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Sun Communities, Inc. Reports 2020 Fourth Quarter Results and 2021 Guidance

February 17, 2021 5:20 PM

Southfield, MI, Feb. 17, 2021 (GLOBE NEWSWIRE) -- Sun Communities, Inc. (NYSE: SUI) (the “Company”), a real estate investment trust (“REIT”) that owns and operates, or has an interest in, manufactured housing (“MH”) communities, recreational vehicle (“RV”) resorts and marinas, (collectively, the “properties”), today reported its fourth quarter results for 2020.

Financial Results for the Quarter and Year Ended December 31, 2020

For the quarter ended December 31, 2020, total revenues increased $82.4 million, or 27.3 percent, to approximately $384.3 million compared to $301.8 million for the same period in 2019. Net income attributable to common stockholders was approximately $7.6 million, or $0.07 per diluted common share, for the quarter ended December 31, 2020.

For the year ended December 31, 2020, total revenues increased $134.3 million, or 10.6 percent, to approximately $1.4 billion compared to $1.3 billion for the same period in 2019. Net income attributable to common stockholders was $131.6 million, or $1.34 per diluted common share, for the year ended December 31, 2020.

Non-GAAP Financial Measures and Portfolio Performance

Gary Shiffman, Chief Executive Officer stated, “As we reflect on the events of 2020, we are pleased with our performance and the demonstrated resilience and stability of our business and operating platform, particularly in light of the challenging environment. We generated 4.0 percent same community NOI growth, delivered 3.5 percent year over year Core FFO(1) per Share growth, deployed $3.0 billion into accretive acquisitions and raised approximately $1.9 billion in two equity offerings with strong investor demand. We are well positioned to continue delivering industry leading growth and have a new business line that broadens our opportunity set with the addition of Safe Harbor Marinas.”

Mr. Shiffman continued, “The dedication and perseverance of our team to create value for our shareholders continues to be a key factor in our success.”

OPERATING HIGHLIGHTS

Portfolio Occupancy

Total MH and annual RV occupancy was 97.3 percent at December 31, 2020, compared to 96.4 percent at December 31, 2019, an increase of 90 basis points.

During the quarter ended December 31, 2020, MH and annual RV revenue producing sites increased by 578 sites, bringing full year 2020 revenue producing site gains to 2,505 sites.

Same Community(2) Results

For the 367 MH and RV properties owned and operated by the Company since January 1, 2019, NOI(1) for the quarter ended December 31, 2020 increased 2.1 percent over the same period in 2019, resulting from a 5.7 percent increase in revenues and a 13.6 percent increase in expenses. Adjusted to remove the impact of $0.3 million of direct COVID-19 related health and safety expense, Same Community NOI(1) growth was 2.4 percent for the quarter ended December 31, 2020. Payroll, utilities and supplies and repair costs were elevated during the quarter primarily due to the extended season of the Company’s northern RV resorts. Same Community occupancy(3) increased to 98.8 percent at December 31, 2020 from 97.0 percent at December 31, 2019.

For the year ended December 31, 2020, NOI(1) increased 4.0 percent over the same period in 2019, resulting from a 3.6 percent increase in revenues and a 3.0 percent increase in expenses. Adjusted to remove the impact of $2.4 million of direct COVID-19 related health and safety expense, Same Community NOI(1) growth was 4.4 percent for the year ended December 31, 2020.

Home Sales

During the quarter ended December 31, 2020, the Company sold 782 homes as compared to 808 homes in the same period in 2019. The Company sold 156 and 140 new homes for the quarters ended December 31, 2020 and 2019, respectively, an increase of 11.4 percent. Pre-owned home sales were 626 in the fourth quarter 2020 as compared to 668 in the same period in 2019. Rental home sales, which are included in total pre-owned home sales, were 269 and 281 for the quarters ended December 31, 2020 and 2019, respectively.

During the year ended December 31, 2020, the Company sold 2,866 homes as compared to 3,439 homes sold during 2019. The Company sold 570 and 571 new homes during the years ended December 31, 2020 and 2019, respectively. Pre-owned home sales were 2,296 during the year ended December 31, 2020, as compared to 2,868 during 2019. Rental home sales, which are included in total pre-owned home sales, were 850 and 1,140 for the years ended December 31, 2020 and 2019, respectively.

Rent Collections

For the fourth quarter of 2020, MH and annual RV rent collections were over 96.0 percent and 97.0 percent, respectively, after adjusting for the impact of COVID-19 related hardship deferrals and prepaid rent balances.

January 2021 rent collections were 97.0 percent for MH and 97.0 percent for annual RV.

PORTFOLIO ACTIVITY

Acquisitions

During and subsequent to the quarter ended December 31, 2020, the Company acquired the following communities and resorts:

Property Name Property Type Sites State Total Purchase Price (in millions) Month Acquired
Gig Harbor RV 115 WA $15.3 November
Maine MH Portfolio(a) MH 1,083 ME $81.3 November
Mouse Mountain MH / RV 304 FL $15.5 December
Lakeview Mobile Estates MH 296 CA $23.8 December
Shenandoah Acres RV 522 VA $17.0 December
Jellystone at Barton Lake RV 555 IN $24.0 December
Kittatinny Portfolio(b) RV 527 NY & PA $16.3 December
Association Island KOA RV 294 NY $15.0 January
Blue Water RV 177 UT $9.0 February
Tranquility MHC MH 25 FL $1.3 February
3,898 $218.5

(a) Includes six MH communities.

(b) Includes two RV resorts.

During and subsequent to the quarter ended December 31, 2020, the Company acquired the following marinas:

Property Name Wet Slips & Dry Storage Spaces State Total Purchase Price (in millions) Month Acquired
Safe Harbor Marinas(a) 37,305 Various $2,016.4 October
Hideaway Bay(b) 628 GA $32.9 November
Anacapa Isle(b) 453 CA $13.9 December
Annapolis 184 MD $31.0 December
Wickford 60 RI $3.5 December
Rybovich Portfolio(c) 78 FL $368.8 December
Rockland 173 ME $16.0 December
Islamorada and Angler House(d) 251 FL $18.0 February
39,132 $2,500.5

(a) Includes 99 owned marinas located in 22 states. In conjunction with the acquisition, the Company issued Series H preferred OP units. As of December 31, 2020, 581,407 Series H preferred OP units were outstanding.

(b) Acquired in connection with Safe Harbor Marinas acquisition. Transfer of the marinas was contingent on receiving third party consents.

(c) Includes two marinas. In conjunction with the acquisition, the Company issued Series I preferred OP units. As of December 31, 2020, 922,000 Series I preferred OP units were outstanding.

(d) Includes two marinas.

During the year ended December 31, 2020, the Company acquired 24 MH communities and RV resorts with 6,919 sites and 106 marinas with over 38,800 wet slips and dry rack storage spaces for a total purchase price of approximately $3.0 billion.

Construction Activity

During the quarter ended December 31, 2020, the Company completed the construction of nearly 50 sites in two ground-up developments and one redevelopment property, and over 120 expansion sites in one RV resort and one MH community. Full-year ground-up and redevelopment site deliveries were over 1,000 sites in five properties and over 300 total expansion sites in eight properties.

