, we are subject to various financial and other covenants. The most restrictive
financial covenants for the Senior Credit Facility are as follows:
Covenant
Maximum leverage ratio
Minimum fixed charge coverage ratio
Maximum dividend payout ratio
Maximum secured leverage ratio
Requirement
<65.0%
>1.40
<95.0%
<40.0%
As of December 31, 2021
28.4%
4.57
49.3%
15.3%
In addition, we are required to maintain the following covenants with respect to the senior unsecured notes payable:
Covenant
Requirement
As of December 31, 2021
Total debt to total assets
Secured debt to total assets
Consolidated income available for debt service to debt service
Unencumbered total asset value to total unsecured debt
≤ 60.0%
≤ 40.0%
≥ 1.50
≥ 150.0%
38.6%
22.9%
5.81
431.7%
As of December 31, 2021, we were in compliance with the above covenants and do not anticipate that we will be unable to comply
with these covenants in the near term.
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SUN COMMUNITIES, INC.
Proactive management of transition away from LIBOR
LIBOR has been used extensively in the U.S. and globally as a reference rate for various commercial and financial contracts, including
variable-rate debt and interest rate swap contracts. However, based on an announcement made by the FCA on March 3, 2021, one-
week and two-month LIBOR rates ceased to be published after December 31, 2021, and all other LIBOR settings will effectively
cease after June 30, 2023, and it is expected that LIBOR will no longer be used after this date. In addition, it is expected that LIBOR
will no longer be used in new contracts entered into after December 31, 2021. To address the impending discontinuation of LIBOR, in
the U.S. the Alternative Reference Rates Committee ("ARRC") was established to help ensure the successful transition from LIBOR
to a more robust reference rate, its recommended alternative, the Secured Overnight Financing Rate (“SOFR”). SOFR is a new index
calculated by reference to short-term repurchase agreements backed by U.S. Treasury securities, as its preferred replacement for U.S.
dollar LIBOR. We have been closely monitoring developments related to the transition away from LIBOR and have implemented
proactive measures to minimize the potential impact of the transition to the Company, specifically:
•
•
During the year ended December 31, 2021, we issued two series of senior unsecured notes that each pay a fixed rate of
interest. As of December 31, 2021, we have an aggregate balance $1.2 billion of senior unsecured notes.
Our Senior Credit Facility agreement contains fallback language generally consistent with the ARRC's recommendation,
which provides a streamlined amendment approach for negotiating a benchmark replacement.
• We continue to monitor developments by the FCA, the ARRC, and other governing bodies involved in LIBOR transition.
Refer to Item 1A. "Risk factors" in this annual report on Form 10-K for additional information about our management of risks related
to the transition away from LIBOR.
Interest Rate Hedging
During and subsequent to the year ended December 31, 2021, we entered into four treasury lock contracts with an aggregate notional
value of $600.0 million to hedge interest rate risk associated with future issuances of fixed-rate long-term debt.
Long-term Financing and Capital Requirements
Long-term Financing
We anticipate meeting our long-term liquidity requirements, such as scheduled debt maturities, large property acquisitions, expansion
and development of properties, other nonrecurring capital improvements and Operating Partnership unit redemptions through the long-
term unsecured and secured indebtedness and the issuance of certain debt or equity securities subject to market conditions.
We had unrestricted cash on hand as of December 31, 2021, of approximately $65.8 million. As of December 31, 2021, there was
approximately $994.5 million of remaining capacity on the Senior Credit Facility. At December 31, 2021 we had a total of 412
unencumbered MH, RV and marina properties.
From time to time, we may also issue shares of our capital stock, issue equity units in our Operating Partnership, issue unsecured
notes, obtain other 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, RV and marina industries at the time, including the effects of the
COVID-19 pandemic, 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. In the event our current credit ratings are downgraded, it may become difficult or more expensive to obtain
additional financing or refinance existing unsecured indebtedness as maturities become due. Refer to "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, 2021, our net debt to enterprise value was approximately 18.0 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, Series D preferred OP units, Series E
preferred OP units, Series F preferred OP units, Series G preferred OP units, Series H preferred OP units, Series I preferred OP units
and Series J preferred OP units to shares of common stock). Our debt has a weighted average maturity of approximately 8.8 years and
a weighted average interest rate of 3.0 percent.
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SUN COMMUNITIES, INC.
Capital Requirements
Our capital requirements as of December 31, 2021 include both short and long term obligations:
Our primary long-term liquidity needs are principal payments on outstanding indebtedness as summarized in the table below:
Outstanding Indebtedness(1)
Principal payments on long-term debt
Interest expense(2)
Operating leases
Finance lease
Payments Due By Period (in thousands)
Total Due
Short-term Obligation
≤1 Year
Long-term Obligation
After 1 Year
Refer to
$
5,698,458 $
141,959 $
5,556,499 Note 8. Debt and Line of Credit
1,413,255
237,742
4,408
174,250
9,978
194
1,239,005
227,764 Note 16. Leases
4,214 Note 16. Leases
Total Outstanding Indebtedness
$
7,353,863 $
326,381 $
7,027,482
(1) Our outstanding indebtedness in this table excludes debt premiums, discounts and deferred financing costs, as applicable.
(2) Our obligations related to interest expense are calculated based on the current debt levels, rates and maturities as of December 31, 2021 (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 for
payment due after five years.
Certain of our nonconsolidated affiliates, which are accounted for under the equity-method of accounting, have incurred indebtedness.
We have not guaranteed the debt of our nonconsolidated affiliates in the arrangements referenced below, nor do we have any
obligations to fund this debt should the nonconsolidated affiliates be unable to do so. Refer to Note 6, "Investments in
Nonconsolidated Affiliates," in the accompanying Consolidated Financial Statements for additional information about these entities.
GTSC - During September 2019, GTSC, entered into a warehouse line of credit with a maximum loan amount of $125.0 million.
During September 2020, May 2021 and December 2021, the maximum amount was increased to $180.0 million, $230.0 million and
$255.0 million, respectively, with an option to increase to $275.0 million subject to the lender's consent. As of December 31, 2021, the
aggregate carrying amount of debt, including both our and our partner's share, incurred by GTSC was $243.1 million (of which our
proportionate share is $97.2 million). As of December 31, 2020, the aggregate carrying amount of debt, including both our and our
partner's share, incurred by GTSC was $167.7 million (of which our proportionate share is $67.1 million). The debt bears interest at a
variable rate based on a Commercial Paper or adjusted Secured Overnight Financing Rate plus 1.65 percent per annum and matures on
December 15, 2025.
Sungenia JV - During May 2020, Sungenia JV, entered into a debt facility agreement with a maximum loan amount of $27.0 million
Australian dollars, or $19.6 million converted at the December 31, 2021 exchange rate. As of December 31, 2021, the aggregate
carrying amount of debt, including both our and our partners' share, incurred by Sungenia JV was $6.3 million (of which our
proportionate share is $3.1 million). As of December 31, 2020, the aggregate carrying amount of debt, including both our and our
partners' share, incurred by Sungenia JV was $6.7 million (of which our proportionate share is $3.3 million). The debt bears interest at
a variable rate based on the BBSY rate plus 2.05 percent per annum and is available for a minimum of three years.
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SUN COMMUNITIES, INC.
SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES
Critical Accounting Estimates
Our Consolidated Financial Statements are prepared in accordance with United States of America 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.
Our significant accounting estimates include acquisitions (of investment properties) and impairment (of long live assets or properties,
right-of-use assets and goodwill). Refer to Note 1, "Significant Accounting Policies," in our accompanying Consolidated Financial
Statements for information regarding our critical accounting estimates that affect the Consolidated Financial Statements and that use
judgments and assumptions. In addition, the likelihood that materially different amounts could be reported under varied conditions and
assumptions is discussed.
Impact of New Accounting Standards
Refer to Note 18, "Recent Accounting Pronouncements," in our accompanying Consolidated Financial Statements for information
regarding new accounting pronouncements.
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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 $1.0 billion and $1.2 billion as of December 31, 2021 and 2020, respectively, and at such dates bore
interest at the Adjusted Eurocurrency Rate or BBSY rate, plus a margin, and Prime or various LIBOR rates, respectively. If the
Adjusted Eurocurrency Rate or BBSY rates, and Prime or LIBOR rates increased or decreased by 1.0 percent, our interest expense
would have increased or decreased by approximately $8.2 million and $3.4 million for the years ended December 31, 2021 and 2020,
respectively, based on the $821.2 million and $339.5 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, our Australian equity investment, and our United Kingdom assets 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, 2021 and 2020, our stockholder's equity included $663.6 million and $250.8 million from our investments and
operations in Canada, Australia and the United Kingdom, which collectively represented 9.9 percent and 4.5 percent of total
stockholder's equity, respectively. Based on our sensitivity analysis, a 10.0 percent strengthening of the U.S. dollar against the
Canadian dollar, Australian dollar and British pound would have caused a reduction of $66.4 million and $25.1 million to our total
stockholder's equity at December 31, 2021 and 2020, respectively.
Capital Market Risk
We are exposed to risks related to the equity capital markets, and our related ability to raise capital through the issuance of our
common stock or other equity instruments. We are also exposed to risks related to the debt capital markets, and our related ability to
finance our business through borrowings under other financing arrangements. As a REIT, we are required to distribute a significant
portion of our taxable income annually, which constrains our ability to accumulate operating cash flow and therefore requires us to
utilize debt or equity capital to finance our business. We seek to mitigate these risks by monitoring the debt and equity capital markets
to inform our decisions on the amount, timing and terms of capital we raise.
81
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
Evaluation of 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, 2021. Based upon this evaluation, our CEO and CFO
concluded that our disclosure controls and procedures were effective as of December 31, 2021.
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 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, 2021,
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, 2021. Based on management's assessment, we have concluded that our internal
control over financial reporting was effective at December 31, 2021.
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 quarter ended December 31, 2021.
ITEM 9B.
OTHER INFORMATION
None.
82
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 2022 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 - Board of Directors - Board Structure -
Committees of the Board of Directors," "Security Ownership Information - Security Ownership of Directors and Executive Officers,"
and "Information About Executive Officers - Executive Officers Biographies."
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 - Board of Directors - Board Structure - Compensation
Committee Interlocks and Insider Participation," and "Compensation Discussion and Analysis." 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 - Board of Directors - Board Structure - Committees of the Board of Directors," "Corporate Governance -
Board of Directors - Board Structure - Leadership Structure and Independence of Non-Employee Directors," and "Corporate
Governance - Board of Directors - Other Board Policies and Processes - 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 for the proposal related to "Ratification of
Selection of Grant Thornton LLP."
83
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.
2.
3.
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.
Financial Statement Schedules
The financial statement schedules 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.
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.
84
SUN COMMUNITIES, INC.
EXHIBITS
Exhibit
Number
2.1*
Agreement and Plan of Merger dated September 29, 2020 by and among Safe Harbor
Marinas, LLC, Sun Communities, Inc., Sun Communities Operating Limited
Partnership, Sun SH LLC and Safe Harbor Marinas II, LLC, individually and in its
capacity as the Seller Representative (as defined therein)
3.1
Sun Communities, Inc. Articles of Restatement
3.2
Third Amended and Restated Bylaws
Description
Method of Filing
Incorporated by reference to Sun Communities, Inc.'s Current
Report on Form 8-K filed on September 29, 2020
Incorporated by reference to Sun Communities, Inc.'s Annual
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
4.2
4.3
4.4
4.5
4.6
4.7
10.1
10.2
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
Description of the Registrant’s Securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934
Incorporated by reference to Sun Communities, Inc.'s Annual
Report on Form 10-K filed for the year ended December 31, 2019
Form of Registration Rights Agreement by and among Sun Communities, Inc. and
certain holders of Merger Securities
Incorporated by reference to Sun Communities, Inc.'s Current
Report on Form 8-K filed on September 29, 2020
Indenture, dated as of June 28, 2021 by and between Sun Communities Operating
Limited Partnership and UMB Bank, N.A. as trustee.
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on June 28, 2021
First Supplemental Indenture, dated as of June 28, 2021 by and among Sun
Communities Operating Limited Partnership, Sun Communities, Inc., and UMB Bank,
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on June 28, 2021
Form of Global Note for 2.700% Notes due 2031
Second Supplemental Indenture, dated as of October 5, 2021 by and among Sun
Communities Operating Limited Partnership, Sun Communities, Inc., and UMB Bank,
N.A. as trustee
Form of Global Note for 2.300% Notes due 2028
Lease, dated November 1, 2002, by and between Sun Communities Operating Limited
Partnership as Tenant and American Center LLC as Landlord
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on June 28, 2021
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on October 5, 2021
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on October 5, 2021
Incorporated by reference to Sun Communities, Inc.'s Annual
Report on Form 10-K for the year ended 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 Annual
Report on Form 10-K filed on February 21, 2019
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
First Amendment to the Fourth Amended and Restated Agreement of Limited
Partnership of Sun Communities Operating Limited Partnership, dated January 9, 2020.
Incorporated by reference to Sun Communities, Inc.'s Current
Report on Form 8-K filed January 13, 2020
Second Amendment to the Fourth Amended and Restated Agreement of Limited
Partnership of Sun Communities Operating Limited Partnership, dated January 13,
2020.
Incorporated by reference to Sun Communities, Inc.'s Current
Report on Form 8-K filed January 14, 2020
Fourth Amendment to the Fourth Amended and Restated Agreement of Limited
Partnership of Sun Communities Operating Limited Partnership, dated May 14, 2020.
Incorporated by reference to Sun Communities, Inc.'s Current
Report on Form 8-K filed May 18, 2020
Sixth Amendment to the Fourth Amended and Restated Agreement of Limited
Partnership of Sun Communities Operating Limited Partnership, dated September 30,
2020.
Incorporated by reference to Sun Communities, Inc.'s Current
Report on Form 8-K filed October 6, 2020
Seventh Amendment to Agreement of Limited Partnership Agreement of Sun
Communities Operating Limited Partnership, dated October, 30, 2020
Incorporated by reference to Sun Communities, Inc.'s Current
Report on Form 8-K filed November 5, 2020
Eighth Amendment to Agreement of Limited Partnership of Sun Communities
Operating Limited Partnership, dated December 31, 2020
Incorporated by reference to Sun Communities, Inc.'s Current
Report on Form 8-K filed January 4, 2021
10.10*
Ninth Amendment to Agreement of Limited Partnership of Sun Communities Operating
Limited Partnership, dated April 21, 2021
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on April 23, 2021
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
Sun Communities, Inc. Non-Employee Directors Deferred Compensation Plan
Filed herewith
10.15
10.16
Form of Stock Option Agreement between Sun Communities, Inc. and certain directors,
officers and other individuals#
Form of Non-Employee Director Stock Option Agreement between Sun Communities,
Inc. and certain directors#
Incorporated by
Registration Statement No. 33 69340
reference
to Sun Communities,
Incorporated by
Registration Statement No. 33 80972
reference
to Sun Communities,
Inc.'s
Inc.'s
10.17
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
10.18*
Employment Agreement dated March 29, 2021 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 on March 31, 2021
85
SUN COMMUNITIES, INC.
10.19*
10.20*
10.21*
10.22*
Employment Agreement dated March 29, 2021 among Sun Communities, Inc., Sun
Communities Operating Limited Partnership and John B. McLaren#
Employment Agreement dated March 29, 2021 among Sun Communities, Inc., Sun
Communities Operating Limited Partnership and Karen J. Dearing#
Employment Agreement dated July 16, 2021 among Sun Communities, Inc., Sun
Communities Operating Limited Partnership and Bruce Thelen#
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on March 31, 2021
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on March 31, 2021
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on July 20, 2021
Employment Agreement dated October 18, 2021 among Sun Communities, Inc., Sun
Communities Operating Limited Partnership and Aaron Weiss#
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on October 18, 2021
10.23
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
Incorporated by reference to Sun Communities, Inc.'s Current
Report on Form 8-K filed on December 29, 2020
Incorporated by reference to Sun Communities Inc.'s Current
Report on Form 8-K filed on June 14, 2021
10.24*
Credit Agreement dated September 14, 2018, and the Third Amendment thereto dated
December 22, 2020, among Safe Harbor Marinas, LLC as borrower; SHM TRS, LLC
and certain subsidiaries of Safe Harbor Marinas, LLC and SHM TRS, LLC from time to
time as guarantors; the lenders that are party thereto; and Citizens Bank, N.A., as
Administrative Agent and Collateral Agent
Fourth Amended and Restated Credit Agreement, dated June 14, 2021, among Sun
Communities Operating Limited Partnership, as Borrower, Citibank, N.A., as
Administrative Agent, Swing Line Lender and L/C Issuer, Citibank, N.A., Citizens
Bank, N.A., BofA Securities, Inc., BMO Capital Markets Corp., JPMorgan Chase Bank,
N.A., Fifth Third Bank, Regions Bank, Royal Bank of Canada, The Huntington
National Bank, Truist Bank, U.S. Bank National Association, and Wells Fargo Bank,
National Association, as Joint Lead Arrangers, and Citibank, N.A., Citizens Bank, N.A.,
BofA Securities, Inc., BMO Capital Markets Corp., and JPMorgan Chase Bank, N.A.,
as Joint Bookrunners, and Bank of America, N.A., JPMorgan Chase Bank, N.A., Bank
of Montreal, and Citizens Bank, N.A., as Co-Syndication Agents
List of Subsidiaries of Sun Communities, Inc.
List issuers of guaranteed securities
Consent of Grant Thornton LLP
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
Filed herewith
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
Furnished herewith
10.25*
21.1
22.1
23.1
31.1
31.2
32.1
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
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
*
#
Certain schedules and exhibits have been omitted pursuance to Item 601(a)(5) of Regulation S-K because such schedules and exhibits do not contain
information which is material to an investment decision or which is not otherwise disclosed in the filed agreements. The Company will furnish the omitted
schedules and exhibits to the SEC upon request by the SEC.
Management contract or compensatory plan or arrangement
86
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 22, 2022
By
/s/
Gary A. Shiffman
Gary A. Shiffman
Chief Executive Officer
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.
SUN COMMUNITIES, INC.
(Registrant)
/s/
/s/
/s/
/s/
/s/
/s/
/s/
/s/
/s/
Name
Gary A. Shiffman
Gary A. Shiffman
Karen J. Dearing
Karen J. Dearing
Tonya Allen
Tonya Allen
Meghan G. Baivier
Meghan G. Baivier
Stephanie W. Bergeron
Stephanie W. Bergeron
Brian M. Hermelin
Brian M. Hermelin
Ronald A. Klein
Ronald A. Klein
Clunet R. Lewis
Clunet R. Lewis
Arthur A. Weiss
Arthur A. Weiss
Capacity
Chief Executive Officer and Chairman of the Board of
Directors (Principal Executive Officer)
Date
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
Executive Vice President, Chief Financial Officer, Treasurer
and Secretary (Principal Financial Officer and Principal
Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
87
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SUN COMMUNITIES, INC.
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248)
Financial Statements:
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2021, 2020 and 2019
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-58
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, 2021 and 2020, 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, 2021, and the related notes and
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, 2021 and 2020, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2021, 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, 2021, 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 22, 2022 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding 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 our 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 1 and 3 to the consolidated financial statements, the
Company evaluates acquisitions to determine whether the acquisition should be classified as either an asset acquisition or business
combination. For asset acquisitions, the Company allocates the purchase price of these properties on a relative fair value basis and
capitalizes direct acquisition related costs as part of the purchase price. Acquisitions that meet the definition of a business combination
are recorded at fair value using a fair value model under which the assets and liabilities are generally recognized at their fair values
and the difference between the consideration transferred, excluding transaction costs, and the fair values of the assets and liabilities is
recognized as goodwill. The Company acquired approximately $1.42 billion of real estate during the year ended December 31, 2021.
