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 Sun Communities, Inc. Reports 2016 Fourth Quarter Results
   Thursday, February 23, 2017 6:31:02 AM ET

NEWS RELEASE

February 23, 2017

Southfield, Michigan, February 23, 2017 - Sun Communities, Inc. (SUI ) (the "Company"), a real estate investment trust ("REIT") that owns and operates, or has an interest in, manufactured housing ("MH") and recreational vehicle ("RV") communities, today reported its fourth quarter results.

Financial Results for the Quarter and Year Ended December 31, 2016

For the quarter ended December 31, 2016, total revenues increased $50.4 million, or 30.0 percent, to $218.6 million compared to $168.2 million for the same period in 2015. Net loss attributable to Common Stockholders was $1.6 million, or $0.02 per diluted common share, as compared to net income attributable to Common Stockholders of $89.4 million, or $1.56 per diluted common share, for the same period in 2015.



For the year ended December 31, 2016, total revenues increased $159.1 million, or 23.6 percent, to $833.8 million compared to $674.7 million for the same period in 2015. Net income attributable to Common Stockholders for the year ended December 31, 2016 was $17.4 million, or $0.26 per diluted common share, as compared to $137.3 million, or $2.52 per diluted common share, for the same period in 2015.

Non-GAAP Financial Measures and Portfolio Performance

- For the quarter ended December 31, 2016, Funds from Operations ("FFO")(1) excluding certain items was $0.91 per diluted share and OP unit ("Share") as compared to $0.81 in the prior year, an increase of 12.3 percent.

- For the year ended December 31, 2016, FFO(1) excluding certain items was $3.79 per Share as compared to $3.63 in the prior year, an increase of 4.4 percent.

- Home sales increased by 27.8 percent as compared to the year ended December 31, 2015.

- Revenue producing sites increased by 301 sites for the quarter bringing total portfolio occupancy to 96.2 percent, up 120 basis points from year end 2015.

- For the quarter, same community Net Operating Income ("NOI")(1) increased by 9.1 percent as compared to the three months ended December 31, 2015.

"Sun’s most recent results demonstrate the ongoing power of our platform. We achieved industry leading internal growth, increased or maintained occupancy for the 20th consecutive quarter and sold a record number of homes into our communities, while integrating our largest acquisition to date," said Gary A. Shiffman, Chairman and Chief Executive Officer. "As we proceed through 2017, we are keenly focused on continuing to deliver exceptional results to our shareholders. Along with continuing to drive NOI growth from our core portfolio, we anticipate the most meaningful opportunities will come from value-add assets that we can reposition to deliver superior returns over the long term. Sun is well positioned to continue our track record of value creation."

OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy increased to 96.2 percent at December 31, 2016 from 95.0 percent at December 31, 2015. During the fourth quarter of 2016, revenue producing sites increased by 301 sites, as compared to 548 revenue producing sites gained in the fourth quarter of 2015.

Revenue producing sites gained during the year ended December 31, 2016 were 1,686 as compared to 1,905 revenue producing sites gained for the same period in 2015.

Same Community Results

For the 219 communities owned throughout 2016 and 2015, fourth quarter 2016 total revenues increased 6.2 percent and total expenses decreased 0.9 percent, resulting in an increase in NOI(1) of 9.1 percent over the fourth quarter of 2015. Same community occupancy increased to 96.6 percent at December 31, 2016 from 94.7 percent at December 31, 2015.

For the year ended December 31, 2016, total revenues increased 6.1 percent and total expenses increased 3.7 percent, resulting in an increase in NOI(1) of 7.1 percent over the year ended December 31, 2015.

Home Sales

Total homes sales were 762 for the fourth quarter of 2016 as compared to 738 total homes sold during the same period in 2015.

During the year ended December 31, 2016, the Company sold 3,172 homes as compared to the 2,483 homes sold during the same period ending 2015, resulting in an additional 689 homes sold during 2016, or a 27.8 percent increase.

Rental homes sales, which are included in total home sales, were 231 and 297 for the three months ended and 1,089 and 908 for the year ended December 31, 2016 and 2015, respectively.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

During the quarter ended December 31, 2016, the Company completed a $58.5 million secured borrowing that bears interest at a fixed rate of 3.33 percent and has a seven-year term. The Company repaid mortgage loans totaling $79.1 million in the fourth quarter and $28.9 million subsequent to year end, substantially addressing all of its 2017 maturities.

As of December 31, 2016, the Company had approximately $3.1 billion of debt outstanding. The weighted average interest rate was 4.48 percent and the weighted average maturity was 8.5 years. The Company had $8.2 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month EBITDA(1) ratio was 7.5 times.

Equity Transactions

During the fourth quarter of 2016 and in January 2017, the Company sold 300,000 shares of common stock through its At-the-Market equity sales program at a weighted average price of $76.43 per share. Net proceeds from the sales were $22.6 million.

PORTFOLIO ACTIVITY

Acquisitions (2)

As noted in its third quarter earnings release, the Company acquired two communities shortly after September 30, 2016, for total consideration of $9.8 million. These communities, located in Colorado and New York, contain 495 RV sites and have expansion potential of approximately 350 sites.

Additionally, during the fourth quarter, the Company acquired a community adjacent to one of its existing communities in Florida, for consideration of $3.4 million. This community has 178 RV sites.

These communities are located in high demand destination locations and will undergo repositioning or expansion activities to fully realize the inherent value in the zoned and entitled land that was previously under-managed or under-utilized.

GUIDANCE 2017

The Company estimates full year 2017 FFO(1) per Share to be in the range of $4.16 to $4.24 per Share and the first quarter 2017 to be in the range of $1.06 to $1.08 per Share. Guidance does not include prospective acquisitions or capital markets activity.

Total Portfolio

Number of communities:                    341                    341                                   
                                              
                       2017 Guidance          2016 Actual                           
                       (in Millions)          (in Millions)                        % Change
  MH Revenues          $479.3 - $479.9                           
  RV Seasonal/Annual   109.0 - 109.5                             
  RV Transient         74.5 - 75.1                               
  Other Revenue        69.0 - 69.5                               
Income from real property                 $731.8 - $734.0        $      620.9      17.9% - 18.2%
Real estate taxes                         52.7 - 52.6            44.3              19.0% - 18.7%
Property operating and maintenance        208.0 - 205.6          173.3             20.0% - 18.6%
Total property operating expenses         $260.7 - $258.2        $      217.6      19.8% - 18.7%
Net operating income ("NOI")(1)           $471.1 - $475.8        $      403.3      16.8% - 18.0%
                                         2017 Guidance                      2016 Actual                                   
                                         (in Millions, except share data)   (in Millions, except share data)             % Change
Rental program, net                                         $25.9 - $26.0                      $          23.5           10.2% - 10.6%
Home sales gross profit                                     32.0 - 32.8                        30.1                      6.3% - 9.0%
Ancillary revenues, net                                     10.7 - 10.8                        10.0                      7.0% - 8.0%
Interest, brokerage commissions, and other revenues, net    24.4 - 24.5                        21.2                      15.1% - 15.6%
Home selling expenses                                       13.0 - 12.9                        9.7                       34.0% - 33.0%
General and administrative                                  72.7 - 72.0                        64.1                      13.4% - 12.3%
                                                                                    
