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 Sun Communities, Inc. Reports 2017 Fourth Quarter Results
   Wednesday, February 21, 2018 5:59:37 PM ET

NEWS RELEASE

February 21, 2018

Southfield, Michigan, February 21, 2018 - 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, 2017

For the quarter ended December 31, 2017, total revenues increased $23.4 million, or 10.7 percent, to $242.0 million compared to $218.6 million for the same period in 2016. Net income attributable to common stockholders was $7.4 million, or $0.09 per diluted common share, as compared to net loss attributable to common stockholders of $1.6 million, or $0.02 net loss per diluted common share, in 2016.

For the year ended December 31, 2017, total revenues increased $148.8 million, or 17.9 percent, to $982.6 million compared to $833.8 million for the same period in 2016. Net income attributable to common stockholders was $65.0 million, or $0.85 per diluted common share, as compared to net income attributable to common stockholders of $17.4 million, or $0.26 per diluted common share, for the same period in 2016.

Non-GAAP Financial Measures and Portfolio Performance

- Core Funds from Operations ("Core FFO")(1) for the quarter ended December 31, 2017, was $0.98 per diluted share and OP unit ("Share") as compared to $0.91 in the prior year, an increase of 7.7 percent.

- Core FFO(1) for the year ended December 31, 2017, was $4.17 per Share as compared to $3.79 in the prior year, an increase of 10.0 percent.

- Same Community Net Operating Income ("NOI")(1) increased by 7.0 percent and 6.9 percent for the quarter and year ended December 31, 2017, respectively, as compared to the same periods in 2016.

- Home sales volumes increased 11.6 percent and 3.5 percent for the quarter and year ended December 31, 2017, respectively, as compared to the same periods in 2016.

- Revenue producing sites increased by 573 sites and 2,406 sites for the quarter and year ended December 31, 2017, respectively, as compared to 301 sites and 1,686 sites in the same periods in 2016.

"Our strong 2017 results demonstrate our commitment to creating shareholder value by sustaining our high-quality portfolio and delivering best in class service to our residents and guests," said Gary A. Shiffman, Chairman and Chief Executive Officer. "We begin 2018 with an optimistic outlook and an enthusiasm to once again deliver industry leading organic growth. Consistent annual rent increases, opportunities to capture occupancy gains, the ongoing development and lease up of our available expansion sites, and the opportunity to convert transient RV sites to annual leases over time provide us with a runway to deliver ongoing attractive results."

OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy was 95.8 percent at December 31, 2017, compared to 96.2 percent at December 31, 2016. The decline in occupancy is primarily attributable to vacant MH expansion sites that were completed during the fourth quarter.

During the fourth quarter of 2017, revenue producing sites increased by 573 sites, as compared to 301 revenue producing sites gained during the fourth quarter of 2016.

Revenue producing sites increased by 2,406 for the year ended December 31, 2017 as compared to 1,686 sites for the year ended December 31, 2016.

Same Community Results

For the 231 communities owned by the Company since January 1, 2016, NOI(1) for the quarter ended December 31, 2017 increased 7.0 percent over the same period in 2016, as a result of a 6.4 percent increase in revenues and a 4.9 percent increase in operating expenses. Same Community occupancy increased to 97.3 percent at December 31, 2017 from 95.4 percent(11)(12) at December 31, 2016.

For the year ended December 31, 2017, total revenues increased by 6.0 percent while total expenses increased by 3.8 percent, resulting in an increase to NOI(1) of 6.9 percent over the year ended December 31, 2016.

Home Sales

Total home sales were 850 for the quarter ended December 31, 2017, as compared to 762 homes sold during the same period in 2016, an 11.6 percent increase. During the year ended December 31, 2017, the Company sold 3,282 homes, compared to 3,172 homes sold for the same period ending 2016, an increase of 3.5 percent.

Rental homes sales, which are included in total home sales, were 340 and 231 for the quarter ended December 31, 2017 and 2016, respectively. Rental home sales were 1,168 and 1,089 for the year ended December 31, 2017 and 2016, respectively.

PORTFOLIO ACTIVITY

Acquisitions (2)

During the quarter ended December 31, 2017, the Company acquired a 201 site MH and RV resort located in Panama City Beach, Florida, for total consideration of $19.5 million. Additionally, the Company acquired a 383 site age-restricted MH community located in Port Orange, Florida, for total consideration of $32.5 million.

Catastrophic Weather

As previously announced, the Company’s communities in Florida and Georgia sustained damage from Hurricane Irma in September 2017, including complete asset impairments at three communities in the Florida Keys which will require redevelopment. Charges of $8.4 million were recognized as "Catastrophic weather related charges, net" in the Consolidated Statements of Operations for the year ended December 31, 2017. After quarter end, the Company received an advance from its insurer for $5.0 million related to losses from debris and tree removal, common area repairs and minor flooding damage.

For the year ended December 31, 2017, no insurance advances for lost earnings from the three Florida Keys communities were received. However, Core FFO(1) for the fourth quarter of 2017 and the Company’s full year 2018 guidance includes adjustments of $0.3 million and $1.3 million, respectively, for estimated loss of earnings in excess of the applicable business interruption deductible.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

During the quarter ended December 31, 2017, the Company defeased a $38.6 million collateralized term loan with a 5.25 percent fixed interest rate. As a result of the transaction the Company recognized a loss on extinguishment of debt of $5.2 million. Concurrent with the defeasance, the Company entered into a new $100.0 million collateralized term loan encumbered by the same property with a 4.25 percent fixed rate of interest that will fully amortize over a 30-year term.

As of December 31, 2017, the Company had $3.1 billion of debt outstanding. The weighted average interest rate was 4.50 percent and the weighted average maturity was 8.9 years. The Company had $10.1 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month Recurring EBITDA(1) ratio was 6.3 times.

Equity Transactions

As previously announced, during the quarter ended December 31, 2017, the Company redeemed its 7.125% Series A Cumulative Redeemable Preferred Stock. Holders received a cash payment of $25.14349 per share which included accrued and unpaid dividends. In the aggregate, the Company paid $85.5 million to redeem all of the 3,400,000 outstanding shares.

Additionally, during the quarter ended December 31, 2017, the Company issued 321,800 shares of common stock through its At-the-Market equity sales program at a weighted average price of $93.33 per share. Net proceeds from the sales were $29.7 million.

2018 Distributions

After quarter end, the Company announced a 6.0 percent annual distribution increase to $2.84 per common share from $2.68 per common share. This increase will begin with the first quarter distribution to be declared in March 2018 and paid in April 2018.

