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Sun Communities, Inc. Reports 2018 Second Quarter Results

Expands Portfolio and Raises 2018 Guidance 

 

NEWS RELEASE
July 25, 2018

Southfield, Michigan, July 25, 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 second quarter results for 2018.

Financial Results for the Quarter and Six Months Ended June 30, 2018

For the quarter ended June 30, 2018, total revenues increased $33.5 million, or 14.1 percent, to $271.4 million compared to $237.9 million for the same period in 2017. Net income attributable to common stockholders was $20.4 million, or $0.25 per diluted common share, for the quarter ended June 30, 2018, as compared to net income attributable to common stockholders of $12.4 million, or $0.16 net income per diluted common share, for the same period in 2017.

For the six months ended June 30, 2018, total revenues increased $57.0 million, or 12.1 percent, to $529.3 million compared to $472.3 million for the same period in 2017. Net income attributable to common stockholders was $50.4 million, or $0.63 per diluted common share, as compared to net income attributable to common stockholders of $33.5 million, or $0.45 net income per diluted common share, for the same period in 2017.

Non-GAAP Financial Measures and Portfolio Performance

  • Core Funds from Operations ("Core FFO")(1) for the quarter ended June 30, 2018, was $1.07 per diluted share and OP unit ("Share") as compared to $0.96 in the prior year, an increase of 11.5 percent.
     
  • Same Community(3) Net Operating Income ("NOI")(1) increased by 7.2 percent for the quarter ended June 30, 2018, as compared to the same period in 2017.
     
  • Same Community occupancy(4) increased by 200 basis points to 97.8 percent, as compared to 95.8 percent at June 30, 2017.
     
  • Home sales volumes increased 17.7 percent for the quarter ended June 30, 2018, as compared to the same period in 2017.  New home sales volumes increased 65.4 percent to 134 for the quarter ended June 30, 2018, as compared to 81 in the same period in 2017.

Gary Shiffman, Chief Executive Officer of Sun Communities commented, "Sun continued to produce solid investor returns in the second quarter and deliver value creation across our MH communities and RV resorts. Core FFO rose 11.5 percent driven by significant contributions from our same community pool as well as our acquisition activity. We invested in properties valued at over $334 million including 17 operating resorts, one resort under development and one land parcel entitled for future development. As a consequence of our strong performance and the accretion from our recent acquisition activity, we are raising our 2018 Core FFO guidance."


OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy was 96.1 percent at June 30, 2018 and June 30, 2017. During the quarter ended June 30, 2018, revenue producing sites increased by 634 sites, as compared to 752 revenue producing sites gained during the second quarter of 2017.

During the six months ended June 30, 2018, revenue producing sites increased by 1,250 sites, as compared to an increase of 1,439 revenue producing sites during the six months ended June 30, 2017.


Same Community(3) Results

For the 336 stabilized communities owned and operated by the Company since January 1, 2017, NOI(1) for the quarter ended June 30, 2018 increased 7.2 percent over the same period in 2017, as a result of a 6.3 percent increase in revenues and a 4.6 percent increase in operating expenses. Same Community occupancy(4) increased to 97.8 percent at June 30, 2018 from 95.8 percent at June 30, 2017.

For the six months ended June 30, 2018, total revenues increased by 6.0 percent  while total expenses increased by 5.6 percent, resulting in an increase to NOI(1) of 6.2 percent over the six months ended June 30, 2017.


Home Sales

During the quarter ended June 30, 2018, the Company sold 943 homes as compared to 801 homes sold during the same period in 2017, a 17.7 percent increase. Rental home sales, which are included in total home sales, were 275 and 302 for the quarters ended June 30, 2018 and 2017, respectively.

During the six months ended June 30, 2018, 1,780 homes were sold compared to 1,627 for the same period in 2017. Rental sales, which are included in total home sales, were 509 and 542 for the six months ended June 30, 2018 and 2017, respectively.