We identified the evaluation of the measurement of the fair values used in purchase price allocation of real estate as a critical audit
matter.
The principal consideration for our determination that the evaluation of the measurement of the fair value used in the purchase price
allocation of real estate was a critical audit matter was that it may involve a high degree of subjectivity in evaluating the
reasonableness of management's estimates and the assumptions used in those estimates, related to the recognition and measurement of
assets acquired and liabilities assumed.
F - 2
SUN COMMUNITIES, INC.
Our audit procedures related to evaluating the fair values used in the purchase price allocation of real estate acquisition included the
following, among others. We obtained an understanding and tested the design and operating effectiveness of relevant controls relating
to accounting for acquisitions, such as controls over the evaluation of accounting treatment and the recognition and measurement of
assets acquired, liabilities assumed, and consideration paid. For each acquisition, we obtained and evaluated the third-party purchase
price allocation report, along with relevant supporting documentation such as the executed purchase agreement, in order to corroborate
our understanding of the substance of the acquisition as well as assess the completeness of the assets acquired and liabilities assumed.
For a selection of real estate acquisitions, we involved our real estate valuation professionals with specialized skills and knowledge
who assisted in evaluating the assumptions used in the fair value measurements of the purchase price allocations. More specifically,
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 and (4) if
applicable, the reasonableness of the fair value of equity interests issued as consideration in the transaction. Our overall assessment of
the amounts reported and disclosed in the consolidated financial statements included consideration of whether such information was
consistent with evidence obtained in other areas of the audit.
Impairment of Investment Properties
As described in footnote 1, the Company reviews the carrying value of its long-lived assets, which includes its investment properties,
for impairment on a quarterly basis or whenever events or changes in circumstances indicate a possible impairment. Events or
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 events that may significantly change
the value of the long-lived asset.
The Company reviews 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 for identified investment properties. Forecasting of cash flows requires management to make estimates
and assumptions about variables such as growth rates, forecasted net operating income, estimated holding period, and capitalization
rates. In 2021, the Company's net operating income trend analysis resulted in 20 investment properties requiring undiscounted cash
flow analysis. No impairments were identified as a result of the Company's review for impairment.
The principal considerations for our determination that the impairment of investment properties is a critical audit matter is that
auditing management's evaluation of impairment is challenging due to the high degree of subjective auditor judgment necessary in
evaluating management's identification of indicators of potential impairment and determination of undiscounted cash flows for
properties where impairment indicators have been identified. The significant assumptions used in the undiscounted cash flows analysis
include growth rates, forecasted net operating income, estimated holding period, and capitalization rates, which can be affected by
expectations about future market or economic conditions, demand, and competition.
We performed the following procedures, among others, in connection with forming our overall opinion on the financial statements.
We obtained an understanding of management's process to identify indicators of impairment. We evaluated the design and tested the
operating effectiveness of the controls that address the identification of indicators of impairment, including management's review of
the operations and financial performance of investment properties, and management's preparation of undiscounted cash flow analysis.
We examined and evaluated the Company's net operating income trend analysis and its assessment of other events, and if
undiscounted cash flow analysis was necessary, we evaluated the significant assumptions and methods used in developing that
analysis. As part of our evaluation, we assessed the historical accuracy of the Company's estimates and ability to forecast property
performance. We also performed sensitivity analyses of certain significant assumptions to evaluate the changes in the undiscounted
cash flows of certain properties that would result from changes in the assumptions used by management. We compared the consistency
of capitalization rates used in the analysis to comparable recent acquisitions completed by the Company which have been reviewed by
our valuation specialists.
/s/ GRANT THORNTON LLP
We have served as the Company's auditor since 2003.
Philadelphia, Pennsylvania
February 22, 2022
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, 2021, 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, 2021, 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, 2021, and our report
dated February 22, 2022 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
Philadelphia, Pennsylvania
February 22, 2022
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 $623,482 and $453,236 for consolidated
VIEs at December 31, 2021 and December 31, 2020; see Note 7)
Cash, cash equivalents and restricted cash (including $13,623 and $6,194 for
consolidated VIEs at December 31, 2021 and December 31, 2020; see Note 7)
Marketable securities (see Note 14)
Inventory of manufactured homes
Notes and other receivables, net
Goodwill
Other intangible assets, net (including $13,443 and $13,900 for consolidated
VIEs at December 31, 2021 and December 31, 2020; see Note 7)
Other assets, net (including $5,270 and $4,979 for consolidated VIEs at
December 31, 2021 and December 31, 2020; see Note 7)
Total Assets
Liabilities
Secured debt (see Note 8) (including $52,546 and $47,706 for consolidated VIEs
at December 31, 2021 and December 31, 2020; see Note 7)
Unsecured debt (see Note 8) (including $35,249 and $35,249 for consolidated
VIEs at December 31, 2021 and December 31, 2020; see Note 7)
Distributions payable
Advanced reservation deposits and rent
Accrued expenses and accounts payable
Other liabilities (including $93,961 and $80,910 for consolidated VIEs at
December 31, 2021 and December 31, 2020; see Note 7)
Total Liabilities
Commitments and contingencies (see Note 15)
Temporary equity (see Note 9) (including $35,391 and $32,719 for consolidated
VIEs at December 31, 2021 and December 31, 2020; see Note 7)
Stockholders' Equity
Common stock, $0.01 par value. Authorized: 180,000 shares; Issued and
outstanding: 115,976 December 31, 2021 and 107,626 December 31, 2020
Additional paid-in capital
Accumulated other comprehensive income
Distributions in excess of accumulated earnings
Total Sun Communities, Inc. stockholders' equity
Noncontrolling interests
Common and preferred OP units
Consolidated entities (including $19,944 and $16,084 for consolidated VIEs at
December 31, 2021 and December 31, 2020; see Note 7)
Total noncontrolling interests
Total Stockholders' Equity
As of
December 31, 2021
December 31, 2020
$
2,556,284 $
9,958,320
591,733
656,367
13,762,704
(2,337,247)
2,119,364
8,480,597
637,603
447,039
11,684,603
(1,968,812)
11,425,457
9,715,791
78,198
186,898
51,055
469,594
495,353
306,755
92,641
124,726
46,643
221,650
428,833
305,611
480,774
13,494,084 $
270,691
11,206,586
3,380,739 $
3,489,983
$
$
2,291,095
98,372
242,778
237,529
224,084
6,474,597
1,267,093
86,988
187,730
148,435
134,650
5,314,879
288,882
264,379
1,160
8,175,676
3,053
(1,555,994)
6,623,895
1,076
7,087,658
3,178
(1,566,636)
5,525,276
86,766
85,968
19,944
106,710
6,730,605
16,084
102,052
5,627,328
11,206,586
Total Liabilities, Temporary Equity and Stockholders' Equity
$
13,494,084 $
See accompanying Notes to Consolidated Financial Statements.
F - 5
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Revenues
Real property
Home sales
Service, retail, dining and entertainment
Interest
Brokerage commissions and other, net
Total Revenues
Expenses
Property operating and maintenance
Real estate tax
Home costs and selling
Service, retail, dining and entertainment
General and administrative
Catastrophic event-related charges, net
Business combinations
Depreciation and amortization
Loss on extinguishment of debt (see Note 8)
Interest
Interest on mandatorily redeemable preferred OP units / equity
Total Expenses
Income Before Other Items
Gain on remeasurement of marketable securities (see Note 14)
Gain / (loss) on foreign currency translation
Gain on dispositions of properties
Other expense, net
Gain / (loss) on remeasurement of notes receivable (see Note 4)
Income from nonconsolidated affiliates (see Note 6)
Loss on remeasurement of investment in nonconsolidated affiliates (see Note 6)
Current tax expense (see Note 12)
Deferred tax benefit / (expense) (see Note 12)
Net Income
Less: Preferred return to preferred OP units / equity interests
Less: Income attributable to noncontrolling interests
Net Income Attributable to Sun Communities, Inc.
Less: Preferred stock distribution
December 31,
2021
Year Ended
December 31,
2020
December 31,
2019
$
1,599,856 $
1,130,119 $
280,152
350,238
12,232
30,127
175,699
65,180
10,119
17,230
1,004,746
181,936
45,371
17,857
14,127
2,272,605
1,398,347
1,264,037
522,918
94,815
205,770
285,768
181,210
2,239
1,362
522,745
8,127
158,629
4,171
1,987,754
284,851
33,457
(3,743)
108,104
(12,122)
685
3,992
(160)
(1,236)
(91)
413,737
12,095
21,490
380,152
—
336,211
72,606
147,075
57,996
109,616
885
23,008
376,876
5,209
129,071
4,177
1,262,730
135,617
6,129
7,666
5,595
(5,188)
(3,275)
1,740
(1,608)
(790)
1,565
147,451
6,935
8,902
131,614
—
293,160
61,880
149,111
43,089
92,777
1,737
—
328,067
16,505
133,153
4,698
1,124,177
139,860
34,240
4,479
—
(1,701)
—
1,374
—
(1,095)
222
177,379
6,058
9,768
161,553
1,288
160,265
88,460
88,915
1.80
1.80
Net Income Attributable to Sun Communities, Inc. Common Stockholders
$
380,152 $
131,614 $
Weighted average common shares outstanding - basic
Weighted average common shares outstanding - diluted
112,582
115,144
97,521
97,522
Basic earnings per share (see Note 13)
Diluted earnings per share (see Note 13)
$
$
3.36 $
3.36 $
1.34 $
1.34 $
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
Unrealized gain on interest rate swaps
Total Comprehensive Income
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive Income attributable to Sun Communities, Inc.
December 31,
2021
Year Ended
December 31,
2020
December 31,
2019
$
$
413,737 $
(476)
345
413,606
(21,484)
392,122 $
147,451 $
4,205
—
151,656
(8,598)
143,058 $
177,379
3,328
—
180,707
(9,923)
170,784
See accompanying Notes to Consolidated Financial Statements.
F - 7
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
December 31, 2021 December 31, 2020 December 31, 2019
$
413,737 $
147,451 $
177,379
Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposition of assets
Gain on disposition of properties
(Gain) / loss on foreign currency translation
Gain on remeasurement of marketable securities (see Note 14)
Loss on remeasurement of contingent liabilities
Share-based compensation
Depreciation and amortization
Deferred tax (benefit) / expense (see Note 12)
Amortization of below market leases
Amortization of debt premium
Amortization of deferred financing costs
Amortization of ground lease intangibles
Loss on extinguishment of debt (see Note 8)
(Gain) / loss on remeasurement of notes receivable (see Note 4)
Loss on remeasurement of investment in nonconsolidated affiliates (see
Note 6)
Income from nonconsolidated affiliates (see Note 6)
Distributions of income from nonconsolidated affiliates
Change in notes receivable from financed sales of inventory homes, net of
repayments
Change in inventory, other assets and other receivables, net
Change in other liabilities
Net Cash Provided By Operating Activities
Investing Activities
Investment in properties
Acquisitions of properties, net of cash acquired
Proceeds from disposition of assets and depreciated homes, net
Proceeds from disposition of properties
Issuance of notes and other receivables
Repayments of notes and other receivables
Investments in marketable securities
Investments in nonconsolidated affiliates
Distributions of capital from nonconsolidated affiliates
Net Cash Used For Investing Activities
Financing Activities
Issuance of common stock, OP units and preferred OP units, net
Contributions from noncontrolling interest
Redemption of Series G preferred OP units
Redemption of Series B-3 preferred OP units
Borrowings on lines of credit
Payments on lines of credit
Proceeds from issuance of debt
Payments on debt
Fees paid in connection with extinguishment of debt
Proceeds received from return of prepaid deferred financing costs
Distributions
Payments for deferred financing costs
Payment of contingent liability
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
(49,322)
(108,104)
3,743
(33,457)
11,031
27,988
511,738
91
(7,844)
(844)
4,924
752
8,127
(685)
160
(3,992)
6,246
(1,217)
(75,950)
46,450
753,572
(672,571)
(1,648,690)
113,762
162,077
(242,609)
5,325
(35,524)
(36,889)
16,870
(2,338,249)
1,057,481
2,529
—
—
3,762,059
(3,960,940)
1,202,539
(76,760)
(195)
—
(390,814)
(15,678)
(9,830)
1,570,391
(157)
(14,443)
92,641
78,198 $
(15,156)
(5,595)
(7,666)
(6,129)
2,962
23,045
371,878
(1,565)
(7,347)
(1,467)
3,090
752
5,209
3,275
1,608
(1,740)
4,088
(176)
5,200
21,578
543,295
(538,523)
(1,946,015)
55,395
12,612
(45,650)
12,173
(11,757)
(35,484)
10,732
(2,486,517)
1,850,611
—
(2,000)
—
1,585,904
(1,361,538)
491,784
(230,330)
(6,226)
—
(313,137)
(14,224)
—
2,000,844
189
57,811
34,830
92,641 $
(11,085)
—
(4,479)
(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)
48,248
476,734
(569,261)
(472,681)
61,337
—
(18,122)
4,542
(8,995)
(51,747)
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
Supplemental Information
Cash paid for interest (net of capitalized interest of $4,521, $9,424 and $7,943,
respectively)
Cash paid for interest on mandatorily redeemable debt
Cash paid 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
Asset held for sale
Conversion of Series A-4 preferred stock
Release of note receivable and accrued interest
Noncash investing and financing activities at the date of acquisition
Acquisitions - Common stock and OP units issued
Acquisitions - Debt
Acquisitions - Series D preferred interest
Acquisitions - Series E preferred interest
Acquisitions - Series F preferred interest
Acquisitions - Series G preferred interest
Acquisitions - Series H preferred interest
Acquisitions - Series I preferred interest
Acquisitions - Series J preferred interest
Acquisitions - Holdback
Acquisitions - Escrow
Acquisitions - Deferred liability
Year Ended
December 31, 2021 December 31, 2020 December 31, 2019
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
147,003 $
4,171 $
1,270 $
— $
11,198 $
2,918 $
705 $
— $
7,270 $
3,643 $
— $
— $
— $
— $
— $
— $
— $
24,000 $
9,386 $
— $
4,317 $
135,986 $
4,177 $
1,115 $
— $
15,280 $
1,022 $
32,145 $
— $
— $
37,565 $
837,800 $
— $
9,000 $
9,000 $
27,261 $
58,113 $
94,540 $
— $
— $
— $
9,000 $
134,990
4,698
948
107,731
8,452
11,310
—
31,739
—
313,392
61,900
51,930
—
—
—
—
—
—
—
392
—
See accompanying Notes to Consolidated Financial Statements.
F - 9
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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"), Sun Home Services, Inc.,
a Michigan corporation ("SHS") and Safe Harbor Marinas, LLC ("Safe Harbor") are referred to herein as the "Company," "us," "we,"
and "our."
We are a fully integrated real estate investment trust ("REIT"). As of December 31, 2021, we owned and operated or held an interest
in a portfolio of 602 MH communities, RV resorts, and marinas (collectively, the "properties") located in 39 states throughout the
United States and in Ontario, Canada and Puerto Rico including 284 MH communities, 160 RV resorts, 33 properties containing both
MH and RV sites, and 125 marinas. As of December 31, 2021, the properties contained an aggregate of 204,163 developed sites
comprised of 98,621 developed MH sites, 30,540 annual RV sites (inclusive of both annual and seasonal usage rights), 29,847
transient RV sites, and 45,155 wet slips and dry storage spaces.
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 intercompany transactions have been eliminated. Any subsidiaries in which we
have an ownership percentage equal to or greater than 50 percent, but less than 100 percent, or considered a VIE, represent
subsidiaries with a non-controlling interest. The non-controlling interests in our subsidiaries are allocated their proportionate share of
the subsidiaries' financial results.
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 accounting principles generally accepted in the United States of America
("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.
Segment Information
FASB Accounting Standards Codification ("ASC") Topic 280, "Segment Reporting," establishes standards for the way business
enterprises report information about operating segments in its financial statements. In accordance with ASC 280, effective January 1,
2021, we changed our organizational structure from a two-segment to a three-segment structure as a result of the acquisition of Safe
Harbor and its internal organization. The new structure reflects how the chief operating decision maker manages the business, makes
operating decisions, allocates resources and evaluates operating performance. All prior period amounts are recast to conform to the
way we internally manage our business and monitor segment performance. Certain reclassifications have been made to the prior
period financial statements and related notes in order to conform to the current period presentation. The most significant changes were
the combining of rental home revenue with real property revenue, the combining of rental home operating and maintenance expenses
with property operating expenses, and the combining of home selling expenses with cost of home sales. Vacation rental home rent has
been reclassified from ancillary income into real property. In addition, ancillary revenues and expenses have been renamed service,
retail, dining & entertainment. There was no impact to prior period net income, stockholders equity or cash flows for any of the
reclassifications. Our three reportable segments are: (i) Manufactured home ("MH") communities, (ii) Recreational vehicle ("RV")
resorts and (iii) Marina.
The MH segment owns, operates, develops, or has an interest in, a portfolio of MH communities and is in the business of acquiring,
operating and developing ground up MH communities to provide affordable housing solutions to residents. The MH segment also
provides manufactured home sales and leasing services to tenants and prospective tenants of our communities.
F - 11
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The RV segment owns, operates, develops, or has an interest in, a portfolio of RV resorts and is in the business of acquiring, operating
and developing ground up RV resorts throughout the U.S. and in Ontario, Canada. It also provides leasing services for vacation rentals
within the RV resorts.
The Marina segment owns, operates, and develops marinas, and is in the business of acquiring, and operating marinas throughout the
U.S. with the majority of such marinas concentrated in coastal regions, others located in various inland regions, and Puerto Rico.
We evaluate segment operating performance based on NOI. Refer to Note 11, "Segment Reporting," for additional information.
Investment Property
Investment property is recorded at cost, less accumulated depreciation.
Impairment of long-lived assets - 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. 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. 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 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.
Real estate held for sale - we periodically classify real estate as "held for sale." An asset is classified as held for sale after an active
program to sell an asset has commenced and when the sale is probable. Subsequent to the classification of assets as held for sale, no
further depreciation expense is recorded. Within Other Assets, net on the Consolidated Balance Sheets are $0.7 million of real estate
held for sale at one property and $32.1 million of real estate held for sale which is the carrying value of four properties respectively, as
of December 31, 2021 and 2020.
Acquisitions - we evaluate acquisitions pursuant to ASC 805 "Business Combinations" to determine whether the acquisition should be
classified as either an asset acquisition or a business combination.
Acquisitions for which substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or a
group of similar identifiable assets are accounted for as an asset acquisition. Most of our property acquisitions are accounted for as
asset acquisitions. For 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.
Acquisitions that meet the definition of a business combination are recorded at fair value using a fair value model under which the
assets and liabilities are generally recognized at their fair values and the difference between the consideration transferred, excluding
transaction costs, and the fair values of the assets and liabilities is recognized as goodwill. For acquisitions that meet the definition of a
business combination, we allocate the purchase price of those properties on a fair value basis and expense the acquisitions related
transaction costs as incurred. Transaction costs are presented as Business combination in our Consolidated Statements of Operations.
For asset acquisitions and business combinations, we allocate the purchase price 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 acquired.