BALANCE SHEET, CAPITAL MARKETS ACTIVITY AND OTHER ITEMS

Debt Transactions

As of December 31, 2020, the Company had approximately $4.8 billion of debt outstanding. The weighted average interest rate was 3.4 percent and the weighted average maturity was 9.4 years. The Company had $83.0 million of unrestricted cash on hand. At December 31, 2020, the Company’s net debt to trailing twelve-month Recurring EBITDA(1) ratio was 6.9 times, which includes all of Safe Harbor’s debt, but only two months of its EBITDA contribution.

During the quarter ended December 31, 2020, as previously disclosed, the Company entered into a new $260.0 million term loan secured by 11 MH and RV properties. The loan has a 12-year maturity and a fixed interest rate of 2.64 percent.

Equity Transactions

During the quarter ended December 31, 2020, as previously disclosed, the Company closed an underwritten registered public offering of 9,200,000 shares of common stock. Proceeds from the offering were $1.2 billion after deducting expenses related to the offering. The Company used the net proceeds of the offering to fund the cash portion of the acquisition of Safe Harbor and for working capital and general corporate purposes.

2021 Distributions

The Company’s Board of Directors has approved setting the 2021 annual distribution rate at $3.32 per common share, an increase of $0.16, or 5.1 percent, over the current $3.16 per common share for 2020. This increase will begin with the first quarter distribution to be paid in April 2021. While the Board of Directors has adopted the new annual distribution policy, the amount of each quarterly distribution on the Company's common stock will be subject to approval by the Board of Directors.

New Director

On February 11, 2020 the Board of Directors increased the size of the board from seven to eight directors and appointed Tonya Allen to the Company’s Board of Directors as an independent director. Ms. Allen brings an expert perspective on sustainability and social issues, an important focus for the Company.

2021 GUIDANCE

The estimates and assumptions presented below represent a range of possible outcomes and may differ materially from actual results. These estimates include contributions from all acquisitions through the date of this release and exclude prospective acquisitions and capital markets activity. The estimates and assumptions 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 Cautionary Statement Regarding Forward-Looking Statements.

Notes to 2021 guidance:

Earnings and Core FFO(1)

Net Income
Weighted average common shares outstanding (in millions)106.9
First quarter 2021, basic earnings per share$0.08 - $0.12
Full year 2021, basic earnings per share$1.66 - $1.82

Core FFO(1)
Weighted average common shares outstanding, fully diluted (in millions)(i)112.7
First quarter 2021, Core FFO(1) per Share$1.13 - $1.17
Full year 2021, Core FFO(1) per Share$5.79 - $5.95

(i) Certain securities that are dilutive to the computation of Core FFO(1) per fully diluted share in the table above have been excluded from the computation of net income per fully diluted share, as inclusion of these securities would have been anti-dilutive to net income per fully diluted share.

1Q21 2Q21 3Q21 4Q21
Seasonality of Core FFO(1) 19.6 % 26.2 % 32.8 % 21.4 %

Total MH and RV Portfolio

Number of properties: 446

2020 Actual (in millions) 2021E Change %
Income from real property $1,002.4 10.9% - 11.4%
Total property operating expenses 367.3 13.7% - 14.4%
Net operating income $635.1 8.8% - 10.1%

1Q21 2Q21 3Q21 4Q21
Seasonality of total MH and RV portfolio NOI 22.6 % 25.0 % 28.6 % 23.8 %

2021E
MH weighted average monthly rental rate increase 3.2 %
RV weighted average monthly rental rate increase 4.3 %
Blended weighted average monthly rental rate increase 3.4 %
Increase in revenue producing sites 2,150 - 2,350
New home sales volume 550 - 650
Pre-owned home sales volume 2,400 - 2,600
Newly built ground-up and expansion sites 1,200 - 1,600

General and Administrative Expenses

2021E
General and administrative expenses $163.7 - $167.3

General and administrative expenses include the impact of the Company’s entry into the marina asset class. The marina portfolio is operated as an independent wholly-owned subsidiary retaining its own senior management, property management and back office operations. As significant growth potential through the consolidation of the highly fragmented marina industry is anticipated, costs associated with scaling to effectively operate a larger portfolio are required. As a general practice, marina acquisitions are underwritten with an expected incremental general and administrative cost of 3.0 percent of revenues.

Same Community(2) Portfolio

Number of MH and RV properties: 407

Same community NOI(1) growth is expected to be between 5.6 percent and 6.6 percent for full year 2021.

Marinas

NOI(1) inclusive of the contribution from service and ancillary operations is expected to be $163.0 million - $169.0 million.

1Q21 2Q21 3Q21 4Q21
Seasonality of marina NOI(1) 18.0% 29.0% 28.6% 24.4%

EARNINGS CONFERENCE CALL

A conference call to discuss fourth quarter operating results will be held on Thursday, February 18, 2021 at 11:00 A.M. (ET). To participate, call toll-free 877-407-9039. Callers outside the U.S. or Canada can access the call at 201-689-8470. A replay will be available following the call through March 4, 2021 and can be accessed toll-free by calling 844-512-2921 or 412-317-6671. The Conference ID number for the call and the replay is 13713712. The conference call will be available live on Sun Communities’ website located at www.suncommunities.com. The replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of December 31, 2020, owned, operated, or had an interest in a portfolio of 552 developed MH, RV and marina properties comprising over 188,000 developed sites in 39 states and Ontario, Canada.

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

CAUTIONARY STATEMENT REGARDING 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. For this purpose, any statements contained in this press release 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 the Company’s current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties and other factors, both general and specific to the matters discussed in or incorporated herein, some of which are beyond the Company’s control. These risks, uncertainties and other factors may cause the Company’s 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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and September 30, 2020, and the Company’s other filings with the Securities and Exchange Commission from time to time, such risks, uncertainties and other factors include but are not limited to:

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements included in this press release, whether as a result of new information, future events, changes in its expectations or otherwise, except as required by law.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by these cautionary statement.

