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Sun Communities, Inc. Reports 2019 First Quarter Results

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Southfield, MI, April 24, 2019 (GLOBE NEWSWIRE) -- 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 first quarter results for 2019.

Financial Results for the Three Months Ended March 31, 2019

For the three months ended March 31, 2019, total revenues increased $29.4 million, or 11.4 percent, to $287.3 million compared to $258.0 million for the same period in 2018. Net income attributable to common stockholders was $34.3 million, or $0.40 per diluted common share, for the three months ended March 31, 2019, as compared to net income attributable to common stockholders of $30.0 million, or $0.38 per diluted common share, for the same period in 2018.

Non-GAAP Financial Measures and Portfolio Performance

  • Core Funds from Operations (“Core FFO”)(1) for the three months ended March 31, 2019, was $1.18 per diluted share and OP unit (“Share”) as compared to $1.14 in the prior year, an increase of 3.5 percent.

  • Same Community(2) Net Operating Income (“NOI”)(1) increased by 7.2 percent for the three months ended March 31, 2019, as compared to the same period in 2018.

  • New home sales volume increased 17.9 percent for the three months ended March 31, 2019, as compared to the same period in 2018.

Gary Shiffman, Chief Executive Officer of Sun Communities, stated, “Our solid momentum has continued as we started the year with strong operating results and numerous investments. We delivered another quarter of robust same community NOI growth, which along with our recent investments and expansions, contributed to our outperformance. Our extensive history of providing first-rate amenities and a focus on customer service continues to draw sustained demand. We remain confident in our outlook, maintain an attractive growth pipeline and anticipate the continued realization of the benefits of our developments and expansion opportunities as we bring them online over time.”

OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy was 96.4 percent at March 31, 2019, compared to 95.8 percent at March 31, 2018.

During the three months ended March 31, 2019, revenue producing sites increased by 571 sites, as compared to 616 revenue producing sites gained during the first quarter of 2018.
Same Community(2) Results

For the 345 communities owned and operated by the Company since January 1, 2018, NOI(1) for the three months ended March 31, 2019, increased 7.2 percent over the same period in 2018, as a result of a 6.0 percent increase in revenues and a 3.1 percent increase in operating expenses. Same Community occupancy(3) increased to 98.2 percent at March 31, 2019 from 96.1 percent at March 31, 2018.

Home Sales

During the three months ended March 31, 2019, the Company sold 798 homes as compared to 837 homes sold during the same period in 2018, a 4.7 percent decrease. Rental home sales, which are included in total home sales, were 210 and 234 for the three months ended March 31, 2019 and 2018, respectively.

PORTFOLIO ACTIVITY

Acquisitions

During the quarter ended March 31, 2019, the Company acquired the following communities:

First Quarter 2019:

Date of Acquisition

Type

Location

Usable Sites

Consideration (in Millions)

1/2019

MH (Age Restricted)

Edgewater, Florida (1)

730

$

115.3

1/2019

RV

Old Orchard Beach, Maine

321

10.8

1/2019

MH

Oregon City, Oregon(2)

518

61.8

2/2019

MH

Buckeye, Arizona

400

22.3

2/2019

MH (3)

Shelby Township, Michigan

1,308

94.5

2/2019

RV

Millsboro, Delaware

291

20.0

Total

3,568

$

324.7

(1) Acquisition includes expansion potential of 70 sites.
(2) In conjunction with the acquisition, the Company issued a new class of Operating Partnership (“OP”) units named Series D Preferred Units. As of March 31, 2019, 488,958 Series D Preferred OP Units were outstanding.
(3) Contains two MH communities.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

During the quarter ended March 31, 2019, the Company completed a $265.0 million twenty-five year term loan transaction which carries an interest rate of 4.17 percent and concurrently repaid a $186.8 million term loan. The transaction provided $78.2 million of additional proceeds and extended the maturity date from 2030 to 2044 using the same assets as collateral for the new loan.

As of March 31, 2019, the Company had $3.4 billion of debt outstanding. The weighted average interest rate was 4.39 percent and the weighted average maturity was 9.3 years. The Company had $21.9 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month Recurring EBITDA(1) ratio was 6.0 times.

2019 Distributions

As previously announced, the Company increased its annual distribution by 5.6 percent to $3.00 per common share from $2.84 per common share. The increase began with the distribution declared in March 2019 that was paid after quarter end.

GUIDANCE 2019

The Company revises full year 2019 net income per diluted share to be in the range of $1.61 to $1.71 and Core FFO(1) per Share to be in the range of $4.80 to $4.88. The Company anticipates second quarter 2019 net income per diluted share to be in the range of $0.31 to $0.35 and Core FFO(1) per Share to be in the range of $1.11 to $1.14. The Company is revising its Same Community NOI(1) growth guidance to be in the range of 6.4 percent to 7.0 percent for full year 2019.