F - 12
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 capitalization
or immediate expense. 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 our 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. Renovations and improvements to marinas are capitalized and
depreciated over their estimated useful lives. Improvements made to docks, buildings, systems, equipment, shorelines and site
improvements are capitalized until the project is substantially complete and available for use.
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 software are capitalized and amortized over the estimated useful lives of the related software
and hardware.
Costs associated with purchases of furniture, fixtures and equipment, major replacements and improvements are capitalized and
subsequently depreciated over their respective underlying assets estimated useful lives.
Costs incurred to obtain new debt financing (i.e. deferred financing costs) are capitalized and amortized over the terms of the
underlying loan agreement using the effective interest method for senior unsecured notes and the straight-line method (which
approximates the effective interest method) for other financing. Deferred financing costs include fees and costs incurred to obtain
long-term financing. 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 any related discounts or
premiums are accounted for in accordance with ASC 470-50-40, "Modifications and Extinguishments." At December 31, 2021 and
2020, $6.4 million and $11.7 million of lines of credit deferred financing costs, respectively, were presented as a component of Other
assets, net on the Consolidated Balance Sheets. At December 31, 2021 and 2020, $13.0 million and $13.9 million of mortgage loans
payable, deferred financing costs and discounts and premiums, respectively, were netted and presented as a component of Secured
debt on the Consolidated Balance Sheets.
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, 2021 and 2020, $65.8 million and $77.3 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 $58.9 million and $74.5 million as of
December 31, 2021 and 2020, respectively.
Restricted Cash
Restricted cash consists primarily of utility deposits and amounts held in deposit for tax, insurance and repair escrows held by lenders
in accordance with certain debt agreements. At December 31, 2021 and 2020, $12.4 million and $15.3 million of restricted cash,
respectively, was included as a component of Cash, cash equivalents and restricted cash on the Consolidated Balance Sheets. Changes
in the 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. Restricted cash and restricted cash equivalents are included with cash and cash equivalents in
the reconciliation of the beginning of period and the end of period cash balance on the Consolidated Statements of Cash Flows.
F - 13
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Marketable Securities
Marketable securities are recorded at fair value with changes in fair value recorded in Gain / (loss) on remeasurement of marketable
securities on the Consolidated Statement of Operations. The values of marketable securities as of December 31, 2021 and 2020 were
$186.9 million and $124.7 million, respectively, and are disclosed on the Consolidated Balance Sheets.
Inventory
Inventory of manufactured homes is stated at lower of specific cost or net realizable value based on the specific identification method
and the balance is separately disclosed on our Consolidated Balance Sheet. Other inventory at our MH and RV properties consists
primarily of service and merchandise related items, grocery, food and beverage products and are stated at the lower of cost or net
realizable value. Physical inventory counts are performed where inventory exists. Inventory records are adjusted accordingly to reflect
actual inventory counts and any resulting shortage is recognized. Inventory at our marinas consists primarily of boat parts used in our
service centers and retail related items such as merchandise used in our ship stores, gasoline and diesel fuel, and food and beverage
products. Inventories at our marinas are stated at the lower of cost or net realizable value with cost determined using the weighted-
average method. Physical inventory counts are performed where inventory exists. Inventory records are adjusted accordingly to reflect
actual inventory counts and any resulting shortage is recognized. The inventory balance is included in Other assets, net on our
Consolidated Balance Sheet.
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. Under the equity method of accounting, 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. The cost method is applied when (a) the
investment is minimal (typically less than 5.0 percent) and (b) our investment is passive. Our exposure to losses associated with
nonconsolidated 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 6, "Investments in Nonconsolidated Affiliates," for additional
information.
Notes and Other Receivables
Notes receivable - includes installment loans for manufactured homes purchased from us, notes receivable from real estate developers
and operators and other receivables.
Installment notes receivable on manufactured homes - represent notes receivable for the purchase of manufactured homes primarily
located in our communities, which are secured by the underlying manufactured home sold. 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.
Notes receivable from real estate developers and operators - represent short-term construction loans provided to real estate developers
and loans provided to real estate operators to finance acquisition and development costs.
F - 14
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Upon the adoption of ASU 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments" ("CECL"), we elected the fair value option for installment notes receivable on manufactured homes, and notes receivable
from real estate developers and operators. Effective January 1, 2020, installment notes receivable on manufactured homes and notes
receivable from real estate developers and operators are measured at fair value pursuant to FASB ASC 820, "Fair Value
Measurements and Disclosures." The adoption of fair value did not result in any opening balance adjustments for notes receivable
from real estate developers and operators as the carrying values of these notes generally approximate their fair market values either
due to the short-term nature of the loan and / or the note being secured by underlying collateral and / or personal guarantees.
Subsequent to the adoption, the fair value is evaluated quarterly, and any fair value adjustments are recorded in Loss on
remeasurement of notes receivable on the Consolidated Statement of Operations. Refer to Note 14, "Fair Value of Financial
Instruments," for additional information regarding the estimates and assumptions used to estimate the fair value of each financial
instrument class.
Other receivables - are generally comprised of sale proceeds receivable from home sales near year end, amounts due from marina
customers for storage service and lease payments, amounts due from MH and annual RV residents for rent and related charges (utility
charges, fees and other pass through charges), insurance receivables and various other miscellaneous receivables. Adoption of CECL
did not require incremental CECL reserves as we believe that the risk of future expected loss on those accounts is immaterial due to
the short-term nature of the accounts, history of collectability, past relationships and various other mitigating factors. Accounts
outstanding longer than the contractual payment terms are considered past due.
Accounts receivable from marina customers are stated at amounts due net of an allowance for doubtful accounts. Receivables related
to our marina rents are reserved when we believe that collection is less than probable, which is generally 50 percent for certain
receivable balances over 180 days, and 60 percent after the balance reaches 60 days past due for all other 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. 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 MH 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.
Refer to Note 4, "Notes and Other Receivables," for additional detail on receivables.
Goodwill
We account for goodwill pursuant to ASC 350, "Intangibles—Goodwill and Other." ASC 350-20, "Goodwill and Other" allows
entities testing goodwill for impairment the option of performing a qualitative assessment before calculating the fair value of a
reporting unit (i.e. the first step of the goodwill impairment test). If entities determine, on the basis of qualitative factors, that the fair
value of the reporting unit is more-likely-than-not greater than the carrying amount, a quantitative calculation would not be needed.
Goodwill represents the excess of costs of an acquired business over the fair value of the identifiable assets acquired less identifiable
liabilities assumed. Goodwill is not amortized. Goodwill is tested for impairment at the operating segment level. If the fair value of
goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value.
We assess our goodwill for impairment on an annual basis or more frequently if events or changes in circumstances arise and
impairment indicators are identified. As of December 31, 2021 and 2020, we had a balance of $495.4 million and $428.8 million of
goodwill from the acquisitions accounted for as business combinations, respectively. The goodwill is attributable to the intellectual
capital and going concern value of the acquired businesses.
Goodwill is deductible for income tax purposes. As such, the goodwill portion allocated to our taxable REIT subsidiary entities will
reduce their taxable income. Given that REITs do not customarily report any taxable income (due to the dividends paid deduction), we
do not expect any significant tax benefits arising from the goodwill allocable to the REIT.
The carrying amount of goodwill is separately disclosed on our Consolidated Balance Sheets. Refer to Note 5, "Goodwill and Other
Intangible Assets," for additional information on goodwill.
We account for implementation costs in a hosting arrangement in accordance with ASU 2018-15, "Intangibles—Goodwill and Other—
Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing
Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)" which aligns requirements for
capitalizing implementation costs in a hosting arrangement as a service contract with internally developed software, and expense
capitalized costs of the hosting arrangement over the term of the arrangement.
F - 15
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other Intangible Assets
Other intangible assets primarily comprise in-place leases (including slip in-place leases), non-competition agreements, trademarks
and trade names, customer relationships and franchise agreements. Other intangible assets are reviewed for impairment on an annual
basis or more frequently if indicators of impairment are identified.
Intangible assets with finite lives - we amortize 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.
Trademarks and trade names - we account for trademarks and trade names pursuant to ASC 350, "Intangibles-Goodwill and Other."
Some trademarks and trade names have an indefinite useful life and some have a three to five year useful life. Trademarks and trade
names with finite lives are amortized over their useful life. Trademarks and trade names with indefinite-lives are not amortized.
Trademarks and trade names are reviewed for impairment on an annual basis or more frequently if indicators of impairment are
identified. We first review qualitative factors to determine if a quantitative impairment test is necessary. If the qualitative assessment
reveals that it's "more likely than not" that the asset is impaired, a calculation of the fair value is performed and the asset is written
down to its implied fair value, if it is lower than its carrying amount. As of December 31, 2021 and 2020, we recognized $119.1
million and $116.5 million of trademarks and trade names in relation to acquisitions accounted for as business combinations,
respectively.
The carrying amounts of the other identified intangible assets are included in Other intangible assets, net on our Consolidated Balance
Sheets. Refer to Note 5, "Goodwill and Other Intangible Assets," for additional information on other intangible assets.
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 12, "Income Taxes," for additional information.
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
We account for awards of restricted stock in accordance with ASC 718-10, "Compensation-Stock Compensation." ASC 718-10
requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting
period). The fair value of restricted stock awards with service vesting is equal to the fair value of our stock on the grant date. 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. Refer to Note 10, "Share-Based Compensation," for additional information.
Fair Value of Financial Instruments
Our financial instruments consist primarily of cash, cash equivalents and restricted cash, marketable securities, notes and accounts
receivables, debt and contingent consideration liabilities. We utilize fair value measurements to record fair value adjustments to
certain assets and liabilities and to determine fair value disclosures, pursuant to ASC 820, "Fair Value Measurements and
Disclosures."
F - 16
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ASC 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 our 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 that we have the ability to access;
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
(e.g. interest rates, yield curves, prepayment speeds, default rates, loss severity, etc.) in active markets or can be corroborated
by observable market data; and
Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers
are unobservable. The unobservable inputs reflect our assumptions about the assumptions that market participants would use.
Refer to Note 14, "Fair Value of Financial Instruments," for additional information on methods and assumptions used to estimate the
fair value of each financial instrument class.
Revenue Recognition
As a real estate owner and operator, the majority of our revenue is derived from site and home leases, and wet slip and dry storage
space leases that are accounted for pursuant to ASC 842, "Leases." We account for revenue from contracts with customers following
ASC 606, "Revenue from Contracts with Customers" except for those that are within the scope of other topics in the FASB accounting
standards codification. 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. 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. Refer to Note 2, "Revenue," for additional information.
Income from real property at our MH and RV properties includes revenue from residents and guests in our communities and resorts,
who lease the site on which their home or RV is located, and either own or lease their home or RV, rental home revenue, and short-
term vacation home and site rentals. Revenues from residents and guests includes revenues from site leases to annual MH residents
and annual RV guests, and site rentals to transient RV guests. Resident leases are generally for one-year, but may range from month-
to-month to two year terms and are renewable by mutual agreement between the parties, or in some cases, as provided by statute.
Revenues from site and home leases fall under the scope of ASC 842, and is accounted for as operating leases with straight-line
recognition. 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. Rental home revenues which comprise rental agreements whereby we lease homes to
residents in our communities, and short-term vacation home and site rentals are accounted for under ASC 842. Additionally, we
include collections of real estate taxes from residents and guests within Income from real property.
Income from real property at our marinas includes rental income which consists primarily of wet slip leases, dry storage space leases
and commercial leases. The majority of our wet slip and dry storage space leases have annual terms that are generally billed seasonally
and are renewable by mutual agreement between the parties. Wet slip and dry storage space leases are paid annually, seasonally,
quarterly, monthly or transient by night. Wet slip rental revenues are recognized as earned on a monthly basis during the slip rental
season and dry storage space lease revenues are typically earned on a monthly basis over the course of the term of the lease.
Commercial lease income is typically earned on a monthly basis. When payment is received in advance of being earned, those
amounts are classified as deferred revenues. We recognize lease income on a straight-line basis when rental agreements contain
material escalation clauses. Additionally, storage income is earned when services have been rendered, and is included in Income from
real property. Those revenues are recognized net of taxes collected from customers and submitted to taxing authorities.
F - 17
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. We recognize revenue for home sales pursuant to ASC 606 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
we therefore do not consider them to be subject to the guidance in ASC 360-20, "Real Estate Sales." 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. As of December 31, 2021 and 2020, we
had $33.5 million and $23.6 million, respectively, of receivables from contracts with customers, which consists of home sales
proceeds, and 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. We report real
estate taxes collected from residents and remitted to taxing authorities in revenue.
Service, retail, dining and entertainment revenue - is primarily composed of proceeds from restaurant, golf, merchandise, retail, fuel,
service and other activities at our RV resorts and marinas, and is included in the scope of ASC 606. Revenues are recognized at the
point of sale when control of the good or service transfers to the customer and our performance obligation has been satisfied. In
addition, Marina rental income, which includes boat rentals is earned when the customer takes control of the good or service and is
included in Service, retail, dining and entertainment revenue. 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 receivable, which include installment notes receivables on manufactured homes
purchased by us from loan originators and notes receivable from real estate developers and operators. 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 4, "Notes and Other Receivables," for additional information.
Brokerage commissions and other - comprise (a) brokerage commissions at our marinas, and (b) brokerage commissions for sales of
manufactured homes at our MH and RV properties, where we act as agent and arrange for a third party to transfer a manufactured
home, a park model or a boat to a customer within one of our properties. Brokerage commission revenues are recognized on a net
basis at closing, when the transaction is completed and our performance obligations have been fulfilled. Other revenues primarily
include management fee revenue earned from managing third party owned marinas.
Advertising Costs
Advertising costs are expensed as incurred. As of December 31, 2021, 2020 and 2019, we had advertising costs of $9.9 million, $8.3
million and $6.7 million, respectively.
Depreciation and Amortization
Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets, ranging from two
months to 40 years depending upon the asset classification.
Asset Class
Land improvement and building
Rental homes
Furniture, fixtures and equipment
Computer hardware and software
Dock improvements
Site improvements
Leasehold improvement
In-place leases (including slip in-place leases)
Goodwill
Non-competition agreements
Trademarks and trade names
Customer relationships
Franchise agreements and other intangible assets
Useful Life
15 years - 40 years
10 years
5 years - 30 years
3 years - 5 years
15 years - 40 years
7 years - 40 years
Lesser of lease term or useful life of assets
2 months - 13 years
Indefinite
5 years
Various(1)
6 years - 15 years
5.5 years - 20 years
(1) All trademarks and trade names have an indefinite life or a three to five year useful life as of the acquisition date.
F - 18
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2021, we recorded a foreign currency translation loss of $3.7 million as compared to a foreign
currency translation gain of $7.7 million and $4.5 million for the years ended December 31, 2020 and 2019, respectively, on our
Consolidated Statements of Operations.
Derivative Instruments and Hedging Activities
We do not enter into derivative instruments for speculative purposes. Our objective and strategy in using interest rate derivatives is to
manage exposure to interest rate movements, thereby minimizing the effect of interest rate changes and the effect they could have on
future cash outflows (forecasted interest payments) on a forecasted issuance of long-term debt. Treasury locks are used to accomplish
this objective.
In December 2021, we entered into a treasury lock contract with a notional value of $150.0 million to hedge interest rate risk
associated with the future issuance of fixed-rate long term debt. The benchmark index rate used is the on-the-run 10-year U.S.
Treasury.
Upon review of ASC Topic 815, "Derivatives and Hedging," we have determined that the treasury lock is a freestanding derivative
and is recorded in the Balance Sheet at fair value. The unrealized gains or losses on the treasury lock are initially recorded in
Accumulated other comprehensive income, and will be reclassified in earnings within the Interest expense on the Consolidated
Statements of Operations in the same period during which the hedged transaction affects earnings. We adjust our Balance Sheet on a
quarterly basis to reflect the current fair market value of our derivative. As of December 31, 2021, the fair value of our derivatives was
approximately $0.4 million and is included within Other assets, net on the Consolidated Balance Sheets.
Accounting for Leases
Lessee Accounting
Pursuant to ASC Topic 842, "Leases," we determine if an arrangement is a lease at inception. Our operating lease agreements are
primarily for land and submerged land under non-cancelable operating leases at certain properties, executive office spaces 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, we recognize 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, 2021, 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 - 19
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. We do not recognize an amortization of finance lease ROU asset on land
as land is not amortizable. ROU assets are periodically reduced by impairment losses. As of December 31, 2021, we have had no
impairment losses. Refer to Note 16, "Leases," for information regarding leasing activities.
Lessor Accounting
Our income from real property at our MH and RV properties is derived from rental agreements where we are the lessor. 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 do not meet the definition of initial direct cost and therefore, are accounted for as general and administrative
expense in our Consolidated Statements of Operations. ASC 842 permits the capitalization of direct commission costs.
Our MH and RV sites are typically leased to customers on an annual basis. Seasonal RV sites are generally leased to customers for a
period less than one year. Transient RV sites are leased to customers on a short-term basis. In addition, customers may lease homes
that are located in our MH communities. Our MH and RV leases with customers are classified as operating leases. Fixed 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 and Brokerage commissions and other revenue, net on the Consolidated Statements of Operations. Variable lease income
consists of rent primarily based on a percentage of revenues at the related properties and is included within Income from real property
and Brokerage commissions and other revenue, net on the Consolidated Statements of Operations. When collectability is not
reasonably assured, the resident is placed on non-accrual status and revenue is recognized when cash payments are received.
Our income from customers for wet slips and dry storage space leases at our marinas is accounted for pursuant to ASC 842. Wet slips
and dry storage spaces are typically leased to customers on an annual basis. Seasonal wet slips and dry storage spaces are generally
leased to customers for a period less than one year. Transient wet slips and dry storage spaces are leased to customers on a short-term
basis. Our wet slips and dry storage space leases are classified as operating leases with lease income recognized over the term of the
respective operating lease or the length of a customer's stay.
