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Form 8-K SUN COMMUNITIES INC For: Oct 27

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October 27, 2015 8:46 AM 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: October 27, 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 2.02
Results of Operations and Financial Condition

On October 27, 2015, Sun Communities, Inc. (the "Company") issued a press release, furnished as Exhibit 99.1 and incorporated herein by reference, announcing its financial results for the period ended September 30, 2015, and certain other information.

The Company will hold an investor conference call and webcast at 1:00 p.m. ET on October 27, 2015 to disclose and discuss the financial results for the period ended September 30, 2015.

The information contained in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended.

Item 9.01
Financial Statements and Exhibits
(d)
Exhibits.
99.1
Press release issued October 27, 2015





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: October 27, 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
 
Press release issued October 27, 2015
 
 
 



Exhibit 99.1

    


NEWS RELEASE                                        
October 27, 2015
                
Sun Communities, Inc. Reports 2015 Third Quarter Results

Southfield, Michigan, October 27, 2015 - Sun Communities, Inc. (NYSE: SUI) (the “Company”), a real estate investment trust (“REIT”) that owns and operates manufactured housing ("MH") and recreational vehicle ("RV") communities, today reported its third quarter results.

Highlights: Three Months Ended September 30, 2015

•
Funds from operations ("FFO")(1) excluding certain items was $1.05 per diluted share and OP unit ("Share") for the three months ended September 30, 2015, representing an 8.2 percent increase over the same period last year.

•
Same site Net Operating Income ("NOI")(2) increased by 9.1 percent as compared to the three months ended September 30, 2014.

•
Revenue producing sites increased by 358 sites during the three months ended September 30, 2015, bringing total portfolio occupancy to 93.7 percent.

•
New home sales more than doubled and pre-owned home sales grew by 13.7 percent as compared to the three months ended September 30, 2014, resulting in total homes sales increasing by 19.5 percent.

•
Acquired three RV communities for $76.1 million; two in Maryland and one in Florida adding 1,185 developed sites and approximately 290 sites available for expansion.

•
Sale of three MH communities; two in Ohio and one in Michigan for approximately $32.5 million. Subsequent to the quarter, completed the sale of three MH communities in Indiana for $36.1 million.

•
Refinanced the Company's senior line of credit; increasing its capacity to $450.0 million, extending its maturity and reducing interest rate spreads.

•
Obtained $51.2 million in financing for four communities for 25 years at 4.06 percent interest.

•
Repurchased 4.1 million shares of Series A-4 Cumulative Convertible Preferred Stock for $126.4 million.

“We continue to successfully execute on our external growth strategy of selecting properties for acquisition with both prime destination locations and strong potential NOI growth, while divesting of communities that no longer meet our long-term objectives," said Gary A. Shiffman, Chairman and CEO. “As a result of our strong operating performance, the benefits of our high-quality acquisitions and the ongoing strengthening of our balance sheet, the Company is building a strong foundation for long-term growth for our shareholders,” Shiffman added.



Sun Communities, Inc. 3rd Quarter 2015                                 Page 2



Funds from Operations ("FFO")(1) 

FFO(1) excluding certain items was $61.5 million and $42.1 million, or $1.05 and $0.97 per Share, for the three months ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015 and 2014, FFO(1) excluding certain items was $158.5 million and $113.2 million, or $2.83 and $2.72 per Share, respectively.

Net Income Attributable to Common Stockholders

Net income attributable to common stockholders for the third quarter of 2015 was $28.8 million, or $0.54 per diluted common share, as compared to net income of $22.7 million, or $0.55 per diluted common share, for the third quarter of 2014.

Net income attributable to common stockholders for the nine months ended September 30, 2015 was $47.9 million, or $0.90 per diluted common share, as compared to net income of $35.4 million , or $0.85 per diluted common share, for the nine months ended September 30, 2014.

Community Occupancy

Total portfolio occupancy increased to 93.7 percent at September 30, 2015 from 92.5 percent at September 30, 2014. During the third quarter of 2015, revenue producing sites increased by 358 sites, as compared to 428 revenue producing sites gained in the third quarter of 2014.