Weighted average common shares outstanding, fully diluted    78.1                                      
                                                                                    
Q1 FFO(1) per Share                                         $1.06 - $1.08                                                 
2017 FFO(1) per Share                                       $4.16 - $4.24                                                 

Supplementary Information:

     1Q17    2Q17    3Q17    4Q17
Seasonality of FFO(1)   25.5%   22.3%   28.3%   23.9%
                                                          2017
New home sales volume                                                        470 - 485
Pre-owned home sales volume                                                  3,000 - 3,100
Increase in revenue producing sites                                          2,600 - 2,800
Weighted average monthly rent increase                                       3.6    %
Gross profit from rental home sales included above (non-FFO) (in millions)   $15.6

Same Community Portfolio:

Number of communities                     231                    231                                   
                                              
                       2017 Guidance          2016 Actual                           
                       (in Millions)          (in Millions)                        % Change
  MH revenues          $401.9 - $402.4                           
  RV seasonal/annual   54.1 - 54.3                               
  RV transient         47.3 - 47.6                               
  Other revenue        28.7 - 28.9                               
Income from real property                 $532.0 - $533.2        $      504.0      5.6% - 5.8%
Real estate taxes                         39.1 - 39.0            36.8              6.3% - 6.0%
Property operating and maintenance        112.2 - 112.1          109.3             2.7% - 2.6%
Total property operating expenses         $151.3 - $151.1        $      146.1      3.6% - 3.4%
Net operating income ("NOI")(1)           $380.7 - $382.1        $      357.9      6.4% - 6.8%

The estimates and assumptions presented above represent a range of possible outcomes and may differ materially from actual results. 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 "Forward-Looking Statements."

EARNINGS CONFERENCE CALL

A conference call to discuss fourth quarter operating results will be held on Thursday, February 23, 2017 at 11:00 A.M. (ET). To participate, call toll-free 877-407-4018. Callers outside the U.S. or Canada can access the call at 201-689-8471. A replay will be available following the call through March 9, 2017 and can be accessed toll-free by calling 844-512-2921 or by calling 412-317-6671. The Conference ID number for the call and the replay is 13652683. The conference call will be available live on Sun Communities’ website www.suncommunities.com. Replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of December 31, 2016, owned or had an interest in a portfolio of 341 communities comprising approximately 117,000 developed sites in 29 states and Ontario, Canada.

For more information about Sun Communities, Inc., please visit the 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 investorrelations@suncommunities.com or by mail Sun Communities, Inc. Attn: Investor Relations, 27777 Franklin Road, Ste. 200, Southfield, MI 48034.

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, changes in foreign currency exchange rates, the ability of manufactured home buyers to obtain financing and the level of repossessions by manufactured home lenders. Further details of potential risks that may affect the Company are described in our periodic reports filed with the U.S. Securities and Exchange Commission, including in the "Risk Factors" section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

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.

Investor Information

RESEARCH COVERAGE                                              
                         
        BMO Capital Markets                Paul Adornato
                        (212) 885-4170
                        paul.adornato@bmo.com
                         
        Citi Research                      Michael Bilerman/Nicholas Joseph
                        (212) 816-1383
                        michael.bilerman@citi.com
                        nicholas.joseph@citi.com
                         
        Evercore ISI                       Steve Sakwa
                        (212) 446-9462
                        steve.sakwa@evercoreisi.com
                         
                        Gwen Clark
                        (212) 446-5611
                        gwen.clark@evercoreisi.com
                         
        Green Street Advisors              Ryan Burke
                        (949) 640-8780
                        rburke@greenstreetadvisors.com
                         
        Robert W. Baird & Co.              Drew Babin
                        (610) 238-6634
                        dbabin@rwbaird.com
                         
        Wells Fargo                        Todd Stender
                        (562) 637-1371
                        todd.stender@wellsfargo.com
                         
                         
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                           investorrelations@suncommunities.com
                         
        By Phone                           (248) 208-2500

Portfolio Overview

(As of December 31, 2016)

Balance Sheets

(amounts in thousands)

                                   Quarter Ended
                                   12/31/2016                              9/30/2016                               6/30/2016                               3/31/2016                               12/31/2015
ASSETS:                                                                                                                                    
Land                                                  $      1,027,976     $      1,072,964     $      458,349       $      456,380       $      451,340    
Land improvements and buildings                       4,825,043            4,682,920            5,294,663            3,586,969            3,535,909         
Rental homes and improvements                         489,633              485,340              477,875              469,217              460,480           
Furniture, fixtures and equipment                     130,127              125,603              107,123              104,855              102,746           
Land held for future development                      23,560               23,497               23,497               23,047               23,047            
Investment property                                   6,496,339            6,390,324            6,361,507            4,640,468            4,573,522         
Accumulated depreciation                              (1,026,858       )                      (977,486         )                      (928,882         )                      (889,941         )                      (852,407         )
Investment property, net                              5,469,481            5,412,838            5,432,625            3,750,527            3,721,115         
Cash and cash equivalents                             8,164                69,829               31,441               410,408              45,086            
Inventory of manufactured homes                       21,632               24,147               29,044               16,636               14,828            
Notes and other receivables, net                      81,179               87,856               76,466               54,124               47,972            
Collateralized receivables, net (3)                   143,870              143,888              144,017              142,944              139,768           
Other assets, net                                     146,450              166,148              109,598              188,247              213,030           
Total assets, net                                     $      5,870,776     $      5,904,706     $      5,823,191     $      4,562,886     $      4,181,799  
LIABILITIES:                                                                                                                               
Mortgage loans payable                                $      2,819,567     $      2,854,831     $      2,792,021     $      2,114,818     $      2,125,267  
Secured borrowings (3)                                144,477              144,522              144,684              143,664              140,440           
Preferred OP units - mandatorily redeemable           45,903               45,903               45,903               45,903               45,903            
Lines of credit                                       100,095              57,737               357,721              58,065               24,687            
Distributions payable                                 51,896               51,100               47,992               45,351               41,265            
Other liabilities                                     279,667              275,650              257,423              184,102              184,859           
Total liabilities                                     3,441,605            3,429,743            3,645,744            2,591,903            2,562,421         
Series A-4 preferred stock                            50,227               50,227               50,227               61,732               61,732            
Series A-4 preferred OP units                         16,717               19,906               20,266               20,762               21,065            
STOCKHOLDERS’ EQUITY:                                                                                                                      
Series A preferred stock                              34                   34                   34                   34                   34                
Common stock                                          732                  730                  686                  646                  584               
Additional paid-in capital                            3,321,441            3,313,905            2,980,382            2,706,657            2,319,314         
Accumulated other comprehensive loss                  (3,181           )                      (4,876           )                      1                    -                    -                 
Distributions in excess of accumulated earnings       (1,023,415       )                      (975,511         )                      (947,988         )                      (896,896         )                      (864,122         )
  Total SUI stockholders’ equity   2,295,611            2,334,282            2,033,115            1,810,441            1,455,810         
Noncontrolling interests:                                                                                                                  
Common and preferred OP units                         69,598               73,284               76,166               80,018               82,538            
Consolidated variable interest entities               (2,982           )                      (2,736           )                      (2,327           )                      (1,970           )                      (1,767           )
Total noncontrolling interest                         66,616               70,548               73,839               78,048               80,771            
Total stockholders’ equity                            2,362,227            2,404,830            2,106,954            1,888,489            1,536,581         
Total liabilities & stockholders’ equity              $      5,870,776     $      5,904,706     $      5,823,191     $      4,562,886     $      4,181,799  