PORTFOLIO ACTIVITY

Acquisitions(2)

During and subsequent to the quarter ended June 30, 2018, the Company invested in 17 RV resorts, an RV development currently under construction and one entitled development land parcel with a total value of $334 million. The investments include:

  • An 80 percent equity interest in Sun NG RV Resorts LLC ("Sun NG Resorts"), consisting of ten operating RV resorts and one ground-up RV development currently under construction. The portfolio consists of 2,700 developed sites and 940 sites available for development. Sun Communities purchased the 80 percent interest in Sun NG Resorts for $61.6 million through Sun NG LLC. Sun paid additional consideration of $123.3 million consisting of a $1.8 million preferred equity investment and a $121.5 million temporary loan to Sun NG Resorts. The Company is in active negotiations to replace the temporary loan with permanent entity level financing. The remaining 20 percent ownership interest in Sun NG Resorts of $15.4 million is held by NG Sun LLC, which is controlled by Northgate Resorts. Other components of the capital structure for the transaction include:

-                   $35.3 million Series A preferred equity - mandatorily redeemable
-                   $6.5 million Series B preferred equity
-                   $15.0 million Assumed debt and other liabilities

  • $72.1 million investment in seven RV resorts located in five states, comprised of approximately 1,500 sites and 175 sites available for expansions.
     
  • $5.3 million investment in a 369 acre land parcel in Granby, Colorado for development of a resort containing over 1,100 MH and RV sites.


BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

During the quarter ended June 30, 2018, the Company repaid three collateralized term loans totaling $177.7 million with a weighted average interest rate of 4.53 percent. One loan was due to mature in August 2018 and two loans were due to mature in May 2023.

As of June 30, 2018, the Company had $3.4 billion of debt outstanding. The weighted average interest rate was 4.36 percent and the weighted average maturity was 7.8 years. The Company had $20.0 million of unrestricted cash on hand. At period-end the Company`s net debt to trailing twelve month Recurring EBITDA(1) ratio was 6.5 times.

Subsequent to quarter end, the Company entered into a $228.0 million mortgage with a 4.10 percent fixed rate and a 20 year term.

Equity Transactions

During and subsequent to the quarter ended June 30, 2018, the Company issued 1,201,700 shares of common stock through its At-the-Market ("ATM") equity sales program at a weighted average price of $93.78 per share. Net proceeds from the sales were $111.3 million.  This issuance includes 200,000 shares which were previously announced in conjunction with first quarter 2018 earnings.


GUIDANCE 2018

The Company is increasing its 2018 total portfolio guidance to take into account the contribution impact of the closed acquisitions, completed ATM share issuances and financings and anticipated additional financing related to the acquisitions.  The updated guidance is as follows:

Total Portfolio
Number of communities: 367

    Q3 2018E   Q4 2018E   FY 2018E
Net Income per fully diluted share   $0.52 - $0.56   $0.18 - $0.22   $1.33 - $1.41
Core FFO(1) per fully diluted share   $1.34 - $1.37   $1.02 - $1.05   $4.57 - $4.63

The Company`s announced acquisitions have significant seasonality and contribute the vast majority of their annual NOI(1) contribution in the second and third quarters of the year.  Due to this seasonality, Core FFO(1) guidance has been increased in the third quarter 2018 and decreased in the fourth quarter 2018. Core FFO(1) contribution from these acquisitions in the first and second quarters of 2019 is expected to be neutral.

The Company affirms 2018 Same Community NOI(1) growth guidance for the year of 6.75 percent to 7.25 percent and raises the estimated range of general and administrative expenses to $79.8 million to $81.0 million. The increase in general and administrative costs is primarily due to changes to the Company`s  executive long term incentive plan which increased amortization in the current year, the staffing of a re-engineering and productivity team, and certain one-time non-recurring expenses incurred through the first half of 2018. Guidance does not include prospective acquisitions but contains certain additional financing assumptions related to its announced acquisition activity.