Guidance estimates include acquisitions completed through the date of this release and exclude any perspective acquisitions or capital markets 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 first quarter operating results will be held on Thursday, April 25, 2019 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 May 9, 2019 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 13688595. The conference call will be available live on Sun Communities’ website www.suncommunities.com. The replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of March 31, 2019, owned, operated, or had an interest in a portfolio of 379 communities comprising over 132,000 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

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 March 31, 2019)


Balance Sheets
(amounts in thousands)

3/31/2019

12/31/2018

ASSETS:

Land

$

1,279,306

$

1,201,945

Land improvements and buildings

5,899,149

5,586,250

Rental homes and improvements

585,994

571,661

Furniture, fixtures and equipment

208,177

201,090

Investment property

7,972,626

7,560,946

Accumulated depreciation

(1,501,370

)

(1,442,630

)

Investment property, net

6,471,256

6,118,316

Cash and cash equivalents

21,946

50,311

Marketable securities

50,501

49,037

Inventory of manufactured homes

52,993

49,199

Notes and other receivables, net

179,814

160,077

Collateralized receivables, net (4)

101,938

106,924

Other assets, net

220,214

176,162

TOTAL ASSETS

$

7,098,662

$

6,710,026

LIABILITIES AND TEMPORARY EQUITY:

Mortgage loans payable

$

2,879,017

$

2,815,957

Secured borrowings (4)

102,676

107,731

Preferred Equity - Sun NG Resorts - mandatorily redeemable

35,249

35,277

Preferred OP units - mandatorily redeemable

34,663

37,338

Lines of credit (5)

396,512

128,000

Distributions payable

66,887

63,249

Advanced reservation deposits and rent

151,860

133,698

Other liabilities

179,461

157,862

TOTAL LIABILITIES

3,846,325

3,479,112

Commitments and contingencies

Series A-4 preferred stock

31,739

31,739

Series A-4 preferred OP units

9,784

9,877

Series D preferred OP units

51,738

Equity Interests - NG Sun LLC

22,167

21,976

STOCKHOLDERS' EQUITY:

Common stock

865

864

Additional paid-in capital

4,398,641

4,398,949

Accumulated other comprehensive loss

(3,006

)

(4,504

)

Distributions in excess of accumulated earnings

(1,317,605

)

(1,288,486

)

Total Sun Communities, Inc. stockholders' equity

3,078,895

3,106,823

Noncontrolling interests:

Common and preferred OP units

51,816

53,354

Consolidated variable interest entities

6,198

7,145

Total noncontrolling interests

58,014

60,499

TOTAL STOCKHOLDERS' EQUITY

3,136,909

3,167,322

TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY

$

7,098,662

$

6,710,026


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

Three Months Ended March 31,

2019

2018

Change

% Change

REVENUES:

Income from real property (excluding transient revenue)

$

190,564

$

175,210

$

15,354

8.8

%

Transient revenue

26,215

22,001

4,214

19.2

%

Revenue from home sales

39,618

34,900

4,718

13.5

%

Rental home revenue

13,971

13,020

951

7.3

%

Ancillary revenue

8,482

6,568

1,914

29.1

%

Interest

4,800

5,316

(516

)

(9.7

)%

Brokerage commissions and other revenues, net

3,680

960

2,720

283.3

%

Total Revenues

287,330

257,975

29,355

11.4

%

EXPENSES:

Property operating and maintenance

57,909

51,630

6,279

12.2

%

Real estate taxes

15,330

13,836

1,494

10.8

%

Cost of home sales

29,277

26,571

2,706

10.2

%

Rental home operating and maintenance

4,788

5,227

(439

)

(8.4

)%

Ancillary expenses

7,101

5,383

1,718

31.9

%

Home selling expenses

3,324

3,290

34

1.0

%

General and administrative

21,887

19,757

2,130

10.8

%

Catastrophic weather related charges, net

782

(2,213

)

2,995

(135.3

)%

Depreciation and amortization

76,556

66,437

10,119

15.2

%

Loss on extinguishment of debt

653

196

457

233.2

%

Interest

34,014

31,138

2,876

9.2

%

Interest on mandatorily redeemable preferred OP units / equity

1,094

619

475

76.7

%

Total Expenses

252,715

221,871

30,844

13.9

%

Income Before Other Items

34,615

36,104

(1,489

)

(4.1

)%

Remeasurement of marketable securities

267

267

N/A

Other income / (expense), net (6)

1,898

(2,617

)

4,515

172.5

%

Income / (loss) from nonconsolidated affiliates

344

(59

)

403

683.1

%

Current tax expense

(214

)

(174

)

(40

)

(23.0

)%

Deferred tax benefit

217

347

(130

)

(37.5

)%

Net Income

37,127

33,601

3,526

10.5

%

Less: Preferred return to preferred OP units / equity

(1,323

)

(1,080

)

(243

)

22.5

%

Less: Amounts attributable to noncontrolling interests

(1,041

)

(2,094

)

1,053

(50.3

)%

Net Income Attributable to Sun Communities, Inc.