Statements of Operations

(amounts in thousands, except per share amounts)

                                     Quarter Ended
                                     12/31/2016                            9/30/2016                             6/30/2016                             3/31/2016                             12/31/2015
REVENUES:                                                                                                                            
Income from real property (excluding transient revenue) $      156,533     $      158,020     $      129,117     $      119,084     $      117,604  
Transient revenue                                       10,824             26,304             10,884             10,151             5,568           
Revenue from home sales                                 28,520             31,211             26,039             24,737             25,169          
Rental home revenue                                     12,084             12,031             11,957             11,708             11,756          
Ancillary revenues                                      4,982              16,446             7,383              4,613              3,576           
Interest                                                4,791              4,705              4,672              3,945              4,074           
Brokerage commissions and other revenues, net           900                984                747                406                491             
Total revenues                                          218,634            249,701            190,799            174,644            168,238         
                                                                                                                  
EXPENSES:                                                                                                                            
Property operating and maintenance                      47,917             57,089             37,067             31,201             33,360          
Real estate taxes                                       12,184             12,384             10,153             9,585              8,683           
Cost of home sales                                      21,617             21,935             18,684             18,184             19,296          
Rental home operating and maintenance                   6,657              6,350              5,411              5,876              6,841           
Ancillary expenses                                      4,728              9,449              5,599              3,649              3,888           
Home selling expenses                                   2,504              2,643              2,460              2,137              2,079           
General and administrative                              17,177             16,575             16,543             13,792             10,511          
Transaction costs                                       4,023              4,191              20,979             2,721              4,653           
Depreciation and amortization                           62,205             61,483             49,670             48,412             47,530          
Extinguishment of debt                                  1,127              -                  -                  -                  -               
Interest                                                30,641             33,800             28,428             26,294             28,066          
Interest on mandatorily redeemable preferred OP units   789                789                787                787                790             
Total expenses                                          211,569            226,688            195,781            162,638            165,697         
Income / (loss) before other items                      7,065              23,013             (4,982         )                      12,006             2,541           
Other expenses, net (4)                                 (5,848         )                      -                  -                  -                  -               
Gain on disposition of properties, net                  -                  -                  -                  -                  98,430          
Current tax (expense) / benefit                         (116           )                      (283           )                      (56            )                      (228           )                      71              
Deferred tax benefit / (expense)                        400                -                  -                  -                  (1,000         )
Income from affiliate transactions                      -                  500                -                  -                  -               
Net income / (loss)                                     1,501              23,230             (5,038         )                      11,778             100,042         
Less: Preferred return to preferred OP units            (1,213         )                      (1,257         )                      (1,263         )                      (1,273         )                      (1,281         )
Less: Amounts attributable to noncontrolling interests  310                (879           )                      695                (276           )                      (6,922         )
Less: Preferred stock distribution                      (2,198         )                      (2,197         )                      (2,197         )                      (2,354         )                      (2,440         )
NET (LOSS) / INCOME ATTRIBUTABLE TO SUI                 $      (1,600  )                      $      18,897      $      (7,803  )                      $      7,875       $      89,399   
Weighted average common shares outstanding:                                                                                          
Basic                                                   72,277             68,655             64,757             57,736             56,181          
Diluted                                                 72,685             69,069             64,757             58,126             57,639          
Earnings / (loss) per share:                                                                                                         
Basic                                                   $      (0.02   )                      $      0.27        $      (0.12   )                      $      0.14        $      1.57     
Diluted                                                 $      (0.02   )                      $      0.27        $      (0.12   )                      $      0.14        $      1.56     

Statements of Operations - Quarter to Date Comparison

(amounts in thousands, except per share amounts)

                                     Three Months Ended December 31,
                                     2016                                  2015                                  Change                                % Change              
REVENUES:                                                                                                           
Income from real property (excluding transient revenue) $      156,533     $      117,604     $      38,929      33.1       %          
Transient revenue                                       10,824             5,568              5,256              94.4       %          
Revenue from home sales                                 28,520             25,169             3,351              13.3       %          
Rental home revenue                                     12,084             11,756             328                2.8        %          
Ancillary revenues                                      4,982              3,576              1,406              39.3       %          
Interest                                                4,791              4,074              717                17.6       %          
Brokerage commissions and other revenues, net           900                491                409                83.3       %          
Total revenues                                          218,634            168,238            50,396             30.0       %          
                                                                                                 
EXPENSES:                                                                                                           
Property operating and maintenance                      47,917             33,360             14,557             43.6       %          
Real estate taxes                                       12,184             8,683              3,501              40.3       %          
Cost of home sales                                      21,617             19,296             2,321              12.0       %          
Rental home operating and maintenance                   6,657              6,841              (184           )                      (2.7       )%         
Ancillary expenses                                      4,728              3,888              840                21.6       %          
Home selling expenses                                   2,504              2,079              425                20.4       %          
General and administrative                              17,177             10,511             6,666              63.4       %          
Transaction costs                                       4,023              4,653              (630           )                      (13.5      )%         
Depreciation and amortization                           62,205             47,530             14,675             30.9       %          
Extinguishment of debt                                  1,127              -                  1,127              N/A                   
Interest                                                30,641             28,066             2,575              9.2        %          
Interest on mandatorily redeemable preferred OP units   789                790                (1             )                      (0.1       )%         
Total expenses                                          211,569            165,697            45,872             27.7       %          
Income before other items                               7,065              2,541              4,524              178.0      %          
Other expenses, net (4)                                 (5,848         )                      -                  (5,848         )                      N/A                   
Gain on disposition of properties, net                  -                  98,430             (98,430        )                      (100.0     )%         
Current tax (expense) / benefit                         (116           )                      71                 (187           )                      (263.4     )%         
Deferred tax benefit / (expense)                        400                (1,000         )                      1,400              (140.0     )%         
Net income                                              1,501              100,042            (98,541        )                      (98.5      )%         
Less: Preferred return to preferred OP units            (1,213         )                      (1,281         )                      68                 5.3        %          
Less: Amounts attributable to noncontrolling interests  310                (6,922         )                      7,232              104.5      %          
Less: Preferred stock distribution                      (2,198         )                      (2,440         )                      242                9.9        %          
NET (LOSS) / INCOME ATTRIBUTABLE TO SUI                 $      (1,600  )                      $      89,399      $      (90,999 )                      (101.8     )%         
Weighted average common shares outstanding:                                                                         
Basic                                                   72,277             56,181             16,096             28.7       %          
Diluted                                                 72,685             57,639             15,046             26.1       %          
Earnings / (loss) per share:                                                                                        
Basic                                                   $      (0.02   )                      $      1.57        $      (1.59   )                      (101.3     )%         
Diluted                                                 $      (0.02   )                      $      1.56        $      (1.58   )                      (101.3     )%         

Statements of Operations - Year to Date Comparison

(amounts in thousands, except per share amounts)

                                     Year Ended December 31,
                                     2016                                  2015                                  Change                                 % Change
REVENUES:                                                                                                          
Income from real property (excluding transient revenue) $      562,754     $      467,114     $      95,640       20.5       %
Transient revenue                                       58,163             38,964             19,199              49.3       %
Revenue from home sales                                 110,507            79,728             30,779              38.6       %
Rental home revenue                                     47,780             46,236             1,544               3.3        %
Ancillary revenues                                      33,424             24,532             8,892               36.3       %
Interest                                                18,113             15,938             2,175               13.7       %
Brokerage commissions and other revenues, net           3,037              2,219              818                 36.9       %
Total revenues                                          833,778            674,731            159,047             23.6       %
                                                                                                