GUIDANCE 2018

The Company estimates full year 2018 net income per diluted share to be in the range of $1.26 to $1.42, and Core FFO(1) per Share to be in the range of $4.48 to $4.58. The Company estimates first quarter 2018 net income per diluted share to be in the range of $0.32 to $0.36, and Core FFO(1) per Share to be in the range of $1.12 to $1.14. Guidance does not include prospective acquisitions or capital markets activity.

Total Portfolio

Number of communities: 350                                                   
                                       2017 Actual                          2018E
                                       (in Millions)                        Change %
Income from real property (excluding transient revenue)   $      664.3      7.0% - 7.4%
Transient revenue                                         77.9              8.9% - 10.0%
Income from real property                                 $      742.2      7.2% - 7.7%
Property operating and maintenance                        210.3             3.9% - 4.3%
Real estate taxes                                         52.3              7.1% - 7.8%
Total property operating expenses                         $      262.6      4.5% - 5.0%
NOI(1)                                                    $      479.6      8.4% - 9.4%
                                        2017 Actual                                                2018E
                                        (in Millions)                                              Change %
Rental program, net                                        $                 28.5                  2.5% - 4.6%
Home sales gross profit                                    32.3                                    0.9% - 5.3%
Ancillary revenues, net                                    10.4                                    (1.9%) - 0.0%
Interest, brokerage commissions, and other revenues, net   24.9                                    2.4% - 3.6%
Home selling expenses                                      12.5                                    21.6% - 22.4%
General and administrative                                 74.7                                    1.3% - 2.9%
 
Net Income per fully diluted share                                                                                                       2018E
Weighted average common shares outstanding, fully diluted (in millions) (i)                                                              78.9
Q1 2018 Net income per fully diluted share                                                                                               $0.32 - $0.36
Full Year 2018 Net income per fully diluted share                                                                                        $1.26 - $1.42
                                                                                                                       
Core FFO per fully diluted share                                                                                                         2018E
Weighted average common shares outstanding, fully diluted (in millions) - Core FFO(1)                                                    84.0
Q1 2018 Core FFO(1) per fully diluted share                                                                                              $1.12 - $1.14
Full Year 2018 Core FFO(1) per fully diluted share                                                                                       $4.48 - $4.58

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

Supplementary Information:

          1Q18    2Q18    3Q18    4Q18
Seasonality of Core FFO(1)   24.9%   23.1%   27.9%   24.1%
                                                          2018E
New home sales volume                                                        500 - 560
Pre-owned home sales volume                                                  2,650 - 2,900
Increase in revenue producing sites                                          2,700 - 2,900
Gross profit from rental home sales included above (non-FFO) (in millions)   $14.5
Loss of earnings in 2018 from Florida Keys (in millions)                     $1.3

Same Community Portfolio(i):

Number of communities: 336                                                   
                                       2017 Actual                          2018E
                                       (in Millions)                        Change %
Income from real property (excluding transient revenue)   $      629.3      6.0% - 6.2%
Transient revenue                                         74.9              4.9% - 5.7%
Income from real property (ii)                            $      704.2      5.9% - 6.1%
Property operating and maintenance (ii) (iii)             172.3             2.7% - 2.9%
Real estate taxes                                         51.7              4.8% - 5.2%
Total property operating expenses                         $      224.0      3.2% - 3.4%
NOI(1)                                                    $      480.2      7.0% - 7.5%

(i) The amounts in the table above reflect constant currency, as Canadian currency figures included within the 2017 actual amounts have been translated at the assumed exchange rate used for 2018 guidance.

(ii) The foregoing table nets $30.6 million of utility revenue against the related utility expense in property operating and maintenance expense.

(iii) 2017 actual property operating and maintenance expense excludes $2.6 million of expenses incurred for recently acquired properties to bring the properties up to the Company’s operating standards that do not meet the Company’s capitalization policy.

Supplementary Information:

                      1Q18                   2Q18                   3Q18                   4Q18
Same Community NOI(1) Seasonality        25.5%                  23.7%                  26.1%                  24.7%
                                   
                              2018E
Weighted average monthly rent increase           3.8                                                  %

Core FFO(1) per Share estimates assume certain gain and loss items that management considers unrelated to the operational and financial performance of our core business will be adjusted from FFO(1). 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 22, 2018 at 11:00 A.M. (ET). To participate, call toll-free 877-407-9039. Callers outside the U.S. or Canada can access the call at 201-689-8470. A replay will be available following the call through March 8, 2018 and can be accessed toll-free by calling 844-512-2921 or 412-317-6671. The Conference ID number for the call and the replay is 13673837. 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, 2017, owned, operated, or had an interest in a portfolio of 350 communities comprising approximately 122,000 developed sites in 29 states and Ontario, Canada.

For more information about Sun Communities, Inc., please visit 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 its 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.

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                                                                
                                                              
Firm                                    Analyst                                Phone                                  Email
Bank of America Merrill Lynch           Joshua Dennerlein                      (646) 855-1681                         joshua.dennerlein@baml.com
BMO Capital Markets                     John Kim                               (212) 885-4115                         johnp.kim@bmo.com
Citi Research                           Michael Bilerman                       (212) 816-1383                         michael.bilerman@citi.com
                     Nicholas Joseph                        (212) 816-1909                         nicholas.joseph@citi.com
Evercore ISI                            Steve Sakwa                            (212) 446-9462                         steve.sakwa@evercoreisi.com
                     Samir Khanal                           (212) 888-3796                         samir.khanal@evercoreisi.com
Green Street Advisors                   Ryan Burke                             (949) 640-8780                         rburke@greenstreetadvisors.com
RBC Capital Markets                     Wes Golladay                           (440) 715-2650                         wes.golladay@rbccm.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, 2017)

Balance Sheets

(amounts in thousands)