Investor Information

RESEARCH COVERAGE
Firm Analyst Phone Email
Bank of America Merrill Lynch Joshua Dennerlein (646) 855-1681 [email protected]
Berenberg Capital Markets Keegan Carl (646) 949-9052 [email protected]
BMO Capital Markets John Kim (212) 885-4115 [email protected]
Citi Research Michael Bilerman (212) 816-1383 [email protected]
Nicholas Joseph (212) 816-1909 [email protected]
Evercore ISI Steve Sakwa (212) 446-9462 [email protected]
Samir Khanal (212) 888-3796 [email protected]
Green Street Advisors John Pawlowski (949) 640-8780 [email protected]
Robert W. Baird & Co. Wesley Golladay (216) 737-7510 [email protected]
Wells Fargo Todd Stender (562) 637-1371 [email protected]
INQUIRIES
Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media, or any prospective investor. Please address all inquiries to our Investor Relations department.
At Our Website www.suncommunities.com
By Email [email protected]
By Phone (248) 208-2500

Portfolio Overview (As of December 31, 2020)

Financial and Operating Highlights (amounts in thousands, except for *)

Quarter Ended
12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
Financial Information
Total revenues$384,265 $400,514 $303,266 $310,302 $301,819
Net income / (loss)$9,818 $89,756 $63,355 $(15,478) $30,685
Net income / (loss) attributable to Sun Communities Inc. common stockholders$7,586 $81,204 $58,910 $(16,086) $28,547
Basic earnings / (loss) per share*$0.07 $0.83 $0.61 $(0.17) $0.31
Diluted earnings / (loss) per share*$0.07 $0.83 $0.61 $(0.17) $0.31
Cash distributions declared per common share*$0.79 $0.79 $0.79 $0.79 $0.75
Recurring EBITDA(1) $168,527 $199,321 $148,650 $156,552 $144,738
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) $110,849 $165,209 $118,092 $95,046 $105,533
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) $124,872 $162,624 $110,325 $117,267 $104,534
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted*$1.03 $1.63 $1.20 $0.98 $1.11
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1)(4) per share - fully diluted*$1.16 $1.60 $1.12 $1.22 $1.10
Balance Sheet
Total assets$11,206,586 $8,335,717 $8,348,659 $8,209,047 $7,802,060
Total debt$4,757,076 $3,340,613 $3,390,771 $3,926,494 $3,434,402
Total liabilities$5,314,879 $3,791,922 $3,845,308 $4,346,127 $3,848,104

Quarter Ended
12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
Operating Information*
Properties552 432 426 424 422
Manufactured home sites96,688 95,209 94,232 93,834 93,821
Annual RV sites27,564 26,817 26,240 26,148 26,056
Transient RV sites25,043 23,728 22,360 21,880 21,416
Total sites149,295 145,754 142,832 141,862 141,293
Wet slips and dry storage spaces38,881 N/A N/A N/A N/A
MH occupancy96.6 % 96.4 % 96.5 % 95.8 % 95.5 %
RV annual occupancy100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Total blended MH and annual RV occupancy97.3 % 97.2 % 97.3 % 96.7 % 96.4 %
New home sales156 155 140 119 140
Pre-owned home sales626 555 471 644 668
Total home sales782 710 611 763 808

Quarter Ended
12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
Net Leased Sites(5)
MH net leased sites247 349 759 287 437
RV net leased sites331 427 92 13 232
Total net leased sites578 776 851 300 669

Consolidated Balance Sheets(amounts in thousands)

December 31, 2020 December 31, 2019
Assets
Land $2,119,364 $1,414,279
Land improvements and buildings 8,480,597 6,595,272
Rental homes and improvements 637,603 627,175
Furniture, fixtures and equipment 447,039 282,874
Investment property 11,684,603 8,919,600
Accumulated depreciation (1,968,812) (1,686,980)
Investment property, net 9,715,791 7,232,620
Cash, cash equivalents and restricted cash 98,294 34,830
Marketable securities 124,726 94,727
Inventory of manufactured homes 46,643 62,061
Notes and other receivables, net 221,650 157,926
Goodwill 428,833 —
Other intangible assets, net 305,611 66,948
Other assets, net 265,038 152,948
Total Assets $11,206,586 $7,802,060
Liabilities
Mortgage loans payable $3,444,967 $3,180,592
Preferred Equity - Sun NG Resorts - mandatorily redeemable 35,249 35,249
Preferred OP units - mandatorily redeemable 34,663 34,663
Lines of credit and other debt(6) 1,242,197 183,898
Distributions payable 86,988 71,704
Advanced reservation deposits and rent 187,730 133,420
Accrued expenses and accounts payable 148,435 127,289
Other liabilities 134,650 81,289
Total Liabilities 5,314,879 3,848,104
Commitments and contingencies
Series D preferred OP units 49,600 50,913
Series F preferred OP units 8,871 —
Series G preferred OP units 25,074 —
Series H preferred OP units 57,833 —
Series I preferred OP units 94,532 —
Other redeemable noncontrolling interests 28,469 27,091
Stockholders' Equity
Common stock 1,076 932
Additional paid-in capital 7,087,658 5,213,264
Accumulated other comprehensive loss 3,178 (1,331)
Distributions in excess of accumulated earnings (1,566,636) (1,393,141)
Total Sun Communities, Inc. stockholders' equity 5,525,276 3,819,724
Noncontrolling interests
Common and preferred OP units 85,968 47,686
Consolidated variable interest entities 16,084 8,542
Total noncontrolling interests 102,052 56,228
Total Stockholders' Equity 5,627,328 3,875,952
Total Liabilities, Temporary Equity and Stockholders' Equity $11,206,586 $7,802,060

Statements of Operations - Quarter to Date and Year to Date Comparison(In thousands, except per share amounts) (Unaudited)