F - 20
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2
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Real Estate Acquisitions and Dispositions
2021 Acquisitions and dispositions
For the year ended December 31, 2021, we acquired the following MH communities, RV resorts and marinas:
Community Name
Type
Sites, Wet Slips and
Dry Storage Spaces
Development
Sites
State / Province Month Acquired
Sun Outdoors Association Island
Blue Water Beach Resort
Tranquility MHC
Islamorada and Angler House(1)
Prime Martha's Vineyard(1)
Pleasant Beach Campground
Sun Outdoors Cape Charles
Beachwood Resort
ThemeWorld RV Resort
Sylvan Glen Estates
Shelter Island Boatyard
Lauderdale Marine Center
Apponaug Harbor
Cabrillo Isle
Marathon
Allen Harbor
Cisco Grove Campground & RV
Four Leaf Portfolio(2)
Harborage Yacht Club
Zeman Portfolio(3)
Southern Leisure RV Resort
Sunroad Marina
Lazy Lakes RV Resort
Puerto del Rey
Stingray Point
Detroit River
Jetstream RV Resort at NASA
Beaver Brook Campground
Emerald Coast
Tall Pines Harbor Campground
Wells Beach Resort Campground
Port Royal
Podickory Point
Sunroad Marina (restaurant)
RV: asset acquisition
RV: asset acquisition
MH: asset acquisition
Marina: asset acquisition
Marina: asset acquisition
RV: asset acquisition
RV: asset acquisition
RV: asset acquisition
RV: asset acquisition
MH: asset acquisition
Marina: asset acquisition
Marina: asset acquisition
Marina: asset acquisition
Marina: business
combination
Marina: asset acquisition
Marina: asset acquisition
RV: asset acquisition
MH: asset acquisition
Marina: asset acquisition
RV: asset acquisition
RV: asset acquisition
Marina: asset acquisition
RV: asset acquisition
Marina: asset acquisition
Marina: asset acquisition
Marina: asset acquisition
RV: asset acquisition
RV: asset acquisition
Marina: business
combination
RV: asset acquisition
RV: asset acquisition
Marina: asset acquisition
Marina: asset acquisition
Marina: asset acquisition
Jellystone Park at Mammoth Cave
RV: asset acquisition
South Bay
Wentworth by the Sea
Rocky Mountain RV Park
Haas Lake RV Park Campground
Pearwood RV Resort
Holly Shores Camping Resort
Pheasant Ridge RV Park
Coyote Ranch Resort
Marina: asset acquisition
Marina: asset acquisition
RV: asset acquisition
RV: asset acquisition
RV: asset acquisition
RV: asset acquisition
RV: asset acquisition
RV: asset acquisition
Jellystone Park at Whispering Pines
RV: asset acquisition
294
177
25
251
395
102
669
672
148
476
52
206
348
476
135
176
18
2,545
300
686
496
617
99
1,746
222
440
202
204
311
241
231
167
209
—
315
333
155
75
492
144
310
130
165
131
F - 22
— NY
— UT
— FL
— FL
— MA
— ON, Canada
— VA
— WA
— FL
— MI
— CA
— FL
— RI
— CA
— FL
— RI
407 CA
340 MI / IN
IL / NJ
— FL
—
— FL
— CA
— FL
— Puerto Rico
— VA
— MI
— TX
150 ME
— FL
— VA
— ME
— SC
— MD
— CA
— KY
— CA
— NH
— MT
— MI
— TX
— NJ
— OR
165 TX
— TX
January
February
February
February
March
March
March
March
April
April
May
May
June
June
June
July
July
July
July
July
August
August
August
September
September
September
September
October
November
November
November
November
December
December
December
December
December
December
December
December
December
December
December
December
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Community Name
Type
Hospitality Creek Campground
RV: asset acquisition
Total
Sites, Wet Slips and
Dry Storage Spaces
Development
Sites
State / Province Month Acquired
230
15,816
— NJ
1,062
December
(1) Includes two marinas.
(2) Includes nine MH communities.
(3) Includes two RV Resorts.
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, 2021 (in thousands):
At Acquisition Date
Consideration
Inventory of
manufactured
homes, boat parts
and retail
related items
Investment
in property
In-place leases,
goodwill and
other intangible
assets(1)
Other assets /
(liabilities),
net
Total
identifiable
assets acquired
net of liabilities
assumed
Temporary
and
permanent
equity
Cash and
escrow
Total
consideration
$ 14,965 $
Sun Outdoors
Association Island
Blue Water Beach
Resort
Tranquility MHC
Islamorada and Angler
House
Prime Martha's
Vineyard
Pleasant Beach
Campground
Sun Outdoors Cape
Charles
Beachwood Resort
ThemeWorld RV
Resort
Sylvan Glen Estates
Shelter Island Boatyard
Lauderdale Marine
Center
Apponaug Harbor
Marathon
Allen Harbor
Cisco Grove
Campground & RV
Four Leaf Portfolio
9,000
1,250
18,001
22,258
1,531
59,669
14,004
25,000
23,469
9,520
336,992
6,540
19,129
3,946
6,609
210,723
Harborage Yacht Club
Zeman Portfolio
Southern Leisure RV
Resort
Sunroad Marina(2)
Lazy Lakes RV Resort
Puerto del Rey
Stingray Point
Detroit River
Jetstream RV Resort at
NASA
Beaver Brook
Campground
Tall Pines Harbor
Campground
Wells Beach Resort
Campground
Port Royal
17,392
14,184
17,476
47,766
11,300
94,482
2,852
8,737
17,025
4,411
10,500
12,200
20,541
— $
41 $
(248) $
14,758
$ 14,758 $
— $
14,758
—
—
22
138
—
—
—
—
20
132
—
—
19
30
—
319
43
—
—
—
—
535
—
—
—
—
—
—
—
(151)
(1)
(317)
(573)
1
(2,029)
(7,616)
(104)
(269)
(85)
958
(689)
(227)
(111)
22
(464)
(504)
(545)
(329)
64,986
(66)
(4,149)
(287)
(599)
(199)
(35)
(20)
—
(314)
—
—
269
127
57
231
211
—
531
402
3,282
89
261
35
—
3,958
4,646
731
274
537
—
1,033
46
159
475
89
—
—
52
F - 23
8,849
1,249
8,849
1,249
17,975
17,975
21,950
21,950
1,589
1,589
57,871
6,599
24,896
23,751
9,969
57,871
6,599
24,896
(249)
9,969
341,232
5,940
19,182
3,900
341,232
5,940
19,182
3,900
6,631
214,536
6,631
214,536
21,577
14,370
21,577
14,370
17,421
17,421
113,289
113,289
11,234
91,901
2,611
8,297
11,234
91,901
2,611
8,297
17,301
17,301
4,465
4,465
10,480
10,480
12,200
20,279
12,200
20,279
—
—
—
—
—
—
—
—
24,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,849
1,249
17,975
21,950
1,589
57,871
6,599
24,896
23,751
9,969
341,232
5,940
19,182
3,900
6,631
214,536
21,577
14,370
17,421
113,289
11,234
91,901
2,611
8,297
17,301
4,465
10,480
12,200
20,279
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At Acquisition Date
Consideration
Inventory of
manufactured
homes, boat parts
and retail
related items
In-place leases,
goodwill and
other intangible
assets(1)
Other assets /
(liabilities),
net
Total
identifiable
assets acquired
net of liabilities
assumed
Temporary
and
permanent
equity
Cash and
escrow
Total
consideration
—
—
—
5
—
—
—
—
—
—
—
—
49
—
174
157
—
—
—
—
—
—
—
—
(187)
3,070
3,070
(640)
(2,454)
31,860
11,654
31,860
11,654
(1,052)
13,211
13,211
—
(44)
(42)
(481)
—
(195)
(172)
(603)
12,500
12,500
20,098
10,208
16,456
10,208
27,019
27,019
19,000
12,405
19,000
12,405
13,578
13,578
14,997
14,997
—
—
—
—
—
3,642
—
—
—
—
—
—
3,070
31,860
11,654
13,211
12,500
20,098
10,208
27,019
19,000
12,405
13,578
14,997
Investment
in property
3,208
32,500
13,934
14,101
12,500
20,142
10,250
27,500
19,000
12,600
13,750
15,600
37,647
8,382
$ 1,302,586 $
—
2,693
3,956 $
10,073
42,614
70,603 $
(703)
(711)
38,752 $
47,017
52,978
1,415,897
47,017
52,978
47,017
52,978
$ 1,388,255 $ 27,642 $ 1,415,897
—
—
Podickory Point(3)
Jellystone Park at
Mammoth Cave(3)
South Bay(3)
Wentworth by the
Sea(3)
Rocky Mountain RV
Park(3)
Haas Lake RV Park
Campground(3)
Pearwood RV Resort(3)
Holly Shores Camping
Resort(3)
Pheasant Ridge RV
Park(3)
Coyote Ranch Resort(3)
Jellystone Park at
Whispering Pines(3)
Hospitality Creek
Campground(3)
Business Combination
Cabrillo Isle
Emerald Coast(4)
Total
(1) Refer to Note 5, "Goodwill and Other Intangible Assets," for additional detail on goodwill and other intangible assets.
(2) The balance includes the marina acquired in August and the restaurant acquired in December of which $9.2 million was recorded in investment property and
$21.0 million Other assets / liabilities.
(3) The above allocations are estimates awaiting purchase price allocation.
(4) Purchase price allocation is preliminary as of December 31, 2021, subject to revision based on the final purchase price allocation to be finalized one year from the
acquisition date.
As of December 31, 2021, we have incurred $18.0 million of transaction costs which have been capitalized and allocated among the
various fixed asset categories for purchases that meet the asset acquisition criteria. As of December 31, 2021, we also incurred
$1.4 million of business combination expenses, which are expensed for purchases deemed to be business combinations.
The total amount of Revenues and Net income included in the Consolidated Statements of Operations for the year ended December
31, 2021 related to business combinations completed in 2021 are set forth in the following table (in thousands):
Total revenues
Net income
Year Ended
December 31, 2021
$
$
6,423
510
F - 24
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma financial information presents the results of our operations for the years ended December 31, 2021
and 2020, as if the properties combined through business combinations in 2021 had been acquired on January 1, 2020. 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 acquisition 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, 2020 (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
Land for Expansion / Development
Year Ended (unaudited)
December 31, 2021
December 31, 2020
$
$
$
$
2,329,947 $
390,945 $
3.47 $
3.40 $
1,444,998
138,075
1.42
1.42
During the year ended December 31, 2021, we acquired 11 land parcels, which are located across the United States and the United
Kingdom for the potential development of nearly 4,000 sites, for total purchase price of $172.8 million.
Other Acquisitions
On December 31, 2021, we acquired Leisure Systems, Inc. for a purchase price of $23.0 million. Leisure Systems, Inc. is the
franchisor of the Jellystone Park™ system. The acquisition will be accounted for as a business combination. The purchase price is
recognized within Other assets, net in the Consolidated Balance Sheets. The Purchase price allocation is preliminary, subject to
revision based on the final purchase price allocation to be finalized one year from the acquisition date.
Dispositions
On July 2, 2021, we sold two MH communities located in Indiana and Missouri, containing a combined 677 sites, for $67.5 million.
The gain from the sale of the property was approximately $49.4 million.
On August 26, 2021, we sold four MH communities located in Arizona, Illinois and Missouri, containing a combined 1,137 sites, for
$94.6 million. The gain from the sale of the property was approximately $58.7 million.
Refer to Note 19, "Subsequent Events," for information regarding real estate transactions we enter into after December 31, 2021.
F - 25
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2020 Acquisitions
For the year ended December 31, 2020, we acquired the following communities:
Property Name
Sun Outdoors Cape Cod
Jellystone Natural Bridge
Forest Springs
Crown Villa
Flamingo Lake
Woodsmoke
Acquisition
Type
RV: asset acquisition
RV: asset acquisition
MH: asset acquisition
RV: asset acquisition
RV: asset acquisition
RV: asset acquisition
RV: asset acquisition
Jellystone Lone Star
El Capitan & Ocean Mesa(1)
RV: asset acquisition
Highland Green Estates & Troy Villa(2) MH: asset acquisition
Safe Harbor Marinas(3)
Safe Harbor Hideaway Bay
Marina: business combination
Marina: business combination
RV: asset acquisition
Gig Harbor
Maine MH Portfolio(4)
MH: asset acquisition
Marina: business combination
Safe Harbor Anacapa Isle
Marina: asset acquisitions
Annapolis
Marina: asset acquisitions
Wickford
Rybovich Portfolio(5)
Marina: business combination
Marina: asset acquisitions
Rockland
Sun Outdoors Orlando Champions Gate MH / RV: asset acquisition
Lakeview Mobile Estates
Shenandoah Acres
Jellystone at Barton Lake
Kittatinny Portfolio
MH: asset acquisition
RV: asset acquisition
RV: asset acquisition
RV: asset acquisition
Total
(1) Includes two RV resorts.
(2) Includes two communities.
(3) Includes 99 owned marinas located in 22 states.
(4) Includes six communities.
(5) Includes two marinas.
Sites, Wet Slips
and Dry Storage
Spaces
Development Sites
State
Month Acquired
230
299
372
123
421
300
344
266
1,162
37,305
628
115
1,083
453
184
60
78
173
304
296
522
555
527
45,800
— MA
— VA
— CA
— OR
— FL
— FL
— TX
109 CA
— MI
— Various
— GA
— WA
— ME
— CA
— MD
— RI
— FL
— ME
— FL
— CA
— VA
IN
—
— NY & PA
109
January
February
May
June
July
September
September
September
September
October
November
November
November
December
December
December
December
December
December
December
December
December
December
F - 26
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the amounts of assets acquired net of liabilities assumed at the acquisition date and the consideration
paid for the acquisitions completed in 2020 (in thousands):
At Acquisition Date
Consideration
Inventory of
manufactured
homes, boat
parts
and retail
related items
Goodwill,
In-place
leases and
other
intangible
assets(1)
Other
assets /
(liabilities),
net
Total
identifiable
assets acquired
net of liabilities
assumed
Investment
in property
Cash and
escrow
Debt
assumed
Temporary
and
permanent
equity
Total
consideration
$
13,350 $
— $
150 $
(295) $
13,205
$
4,205 $
— $
9,000 $
13,205
11,364
51,949
16,792
34,000
25,120
21,000
69,690
60,988
15,250
79,890
24,354
3,468
15,082
15,221
22,917
16,166
23,462
16,220
—
1,337
—
—
40
—
—
1,679
—
—
—
—
348
—
195
—
—
—
80
2,160
—
—
840
—
(391)
(107)
(230)
(155)
(461)
(703)
11,053
55,339
16,562
33,845
25,539
20,297
11,053
36,260
16,562
33,845
25,539
20,297
—
(10,321)
59,369
32,108
2,030
—
1,359
6,922
42
101
279
638
834
538
30
(15)
(22)
30
(546)
(121)
(368)
(4)
(72)
(197)
(397)
29
64,682
15,228
81,279
30,730
3,389
15,163
64,682
15,228
72,479
30,730
3,389
15,163
15,496
15,496
23,678
16,803
23,603
16,279
23,678
16,803
23,603
16,279
—
—
—
—
—
—
—
—
—
8,800
—
—
—
—
—
—
—
—
—
19,079
—
—
—
—
11,053
55,339
16,562
33,845
25,539
20,297
27,261
59,369
—
—
—
—
—
—
—
—
—
—
—
64,682
15,228
81,279
30,730
3,389
15,163
15,496
23,678
16,803
23,603
16,279
1,643,879
26,218
10,924
122,064
$ 2,339,368 $
5,700
23
—
620
444,146
7,242
3,146
249,840
9,942 $ 720,377 $
(52,944)
(1,077)
60
(37)
(68,344) $
2,040,781
32,406
14,130
372,487
3,001,343
1,141,797
829,000
32,406
—
14,130
—
258,123
—
$ 1,923,855 $ 837,800 $ 239,688 $
69,984
—
—
114,364
2,040,781
32,406
14,130
372,487
3,001,343
Sun Outdoors Cape
Cod
Jellystone Natural
Bridge
Forest Springs
Crown Villa
Flamingo Lake
Woodsmoke
Jellystone Lone Star
El Capitan & Ocean
Mesa (2)
Highland Green
Estates & Troy Villa
Gig Harbor
Maine MH Portfolio
Annapolis
Wickford
Rockland
Sun Outdoors Orlando
Champions Gate
Lakeview Mobile
Estates
Shenandoah Acres
Jellystone at Barton
Lake
Kittatinny Portfolio
Business Combination
Safe Harbor(3)
Hideaway Bay
Anacapa Isle
Rybovich Portfolio(4)
Total
(1) Refer to Note 5, "Goodwill and Other Intangible Assets," for additional detail on goodwill and other intangible assets.
(2) We have an obligation to pay the seller $9.0 million for 60 development sites over eight years from the acquisition date. Payment is due on a per site basis as ground
is broken, paid the earlier of semi-annually or $4.5 million four years from the date of acquisition and an incremental $4.5 million eight years from the date of
acquisition. To the extent we are able to develop those sites, our contingent liability will increase after one year of operation contingent upon achieving a seven
percent return on investment. The initial contingent consideration liability of $9.0 million was recognized at acquisition within Investment property in the
Consolidated Balance Sheets, and within Acquisition deferred liabilities in the Supplemental information of the Consolidated Statement of Cash Flows.
(3) Purchase price allocation was preliminary as of December 31, 2020 and was subsequently adjusted based on the final purchase price allocation. We reclassified
$26.1 million from "Other assets / (liabilities), net" to "Goodwill, In-place leases and other intangible assets." The reclassifications consist of $29.8 million to
goodwill and various other asset / liability true-ups of $3.7 million during the year ended December 31, 2021. These adjustments did not have any impact on the
Statements of Operations.
(4) Purchase price allocation was preliminary as of December 31, 2020 and was adjusted as of March 31, 2021 based on the final purchase price allocation.
As of December 31, 2020, we have incurred $23.0 million of expensed business combination transaction costs (in relation to the
acquisition Safe Harbor, Hideaway Bay, Anacapa Isle and the Rybovich Portfolio, as each such acquisition meets the criteria to be
accounted for as business combination), and $13.4 million of capitalized transaction costs for asset acquisitions, which have been
allocated among the various categories above.
F - 27
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Land for Expansion / Development
During the year ended December 31, 2020, we acquired eight land parcels, which are located in Orange Beach, Alabama; Jensen
Beach, Florida; Citra Lakes, Florida; Comal County, Texas; and Menifee, California for total consideration of $9.7 million. Seven of
the land parcels are adjacent to existing communities.
Dispositions
On July 1, 2020, we sold a manufactured housing community located in Montana, containing 226 sites, for $12.6 million. The gain
from the sale of the property was approximately $5.6 million.
4. Notes and Other Receivables
The following table sets forth certain information regarding notes and other receivables (in thousands):
Installment notes receivable on manufactured homes, net
Notes receivable from real estate developers and operators
Other receivables, net
Total Notes and Other Receivables, net
Installment Notes Receivable on Manufactured Homes
December 31, 2021
December 31, 2020
$
$
79,096 $
284,035
106,463
469,594 $
85,866
52,638
83,146
221,650
Installment notes receivable are measured at fair value, using indicative pricing models from third party valuation specialists, in
accordance with ASC Topic 820 "Fair Value Measurements and Disclosures." The balances of installment notes receivable of $79.1
million (net of fair value adjustment of $0.6 million) and $85.9 million (net of fair value adjustment of $1.3 million) as of December
31, 2021 and 2020, respectively, are secured by manufactured homes. The notes represent financing to purchasers of manufactured
homes located in our communities and require monthly principal and interest payments. The notes had a net weighted average interest
rate (net of servicing costs) and maturity of 7.6 percent and 14.7 years as of December 31, 2021, and 7.8 percent and 15.2 years as of
December 31, 2020, respectively. Refer to Note 14, "Fair Value of Financial Instruments," for additional detail.
The change in the aggregate balance of the installment notes receivable is as follows (in thousands):
Beginning balance of gross installment notes receivable
Financed sale of manufactured homes
Adjustment for notes receivable related to assets held for sale
Principal payments and payoffs from our customers
Principal reduction from repossessed homes
Dispositions of properties
Ending balance of gross installment notes receivable
Beginning balance of allowance for losses on installment notes receivables
Initial fair value option adjustment
Ending balance of allowance for losses on installment notes receivables
Beginning balance of fair value adjustments on gross installment notes receivable
Initial fair value option adjustment
Adjustment for notes receivable related to assets held for sale
Fair value adjustment
Fair value adjustments on gross installment notes receivable
$
Year Ended
December 31, 2021
December 31, 2020
87,142 $
8,606
477
(11,644)
(2,968)
(1,919)
79,694
—
—
—
(1,276)
—
(7)
685
(598)
96,225
5,014
(477)
(8,977)
(4,643)
—
87,142
(645)
645
—
—
991
7
(2,274)
(1,276)
Ending balance of installment notes receivable, net
$
79,096 $
85,866
F - 28
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes Receivable from Real Estate Developers and Operators
The change in the aggregate balance of notes receivable from real estate developers and operators is as follows (in thousands):
Beginning balance
Additions
Payments
Other adjustments
Ending balance
Year Ended
December 31, 2021
December 31, 2020
$
$
52,638 $
239,731
(13,050)
4,716
284,035 $
18,960
60,369
(24,598)
(2,093)
52,638
Notes receivable from real estate developers and operators are measured at fair value, using indicative pricing models from third party
valuation specialists, in accordance with ASC Topic 820 "Fair Value Measurements and Disclosures." As of December 31, 2021 and
2020, the notes receivable balances are primarily comprised of a loan provided to a real estate operator to finance its acquisition and
development costs, and construction loans provided to real estate developers in 2021 and 2020. The notes receivable from real estate
developers and operators have a net weighted average interest rate and maturity of 7.2 percent and 0.9 years as of December 31, 2021,
and 6.2 percent and 1.8 years as of December 31, 2020, respectively. As of December 31, 2021, real estate developers and operators
collectively have $40.9 million of undrawn funds on their loans. There were no adjustments to the fair value of notes receivable from
real estate developers and operators for the years ended December 31, 2021 and 2020. Refer to Note 14, "Fair Value of Financial
Instruments," for additional detail.