                                   12/31/2017                              12/31/2016
ASSETS:                                                                     
Land                                                  $      1,107,838     $      1,051,536  
Land improvements and buildings                       5,102,014            4,825,043         
Rental homes and improvements                         528,074              489,633           
Furniture, fixtures and equipment                     144,953              130,127           
Investment property                                   6,882,879            6,496,339         
Accumulated depreciation                              (1,237,525       )                      (1,026,858       )
Investment property, net                              5,645,354            5,469,481         
Cash and cash equivalents                             10,127               8,164             
Inventory of manufactured homes                       30,430               21,632            
Notes and other receivables, net                      163,496              81,179            
Collateralized receivables, net (3)                   128,246              143,870           
Other assets, net                                     134,304              146,450           
Total assets                                          $      6,111,957     $      5,870,776  
LIABILITIES:                                                                
Mortgage loans payable                                $      2,867,356     $      2,819,567  
Secured borrowings (3)                                129,182              144,477           
Preferred OP units - mandatorily redeemable           41,443               45,903            
Lines of credit                                       41,257               100,095           
Distributions payable                                 55,225               51,896            
Other liabilities                                     270,741              279,667           
Total liabilities                                     3,405,204            3,441,605         
Series A-4 preferred stock                            32,414               50,227            
Series A-4 preferred OP units                         10,652               16,717            
STOCKHOLDERS’ EQUITY:                                                       
Series A preferred stock                              -                    34                
Common stock                                          797                  732               
Additional paid-in capital                            3,758,533            3,321,441         
Accumulated other comprehensive income (loss)         1,102                (3,181           )
Distributions in excess of accumulated earnings       (1,162,001       )                      (1,023,415       )
  Total SUI stockholders’ equity   2,598,431            2,295,611         
Noncontrolling interests:                                                   
Common and preferred OP units                         60,971               69,598            
Consolidated variable interest entities               4,285                (2,982           )
Total noncontrolling interest                         65,256               66,616            
Total stockholders’ equity                            2,663,687            2,362,227         
Total liabilities & stockholders’ equity              $      6,111,957     $      5,870,776  

Statements of Operations - Quarter to Date Comparison

(amounts in thousands, except per share amounts)

                                     Three Months Ended December 31,
                                     2017                                  2016                                  Change                               % Change
REVENUES                                                                                                         
Income from real property (excluding transient revenue) $      169,102     $      156,533     $      12,569     8.0        %
Transient revenue                                       12,348             10,824             1,524             14.1       %
Revenue from home sales                                 36,089             28,520             7,569             26.5       %
Rental home revenue                                     12,775             12,084             691               5.7        %
Ancillary revenues                                      5,425              4,982              443               8.9        %
Interest                                                5,571              4,791              780               16.3       %
Brokerage commissions and other revenues, net           716                900                (184          )                      (20.4      )%
Total revenues                                          242,026            218,634            23,392            10.7       %
                                                                                              
EXPENSES                                                                                                         
Property operating and maintenance                      50,417             47,917             2,500             5.2        %
Real estate taxes                                       12,966             12,184             782               6.4        %
Cost of home sales                                      27,115             21,617             5,498             25.4       %
Rental home operating and maintenance                   5,179              6,657              (1,478        )                      (22.2      )%
Ancillary expenses                                      5,352              4,728              624               13.2       %
Home selling expenses                                   3,066              2,504              562               22.4       %
General and administrative                              18,523             17,177             1,346             7.8        %
Transaction costs                                       2,811              4,023              (1,212        )                      (30.1      )%
Catastrophic weather related charges, net               228                1,172              (944          )                      (80.6      )%
Depreciation and amortization                           71,817             62,205             9,612             15.5       %
Loss on extinguishment of debt                          5,260              1,127              4,133             366.7      %
Interest                                                31,363             30,641             722               2.4        %
Interest on mandatorily redeemable preferred OP units   753                789                (36           )                      (4.6       )%
Total expenses                                          234,850            212,741            22,109            10.4       %
Income before other items                               7,176              5,893              1,283             21.8       %
Other income / (expense), net (4)                       3,642              (4,676         )                      8,318             177.9      %
Current tax expense                                     (313           )                      (116           )                      (197          )                      (169.8     )%
Deferred tax (expense) / benefit                        (163           )                      400                (563          )                      (140.8     )%
Net income                                              10,342             1,501              8,841             589.0      %
Less: Preferred return to preferred OP units            (1,099         )                      (1,213         )                      114               (9.4       )%
Less: Amounts attributable to noncontrolling interests  (876           )                      310                (1,186        )                      (382.6     )%
Less: Preferred stock distribution                      (929           )                      (2,198         )                      1,269             (57.7      )%
NET INCOME / (LOSS) ATTRIBUTABLE TO SUI                 $      7,438       $      (1,600  )                      $      9,038      564.9      %
                                                                                              
Weighted average common shares outstanding:                                                                      
Basic                                                   78,633             72,277             6,356             8.8        %
Diluted                                                 79,107             72,685             6,422             8.8        %
Earnings / (loss) per share:                                                                                     
Basic                                                   $      0.09        $      (0.02   )                      $      0.11       550.0      %
Diluted                                                 $      0.09        $      (0.02   )                      $      0.11       550.0      %

Statements of Operations - Year to Date Comparison

(amounts in thousands, except per share amounts)

                                       Year Ended December 31,
                                       2017                                  2016                                  Change                                % Change
REVENUES:                                                                                                           
Income from real property (excluding transient revenue)   $      664,281     $      562,754     $      101,527     18.0       %
Transient revenue                                         77,947             58,163             19,784             34.0       %
Revenue from home sales                                   127,408            110,507            16,901             15.3       %
Rental home revenue                                       50,549             47,780             2,769              5.8        %
Ancillary revenues                                        37,511             33,424             4,087              12.2       %
Interest                                                  21,180             18,113             3,067              16.9       %
Brokerage commissions and other revenues, net             3,694              3,037              657                21.6       %
Total revenues                                            982,570            833,778            148,792            17.9       %
                                                                                                 
EXPENSES:                                                                                                           
Property operating and maintenance                        210,278            173,274            37,004             21.4       %
Real estate taxes                                         52,288             44,306             7,982              18.0       %
Cost of home sales                                        95,114             80,420             14,694             18.3       %
Rental home operating and maintenance                     22,000             24,294             (2,294         )                      (9.4       )%
Ancillary expenses                                        27,071             23,425             3,646              15.6       %
Home selling expenses                                     12,457             9,744              2,713              27.8       %
General and administrative                                74,711             64,087             10,624             16.6       %
Transaction costs                                         9,801              31,914             (22,113        )                      (69.3      )%
Catastrophic weather related charges, net                 8,352              1,172              7,180              612.6      %
Depreciation and amortization                             261,536            221,770            39,766             17.9       %
Loss on extinguishment of debt                            6,019              1,127              4,892              434.1      %
Interest                                                  127,128            119,163            7,965              6.7        %
Interest on mandatorily redeemable preferred OP units     3,114              3,152              (38            )                      (1.2       )%
Total expenses                                            909,869            797,848            112,021            14.0       %
Income before other items                                 72,701             35,930             36,771             102.3      %
Other income / (expense), net (4)                         8,982              (4,676         )                      13,658             292.1      %
Current tax expense                                       (446           )                      (683           )                      237                34.7       %
Deferred tax benefit                                      582                400                182                45.5       %
Income from affiliate transactions                        -                  500                (500           )                      100.0      %
Net income                                                81,819             31,471             50,348             160.0      %
Less: Preferred return to preferred OP units              (4,581         )                      (5,006         )                      425                (8.5       )%
Less: Amounts attributable to noncontrolling interests    (5,055         )                      (150           )                      (4,905         )                      3,270.0    %
Less: Preferred stock distribution                        (7,162         )                      (8,946         )                      1,784              (19.9      )%
NET INCOME ATTRIBUTABLE TO SUI                            $      65,021      $      17,369      $      47,652      274.4      %
                                                                                                 