Three Months Ended Year Ended
December 31, 2020 December 31, 2019 Change % Change December 31, 2020 December 31, 2019 Change % Change
Revenues
Income from real property (excluding transient revenue)$249,065 $205,131 $43,934 21.4 % $895,945 $793,403 $102,542 12.9 %
Transient revenue27,929 19,886 8,043 40.4 % 134,691 121,504 13,187 10.9 %
Revenue from home sales48,920 45,271 3,649 8.1 % 175,699 181,936 (6,237) (3.4)%
Rental home revenue16,035 14,745 1,290 8.7 % 62,646 57,572 5,074 8.8 %
Ancillary revenue35,644 10,481 25,163 240.1 % 102,017 77,638 24,379 31.4 %
Interest income2,510 3,368 (858) (25.5)% 10,119 17,857 (7,738) (43.3)%
Brokerage commissions and other revenues, net4,162 2,937 1,225 41.7 % 17,230 14,127 3,103 22.0 %
Total Revenues384,265 301,819 82,446 27.3 % 1,398,347 1,264,037 134,310 10.6 %
Expenses
Property operating and maintenance88,889 63,486 25,403 40.0 % 308,797 266,378 42,419 15.9 %
Real estate taxes20,265 15,425 4,840 31.4 % 72,606 61,880 10,726 17.3 %
Cost of home sales36,434 34,327 2,107 6.1 % 131,884 134,357 (2,473) (1.8)%
Rental home operating and maintenance6,058 5,542 516 9.3 % 22,186 21,995 191 0.9 %
Ancillary expenses27,671 9,099 18,572 204.1 % 63,402 47,432 15,970 33.7 %
Home selling expenses4,626 3,768 858 22.8 % 15,134 14,690 444 3.0 %
General and administrative expenses31,795 25,434 6,361 25.0 % 111,288 93,964 17,324 18.4 %
Catastrophic weather-related charges, net831 435 396 91.0 % 885 1,737 (852) (49.1)%
Business combination expense23,008 — 23,008 N/A 23,008 — 23,008 N/A
Depreciation and amortization117,423 98,826 18,597 18.8 % 376,876 328,067 48,809 14.9 %
Loss on extinguishment of debt— 3,027 (3,027) N/A 5,209 16,505 (11,296) (68.4)%
Interest expense35,013 33,259 1,754 5.3 % 129,071 133,153 (4,082) (3.1)%
Interest on mandatorily redeemable preferred OP units / equity1,047 1,207 (160) (13.3)% 4,177 4,698 (521) (11.1)%
Total Expenses393,060 293,835 99,225 33.8 % 1,264,523 1,124,856 139,667 12.4 %
Income / (Loss) Before Other Items(8,795) 7,984 (16,779) (210.2)% 133,824 139,181 (5,357) (3.8)%
Gain on remeasurement of marketable securities8,765 17,692 (8,927) (50.5)% 6,129 34,240 (28,111) (82.1)%
Gain on foreign currency translation10,480 4,522 5,958 131.8 % 8,039 4,557 3,482 76.4 %
Gain on disposition of property— — — N/A 5,595 — 5,595 N/A
Other income / (expense), net(7)(390) 424 (814) (192.0)% (3,768) (1,100) (2,668) 242.5 %
Loss on remeasurement of notes receivable(964) — (964) N/A (3,275) — (3,275) N/A
Income / (loss) from nonconsolidated affiliates392 (6) 398 N/M 1,740 1,374 366 26.6 %
Loss on remeasurement of investment in nonconsolidated affiliates(103) — (103) N/A (1,608) — (1,608) N/A
Current tax expense(328) (189) (139) 73.5 % (790) (1,095) 305 (27.9)%
Deferred tax benefit761 258 503 195.0 % 1,565 222 1,343 605.0 %
Net Income9,818 30,685 (20,867) (68.0)% 147,451 177,379 (29,928) (16.9)%
Less: Preferred return to preferred OP units / equity2,136 1,418 718 50.6 % 6,935 6,058 877 14.5 %
Less: Income attributable to noncontrolling interests96 720 (624) (86.7)% 8,902 9,768 (866) (8.9)%
Net Income Attributable to Sun Communities, Inc.7,586 28,547 (20,961) (73.4)% 131,614 161,553 (29,939) (18.5)%
Less: Preferred stock distribution— — — N/A — 1,288 (1,288) N/A
Net Income Attributable to Sun Communities, Inc. Common Stockholders$7,586 $28,547 $(20,961) (73.4)% $131,614 $160,265 $(28,651) (17.9)%
Weighted average common shares outstanding - basic104,275 91,342 12,933 14.2 % 97,521 88,460 9,061 10.2 %
Weighted average common shares outstanding - diluted104,744 91,893 12,851 14.0 % 97,522 88,915 8,607 9.7 %
Basic earnings per share$0.07 $0.31 $(0.24) (77.4)% $1.34 $1.80 $(0.46) (25.6)%
Diluted earnings per share$0.07 $0.31 $(0.24) (77.4)% $1.34 $1.80 $(0.46) (25.6)%

N/M = Percentage change is not meaningful.

Outstanding Securities and Capitalization(amounts in thousands except for *)

Outstanding Securities - As of December 31, 2020
Number of Units / Shares Outstanding Conversion Rate* If Converted(1) Issuance Price Per Unit* Annual Distribution Rate*
Non-convertible Securities
Common shares107,626 N/A N/A N/A $3.16^
Convertible Securities
Common OP units2,607 1.0000 2,607 N/A Mirrors common shares distributions
Series A-1 preferred OP units295 2.4390 719 $100 6.00%
Series A-3 preferred OP units40 1.8605 75 $100 4.50%
Series C preferred OP units306 1.1100 340 $100 4.50%
Series D preferred OP units489 0.8000 391 $100 3.80%
Series E preferred OP units90 0.6897 62 $100 5.25%
Series F preferred OP units90 0.6250 56 $100 3.00%
Series G preferred OP units241 0.6452 155 $100 3.20%
Series H preferred OP units581 0.6098 355 $100 3.00%
Series I preferred OP units922 0.6098 562 $100 3.00%

^ Annual distribution is based on the last quarterly distribution annualized.

(1) Calculation may yield minor differences due to fractional shares paid in cash to the stockholder at conversion.

Capitalization - As of December 31, 2020
Equity Shares Share Price* Total
Common shares 107,626 $151.95 $16,353,771
Common OP units 2,607 $151.95 396,134
Subtotal 110,233 $16,749,905
Preferred OP units as converted 2,715 $151.95 $412,544
Total diluted shares outstanding 112,948 17,162,449
Debt
Mortgage loans payable $3,444,967
Preferred Equity - Sun NG Resorts - mandatorily redeemable 35,249
Preferred OP units - mandatorily redeemable 34,663
Lines of credit and other debt(6) 1,242,197
Total debt $4,757,076
Total Capitalization $21,919,525

Reconciliations to Non-GAAP Financial Measures

Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to FFO(1) (amounts in thousands except for per share data)

Three Months Ended Year Ended
December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019
Net Income Attributable To Sun Communities, Inc. Common Stockholders$7,586 $28,547 $131,614 $160,265
Adjustments
Depreciation and amortization117,354 98,950 376,897 328,646
Depreciation on nonconsolidated affiliates38 — 66 —
Gain on remeasurement of marketable securities(8,765) (17,692) (6,129) (34,240)
Loss on remeasurement of investment in nonconsolidated affiliates103 — 1,608 —
Loss on remeasurement of notes receivable964 — 3,275 —
Income attributable to noncontrolling interests4 482 7,881 8,474
Preferred return to preferred OP units494 519 2,231 2,610
Preferred distribution to Series A-4 preferred stock— — — 1,288
Gain on disposition of properties— — (5,595) —
Gain on disposition of assets, net(6,929) (5,273) (22,180) (26,356)
FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities(1)(4) $110,849 $105,533 $489,668 $440,687
Adjustments
Business combination expense23,008 — 23,008 —
Other acquisition related costs(8)1,035 244 2,326 1,146
Loss on extinguishment of debt— 3,027 5,209 16,505
Catastrophic weather-related charges, net831 398 885 1,737
Gain on foreign currency translation(10,480) (4,522) (8,039) (4,557)
Other (income) / expense, net(7)390 (424) 3,768 1,100
Other adjustments(a)(761) 278 (1,265) 314
Core FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities(1)(4)$124,872 $104,534 $515,560 $456,932
Weighted average common shares outstanding - basic104,275 91,342 97,521 88,460
Add
Common stock issuable upon conversion of stock options1 1 1 1
Restricted stock468 550 455 454
Common OP units2,496 2,300 2,458 2,448
Common stock issuable upon conversion of certain preferred OP units798 1,270 907 1,454
Weighted Average Common Shares Outstanding - Fully Diluted108,038 95,463 101,342 92,817
FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities(1)(4) Per Share - Fully Diluted $1.03 $1.11 $4.83 $4.75
Core FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities(1)(4) Per Share - Fully Diluted $1.16 $1.10 $5.09 $4.92

(a) Adjustments include deferred compensation amortization upon retirement and deferred tax (benefit) / expense.

Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to Recurring EBITDA(1)(amounts in thousands)

Three Months Ended Year Ended
December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019
Net Income Attributable to Sun Communities, Inc. Common Stockholders$7,586 $28,547 $131,614 $160,265
Adjustments
Depreciation and amortization117,423 98,826 376,876 328,067
Loss on extinguishment of debt— 3,027 5,209 16,505
Interest expense35,013 33,259 129,071 133,153
Interest on mandatorily redeemable preferred OP units / equity1,047 1,207 4,177 4,698
Current tax expense328 189 790 1,095
Deferred tax benefit(761) (258) (1,565) (222)
(Income) / loss from nonconsolidated affiliates(392) 6 (1,740) (1,374)
Less: Gain on dispositions of assets, net(6,929) (5,273) (22,180) (26,356)
Less: Gain on disposition of properties— — (5,595) —
EBITDAre(1)$153,315 $159,530 $616,657 $615,831
Adjustments
Catastrophic weather related charges, net831 435 885 1,737
Business combination expense23,008 — 23,008 —
Gain on remeasurement of marketable securities(8,765) (17,692) (6,129) (34,240)
Gain on foreign currency translation(10,480) (4,522) (8,039) (4,557)
Other (income) / expense, net(6)390 (424) 3,768 1,100
Loss on remeasurement of notes receivable964 — 3,275 —
Loss on remeasurement of investment in nonconsolidated affiliates103 — 1,608 —
Preferred return to preferred OP units / equity2,136 1,418 6,935 6,058
Income attributable to noncontrolling interests96 720 8,902 9,768
Preferred stock distribution— — — 1,288
Plus: Gain on dispositions of assets, net6,929 5,273 22,180 26,356
Recurring EBITDA(1) $168,527 $144,738 $673,050 $623,341

Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to NOI(1)(amounts in thousands)

Three Months Ended Year Ended
December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019
Net Income Attributable to Sun Communities, Inc. Common Stockholders$7,586 $28,547 $131,614 $160,265
Interest income(2,510) (3,368) (10,119) (17,857)
Brokerage commissions and other revenues, net(4,162) (2,937) (17,230) (14,127)
Home selling expenses4,626 3,768 15,134 14,690
General and administrative expenses31,795 25,434 111,288 93,964
Catastrophic weather-related charges, net831 435 885 1,737
Business combination expense23,008 — 23,008 —
Depreciation and amortization117,423 98,826 376,876 328,067
Loss on extinguishment of debt— 3,027 5,209 16,505
Interest expense35,013 33,259 129,071 133,153
Interest on mandatorily redeemable preferred OP units / equity1,047 1,207 4,177 4,698
Gain on remeasurement of marketable securities(8,765) (17,692) (6,129) (34,240)
Gain on foreign currency translation(10,480) (4,522) (8,039) (4,557)
Gain on disposition of property— — (5,595) —
Other (income) / expense, net(7)390 (424) 3,768 1,100
Loss on remeasurement of notes receivable964 — 3,275 —
Loss / (income) from nonconsolidated affiliates(392) 6 (1,740) (1,374)
Loss on remeasurement of investment in nonconsolidated affiliates103 — 1,608 —
Current tax expense328 189 790 1,095
Deferred tax benefit(761) (258) (1,565) (222)
Preferred return to preferred OP units / equity2,136 1,418 6,935 6,058
Income attributable to noncontrolling interests96 720 8,902 9,768
Preferred stock distribution— — — 1,288
NOI(1) / Gross Profit$198,276 $167,635 $772,123 $700,011

Three Months Ended Year Ended
December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019
Real Property NOI(1)$167,840 $146,106 $649,233 $586,649
Home Sales NOI(1) / Gross Profit12,486 10,944 43,815 47,579
Rental Program NOI(1)29,101 26,682 115,283 104,382
Ancillary NOI(1) / Gross Profit7,973 1,382 38,615 30,206
Site rent from Rental Program (included in Real Property NOI)(1)(9)(19,124) (17,479) (74,823) (68,805)
NOI(1) / Gross Profit$198,276 $167,635 $772,123 $700,011

Non-GAAP and Other Financial Measures

Debt Analysis (amounts in thousands)

Quarter Ended
12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
Debt Outstanding
Mortgage loans payable$3,444,967 $3,191,380 $3,205,507 $3,273,808 $3,180,592
Preferred Equity - Sun NG Resorts - mandatorily redeemable35,249 35,249 35,249 35,249 35,249
Preferred OP units - mandatorily redeemable34,663 34,663 34,663 34,663 34,663
Lines of credit and other debt(6)1,242,197 79,321 115,352 582,774 183,898
Total debt$4,757,076 $3,340,613 $3,390,771 $3,926,494 $3,434,402
% Fixed / Floating
Fixed74.0 % 97.6 % 96.6 % 85.2 % 94.7 %
Floating26.0 % 2.4 % 3.4 % 14.8 % 5.3 %
Total100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Weighted Average Interest Rates
Mortgage loans payable3.78 % 3.88 % 3.88 % 3.91 % 4.05 %
Preferred Equity - Sun NG Resorts - mandatorily redeemable6.00 % 6.00 % 6.00 % 6.00 % 6.00 %
Preferred OP units - mandatorily redeemable5.93 % 5.93 % 5.93 % 5.93 % 6.50 %
Lines of credit and other debt(6)2.08 % 1.32 % 2.03 % 1.85 % 2.71 %
Total average3.37 % 3.86 % 3.86 % 3.64 % 4.03 %
Debt Ratios
Net Debt / Recurring EBITDA(1) (TTM)6.9 5.0 4.8 5.6 5.5
Net Debt / Enterprise Value21.4 % 18.3 % 17.8 % 22.6 % 19.0 %
Net Debt / Gross Assets35.5 % 31.6 % 29.7 % 35.6 % 36.0 %
Coverage Ratios
Recurring EBITDA(1) (TTM) / Interest4.9 4.8 4.5 4.5 4.4
Recurring EBITDA(1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution4.8 4.6 4.4 4.3 4.2

Maturities / Principal Amortization Next Five Years2021 2022 2023 2024 2025
Mortgage loans payable
Maturities$— $82,155 $185,618 $315,330 $50,528
Principal amortization59,585 61,364 60,739 57,293 53,879
Preferred Equity - Sun NG Resorts - mandatorily redeemable— — — 33,428 1,821
Preferred OP units - mandatorily redeemable— — — 27,373 —
Lines of credit and other debt(6)10,000 14,794 65,403 1,152,000 —
Total$69,585 $158,313 $311,760 $1,585,424 $106,228
Weighted average rate of maturities— % 4.46 % 4.08 % 4.47 % 4.04 %

Real Property Operations – Same Community(2) (amounts in thousands except for Other Information)

Three Months Ended Year Ended
December 31, 2020 December 31, 2019 Change % Change December 31, 2020 December 31, 2019 Change % Change
Financial Information
Income from real property(10)$214,996 $203,422 $11,574 5.7 % $876,981 $846,231 $30,750 3.6 %
Property operating expenses
Payroll and benefits21,440 19,472 1,968 10.1 % 81,897 82,727 (830) (1.0)%
Legal, taxes, and insurance3,170 2,919 251 8.6 % 10,860 10,351 509 4.9 %
Utilities(10)16,399 14,120 2,279 16.1 % 66,214 63,410 2,804 4.4 %
Supplies and repair(11)8,393 6,926 1,467 21.2 % 33,616 33,153 463 1.4 %
Other(a)6,309 5,462 847 15.5 % 27,916 26,738 1,178 4.4 %
Real estate taxes15,786 14,039 1,747 12.4 % 63,706 59,649 4,057 6.8 %
Property operating expenses71,497 62,938 8,559 13.6 % 284,209 276,028 8,181 3.0 %
Real Property NOI(1)$143,499 $140,484 $3,015 2.1 % $592,772 $570,203 $22,569 4.0 %

(a) Includes COVID-19 personal protective equipment expense of $0.3 million and $2.4 million for the quarter and year ended December 31, 2020, respectively.