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 second quarter operating results will be held on Thursday, July 26, 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 August 9, 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 13680133. 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 June 30, 2018, owned, operated, or had an interest in a portfolio of 367 communities comprising approximately 126,000 developed sites in 31 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 to (248) 208-2500, by email to investorrelations@suncommunities.com or by mail to 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   John Pawlowski   (949) 640-8780   jpawlowski@greenstreetadvisors.com
    Ryan Lumb   (949) 640-8780   rlumb@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 June 30, 2018)

 


Balance Sheets                                                                                                                                              
(amounts in thousands)

    6/30/2018   12/31/2017
ASSETS:        
Land   $ 1,131,956     $ 1,107,838  
Land improvements and buildings   5,484,388     5,102,014  
Rental homes and improvements   551,840     528,074  
Furniture, fixtures and equipment   162,961     144,953  
Investment property   7,331,145     6,882,879  
Accumulated depreciation   (1,337,567 )   (1,237,525 )
Investment property, net   5,993,578     5,645,354  
Cash and cash equivalents   20,046     10,127  
Inventory of manufactured homes   38,298     30,430  
Notes and other receivables, net   176,755     163,496  
Collateralized receivables, net (5)   117,314     128,246  
Other assets, net   146,357     134,304  
Total assets   $ 6,492,348     $ 6,111,957  
LIABILITIES:        
Mortgage loans payable   $ 2,636,847     $ 2,867,356  
Secured borrowings (5)   118,242     129,182  
Preferred Equity - Sun NG Resorts - mandatorily redeemable   35,277     -  
Preferred OP units - mandatorily redeemable   37,338     41,443  
Lines of credit (6)   536,377     41,257  
Distributions payable   59,364     55,225  
Advanced reservation deposits and rent   161,192     132,205  
Other liabilities   151,984     138,536  
Total liabilities   3,736,621     3,405,204  
Commitments and contingencies   -     -  
Series A-4 preferred stock   31,739     32,414  
Series A-4 preferred OP units   10,137     10,652  
Equity Interests - NG Sun LLC   21,869     -  
STOCKHOLDERS` EQUITY:        
Common stock   809     797  
Additional paid-in capital   3,854,057     3,758,533  
Accumulated other comprehensive (loss) / income   (2,184 )   1,102  
Distributions in excess of accumulated earnings   (1,223,394 )   (1,162,001 )
Total SUI stockholders` equity   2,629,288     2,598,431  
Noncontrolling interests:        
Common and preferred OP units   56,820     60,971  
Consolidated variable interest entities   5,874     4,285  
Total noncontrolling interests   62,694     65,256  
Total stockholders` equity   2,691,982     2,663,687  
Total liabilities & stockholders` equity   $ 6,492,348     $ 6,111,957  



Statements of Operations - Quarter to Date Comparison                                                           
(amounts in thousands, except per share amounts)

  Three Months Ended June 30,
  2018   2017   Change   % Change
REVENUES:              
Income from real property (excluding transient revenue) $ 177,080     $ 163,770     $ 13,310     8.1 %
Transient revenue 21,590     15,691     5,899     37.6 %
Revenue from home sales 41,217     30,859     10,358     33.6 %
Rental home revenue 13,348     12,678     670     5.3 %
Ancillary revenues 12,031     8,850     3,181     35.9 %
Interest 5,277     5,043     234     4.6 %
Brokerage commissions and other revenues, net 883     1,008     (125 )   (12.4 )%
Total revenues 271,426     237,899     33,527     14.1 %
               