Weighted average common shares outstanding:                                                                         
Basic                                                     76,084             65,856             10,228             15.5       %
Diluted                                                   76,711             66,321             10,390             15.7       %
Earnings per share:                                                                                                 
Basic                                                     $      0.85        $      0.27        $      0.58        214.8      %
Diluted                                                   $      0.85        $      0.26        $      0.59        226.9      %

Outstanding Securities and Capitalization

(in thousands except for *)

Outstanding Securities - As of December 31, 2017
                                                                  
                               Number of Units/Shares Outstanding   Conversion Rate*       If Converted           Issuance Price per unit*   Annual Distribution Rate*
Convertible Securities                                                               
Series A-1 preferred OP units                     345                                  2.4390                 841                    $100                       6.0%
Series A-3 preferred OP units                     40                                   1.8605                 74                     $100                       4.5%
Series A-4 preferred OP units                     424                                  0.4444                 188                    $25                        6.5%
Series C preferred OP units                       316                                  1.1100                 351                    $100                       4.5%
Common OP units                                   2,746                                1.0000                 2,746                  N/A                        Mirrors common shares distributions
Series A-4 cumulative convertible preferred stock 1,085                                0.4444                 482                    $25                        6.5%
                                                                  
Non-Convertible Securities                                                           
Common shares                                     79,679                               N/A                    N/A                    N/A                        $2.68^
^ Annual distribution is based on the last quarterly distribution annualized.
Capitalization - As of December 31, 2017                                        
                                                             
Equity                                        Shares                            Share Price*                         Total
Common shares                                 79,679         $      92.78      $      7,392,618   
Common OP units                               2,746          $      92.78      254,774            
Subtotal                                      82,425                           $      7,647,392   
                                                             
Series A-1 preferred OP units                 841            $      92.78      78,028             
Series A-3 preferred OP units                 74             $      92.78      6,866              
Series A-4 preferred OP units                 188            $      92.78      17,443             
Series C preferred OP units                   351            $      92.78      32,566             
Total diluted shares outstanding              83,879                           $      7,782,295   
 
Debt
Mortgage loans payable                                                         $      2,867,356   
Secured borrowings (3)                                                         129,182            
Preferred OP units - mandatorily redeemable                                    41,443             
Lines of credit                                                                41,257             
Total Debt                                                                     $      3,079,238   
 
Preferred
A-4 preferred stock                           1,085          $      25.00      $      27,125      
Total Capitalization                                                           $      10,888,658  

Reconciliations to Non-GAAP Financial Measures

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

(amounts in thousands except for per share data)

                                                                                                                      Three Months Ended December 31,                                                              Year Ended
                                                                                                                                                                                                                                                          December 31,
                                                                                                                      2017                                 2016                                 2017                                  2016
Net income / (loss) attributable to Sun Communities, Inc. common stockholders                                                            $      7,438      $      (1,600 )                      $      65,021      $      17,369   
Adjustments:                                                                                                                                                                                     
Depreciation and amortization                                                                                                            72,068            62,351            262,211            221,576         
Amounts attributable to noncontrolling interests                                                                                         825               (296          )                      4,535              (41            )
Preferred return to preferred OP units                                                                                                   570               604               2,320              2,462           
Preferred distribution to Series A-4 preferred stock                                                                                     441               -                 2,107              -               
Gain on disposition of assets, net                                                                                                       (4,733        )                      (3,487        )                      (16,075        )                      (15,713        )
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6)                                76,609            57,572            320,119            225,653         
 
Adjustments:                                                                                                                                                                                     
Transaction costs                                                                                                                        2,811             4,023             9,801              31,914          
Other acquisition related costs (5)                                                                                                      98                1,861             2,810              3,328           
Income from affiliate transactions                                                                                                       -                 -                 -                  (500           )
Loss on extinguishment of debt                                                                                                           5,260             1,127             6,019              1,127           
Catastrophic weather related charges, net                                                                                                228               1,172             8,352              1,172           
Loss of earnings - catastrophic weather related                                                                                          292               -                 292                -               
Other (income) / expense, net (4)                                                                                                        (3,642        )                      4,676             (8,982         )                      4,676           
Debt premium write-off                                                                                                                   (905          )                      (839          )                      (1,343         )                      (839           )
Ground lease intangible write-off                                                                                                        898               -                 898                -               
Deferred tax expense / (benefit)                                                                                                         163               (400          )                      (582           )                      (400           )
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6)                           $      81,812     $      69,192     $      337,384     $      266,131  
 
                                                                                                                                                                              
Weighted average common shares outstanding - basic:                                                                                      78,633            72,277            76,084             65,856          
Add:                                                                                                                                                                                             
Common stock issuable upon conversion of stock options                                                                                   2                 1                 2                  8               
Restricted stock                                                                                                                         472               407               625                457             
Common OP units                                                                                                                          2,751             2,793             2,756              2,844           
Common stock issuable upon conversion of Series A-1 preferred OP units                                                                   847               901               869                925             
Common stock issuable upon conversion of Series A-3 preferred OP units                                                                   75                75                75                 75              
Common stock issuable upon conversion of Series A-4 preferred stock                                                                      482               -                 585                -               
Weighted average common shares outstanding - fully diluted                                                                               83,262            76,454            80,996             70,165          
                                                                                                                                                                              
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share - fully diluted      $      0.92       $      0.75       $      3.95        $      3.22     
 
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share - fully diluted $      0.98       $      0.91       $      4.17        $      3.79     
 

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

(amounts in thousands)

                                                            Three Months Ended                                                                         Year Ended
                                                                                December 31,                                                                               December 31,
                                                            2017                                2016                                2017                                2016
Net income / (loss) attributable to Sun Communities, Inc., common stockholders $    7,438       $    (1,600  )                      $    65,021      $    17,369   
Interest                                                                       32,116           31,430           130,242          122,315       
Depreciation and amortization                                                  71,817           62,205           261,536          221,770       
Loss on extinguishment of debt                                                 5,260            1,127            6,019            1,127         
Transaction costs                                                              2,811            4,023            9,801            31,914        
Catastrophic weather related charges, net                                      228              1,172            8,352            1,172         
Other (income) / expense, net (4)                                              (3,642       )                      4,676            (8,982       )                      4,676         
Current tax expense                                                            313              116              446              683           
Deferred tax expense / (benefit)                                               163              (400         )                      (582         )                      (400         )
Income from affiliate transactions                                             -                -                -                (500         )
Preferred return to preferred OP units                                         1,099            1,213            4,581            5,006         
Amounts attributable to noncontrolling interests                               876              (310         )                      5,055            150           
Preferred stock distribution                                                   929              2,198            7,162            8,946         
RECURRING EBITDA (1)                                                           $    119,408     $    105,850     $    488,651     $    414,228  

