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Form 8-K SUN COMMUNITIES INC For: Jun 08

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June 8, 2015 4:07 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8‑K


CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934


Date of Report: June 8, 2015
(Date of earliest event reported)

SUN COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)

Maryland
 
1-12616
 
38-2730780
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)

27777 Franklin Rd.
 
 
Suite 200
 
 
Southfield, Michigan
 
48034
(Address of Principal Executive Offices)
 
(Zip Code)


(248) 208-2500
(Registrant’s telephone number, including area code)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 7.01
Regulation FD Disclosure
Attached as Exhibit 99.1 to this report is an investor presentation of Sun Communities, Inc. that will be used at REIT Week 2015: NAREIT's Investor Forum on Tuesday, June 9, 2015. The presentation also will be posted on Sun Communities, Inc.'s website, www.suncommunities.com, on June 8, 2015.
The information contained in this Item 7.01 on Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of the United States Securities Exchange Act of 1934, as amended (the "Exchange Act").
This report contains various “forward-looking statements” within the meaning of the United States Securities Act of 1933, as amended, and the Exchange Act, and we intend that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this filing that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as “forecasts,” “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,” “plans,” “predicts,” “potential,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,” “will,” “designed to,” “foreseeable future,” “believe,” “believes,” “scheduled,” "guidance" and similar expressions are intended to identify forward-looking statements, although not all forward looking statements contain these words. These forward-looking statements reflect our current views with respect to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this filing. These risks and uncertainties may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. In addition to the risks disclosed under “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2014 and our other filings with the SEC from time to time, such risks and uncertainties include:

•
changes in general economic conditions, the real estate industry and the markets in which we operate;
•
difficulties in our ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;
•
our liquidity and refinancing demands;
•
our ability to obtain or refinance maturing debt;
•
our ability to maintain compliance with covenants contained in our debt facilities;
•
availability of capital;
•
our ability to maintain rental rates and occupancy levels;
•
our failure to maintain effective internal control over financial reporting and disclosure controls and procedures;
•
increases in interest rates and operating costs, including insurance premiums and real property taxes;
•
risks related to natural disasters;
•
general volatility of the capital markets and the market price of shares of our capital stock;
•
our failure to maintain our status as a REIT;
•
changes in real estate and zoning laws and regulations;
•
legislative or regulatory changes, including changes to laws governing the taxation of REITs;
•
litigation, judgments or settlements;
•
competitive market forces;
•
the ability of manufactured home buyers to obtain financing; and
•
the level of repossessions by manufactured home lenders.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to publicly update or revise any forward-looking statements included or incorporated by reference into this filing, whether as a result of new information, future events, changes in our expectations or otherwise, except as required by law.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future




results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements.
Item 9.01
Financial Statements and Exhibits
(d)
Exhibits.
99.1
Investor Presentation





SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
SUN COMMUNITIES, INC.

Dated: June 8, 2015
 
By:
/s/ Karen J. Dearing
 
 
 
Karen J. Dearing, Executive Vice President,
Chief Financial Officer, Secretary and Treasurer





EXHIBIT INDEX

Exhibit No.
 