34,763

30,427

4,336

14.3

%

Less: Preferred stock distribution

(432

)

(441

)

9

(2.0

)%

Net Income Attributable to Sun Communities, Inc. Common Stockholders

$

34,331

$

29,986

$

4,345

14.5

%

Weighted average common shares outstanding:

Basic

85,520

78,855

6,665

8.5

%

Diluted

86,033

79,464

6,569

8.3

%

Earnings per share:

Basic

$

0.40

$

0.38

$

0.02

5.3

%

Diluted

$

0.40

$

0.38

$

0.02

5.3

%

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

Outstanding Securities - As of March 31, 2019

Number of Units/Shares Outstanding

Conversion Rate*

If Converted

Issuance Price per unit*

Annual Distribution Rate*

Convertible Securities

Series A-1 preferred OP units

328

2.4390

800

$

100

6.0

%

Series A-3 preferred OP units

40

1.8605

74

$

100

4.5

%

Series A-4 preferred OP units

410

0.4444

182

$

25

6.5

%

Series C preferred OP units

314

1.1100

349

$

100

4.5

%

Series D preferred OP units

489

0.8000

391

$

100

3.8

%

Common OP units

2,719

1.0000

2,719

N/A

Mirrors common shares distributions

Series A-4 preferred stock

1,063

0.4444

472

$

25

6.5

%

Non-Convertible Securities

Common shares

86,463

N/A

N/A

N/A

$3.00^

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

Capitalization - As of March 31, 2019

Equity

Shares

Share Price*

Total

Common shares

86,463

$

118.52

$

10,247,595

Common OP units

2,719

$

118.52

322,256

Subtotal

89,182

$

10,569,851

Series A-1 preferred OP units

800

$

118.52

94,816

Series A-3 preferred OP units

74

$

118.52

8,770

Series A-4 preferred OP units

182

$

118.52

21,571

Series C preferred OP units

349

$

118.52

41,363

Series D preferred OP units

391

$

118.52

46,341

Total diluted shares outstanding

90,978

$

10,782,712

Debt

Mortgage loans payable

$

2,879,017

Secured borrowings (4)

102,676

Preferred Equity - Sun NG Resorts - mandatorily redeemable

35,249

Preferred OP units - mandatorily redeemable

34,663

Lines of credit (5)

396,512

Total debt

$

3,448,117

Preferred

Series A-4 preferred stock

1,063

$

25.00

$

26,575

Total Capitalization

$

14,257,404

Reconciliations to Non-GAAP Financial Measures

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

Three Months Ended
March 31,

2019

2018

Net income attributable to Sun Communities, Inc. common stockholders:

$

34,331

$

29,986

Adjustments:

Depreciation and amortization

76,712

66,646

Remeasurement of marketable securities

(267

)

Amounts attributable to noncontrolling interests

723

1,889

Preferred return to preferred OP units

527

553

Preferred distribution to Series A-4 preferred stock

432

441

Gain on disposition of assets, net

(5,679

)

(4,539

)

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

$

106,779

$

94,976

Adjustments:

Other acquisition related costs (8)

160

135

Loss on extinguishment of debt

653

196

Catastrophic weather related charges, net

782

(2,213

)

Loss of earnings - catastrophic weather related (9)

325

Other (income) / expense (6)

(1,898

)

2,617

Debt premium write-off

(782

)

Deferred tax benefit

(217

)

(347

)

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

$

106,259

$

94,907

Weighted average common shares outstanding - basic:

85,520

78,855

Add:

Common stock issuable upon conversion of stock options

1

2

Restricted stock

512

607

Common OP units

2,722

2,741

Common stock issuable upon conversion of Series A-4 preferred stock

472

482

Common stock issuable upon conversion of Series A-3 preferred OP units

75

75

Common stock issuable upon conversion of Series A-1 preferred OP units

803

836

Weighted average common shares outstanding - fully diluted

90,105

83,598

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted

$

1.19

$

1.14

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted

$

1.18

$

1.14

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

Three Months Ended
March 31,

2019

2018

Net income attributable to Sun Communities, Inc., common stockholders:

$

34,331

$

29,986

Adjustments:

Interest expense

35,108

31,757

Loss on extinguishment of debt

653

196

Current tax expense

214

174

Deferred tax benefit

(217

)

(347

)

(Income) / loss from nonconsolidated affiliates

(344

)

59

Depreciation and amortization

76,556

66,437

Gain on disposition of assets, net

(5,679

)

(4,539

)

EBITDAre (1)