Other Receivables, net
Other receivables, net were comprised of amounts due from (in thousands):
December 31, 2021
December 31, 2020
Home sale proceeds
Marina customers for storage service and lease payments, net(1)
MH and annual RV residents for rent, utility charges, fees and other pass through charges, net(2)
Insurance receivables
Other receivables(3)
Total Other Receivables, net
$
$
33,458 $
29,318
9,952
9,021
24,714
106,463 $
23,643
19,197
7,106
13,597
19,603
83,146
(1) Net of allowance of $1.5 million and $1.4 million as of December 31, 2021 and 2020, respectively.
(2) Net of allowance of $5.5 million and $7.2 million as of December 31, 2021 and 2020, respectively.
(3) Includes receivable from Rezplot Systems LLC, a nonconsolidated affiliate in which we have a 49.2 percent ownership interest. In June 2020, we made a convertible
secured loan to Rezplot Systems LLC. The note allows for a principal amount of up to $10.0 million to be drawn down over a period of three years, bears an interest
rate of 3.0 percent and is secured by all the assets of Rezplot Systems LLC. The outstanding balances were $10.2 million and $2.0 million as of December 31, 2021
and 2020, respectively. Refer to Note 6, "Investments in Nonconsolidated Affiliates," for additional information on Rezplot Systems LLC.
5. Goodwill and Other Intangible Assets
Our intangible assets include goodwill, in-place leases, non-competition agreements, trademarks and trade names, customer
relationships, franchise agreements and other intangible assets. These intangible assets are recorded in Goodwill and Other intangible
assets, net on the Consolidated Balance Sheets.
Goodwill
The change in the carrying amount of goodwill is as follows (in thousands):
December 31,
2019
Acquisitions
Other(1)
December 31,
2020
Acquisitions
Other(1)
December 31,
2021
Goodwill
495,353
(1) The measurement periods for the valuation of assets acquired and liabilities assumed end as soon as information on the facts and circumstances that existed as of the
acquisition dates becomes available but do not exceed 12 months. Adjustments in purchase price allocations may require a change in the amounts allocated to
goodwill during the periods in which the adjustments are determined. These purchase accounting adjustments are presented under Other in the table above.
428,128 $
428,833 $
29,782 $
36,738 $
705 $
— $
$
F - 29
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The entire goodwill balance was allocated to the Marina segment as of December 31, 2021 and 2020.
Goodwill impairment - we performed qualitative and quantitative assessments in accordance with ASC 350-20, "Goodwill and Other."
We determined that the fair value of the Marina reporting unit exceeded its carrying value as of December 31, 2021. As a result, there
was no impairment of goodwill during the year ended December 31, 2021. We did not record any impairment of goodwill during the
year ended December 31, 2020.
Other intangible assets, net
The gross carrying amounts and accumulated amortization of our intangible assets are as follows (in thousands):
Other Intangible Asset
In-place leases
Non-competition agreements
Trademarks and trade names
Useful Life
2 months
- 13 years
5 years
3 - 5 years
Customer relationships
Franchise agreements and other intangible assets
6 - 15 years
5.5 - 20 years
Total finite-lived assets
Indefinite-lived assets - Trademarks and trade
names
Indefinite-lived assets - Other
Total indefinite-lived assets
Total
N/A
N/A
$
$
$
December 31, 2021
December 31, 2020
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
$
162,611 $
(120,787) $
145,531 $
(92,327)
10,000
5,800
122,378
31,054
331,843 $
114,190
2,477
116,667 $
448,510 $
(2,000)
(888)
(12,310)
(5,770)
(141,755) $
—
—
— $
(141,755) $
10,000
2,500
108,000
23,355
289,386 $
114,000
501
114,501 $
403,887 $
—
—
(2,371)
(3,578)
(98,276)
—
—
—
(98,276)
Amortization expenses related to our Other intangible assets are as follows (in thousands):
Intangible Asset Amortization Expense
In-place leases
Non-competition agreements
Trademarks and trade names
Customer relationships
Franchise agreements and other intangible assets
Total
December 31,
2021
Year Ended
December 31,
2020
December 31,
2019
$
$
28,502 $
2,000
888
9,939
2,167
43,496 $
18,186 $
—
—
2,371
822
21,379 $
14,912
—
—
—
818
15,730
We anticipate amortization expense for Other intangible assets to be as follows for the next five years (in thousands):
2022
2023
2024
2025
2026
In-place leases
Non-competition agreements
Trademarks and trade names
Customer relationships
Franchise agreements and other intangible assets
$
14,460 $
9,535 $
6,663 $
5,815 $
2,000
1,493
13,238
2,513
2,000
1,493
13,238
2,484
2,000
660
13,238
2,420
2,000
660
13,238
2,397
Total
$
33,704 $
28,750 $
24,981 $
24,110 $
3,093
—
605
13,238
2,159
19,095
F - 30
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. 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 line item on the Consolidated Statements of Operations.
RezPlot Systems LLC ("Rezplot")
At December 31, 2021 and December 31, 2020, we had a 49.2 percent and 50 percent ownership interest, respectively, in RezPlot, a
RV reservation software technology company, which interest we acquired in January 2019.
Sungenia joint venture ("Sungenia JV")
At December 31, 2021 and December 31, 2020, we had a 50 percent ownership interest in Sungenia JV, a joint venture formed
between us 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, 2021 and December 31, 2020, we 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 our communities.
Origen Financial Services, LLC ("OFS")
At December 31, 2021 and December 31, 2020, we had a 22.9 percent ownership interest in OFS, an end-to-end online resident
screening and document management suite.
SV Lift, LLC ("SV Lift")
At December 31, 2021 and December 31, 2020, we had a 50 percent ownership interest in SV Lift, which owns, operates and leases an
aircraft.
The investment balance in each nonconsolidated affiliate is as follows (in thousands):
Investment
Investment in RezPlot
Investment in Sungenia JV
Investment in GTSC
Investment in OFS
Investment in SV Lift
Total
The income / (loss) from each nonconsolidated affiliate is as follows (in thousands):
Equity income
RezPlot equity loss
Sungenia JV equity income / (loss)
GTSC equity income
OFS equity income
SV Lift equity loss
Total equity income
Year Ended
December 31,
2021
December 31,
2020
$
$
$
$
$
$
115
36,221
35,719
239
2,840
75,134
Year Ended
December 31,
2020
(1,887)
338
3,944
148
(803)
3,047
26,890
25,495
152
3,490
59,074
December 31,
2019
(1,344)
(290)
2,803
205
—
1,374
December 31,
2021
$
(2,932)
1,832
6,153
180
(1,241)
$
3,992
$
1,740
$
F - 31
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The change in the GTSC investment balance is as follows (in thousands):
Beginning balance
Initial fair value option adjustment
Contributions
Distributions
Equity earnings
Fair value adjustment
Ending Balance
The change in the Sungenia JV investment balance is as follows (in thousands):
Beginning balance
Cumulative translation adjustment
Contributions
Equity earnings
Ending Balance
7. Consolidated Variable Interest Entities
The Operating Partnership
Year Ended
December 31,
2021
December 31,
2020
$
25,495
$
—
27,254
(23,023)
6,153
(160)
$
35,719
$
18,488
317
19,030
(14,676)
3,944
(1,608)
25,495
Year Ended
December 31,
2021
December 31,
2020
$
$
26,890
(1,545)
9,044
1,832
36,221
$
$
11,995
2,180
12,377
338
26,890
We consolidate the Operating Partnership under the guidance set forth in ASC 810 "Consolidation." We evaluated whether the
Operating Partnership met the criteria for classification as a variable interest entity ("VIE") or, alternatively, as a voting interest entity
and concluded that the Operating Partnership met 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 Resorts LLC; FPG Sun Menifee 80 LLC, SHM South Fork JV, LLC; Sun
Solar Energy Project LLC (the "Sun Solar JV"), Sun Solar Energy Project CA II (the "Sun Solar II"), FPG Sun Moreno Valley 66
LLC.
We consolidate Sun NG Resorts, Rudgate, Sun NG Whitewater RV Resorts LLC, FPG Sun Menifee 80 LLC, SHM South Fork JV,
LLC, Sun Solar JV, Sun Solar II and FPG Sun Moreno Valley 66 LLC under the guidance set forth in ASC Topic 810
"Consolidation." We concluded that each entity is a VIE where we are the primary beneficiary, as we have the power to direct the
significant activities of, and absorb the significant losses and receive the significant benefits from each entity. Refer to Note 8, "Debt
and Line of Credit," for additional information on Sun NG Resorts and Note 9, "Equity and Temporary Equity," for additional
information on Sun NG Resorts, Sun NG Whitewater RV Resorts LLC, FPG Sun Menifee 80 LLC, SHM South Fork JV, LLC, Sun
Solar JV, Sun Solar II and FPG Sun Moreno Valley 66 LLC.
F - 32
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the assets and liabilities of Sun NG Resorts, Rudgate, Sun NG Whitewater RV Resorts LLC, FPG
Sun Menifee 80 LLC, SHM South Fork JV, LLC, Sun Solar JV, Sun Solar II and FPG Sun Moreno Valley 66 LLC included in our
Consolidated Balance Sheets after eliminations (in thousands):
Assets
Investment property, net
Cash, cash equivalents and restricted cash
Other intangible assets, net
Other assets, net
Total Assets
Liabilities and Other Equity
Secured debt
Unsecured debt
Other liabilities
Total Liabilities
Temporary equity
Noncontrolling interests
Total Liabilities and Other Equity
December 31, 2021
December 31, 2020
$
$
$
$
623,482
$
13,623
13,443
5,270
655,818
$
52,546
$
35,249
93,961
181,756
35,391
19,944
237,091
$
453,236
6,194
13,900
4,979
478,309
47,706
35,249
80,910
163,865
32,719
16,084
212,668
Total assets related to the consolidated VIEs, with the exception of the Operating Partnership, comprised approximately 4.9 percent
and 4.3 percent of our consolidated total assets at December 31, 2021 and 2020, respectively. Total liabilities comprised
approximately 2.8 percent and 3.1 percent of our consolidated total liabilities at December 31, 2021 and 2020, respectively. Equity
Interests and Noncontrolling interests related to the consolidated VIEs, on an absolute basis, comprised less than 1.0 percent of our
consolidated total equity at December 31, 2021 and 2020, respectively.
8. Debt and Line of Credit
The following table sets forth certain information regarding debt including premiums, discounts and deferred financing costs (in
thousands except statistical information):
Carrying Amount
Weighted Average
Years to Maturity
Weighted Average
Interest Rates
December 31,
2021
December 31,
2020
December 31,
2021
December 31,
2020
10.6
8.5
3.5
2.8
4.1
8.8
11.4
N/A
3.7
3.8
5.1
9.4
3.779 %
3.751 %
2.55 %
0.978 %
6.0 %
5.932 %
N/A
2.107 %
6.0 %
5.932 %
3.038 %
3.37 %
Secured Debt
Unsecured Debt
December 31,
2021
3,380,739 $
December 31,
2020
3,489,983
$
Senior unsecured notes
Line of credit and other debt
Preferred equity - Sun NG Resorts -
mandatorily redeemable
Preferred OP units - mandatorily redeemable
Total Unsecured Debt
Total Debt
1,186,350
1,034,833
—
1,197,181
35,249
34,663
35,249
34,663
2,291,095
1,267,093
$
5,671,834 $
4,757,076
F - 33
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Secured Debt
Secured debt consists primarily of mortgage term loans.
During the years ended December 31, 2021 and 2020, we paid off the following mortgage term loans (in thousands except statistical
information):
Three months ended December 31, 2021
Period
Three months ended June 30, 2020
Three months ended March 31, 2020
Repayment
Amount
Fixed Interest
Rate
Maturity Date
11,607 (1)
4.3 %
February 1, 2022
52,710 (2)
99,607
19,922 (3)
5.98 % (4)
5.837 %
5.83 % (4)
March 1, 2021
July 11, 2021
December 1, 2021
March 1, 2021
July 1, 2020
$
$
$
$
(Gain) / Loss on
Extinguishment
of Debt
$
$
$
$
19
1,930
3,403
(124)
(1) Includes two mortgage term loans due to mature on February 1, 2022.
(2) Includes four mortgage term loans, two due to mature on March 1, 2021, one due to mature on July 11, 2021 and the other due to mature on December 1, 2021.
(3) Includes four mortgage term loans due to mature on July 1, 2020.
(4) The interest rate represents the weighted average interest rate on mortgage term loans.
During the year ended December 31, 2021, we did not enter into any new mortgage term loans. During the year ended December 31,
2020, we entered into the following mortgage term loans (in thousands except statistical information):
Period
Loan Amount
Term (in years)
Interest Rate
Maturity Date
Three months ended December 31, 2020
Three months ended March 31, 2020
$
$
268,800 (1)
230,000
12
15
2.662 % (2)
2.995 %
May 1, 2030
November 1, 2032
April 1, 2035
(1) Includes three mortgage term loans, one for $8.8 million due to mature on May 1, 2030 and two for $39.5 million and $220.5 million, due to mature on November 1,
2032.
(2) The interest rate represents the weighted average interest rate on mortgage term loans.
The mortgage term loans totaling $3.4 billion as of December 31, 2021, are secured by 190 properties comprised of 75,319 sites
representing approximately $3.1 billion of net book value.
Unsecured Debt
Senior Unsecured Notes
On October 5, 2021, we issued $450.0 million of senior unsecured notes with an interest rate of 2.3 percent and a seven-year term, due
November 1, 2028 (the "2028 Notes"). Interest on the 2028 Notes is payable semi-annually in arrears on May 1 and November 1 of
each year, beginning on May 1, 2022. In addition, on October 5, 2021, we issued $150 million of senior unsecured 2031 Notes (as
defined below) with an interest rate of 2.7 percent and a ten-year term due July 15, 2031. The 2031 Notes are additional notes of the
same series as the $600.0 million aggregate principal amount of 2.7 percent senior unsecured notes due July 15, 2031 that we issued
on June 28, 2021. The net proceeds from the offering were approximately $595.5 million after deducting underwriters' discounts and
estimated offering expenses. The proceeds were used to pay down borrowings under our line of credit.
On June 28, 2021, we issued $600.0 million of senior unsecured notes with an interest rate of 2.7 percent and a ten-year term, due July
15, 2031 (the "2031 Notes"). Interest on the 2031 Notes is payable semi-annually in arrears on January 15 and July 15 of each year,
beginning on January 15, 2022. The net proceeds from the offering were approximately $592.4 million, after deducting underwriters'
discounts and estimated offering expenses. The proceeds were used to pay down borrowings under our line of credit.
The total outstanding balance on senior unsecured notes was $1.2 billion at December 31, 2021. This balance is recorded in the
Unsecured debt line item on the Consolidated Balance Sheets.
F - 34
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Line of Credit
On June 14, 2021, we entered into a new senior credit agreement (the "Credit Agreement") with certain lenders. The Credit Agreement
combined and replaced our prior $750.0 million credit facility, which was scheduled to mature on May 21, 2023, (the "A&R
Facility"), and the $1.8 billion credit facility between Safe Harbor and certain lenders, which was scheduled to mature on October 11,
2024 (the "Safe Harbor Facility"). The Safe Harbor Facility was terminated in connection with the execution of the Credit Agreement.
We repaid all amounts due and outstanding under the Safe Harbor Facility on or prior to such effective date. We recognized a Loss on
extinguishment of debt in our Consolidated Statement of Operations related to the termination of the A&R Facility and the Safe
Harbor Facility of $0.2 million and $7.9 million, respectively.
Pursuant to the Credit Agreement, we may borrow up to $2.0 billion under a revolving loan (the "Senior Credit Facility"). The Senior
Credit Facility is available to fund all of the Company's business, including its marina business conducted by Safe Harbor. The Credit
Agreement also permits, subject to the satisfaction of certain conditions, additional borrowings (with the consent of the lenders) in an
amount not to exceed $1.0 billion with the option to treat all, or a portion, of such additional funds as an incremental term loan.
The Senior Credit Facility has a four-year term ending June 14, 2025, and, at our option, the maturity date may be extended for two
additional six-month periods, subject to the satisfaction of certain conditions. However, the maturity date with respect to
$500.0 million of available borrowing under the Senior Credit Facility is October 11, 2024, which, under the terms of the Credit
Agreement, may not be extended. The Senior Credit Facility bears interest at a floating rate based on the Adjusted Eurocurrency Rate
or BBSY rate, plus a margin that is determined based on the Company's credit ratings calculated in accordance with the Credit
Agreement, which can range from 0.725 percent to 1.4 percent. As of December 31, 2021, the margin based on our credit ratings was
0.85 percent on the Senior Credit Facility.
At the lenders' option, the Senior Credit Facility will become immediately due and payable upon an event of default under the Credit
Agreement. We had $1.0 billion of borrowings on the Senior Credit Facility as of December 31, 2021, all scheduled to mature June
14, 2025. As of December 31, 2020, we had $40.4 million of borrowings on the revolving loan and no borrowings on the term loan
under our A&R Facility, respectively. As of December 31, 2020, we had $652.0 million and $500.0 million of borrowings under the
revolving loan and term loan under the Safe Harbor Facility, respectively. These balances are recorded in the Unsecured debt line item
on the Consolidated Balance Sheets.
The Senior Credit Facility provides us with the ability to issue letters of credit. Our issuance of letters of credit does not increase our
borrowings outstanding under the Senior Credit Facility, but does reduce the borrowing amount available. At December 31, 2021 and
2020, we had approximately $2.2 million and $2.4 million (including none and $0.3 million associated with the Safe Harbor Facility)
of outstanding letters of credit, respectively.
Unsecured Term Loan
In October 2019, we assumed a term loan facility, in the amount of $58.0 million in relation to an acquisition. 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 plus a margin
ranging from 1.20 percent to 2.05 percent. Effective July 1, 2021, the agreement was amended to release the associated collateral. The
amendment extended the term loan facility maturity date to October 29, 2025 and adjusted the interest rate margin to a range from 0.8
percent to 1.6 percent. As of December 31, 2021, the margin was 0.95 percent. The outstanding balance was $31.6 million at
December 31, 2021 and $45.0 million at December 31, 2020. These balances are recorded in the Unsecured debt and Secured debt line
items on the Consolidated Balance Sheets, respectively.