EXPENSES:              
Property operating and maintenance 58,691     53,446     5,245     9.8 %
Real estate taxes 14,076     13,126     950     7.2 %
Cost of home sales 30,932     22,022     8,910     40.5 %
Rental home operating and maintenance 5,268     4,944     324     6.6 %
Ancillary expenses 8,241     7,148     1,093     15.3 %
Home selling expenses 3,986     2,990     996     33.3 %
General and administrative 21,442     19,899     1,543     7.8 %
Transaction costs (7) 57     2,437     (2,380 )   (97.7 )%
Catastrophic weather related charges, net 53     281     (228 )   (81.1 )%
Depreciation and amortization 67,773     62,721     5,052     8.1 %
Loss on extinguishment of debt 1,522     293     1,229     419.5 %
Interest 32,260     32,358     (98 )   (0.3 )%
Interest on mandatorily redeemable preferred OP units / equity 790     787     3     0.4 %
Total expenses 245,091     222,452     22,639     10.2 %
Income before other items 26,335     15,447     10,888     70.5 %
Other (expense) / income, net (8) (1,828 )   1,156     (2,984 )   (258.1 )%
Current tax (expense) / benefit (225 )   7     (232 )   NM*
Deferred tax (expense) / benefit (112 )   364     (476 )   (130.8 )%
Net income 24,170     16,974     7,196     42.4 %
Less: Preferred return to preferred OP units / equity (1,103 )   (1,196 )   93     (7.8 )%
Less: Amounts attributable to noncontrolling interests (2,227 )   (1,315 )   (912 )   69.4 %
Less: Preferred stock distribution (432 )   (2,099 )   1,667     (79.4 )%
NET INCOME ATTRIBUTABLE TO SUI $ 20,408     $ 12,364     $ 8,044     65.1 %
               
Weighted average common shares outstanding:              
Basic 79,612     74,678     4,934     6.6 %
Diluted 80,116     75,154     4,962     6.6 %
Earnings per share:              
Basic $ 0.25     $ 0.16     $ 0.09     56.3 %
Diluted $ 0.25     $ 0.16     $ 0.09     56.3 %

* Not Meaningful


Statements of Operations - Year to Date Comparison                                                                              
(amounts in thousands, except per share amounts)

    Six Months Ended June 30,
    2018   2017   Change   % Change
REVENUES:                
Income from real property (excluding transient revenue)   $ 352,290     $ 325,646     $ 26,644     8.2 %
Transient revenue   43,591     36,869     6,722     18.2 %
Revenue from home sales   76,117     58,122     17,995     31.0 %
Rental home revenue   26,368     25,017     1,351     5.4 %
Ancillary revenues   18,599     15,069     3,530     23.4 %
Interest   10,593     9,689     904     9.3 %
Brokerage commissions and other revenues, net   1,784     1,887     (103 )   (5.5 )%
Total revenues   529,342     472,299     57,043     12.1 %
                 
EXPENSES:                
Property operating and maintenance   110,321     100,612     9,709     9.6 %
Real estate taxes   27,912     26,269     1,643     6.3 %
Cost of home sales   57,503     42,905     14,598     34.0 %
Rental home operating and maintenance   10,438     10,046     392     3.9 %
Ancillary expenses   13,624     11,909     1,715     14.4 %
Home selling expenses   7,276     6,101     1,175     19.3 %
General and administrative   41,199     37,738     3,461     9.2 %
Transaction costs (7)   114     4,823     (4,709 )   (97.6 )%
Catastrophic weather related charges, net   (2,160 )   368     (2,528 )   (687.0 )%
Depreciation and amortization   134,210     125,487     8,723     7.0 %
Loss on extinguishment of debt   1,718     759     959     126.4 %
Interest   63,398     63,680     (282 )   (0.4 )%
Interest on mandatorily redeemable preferred OP units / equity   1,409     1,571     (162 )   (10.3 )%
Total expenses   466,962     432,268     34,694     8.0 %
Income before other items   62,380     40,031     22,349     55.8 %
Other (expense) / income, net (8)   (4,445 )   1,995     (6,440 )   (322.8 )%
Current tax expense   (399 )   (171 )   (228 )   (133.3 )%
Deferred tax benefit   235     664     (429 )   (64.6 )%
Net income   57,771     42,519     15,252     35.9 %
Less: Preferred return to preferred OP units / equity   (2,183 )   (2,370 )   187     (7.9 )%
Less: Amounts attributable to noncontrolling interests   (4,321 )   (2,403 )   (1,918 )   79.8 %
Less: Preferred stock distribution   (873 )   (4,278 )   3,405     (79.6 )%
NET INCOME ATTRIBUTABLE TO SUI   $ 50,394     $ 33,468     $ 16,926     50.6 %
                 
