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Sun Communities, Inc. Reports 2019 Fourth Quarter Results and 2020 Guidance


Southfield, MI, Feb. 19, 2020 (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 fourth quarter results for 2019.

Financial Results for the Quarter and Year Ended December 31, 2019

For the quarter ended December 31, 2019, total revenues increased $27.8 million, or 10.2 percent, to $301.8 million compared to $274.0 million for the same period in 2018. Net income attributable to common stockholders was $28.5 million, or $0.31 per diluted common share, for the quarter ended December 31, 2019, as compared to net income attributable to common stockholders of $9.0 million, or $0.11 per diluted common share, for the same period in 2018.

For the year ended December 31, 2019, total revenues increased $137.2 million, or 12.2 percent, to $1.3 billion compared to $1.1 billion for the same period in 2018. Net income attributable to common stockholders was $160.3 million, or $1.80 per diluted common share, for the year ended December 31, 2019, as compared to net income attributable to common stockholders of $105.5 million, or $1.29 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 quarter ended December 31, 2019, was $1.10 per diluted share and OP unit (“Share”) as compared to $1.03 in the prior year, an increase of 6.8 percent. Core FFO(1) for the year ended December 31, 2019, was $4.92 per Share as compared to $4.58 in the prior year, an increase of 7.4 percent.
     
  • Same Community(2) Net Operating Income (“NOI”)(1) increased by 7.6 percent and 7.3 percent for the quarter and year ended December 31, 2019, respectively, as compared to the corresponding periods in 2018.
     
  • Same Community Occupancy (3) increased by 220 basis points to 98.4 percent at December 31, 2019, as compared to 96.2 percent at December 31, 2018.
     
  • Revenue Producing Sites increased by 669 sites for the quarter and 2,674 sites for the year ended December 31, 2019, respectively, bringing total portfolio occupancy to 96.4 percent.

Gary Shiffman, Chief Executive Officer of Sun Communities stated, “Sun Communities again delivered industry leading growth as we successfully executed on our strategic initiatives and saw strong results across the business. Our organic growth has been a consistent earnings driver as we benefit from sustained consumer demand for our high-quality, affordable homes and RV vacation destinations. Capital deployment during 2019 of over $1.2 billion in accretive acquisitions, expansions, and ground up development provide incremental growth opportunities for the years ahead. In recognition of an outstanding year and a solid future, the Board of Directors for the fourth consecutive year approved an increase in our quarterly dividend. We are proud of our accomplishments and our team and remain committed to delivering superior value to our shareholders.”


OPERATING HIGHLIGHTS

Portfolio Occupancy

Total portfolio occupancy was 96.4 percent at December 31, 2019, compared to 96.1 percent at December 31, 2018.

During the quarter ended December 31, 2019, revenue producing sites increased by 669 sites, as compared to 722 revenue producing sites gained during the fourth quarter of 2018.

During the year ended December 31, 2019, revenue producing sites increased by 2,674 sites, as compared to an increase of 2,600 revenue producing sites during the year ended December 31, 2018, a 2.8 percent increase.


Same Community(2) Results

For the 345 communities owned and operated by the Company since January 1, 2018, NOI(1) for the quarter ended December 31, 2019 increased 7.6 percent over the same period in 2018, as a result of a 6.4 percent increase in revenues and a 3.6 percent increase in operating expenses. Same Community occupancy(3) increased to 98.4 percent at December 31, 2019 from 96.2 percent at December 31, 2018.

For the year ended December 31, 2019, NOI(1) increased 7.3 percent over  2018, as a result of a 6.2 percent increase in revenues and a 3.8 percent increase in operating expenses.


Home Sales

During the quarter ended December 31, 2019, the Company sold 808 homes as compared to 878 homes sold during the same period in 2018.  New home sales volume was 140 for both the quarters ended December 31, 2019 and 2018. Rental home sales, which are included in total home sales, were 281 in 2019, as compared to 297 sold during 2018.

During the year ended December 31, 2019, 3,439 homes were sold compared to 3,629 for the same period in 2018. New home sales volume increased 8.6 percent to 571 new home sales for the year ended December 31, 2019, as compared to 526 homes during the same period in 2018.  Rental home sales, which are included in total home sales, were 1,140 in 2019, an increase of 1.6 percent over the 1,122 sold during 2018.