Floor Plan
During the year ended December 31, 2021, we terminated our $12.0 million manufactured home floor plan facility and paid off the
outstanding balance. The outstanding balance was $4.8 million as of December 31, 2020, and is recorded within the Unsecured debt
line item on the Consolidated Balance Sheets.
F - 35
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Potential Bridge Loan
On November 13, 2021, we entered into a commitment letter with Citigroup Global Markets, Inc. ("Citigroup"), pursuant to which,
and subject to certain terms and conditions (including the closing of the acquisition of Park Holidays), Citigroup (on behalf of its
affiliates) committed to lend us up to £950.0 million, or approximately $1.3 billion converted at the December 31, 2021 exchange rate,
under a new senior unsecured bridge loan (the "Bridge Loan"). If we enter into the Bridge Loan, the proceeds of the Bridge Loan will
be used to finance a portion of the cash consideration payable for the acquisition of Park Holidays. As of December 31, 2021, we did
not have any borrowings outstanding under the Bridge Loan.
Preferred Equity - Sun NG Resorts - mandatorily redeemable
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 seven-year term ending June 1, 2025 and $33.4 million can be
redeemed in the fourth quarter of 2024 at the holders' option. The Preferred Equity - Sun NG Resorts as of December 31, 2021 was
$35.2 million. These balances are recorded within the Unsecured debt line item on the Consolidated Balance Sheets. Refer to Note 7,
"Consolidated Variable Interest Entities," and Note 9, "Equity and Temporary Equity," for additional information.
Preferred OP Units - mandatorily redeemable
Preferred OP units at December 31, 2021 and 2020 include $34.7 million of Aspen preferred OP units issued by the Operating
Partnership. As of December 31, 2021, these units are convertible indirectly into 383,389 shares of our common stock.
In January 2020, we amended the Operating Partnership's partnership agreement. The amendment extended the automatic redemption
date and reduced the annual distribution rate for 270,000 of the Aspen preferred OP units (the "Extended 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), 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 ten-day average closing price
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) 25.0
percent of the amount by which the ten-day average closing price exceeds $68.00 per share, by (ii) the ten-day average closing price.
The current preferred distribution rate is 3.8 percent on the Extended Units and 6.5 percent on all other Aspen preferred OP units. On
January 2, 2024 (or January 2, 2034 with respect to the Extended Units), we are required to redeem for cash all Aspen preferred OP
units that have not been converted to common OP units. As of December 31, 2021, 270,000 of the Extended Units and 1,013,819 other
Aspen preferred units were outstanding. These balances are recorded within the Unsecured debt line item on the Consolidated Balance
Sheets.
Covenants
The mortgage term loans, senior unsecured notes and Senior Credit Facility are subject to various financial and other covenants. The
most restrictive covenants are pursuant to (a) the terms of the Senior Credit Facility, which contains a minimum fixed charge coverage
ratio, maximum leverage ratio, distribution ratio and variable rate indebtedness and (b) senior unsecured notes, which contain a total
debt to total assets, secured debt to total assets, consolidated income available for debt service to debt service and unencumbered total
asset value to unsecured debt covenants. At December 31, 2021, 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 our
debts and other obligations, and any of our other subsidiaries or any other person or entity.
F - 36
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Long-term Debt Maturities
As of December 31, 2021, the total of maturities and amortization of our secured debt (excluding premiums and discounts) and
unsecured debt by year were as follows (in thousands):
Secured debt
Mortgage loans payable
Maturities
Principal amortization
Secured debt total
Unsecured Debt
Senior unsecured notes
Line of credit and other debt
Preferred equity - Sun NG Resorts -
mandatorily redeemable
Preferred OP units - mandatorily
redeemable
Total Due
2022
2023
2024
2025
2026
Thereafter
Maturities and Amortization By Year
$ 2,451,652 $
70,678 $
185,619 $
315,330 $
50,528 $
521,582 $ 1,307,915
942,061
3,393,713
61,281
131,959
60,865
246,484
57,424
372,754
54,019
104,547
45,867
567,449
662,605
1,970,520
1,200,000
1,034,833
—
10,000
—
10,000
—
—
10,000
1,004,833
33,428
27,373
70,801
1,821
—
1,006,654
443,555 $ 1,111,201 $
—
—
—
—
1,200,000
—
—
7,290
—
1,207,290
567,449 $ 3,177,810
35,249
34,663
—
—
—
—
Unsecured debt total
Total
2,304,745
$ 5,698,458 $
10,000
141,959 $
10,000
256,484 $
9. Equity and Temporary Equity
Temporary Equity
Redeemable Preferred OP Units in Connection with the Acquisition of Certain Properties
Series J Preferred OP Units - In April 2021, we issued 240,000 Series J preferred OP units in connection with the acquisition of
Sylvan Glen Estates. The Series J preferred OP units have a stated issuance price of $100.00 per OP unit and carry a preferred return
of 2.85 percent. Subject to certain limitations, at any time after the Series J issuance date, each Series J preferred OP unit can be
exchanged for a number of shares of our common stock equal to the quotient obtained by dividing $100.00 by $165.00 (as such ratio is
subject to adjustments for certain capital events) at the holder's option. Each holder may require redemption in cash during the 30-day
period following a change of control of the Company or any time after the fifth anniversary of the Series J issuance date. As of
December 31, 2021, 240,000 Series J preferred OP units were outstanding. Refer to Note 3, "Real Estate Acquisitions and
Dispositions," for additional information.
Series I Preferred OP Units - In December 2020, we issued 922,000 Series I preferred OP units in connection with the acquisition of
the Rybovich Portfolio. The Series I preferred OP units have a stated issuance price of $100.00 per OP unit and carry a preferred
return of 3.0 percent. Subject to certain limitations, at any time after the Series I issuance date, each Series I preferred OP unit can be
exchanged for a number of shares of our common stock equal to the quotient obtained by dividing $100.00 by $164.00 (as such ratio is
subject to adjustments for certain capital events) at the holder's option. Each holder may require redemption in cash after the fifth
anniversary of the Series I issuance date or upon the holder's death. As of December 31, 2021, 922,000 Series I preferred OP units
were outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.
Series H Preferred OP Units - In October 2020, we issued 581,407 Series H preferred OP units in connection with the acquisition of
Safe Harbor. The Series H preferred OP units have a stated issuance price of $100.00 per OP unit and carry a preferred return of 3.0
percent. Subject to certain limitations, at any time after the Series H issuance date, each Series H preferred OP unit can be exchanged
for a number of shares of our common stock equal to the quotient obtained by dividing $100.00 by $164.00 (as such ratio is subject to
adjustments for certain capital events) at the holder's option. Each holder may require redemption in cash after the fifth anniversary of
the Series H issuance date or upon the holder's death. As of December 31, 2021, 581,407 Series H preferred OP units were
outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.
F - 37
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Series G Preferred OP Units - In September 2020, we issued 260,710 Series G preferred OP units in connection with the acquisition
of El Capitan & Ocean Mesa Resorts. The Series G preferred OP units have a stated issuance price of $100.00 per OP unit and carry a
preferred return of 3.2 percent. Subject to certain limitations, at any time after the Series G issuance date, each Series G preferred OP
unit can be exchanged for a number of shares of our common stock equal to the quotient obtained by dividing $100.00 by $155.00 (as
such ratio is subject to adjustments for certain capital events) at the holder's option. Each holder may require redemption in cash after
the fifth anniversary of the Series G issuance date or upon the holder's death. As of December 31, 2021, 240,710 Series G preferred
OP units were outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.
Series F Preferred OP Units - In May 2020, we issued 90,000 Series F preferred OP units in connection with the acquisition of Forest
Springs. The Series F preferred OP units have a stated issuance price of $100.00 per OP unit and carry a preferred return of 3.0
percent. Subject to certain limitations, at any time after the Series F issuance date, each Series F preferred OP unit can be exchanged
for a number of shares of our common stock equal to the quotient obtained by dividing $100.00 by $160.00 (as such ratio is subject to
adjustments for certain capital events) at the holder's option. Each holder may require redemption in cash after the fifth anniversary of
the Series F issuance date or upon the holder's death. As of December 31, 2021, 90,000 Series F preferred OP units were outstanding.
Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.
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 our common stock equal to the quotient obtained by dividing $100.00 by
$125.00 (as such ratio is subject to adjustments for certain capital events) 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. As of December 31, 2021, 488,958 Series D
preferred OP units were outstanding.
Redeemable Equity Interests
Equity Interest - FPG Sun Moreno Valley 66 LLC - In December 2021, in connection with the investment in land for future
development in the city of Moreno Valley, California, at the property known as FPG Sun Moreno Valley 66 LLC, Foremost Pacific
Group, LLC, ("FPG") purchased $0.1 million of common equity interest in the land (referred to as "Equity Interest - FPG Sun Moreno
Valley 66 LLC"). The Equity Interest - FPG Sun Moreno Valley 66 LLC does not have a fixed maturity date. Upon the occurrence of
certain events, either FPG or Sun FPG Venture LLC, our subsidiary, can trigger a process under which we may be required to
purchase the Equity Interest - FPG Sun Moreno Valley 66 LLC from FPG. The Equity Interest - FPG Sun Moreno Valley 66 LLC
balance was $0.1 million as of December 31, 2021. Refer to Note 7, "Consolidated Variable Interest Entities," for additional
information.
Equity Interest - Sun Solar Energy Project CA II - In December 2021, we entered into a joint venture with an unrelated third party to
operate and maintain solar energy equipment in select California communities ("Sun Solar II"). The unrelated third party will make a
series of investments in Sun Solar II upon reaching specified milestones (referred to as "Equity Interest - Sun Solar II"). We are the
managing member and made an equity contribution of $12.3 million, subject to adjustment per the terms of the operating agreement.
The Equity Interest - Sun Solar II balance was $0.5 million as of December 31, 2021. Refer to Note 7, "Consolidated Variable Interest
Entities," for additional information.
Equity Interest - Sun Solar JV - In July 2021, we entered into a joint venture with an unrelated third party to operate and maintain solar
energy equipment in select California communities. The unrelated third party made an equity contribution of $1.8 million in the Solar
JV (referred to as "Equity Interest - Sun Solar JV"). We are the managing member and made an equity contribution of $5.8 million.
The Equity Interest - Sun Solar JV balance was $1.6 million as of December 31, 2021. Refer to Note 7, "Consolidated Variable
Interest Entities," for additional information.
Equity Interest - FPG Sun Menifee 80 LLC - In October 2020, in connection with the investment in land for future development in the
city of Menifee in California, at the property known as FPG Sun Menifee 80 LLC, Foremost Pacific Group, LLC, "FPG," purchased
$0.1 million of common equity interest in the land (referred to as "Equity Interest - FPG Sun Menifee 80 LLC"). The Equity Interest -
FPG Sun Menifee 80 LLC does not have a fixed maturity date. Upon the occurrence of certain events, either FPG or Sun FPG Venture
LLC, our subsidiary, can trigger a process under which we may be required to purchase the Equity Interest - FPG Sun Menifee 80
LLC from FPG. The Equity Interest - FPG Sun Menifee 80 LLC balance was $0.1 million as of December 31, 2021 and 2020,
respectively. Refer to Note 7, "Consolidated Variable Interest Entities," for additional information.
F - 38
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Equity Interest - NG Sun Whitewater 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 Resorts LLC
(referred to as "Equity Interest - NG Sun Whitewater LLC"). The Equity Interest - NG Sun Whitewater LLC does not have a fixed
maturity date. Upon the occurrence of certain events, either NG Sun Whitewater LLC or Sun NG LLC, our subsidiary, can trigger a
process under which we may be required to purchase the Equity Interest - NG Sun Whitewater LLC from NG Sun Whitewater LLC.
The Equity Interest - NG Sun Whitewater LLC balance was $4.3 million and $5.1 million for the years ended December 31, 2021 and
2020, respectively. Refer to Note 7, "Consolidated Variable Interest Entities," for additional information.
Equity Interest - 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 interests in Sun NG Resorts (herein jointly
referred to as "Equity Interest - NG Sun LLC"). In April and September 2020, in connection with the acquisitions of Glen Ellis RV
Park and Lone Star RV Park, $3.0 million of Series B preferred equity interests were converted to common equity interests. 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 Interest - NG Sun LLC does not have a fixed maturity
date and can be redeemed in the fourth quarters of 2024, 2025 and 2026 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 2024, 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 we are required to purchase the remaining interests of NG Sun LLC and the property
management agreement at fair value. In December 2021, the operating agreement was amended and Sun NG Resorts initiated a
contingent consideration earnout provision in the amount of $38.3 million. The contingent consideration payment was recognized as
an additional purchase price payment within Land improvements and buildings in the Consolidated Balance Sheets, and within
Acquisition of properties, net of cash acquired in the Consolidated Statement of Cash Flows. The Equity Interest - NG Sun LLC
balance was $24.7 million and $23.3 million for the years ended December 31, 2021 and 2020, respectively. Refer to Note 7,
"Consolidated Variable Interest Entities," and Note 8, "Debt and Line of Credit," for additional information.
Universal Shelf Registration Statement
On April 5, 2021, in connection with the expiration of our universal shelf registration statement on Form S-3, that was filed with the
SEC on April 6, 2018, we filed a new universal shelf registration statement on Form S-3 with the SEC. The new universal shelf
registration statement was deemed automatically effective and provides for the registration of unspecified amounts of equity and debt
securities. We have the authority to issue 200,000,000 shares of capital stock, of which 180,000,000 shares are common stock, par
value $0.01 per share, and 20,000,000 are shares of preferred stock, par value $0.01 per share. As of December 31, 2021, we had
115,976,408 shares of common stock issued and outstanding and no shares of preferred stock were issued and outstanding.
Public Equity Offerings
On November 15 and 16, 2021, we entered into two forward sale agreements relating to an underwritten registered public offering of
4,025,000 shares of our common stock at a public offering price of $185.00 per share and completed the offering on November 18,
2021. We did not initially receive any proceeds from the sale of shares of our common stock by the forward purchaser or its affiliates.
We intend to use the net proceeds, if any, received upon the future settlement of the forward sale agreements, which we expect to
occur no later than November 18, 2022, to fund a portion of the Park Holidays total consideration, to repay borrowings outstanding
under our Senior Credit Facility, to fund possible future acquisitions of properties and / or for working capital and general corporate
purposes.
On March 2, 2021, we priced a $1.1 billion underwritten public offering of an aggregate of 8,050,000 shares at a public offering price
of $140.00 per share, before underwriting discounts and commissions. The offering consisted of 4,000,000 shares offered directly by
us and 4,050,000 shares offered under a forward equity sales agreement. We sold the 4,000,000 shares on March 9, 2021 and received
net proceeds of $537.6 million after deducting expenses related to the offering. In May and June 2021, we completed the physical
settlement of the remaining 4,050,000 shares and received net proceeds of $539.7 million after deducting expenses related to the
offering. Proceeds from the offering were used to acquire assets and pay down borrowings under our revolving line of credit.
On September 30, 2020 and October 1, 2020, we entered into two forward sale agreements relating to an underwritten registered
public offering of 9,200,000 shares of our common stock at a public offering price of $139.50 per share. The offering closed on
October 5, 2020. On October 26, 2020, we physically settled these forward sales agreements by the delivery of shares of our common
stock. Proceeds from the offering were approximately $1.23 billion after deducting expenses related to the offering. We used the net
proceeds of this offering to fund the cash portion of the acquisition of Safe Harbor, and for working capital and general corporate
purposes.
F - 39
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In May 2020, we closed an underwritten registered public offering of 4,968,000 shares of common stock. Proceeds from the offering
were $633.1 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
On December 17, 2021, we entered into an At the Market Offering Sales Agreement with certain sales agents, and forward sellers
pursuant to which we may sell, from time to time, up to an aggregate gross sales price of $1.25 billion of our common stock (the
"December 2021 Sales Agreement"), through the sales agents, acting as our sales agents or, if applicable, as forward sellers, or directly
to the sales agents as principals for their own accounts. The sales agents and forward sellers are entitled to compensation in an agreed
amount not to exceed 2.0 percent of the gross price per share for any shares sold under the December 2021 Sales Agreement. We
simultaneously terminated our June 2021 Sales Agreement (as defined below) upon entering into the December 2021 Sales
Agreement.
On June 4, 2021, we entered into an At the Market Offering Sales Agreement with certain sales agents, and forward sellers pursuant to
which we could sell, from time to time, up to an aggregate gross sales price of $500.0 million of our common stock (the "June 2021
Sales Agreement"), through the sales agents, acting as our sales agents or, if applicable, as forward sellers, or directly to the sales
agents as principals for their own accounts. The sales agents and forward sellers are entitled to compensation in an agreed amount not
to exceed 2.0 percent of the gross price per share for any shares sold under the Sales Agreement. We simultaneously terminated our
previous At the Market Offering Sales Agreement entered into in July 2017 upon entering into the June 2021 Sales Agreement.
There were no sales of common stock under the December 2021 Sales Agreement as of December 31, 2021. We entered into forward
sale agreements with respect to 1,820,109 shares of common stock under the June 2021 Sales Agreement for $356.5 million during the
year ended December 31, 2021 prior to its termination. These forward sale agreements were not settled as of December 31, 2021 but
we expect to settle them no later than September 2022. There were no issuances of common stock under the prior At the Market
Offering Sales Agreement entered into in July 2017, during the years ended December 31, 2021, 2020 and 2019, and from inception
through termination of such prior sales agreement, we sold shares of our common stock for gross proceeds of $163.8 million.
Issuances of Common OP Units and Preferred OP Units in Connection with the Acquisition of Certain Properties
Issuances of Common OP Units
Year Ended December 31, 2021 and 2020
December 2021
December 2020
October 2020
May 2020
Common OP Units Issued
Related Acquisition
17,707 Haas Lake RV Campground
130,475 Rybovich Portfolio
55,403 Safe Harbor
82,420 Forest Springs
Issuance of Series E Preferred OP Units - In January 2020, we issued 90,000 Series E preferred OP units in connection with the
acquisition of Sun Outdoors Cape Cod. The Series E preferred OP units have a stated issuance price of $100.00 per OP unit and carry
a preferred return of 5.25 percent until the second anniversary of the issuance date. Commencing with the second anniversary of the
issuance date, the Series E Preferred OP Units carry a preferred return of 5.5 percent. Commencing with the first anniversary of the
issuance date, subject to certain limitations, each Series E Preferred OP Unit can be exchanged for our common stock equal to the
quotient obtained by dividing $100.00 by $145.00 (as such ratio is subject to adjustments for certain capital events). As of December
31, 2021, 90,000 Series E preferred OP units were outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for
additional information.
Equity Interest
Equity Interest - SHM South Fork JV, LLC - In October 2020, in conjunction with the acquisition of Safe Harbor, we indirectly
acquired $4.3 million of Safe Harbor's equity interest in SHM South Fork JV, LLC, a joint venture created for the purpose of acquiring
land and constructing a marina in Fort Lauderdale, Florida. The Safe Harbor Equity Interest - SHM South Fork JV, LLC balance was
$4.1 million and $4.3 million as of December 31, 2021 and 2020, respectively. Refer to Note 7, "Consolidated Variable Interest
Entities," for additional information.
F - 40
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 the years ended December 31, 2021 and 2020:
December 31, 2021
December 31, 2020
Year Ended
Series
Common OP unit
Series A-1 preferred OP unit
Conversion Rate
Units / Shares
Converted
1.0000
2.4390
86,364
19,710
Common Stock(1)
86,364
Units / Shares
Converted
Common Stock(1)
81,845
81,845
48,067
155
14,500
4,121
35,359
4,573
Series C preferred OP unit
(1) Calculation may yield minor differences due to rounding incorporated in the above numbers.