EXPENSES:                                                                                                          
Property operating and maintenance                      173,274            135,797            37,477              27.6       %
Real estate taxes                                       44,306             34,714             9,592               27.6       %
Cost of home sales                                      80,420             58,941             21,479              36.4       %
Rental home operating and maintenance                   24,294             24,956             (662            )                      (2.7       )%
Ancillary expenses                                      23,425             17,519             5,906               33.7       %
Home selling expenses                                   9,744              7,476              2,268               30.3       %
General and administrative                              64,087             47,455             16,632              35.1       %
Transaction costs                                       31,914             17,803             14,111              79.3       %
Depreciation and amortization                           221,770            177,637            44,133              24.8       %
Extinguishment of debt                                  1,127              2,800              (1,673          )                      (59.8      )%
Interest                                                119,163            107,659            11,504              10.7       %
Interest on mandatorily redeemable preferred OP units   3,152              3,219              (67             )                      (2.1       )%
Total expenses                                          796,676            635,976            160,700             25.3       %
Income before other items                               37,102             38,755             (1,653          )                      (4.3       )%
Other expenses, net (4)                                 (5,848         )                      -                  (5,848          )                      N/A
Gain on disposition of properties, net                  -                  125,376            (125,376        )                      (100.0     )%
Current tax expense                                     (683           )                      (158           )                      (525            )                      (332.3     )%
Deferred tax benefit / (expense)                        400                (1,000         )                      1,400               140.0      %
Income from affiliate transactions                      500                7,500              (7,000          )                      (93.3      )%
Net income                                              31,471             170,473            (139,002        )                      (81.5      )%
Less: Preferred return to preferred OP units            (5,006         )                      (4,973         )                      (33             )                      (0.7       )%
Less: Amounts attributable to noncontrolling interests  (150           )                      (10,054        )                      9,904               98.5       %
Less: Preferred stock distribution                      (8,946         )                      (13,793        )                      4,847               35.1       %
Less: Preferred stock redemption costs                  -                  (4,328         )                      4,328               N/A
NET INCOME ATTRIBUTABLE TO SUI                          $      17,369      $      137,325     $      (119,956 )                      (87.4      )%
Weighted average common shares outstanding:                                                                        
Basic                                                   65,856             53,686             $      12,170       22.7       %
Diluted                                                 66,321             53,702             $      12,619       23.5       %
Earnings per share:                                                                                                
Basic                                                   $      0.27        $      2.53        $      (2.26    )                      (89.3      )%
Diluted                                                 $      0.26        $      2.52        $      (2.26    )                      (89.7      )%

Summary of Securities Outstanding as of December 31, 2016

(units/stock/shares in thousands)

                                                   Number of Units/Stock/Shares Outstanding   Conversion Rate        If Converted           Issuance Price per unit   Annual Distribution Rate
Convertible Securities                                                                                        
Series A-1 preferred OP Units                                         367                                        2.4390                 895                    $100                      6.0%
Series A-3 preferred OP Units                                         40                                         1.8605                 74                     $100                      4.5%
Series A-4 preferred OP Units                                         634                                        0.4444                 282                    $25                       6.5%
Series C preferred OP Units                                           333                                        1.1100                 370                    $100                      4.0%
Common OP Units                                                       2,759                                      1.0000                 2,759                  N/A                       Mirrors the Common Share distributions
Series A-4 cumulative convertible Preferred  Stock 1,682                                      0.4444                 747                    $25                       6.5%
                                                                                           
Non-Convertible Securities                                                                                    
Preferred Stock ( SUI-PrA)                                            3,400                                      N/A                    N/A                    $25                       7.125%
                                                                                           
Common Shares                                                         73,206                                     N/A                    N/A                    N/A                       $2.60*
* Annual distribution is based on the last quarter distribution annualized.

Reconciliations to Non-GAAP Financial Measures

Reconciliation of Net (Loss) Income Attributable to Sun Communities, Inc. Common Stockholders to Funds from Operations

(amounts in thousands except for per share data)

                                                                                                                                     Three Months Ended                                                                           Year Ended
                                                                                                                                                         December 31,                                                                                 December 31,
                                                                                                                                     2016                                 2015                                 2016                                  2015
Net (loss) income attributable to Sun Communities, Inc. common stockholders                                                                             $      (1,600 )                      $      89,399     $      17,369      $      137,325  
Adjustments:                                                                                                                                                                                                    
Preferred return to preferred OP units                                                                                                                  604               631               2,462              2,612           
Amounts attributable to noncontrolling interests                                                                                                        (296          )                      6,941             (41            )                      9,644           
Depreciation and amortization                                                                                                                           62,351            47,801            221,576            178,048         
Gain on disposition of properties, net                                                                                                                  -                 (98,430       )                      -                  (125,376       )
Gain on disposition of assets, net                                                                                                                      (3,487        )                      (3,060        )                      (15,713        )                      (10,125        )
Funds from operations ("FFO") attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6)                     57,572            43,282            225,653            192,128         
 
Adjustments:                                                                                                                                                                                                    
Transaction costs                                                                                                                                       4,023             4,653             31,914             17,803          
Other acquisition related costs (5)                                                                                                                     1,861             -                 3,328              -               
Income from affiliate transactions                                                                                                                      -                 -                 (500           )                      (7,500         )
Foreign currency exchange (4)                                                                                                                           5,005             -                 5,005              -               
Contingent liability re-measurement (4)                                                                                                                 181               -                 181                -               
Gain on acquisition of property (4)                                                                                                                     (510          )                      -                 (510           )                      -               
 
Hurricane related costs (4)                                                                                                                             1,172             -                 1,172              -               
Preferred stock redemption costs                                                                                                                        -                 -                 -                  4,328           
Extinguishment of debt                                                                                                                                  1,127             -                 1,127              2,800           
Debt premium write-off                                                                                                                                  (839          )                      -                 (839           )                      -               
Deferred tax (benefit) expense                                                                                                                          (400          )                      1,000             (400           )                      1,000           
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items (1) (6)                       $      69,192     $      48,935     $      266,131     $      210,559  
 
                                                                                                                                                                                             
Weighted average common shares outstanding - basic:                                                                                                     72,277            56,181            65,856             53,686          
Add:                                                                                                                                                                                                            
Common stock issuable upon conversion of stock options                                                                                                  1                 13                8                  16              
Restricted stock                                                                                                                                        407               423               457                411             
Common OP units                                                                                                                                         2,793             2,863             2,844              2,803           
Common stock issuable upon conversion of Series A-1 preferred OP units                                                                                  901               947               925                988             
Common stock issuable upon conversion of Series A-3 preferred OP units                                                                                  75                75                75                 75              
Weighted average common shares outstanding - fully diluted                                                                                              76,454            60,502            70,165             57,979          
                                                                                                                                                                                             
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (6) per share - fully diluted                         $      0.75       $      0.72       $      3.22        $      3.31     
 
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (6) per share excluding certain items - fully diluted $      0.91       $      0.81       $      3.79        $      3.63     
 