Revenue producing sites increased by 1,357 sites for the nine months ended September 30, 2015 as compared to 1,415 revenue producing sites gained during the nine months ended September 30, 2014.

Same Site Results

For the 174 communities owned throughout 2015 and 2014, third quarter 2015 total revenues increased 7.4 percent and total expenses increased 3.7 percent, resulting in an increase in NOI(2) of 9.1 percent over the third quarter of 2014. Same site occupancy increased to 95.0 percent at September 30, 2015 from 93.5 percent at September 30, 2014.

For the nine months ended September 30, 2015, total revenues increased 7.5 percent and total expenses increased 3.6 percent, resulting in an increase in NOI(2) of 9.2 percent over the nine months ended September 30, 2014.

Home Sales

The Company sold 60 new homes during the third quarter of 2015, representing an increase of 130.8 percent as compared to the same three month period in 2014. Total home sales were 626 for the third quarter as compared to 524 homes sold during the third quarter of 2014, a 19.5 percent increase. Total home sales gross profit margins were 29.5 percent, an increase of 520 basis points when compared to the same period in 2014.

During the nine months ended September 30, 2015, 1,745 homes were sold compared to the 1,414 homes sold during the same period ending 2014, resulting in an additional 331 homes sold during 2015, or a 23.4

Sun Communities, Inc. 3rd Quarter 2015                                 Page 3

percent increase. Total home sales gross profit margins were 27.3 percent, an increase of 320 basis points when compared to the same period in 2014.

Rental homes sales, which are included in total home sales, were 611 and 562 for the nine months ended September 30, 2015 and 2014.

Acquisitions (3) 

As previously announced, the Company acquired three recreational vehicle communities for $76.1 million in cash; two in Maryland and one in Florida. The properties contain 1,185 developed sites and approximately 290 sites available for expansion. These high quality resorts compliment the Company's geographic mix in the highly desirable areas of Ocean City, Maryland and Central Florida.

Since March of this year the Company has acquired 12 communities (8 manufactured home communities and 4 recreational vehicle resorts) for approximately $400.0 million resulting in the addition of over 5,300 developed sites to the portfolio.

Dispositions

The Company completed the sale of the six manufactured home communities that was announced in its second quarter earnings press release in two separate closings. On August 19, 2015, three of the manufactured home communities, associated homes and notes, (two in Ohio and one in Michigan) comprised of approximately 900 developed sites were sold for $32.5 million. On October 16, 2015, the Company sold the three remaining manufactured home communities, associated homes and notes for $36.1 million. The properties were located in Indiana and contained approximately 1,250 developed sites. Proceeds from the dispositions were used to pay down the Company's line of credit.

“We continue to evaluate a steady flow of both manufactured home communities and recreational vehicle resort acquisition opportunities and seek to capitalize on our opportunity to re-cycle funds from our dispositions into purchased communities which provide higher long term value for our shareholders,” said Shiffman.

Debt Transactions

As previously disclosed, the Company entered into a senior line of credit facility in the amount of $450.0 million (the "Facility"). The Facility is comprised of a $392.0 million revolving loan and a $58.0 million term loan and has an accordion feature allowing up to $300.0 million in additional borrowing upon the satisfaction of certain conditions. The four-year facility also contains two six-month extension options and bears interest at a floating rate based on Eurodollar plus a margin that is determined based on the Company's leverage ratio, which can range from 1.40% to 2.25% for the revolving loan and 1.35% to 2.20% for the term loan. The Facility replaced the Company's $350.0 million senior secured revolving line of credit which was scheduled to mature on May 14, 2017.

The Company entered into an agreement in August 2015 to borrow $87.0 million in mortgage debt that will be secured by five communities at an interest rate of 4.06% for a term of 25 years and will be completed in two separate closings. On September 24, 2015, the Company completed the first closing for $51.2 million secured by four communities. The second closing, for $35.8 million, is scheduled to close in December 2015.