As of
December 31, 2020 December 31, 2019 Change % Change
Other Information
Number of properties367 367 —
MH occupancy(3)97.4 %
RV occupancy(3)100.0 %
MH & RV blended occupancy(3)98.0 %
Adjusted MH occupancy(3)98.5 %
Adjusted RV occupancy(3)100.0 %
Adjusted MH & RV blended occupancy(3)98.8 % 97.0 % 1.8 %
Sites available for development6,682 6,314 368
Monthly base rent per site - MH$600 $580 $20 3.4%(13)
Monthly base rent per site - RV(12)$514 $488 $26 5.4%(13)
Monthly base rent per site - Total(12)$579 $558 $21 3.8%(13)

Home Sales Summary (amounts in thousands except for *)

Three Months Ended Year Ended
December 31, 2020 December 31, 2019 Change % Change December 31, 2020 December 31, 2019 Change % Change
Financial Information
New Homes
New home sales$21,192 $19,900 $1,292 6.5 % $79,728 $71,760 $7,968 11.1 %
New home cost of sales17,922 16,817 1,105 6.6 % 65,533 61,557 3,976 6.5 %
NOI(1) / Gross Profit – new homes3,270 3,083 187 6.1 % 14,195 10,203 3,992 39.1 %
Gross margin % – new homes15.4 % 15.5 % (0.1)% 17.8 % 14.2 % 3.6 %
Average selling price – new homes*$135,846 $142,143 $(6,297) (4.4)% $139,874 $125,674 $14,200 11.3 %
Pre-owned Homes
Pre-owned home sales$27,728 $25,371 $2,357 9.3 % $95,971 $110,176 $(14,205) (12.9)%
Pre-owned home cost of sales18,512 17,510 1,002 5.7 % 66,351 72,800 (6,449) (8.9)%
NOI(1) / Gross Profit – pre-owned homes9,216 7,861 1,355 17.2 % 29,620 37,376 (7,756) (20.8)%
Gross margin % – pre-owned homes33.2 % 31.0 % 2.2 % 30.9 % 33.9 % (3.0)%
Average selling price – pre-owned homes*$44,294 $37,981 $6,313 16.6 % $41,799 $38,416 $3,383 8.8 %
Total Home Sales
Revenue from home sales$48,920 $45,271 $3,649 8.1 % $175,699 $181,936 $(6,237) (3.4)%
Cost of home sales36,434 34,327 2,107 6.1 % 131,884 134,357 (2,473) (1.8)%
NOI(1) / Gross Profit – home sales$12,486 $10,944 $1,542 14.1 % $43,815 $47,579 $(3,764) (7.9)%
Statistical Information
New home sales volume*156 140 16 11.4 % 570 571 (1) (0.2)%
Pre-owned home sales volume*626 668 (42) (6.3)% 2,296 2,868 (572) (19.9)%
Total home sales volume*782 808 (26) (3.2)% 2,866 3,439 (573) (16.7)%

Rental Program Summary (amounts in thousands except for *)

Three Months Ended Year Ended
December 31, 2020 December 31, 2019 Change % Change December 31, 2020 December 31, 2019 Change % Change
Financial Information
Revenues
Rental home revenue$16,035 $14,745 $1,290 8.7 % $62,646 $57,572 $5,074 8.8 %
Site rent from Rental Program(1)(9)19,124 17,479 1,645 9.4 % 74,823 68,805 6,018 8.7 %
Rental Program revenue35,159 32,224 2,935 9.1 % 137,469 126,377 11,092 8.8 %
Expenses
Repairs and refurbishment3,263 3,273 (10) (0.3)% 11,886 12,591 (705) (5.6)%
Taxes and insurance2,382 1,857 525 28.3 % 8,460 7,488 972 13.0 %
Other413 412 1 0.2 % 1,840 1,916 (76) (4.0)%
Rental Program operating and maintenance6,058 5,542 516 9.3 % 22,186 21,995 191 0.9 %
Rental Program NOI(1)$29,101 $26,682 $2,419 9.1 % $115,283 $104,382 $10,901 10.4 %
Other Information
Number of sold rental homes*269 281 (12) (4.3)% 850 1,140 (290) (25.4)%
Number of occupied rentals, end of period* 11,752 11,325 427 3.8 %
Investment in occupied rental homes, end of period $629,162 $584,771 $44,391 7.6 %
Weighted average monthly rental rate, end of period* $1,042 $997 $45 4.5 %

Acquisitions and Other Summary(14) (amounts in thousands except for statistical data)

Three Months Ended Year Ended
December 31, 2020 December 31, 2020
Financial Information
Revenues
Income from real property $52,737 $115,994
Property and Operating Expenses
Payroll and benefits 9,791 19,348
Legal, taxes & insurance 1,064 1,844
Utilities 5,492 12,307
Supplies and repairs 2,205 6,076
Other 5,365 11,058
Real estate taxes 4,479 8,900
Property operating expenses 28,396 59,533
Net operating income (NOI)(1) $24,341 $56,461
Other Information - MH and RVs December 31, 2020
Number of properties 79
Occupied sites 11,070
Developed sites 12,118
Occupancy % 91.4 %
Transient sites 6,942

Other Information - Marinas December 31, 2020
Number of properties 106
Wet slips 29,530
Dry storage 9,351
Total wet slips and dry storage 38,881

