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Sun Communities, Inc. Reports 2017 Fourth Quarter Results


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
 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  
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
 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  
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
 December 31,
  Year Ended
 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 %