$

140,622

$

123,723

Adjustments:

Remeasurement of marketable securities

(267

)

Other (income) / expense, net (6)

(1,898

)

2,617

Catastrophic weather related charges, net

782

(2,213

)

Preferred return to preferred OP units / equity

1,323

1,080

Amounts attributable to noncontrolling interests

1,041

2,094

Preferred stock distribution

432

441

Plus: Gain on dispositions of assets, net

5,679

4,539

Recurring EBITDA (1)

$

147,714

$

132,281


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

Three Months Ended
March 31,

2019

2018

Net income attributable to Sun Communities, Inc., common stockholders:

$

34,331

$

29,986

Other revenues

(8,480

)

(6,276

)

Home selling expenses

3,324

3,290

General and administrative

21,887

19,757

Catastrophic weather related charges, net

782

(2,213

)

Depreciation and amortization

76,556

66,437

Loss on extinguishment of debt

653

196

Interest expense

35,108

31,757

Remeasurement of marketable securities

(267

)

Other (income) / expense, net (6)

(1,898

)

2,617

(Income) / loss from nonconsolidated affiliates

(344

)

59

Current tax expense

214

174

Deferred tax benefit

(217

)

(347

)

Preferred return to preferred OP units / equity

1,323

1,080

Amounts attributable to noncontrolling interests

1,041

2,094

Preferred stock distribution

432

441

NOI(1) / Gross Profit

$

164,445

$

149,052

Three Months Ended
March 31,

2019

2018

Real Property NOI (1)

$

143,540

$

131,745

Rental Program NOI (1)

26,061

24,102

Home Sales NOI (1) / Gross Profit

10,341

8,329

Ancillary NOI (1) / Gross Profit

1,381

1,185

Site rent from Rental Program (included in Real Property NOI) (1)(10)

(16,878

)

(16,309

)

NOI (1) / Gross profit

$

164,445

$

149,052


Non-GAAP and Other Financial Measures

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

Quarter Ended

3/31/2019

12/31/2018

9/30/2018

6/30/2018

3/31/2018

FINANCIAL INFORMATION

Total revenues

$

287,330

$

274,004

$

323,538

$

271,426

$

257,975

Net income

37,127

10,672

51,715

24,170

33,601

Net income attributable to Sun Communities Inc.

34,331

9,039

46,060

20,408

29,986

Earnings per share basic*

$

0.40

$

0.11

$

0.56

$

0.25

$

0.38

Earnings per share diluted*

0.40

0.11

0.56

0.25

0.38

Cash distributions declared per common share*

$

0.75

$

0.71

$

0.71

$

0.71

$

0.71

Recurring EBITDA (1)

$

147,714

$

133,669

$

158,153

$

128,798

$

132,281

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

106,779

88,562

117,018

85,623

94,976

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

106,259

92,695

116,959

90,372

94,907

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted*

$

1.19

$

0.98

$

1.35

$

1.02

$

1.14

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted*

1.18

1.03

1.35

1.07

1.14

BALANCE SHEETS

Total assets

$

7,098,662

$

6,710,026

$

6,653,726

$

6,492,348

$

6,149,653

Total debt

3,448,117

3,124,303

3,004,929

3,364,081

3,129,440

Total liabilities

3,846,325

3,479,112

3,367,285

3,736,621

3,471,096

Quarter Ended

3/31/2019

12/31/2018

9/30/2018

6/30/2018

3/31/2018

OPERATING INFORMATION*

New home sales

125

140

146

134

106

Pre-owned home sales

673

738

825

809

731

Total homes sold

798

878

971

943

837

Communities

379

371

370

367

350

Developed sites

112,175

108,963

108,142

107,192

106,617

Transient RV sites

20,173

19,491

19,432

19,007

15,693

Total sites

132,348

128,454

127,574

126,199

122,310

MH occupancy

95.4

%

95.0

%

94.9

%

95.0

%

94.7

%

RV occupancy

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Total blended MH and RV occupancy

96.4

%

96.1

%

96.1

%

96.1

%

95.8

%


Debt Analysis
(amounts in thousands)

Quarter Ended

3/31/2019

12/31/2018

9/30/2018

6/30/2018

3/31/2018

DEBT OUTSTANDING

Mortgage loans payable

$

2,879,017

$

2,815,957

$

2,819,225

$

2,636,847

$

2,826,225

Secured borrowings (4)

102,676

107,731

113,089

118,242

124,077

Preferred Equity - Sun NG Resorts - mandatorily redeemable

35,249

35,277

35,277

35,277

Preferred OP units - mandatorily redeemable

34,663

37,338

37,338

37,338

37,338

Lines of credit (5)