Weighted average common shares outstanding:                
Basic   79,233     73,677     5,556     7.5 %
Diluted   79,905     74,272     5,633     7.6 %
Earnings per share:                
Basic   $ 0.63     $ 0.45     $ 0.18     40.0 %
Diluted   $ 0.63     $ 0.45     $ 0.18     40.0 %

Outstanding Securities and Capitalization 
(in thousands except for *)

Outstanding Securities - As of June 30, 2018
                   
  Number of Units/Shares Outstanding   Conversion Rate*   If Converted   Issuance Price per unit*   Annual Distribution Rate*
Convertible Securities                  
Series A-1 preferred OP units 337   2.4390   822   $100   6.0%
Series A-3 preferred OP units 40   1.8605   74   $100   4.5%
Series A-4 preferred OP units 412   0.4444   183   $25   6.5%
Series C preferred OP units 314   1.1100   349   $100   4.5%
Common OP units 2,731   1.0000   2,731   N/A   Mirrors common shares distributions
Series A-4 cumulative convertible preferred stock 1,063   0.4444   472   $25   6.5%
                   
Non-Convertible Securities                  
Common shares 80,891   N/A   N/A   N/A   $2.84^
^ Annual distribution is based on the last quarterly distribution annualized.


Capitalization - As of June 30, 2018            
             
Equity   Shares   Share Price*   Total
Common shares   80,891     $ 97.88     $ 7,917,611  
Common OP units   2,731     $ 97.88     267,310  
Subtotal   83,622         $ 8,184,921  
             
Series A-1 preferred OP units   822     $ 97.88     80,457  
Series A-3 preferred OP units   74     $ 97.88     7,243  
Series A-4 preferred OP units   183     $ 97.88     17,912  
Series C preferred OP units   349     $ 97.88     34,160  
Total diluted shares outstanding   85,050         $ 8,324,693  
 
Debt
Mortgage loans payable           $ 2,636,847  
Secured borrowings (5)           118,242  
Preferred Equity - Sun NG Resorts - mandatorily redeemable           35,277  
Preferred OP units - mandatorily redeemable           37,338  
Lines of credit           536,377  
Total Debt           $ 3,364,081  
 
Preferred
A-4 preferred stock   1,063     $ 25.00     $ 26,575  
Total Capitalization           $ 11,715,349  


Reconciliations to Non-GAAP Financial Measures


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

  Three Months Ended
 June 30,
  Six Months Ended
 June 30,
  2018   2017   2018   2017
Net income attributable to Sun Communities, Inc. common stockholders: $ 20,408     $ 12,364     $ 50,394     $ 33,468  
Adjustments:              
Depreciation and amortization 67,977     62,842     134,623     125,659  
Amounts attributable to noncontrolling interests 2,089     1,202     3,978     2,102  
Preferred return to preferred OP units 552     586     1,105     1,172  
Preferred distribution to Series A-4 preferred stock 432     560     873     1,225  
Gain on disposition of assets, net (5,835 )   (4,352 )   (10,374 )   (7,033 )
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (9)

$ 85,623     $ 73,202     $ 180,599     $ 156,593  
Adjustments:              
Transaction costs (7) -     2,437     -     4,823  
Other acquisition related costs (10) 301     1,525     436     2,369  
Loss on extinguishment of debt 1,522     293     1,718     759  
Catastrophic weather related charges, net 53     281     (2,160 )   368  
Loss of earnings - catastrophic weather related (11) 325     -     650     -  
Other expense / (income), net (8) 1,828     (1,156 )   4,445     (1,995 )
Debt premium write-off (209 )   (24 )   (991 )   (438 )
Ground lease intangible write-off 817     -     817     -  
Deferred tax expense / (benefit) 112     (364 )   (235 )   (664 )
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (9)