Sun Communities, Inc. 3rd Quarter 2015                                 Page 4


Equity Transactions

As previously announced, the Company repurchased 4,066,586 shares of the Company’s 6.50% Series A-4 Cumulative Convertible Preferred Stock pursuant to a repurchase agreement with certain holders. Each Series A-4 preferred share was purchased at a price equal to $30.90 plus $0.18 for accrued and unpaid distributions through August 9, 2015. In aggregate the Company repurchase totaled $126.4 million, which was funded using the Company's line of credit. After the repurchase there are 2,298,184 Series A-4 preferred shares outstanding.

The Company sold 608,100 common shares using its at-the-market program at an average sales price of $68.00 for net proceeds of $40.8 million during the three months ended September 30, 2015, which were used to pay down the Company's line of credit.

Guidance

The Company is narrowing the range of its previously provided guidance for full year 2015 FFO(1) excluding certain items to $3.65 - $3.69 per Share. The guidance provided is subject to the estimates and assumptions previously disclosed and the following: (a) includes all acquisitions and dispositions completed through October 27, 2015, but no prospective acquisitions or dispositions and (b) the assumption that certain non-core items are adjusted from FFO(1) as noted in the table contained in this press release.

The estimates and assumptions presented above are forward-looking based on the Company's current assessment of economic and market conditions, as well as other risks outlined below under the caption “Forward-Looking Statements.”

Sun Communities, Inc. 3rd Quarter 2015                                 Page 5

Earnings Conference Call

A conference call to discuss third quarter operating results will be held on Tuesday October 27, 2015 at 1:00 P.M. (ET). To participate, call toll-free 888-427-9411. Callers outside the U.S. or Canada can access the call at 719-457-2689. A replay will be available following the call through November 10, 2015, and can be accessed toll-free by calling 888-203-1112 or by calling 719-457-0820. The Conference ID number for the call and the replay is 669598. The conference call will be available live on Sun Communitie's website www.suncommunities.com. Replay will also be available on the website.

Sun Communities, Inc. is a REIT that currently owns and operates a portfolio of 248 communities comprising approximately 92,500 developed sites.

For more information about Sun Communities, Inc., please visit our website at www.suncommunities.com.

Contact

Please address all inquiries to our investor relations department at our website www.suncommunities.com, by phone (248) 208-2500, by email [email protected] or by mail Sun Communities, Inc. Investor Relations, 27777 Franklin Road, Ste. 200, Southfield, MI 48034.


Sun Communities, Inc. 3rd Quarter 2015                                 Page 6

Forward-Looking Statements

This press release contains various “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the Company intends that such forward-looking statements will be subject to the safe harbors created thereby. Forward-looking statements can be identified by words such as “will,” “may,” “could,” “expect,” “anticipate,” “believes,” “intends,” “should,” “plans,” “estimates,” “approximate”, “guidance” and similar expressions in this press release that predict or indicate future events and trends and that do not report historical matters.

These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control. These risks, uncertainties, and other factors may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, the performance of recent acquisitions, the ability to integrate future acquisitions smoothly and efficiently, changes in market rates of interest, the ability of manufactured home buyers to obtain financing, the level of repossessions by manufactured home lenders and those risks and uncertainties referenced under the headings entitled “Risk Factors” contained in the Company's 2014 Annual Report on Form 10-K, and the Company’s other periodic filings with the Securities and Exchange Commission.

The forward-looking statements contained in this press release speak only as of the date hereof and the Company expressly disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in the Company’s assumptions, expectations of future events, or trends.


Sun Communities, Inc. 3rd Quarter 2015                                 Page 7

(1) 
Funds from operations attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities ("FFO") is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as net income (loss) (computed in accordance with generally accepted accounting principles “GAAP”), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company's operating performance. Management generally considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not readily apparent from net loss. Management believes that the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. FFO is computed in accordance with the Company's interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company.