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

(amounts in thousands)

                                                             Three Months Ended                                                                         Year Ended
                                                                                 December 31,                                                                               December 31,
                                                             2017                                2016                                2017                                2016
Net income / (loss) attributable to Sun Communities, Inc., common stockholders: $    7,438       $    (1,600  )                      $    65,021      $    17,369   
Other revenues                                                                  (6,287       )                      (5,691       )                      (24,874      )                      (21,150      )
Home selling expenses                                                           3,066            2,504            12,457           9,744         
General and administrative                                                      18,523           17,177           74,711           64,087        
Transaction costs                                                               2,811            4,023            9,801            31,914        
Depreciation and amortization                                                   71,817           62,205           261,536          221,770       
Loss on extinguishment of debt                                                  5,260            1,127            6,019            1,127         
Interest expense                                                                32,116           31,430           130,242          122,315       
Catastrophic weather related charges, net                                       228              1,172            8,352            1,172         
Other (income) / expense, net (4)                                               (3,642       )                      4,676            (8,982       )                      4,676         
Current tax expense                                                             313              116              446              683           
Deferred tax expense / (benefit)                                                163              (400         )                      (582         )                      (400         )
Income from affiliate transactions                                              -                -                -                (500         )
Preferred return to preferred OP units                                          1,099            1,213            4,581            5,006         
Amounts attributable to noncontrolling interests                                876              (310         )                      5,055            150           
Preferred stock distributions                                                   929              2,198            7,162            8,946         
NOI(1) / Gross Profit                                                           $    134,710     $    119,840     $    550,945     $    466,909  
                                                  Three Months Ended                                                                         Year Ended
                                                                      December 31,                                                                               December 31,
                                                  2017                                2016                                2017                                2016
Real Property NOI (1)                                                $    118,067     $    107,256     $    479,662     $    403,337  
Rental Program NOI (1)                                               23,623           20,863           92,382           85,086        
Home Sales NOI (1) / Gross Profit                                    8,974            6,903            32,294           30,087        
Ancillary NOI (1) / Gross Profit                                     73               254              10,440           9,999         
Site rent from Rental Program (included in Real Property NOI) (1)(7) (16,027      )                      (15,436      )                      (63,833      )                      (61,600      )
NOI (1) / Gross profit                                               $    134,710     $    119,840     $    550,945     $    466,909  

Non-GAAP and Other Financial Measures

Financial Highlights

(amounts in thousands, except per share data)

                                                                                                                      Quarter Ended
                                                                                                                      12/31/2017                              9/30/2017                               6/30/2017                               3/31/2017                               12/31/2016
OPERATING INFORMATION                                                                                                                                                                                                         
Total revenues                                                                                                                           $      242,026       $      268,245       $      237,899       $      234,400       $      218,634    
Net income                                                                                                                               $      10,342        $      28,958        $      16,974        $      25,545        $      1,501      
Net income / (loss) attributable to common stockholders                                                                                  $      7,438         $      24,115        $      12,364        $      21,104        $      (1,600    )
Earnings / (loss) per share basic                                                                                                        $      0.09          $      0.31          $      0.16          $      0.29          $      (0.02     )
Earnings / (loss) per share diluted                                                                                                      $      0.09          $      0.31          $      0.16          $      0.29          $      (0.02     )
                                                                                                                                                                                                           
Recurring EBITDA (1)                                                                                                                     $      119,408       $      132,524       $      114,324       $      122,395       $      105,850    
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6)                                $      76,609        $      86,917        $      73,202        $      83,391        $      57,572     
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6)                           $      81,812        $      93,757        $      76,194        $      85,621        $      69,192     
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share - fully diluted      $      0.92          $      1.05          $      0.92          $      1.07          $      0.75       
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (6) per share - fully diluted $      0.98          $      1.13          $      0.96          $      1.10          $      0.91       
                                                                                                                                                                                                           
BALANCE SHEETS                                                                                                                                                                                                                
Total assets                                                                                                                             $      6,111,957     $      6,157,836     $      6,178,713     $      5,902,447     $      5,870,776  
Total debt                                                                                                                               $      3,079,238     $      3,003,427     $      3,018,653     $      3,140,547     $      3,110,042  
Total liabilities                                                                                                                        $      3,405,204     $      3,351,021     $      3,373,695     $      3,478,132     $      3,441,605  

Debt Analysis

(amounts in thousands)

                                                Quarter Ended
                                                12/31/2017                              9/30/2017                               6/30/2017                               3/31/2017                               12/31/2016
DEBT OUTSTANDING                                                                                                                                        
Mortgage loans payable                                             $      2,867,356     $      2,822,640     $      2,832,819     $      2,774,645     $      2,819,567  
  Secured borrowings (3)                        129,182              134,884              139,496              141,671              144,477           
Preferred OP units - mandatorily redeemable                        41,443               45,903               45,903               45,903               45,903            
Lines of credit (8)                                                41,257               -                    435                  178,328              100,095           
Total debt                                                         $      3,079,238     $      3,003,427     $      3,018,653     $      3,140,547     $      3,110,042  
                                                                                                                                     
% FIXED/FLOATING                                                                                                                                        
Fixed                                                              93.7             %                      94.9             %                      94.9             %                      89.4             %                      91.8             %
Floating                                                           6.3              %                      5.1              %                      5.1              %                      10.6             %                      8.2              %
Total                                                              100.0            %                      100.0            %                      100.0            %                      100.0            %                      100.0            %
                                                                                                                                     
WEIGHTED AVERAGE INTEREST RATES                                                                                                                         
Mortgage loans payable                                             4.25             %                      4.26             %                      4.26             %                      4.26             %                      4.24             %
Preferred OP units - mandatorily redeemable                        6.75             %                      6.87             %                      6.87             %                      6.87             %                      6.87             %
Lines of credit (8)                                                2.79             %                      -                %                      -                %                      2.52             %                      2.14             %
Average before Secured borrowings (3)                              4.26             %                      4.30             %                      4.30             %                      4.19             %                      4.21             %
Secured borrowings (3)                                             9.97             %                      9.98             %                      9.99             %                      10.01            %                      10.03            %
Total average                                                      4.50             %                      4.56             %                      4.56             %                      4.45             %                      4.48             %
                                                                                                                                     