396,512

128,000

536,377

141,800

Total debt

$

3,448,117

$

3,124,303

$

3,004,929

$

3,364,081

$

3,129,440

% FIXED/FLOATING

Fixed

88.5

%

95.9

%

100.0

%

84.0

%

90.6

%

Floating

11.5

%

4.1

%

%

16.0

%

9.4

%

Total

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

WEIGHTED AVERAGE INTEREST RATES

Mortgage loans payable

4.24

%

4.22

%

4.23

%

4.27

%

4.25

%

Preferred Equity - Sun NG Resorts - mandatorily redeemable

6.00

%

6.00

%

6.00

%

6.00

%

%

Preferred OP units - mandatorily redeemable

6.50

%

6.61

%

6.61

%

6.61

%

6.61

%

Lines of credit (5)

3.73

%

3.77

%

%

3.31

%

3.01

%

Average before Secured borrowings (4)

4.22

%

4.25

%

4.28

%

4.15

%

4.22

%

Secured borrowings (4)

9.94

%

9.94

%

9.95

%

9.96

%

9.97

%

Total average

4.39

%

4.45

%

4.40

%

4.36

%

4.45

%

DEBT RATIOS

Net Debt / Recurring EBITDA (1) (TTM)

6.0

5.6

5.4

6.5

6.2

Net Debt / Enterprise Value

24.1null

%

25.2

%

24.1

%

28.6

%

28.8

%

Net Debt / Gross Assets

39.8

%

37.7

%

35.9

%

42.7

%

41.9

%

COVERAGE RATIOS

Recurring EBITDA (1) (TTM) / Interest

4.1

4.0

3.9

3.7

3.6

Recurring EBITDA (1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution

3.9

3.9

3.8

3.6

3.4

MATURITIES/PRINCIPAL AMORTIZATION NEXT FIVE YEARS

Remaining 2019

2020

2021

2022

2023

Mortgage loans payable:

Maturities

$

$

58,078

$

270,680

$

82,155

$

307,465

Weighted average rate of maturities

%

5.92

%

5.53

%

4.46

%

4.17

%

Principal amortization

44,099

59,931

59,173

57,182

53,829

Secured borrowings (4)

3,846

5,547

5,956

6,154

6,154

Preferred Equity - Sun NG Resorts - mandatorily redeemable

35,249

Lines of credit (5)

3,512

393,000

Total

$

47,945

$

127,068

$

728,809

$

180,740

$

367,448

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

Three Months Ended March 31,

2019

2018

Change

% Change

Financial Information

Income from real property (11)

$

199,084

$

187,826

$

11,258

6.0

%

Property Operating Expenses:

Payroll and benefits

16,421

15,534

887

5.7

%

Legal, taxes & insurance

2,191

2,471

(280

)

(11.3

)%

Utilities (11)

14,434

14,463

(29

)

(0.2

)%

Supplies and repair (12)

5,719

5,159

560

10.9

%

Other

4,455

4,688

(233

)

(5.0

)%

Real estate taxes

14,590

13,766

824

6.0

%

Total property operating expenses

57,810

56,081

1,729

3.1

%

Real Property NOI(1)

$

141,274

$

131,745

$

9,529

7.2

%

As of March 31,

2019

2018

Change

% Change

Other Information

Number of properties

345

345

MH occupancy (3)

97.6

%

RV occupancy (3)

100.0

%

MH & RV blended occupancy % (3)

98.2

%

96.1

%

2.1

%

Sites available for development

7,296

7,602

(306

)

(4.0

)%

Monthly base rent per site - MH

$

565

$

543

$

22

4.1

%

(14)

Monthly base rent per site - RV (13)

$

457

$

434

$

23

5.3

%

(14)

Monthly base rent per site - Total (13)

$

541

$

519

$

22

4.2

%

(14)


Home Sales Summary
(amounts in thousands except for *)

Three Months Ended March 31,

Financial Information

2019

2018

Change

% Change

Revenue:

New home sales

$

15,381

$

11,893

$

3,488

29.3

%

Pre-owned home sales

24,237

23,007

1,230

5.3

%

Revenue from home sales

39,618

34,900

4,718

13.5

%

Expenses:

New home cost of sales

13,146

10,197

2,949

28.9

%

Pre-owned home cost of sales

16,131

16,374

(243

)

(1.5

)%

Cost of home sales

29,277

26,571

2,706

10.2

%

NOI / Gross Profit (1)

$

10,341

$

8,329

$

2,012

24.2

%

Gross profit – new homes

$

2,235

$

1,696

$

539

31.8

%

Gross margin % – new homes

14.5

%

14.3

%

0.2

%

Average selling price – new homes*

$

123,048

$

112,198

$

10,850

9.7

%

Gross profit – pre-owned homes

$

8,106

$

6,633

$

1,473

22.2

%

Gross margin % – pre-owned homes

33.4

%

28.8

%

4.6

%

Average selling price – pre-owned homes*

$

36,013

$

31,473

$

4,540

14.4

%

Statistical Information

New home sales volume*

125

106

19

17.9

%

Pre-owned home sales volume*

673

731

(58

)