$ 90,372     $ 76,194     $ 185,279     $ 161,815  
               
Weighted average common shares outstanding - basic: 79,612     74,678     79,233     73,677  
Add:              
Common stock issuable upon conversion of stock options 2     2     2     2  
Restricted stock 502     474     670     593  
Common OP units 2,735     2,757     2,738     2,756  
Common stock issuable upon conversion of Series A-1 preferred OP units 825     882     831     887  
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 472     645     472     690  
Weighted average common shares outstanding - fully diluted 84,223     79,513     84,021     78,680  
               
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (9) per share - fully diluted $ 1.02     $ 0.92     $ 2.15     $ 1.99  
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (9) per share - fully diluted $ 1.07     $ 0.96     $ 2.21     $ 2.06  


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


  Three Months Ended
 June 30,
  Six Months Ended
 June 30,
  2018   2017   2018   2017
Net income attributable to Sun Communities, Inc., common stockholders: $ 20,408     $ 12,364     $ 50,394     $ 33,468  
Adjustments:              
Interest expense 33,050     33,145     64,807     65,251  
Loss on extinguishment of debt 1,522     293     1,718     759  
Current tax expense / (benefit) 225     (7 )   399     171  
Deferred tax expense / (benefit) 112     (364 )   (235 )   (664 )
Depreciation and amortization 67,773     62,721     134,210     125,487  
Gain on disposition of assets, net (5,835 )   (4,352 )   (10,374 )   (7,033 )
EBITDAre (1) $ 117,255     $ 103,800     $ 240,919     $ 217,439  
Adjustments:              
Transaction costs (7) 57     2,437     114     4,823  
Other expense / (income), net (8) 1,828     (1,156 )   4,445     (1,995 )
Catastrophic weather related charges, net 53     281     (2,160 )   368  
Preferred return to preferred OP units / equity 1,103     1,196     2,183     2,370  
Amounts attributable to noncontrolling interests 2,227     1,315     4,321     2,403  
Preferred stock distribution 432     2,099     873     4,278  
Plus: Gain on dispositions of assets, net 5,835     4,352     10,374     7,033  
Recurring EBITDA (1) $ 128,790     $ 114,324     $ 261,069     $ 236,719  



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


  Three Months Ended
 June 30,
  Six Months Ended
 June 30,
  2018   2017   2018   2017
Net income attributable to Sun Communities, Inc., common stockholders: $ 20,408     $ 12,364     $ 50,394     $ 33,468  
Other revenues (6,160 )   (6,051 )   (12,377 )   (11,576 )
Home selling expenses 3,986     2,990     7,276     6,101  
General and administrative 21,442     19,899     41,199     37,738  
Transaction costs (7) 57     2,437     114     4,823  
Depreciation and amortization 67,773     62,721     134,210     125,487  
Loss on extinguishment of debt 1,522     293     1,718     759  
Interest expense 33,050     33,145     64,807     65,251  
Catastrophic weather related charges, net 53     281     (2,160 )   368  
Other expense / (income), net (8) 1,828     (1,156 )   4,445     (1,995 )
Current tax expense / (benefit) 225     (7 )   399     171  
Deferred tax expense / (benefit) 112     (364 )   (235 )   (664 )
Preferred return to preferred OP units / equity 1,103     1,196     2,183     2,370  
Amounts attributable to noncontrolling interests 2,227     1,315     4,321     2,403  
Preferred stock distribution 432     2,099     873     4,278  
NOI(1) / Gross Profit $ 148,058     $ 131,162     $ 297,167     $ 268,982  