1.1100
140
Conversions to Common OP Units - Subject to certain limitations, holders can convert certain series of preferred OP units to common
OP units. There were no such conversions during the years ended December 31, 2021 and 2020.
Redemption of OP Units - Subject to certain limitations, holders can redeem certain series OP units for cash, provided that certain
requirements are met. There were no redemptions of series OP units during the year ended December 31, 2021. On November 4, 2020,
20,000 Series G preferred OP units were redeemed for a net cash payment of $2.0 million, inclusive of all distributions on the
redeemed units that were accrued and unpaid as of the redemption date, in accordance with the terms and conditions set for in the
redemption agreement.
Distributions
Distributions declared for the quarter ended December 31, 2021 were as follows:
Common Stock, Common OP units and Restricted Stock
Distributions for the Quarter Ended
December 31, 2021
Record Date
Payment Date
Distribution Per
Share
Total Distribution
(in Thousands)
12/31/2021
1/18/2022
$
0.83 $
98,367
10. Share-Based Compensation
As of December 31, 2021, we had two share-based compensation plans: the Sun Communities, Inc. 2015 Equity Incentive Plan ("2015
Equity Incentive Plan") and the First Amended and Restated 2004 Non-Employee Director Option Plan ("2004 Non-Employee
Director Option Plan"). We believe granting equity awards will provide certain executives, key employees and directors additional
incentives to promote our financial success and promote employee and director retention by providing an opportunity to acquire or
increase the direct proprietary interest of those individuals in our operations and future.
Restricted Stock
The majority of our share-based compensation is awarded as service vesting restricted stock grants to executives and key employees.
We have also awarded restricted stock to our non-employee directors. We measure the fair value associated with these awards using
the closing price of our common stock as of the grant date to calculate compensation cost. Employee awards typically vest over
several years and are subject to continued employment by the employee. Award recipients receive distribution payments on unvested
shares of restricted stock.
2015 Equity Incentive Plan
At the Annual Meeting of Stockholders held on July 20, 2015, the stockholders approved the 2015 Equity Plan. The 2015 Equity Plan
had been adopted by the Board and was effective upon approval by our stockholders. The maximum number of shares of common
stock that may be issued under the 2015 Equity Plan is 1,750,000 shares of our common stock, with 457,767 as of December 31, 2021
shares remaining for future issuance.
F - 41
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Non-Employee Director Plans
2021 Non-Employee Directors Deferred Compensation Plan - In November 2021, we adopted the 2021 Non-Employee Directors
Deferred Compensation Plan ("2021 Deferred Compensation Plan"), which was approved by the Compensation Committee of the
Board of Directors. The 2021 Deferred Compensation Plan entitles a non-employee director to annually submit an election to defer all
or a portion of his or her eligible share-based and cash compensation, effective starting January 2022.
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 the
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 169,865 as of December 31, 2021 shares remaining for future issuance.
During the years ended December 31, 2021 and 2020, shares were granted as follows:
Type
Plan
Shares
Granted
Grant Date
Fair Value
Per Share
Grant
Period
2021
2021
2021
2021
2021
2021
2021
2021
2021
2021
2021
2021
2020
2020
2020
2020
2020
2020
2020
Key Employees
Key Employees
Executive Officers
Executive Officers
Executive Officers
Executive Officers
Executive Officers
Key Employees
Key Employees
Executive Officers
Executive Officers
Directors
Key Employees
Executive Officers
Key Employees
Key Employees
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2004 Non-Employee
Director Option Plan
2004 Non-Employee
Director Option Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
2015 Equity Incentive Plan
Executive Officers
2015 Equity Incentive Plan
Executive Officers
2015 Equity Incentive Plan
Directors
2004 Non-Employee
Director Option Plan
2021
Directors
$
2,500
$
1,004
$
11,488
54,000
$
81,000 (2) $
15,000
$
15,000 (3) $
$
28,856
$
61,550
3,400
$
5,100 (4) $
$
1,509
10,200
13,873
69,368
1,500
51,790
46,000
69,000
10,200
$
$
$
$
$
$
(5) $
$
Vesting Type
(1) Time Based
(1) Time Based
(1) Time Based
(1) Time Based
(2) Market Condition
(1) Time Based
(3) Market Condition
(1) Time Based
(1) Time Based
(1) Time Based
(4) Market Condition
(1) Time Based
196.75
202.31
196.39
151.89
94.32
151.89
87.49
151.89
143.28
147.19
96.41
147.19
148.44
(1) Time Based
140.39
137.63
143.20
162.42
165.97
125.47
147.97
(1) Time Based
(1) Time Based
(1) Time Based
(1) Time Based
(1) Time Based
(5) Market Condition
(1) Time Based
Vesting
Anniversary
Percentage
20.0% annually over 5 years
25.0% annually over 4 years
20.0% annually over 5 years
20.0% annually over 5 years
3rd
100.0 %
33.3% annually over 3 years
3rd
100.0 %
33.3% annually over 3 years
20.0% annually over 5 years
20.0% annually over 5 years
3rd
3rd
3rd
100.0 %
100.0 %
100.0 %
20.0% annually over 5 years
20.0% annually over 5 years
20.0% annually over 5 years
20.0% annually over 5 years
20.0% annually over 5 years
3rd
3rd
100.0 %
100.0 %
(1) The fair values of the grants were determined by using the average closing price of our common stock on the dates the shares were issued.
(2) Share-based compensation for restricted stock awards with market conditions is measured based on an estimate of shares expected to vest. We estimate the fair value
of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. At the grant date our common stock price was $151.89.
Based on the Monte Carlo simulation we expect 62.1 percent of the 81,000 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 $151.89.
Based on the Monte Carlo simulation we expect 57.6 percent of the 15,000 shares to vest.
(4) 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 $147.19.
Based on the Monte Carlo simulation we expect 65.5 percent of the 5,100 shares to vest.
(5) 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 $165.97.
Based on the Monte Carlo simulation we expect 75.6 percent of the 69,000 shares to vest.
F - 42
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes our restricted stock activity for the years ended December 31, 2021, 2020 and 2019:
Unvested restricted shares at January 1, 2019
Granted
Vested
Forfeited
Unvested restricted shares at December 31, 2019
Granted
Vested
Forfeited
Unvested restricted shares at December 31, 2020
Granted
Vested
Forfeited
Unvested restricted shares at December 31, 2021
Number of Shares
Weighted Average
Grant Date Fair Value
871,117 $
190,020 $
(237,406) $
(10,690) $
813,041 $
261,731 $
(258,280) $
(5,678) $
810,814 $
290,607 $
(305,747) $
(7,654) $
788,020 $
72.65
107.50
64.46
79.58
83.10
144.89
73.47
111.04
105.92
131.84
91.06
113.02
121.18
The total fair value of shares vested was $27.8 million, $19.0 million and $15.3 million for the years ended December 31, 2021, 2020
and 2019, respectively.
Total compensation cost recognized for restricted stock was $28.0 million, $22.7 million and $17.5 million for the years ended
December 31, 2021, 2020 and 2019, respectively, and is included in General and Administrative Expenses in the accompanying
Consolidated Statements of Operations.
The remaining share-based compensation cost, net related to our unvested restricted shares outstanding as of December 31, 2021 is
approximately $60.8 million. The following table summarizes our expected share-based compensation cost, net related to our unvested
restricted shares, in thousands:
Expected share-based compensation costs, net
$
25.1 $
18.3 $
10.2 $
7.2
2022
2023
2024
Thereafter
11. Segment Reporting
We group our 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 managing the business, making operating decisions,
allocating resources and evaluating operating performance. As described in Note 1, "Significant Accounting Policies," effective
January 1, 2021, we transitioned from a two-segment to a three-segment structure: MH, RV and Marina. Hybrid properties are
classified to a segment based on the predominant site counts at the properties. We evaluate segment operating performance based on
NOI.
F - 43
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SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
MH
RV
Marina
Consolidated
MH
December 31, 2020(1)
Marina
RV
Consolidated
$ 5,172,220 $ 3,638,938 $ 2,614,299 $ 11,425,457
$ 4,823,174 $ 3,038,686 $ 1,853,931 $ 9,715,791
36,630
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19,931
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495,353
256,712
219,054
78,198
186,898
53,152
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28,919
43,950
51,055
33,448
13,195
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495,353
306,755
480,774
144,027
44,002
—
33,998
184,917
—
23,819
38,075
10,570
—
—
33,621
428,833
247,794
47,699
92,641
124,726
46,643
221,650
428,833
305,611
270,691
$ 5,973,734 $ 3,873,393 $ 3,646,957 $ 13,494,084
$ 5,353,492 $ 3,230,646 $ 2,622,448 $ 11,206,586
Identifiable assets
Investment property, net
Cash, cash equivalents and
restricted cash
Marketable securities
Inventory of manufactured
homes
Notes and other receivables,
net
Goodwill
Other intangible assets, net
Other assets, net
Total Assets
(1) Recast to reflect segment changes.
12. Income Taxes
We have elected to be taxed as a REIT pursuant to Section 856(c) of the Internal Revenue Code of 1986, as amended ("Code"). In
order for us to qualify as a REIT, at least 95.0 percent of our gross income in any year must be derived from qualifying sources. In
addition, a REIT must distribute annually at least 90.0 percent of its REIT taxable income (calculated without any deduction for
dividends paid and excluding capital gain) to its stockholders and meet other tests.
Qualification as a REIT involves the satisfaction of numerous requirements (on an annual and quarterly basis) established under highly
technical and complex Code provisions for which there are limited judicial or administrative interpretations and involves the
determination of various factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the
area of REIT taxation, which requires us to continually monitor our tax status. We analyzed the various REIT tests and confirmed that
we continued to qualify as a REIT for the year ended December 31, 2021.
As a REIT, we generally will not be subject to United States ("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. 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 is subject to federal, state and local income taxes. We are also subject
to local income taxes in Canada of certain properties located in Canada. 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 of the U.S.
However, we are subject to Australian 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, 2021, 2020 and 2019, distributions paid per share were taxable as follows (unaudited / rounded):
Ordinary income(1)
Capital gain
Return of capital
Total distributions declared
Year Ended
December 31, 2021
December 31, 2020
December 31, 2019
Amount
Percentage
Amount
Percentage
Amount
Percentage
$
$
2.31
—
0.97
3.28
70.47 % $
— %
29.53 %
100.0 % $
2.14
0.06
0.92
3.12
68.54 % $
1.92 %
29.54 %
100.0 % $
1.66
—
1.30
2.96
56.0 %
— %
44.0 %
100.0 %
(1) 98.99499 percent of the ordinary taxable dividend qualifies as a Section 199A dividend for 2021 and 1.00501 percent of the ordinary taxable dividend qualifies as a
Qualified Dividend for 2021.
F - 45
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of our provision / (benefit) for income taxes attributable to continuing operations for the years ended December 31,
2021, 2020 and 2019 are as follows (amounts in thousands):
December 31,
2021
Year Ended
December 31,
2020
December 31,
2019
Federal
Current
Deferred
State and Local
Current
Deferred
Foreign
Current
Deferred
$
14 $
—
(835) $
(613)
1,054
(89)
168
180
1,539
(2)
85
(949)
Total provision / (benefit)
$
1,327 $
(775) $
(3)
—
919
—
179
(222)
873
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 years ended December 31, 2021, 2020 and 2019 is as follows (amounts in
thousands):
Pre-tax income / (loss) attributable to taxable subsidiaries
$
(5,182)
$
8,393
$
(4,122)
December 31, 2021
Year Ended
December 31, 2020
December 31, 2019
Federal benefit at statutory tax rate
State and local taxes, net of federal benefit
Rate differential
Change in valuation allowance
Others
Tax provision / (benefit) - taxable subsidiaries
Other state taxes - flow through subsidiaries
Total provision / (benefit)
(1,088)
195
141
3,371
(2,062)
557
770
1,327
$
21.0 %
(3.8) %
(2.7) %
(65.0) %
39.8 %
(10.7) %
$
(1,763)
721
(236)
1,326
(1,638)
(1,590)
815
(775)
21.0 %
(8.6) %
2.8 %
(15.8) %
19.5 %
18.9 %
$
(866)
42
(73)
526
692
321
552
873
21.0 %
(1.0) %
1.8 %
(12.7) %
(16.8) %
(7.7) %
Deferred tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial
reporting purposes and the basis 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
GAAP. Our deferred tax assets that have a full valuation allowance relate to our taxable REIT subsidiaries.
F - 46
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 most recent tax rate legislation (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 - US assets
Basis differences - foreign investment
Gross deferred tax liabilities
December 31,
2021
As of
December 31,
2020
December 31,
2019
$
26,244 $
23,732
19,504 $
32,968
77
50,053
(47,050)
3,003
(1,236)
(22,497)
(23,733)
(609)
51,863
(44,017)
7,846
(5,743)
(22,653)
(28,396)
18,009
28,787
395
47,191
(45,342)
1,849
—
(22,813)
(22,813)
Net Deferred Tax Liability(1)
(1) Net deferred tax liability is included within Other liabilities in our Consolidated Balance Sheets.
$
(20,730) $
(20,550) $
(20,964)
Our U.S. taxable REIT subsidiaries operating loss carryforwards are $119.0 million, or $24.8 million after tax, including SHS loss
carryforwards of $116.5 million, or $24.5 million after tax, as of December 31, 2021. The loss carryforwards will begin to expire in
2022 through 2035 if not offset by future taxable income. In addition, our Canadian subsidiaries have operating loss carryforwards of
$6.9 million, or $1.8 million after tax, as of December 31, 2021. 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, 2021 and 2020. We expect no significant increases or decreases in
unrecognized tax benefits due to changes in tax positions within one year of December 31, 2021.
We classify certain state taxes as income taxes for financial reporting purposes. We recorded a provision for state income taxes of
$1.1 million for the year ended December 31, 2021, $1.5 million for the year ended December 31, 2020, and $0.9 million for the year
ended December 31, 2019.
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 provision or benefit was accrued, nor was any income tax related interest or
penalty recognized during the years ended December 31, 2021, 2020 and 2019.
13. Earnings Per Share
Earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the
period on a basic and diluted basis. We calculate diluted earnings per share using the more dilutive of the treasury stock method and
the two-class method.
From time to time, we enter into forward equity sales agreements, which are discussed in Note 9, "Equity and Temporary Equity." We
considered the potential dilution resulting from the forward equity sales agreements on the earnings per share calculations. At
inception, the agreements do not have an effect on the computation of basic earnings per share as no shares are delivered unless and
until there is a physical settlement. Common shares issued upon the physical settlement of the forward equity sales agreements,
weighted for the period these common shares are outstanding, are usually included in the denominator of basic earnings per share. To
determine the dilution resulting from the forward equity sales agreements during the period of time prior to settlement, we calculate
the number of weighted-average shares outstanding - diluted.
F - 47
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our potentially dilutive securities include our potential common shares related to our forward equity offerings, our unvested restricted
common shares, and our Operating Partnership 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, Series E preferred OP units, Series F preferred OP units, Series G
preferred OP units, Series H preferred OP units, Series I preferred OP units, Series J preferred OP units and Aspen preferred OP Units,
which, if converted or exercised, may impact dilution.
Diluted earnings per share considers the impact of potentially dilutive securities except when the potential common shares have an
antidilutive effect. Our unvested restricted stock common shares contain rights to receive non-forfeitable distributions and participate
equally with common stock with respect to distributions issued or declared, and thus, are participating securities, requiring the two-
class method of computing earnings per share. The two-class method determines earnings per share by dividing the sum of distributed
earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of
shares of common stock outstanding for the period. In calculating the two-class method, undistributed earnings are allocated to both
common shares and participating securities based on the weighted average number of shares outstanding during the period. The
remaining potential dilutive common shares do not contain rights to distributions and are included in the computation of diluted
earnings per share.
Computations of basic and diluted earnings per share were as follows (in thousands, except per share data):
December 31,
2021
Year Ended
December 31,
2020
December 31,
2019
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 common and preferred OP units dilutive effect
Add: allocation to restricted stock awards
Diluted earnings - Net income attributable to common stockholders after allocation to common
and preferred OP units(1)
$
$
380,152 $
2,358
131,614 $
795
377,794 $
8,551
—
130,819 $
—
—
160,265
1,170
159,095
—
1,170
$
386,345 $
130,819 $
160,265
Denominator
Weighted average common shares outstanding
Add: dilutive stock options
Add: common and preferred OP units dilutive effect
Add: dilutive restricted stock
Diluted weighted average common shares and securities(1)
112,582
—
2,562
—
115,144
97,521
1
—
—
97,522
Earnings Per Share Available to Common Stockholders After Allocation
Basic earnings per share
Diluted earnings per share(1)
$
$
3.36 $
3.36 $
1.34 $
1.34 $
88,460
1
—
454
88,915
1.80
1.80
(1) For the years ended December 31, 2021 and 2020, diluted earnings per share was calculated using the two-class method. The application of this method resulted in a
more dilutive earnings per share for the year. Diluted earnings per share for the year ended December 31, 2019 were calculated using the treasury stock method as the
application of this method resulted in a more dilutive earnings per share for that period.
F - 48
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We have excluded certain convertible 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, 2021, 2020 and 2019 (amounts in
thousands):
Common OP units
A-1 preferred OP units
A-3 preferred OP units
Aspen preferred OP units
Series C preferred OP units
Series D preferred OP units
Series E preferred OP units
Series F preferred OP units
Series G preferred OP units
Series H preferred OP units
Series I preferred OP units
Series J preferred OP units
Total Securities
December 31,
2021
Year Ended
December 31,
2020
December 31,
2019
—
275
40
1,284
306
489
90
90
241
581
922
240
4,558
2,607
295
40
1,284
306
489
90
90
241
581
922
—
6,945
2,420
309
40
1,284
310
489
—
—
—
—
—
—
4,852
F - 49
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Fair Value of Financial Instruments
Our financial instruments consist primarily of cash, cash equivalents and restricted cash, marketable securities, notes and other
receivables, derivatives debt and other liabilities. We utilize fair value measurements to record fair value adjustments to certain assets
and liabilities and to determine fair value disclosures, pursuant to ASC 820, "Fair Value Measurements and 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:
Assets by Hierarchy Level
The table below sets forth our financial assets and liabilities (in thousands) that required disclosure of fair value on a recurring basis as
of December 31, 2021. The table presents the carrying values and fair values of our financial instruments as of December 31, 2021 and
2020, that were measured using the valuation techniques described below. The table excludes other financial instruments such as other
receivables and accounts payable as the carrying values associated with these instruments approximate their fair value since their
maturities are less than one year. These are classified as Level 1 in the hierarchy.