Reconciliation of Recurring EBITDA to Net (Loss) Income Attributable to Sun Communities, Inc. Common Stockholders

(amounts in thousands)

The following table reconciles Recurring EBITDA to consolidated net (loss) income:

                                                            Three Months Ended December 31,                                                           Year Ended
                                                                                                                                                                                             December 31,
                                                            2016                                2015                               2016                                2015
RECURRING EBITDA (1)                                                           $    105,850     $    83,580     $    414,228     $    347,873  
Interest                                                                       30,641           28,066          119,163          107,659       
Interest on mandatorily redeemable preferred OP units                          789              790             3,152            3,219         
Depreciation and amortization                                                  62,205           47,530          221,770          177,637       
Extinguishment of debt                                                         1,127            -               1,127            2,800         
Transaction costs                                                              4,023            4,653           31,914           17,803        
Gain on disposition of properties, net                                         -                (98,430     )                      -                (125,376     )
Other expenses, net                                                            5,848            -               5,848            -             
Current tax expense / (benefit)                                                116              (71         )                      683              158           
Deferred tax (benefit) / expense                                               (400         )                      1,000           (400         )                      1,000         
Income from affiliate transactions                                             -                -               (500         )                      (7,500       )
Net income                                                                     1,501            100,042         31,471           170,473       
Less: Preferred return to preferred OP units                                   1,213            1,281           5,006            4,973         
Less: Amounts attributable to noncontrolling interests                         (310         )                      6,922           150              10,054        
Net income attributable to Sun Communities, Inc.                               598              91,839          26,315           155,446       
Less: Preferred stock distributions                                            2,198            2,440           8,946            13,793        
Less: Preferred stock redemption costs                                         -                -               -                4,328         
Net (loss) / income attributable to Sun Communities, Inc., common stockholders $    (1,600  )                      $    89,399     $    17,369      $    137,325  

Reconciliation of Net Operating Income to Net (Loss) Income Attributable to Sun Communities, Inc. Common Stockholders

(amounts in thousands)

The following table reconciles net operating income to consolidated net (loss) income:

                                                           Three Months Ended December 31,                                                               Year Ended
                                                                                                                                                                                                December 31,
                                                           2016                                  2015                                 2016                                  2015
Real Property NOI                                                             $      107,256     $      81,129     $      403,337     $      335,567  
Rental Program NOI                                                            20,863             20,427            85,086             83,232          
Home Sales NOI/Gross Profit                                                   6,903              5,873             30,087             20,787          
Ancillary NOI/Gross Profit (Loss)                                             254                (312          )                      9,999              7,013           
Site rent from Rental Program (included in Real Property NOI) (7)             (15,436        )                      (15,512       )                      (61,600        )                      (61,952        )
NOI/Gross profit                                                              119,840            91,605            466,909            384,647         
Adjustments to arrive at net (loss) income:                                                                                            
Other revenues                                                                5,691              4,565             21,150             18,157          
Home selling expenses                                                         (2,504         )                      (2,079        )                      (9,744         )                      (7,476         )
General and administrative                                                    (17,177        )                      (10,511       )                      (64,087        )                      (47,455        )
Transaction costs                                                             (4,023         )                      (4,653        )                      (31,914        )                      (17,803        )
Depreciation and amortization                                                 (62,205        )                      (47,530       )                      (221,770       )                      (177,637       )
Extinguishment of debt                                                        (1,127         )                      -                 (1,127         )                      (2,800         )
Interest expense                                                              (31,430        )                      (28,856       )                      (122,315       )                      (110,878       )
Other expenses, net                                                           (5,848         )                      -                 (5,848         )                      -               
Gain on disposition of properties, net                                        -                  98,430            -                  125,376         
Current tax (expense) / benefit                                               (116           )                      71                (683           )                      (158           )
Deferred tax benefit / (expense)                                              400                (1,000        )                      400                (1,000         )
Income from affiliate transactions                                            -                  -                 500                7,500           
Net income                                                                    1,501              100,042           31,471             170,473         
Less: Preferred return to preferred OP units               1,213              1,281             5,006              4,973           
Less: Amounts attributable to noncontrolling interests     (310           )                      6,922             150                10,054          
Net income attributable to Sun Communities, Inc.                              598                91,839            26,315             155,446         
Less: Preferred stock distributions                                           2,198              2,440             8,946              13,793          
Less: Preferred stock redemption costs                                        -                  -                 -                  4,328           
Net (loss) / income attributable to Sun Communities, Inc. common stockholders $      (1,600  )                      $      89,399     $      17,369      $      137,325  

Non-GAAP and Other Financial Measures

Financial Highlights

(amounts in thousands, except per share data)

                                                                                                                                     Quarter Ended
                                                                                                                                     12/31/2016                              9/30/2016                               6/30/2016                               3/31/2016                               12/31/2015
OPERATING INFORMATION                                                                                                                                                                                                                        
Total revenues                                                                                                                                          $      218,634       $      249,701       $      190,799       $      174,644       $      168,238    
Net income (loss)                                                                                                                                       $      1,501         $      23,230        $      (5,038    )                      $      11,778        $      100,042    
Net (loss) income attributable to common stockholders                                                                                                   $      (1,600    )                      $      18,897        $      (7,803    )                      $      7,875         $      89,399     
(Loss) earnings per share basic                                                                                                                         $      (0.02     )                      $      0.27          $      (0.12     )                      $      0.14          $      1.57       
(Loss) earnings per share diluted                                                                                                                       $      (0.02     )                      $      0.27          $      (0.12     )                      $      0.14          $      1.56       
                                                                                                                                                                                                                          
Recurring EBITDA (1)                                                                                                                                    $      105,850       $      123,276       $      94,882        $      90,220        $      83,580     
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities(1) (6)                                                $      57,572        $      78,023        $      37,473        $      53,270        $      43,282     
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items(1) (6)                        $      69,192        $      83,181        $      58,452        $      55,991        $      48,935     
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (6) per share - fully diluted                         $      0.75          $      1.06          $      0.54          $      0.86          $      0.72       
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (6) per share excluding certain items - fully diluted $      0.91          $      1.13          $      0.85          $      0.90          $      0.81       
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
BALANCE SHEETS                                                                                                                                                                                                                               
Total assets                                                                                                                                            $      5,870,776     $      5,904,706     $      5,823,191     $      4,562,886     $      4,181,799  
Total debt                                                                                                                                              $      3,110,042     $      3,102,993     $      3,340,329     $      2,362,450     $      2,336,297  
Total liabilities                                                                                                                                       $      3,441,605     $      3,429,743     $      3,645,744     $      2,591,903     $      2,562,421  

Debt Analysis

(amounts in thousands)

                                            Quarter Ended
                                            12/31/2016                              9/30/2016                               6/30/2016                               3/31/2016                               12/31/2015
DEBT OUTSTANDING                                                                                                                                    
Lines of credit                                                $      100,095       $      57,737        $      357,721       $      58,065        $      24,687     
Mortgage loans payable                                         2,819,567            2,854,831            2,792,021            2,114,818            2,125,267         
Preferred OP units - mandatorily redeemable                    45,903               45,903               45,903               45,903               45,903            
Secured borrowing (3)                                          144,477              144,522              144,684              143,664              140,440           
Total debt                                                     $      3,110,042     $      3,102,993     $      3,340,329     $      2,362,450     $      2,336,297  
                                                                                                                                 