DEBT RATIOS                                                                                                                                             
Net Debt / Recurring EBITDA (1) (TTM)                              6.3                  6.0                  6.0                  7.0                  7.5               
Net Debt / Enterprise Value                                        28.2             %                      28.3             %                      27.2             %                      32.8             %                      33.8             %
Net Debt + Preferred Stock / Enterprise Value                      28.5             %                      29.4             %                      28.4             %                      34.2             %                      35.2             %
Net Debt / Gross Assets                                            41.8             %                      39.0             %                      38.0             %                      44.8             %                      45.0             %
                                                                                                                                     
COVERAGE RATIOS                                                                                                                                         
Recurring EBITDA (1) (TTM) / Interest                              3.6                                     3.5                                     3.4                                     3.3                                     3.2
  Recurring EBITDA (1) (TTM) / Interest + Pref. 3.3                                     3.2                                     3.1                                     3.0                                     2.9
Distributions + Pref. Stock Distribution
MATURITIES/PRINCIPAL AMORTIZATION NEXT FIVE YEARS 2018                                 2019                                  2020                                  2021                                  2022
Mortgage loans payable:                                                                                                       
Maturities                                        $      26,186     $      64,314      $      58,078      $      270,680     $      82,544   
Weighted average rate of maturities               6.13          %                      6.24           %                      5.92           %                      5.53           %                      4.46           %
Principal amortization                            55,564            56,904             57,593             56,612             54,001          
Secured borrowings (3)                            5,541             6,036              6,583              7,069              7,302           
Preferred OP units - mandatorily redeemable       6,780             -                  -                  -                  -               
Lines of credit                                   -                 4,009              -                  37,800             -               
Total                                             $      94,071     $      131,263     $      122,254     $      372,161     $      143,847  

Statements of Operations - Same Community

(amounts in thousands except for Other Information)

           Three Months Ended December 31,                                                                                                                                             Year Ended December 31,
           2017                                  2016                                  Change                             % Change               2017                                  2016                                  Change                               % Change
REVENUES:                                                                                                                                        
Income from real property (9) $      129,589     $      121,791     $      7,798    6.4        %           $      533,942     $      503,770     $      30,172     6.0        %
                                                                                                                              
PROPERTY OPERATING EXPENSES:                                                                                                                                                                              
Payroll and benefits          10,460             9,671              789             8.2        %           45,240             43,078             2,162             5.0        %
Legal, taxes & insurance      1,489              1,279              210             16.4       %           5,562              5,174              388               7.5        %
Utilities (9)                 6,821              6,393              428             6.7        %           29,726             28,475             1,251             4.4        %
Supplies and repair (10)      4,397              4,255              142             3.3        %           19,109             18,729             380               2.0        %
Other                         3,146              3,576              (430          )                    (12.0      )%          13,696             13,988             (292          )                      (2.1       )%
Real estate taxes             9,295              8,765              530             6.1        %           38,399             36,708             1,691             4.6        %
Property operating expenses   35,608             33,939             1,669           4.9        %           151,732            146,152            5,580             3.8        %
NET OPERATING INCOME (NOI)(1) $      93,981      $      87,852      $      6,129    7.0        %           $      382,210     $      357,618     $      24,592     6.9        %
                  As of December 31,                                                                                                                                                                            
                  2017                                 2016                                 Change                               % Change              
OTHER INFORMATION                                                                             
Number of properties                 231               231               -                    
                                                                           
MH occupancy (11)                    96.9          %                                                             
RV occupancy (11)                    100.0         %                                                             
MH & RV blended occupancy % (11)     97.3          %                      95.4          %                    (12)                 1.9           %                         
                                                                           
Sites available for development      5,087             6,263             (1,176        )                      (18.8      )%         
                                                                           
Monthly base rent per site - MH      $      518        $      500        $      18         3.6        %         (14)
Monthly base rent per site - RV (13) $      459        $      441        $      18         4.2        %         (14)
Monthly base rent per site - Total   $      510        $      492        $      18         3.6        %         (14)

Rental Program Summary

(amounts in thousands except for *)

                             Three Months Ended December 31,                                                                                                                                                                Year Ended December 31,
                             2017                                 2016                                 Change                               % Change               2017                                 2016                                 Change                               % Change
REVENUES:                                                                                                                                                        
Rental home revenue                             $      12,775     $      12,084     $      691        5.7        %           $      50,549     $      47,780     $      2,769      5.8        %
Site rent included in Income from real property 16,027            15,436            591               3.8        %           63,833            61,600            2,233             3.6        %
Rental program revenue                          28,802            27,520            1,282             4.7        %           114,382           109,380           5,002             4.6        %
                                                                                                                                              
EXPENSES:                                                                                                                                                        
Commissions                                     718               532               186               35.0       %           2,620             2,242             378               16.9       %
Repairs and refurbishment                       1,914             3,537             (1,623        )                      (45.9      )%          9,864             12,825            (2,961        )                      (23.1      )%
Taxes and insurance                             1,613             1,556             57                3.7        %           6,102             5,734             368               6.4        %
Marketing and other                             934               1,032             (98           )                      (9.5       )%          3,414             3,493             (79           )                      (2.3       )%
Rental program operating and maintenance        5,179             6,657             (1,478        )                      (22.2      )%          22,000            24,294            (2,294        )                      (9.4       )%
NET OPERATING INCOME (NOI) (1)                  $      23,623     $      20,863     $      2,760      13.2       %           $      92,382     $      85,086     $      7,296      8.6        %
                                                                                                                                              
Occupied rental home information as of December 31, 2017 and 2016:                                                            
Number of occupied rentals, end of period*                           11,074             10,733             341               3.2        %
Investment in occupied rental homes, end of period                   $      494,945     $      457,691     $      37,254     8.1        %
Number of sold rental homes (YTD)*                                   1,168              1,089              79                7.3        %
Weighted average monthly rental rate, end of period*                 $      917         $      882         $      35         4.0        %

Home Sales Summary

(amounts in thousands except for *)

                      Three Months Ended December 31,                                                                                                                                                                  Year Ended December 31,
                      2017                                  2016                                  Change                               % Change               2017                                  2016                                 Change                               % Change
New home sales                           $      12,155      $      10,505      $      1,650      15.7       %           $      36,915      $      30,977     $      5,938      19.2       %
Pre-owned home sales                     23,934             18,015             5,919             32.9       %           90,493             79,530            10,963            13.8       %
Revenue from home sales                  36,089             28,520             7,569             26.5       %           127,408            110,507           16,901            15.3       %
                                                                                                                                          