Because FFO excludes significant economic components of net income (loss) including depreciation and amortization, FFO should be used as an adjunct to net income (loss) and not as an alternative to net income (loss). The principal limitation of FFO is that it does not represent cash flow from operations as defined by GAAP and is a supplemental measure of performance that does not replace net income (loss) as a measure of performance or net cash provided by operating activities as a measure of liquidity. In addition, FFO is not intended as a measure of a REIT's ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO only provides investors with an additional performance measure.


(2) 
Investors in and analysts following the real estate industry utilize NOI as a supplemental performance measure. NOI is derived from revenues minus property operating expenses and real estate taxes. NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity; nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions. The Company believes that net income (loss) is the most directly comparable GAAP measurement to NOI. Net income (loss) includes interest and depreciation and amortization which often have no effect on the market value of a property and therefore limit its use as a performance measure. In addition, such expenses are often incurred at a parent company level and therefore are not necessarily linked to the performance of a real estate asset. The Company believes that NOI is helpful to investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key management tool when evaluating performance and growth of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense, and non-property specific expenses such as general and administrative expenses, all of which are significant costs, and therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.

(3) 
The consideration amounts presented with respect to acquired communities represent the economic transaction and do not contemplate the fair value purchase accounting required by GAAP.

Sun Communities, Inc. 3rd Quarter 2015                                 Page 8
                                        

Consolidated Balance Sheets
(in thousands, except per share amounts)
 
(unaudited) 
 September 30, 2015
 
December 31, 2014
ASSETS
 
 
 
Land
$
457,279

 
$
309,386

Land improvements and buildings
3,604,444

 
2,509,827

Rental homes and improvements
478,764

 
439,163

Furniture, fixtures, and equipment
98,567

 
81,586

Land held for future development
23,659

 
23,955

Investment property
4,662,713

 
3,363,917

Accumulated depreciation
(879,184
)
 
(795,753
)
Investment property, net (including $92,593 and $94,230 for consolidated variable interest entities at September 30, 2015 and December 31, 2014)
$
3,783,529

 
$
2,568,164

Cash and cash equivalents
23,917

 
83,459

Inventory of manufactured homes
15,263

 
8,860

Notes and other receivables, net
49,201

 
51,895

Collateralized receivables, net
138,241

 
122,962

Other assets, net
104,452

 
102,352

TOTAL ASSETS
$
4,114,603

 
$
2,937,692

LIABILITIES
 
 
 
Mortgage loans payable (including $64,531 and $65,849 for consolidated variable interest entities at September 30, 2015 and December 31, 2014)
$
2,205,760

 
$
1,656,740

Secured borrowings on collateralized receivables
138,887

 
123,650

Preferred OP units - mandatorily redeemable
45,903

 
45,903

Lines of credit
167,000

 
5,794

Distributions payable
38,819

 
35,084

Other liabilities (including $19,474 and $10,442 for consolidated variable interest entities at September 30, 2015 and December 31, 2014)
190,284

 
130,369

TOTAL LIABILITIES
$
2,786,653

 
$
1,997,540

Commitments and contingencies
 
 
 
Series A-4 preferred stock, $0.01 par value. Issued and outstanding: 2,298 shares at September 30, 2015 and 483 shares at December 31, 2014
$
68,633

 
$
13,610

Series A-4 preferred OP units
$
20,982

 
$
18,722

STOCKHOLDERS’ EQUITY
 
 
 
Series A preferred stock, $0.01 par value. Issued and outstanding: 3,400 shares at September 30, 2015 and December 31, 2014
$
34

 
$
34

Common stock, $0.01 par value. Authorized: 180,000 shares;
Issued and outstanding: 54,546 shares at September 30, 2015 and 48,573 shares at December 31, 2014
545

 
486

Additional paid-in capital
2,079,139

 
1,741,154

Distributions in excess of accumulated earnings
(916,961
)
 
(863,545
)
Total Sun Communities, Inc. stockholders' equity
1,162,757

 
878,129

Noncontrolling interests:
 