Description
99.1
 
Investor Presentation



 
FORWARD LOOKING STATEMENTS This presentation has been prepared for informational purposes only from information supplied by Sun Communities, Inc. (the "Company") and from third-party sources indicated herein. Such third-party information has not been independently verified. The Company makes no representation or warranty, expressed or implied, as to the accuracy or completeness of such information. This presentation contains various “forward-looking statements” within the meaning of the United States Securities Act of 1933, as amended, and the United States Securities Exchange Act of 1934, as amended, 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 presentation that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as “forecasts,” “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,” “plans,” “predicts,” “potential,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,” “will,” “designed to,” “foreseeable future,” “believe,” “believes,” “scheduled,” “guidance” and similar expressions are intended to identify forward-looking statements, although not all forward looking statements contain these words. These forward-looking statements reflect our current views with respect to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this presentation. These risks and uncertainties may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. In addition to the risks disclosed under “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2014, and our other filings with the Securities and Exchange Commission from time to time, such risks and uncertainties include:  changes in general economic conditions, the real estate industry and the markets in which we operate; • difficulties in our ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;  our liquidity and refinancing demands;  our ability to obtain or refinance maturing debt;  our ability to maintain compliance with covenants contained in our debt facilities;  availability of capital;  our failure to maintain effective internal control over financial reporting and disclosure controls and procedures;  increases in interest rates and operating costs, including insurance premiums and real property taxes;  risks related to natural disasters;  general volatility of the capital markets and the market price of shares of our capital stock;  our failure to maintain our status as a REIT;  changes in real estate and zoning laws and regulations;  legislative or regulatory changes, including changes to laws governing the taxation of REITs;  litigation, judgments or settlements;  our ability to maintain rental rates and occupancy levels;  competitive market forces; and  the ability of manufactured home buyers to obtain financing and the level of repossessions by manufactured home lenders. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to publicly update or revise any forward-looking statements included in this presentation, 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. 2

 
SUN COMMUNITIES, INC. (NYSE: SUI)  Leading owner, operator and developer of manufactured housing (“MH”) and recreational vehicle (“RV”) communities  Sun Communities’ current portfolio includes 251 communities consisting of 93,115 sites across 30 states □ 204 MH communities, 34 RV resorts, and 13 communities containing both MH and RV. □ 74,660 manufactured home sites □ 18,455 RV sites □ Annuals/Seasonals – 9,409 □ Transient – 9,046  Sell and lease new and pre-owned manufactured homes as an adjunct to our core business 3 *As of 5/15/2015

 
AFFORDABILITY Affordability Drives Manufactured Housing Manufactured Housing vs. Multi Family: Sun – Manufactured Homes • Average rent ≈ $835/month or $0.64/square foot • Average square footage ≈ 1,300 square feet Apartments • Average rent ≈ $1,000/month or $1.00/square foot* • Average square footage ≈ 1,000 square feet Source: Rent.com data *Represents average rent for a 2 bedroom apartment in major metropolitan areas Sun operates in as of 2/24/15.4 Comparing Sun manufactured homes to the multifamily average, a manufactured home provides approximately 30% more space at approximately 35% less cost per square foot.

 
The median income in the 29 states in which Sun operates is $60,000. The average single family home costs over 5x the price of a MH unit *2013 Average household income - 29 states in which SUI operates per US Census data. Housing data from 2014 MHI Quick Facts Manufactured Housing vs. Single Family • Average cost of Manufactured Housing ≈ $64,000 or roughly 1 years income • Average cost of Single Family ≈ $324,500 or roughly 5 years income 5 AFFORDABILITY Affordability Drives Manufactured Housing

 
STABILITY OF REVENUE Stable and growing revenue due to:  Low turnover of owner occupied sites due to high cost to move a home ($4,000- $10,000)  Average tenure of our residents in our communities is 13 years  Average term of home in our communities is approximately 40 years No loss in revenue as home stays in the community. 6 Move Outs and Re-Sales Stable and Growing Revenues

 
CAPITAL EXPENDITURES Manufactured housing is a low capex business relative to its peers as it is largely a land ownership business Source: Company filings Data as of 12/31/2014 7 12.2% 8.8% 8.1% 4.7% 3.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% Multi-family Student Housing Overall Average Self-Storage Manufactured Housing Capex as a % of Revenues

 
RECESSION RESISTANT Same Site NOI Growth Same Site OccupancySame Site Rent Growth 3.12% 3.58% 5.54% 5.87% 7.71% 7.90% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 * 84.3% 85.8% 86.7% 88.9% 93.2% 94.2% 80.0% 82.0% 84.0% 86.0% 88.0% 90.0% 92.0% 94.0% 96.0% 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 * $413  $425  $437  $445  $456  $472   $370  $390  $410  $430  $450  $470  $490 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 * A v e r a g e M o n t h l y R e n t o f M a n u f a c t u r e d H o m e s  Low annual resident turnover results in stability of income and occupancy  Strong and consistent rental growth creating a stable revenue stream  Occupancy gains are a function of Sun’s integrated platform, including leasing, sales, and financing 8 *Projection based on midpoint of 2015 guidance