New home cost of sales                   10,534             9,289              1,245             13.4       %           31,578             26,802            4,776             17.8       %
Pre-owned home cost of sales             16,581             12,328             4,253             34.5       %           63,536             53,618            9,918             18.5       %
Cost of home sales                       27,115             21,617             5,498             25.4       %           95,114             80,420            14,694            18.3       %
                                                                                                                                          
NOI / Gross Profit (1)                   $      8,974       $      6,903       $      2,071      30.0       %           $      32,294      $      30,087     $      2,207      7.3        %
                                                                                                                                          
Gross profit - new homes                 $      1,621       $      1,216       $      405        33.3       %           $      5,337       $      4,175      $      1,162      27.8       %
Gross margin % - new homes               13.3           %                      11.6           %                      1.7           %                          14.5           %                      13.5          %                      1.0           %                       
Average selling price - new homes*       $      118,010     $      105,050     $      12,960     12.3       %           $      101,975     $      94,156     $      7,819      8.3        %
                                                                                                                                          
Gross profit - pre-owned homes           $      7,353       $      5,687       $      1,666      29.3       %           $      26,957      $      25,912     $      1,045      4.0        %
Gross margin % - pre-owned homes         30.7           %                      31.6           %                      (0.9          )%                         29.8           %                      32.6          %                      (2.8          )%                      
Average selling price - pre-owned homes* $      32,040      $      27,213      $      4,827      17.7       %           $      30,991      $      27,974     $      3,017      10.8       %
                                                                                                                                          
Home sales volume:                                                                                                                                                                                                                                                                                
New home sales*                          103                100                3                 3.0        %           362                329               33                10.0       %
Pre-owned home sales*                    747                662                85                12.8       %           2,920              2,843             77                2.7        %
Total homes sold*                        850                762                88                11.6       %           3,282              3,172             110               3.5        %

Acquisitions Summary - Properties Acquired in 2017 and 2016

(amounts in thousands except for statistical data)

                                  Three Months Ended                               Year Ended
                                                                         December 31, 2017                                December 31, 2017
REVENUES:                                                                           
Income from real property                            $            44,082           $            177,525       
PROPERTY AND OPERATING EXPENSES:                                                    
Payroll and benefits                                 5,475                         21,835                     
Legal, taxes & insurance                             435                           1,701                      
Utilities                                            5,308                         23,063                     
Supplies and repair                                  1,745                         6,657                      
Other                                                3,362                         12,928                     
Real estate taxes                                    3,671                         13,889                     
Property operating expenses                          19,996                        80,073                     
                                                                 
NET OPERATING INCOME (NOI) (1)                       $            24,086           $            97,452        
                                                                 
                                                                As of December 31, 2017
Other information:                                                                  
Number of properties                                                               119                        
Occupied sites (15)                                                                23,275                     
Developed sites (15)                                                               23,832                     
Occupancy % (15)                                                                   97.7                      %
Transient sites                                                                    7,135                      
Monthly base rent per site - MH                                                    $            635           
Monthly base rent per site - RV (13)                                               $            422           
Monthly base rent per site - Total (13)                                            $            520           
Ancillary revenues, net (in thousands)                                             $            2,663         
                                                                 
Home sales:                                                                         
Gross profit from home sales (in thousands)                                        $            4,857         
New homes sales                                                                    95                         
Pre-owned homes sales                                                              266                        
                                                                 
Occupied rental home information:                                                   
Rental program NOI (1) (in thousands)                                              $            934           
Number of occupied rentals, end of period                                          392                        
Investment in occupied rental homes (in thousands)                                 $            13,871        
Weighted average monthly rental rate                                               $            894           
Property Summary                                                                              
(includes MH and Annual RV’s)
                                                                           
COMMUNITIES                      12/31/2017                        9/30/2017                         6/30/2017                         3/31/2017                         12/31/2016
FLORIDA                                                                                       
Communities                      123            121            121            121            121         
Developed sites (15)             37,254         36,587         36,661         36,533         36,326      
Occupied (15)                    36,170         35,414         35,479         35,257         35,021      
Occupancy % (15)                 97.1       %                      96.8       %                      96.8       %                      96.5       %                      96.4       %
Sites for development            1,485          1,469          1,368          1,359          1,461       
MICHIGAN                                                                                      
Communities                      68             68             68             67             67          
Developed sites (15)             25,881         25,498         25,496         25,024         24,512      
Occupied (15)                    24,147         23,996         23,924         23,443         23,248      
Occupancy % (15)                 93.3       %                      94.1       %                      93.8       %                      93.7       %                      94.8       %
Sites for development            1,371          1,752          1,752          1,798          2,414       
TEXAS                                                                                         
Communities                      21             21             21             21             21          
Developed sites (15)             6,601          6,410          6,312          6,292          6,186       
Occupied (15)                    6,152          6,041          6,021          5,943          5,862       
Occupancy % (15)                 93.2       %                      94.2       %                      95.4       %                      94.5       %                      94.8       %
Sites for development            1,100          1,277          1,345          1,387          1,474       
CALIFORNIA                                                                                    
Communities                      27             27             23             23             22          
Developed sites (15)             5,692          5,693          4,894          4,865          4,862       
Occupied (15)                    5,639          5,630          4,834          4,804          4,793       
Occupancy % (15)                 99.1       %                      98.9       %                      98.8       %                      98.8       %                      98.6       %
Sites for development            389            379            367            411            332         
ONTARIO, CANADA                                                                               
Communities                      15             15             15             15             15          
Developed sites (15)             3,634          3,620          3,564          3,451          3,368       
Occupied (15)                    3,634          3,620          3,564          3,451          3,368       
Occupancy % (15)                 100.0      %                      100.0      %                      100.0      %                      100.0      %                      100.0      %
Sites for development            1,696          1,628          1,628          1,628          1,599       
ARIZONA                                                                                       
Communities                      11             11             11             11             11          
Developed sites (15)             3,786          3,602          3,589          3,582          3,565       
Occupied (15)                    3,446          3,410          3,383          3,370          3,338       
Occupancy % (15)                 91.0       %                      94.7       %                      94.3       %                      94.1       %                      93.6       %
Sites for development            -              269            269            269            358         
INDIANA                                                                                       
Communities                      11             11             11             11             11          
Developed sites (15)             2,900          2,900          2,900          2,900          2,900       
Occupied (15)                    2,756          2,759          2,758          2,741          2,724       
Occupancy % (15)                 95.0       %                      95.1       %                      95.1       %                      94.5       %                      93.9       %
Sites for development            466            330            330            330            316         
OHIO                                                                                          
Communities                      9              9              9              9              9           
Developed sites (15)             2,759          2,757          2,735          2,719          2,715       
Occupied (15)                    2,676          2,676          2,643          2,623          2,595       
Occupancy % (15)                 97.0       %                      97.1       %                      96.6       %                      96.5       %                      95.6       %
Sites for development            75             75             75             75             -           
COLORADO                                                                                      
Communities                      8              8              8              8              8           
Developed sites (15)             2,335          2,335          2,335          2,335          2,335       
Occupied (15)                    2,325          2,318          2,326          2,329          2,325       
Occupancy % (15)                 99.6       %                      99.3       %                      99.6       %                      99.7       %                      99.6       %
Sites for development            650            670            656            656            656         
OTHER STATES                                                                                  
Communities                      57             57             57             56             56          
Developed sites (15)             15,194         14,957         14,891         14,567         14,313      
Occupied (15)                    14,587         14,532         14,439         14,130         13,919      
Occupancy % (15)                 96.0       %                      97.2       %                      97.0       %                      97.0       %                      97.3       %
Sites for development            2,385          2,540          2,582          1,977          1,727       
TOTAL - PORTFOLIO                                                                             
Communities                      350            348            344            342            341         
Developed sites (15)             106,036        104,359        103,377        102,268        101,082     
Occupied (15)                    101,532        100,396        99,371         98,091         97,193      
Occupancy % (15)(16)             95.8       %                      96.2       %                      96.1       %                      95.9       %                      96.2       %
Sites for development            9,617          10,389         10,372         9,890          10,337      
% Communities age restricted     33.7       %                      33.6       %                      32.8       %                      33.0       %                      33.1       %
                                                                           