% FIXED/FLOATING                                                                                                                                    
Fixed                                                          91.8%                                   93.1%                                   84.5%                                   90.7%                                   92.0%
Floating                                                       8.2%                                    6.9%                                    15.5%                                   9.3%                                    8.0%
Total                                                          100.0%                                  100.0%                                  100.0%                                  100.0%                                  100.0%
                                                                                                                                 
WEIGHTED AVERAGE INTEREST RATES                                                                                                                     
Lines of credit                                                2.14%                                   1.93%                                   1.89%                                   1.87%                                   1.62%
Mortgage loans payable                                         4.24%                                   4.30%                                   4.38%                                   4.67%                                   4.65%
Preferred OP units - mandatorily redeemable                    6.87%                                   6.87%                                   6.87%                                   6.87%                                   6.87%
Average before Secured borrowing                               4.21%                                   4.29%                                   4.13%                                   4.64%                                   4.66%
Secured borrowing (3)                                          10.03%                                  10.06%                                  10.09%                                  10.12%                                  10.17%
Total average                                                  4.48%                                   4.56%                                   4.39%                                   4.98%                                   4.99%
                                                                                                                                 
DEBT RATIOS                                                                                                                                         
Net Debt/(T-12) Recurring EBITDA (1)                           7.5                                     7.7                                     9.1                                     5.5                                     6.6
                                                                                                                                 
Net Debt/Enterprise Value                                      33.8%                                   32.8%                                   36.6%                                   27.7%                                   34.0%
                                                                                                                                 
Net Debt + Preferred Stock/Enterprise Value                    35.2%                                   34.2%                                   38.0%                                   29.7%                                   36.1%
                                                                                                                                 
Net Debt/Gross Assets                                          45.0%                                   44.1%                                   49.0%                                   35.8%                                   45.6%
                                                                                                                                 
COVERAGE RATIOS                                                                                                                                     
(T-12) Recurring EBITDA/ Interest (1)                          3.2                                     3.1                                     3.1                                     3.0                                     3.1
                                                                                                                                 
  (T-12) Recurring EBITDA/ Interest + Pref. 2.9                                     2.9                                     2.8                                     2.7                                     2.6
Distributions + Pref. Stock Distribution (1)
MATURITIES/PRINCIPAL AMORTIZATION NEXT FIVE YEARS 2017                                  2018                                 2019                                  2020                                  2021
Lines of credit                                   $      -           $      2,889      $      -           $      97,455      $      -        
Mortgage loans payable:                                                                                                       
Maturities                                        32,688             26,186            64,314             58,078             270,680         
Weighted average rate of maturities               6.67           %                      6.22          %                      5.35           %                      3.39           %                      5.53           %
Principal amortization                            51,878             53,318            54,035             54,575             53,436          
Preferred OP units - mandatorily redeemable       11,240             -                 -                  -                  -               
Secured borrowing (3)                             5,645              6,186             6,727              7,341              7,888           
Total                                             $      101,451     $      88,579     $      125,076     $      217,449     $      332,004  

Statements of Operations - Same Community

(amounts in thousands except for Other Information)

           Three Months Ended December 31,                                                                                                                                                                  Year Ended December 31,
           2016                                  2015                                  Change                               % Change               2016                                  2015                                  Change                               % Change
REVENUES:                                                                                                                                          
Income from real property     $      113,884     $      107,224     $      6,660      6.2        %           $      466,967     $      440,202     $      26,765     6.1        %
                                                                                                                                
PROPERTY OPERATING EXPENSES:                                                                                                                                                                                
Payroll and benefits          8,809              8,944              (135          )                      (1.5       )%          38,688             36,465             2,223             6.1        %
Legal, taxes & insurance      1,224              1,412              (188          )                      (13.3      )%          5,398              6,633              (1,235        )                      (18.6      )%
Utilities                     5,761              5,958              (197          )                      (3.3       )%          26,161             25,674             487               1.9        %
Supplies and repair           3,884              4,651            (8)                  (767          )                      (16.5      )%          16,617             17,154           (8)                  (537          )                      (3.1       )%
Other                         3,283              2,333              950               40.7       %           12,945             11,823             1,122             9.5        %
Real estate taxes             7,936              7,880              56                0.7        %           34,239             31,563             2,676             8.5        %
Property operating expenses   30,897             31,178             (281          )                      (0.9       )%          134,048            129,312            4,736             3.7        %
NET OPERATING INCOME (NOI)(1) $      82,987      $      76,046      $      6,941      9.1        %           $      332,919     $      310,890     $      22,029     7.1        %
                  As of December 31,
                  2016                                 2015                                 Change                               % Change
OTHER INFORMATION                                                                           
Number of properties                 219               219               -                  
                                                                         
Overall occupancy (9)                96.6          %                      94.7          %                    (10)                 1.9           %                       
                                                                         
Sites available for development      6,542             5,906             636               10.8       %
                                                                         
Monthly base rent per site - MH      $      498        $      482        $      16         3.3        %
Monthly base rent per site - RV (11) $      436        $      423        $      13         3.1        %
Monthly base rent per site - Total   $      489        $      474        $      15         3.2        %

Rental Program Summary

(amounts in thousands except for *)

                                            Three Months Ended December 31,                                                                                                                                                                Year Ended December 31,
                                            2016                                 2015                                 Change                               % Change               2016                                  2015                                  Change                               % Change
REVENUES:                                                                                                                                                                         
Rental home revenue                                            $      12,084     $      11,756     $      328        2.8        %           $      47,780      $      46,236      $      1,544      3.3        %
Site rent included in Income from real property                15,436            15,512            (76           )                      (0.5       )%          61,600             61,952             (352          )                      (0.6       )%
Rental Program revenue                                         27,520            27,268            252               0.9        %           109,380            108,188            1,192             1.1        %
                                                                                                                                                               
EXPENSES:                                                                                                                                                                         
Commissions                                                    532               775               (243          )                      (31.4      )%          2,242              3,216              (974          )                      (30.3      )%
Repairs and refurbishment                                      3,537             4,198             (661          )                      (15.8      )%          12,825             12,326             499               4.1        %
Taxes and insurance                                            1,556             973               583               59.9       %           5,734              5,638              96                1.7        %
Marketing and other                                            1,032             895               137               15.3       %           3,493              3,776              (283          )                      (7.5       )%
Rental Program operating and maintenance                       6,657             6,841             (184          )                      (2.7       )%          24,294             24,956             (662          )                      (2.7       )%
NET OPERATING INCOME (NOI) (1)                                 $      20,863     $      20,427     $      436        2.1        %           $      85,086      $      83,232      $      1,854      2.2        %
                                                                                                                                                               
Occupied rental home information as of December 31, 2016 and 2015:                                                                                                                                                                                                                                                                                           
Number of occupied rentals,  end of period*                                                           10,733             10,685             48                0.5        %
Investment in occupied rental homes, end of period                                                                       $      457,691     $      448,837     $      8,854      2.0        %
Number of sold rental homes*                                                                                             1,089              908                181               19.9       %
Weighted average monthly rental rate, end of period*                                                                     $      882         $      858         $      24         2.8        %

Homes Sales Summary

(amounts in thousands except for *)