(7.9

)%

Total homes sold*

798

837

(39

)

(4.7

)%

Rental Program Summary
(amounts in thousands except for *)

Three Months Ended March 31,

Financial Information

2019

2018

Change

% Change

Revenues:

Rental home revenue

$

13,971

$

13,020

$

951

7.3

%

Site rent included in Income from real property

16,878

16,309

569

3.5

%

Rental program revenue

30,849

29,329

1,520

5.2

%

Expenses:

Repairs and refurbishment

2,304

2,314

(10

)

(0.4

)%

Taxes and insurance

1,864

1,546

318

20.6

%

Other

620

1,367

(747

)

(54.6

)%

Rental program operating and maintenance

4,788

5,227

(439

)

(8.4

)%

Rental Program NOI(1)

$

26,061

$

24,102

$

1,959

8.1

%

As of March 31,

Other Information

2019

2018

Change

% Change

Number of occupied rental homes, end of period*

11,170

11,074

96

0.9

%

Investment in occupied rental homes, end of period

$

547,844

$

504,402

$

43,442

8.6

%

Number of sold rental homes (YTD)*

210

234

(24

)

(10.3

)%

Weighted average monthly rental rate, end of period*

$

963

$

913

$

50

5.5

%


Acquisitions and Other Summary (15)
(amounts in thousands except for statistical data)

Three Months Ended
March 31, 2019

REVENUES:

Income from real property

$

9,251

PROPERTY AND OPERATING EXPENSES:

Payroll and benefits

2,450

Legal, taxes & insurance

193

Utilities(11)

1,550

Supplies and repair

635

Other

1,417

Real estate taxes

740

Property operating expenses

6,985

NET OPERATING INCOME (NOI) (1)

$

2,266

As of March 31, 2019

Other information:

Number of properties

34

Occupied sites

3,699

Developed sites

3,893

Occupancy %

95.0

%

Transient sites

5,189


Property Summary

(includes MH and Annual RVs)

COMMUNITIES

3/31/2019

12/31/2018

9/30/2018

6/30/2018

3/31/2018

FLORIDA

Communities

125

124

124

124

123

Developed sites (16)

38,878

37,874

37,879

37,723

37,726

Occupied (16)

37,932

36,868

36,822

36,602

36,546

Occupancy % (16)

97.6

%

97.3

%

97.2

%

97.0

%

96.9

%

Sites for development

1,754

1,684

1,494

1,335

1,397

MICHIGAN

Communities

72

70

70

69

68

Developed sites (16)

27,777

26,504

26,116

26,039

25,881

Occupied (16)

26,430

25,075

24,830

24,709

24,319

Occupancy % (16)

95.2

%

94.6

%

95.1

%

94.9

%

94.0

%

Sites for development

1,202

1,202

1,533

1,668

1,371

TEXAS

Communities

23

23

23

23

21

Developed sites (16)

6,953

6,922

6,905

6,622

6,614

Occupied (16)

6,529

6,428

6,301

6,251

6,191

Occupancy % (16)

93.9

%

92.9

%

91.3

%

94.4

%

93.6

%

Sites for development

1,107

1,121

907

1,168

1,100

CALIFORNIA

Communities

31

30

30

29

27

Developed sites (16)

5,949

5,941

5,932

5,694

5,692

Occupied (16)

5,902

5,897

5,881

5,647

5,646

Occupancy % (16)

99.2

%

99.3

%

99.1

%

99.2

%

99.2

%

Sites for development

56

56

59

177

389

ARIZONA

Communities

13

12

11

11

11

Developed sites (16)

4,238

3,836

3,826

3,804

3,797

Occupied (16)

3,830

3,545

3,515

3,485

3,468

Occupancy % (16)

90.4

%

92.4

%

91.9

%

91.6

%

91.3

%

Sites for development

ONTARIO, CANADA

Communities

15

15

15

15

15

Developed sites (16)

3,832

3,845

3,832

3,752

3,650

Occupied (16)

3,832

3,845

3,832

3,752

3,650

Occupancy % (16)

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Sites for development

1,675

1,682

1,662

1,662

1,664

INDIANA

Communities

11

11

11

11

11

Developed sites (16)

3,089

3,089

3,089

3,089

3,048

Occupied (16)

2,823

2,772

2,778

2,791

2,785

Occupancy % (16)

91.4

%

89.7

%

89.9

%

90.4

%

91.4

%

Sites for development

277

277

277

277

318

OHIO

Communities

9

9

9

9

9

Developed sites (16)

2,770

2,770

2,770

2,767

2,756

Occupied (16)