TRANSIENT RV PORTFOLIO SUMMARY                                                                
 Location                                                                  
Florida                          6,074          6,133          6,244          6,467          6,497       
Texas                            1,373          1,392          1,403          1,412          1,407       
Ontario, Canada                  1,248          1,262          1,314          1,451          1,500       
Arizona                          1,096          1,012          1,025          1,032          1,049       
New Jersey                       917            1,016          1,028          1,059          1,042       
California                       806            808            808            840            513         
New York                         614            623            630            588            830         
Maine                            596            529            533            543            555         
Indiana                          520            520            520            520            502         
Michigan                         256            258            260            210            204         
Ohio                             145            147            169            194            198         
Other locations                  2,211          2,215          2,253          1,966          1,997       
Total transient RV sites         15,856         15,915         16,187         16,282         16,294      

Capital Improvements, Development, and Acquisitions

(amounts in thousands except for *)

  Recurring                                                                                                                                     
  Capital                                             Recurring                                                                                                                       
  Expenditures                                        Capital                                                 Lot                                                                                      Expansion &                                             Revenue
    Average/Site*                    Expenditures (17)                    Modifications (18)            Acquisitions (19)                       Development (20)                     Producing (21)
2017                   $    214      $      14,166     $            18,049           $      204,375       $      88,331     $      1,990   
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   

Operating Statistics for Manufactured Homes and Annual RV’s

          Resident                                        Net Leased                                      New Home                                      Pre-owned                                       Brokered
LOCATIONS                    Move-outs                                       Sites (22)                                      Sales                                         Home Sales                                      Re-sales
Florida                        1,133     746       165     349       1,175  
Michigan                       459       609       34      1,394     134    
Texas                          225       290       25      335       30     
Ontario, Canada                179       266       28      36        226    
Arizona                        60        108       29      23        183    
Indiana                        54        32        1       217       19     
Ohio                           89        81        -       117       5      
Colorado                       10        -         6       146       54     
California                     33        25        12      18        42     
Other locations                497       249       62      285       138    
Year Ended December 31, 2017   2,739     2,406     362     2,920     2,006  
  Resident                                        Net Leased                                      New Home                                      Pre-owned                                       Brokered
TOTAL FOR YEAR ENDED Move-outs                                       Sites (22)                                      Sales                                         Home Sales                                      Re-sales
2016                   1,722     1,686     329     2,843     1,655  
2015                   1,344     1,905     273     2,210     1,244  
  Resident                     Resident
PERCENTAGE TRENDS    Move-outs                    Re-sales
2017                   1.9 %     6.6 %
2016                   2.0 %     6.1 %
2015                   2.0 %     5.9 %

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 gain and loss items that management considers unrelated to the operational and financial performance of our core business ("Core FFO"). 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 meet 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 income / (expense), net was as follows (in thousands):

                              Three Months Ended December 31,                                                         Year Ended
                                                                                                                                                             December 31,
                              2017                              2016                               2017                              2016
Contingent liability remeasurement gain / (loss) $    4,139     (181        )                      $    3,035     $    (181   )
Foreign currency translation gain / (loss)       (497       )                      (5,005      )                      5,947          (5,005      )
Gain on acquisition of property                  -              510             -              510          
Other income / (expense), net                    $    3,642     $    (4,676 )                      $    8,982     $    (4,676 )

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

(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 home lease. Site rent is reflected in Real Property NOI. For purposes of management analysis, site rent is included in 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 the Company’s operations.

(8) Lines of credit includes the Company’s MH floor plan facility. The effective interest rate on the MH floor plan facility was 7.0 percent for all periods presented. However, the Company pays no interest if the floor plan balance is repaid within 60 days.

(9) Same Community results net $6.8 million and $6.4 million of utility revenue against the related utility expense in property operating and maintenance expense for the three months ended December 31, 2017 and 2016, respectively, and $26.9 million and $25.8 million for the years ended December 31, 2017 and 2016, respectively.

(10) Same Community property operating and maintenance expense for the year ended December 31, 2016, excludes $0.1 million of expenses incurred for recently acquired properties to bring the properties up to the Company’s operating standards, including items such as tree trimming and painting costs that do not meet the Company’s capitalization policy.

(11) The Same Community occupancy percentage for 2017 is derived from 80,407 developed sites, of which 78,257 were occupied. The number of developed sites excludes RV transient sites and approximately 1,800 recently completed but vacant MH expansion sites.

(12) The Same Community occupancy percentage for 2016 has been adjusted to reflect incremental growth period-over-period from filled expansion sites and the conversion of transient RV sites to annual RV sites.

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

(14) Calculated using actual results without rounding.

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

(16) At December 31, 2017, total portfolio MH occupancy was 94.6 percent (including the impact of approximately 1,800 recently completed but vacant expansion sites) and annual RV occupancy was 100.0 percent.

(17) 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, 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.

(18) 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.

(19) Acquisitions represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. Acquisitions for the twelve months ended December 31, 2017 also include $84.0 million of capital improvements identified during due diligence that are necessary to bring the community 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, often require 24 to 36 months after closing to complete.

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

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

(22) Net leased sites do not include occupied sites acquired during 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 2017 Press Release and Supplemental - http://hugin.info/143420/R/2170854/836364.pdf



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