 
 

Common and preferred OP units
76,914

 
30,107

Consolidated variable interest entities
(1,336
)
 
(416
)
Total noncontrolling interest
75,578

 
29,691

TOTAL STOCKHOLDERS’ EQUITY
1,238,335

 
907,820

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
4,114,603

 
$
2,937,692


Sun Communities, Inc. 3rd Quarter 2015                                 Page 9

Consolidated Statements of Operations
Unaudited - dollars in thousands, except per share amounts
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
REVENUES
 
 
 
 
 
 
 
Income from real property
$
137,548

 
$
94,245

 
$
382,906

 
$
267,847

Revenue from home sales
18,991

 
13,913

 
54,559

 
38,849

Rental home revenue
11,856

 
9,829

 
34,480

 
28,964

Ancillary revenues
12,511

 
8,762

 
20,956

 
15,452

Interest
3,987

 
3,545

 
11,864

 
10,425

Brokerage commissions and other income, net
462

 
338

 
1,728

 
720

Total revenues
185,355

 
130,632

 
506,493

 
362,257

COSTS AND EXPENSES
 
 
 
 
 
 
 
Property operating and maintenance
38,716

 
28,031

 
102,437

 
76,413

Real estate taxes
8,520

 
6,004

 
26,031

 
18,092

Cost of home sales
13,386

 
10,524

 
39,645

 
29,472

Rental home operating and maintenance
7,031

 
6,232

 
18,115

 
16,696

Ancillary expenses
6,936

 
5,197

 
13,631

 
10,254

General and administrative - real property
10,735

 
6,971

 
31,051

 
23,177

General and administrative - home sales and rentals
3,845

 
2,313

 
11,290

 
7,932

Transaction costs
1,664

 
2,399

 
13,150

 
4,263

Depreciation and amortization
44,695

 
29,917

 
130,107

 
88,851

Asset impairment charge
—

 
837

 
—

 
837

Extinguishment of debt
—

 
—

 
2,800

 
—

Interest
27,453

 
18,619

 
79,593

 
54,149

Interest on mandatorily redeemable preferred OP units
790

 
808

 
2,429

 
2,417

Total expenses
163,771

 
117,852

 
470,279

 
332,553

Income before other gains (losses)
21,584

 
12,780

 
36,214

 
29,704

Gain on disposition of properties, net
18,190

 
13,631

 
26,946

 
14,516

Provision for state income taxes
(77
)
 
(69
)
 
(229
)
 
(207
)
Distributions from affiliate
—

 
400

 
7,500

 
1,200

Net income
39,697

 
26,742

 
70,431

 
45,213

Less:  Preferred return to Series A-1 preferred OP units
591

 
661

 
1,844

 
1,997

Less:  Preferred return to Series A-3 preferred OP units
45

 
45

 
136

 
136

Less:  Preferred return to Series A-4 preferred OP units
326

 
—

 
1,032

 
—

Less: Preferred return to Series C preferred OP units
340

 
—

 
680

 
—

Less:  Amounts attributable to noncontrolling interests
2,125

 
1,851

 
3,132

 
3,093

Net income attributable to Sun Communities, Inc.
36,270

 
24,185

 
63,607

 
39,987

Less: Preferred stock distributions
3,179

 
1,514

 
11,353

 
4,542

Less: Preferred stock redemption costs
4,328

 
—

 
4,328

 
—

Net income attributable to Sun Communities, Inc. common stockholders
$
28,763

 
$
22,671

 
$
47,926

 
$
35,445

Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
53,220

 
41,023

 
52,855

 
39,283

Diluted
53,665

 
41,267

 
53,271

 
41,575

Earnings per share:
 

 
 

 
 

 
 

Basic
$
0.53

 
$
0.55

 
$
0.90

 
$
0.89

Diluted
$
0.54

 
$
0.55

 
$
0.90

 
$
0.85


Sun Communities, Inc. 3rd Quarter 2015                                 Page 10

Reconciliation of Net Income to FFO(1) 
(in thousands, except per share amounts)