2,704

2,693

2,694

2,698

2,672

Occupancy % (16)

97.6

%

97.2

%

97.3

%

97.5

%

97.0

%

Sites for development

59

59

59

59

75

COLORADO

Communities

8

8

8

8

8

Developed sites (16)

2,335

2,335

2,335

2,335

2,335

Occupied (16)

2,323

2,320

2,313

2,319

2,327

Occupancy % (16)

99.5

%

99.4

%

99.1

%

99.3

%

99.7

%

Sites for development

2,129

2,129

2,129

1,819

650

OTHER STATES

Communities

72

69

69

68

57

Developed sites (16)

16,354

15,847

15,458

15,367

15,118

Occupied (16)

15,826

15,323

14,932

14,786

14,544

Occupancy % (16)

96.8

%

96.7

%

96.6

%

96.2

%

96.2

%

Sites for development

2,987

3,048

3,195

3,233

2,381

TOTAL - PORTFOLIO

Communities

379

371

370

367

350

Developed sites (16)

112,175

108,963

108,142

107,192

106,617

Occupied (16)

108,131

104,766

103,898

103,040

102,148

Occupancy % (16)

96.4

%

(17)

96.1

%

96.1

%

96.1

%

95.8

%

Sites for development (18)

11,246

11,258

11,315

11,398

9,345

% Communities age restricted

31.7

%

32.1

%

32.2

%

32.2

%

33.7

%

TRANSIENT RV PORTFOLIO SUMMARY

Location

Florida

5,650

5,917

5,786

5,942

5,870

California

1,975

1,765

1,774

1,377

806

Texas

1,717

1,752

1,758

1,776

1,360

Arizona

1,421

1,423

1,057

1,079

1,085

Maryland

1,375

1,381

1,386

1,386

1,155

Ontario, Canada

1,131

1,046

1,056

1,133

1,234

New York

929

925

910

928

610

New Jersey

906

884

893

906

931

Maine

857

572

578

591

591

Michigan

611

576

629

350

256

Indiana

519

519

519

519

519

Other locations

3,082

2,731

3,086

3,020

1,276

Total transient RV sites

20,173

19,491

19,432

19,007

15,693


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

Recurring Capital Expenditures
Average/Site*

Recurring
Capital Expenditures (19)

Lot Modifications (20)

Acquisitions (21)

Expansion &
Development (22)

Revenue Producing (23)

YTD 2019

$

53

$

5,296

$

5,587

$

328,700

$

51,157

$

2,803

2018

$

263

$

24,265

$

22,867

$

414,840

$

152,672

$

3,864

2017

$

214

$

14,166

$

18,049

$

204,375

$

88,331

$

1,990


Operating Statistics for MH and Annual RVs

LOCATIONS

Resident Move-outs

Net Leased Sites (24)

New Home Sales

Pre-owned Home Sales

Brokered Re-sales

Florida

281

348

59

56

342

Michigan

197

111

15

324

30

Ontario, Canada

301

(13

)

3

2

13

Texas

61

101

11

77

14

Arizona

11

16

11

1

54

Indiana

13

51

2

82

4

Ohio

48

11

38

California

12

5

5

14

Colorado

3

6

19

8

Other locations

426

(62

)

13

74

21

Three Months Ended March 31, 2019

1,350

571

125

673

500

TOTAL FOR YEAR ENDED

Resident Move-outs

New Leased Sites (24)

New Home Sales

Pre-owned Home Sales

Brokered Re-sales

2018

3,435

2,600

526

3,103

2,147

2017

2,739

2,406

362

2,920

2,006

PERCENTAGE TRENDS

Resident Move-outs

Resident Re-sales

2019 (TTM)

2.5

%

7.2

%

2018

2.4

%

7.2

%

2017

1.9

%

6.6

%

Footnotes and Definitions

(1)Investors in and analysts following the real estate industry utilize funds from operations (“FFO”), net operating income (“NOI”), and earnings before interest, tax, depreciation and amortization (“EBITDA”) as supplemental performance measures. The Company believes that FFO, NOI, and EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. Additionally, FFO, NOI, and EBITDA are commonly used in various ratios, pricing multiples, yields and returns and valuation calculations used to measure financial position, performance and value.

• FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of generally accepted accounting principles (“GAAP”) depreciation and amortization of real estate assets.

• NOI provides a measure of rental operations that does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses.

• EBITDA provides a further measure to evaluate ability to incur and service debt and to fund dividends and other cash needs.

FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, 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. By excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared period-over-period, reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from GAAP net income (loss). Management believes the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. The Company also uses FFO excluding certain gain and loss items that management considers unrelated to the operational and financial performance of our core business (“Core FFO”). The Company believes that Core FFO provides enhanced comparability for investor evaluations of period-over-period results.