Financial Assets
December 31, 2021
Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Value
Fair Value
Cash, cash equivalents and restricted cash
Marketable securities
Installment notes receivable on manufactured homes, net
Notes receivable from real estate developers and operators
Derivatives designated as hedges - interest rate derivative
Total assets measured at fair value
$
$
78,198 $
186,898
79,096
284,035
360
628,587 $
78,198 $
186,898
—
—
—
265,096 $
— $
—
—
—
360
360 $
— $
—
79,096
284,035
—
363,131 $
78,198
186,898
79,096
284,035
360
628,587
Financial Liabilities
Secured debt
Unsecured debt
$ 3,380,739 $
— $
3,380,739 $
— $ 3,405,916
Senior unsecured notes
Line of credit and other unsecured debt
Total unsecured debt
Other financial liabilities (contingent consideration)
Total liabilities measured at fair value
1,186,350
1,104,745
2,291,095
11,317
$ 5,683,151 $
—
—
—
—
— $
1,186,350
1,104,745
2,291,095
—
5,671,834 $
—
1,201,753
—
1,104,745
—
2,306,498
11,317
11,317
11,317 $ 5,723,731
Financial Assets
December 31, 2020
Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Value
Fair Value
Cash, cash equivalents and restricted cash
$
92,641 $
92,641 $
Marketable securities
Installment notes receivable on manufactured homes, net
Notes receivable from real estate developers and operators
124,726
85,866
52,638
124,726
—
—
— $
—
85,866
52,638
— $
92,641
—
—
—
124,726
85,866
52,638
Total assets measured at fair value
$
355,871 $
217,367 $
138,504 $
— $
355,871
Financial Liabilities
Secured debt
Unsecured debt
$ 3,489,983 $
— $
3,489,983 $
— $ 3,588,901
Line of credit and other unsecured debt
Total unsecured debt
Other financial liabilities (contingent consideration)
1,267,093
1,267,093
15,842
—
—
—
1,267,093
1,267,093
—
—
—
15,842
1,267,093
1,267,093
15,842
Total liabilities measured at fair value
$ 4,772,918 $
— $
4,757,076 $
15,842 $ 4,871,836
F - 50
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash, Cash Equivalents and Restricted Cash
The carrying values of cash, cash equivalents and restricted cash approximate their fair market values due to the short-term nature of
the instruments. These are classified as Level 1 in the hierarchy.
Marketable Securities
Marketable securities held by us and accounted for under ASC 321 "Investments - Equity Securities" are measured at fair value. Any
change in fair value is recognized in the Consolidated Statement of Operations in Gain / (loss) on 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).
The change in the marketable securities balance is as follows (in thousands):
Beginning Balance
Additional purchases
Change in fair value measurement
Foreign currency translation adjustment
Dividend reinvestment, net of tax
Ending Balance
Installment Notes Receivable on Manufactured Homes
Year Ended
December 31, 2021
December 31, 2020
$
$
124,726 $
35,524
33,432
(9,229)
2,445
186,898 $
94,727
11,757
6,132
10,139
1,971
124,726
Installment notes receivable on manufactured homes are recorded at fair value and are measured using model-derived indicative
pricing using primarily unobservable inputs, inclusive of default rates, interest rates and recovery rates (Level 3). Refer to Note 4,
"Notes and Other Receivables," for additional information.
Notes Receivable from Real Estate Developers and Operators
Notes receivable from real estate developers and operators are recorded at fair value and are measured using model-derived indicative
pricing using primarily unobservable inputs including interest rates and counterparty performance (Level 3). The carrying values of
the notes generally approximate their fair market values either due to the nature of the note and / or the note being secured by
underlying collateral and / or personal guarantees. Refer to Note 4, "Notes and Other Receivables," for additional information.
Derivatives Designated as Hedges - Interest Rate Derivative
Interest rate derivatives are recorded at fair value and consist of a treasury lock transaction that we have designated as a cash flow
hedge of forecasted interest payments on a forecasted issuance of long-term debt. The fair value of the treasury lock is measured using
observable inputs based on the 10 year Treasury note rate (Level 2).
Secured Debt
Secured debt consists primarily of our mortgage term loans. The fair value of mortgage term loans 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 8, "Debt and Line of Credit," for additional information.
Unsecured Debt
Senior unsecured notes - the fair value of senior unsecured notes 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 8, "Debt and
Line of Credit," for additional information.
F - 51
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Line of credit and other unsecured debt - consists primarily of our Senior Credit Facility. We have variable rates on our Senior Credit
Facility. The fair value of the debt with variable rates approximates carrying value as the interest rates of these amounts approximate
market rates. The estimated fair value of our indebtedness as of December 31, 2021 approximated its gross carrying value.
Other Financial Liabilities
We estimate the fair value of contingent consideration liabilities based on valuation models using significant unobservable inputs that
generally consider discounting of future cash flows using market interest rates and adjusting for non-performance risk over the
remaining term of the liability (Level 3).
Level 3 Reconciliation, Measurements and Transfers
We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may
result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3
at the beginning fair value for the reporting period in which the changes occur. Availability of secondary market activity and
consistency of pricing from third-party sources impacts our ability to classify securities as Level 2 or Level 3.
Our assessment resulted in a net transfer into Level 3 of $138.5 million related to installment notes receivable on manufactured homes
and notes from real estate developers during the year ended December 31, 2021.
Inputs that are used to derive the fair value for installment notes receivables on manufactured homes and notes receivable from real
estate developers and operators transferred to Level 3 from Level 2 during the quarter ended March 31, 2021 as significant inputs used
to value those instruments inclusive of default rates, interest rates, recovery rates, and counterparty performance rely heavily on
internally sourced assumptions as opposed to observable market-based inputs.
The following tables summarize changes to our financial instruments carried at fair value and classified within Level 3 of the fair
value hierarchy for the year ended December 31, 2021 (in thousands):
Year Ended
December 31, 2021
Installment Notes
Receivable on MH, net
Notes Receivable From
Real Estate Developers
and Operators
$
— $
85,866
685
8,606
(14,612)
(1,919)
470
$
79,096 $
—
52,638
—
239,731
(13,050)
—
4,716
284,035
Year Ended
December 31, 2021
Other Liabilities
(Contingent
Consideration)
$
$
15,842
9,339
17,649
(33,767)
2,254
11,317
Assets:
Level 3 beginning balance at December 31, 2020
Transfer to level 3
Realized gains
Purchases and issuances
Sales and settlements
Dispositions of properties
Other adjustments
Level 3 ending balance at December 31, 2021
Liabilities:
Level 3 beginning balance at December 31, 2020
Realized losses
Purchases and issuances
Sales and settlements
Other adjustments
Level 3 ending balance at December 31, 2021
F - 52
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Although we have determined the estimated fair value amounts using available market information and commonly accepted valuation
methodologies, considerable judgment is required in interpreting market data to develop fair value estimates. The fair value estimates
are based on information available as of December 31, 2021. As such, our estimates of fair value could differ significantly from the
actual carrying value.
15. 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.
16. Leases
Lessee Accounting
We lease land under non-cancelable operating leases at certain MH, RV and marina properties expiring at various dates through 2094.
The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of revenues at those
properties. We also have other operating leases, primarily office space and equipment expiring at various dates through 2041.
Future minimum lease payments under non-cancellable leases as of December 31, 2021 where we are the lessee include:
Maturity of Lease Liabilities (in thousands)
2022
2023
2024
2025
2026
Thereafter
Total Lease Payments
Less: Imputed interest
Present Value of Lease Liabilities
Operating Leases
Finance Leases
Total
$
$
$
9,978 $
9,858
10,204
10,157
9,067
188,478
237,742 $
(108,567)
129,175 $
194 $
146
4,068
—
—
—
4,408 $
(255)
4,153 $
10,172
10,004
14,272
10,157
9,067
188,478
242,150
(108,822)
133,328
Right-of-use (ROU) assets and lease liabilities for finance and operating leases as included in our Consolidated Balance Sheets are as
follows (in thousands):
Lease Assets
Description
Financial Statement
Classification
As of
December 31, 2021
December 31, 2020
ROU asset obtained in exchange for new finance lease liabilities
Investment property, net
ROU asset obtained in exchange for new operating lease liabilities
ROU asset obtained relative to below market operating lease
Lease Liabilities
Finance lease liabilities
Operating lease liabilities
Other assets, net
Other assets, net
Other liabilities
Other liabilities
$
$
$
$
$
4,278 $
138,232 $
93,058 $
4,153 $
129,175 $
4,350
48,419
27,614
4,334
49,964
F - 53
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Lease expense for finance and operating leases, and short term lease cost as included in our Consolidated Statements of Operations are
as follows (in thousands):
Description
Financial Statement Classification
December 31, 2021
December 31, 2020
December 31, 2019
Year Ended
Finance Lease Expense
Interest on lease liabilities
Operating lease cost
Variable lease cost
Interest expense
General and administrative expense, Property
operating and maintenance
Property operating and maintenance
Short term lease cost
Property operating and maintenance
Total Lease Expense
$
$
214 $
104 $
11,334
6,609
233
4,255
2,328
17
18,390 $
6,704 $
103
3,474
1,584
—
5,161
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
As of
December 31, 2021
2.48
33.78
2.48 %
3.84 %
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
Lessor Accounting
December 31, 2021
Year Ended
December 31, 2020
December 31, 2019
$
$
6,607 $
243
6,850 $
2,712 $
137
2,849 $
2,199
120
2,319
We are not the lessor for any finance leases at our MH, RV or marina properties as of December 31, 2021.
Almost all of our operating leases at our MH and RV properties where we are the lessor are either month to month or for a time period
not to exceed one year. As of December 31, 2021, future minimum lease payments would not exceed 12 months.
Future minimum lease payments under non-cancellable leases at our RV resorts and marinas at the year ended December 31, 2021
where we are the lessor include:
Maturity of Lease Payments (in thousands)
Operating Leases
2022
2023
2024
2025
2026
Thereafter
Total Undiscounted Cash Flows
$
$
21,800
18,020
9,334
5,212
1,629
4,731
60,726
F - 54
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of lease income for our operating leases, as included in our Consolidated Statements of Operations are as follows (in
thousands):
Description
Financial Statement Classification
December 31, 2021
December 31, 2020
December 31, 2019
Year Ended
Operating Leases
Fixed lease income
Income from real property; Brokerage
commissions and other revenue, net
Income from real property; Brokerage
commissions and other revenue, net
Variable lease income(1)
(1) Consists of rent primarily based on a percentage of acquisition costs and net operating income.
$
5,736 $
2,027 $
$
23,041 $
3,319 $
1,246
772
During the year ended December 31, 2021, we terminated our operating ground lease agreements at two properties and settled a
contingent consideration earnout provision in the amount of $17.2 million. As these properties were deemed asset acquisitions, the
contingent consideration payment was recognized as an additional purchase price within Land improvements and buildings in the
Consolidated Balance Sheets, and within Acquisition of properties, net of cash acquired, in the Consolidated Statement of Cash Flows.
In conjunction with the termination, we entered into management agreements with the previous operators to manage these properties
effective January 1, 2022.
During the year ended December 31, 2021, we terminated our operating ground lease agreement at one property and settled a
contingent consideration earnout provision in the amount of $20.1 million. The initial contingent consideration liability of $9.8 million
was recognized at acquisition within Investment property in the Consolidated Balance Sheets, and within financing in the
Consolidated Statement of Cash Flows. As this property was deemed a business combination, incremental contingent consideration
expense of $10.3 million was recognized within Other expense, net in the Consolidated Statement of Operations and within Operating
in the Consolidated Statement of Cash Flows. In conjunction with the termination, we entered into a management agreement with the
previous operator to manage the property effective January 1, 2022.
17. 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 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 lease
agreement includes annual graduated rent increases through the initial end date of October 31, 2026. As of December 31, 2021, the
average gross base rent was $19.95 per square foot. 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 years ended December 31, 2021, 2020 and 2019, we paid $0.7 million, $0.3 million and $0.4 million for the use of the airplane,
respectively. 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 years ended December 31, 2021 and 2020, we paid $0.2 million for these services,
respectively. 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.
Legal Counsel - During 2019-2021, 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 $10.3 million, $13.3 million and $11.1 million
in the years ended December 31, 2021, 2020 and 2019, 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.
F - 55
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Recent Accounting Pronouncements
Recent Accounting Pronouncements - Adopted
In July 2021, the FASB issued ASU 2021-05, "Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments." This
update amends ASC 842 so that lessors are no longer required to recognize a selling loss upon commencement of a lease with variable
lease payments that, prior to the amendments, would have been classified as a sales-type or direct financing lease. Under the amended
guidance, a lessor must classify as an operating lease any lease that would otherwise be classified as a sales-type or direct financing
lease and that would result in the recognition of a selling loss at lease commencement, provided that the lease includes variable lease
payments that do not depend on an index or rate. We adopted the ASU during the three months ended September 30, 2021. The
adoption of this ASU did not have an impact on our Consolidated Financial Statements as none of our lessor leases with variable lease
payments required us to recognize a selling loss upon commencement of the lease.
Recent Accounting Pronouncements - Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate
Reform on Financial Reporting," which provides optional guidance for accounting for contracts, hedging relationships, and other
transactions affected by the reference rate reform, if certain criteria are met. The provisions of this standard are available for election
through December 31, 2022. As of December 31, 2021, we do not expect the reference rate reform will have a material impact on our
Consolidated Financial Statements as the majority of our debt has fixed interest rates.
19. Subsequent Events
Acquisitions
On November 13, 2021, we entered into a definitive agreement to acquire Park Holidays, an owner and operator of holiday
communities in the United Kingdom, for £950.0 million, or approximately $1.3 billion. We anticipate the closing of the acquisition
will occur in the three months ending March 31, 2022.
Subsequent to the year ended December 31, 2021, we acquired the following properties:
Property Name
Harrison Yacht Yard
Outer Banks
Jarrett Bay Boatworks(1)
Total Subsequent Acquisitions
Property Type
Marina
Marina
Marina
Sites, Wet Slips
and Dry Storage
Spaces
21
196
12
229
Development
Sites
City
— Grasonville
— Wanchese
— Beaufort
—
State / Province
MD
NC
NC
Total
Purchase Price
(in millions)
$
$
5.8
5.0
51.4
62.2
(1) In conjunction with the acquisition, we issued 14,683 common OP units.
Derivatives
In January 2022, we entered into a treasury lock contract with a notional value of $150.0 million to hedge the interest rate risk
associated with future issuances of fixed-rate long term debt. The benchmark index rate used is the on-the-run 10-year U.S. Treasury.
In February 2022, we entered into two treasury lock contracts each with an aggregate notional value of $300.0 million to hedge the
interest rate risk associated with future issuances of fixed-rate long term debt. The benchmark index rate used is the on-the-run 10-year
U.S. Treasury.
Proposed Loan Amendment
In January 2022, we obtained commitments from our lender group to enter into the Proposed Loan Amendment to amend our Credit
Agreement. The Proposed Loan Amendment would provide for borrowings of up to an aggregate of $4.2 billion in the form of a
$3.05 billion revolving loan facility and a $1.15 billion term loan facility with the ability to draw funds from the combined facility in
U.S. dollars, British pounds, Euros, Canadian dollars and Australian dollars. We would also have the ability to upsize our total
borrowing by an additional $800.0 million, subject to certain conditions.
F - 56
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The revolving loan facility would mature on the fifth anniversary of the Proposed Loan Amendment, assuming the exercise of two six-
month extension options. The term loan facility would mature on the third anniversary of the Proposed Loan Amendment. Interest on
the combined facility would be based on Term SOFR, the Adjusted Eurocurrency Rate, the Australian Bank Bill Swap Bid Rate
(BBSY), the Daily SONIA Rate or the Canadian Dollar Offered Rate plus a margin which can range from 0.725 percent to 1.6 percent.
The closing of the Proposed Loan Amendment is subject to, among other things, the closing of our acquisition of Park Holidays, the
negotiation and execution of definitive documentation acceptable to our lender group, and customary closing contingencies. There can
be no assurance that we will be able to successfully enter into the Proposed Loan Amendment on the terms described above or at all.
We have evaluated our Consolidated Financial Statements for subsequent events through the date that this Form 10-K was issued.
F - 57
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F - 79SHAREHOLDER INFORMATION
ANNUAL MEETING
Due to the public health impact of the COVID-19 pandemic, and to support
the health and well-being of our shareholders, the 2022 Annual Meeting
of shareholders will be conducted in a virtual format only by visiting
www.virtualshareholdermeeting.com/SUI2022 on May 17, 2022 at 11:00
a.m. Eastern Daylight Time.
SEC FORM 10-K
A copy of our Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 2021 is available at
no charge to shareholders who direct a written request to:
Investor Relations Department
Sun Communities, Inc.
27777 Franklin Road, Suite 200
Southfield, Michigan 48034
Telephone: (248) 208-2500
Web Site: www.suncommunities.com
CORPORATE HEADQUARTERS
Sun Communities, Inc.
27777 Franklin Road, Suite 200
Southfield, Michigan 48034
Telephone: (248) 208-2500
REGIONAL OFFICES
Austin, Texas
Dallas, Texas
Denver, Colorado
Ft. Myers Beach, Florida
Grand Rapids, Michigan
Orlando, Florida
Newport, Rhode Island
STOC K TRADING INFORMATION
New York Stock Exchange
Ticker Symbol – SUI (Common Stock)
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
QUARTERLY STOC K PRICE INFORMATION
2021
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
2020
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
HIGH
$211.79
$209.98
$178.17
$157.70
HIGH
$153.00
$152.25
$149.66
$173.98
LOW
$183.84
$170.59
$150.17
$137.43
LOW
$135.01
$132.73
$105.36
$95.34
DISTRIBUTION
$0.83
$0.83
$0.83
$0.83
DISTRIBUTION
$0.79
$0.79
$0.79
$0.79
CORPORATE COUNSEL
Jaffe, Raitt, Heuer & Weiss, P.C
27777 Franklin Road, Suite 2500
Southfield, Michigan 48034
The Annual CEO Certification was submitted to the NYSE pursuant to NYSE rules and guidelines without qualification on June 4, 2021.
Sun Communities, Inc. has filed, as exhibits to its Annual Report on Form 10-K for the year ended December 31, 2021, 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
Bruce D. Thelen . . . . . . . . . .Executive Vice President of Operations and Sales
Aaron Weiss . . . . . . . . . . . . . .Executive Vice President of Corporate Strategy and Business Development
Baxter R. Underwood. . . . .Chief Executive Officer of Safe Harbor Marinas, LLC
Tonya Allen . . . . . . . . . . . . . . Director, President at McKnight Foundation
Meghan G. Baivier . . . . . . . . Director, Executive Vice President, Chief Financial Officer, and Chief Operating Officer of Easterly
Stephanie W. Bergeron. . . . Director, Chief Executive Officer of Bluepoint Partners
Government Properties, Inc.
Brian M. Hermelin . . . . . . . .Director, Co-Founder and Managing Partner of Rockbridge Growth Equity LLC, Co-Founder and General
Partner of Detroit Venture Partners, LLC
Ronald A. Klein. . . . . . . . . . .Director, Principal of JK Ventures
Clunet R. Lewis. . . . . . . . . . .Director
Arthur A. Weiss . . . . . . . . . . . Director, Chairman of the Board and Shareholder of Jaffe Raitt Heuer & Weiss, P.C.
NATIONWIDE & CANADA
ALABAMA
ARIZONA
ARKANSAS
CALIFORNIA
COLORADO
CONNECTICUT
DELAWARE
FLORIDA
GEORGIA
ILLINOIS
INDIANA
IOWA
KENTUCKY
LOUISIANA
Puerto Rico
MAINE
OREGON
MARYLAND
PENNSYLVANIA
MASSACHUSETTS
RHODE ISLAND
MICHIGAN
SOUTH CAROLINA
MINNESOTA
MISSISSIPPI
MONTANA
NEVADA
NEW HAMPSHIRE
TENNESSEE
TEXAS
UTAH
VERMONT
VIRGINIA
NEW JERSEY
WASHINGTON
NEW YORK
WISCONSIN
NORTH CAROLINA
ONTARIO, CANADA
OKLAHOMA
PUERTO RICO
OHIO
27777 Franklin Road, Suite 200 • Southfield, Michigan 48034
www.suncommunities.com • NYSE: SUI