 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Net income attributable to Sun Communities, Inc. common stockholders
$
28,763

 
$
22,671

 
$
47,926

 
$
35,445

Adjustments:
 

 
 

 
 
 
 
Amounts attributable to noncontrolling interests
1,174

 
1,220

 
1,554

 
2,067

Preferred distribution to Series A-4 preferred stock
1,666

 
—

 
—

 
—

Depreciation and amortization
45,014

 
30,229

 
130,247

 
89,772

Asset impairment charge
—

 
837

 
—

 
837

Gain on disposition of properties, net
(18,190
)
 
(13,631
)
 
(26,946
)
 
(14,516
)
Gain on disposition of assets, net
(2,937
)
 
(1,634
)
 
(7,065
)
 
(4,663
)
Funds from operations ("FFO") attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1)(4)
55,490

 
39,692

 
145,716

 
108,942

Adjustments:
 
 
 
 
 
 
 
Distribution from affiliate
—

 
—

 
(7,500
)
 
—

Transaction costs
1,664

 
2,399

 
13,150

 
4,263

Preferred stock redemption costs
4,328

 
—

 
4,328

 
—

Extinguishment of debt
—

 
—

 
2,800

 
—

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items (1)(4)
$
61,482

 
$
42,091

 
$
158,494

 
$
113,205

 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic:
53,220

 
41,023

 
52,855

 
39,283

Add:


 


 


 


Common stock issuable upon conversion of stock options
14

 
15

 
16

 
16

Restricted stock
431

 
229

 
400

 
207

Common OP units
2,874

 
2,069

 
2,783

 
2,069

Common stock issuable upon conversion of Series A-4 preferred stock
1,826

 
—

 
—

 
—

Weighted average common shares outstanding - fully diluted
58,365

 
43,336

 
56,054

 
41,575

 
 
 
 
 
 
 
 
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) per Share - fully diluted
$
0.95

 
$
0.92

 
$
2.60

 
$
2.62

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items(1) per Share - fully diluted
$
1.05

 
$
0.97

 
$
2.83

 
$
2.72

(4) The effect of certain anti-dilutive convertible securities is excluded from these items.

Sun Communities, Inc. 3rd Quarter 2015                                 Page 11

Statement of Operations – Same Site
(in thousands except for Other Information)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
Change
 
% Change
 
2015
 
2014
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from real property
$
84,972

 
$
79,107

 
$
5,865

 
7.4
 %
 
$
248,082

 
$
230,860

 
$
17,222

 
7.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PROPERTY OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and benefits
6,996

 
7,217

 
(221
)
 
(3.1
)%
 
20,793

 
19,783

 
1,010

 
5.1
 %
Legal, taxes, & insurance
1,436

 
1,285

 
151

 
11.8
 %
 
4,203

 
3,602

 
601

 
16.7
 %
Utilities
5,440

 
4,747

 
693

 
14.6
 %
 
14,961

 
14,555

 
406

 
2.8
 %
Supplies and repair
4,119

 
3,654

 
465

 
12.7
 %
 
9,538

 
9,221

 
317

 
3.4
 %
Other
2,706

 
2,559

 
147

 
5.7
 %
 
7,386

 
7,084

 
302

 
4.3
 %
Real estate taxes
5,336

 
5,639

 
(303
)
 
(5.4
)%
 
16,689

 
16,768

 
(79
)
 
(0.5
)%
Property operating expenses
26,033

 
25,101

 
932

 
3.7
 %
 
73,570

 
71,013

 
2,557

 
3.6
 %
NET OPERATING INCOME ("NOI")(3)
$
58,939

 
$
54,006

 
$
4,933

 
9.1
 %
 
$
174,512

 
$
159,847

 
$
14,665

 
9.2
 %


 
 
As of September 30,
OTHER INFORMATION
 
2015
 
2014
 
Change
Number of properties
 
174

 
174

 
—

Developed sites
 
66,020

 
65,340

 
680

Occupied sites (5)
 