The Company believes that GAAP net income (loss) is the most directly comparable measure to FFO. The principal limitation of FFO is that it does not replace GAAP net income (loss) as a performance measure or GAAP cash flow from operations as a liquidity measure. Because FFO excludes significant economic components of GAAP net income (loss) including depreciation and amortization, FFO should be used as a supplement to GAAP net income (loss) and not as an alternative to it. Further, FFO is not intended as a measure of a REIT’s ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO is calculated in accordance with the Company’s interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that interpret the NAREIT definition differently.

NOI is derived from revenues minus property operating expenses and real estate taxes. NOI is a non-GAAP financial measure that the Company believes is helpful to investors as a supplemental measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key measure when evaluating performance and growth of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense and non-property specific expenses such as general and administrative expenses, all of which are significant costs. Therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.

The Company believes that GAAP net income (loss) is the most directly comparable measure to NOI. NOI should not be considered to be an alternative to GAAP net income (loss) as an indication of the Company’s financial performance or GAAP cash flow from operating activities as a measure of the Company’s liquidity; nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions. Because of the inclusion of items such as interest, depreciation, and amortization, the use of GAAP net income (loss) as a performance measure is limited as these items may not accurately reflect the actual change in market value of a property, in the case of depreciation and in the case of interest, may not necessarily be linked to the operating performance of a real estate asset, as it is often incurred at a parent company level and not at a property level.

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

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

(2) Same Community results reflect constant currency for comparative purposes. Canadian currency figures in the prior comparative period have been translated at 2019 actual exchange rates.

(3) The Same Community occupancy percentage for 2019 is derived from 106,386 developed sites, of which 104,432 were occupied. The number of developed sites excludes RV transient sites and approximately 1,900 recently completed but vacant MH expansion sites. Without the adjustment for vacant expansion sites, the Same Community occupancy percentage is 95.4 percent for MH, 100.0 percent for RV, and 96.4 percent for the blended MH and RV. The MH and RV blended occupancy is derived from 108,282 developed sites, of which 104,432 were occupied. The Same Community occupancy percentage for 2018 has been adjusted to reflect incremental period-over-period growth from filled expansion sites and the conversion of transient RV sites to annual RV sites.

(4) 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 and amount.

(5) 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.

(6) Other income / (expense), net was as follows (in thousands):

Three Months Ended
March 31,

2019

2018

Foreign currency translation gain / (loss)

$

1,969

$

(2,524

)

Contingent liability remeasurement (loss) / gain

(71

)

(93

)

Other income / (expense), net

$

1,898

$

(2,617

)

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

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

(9) We recorded a total estimated income of $0.3 million in the Core FFO(1) during the first quarter ending March 31, 2018 for the income related to the loss of earnings in excess of the applicable business interruption deductible in relation to our Florida Keys communities. The estimated income was not recorded within our consolidated financial statements during that period in accordance with GAAP. The income was recognized in the fourth quarter of 2018. During the three months ended March 31, 2019, we recorded GAAP income of $0.4 million from business interruption coverage upon notification of payment by the insurance company.

(10) 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.

(11) Same Community results net $8.4 million and $8.1 million of utility revenue against the related utility expense in property operating and maintenance expense for the three months ended March 31, 2019 and 2018, respectively. The Company adopted ASC 842, the new leasing standard, as of January 1, 2019 which required the reclassification of bad debt expense from Property operating expense to Income from real property. To assist with comparability within Same Community results, bad debt expense has been reclassified to be shown as a reduction of Income from real property for all periods presented.

(12) Same Community supplies and repair expense excludes $0.1 million for the three months ended March 31, 2018 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.

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

(14) Calculated using actual results without rounding.

(15) Acquisitions and other is comprised of seven properties acquired and one property being operated under a temporary use permit in 2019, twenty properties acquired in 2018, three Florida Keys properties that require redevelopment as a result of damage sustained from Hurricane Irma in 2017, one recently opened ground-up development, one property undergoing redevelopment, one property that we have an interest in, but do not operate, and other miscellaneous transactions and activity.

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

(17) As of March 31, 2019, total portfolio MH occupancy was 95.4 percent (including the impact of approximately 1,900 recently constructed but vacant MH expansion sites) and annual RV occupancy was 100.0 percent.

(18) Total sites for development were comprised of approximately 71.7 percent for expansion, 23.3 percent for greenfield development and 5.0 percent for redevelopment.

(19) Recurring capital expenditures are 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.

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

(21) Capital expenditures related to acquisitions represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. These costs for the three months ended March 31, 2019 include $12.4 million of capital improvements identified during due diligence that are necessary to bring the communities to the Company’s operating standards. For the years ended December 31, 2018 and 2017, these costs were $94.6 million and $84.0 million, respectively. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, often require 24 to 36 months after closing to complete.

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

(23) 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.

(24) 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.

Attachment