 
SAME SITE NOI Source: Citi Investment research, May 2015. “REITs”- includes an index of REITs across a variety of asset classes including self storage, mixed office, regional malls, shopping centers, multifamily, student housing, manufactured homes and specialty Sun’s average same site NOI growth has exceeded the Industry Average by 1.6% and Apartment Average by 1.4% over a 15 year period 9 ‐9.00% ‐8.00% ‐7.00% ‐6.00% ‐5.00% ‐4.00% ‐3.00% ‐2.00% ‐1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 1 Q 9 9 2 Q 9 9 3 Q 9 9 4 Q 9 9 1 Q 0 0 2 Q 0 0 3 Q 0 0 4 Q 0 0 1 Q 0 1 2 Q 0 1 3 Q 0 1 4 Q 0 1 1 Q 0 2 2 Q 0 2 3 Q 0 2 4 Q 0 2 1 Q 0 3 2 Q 0 3 3 Q 0 3 4 Q 0 3 1 Q 0 4 2 Q 0 4 3 Q 0 4 4 Q 0 4 1 Q 0 5 2 Q 0 5 3 Q 0 5 4 Q 0 5 1 Q 0 6 2 Q 0 6 3 Q 0 6 4 Q 0 6 1 Q 0 7 2 Q 0 7 3 Q 0 7 4 Q 0 7 1 Q 0 8 2 Q 0 8 3 Q 0 8 4 Q 0 8 1 Q 0 9 2 Q 0 9 3 Q 0 9 4 Q 0 9 1 Q 1 0 2 Q 1 0 3 Q 1 0 4 Q 1 0 1 Q 1 1 2 Q 1 1 3 Q 1 1 4 Q 1 1 1 Q 1 2 2 Q 1 2 3 Q 1 2 4 Q 1 2 1 Q 1 3 2 Q 1 3 3 Q 1 3 4 Q 1 3 1 Q 1 4 2 Q 1 4 3 Q 1 4 4 Q 1 4 1 Q 1 5 Apartments Apartments Average (2.9%) SUI SUI Average (4.3%) Industry Average (2.7%)

 
SAME SITE INDEXED NOI GROWTH MH is the most recession resistant sector of the housing and commercial real estate sectors and has consistently outperformed multifamily in same site NOI growth since 2000. Source: SNL 10

 
TIMELINE : STRATEGIC ACQUISITIONS • 17 MH & 1 RV properties Kentland Acquisition growing the portfolio. 136 communities Acquired 115 communities in 4 years totaling over $2.4 billion, diversifying from both a business segment and geographic perspective. 11 2011 173 communities 2012 188 communities 2013 217 communities 2014 251 communities 2015 • Further strengthened the MH portfolio with the 6 community Rudgate Acquisition. • Acquired Palm Creek, an irreplaceable age restricted asset. • Geographic & RV Diversification with 10 RV community Morgan acquisition entering 5 new states. • Closed 1st phase of “ALL” 59 quality, high quality, age-restricted community acquisition, strengthening & diversifying the portfolio. • Final closing of “ALL” acquisition enhancing the portfolio by adding FL and 26 age- restricted communities. • Acquired 6 MH communities, adding 3 age-restricted communities in FL.

 
GROWTH THROUGH ACCRETIVE ACQUISITIONS Since June 2011, Sun has acquired over $2.4 billion of acquisitions, increasing its number of sites and communities by 91% and 95%, respectively 2011 Acquisitions (26 Communities) 90.8% 92.5% 97.6% 90% 92% 94% 96% 98% 100% Year 1 Year 2 Year 3 Occupancy 2012 Acquisitions (11 Communities) 96.8% 97.1% 96% 97% 98% 99% 100% Year 1 Year 2 Occupancy 12  $13  $16  $19  $22  $25  $28  $31  $34  $37  $40 Year 1 Year 2 Year 3 ( i n   m i l l i o n s ) Revenues NOI  $20  $22  $24  $26  $28  $30  $32  $34  $36  $38  $40 Year 1 Year 2 (   i n   m i l l i o n s ) Revenues NOI