55,699

 
53,750

 
1,949

Occupancy % (5) (6)
 
95.0
%
 
93.5
%
 
1.5
%
Weighted average monthly rent per site - MH
 
$
472

 
$
457

 
$
15

Weighted average monthly rent per site - RV (7)
 
$
407

 
$
394

 
$
13

Weighted average monthly rent per site - Total
 
$
463

 
$
449

 
$
14

Sites available for development
 
5,797

 
6,118

 
(321
)

(5) Includes manufactured housing and annual/seasonal recreational vehicle sites, and excludes transient recreational vehicle sites, which are included in total developed sites.
(6) Occupancy % excludes recently completed but vacant expansion sites.
(7) Weighted average rent pertains to annual/seasonal RV sites and excludes transient RV sites.



Sun Communities, Inc. 3rd Quarter 2015                                 Page 12

Rental Program Summary
(amounts in thousands except for *)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
Change
 
% Change
 
2015
 
2014
 
Change
 
% Change
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental home revenue
$
11,856

 
$
9,829

 
$
2,027

 
20.6
 %
 
$
34,480

 
$
28,964

 
$
5,516

 
19.0
 %
Site rent included in Income from real property
15,762

 
13,543

 
2,219

 
16.4
 %
 
46,440

 
40,159

 
6,281

 
15.6
 %
Rental Program revenue
27,618

 
23,372

 
4,246

 
18.2
 %
 
80,920

 
69,123

 
11,797

 
17.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions
855

 
677

 
178

 
26.3
 %
 
2,441

 
1,899

 
542

 
28.5
 %
Repairs and refurbishment
3,389

 
3,049

 
340

 
11.2
 %
 
8,127

 
7,859

 
268

 
3.4
 %
Taxes and insurance
1,645

 
1,313

 
332

 
25.3
 %
 
4,665

 
3,935

 
730

 
18.6
 %
Marketing and other
1,142

 
1,193

 
(51
)
 
(4.3
)%
 
2,882

 
3,003

 
(121
)
 
(4.0
)%
Rental Program operating and maintenance
7,031

 
6,232

 
799

 
12.8
 %
 
18,115

 
16,696

 
1,419

 
8.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET OPERATING INCOME ("NOI") (3)
$
20,587

 
$
17,140

 
$
3,447

 
20.1
 %
 
$
62,805

 
$
52,427

 
$
10,378

 
19.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupied rental home information as of September 30, 2015 and 2014:
Number of occupied rentals, end of period* 
 
 
 
 
 
 
 
 
11,443

 
10,116

 
1,327

 
13.1
 %
Investment in occupied rental homes
 
 
 
 
 
 
 
 
$
456,027

 
$
389,634

 
$
66,393

 
17.0
 %
Number of sold rental homes* 
 
 
 
 
 
 
 
 
611

 
562

 
49

 
8.7
 %
Weighted average monthly rental rate, end of period* 
 
 
 
 
 
$
843

 
$
816

 
$
27

 
3.3
 %



Sun Communities, Inc. 3rd Quarter 2015                                 Page 13

Homes Sales Summary
(amounts in thousands except for *)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
Change
 
% Change
 
2015
 
2014
 
Change
 
% Change
New home sales
$
4,469

 
$
2,250

 
$
2,219

 
98.6
 %
 
$
14,890

 
$
6,825

 
$
8,065

 
118.2
 %
Pre-owned home sales
14,522

 
11,663

 
2,859

 
24.5
 %
 
39,669

 
32,024

 
7,645

 
23.9
 %
Revenue from home sales
18,991

 
13,913

 
5,078

 
36.5
 %
 
54,559

 
38,849

 
15,710

 
40.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New home cost of sales
3,739

 
1,910

 
1,829

 
95.8
 %
 
12,348

 
5,785

 
6,563

 
113.4
 %
Pre-owned home cost of sales
9,647

 
8,614

 
1,033

 
12.0
 %
 
27,297

 
23,687

 
3,610

 
15.2
 %
Cost of home sales
13,386

 
10,524

 
2,862

 
27.2
 %
 
39,645

 
29,472

 
10,173

 
34.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI / Gross Profit (2)
$
5,605