MH and RV Property Summary
Properties 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019
FLORIDA
Properties 128 127 125 125 125
Developed sites(15) 39,803 39,517 39,241 39,380 39,230
Occupied(15) 39,063 38,743 38,453 38,526 38,346
Occupancy %(15) 98.1 % 98.0 % 98.0 % 97.8 % 97.7 %
Sites for development 1,497 1,427 1,427 1,527 1,527
MICHIGAN
Properties 74 74 72 72 72
Developed sites(15) 29,086 29,086 27,901 27,883 27,905
Occupied(15) 28,109 28,033 27,191 26,863 26,785
Occupancy %(15) 96.6 % 96.4 % 97.5 % 96.3 % 96.0 %
Sites for development 1,182 1,182 1,182 1,115 1,115
CALIFORNIA
Properties 35 34 32 31 31
Developed sites(15) 6,675 6,372 6,364 5,986 5,981
Occupied(15) 6,602 6,290 6,272 5,948 5,941
Occupancy %(15) 98.9 % 98.7 % 98.6 % 99.4 % 99.3 %
Sites for development 373 373 264 302 302
TEXAS
Properties 24 24 23 23 23
Developed sites(15) 7,766 7,659 7,641 7,627 7,615
Occupied(15) 7,572 7,427 7,289 7,076 7,006
Occupancy %(15) 97.5 % 97.0 % 95.4 % 92.8 % 92.0 %
Sites for development 1,378 1,378 565 555 555
ONTARIO, CANADA
Properties 15 15 15 15 15
Developed sites(15) 4,090 4,067 3,980 3,977 4,031
Occupied(15) 4,090 4,067 3,980 3,977 4,031
Occupancy %(15) 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Sites for development 1,525 1,593 1,593 1,608 1,611
ARIZONA
Properties 14 13 13 13 13
Developed sites(15) 4,323 4,274 4,259 4,268 4,263
Occupied(15) 4,030 3,957 3,932 3,923 3,892
Occupancy %(15) 93.2 % 92.6 % 92.3 % 91.9 % 91.3 %
Sites for development — — — — —
INDIANA
Properties 12 11 11 11 11
Developed sites(15) 3,087 3,087 3,087 3,087 3,087
Occupied(15) 2,950 2,957 2,961 2,914 2,900
Occupancy %(15) 95.6 % 95.8 % 95.9 % 94.4 % 93.9 %
Sites for development 277 277 277 277 277
COLORADO
Properties 10 10 10 10 10
Developed sites(14) 2,453 2,453 2,441 2,423 2,423
Occupied(15) 2,380 2,365 2,327 2,318 2,322
Occupancy %(15) 97.0 % 96.4 % 95.3 % 95.7 % 95.8 %
Sites for development 1,250 1,282 1,566 1,867 1,867
OHIO
Properties 9 9 9 9 9
Developed sites(15) 2,790 2,790 2,778 2,768 2,770
Occupied(15) 2,755 2,758 2,736 2,702 2,716
Occupancy %(15) 98.7 % 98.9 % 98.5 % 97.6 % 98.1 %
Sites for development 22 22 22 59 59
OTHER STATES
Properties 125 115 116 115 113
Developed sites(15) 24,179 22,721 22,780 22,583 22,572
Occupied(15) 23,401 21,995 22,024 21,749 21,678
Occupancy %(15) 96.8 % 96.8 % 96.7 % 96.3 % 96.0 %
Sites for development 2,521 2,596 2,846 2,980 2,980
TOTAL - MH AND ANNUAL RV PORTFOLIO
Properties 446 432 426 424 422
Developed sites(15) 124,252 122,026 120,472 119,982 119,877
Occupied(15) 120,952 118,592 117,165 115,996 115,617
Occupancy %(15) 97.3 %(16)97.2 % 97.3 % 96.7 % 96.4 %
Sites for development(17) 10,025 10,130 9,742 10,290 10,293
% Communities age restricted 33.2 % 33.6 % 34.0 % 34.0 % 34.1 %
TRANSIENT RV SITE SUMMARY
Location
Florida 6,011 5,993 5,547 5,311 5,465
California 2,231 2,236 1,978 1,947 1,952
Texas 1,810 1,917 1,590 1,612 1,623
Maryland 1,515 1,515 1,515 1,488 1,488
New York 1,422 900 911 916 923
Arizona 1,337 1,386 1,401 1,392 1,397
Indiana 1,089 534 534 534 534
Ontario, Canada 966 920 1,007 1,009 939
Colorado 962 930 574 291 291
Maine 805 819 837 828 811
New Jersey 813 828 857 875 864
Virginia 737 564 598 630 324
Other states 5,345 5,186 5,011 5,047 4,805
Total Transient RV Sites 25,043 23,728 22,360 21,880 21,416

Marina Property Summary
MARINAS 12/31/2020
MICHIGAN
Properties 5
Total wet slips and dry storage spaces 4,468
FLORIDA
Properties 14
Total wet slips and dry storage spaces 3,573
CONNECTICUT
Properties 11
Total wet slips and dry storage spaces 3,254
GEORGIA
Properties 4
Total wet slips and dry storage spaces 2,834
RHODE ISLAND
Properties 11
Total wet slips and dry storage spaces 2,690
NEW YORK
Properties 8
Total wet slips and dry storage spaces 2,620
OTHER STATES
Properties 53
Total wet slips and dry storage spaces 19,442
TOTAL - MARINA PORTFOLIO
Properties 106
Total wet slips and dry storage spaces 38,881

Capital Improvements, Development, and Acquisitions(amounts in thousands except for *)

Recurring Capital Expenditures Average / Site*Recurring Capital Expenditures(18) Lot Modifications(19)Acquisitions(20) Expansion and Development(21)Revenue Producing /Expense Reduction Projects(22)Marina RelatedCapital Expenditures(a)
2020$265 $31,398 $29,789 $3,099,547 $246,454 $23,683 $14,147
2019$345 $30,382 $31,135 $930,668 $281,808 $9,638 N/A
2018$263 $24,265 $22,867 $414,840 $152,672 $3,864 N/A

(a) Includes capital improvements at recently acquired marinas, recurring capital expenditures, revenue producing capital expenditures and expansion and development.

Operating Statistics for MH and Annual RVs

Locations Resident Move-outs Net Leased Sites(5) New Home Sales Pre-owned Home Sales Brokered Re-sales
Florida 2,303 410 164 209 1,251
Michigan 422 601 43 1,148 159
Ontario, Canada 677 59 37 21 424
Texas 398 566 73 254 68
Arizona 81 138 43 28 143
Indiana 67 50 4 187 18
Ohio 95 39 — 98 9
California 116 47 29 15 94
Colorado 22 58 33 26 48
Other states 1,184 537 144 310 343
Year Ended December 31, 2020 5,365 2,505 570 2,296 2,557

Total For Year Ended Resident Move-outs Net Leased Sites(5) New Home Sales Pre-owned Home Sales Brokered Re-sales
2019 4,139 2,674 571 2,868 2,231
2018 3,435 2,600 526 3,103 2,147

Percentage Trends Resident Move-outs Resident Re-sales
2020 3.3 % 6.9 %
2019 2.6 % 6.6 %
2018 2.4 % 7.2 %

Footnotes and Definitions

  1. Investors in and analysts following the real estate industry utilize funds from operations (“FFO”), net operating income (“NOI”), and earnings before interest, tax, depreciation and amortization (“EBITDA”) as supplemental performance measures. The Company believes that FFO, NOI, and EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. Additionally, FFO, NOI, and EBITDA are commonly used in various ratios, pricing multiples, yields and returns and valuation calculations used to measure financial position, performance and value.
    • FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of generally accepted accounting principles (“GAAP”) depreciation and amortization of real estate assets.
    • NOI provides a measure of rental operations that does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses.
    • EBITDA provides a further measure to evaluate ability to incur and service debt and to fund dividends and other cash needs.