                      Three Months Ended December 31,                                                                                                                                                                 Year Ended December 31,
                      2016                                  2015                                 Change                               % Change               2016                                 2015                                 Change                               % Change
New home sales                           $      10,505      $      7,318      $      3,187      43.6       %           $      30,977     $      22,208     $      8,769      39.5       %
Pre-owned home sales                     18,015             17,851            164               0.9        %           79,530            57,520            22,010            38.3       %
Revenue from home sales                  28,520             25,169            3,351             13.3       %           110,507           79,728            30,779            38.6       %
                                                                                                                                        
New home cost of sales                   9,289              6,272             3,017             48.1       %           26,802            18,620            8,182             43.9       %
Pre-owned home cost of sales             12,328             13,024            (696          )                      (5.3       )%          53,618            40,321            13,297            33.0       %
Cost of home sales                       21,617             19,296            2,321             12.0       %           80,420            58,941            21,479            36.4       %
                                                                                                                                        
NOI / Gross Profit (1)                   $      6,903       $      5,873      $      1,030      17.5       %           $      30,087     $      20,787     $      9,300      44.7       %
                                                                                                                                        
Gross profit - new homes                 $      1,216       $      1,046      $      170        16.3       %           $      4,175      $      3,588      $      587        16.4       %
Gross margin % - new homes               11.6           %                      14.3          %                      (2.7          )%                         13.5          %                      16.2          %                      (2.7          )%                      
Average selling price - new homes*       $      105,050     $      89,242     $      15,808     17.7       %           $      94,156     $      81,346     $      12,810     15.8       %
                                                                                                                                        
Gross profit - pre-owned homes           $      5,687       $      4,827      $      860        17.8       %           $      25,912     $      17,199     $      8,713      50.7       %
Gross margin % - pre-owned homes         31.6           %                      27.0          %                      4.6           %                          32.6          %                      29.9          %                      2.7           %                       
Average selling price - pre-owned homes* $      27,213      $      27,211     $      2          -          %           $      27,974     $      26,027     $      1,947      7.5        %
                                                                                                                                        
Home sales volume:                                                                                                                                                                                                                                                                              
New home sales*                          100                82                18                22.0       %           329               273               56                20.5       %
Pre-owned home sales*                    662                656               6                 0.9        %           2,843             2,210             633               28.6       %
Total homes sold*                        762                738               24                3.3        %           3,172             2,483             689               27.8       %

Acquisitions Summary - Properties Acquired in 2016 and 2015

(amounts in thousands except for statistical data)

                                Three Months Ended December 31, 2016             Year Ended
                                                                                                                        December 31, 2016
REVENUES:                                                                         
Income from real property                          $            53,473           $            153,950       
PROPERTY AND OPERATING EXPENSES:                                                  
Payroll and benefits                               7,363                         18,056                     
Legal, taxes & insurance                           330                           543                        
Utilities                                          12,893                        41,334                     
Supplies and repair                                1,774                         4,115                      
Other                                              2,596                         9,417                      
Real estate taxes                                  4,248                         10,067                     
Property operating expenses                        29,204                        83,532                     
                                                               
NET OPERATING INCOME (NOI) (1)                     $            24,269           $            70,418        
                                                               
                                                              As of December 31, 2016
Other information:                                                                
Number of properties                                                             122                        
Occupied sites (12)                                                              24,359                     
Developed sites (12)                                                             25,055                     
Occupancy % (12)                                                                 97.2                      %
Transient sites                                                                  8,703                      
Monthly base rent per site - MH                                                  $            596           
Monthly base rent per site - RV (11)                                             $            398           
Monthly base rent per site - Total (11)                                          $            509           
Ancillary revenues, net (in thousands)                                           $            2,992         
                                                               
Home sales:                                                                       
Gross profit from home sales (in thousands)                                      $            4,452         
New homes sales                                                                  95                         
Pre-owned homes sales                                                            306                        
                                                               
Occupied rental home information:                                                 
Rental program NOI (1) (in thousands)                                            $            540           
Number of occupied rentals, end of period                                        292                        
Investment in occupied rental homes (in thousands)                               $            9,716         
Weighted average monthly rental rate                                             $            955           
Property Summary                                                                                           
(includes MH and Annual/Seasonal RV’s)                                                                                                                                                                                       
                                                                                        
COMMUNITIES                      12/31/2016                        9/30/2016                         6/30/2016                         3/31/2016                         12/31/2015                       
FLORIDA                                                                                                    
Communities                      121            121            121            61             61            
Developed sites (12)             36,326         36,050         36,119         24,312         24,216        
Occupied (12)                    35,021         34,745         34,720         23,359         23,201        
Occupancy % (12)                 96.4       %                      96.4       %                      96.1       %                      96.1       %                      95.8       %                     
Sites for development            1,465          1,259          1,259          823            823           
MICHIGAN                                                                                                   
Communities                      67             67             66             66             65            
Developed sites (12)             24,512         24,388         24,387         24,363         23,966        
Occupied (12)                    23,248         23,218         23,198         23,079         22,677        
Occupancy % (12)                 94.8       %                      95.2       %                      95.1       %                      94.7       %                      94.6       %                     
Sites for development            2,589          2,628          2,248          2,105          2,105         
TEXAS                                                                                                      
Communities                      21             21             21             17             16            
Developed sites (12)             6,186          6,088          6,071          5,970          5,965         
Occupied (12)                    5,862          5,774          5,771          5,602          5,517         
Occupancy % (12)                 94.8       %                      94.8       %                      95.1       %                      93.8       %                      92.5       %                     
Sites for development            1,474          1,455          1,347          1,347          1,347         
CALIFORNIA                                                                                                 
Communities                      22             22             22             3              3             
Developed sites (12)             4,862          4,863          4,864          198            198           
Occupied (12)                    4,793          4,792          4,796          192            192           
Occupancy % (12)                 98.6       %                      98.5       %                      98.6       %                      97.0       %                      97.0       %                     
Sites for development            332            332            332            332            332           
ARIZONA                                                                                                    
Communities                      11             11             11             10             10            
Developed sites (12)             3,565          3,567          3,532          3,302          3,301         
Occupied (12)                    3,338          3,305          3,281          3,102          3,078         
Occupancy % (12)                 93.6       %                      92.7       %                      92.9       %                      93.9       %                      93.2       %                     
Sites for development            358            358            358            393            393           
ONTARIO, CANADA                                                                                            
Communities                      15             15             15             -              -             
Developed sites (12)             3,368          3,453          3,375          -              -             
Occupied (12)                    3,368          3,453          3,375          -              -             
Occupancy % (12)                 100.0      %                      100.0      %                      100.0      %                      -          %                      -          %                     
Sites for development            1,599          2,029          2,029          -              -             
INDIANA                                                                                                    
Communities                      11             11             11             11             11            
Developed sites (12)             2,900          2,900          2,900          2,900          2,900         
Occupied (12)                    2,724          2,712          2,700          2,674          2,628         
Occupancy % (12)                 93.9       %                      93.5       %                      93.1       %                      92.2       %                      90.6       %                     
Sites for development            316            316            316            363            363           
                                                                                        