  Three Months Ended
 June 30,
  Six Months Ended
 June 30,
  2018   2017   2018   2017
Real Property NOI (1) $ 125,903     $ 112,889     $ 257,648     $ 235,634  
Rental Program NOI (1) 24,619     23,743     48,778     46,699  
Home Sales NOI (1) / Gross Profit 10,285     8,837     18,614     15,217  
Ancillary NOI (1) / Gross Profit 3,790     1,702     4,975     3,160  
Site rent from Rental Program (included in Real Property NOI) (1)(12) (16,539 )   (16,009 )   (32,848 )   (31,728 )
NOI (1) / Gross profit $ 148,058     $ 131,162     $ 297,167     $ 268,982  



Non-GAAP and Other Financial Measures


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

  Quarter Ended
  6/30/2018   3/31/2018   12/31/2017   9/30/2017   6/30/2017
FINANCIAL INFORMATION                  
Total revenues $ 271,426     $ 257,916     $ 242,026     $ 268,245     $ 237,899  
Net income 24,170     33,601     10,342     28,958     16,974  
Net income attributable to common stockholders 20,408     29,986     7,438     24,115     12,364  
Earnings per share basic* $ 0.25     $ 0.38     $ 0.09     $ 0.31     $ 0.16  
Earnings per share diluted* 0.25     0.38     0.09     0.31     0.16  
                   
Recurring EBITDA (1) $ 128,790     $ 132,222     $ 119,408     $ 132,524     $ 114,324  
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (9) 85,623     94,976     76,609     86,917     73,202  
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (9) 90,372     94,907     81,812     93,757     76,194  
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (9) per share - fully diluted* $ 1.02     $ 1.14     $ 0.92     $ 1.05     $ 0.92  
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (9) per share - fully diluted* 1.07     1.14     0.98     1.13     0.96  
                   
BALANCE SHEETS                  
Total assets $ 6,492,348     $ 6,149,653     $ 6,111,957     $ 6,157,836     $ 6,178,713  
Total debt 3,364,081     3,129,440     3,079,238     3,003,427     3,018,653  
Total liabilities 3,736,621     3,471,096     3,405,204     3,351,021     3,373,695  


  Quarter Ended
  6/30/2018   3/31/2018   12/31/2017   9/30/2017   6/30/2017
OPERATING INFORMATION*                  
New home sales 134     106     103     102     81  
Pre-owned home sales 809     731     747     703     720  
Total homes sold 943     837     850     805     801  
                   
Communities 367     350     350     348     344  
Developed sites 107,192     106,617     106,036     104,359     103,377  
Transient RV sites 19,007     15,693     15,856     15,915     16,187  
Total sites 126,199     122,310     121,892     120,274     119,564  
                   
MH occupancy 95.0 %   94.7 %   94.6 %   95.2 %   95.1 %
RV occupancy 100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
Total blended MH and RV occupancy 96.1 %   95.8 %   95.8 %   96.2 %   96.1 %



Debt Analysis
(amounts in thousands)

...
  Quarter Ended
  6/30/2018   3/31/2018   12/31/2017   9/30/2017   6/30/2017
DEBT OUTSTANDING                  
Mortgage loans payable $ 2,636,847     $ 2,826,225     $ 2,867,356     $ 2,822,640     $ 2,832,819  
  Secured borrowings (5) 118,242     124,077     129,182     134,884     139,496  
Preferred Equity - Sun NG Resorts - mandatorily redeemable 35,277     -     -     -     -  
Preferred OP units - mandatorily redeemable 37,338     37,338     41,443     45,903     45,903  
Lines of credit (6) 536,377     141,800     41,257     -     435  
Total debt $ 3,364,081     $ 3,129,440     $ 3,079,238     $ 3,003,427     $ 3,018,653  
                   
% FIXED/FLOATING                  
Fixed 84.0 %   90.6 %   93.7 %   94.9 %   94.9 %
Floating 16.0 %   9.4 %   6.3 %   5.1 %   5.1 %
Total 100.0 %   100.0 %   100.0