 
RV INDUSTRY : GROWTH CONTRIBUTORS Contributors  In the 5 years to 2020, industry revenue is expected to increase at approximately 1.6% to $6 billion  Shipments reached a 7 year high in 2014 and a 6.5% year-over-year increase is projected for 2015  16,000 RV parks in the U.S. for 9 million RV’s  Growth in disposable income positively affects the industry and is expected to average 2.4% through 2020  Through 2020 domestic travel is forecast to increase at an average rate of 1.6% per year  Through 2020 inbound travel is forecast to increase at 4.2% per year Sources: RVIA , GoRVing.com & IBISWorld *Recession period (credit and gas crunch). RV INDUSTRY: High Demand/ Steady Growth 13

 
SUN RV PORTFOLIO PERFORMANCE Strong RV Portfolio Performance **Based on 2015 guidance. Percentage of revenues from RV resorts increased from 10% in 2011 to an estimated 18% in 2015 NOI and Income Growth – 2013 Morgan acquisition (10 properties) 14

 
SUN’S TRANSFORMATION 15 All‐Age, 75% Age‐Restricted,  25% Geographic GROWTH – GEOGRAPHIC DIVERSIFICATION – STRENGTHEN RV POSITION – ENHANCED PORTFOLIO QUALITY June 2011 June 2015 Demographic Site Mix MI FL TX IN Other (37%) (20%) (10%) (12%) (21%) FL MI TX IN AZ Other (29%) (27%) (7%) (6%) (5%) (26%) All‐Age, 93% Age‐Restricted, 7%     

 
GROWTH THROUGH EXPANSION OPPORTUNITIES  Inventory of over 7,500 zoned and entitled sites available for expansion at 42 communities  Expanding in communities with strong demand evidenced by occupancy of ~95%  Expansion lease-up is driven by sales, rental and relocation programs  800 sites expected to be developed at 8 communities in TX, CA, OH and MD by end of 2015  4,100 sites planned for development in the next 4 years  Assuming a 100 site expansion at $45,000 per site, that is leased up in a year (8 sites/month), results in an unlevered return of 15%-17%* *assuming a 6% cap rate and exiting in 5 years 16 Strong Growth and Returns from Expansions

 
CONSERVATIVE BALANCE SHEET Net Debt / Enterprise Value EBITDA / Interest 17 *Calculated based on trailing 12 months ended March 31, 2015 Net Debt / EBITDA Fixed Debt (%)

 
EXPERIENCED AND PROVEN LEADERSHIP TEAM Key executives have a combined 80 years experience in the industry and over 65 years at the company. Senior Management team has combined experience of over 70 years at the company Gary A. Shiffman - Chairman and Chief Executive Officer Karen J. Dearing – Executive Vice President and Chief Financial Officer John B. McLaren – President and Chief Operating Officer Jonathan M. Colman - Executive Vice President of Acquisitions • Vision and leadership to generate consistent profitability  through all cycles • Superior total return performance • Strong portfolio management as reflected by continuously  improving operating metrics • Sound balance sheet management and improving credit  metrics • Solid external growth strategy in highly‐fragmented sector • Wide access to various capital sources  18

 
19

 
PERFORMANCE VS. INDICES 20 Sun has outperformed all major REIT sector indices and many major market indices over the last five years. 368% 259% 212% 209% 209% 197% 197% 0% 50% 100% 150% 200% 250% 300% 350% 400% SUI SNL US REIT Manufactured Homes S&P Small-Cap SNL US REIT Equity MSCI US REIT (RMS) Russell 2000 S&P 500 368% 286% 259% 256% 237% 233% 203% 198% 193% 183% 181% 0% 50% 100% 150% 200% 250% 300% 350% 400% SUI Self-Storage Manufactured Housing Shopping Malls Multifamily Retail Strip Malls Healthcare Industrial Hotel Office 5-year Total Returns by Index as of 3-31-2015 5-year Total Returns by REIT Sector as 3-31-2015 Source: SNL

 

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