                                                                                        
OHIO                                                                                                       
Communities                      9              9              9              9              9             
Developed sites (12)             2,715          2,719          2,718          2,700          2,703         
Occupied (12)                    2,595          2,602          2,616          2,585          2,560         
Occupancy % (12)                 95.6       %                      95.7       %                      96.2       %                      95.7       %                      94.7       %                     
Sites for development            -              -              -              -              -             
COLORADO                                                                                                   
Communities                      8              7              7              7              7             
Developed sites (12)             2,335          2,335          2,335          2,335          2,335         
Occupied (12)                    2,325          2,323          2,320          2,319          2,315         
Occupancy % (12)                 99.6       %                      99.5       %                      99.4       %                      99.3       %                      99.1       %                     
Sites for development            656            304            304            304            304           
OTHER STATES                                                                                               
Communities                      56             55             54             49             49            
Developed sites (12)             14,313         14,415         14,337         13,683         13,657        
Occupied (12)                    13,919         13,991         13,912         13,237         13,142        
Occupancy % (12)                 97.3       %                      97.1       %                      97.0       %                      96.7       %                      96.2       %                     
Sites for development            1,827          1,823          1,728          1,514          1,514         
TOTAL - PORTFOLIO                                                                                          
Communities                      341            339            337            233            231           
Developed sites (12)             101,082        100,778        100,638        79,763         79,241        
Occupied (12)                    97,193         96,915         96,689         76,149         75,310        
Occupancy % (12)                 96.2       %                      96.2       %                      96.1       %                      95.5       %                      95.0       %                     
Sites for development            10,616         10,504         9,921          7,181          7,181         
% Communities age restricted     33.1       %                      33.3       %                      33.5       %                      26.2       %                      26.4       %                     
                                                                                        
TRANSIENT RV PORTFOLIO SUMMARY                                                                             
 Location                                                                               
Florida                          6,497          7,232          6,990          2,664          2,823         
Ontario, Canada                  1,500          1,485          1,657          -              -             
Texas                            1,407          1,446          1,455          799            414           
Arizona                          1,049          1,047          1,055          1,096          1,087         
New Jersey                       1,042          1,047          1,084          995            981           
New York                         830            484            483            489            499           
Maine                            555            556            571            575            604           
California                       513            478            518            296            296           
Indiana                          502            501            501            501            501           
Michigan                         204            203            126            150            160           
Ohio                             198            194            195            213            210           
Other States                     1,997          1,801          1,864          2,099          2,092         
Total transient RV sites         16,294         16,474         16,499         9,877          9,667         

Capital Improvements, Development, and Acquisitions

(amounts in thousands except for *)

  Recurring                                                                                                                                     
  Capital                                             Recurring                                                                                                                       
  Expenditures                                        Capital                                                 Lot                                                                                      Expansion &                                             Revenue
    Average/Site*                    Expenditures (13)                    Modifications (14)            Acquisitions (15)                       Development (16)                     Producing (17)
2016                   $    211      $      17,613     $            19,040           $      1,822,564     $      47,958     $      2,631   
2015                   $    230      $      20,344     $            13,961           $      1,214,482     $      28,660     $      4,497   
2014                   $    227      $      18,077     $            9,414            $      785,624       $      22,196     $      1,454   

Operating Statistics for Manufactured Homes and Annual/Seasonal RV’s

              Resident                                        Net Leased                                      New Home                                      Pre-owned                                       Brokered
MARKETS                          Move-outs                                       Sites (18)                                      Sales                                         Home Sales                                      Re-sales
Michigan                           439       310       9       1,231     152    
Florida                            358       662       186     338       987    
Texas                              180       249       14      377       49     
Indiana                            54        96        -       213       9      
Ohio                               100       36        1       102       6      
Arizona                            49        127       40      28        133    
Colorado                           12        12        16      204       46     
Other states and Ontario, Canada   530       194       63      350       273    
Year Ended December 31, 2016       1,722     1,686     329     2,843     1,655  
  Resident                                        Net Leased                                      New Home                                      Pre-owned                                       Brokered
TOTAL FOR YEAR ENDED Move-outs                                       Sites (18)                                      Sales                                         Home Sales                                      Re-sales
2015                   1,344     1,905     273     2,210     1,244  
2014                   1,504     1,890     113     1,853     618    
  Resident                     Resident
PERCENTAGE TRENDS    Move-outs                    Re-sales
2016                   2.0 %     6.1 %
2015                   2.0 %     5.9 %
2014                   2.6 %     5.0 %

Footnotes and Definitions

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

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 period over period, reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from net income (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. The Company also uses FFO excluding certain items, which excludes certain gain and loss items that management considers unrelated to the operational and financial performance of our core business. We believe that this provides investors with another financial measure of our operating performance that is more comparable when evaluating period over period results.

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 that, when combined with measures computed in accordance with GAAP such as net income (loss), cash flow from operating activities, investing activities and financing activities, provide investors with an indication of our ability to service debt and to fund acquisitions and other expenditures. Other REITs may use different methods for calculating FFO, accordingly, our FFO may not be comparable to other REITs.

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. Because of the inclusion of items such as interest, depreciation, and amortization, the use of 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. 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, therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.

EBITDA is defined as NOI plus other income, plus (minus) equity earnings (loss) from affiliates, minus general and administrative expenses. EBITDA includes EBITDA from discontinued operations. The Company believes that net income (loss) is the most directly comparable GAAP measurement to EBITDA.

(2) 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.

(3) This is a transferred asset transaction which has been classified as collateralized receivables and the cash received from this transaction has been classified as a secured borrowing. The interest income and interest expense accrue at the same rate/amount.

(4) Other expenses, net on the Consolidated Statements of Operations is comprised of: foreign currency exchange $5.0 million; hurricane related costs $1.2 million; and contingent liability re-measurement $0.2 million; partially offset by gain on acquisition of property $0.5 million.

(5) These costs represent the first year expenses incurred to bring 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. As these costs have become more significant in connection with the size of our acquisitions, they are included as an adjustment to FFO for the year ended December 31, 2016. The Company incurred $1.1 million and $2.8 million of these first year expenses for the three months and year ended December 31, 2015, and had a similar adjustment been made, FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per share excluding certain items would have been $0.83 and $3.68 for the three months and year ended December 31, 2015.

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

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

(8) Three months and year ended December 31, 2015 excludes $1.1 million and $2.8 million of first year expenses for properties acquired in late 2014 and 2015 incurred to bring the properties up to Sun’s operating standards. These costs did not meet the Company’s capitalization policy.

(9) Includes manufactured housing (MH) and annual/seasonal recreational vehicle (RV) sites, and excludes transient RV sites and recently completed but vacant expansion sites.

(10) Occupancy reflects current year gains from expansion sites and the conversion of transient RV guests to annual/seasonal RV contracts as vacant in 2015.

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

(12) Includes MH and annual/seasonal RV sites, and excludes transient RV sites.

(13) Includes capital expenditures necessary to maintain asset quality, including purchasing and replacing assets used to operate the community. These capital expenditures include items such as: major road, driveway, and 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.

(14) Includes capital expenditures which 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.

(15) Acquisitions represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. Acquisitions also include deferred maintenance identified during due diligence and those capital improvements necessary to bring the community up to the Company’s standards. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, they sometimes require up to twelve months after closing to complete.

(16) Expansion and development costs consist primarily of construction costs and costs necessary to complete home site improvements.

(17) Capital costs related to revenue generating activities, consisting primarily of garages, sheds, and 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.

(18) Net leased sites do not include occupied sites acquired in that year.

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

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Sun Communities via Globenewswire

4th Quarter 2016 Press Release and Supplemental - http://hugin.info/143420/R/2081293/783913.pdf



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