 
$
3,389

 
$
2,216

 
65.4
 %
 
$
14,914

 
$
9,377

 
$
5,537

 
59.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – new homes
$
730

 
$
340

 
$
390

 
114.7
 %
 
$
2,542

 
$
1,040

 
$
1,502

 
144.4
 %
Gross margin % – new homes
16.3
%
 
15.1
%
 
1.2
%
 
 
 
17.1
%
 
15.2
%
 
1.9
%
 
 
Average selling price - new homes*
$
74,485

 
$
86,482

 
$
(11,997
)
 
(13.9
)%
 
$
77,956

 
$
85,306

 
$
(7,350
)
 
(8.6
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit – pre-owned homes
$
4,875

 
$
3,049

 
$
1,826

 
59.9
 %
 
$
12,372

 
$
8,337

 
$
4,035

 
48.4
 %
Gross margin % – pre-owned homes
33.6
%
 
26.1
%
 
7.5
%
 
 
 
31.2
%
 
26.0
%
 
5.2
%
 
 
Average selling price - pre-owned homes*
$
25,658

 
$
23,435

 
$
2,223

 
9.5
 %
 
$
25,527

 
$
24,011

 
$
1,516

 
6.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home sales volume:
 
 
 
 
 
 
 
 
New home sales*
60

 
26

 
34

 
130.8
 %
 
191

 
80

 
111

 
138.8
 %
Pre-owned home sales*
566

 
498

 
68

 
13.7
 %
 
1,554

 
1,334

 
220

 
16.5
 %
Total homes sold*
626

 
524

 
102

 
19.5
 %
 
1,745

 
1,414

 
331

 
23.4
 %


Sun Communities, Inc. 3rd Quarter 2015                                 Page 14

Acquisition Summary - Properties Acquired in 2014 and 2015
(amounts in thousands except for statistical data)

 
Three Months Ended
September 30, 2015
 
Nine Months Ended
September 30, 2015
REVENUES:
 
 
 
Income from real property (excluding transient revenue)
$
37,148

 
$
103,286

Transient revenue
9,808

 
13,500

Revenue from home sales
5,366

 
14,880

Rental home revenue
683

 
2,121

Ancillary revenues
7,143

 
9,909

Total revenues
60,148

 
143,696

COSTS AND EXPENSES:
 
 
 
Property operating and maintenance
11,936

 
28,575

Real estate taxes
3,130

 
8,794

Cost of home sales
4,001

 
11,515

Rental home operating and maintenance
294

 
527

Ancillary expense
3,630

 
5,322

Total expenses
22,991

 
54,733

 
 
 
 
NET OPERATING INCOME ("NOI") (2)
$
37,157

 
$
88,963

 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2015
Other information:
 
 
 
Number of properties
 
 
77

Developed sites
 
 
27,698

Occupied sites (5)
 
 
22,832

Occupancy % (5)

 
 
92.4
%
Weighted average monthly rent per site - MH
 
 
$
486

Weighted average monthly rent per site - RV (7)
 
 
$
425

Weighted average monthly rent per site - MH/RV
 
 
$
483

 
 
 
 
Home sales volume:
 
 
 
New homes
 
 
118

Pre-owned homes
 
 
310

 
 
 
 
Occupied rental home information:
 
 
 
Number of occupied rentals, end of period
 
 
491

Investment in occupied rental homes (in thousands)
 
 
$
14,085

Weighted average monthly rental rate
 
 
$
994


(5) Includes manufactured housing and annual/seasonal recreational vehicle sites, and excludes transient recreational vehicle sites, which are included in total developed sites.
(7) Weighted average rent pertains to annual/seasonal RV sites and excludes transient RV sites.


Sun Communities, Inc. 3rd Quarter 2015                                 Page 15

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