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 nonconsolidated 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. 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. The Company also uses FFO excluding certain gain and loss items that management considers unrelated to the operational and financial performance of our core business (“Core FFO”). The Company believes that Core FFO provides enhanced comparability for investor evaluations of period-over-period results.

The Company believes 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 the Company’s interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that interpret the NAREIT definition differently.

NOI is derived from revenues minus property operating expenses and real estate taxes. NOI is a non-GAAP financial measure that the Company believes 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. The Company uses 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 the properties of the Company rather than of the Company overall.

The Company believes 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 the Company’s financial performance or GAAP cash flow from operating activities 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. 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.

EBITDA as defined by NAREIT (referred to as “EBITDAre”) is calculated as GAAP net income (loss), plus interest expense, plus income tax expense, plus depreciation and amortization, plus or minus losses or gains on the disposition of depreciated property (including losses or gains on change of control), plus impairment write-downs of depreciated property and of investments in nonconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of nonconsolidated affiliates. EBITDAre is a non-GAAP financial measure that the Company uses to evaluate its ability to incur and service debt, fund dividends and other cash needs and cover fixed costs. Investors utilize EBITDAre as a supplemental measure to evaluate and compare investment quality and enterprise value of REITs. The Company also uses EBITDAre excluding certain gain and loss items that management considers unrelated to measurement of the Company’s performance on a basis that is independent of capital structure (“Recurring EBITDA”).

The Company believes that GAAP net income (loss) is the most directly comparable measure to EBITDAre. EBITDAre is not intended to be used as a measure of the Company’s cash generated by operations or its dividend-paying capacity, and should therefore not replace GAAP net income (loss) as an indication of the Company’s financial performance or GAAP cash flow from operating, investing and financing activities as measures of liquidity.

(2) Same Community results reflect constant currency for comparative purposes. Canadian currency figures in the prior comparative period have been translated at 2020 average exchange rates.

(3) The Same Community occupancy percentage is 97.4 percent for MH, 100.0 percent for RV, and 98.0 percent for the blended MH and RV. The MH and RV blended occupancy is derived from 112,134 developed sites, of which 109,882 were occupied. The Same Community occupancy percentage for 2019 has been adjusted to reflect incremental period-over-period growth from filled expansion sites and the conversion of transient RV sites to annual RV sites. The adjusted Same Community occupancy percentage for 2020 is derived from 111,196 developed sites, of which 109,882 were occupied. The number of developed sites excludes RV transient sites and approximately 950 recently completed but vacant MH expansion sites.

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

(5) Net leased sites do not include occupied sites acquired during that year.

(6) Lines of credit and other debt includes the Company’s MH floor plan facility. The effective interest rate on the MH floor plan facility was 6.0 percent for the quarters ended December 31, September 30 and June 30, 2020, and 7.0 percent for the quarters ended March 31, 2020, and December 31, 2019. However, the Company pays no interest if the floor plan balance is repaid within 60 days.

(7) Other expense, net was as follows (in thousands):

Three Months Ended Year Ended
December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019
Foreign currency remeasurement gain / (loss)$(318) $(16) $(373) $(77)
Collateralized receivables derecognition gain— 587 — 587
Contingent consideration value expense(72) (82) (2,962) (1,503)
Long term lease termination expense— (65) (433) (107)
Other expense, net$(390) $424 $(3,768) $(1,100)

(8) These costs represent the expenses incurred to bring recently acquired properties up to the Company’s operating standards, including items such as tree trimming and painting costs that do not meet the Company’s capitalization policy.

(9) The renter’s monthly payment includes the site rent and an amount attributable to the home lease. The site rent is reflected in Real Property Operations’ segment revenue. For purposes of management analysis, site rent is included in Rental Program revenue to evaluate the incremental revenue gains associated with the Rental Program, and to assess the overall growth and performance of the Rental Program and financial impact on the Company’s operations.

(10) Same Community results net $9.3 million and $8.7 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the three months ended December 31, 2020 and 2019, respectively. Same Community results net $37.7 million and $34.7 million of utility revenue against the related utility expense in property operating and maintenance expense for the years ended December 31, 2020 and 2019, respectively.

(11) Same Community supplies and repair expense excludes $0.1 million and $0.7 million for the three months and year ended December 31, 2019, of expenses incurred for recently acquired properties to bring the properties up to the Company’s operating standards, including items such as tree trimming and painting costs that do not meet the Company’s capitalization policy.

(12) Monthly base rent per site pertains to annual RV sites and excludes transient RV sites.

(13) Calculated using actual results without rounding.

(14) Acquisitions and other is comprised of 130 properties acquired and three properties that the Company has an interest in, but does not operate in 2020, 42 properties acquired in 2019, one property being operated under a temporary use permit, three Florida Keys properties that require redevelopment as a result of damage sustained from Hurricane Irma in 2017, five recently opened ground-up developments, one property undergoing redevelopment, and other miscellaneous transactions and activity.

(15) Includes MH and annual RV sites, and excludes transient RV sites, as applicable.

(16) As of December 31, 2020, total portfolio MH occupancy was 96.6 percent inclusive of the impact of over 1,200 recently constructed but vacant MH expansion sites, and annual RV occupancy was 100.0 percent.

(17) Total sites for development were comprised of 75.7 percent for expansion, 22.2 percent for greenfield development and 2.2 percent for redevelopment.

(18) MH recurring capital expenditures are necessary to maintain asset quality, including purchasing and replacing assets used to operate the communities. These capital expenditures include items such as: major road, driveway, pool improvements; clubhouse renovations; adding or replacing street lights; playground equipment; signage; maintenance facilities; manager housing and property vehicles. The minimum capitalized amount is five hundred dollars.

(19) MH lot modification capital expenditures improve the asset quality of the community. These costs are incurred when an existing older home moves out, and the site is prepared for a new home, more often than not, a multi-sectional home. These activities, which are mandated by strict manufacturer’s installation requirements and state building code, include items such as new foundations, driveways, and utility upgrades.

(20) Capital expenditures related to acquisitions represent the purchase price of existing operating properties (including marinas) and land parcels to develop expansions or new properties. These costs for the year ended December 31, 2020 include $40.6 million of capital improvements identified during due diligence that are necessary to bring the communities to the Company’s operating standards. For the years ended December 31, 2019 and 2018, these costs were $50.7 million and $94.6 million, respectively. 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; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, often require 24 to 36 months after closing to complete.

(21) MH expansion and development expenditures consist primarily of construction costs and costs necessary to complete home site improvements, such as driveways, sidewalks and landscaping.

(22) MH capital costs related to revenue generating activities consist primarily of garages, sheds, sub-metering of water, sewer and electricity. Revenue generating attractions at our RV resorts are also included here and, occasionally, a special capital project requested by residents and accompanied by an extra rental increase will be classified as revenue producing.

Certain financial information has been revised to reflect reclassifications in prior periods to conform to current period presentation.

Attachment

Source: Sun Communities, Inc.

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