PORTFOLIO ACTIVITY

Acquisitions

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

Community Name   Type   Sites   Expansion Sites   State   Total Purchase Price (in millions)   Month Acquired
Slickrock Campground   RV   193     UT   $ 8.3   December
Pandion Ridge   RV   142   351   AL   $ 19.1   November
Jensen Portfolio (1)   MH   5,230   466   Various   $ 343.6   October

(1)
Contains
31
 communities located in CT, GA, MD, NH, NJ, NY, NC and SC.

For the year ended December 31, 2019, the Company acquired 47 communities, totaling over 10,000 developed sites and over 900 sites available for expansion, for a total purchase price of approximately $815.2 million.

Subsequent to the year ended December 31, 2019, the Company acquired Cape Cod RV Resort located in East Falmouth, Massachusetts with 230 developed sites for a purchase price of $13.5 million. In conjunction with the acquisition, the Company’s operating partnership issued 90,000 Series E Preferred Units, at an issuance price of $100 per unit.

Construction Activity

During the quarter ended December 31, 2019, the Company completed the construction of 284 sites at the following ground-up developments:

Community Name   Type   State   Completed Construction Sites   Remaining Construction Sites (1)   Total Sites Once Completed (1)
Carolina Pines   RV   SC   109     351   846  
Jellystone Golden Valley   RV   NC   69     133   315  
River Run   RV   CO   106     823   1,150  

(1) Remaining sites are approximate and may be adjusted as final construction is completed.

For the year ended December 31, 2019, the Company completed the construction of approximately 1,100 sites at four ground-up developments and one redevelopment community.

During the quarter ended December 31, 2019, the Company completed the construction of 864 expansion sites in nine communities. For the year ended December 31, 2019, the Company completed the construction of approximately 1,230 expansion sites in 16 communities.


BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Series A-4 Preferred Stock and OP Units

On December 13, 2019, as previously announced and disclosed, all outstanding shares of the Company’s 6.50% Series A-4 Cumulative Convertible Preferred Stock, and all of its operating partnership’s Series A-4 Preferred OP Units, were converted into common stock and common OP units, respectively. All 1,031,747 shares of Series A-4 Preferred Stock were converted into 458,541 shares of common stock (net of fractional shares paid in cash). All 405,656 Series A-4 preferred OP units were converted into 180,277 common OP units (net of fractional units paid in cash).

Debt Transactions

During the quarter ended December 31, 2019, the Company completed a 21-year, $400.0 million term loan transaction that carries an interest rate of 4.0 percent.  Concurrently, the Company repaid a $17.0 million term loan due to mature in 2020 and $127.3 million in term loans due to mature in 2021.  The Company also repaid four term loans secured by three properties totaling $21.5 million which were set to mature in 2020.

As of December 31, 2019, the Company had $3.4 billion of debt outstanding. The weighted average interest rate was 4.0 percent and the weighted average maturity was 11.1 years. The Company had $22.1 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month Recurring EBITDA(1) ratio was 5.5 times.

2020 Distributions

After quarter end, the Company announced a 5.3 percent annual distribution increase to $3.16 per common share from $3.00 per common share. This increase will begin with the first quarter distribution to be paid in April 2020. While the Company has adopted the new annual distribution policy, the amount of each quarterly distribution on the Company’s common stock will be subject to approval by its Board of Directors.


GUIDANCE 2020

The estimates and assumptions presented below represent a range of possible outcomes and may differ materially from actual results. Guidance estimates include acquisitions completed through the date of this release, and exclude any prospective acquisitions or capital markets activity. 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.”

    Net Income   Core FFO(1)
Weighted average common shares outstanding, fully diluted (in mm)(i)   92.5   96.9
First quarter 2020, per fully diluted share   $0.34 - $0.37   $1.18 - $1.21
Full year 2020, per fully diluted share   $1.79 - $1.91   $5.20 - $5.30


    1Q20   2Q20   3Q20   4Q20
Seasonality of Core FFO(1)   22.9 %   23.8 %   30.8 %   22.5 %

Total Portfolio
Number of communities: 422

    2019 Actual   2020E
    (in Millions)   Change %
Income from real property (excluding transient revenue)   $ 793.4     9.6% - 10.1%
Transient revenue   132.3     13.8% - 15.0%
Income from real property   $ 925.7     10.2% - 10.8%
Property operating and maintenance   266.4     11.9% - 12.4%
Real estate taxes   61.9     11.6% - 12.1%
Total property operating expenses   $ 328.3     11.9% - 12.3%
NOI(1)   $ 597.4     9.1% - 10.2%

Same Community(2) Portfolio(ii)
Number of communities: 367

    2019 Actual   2020E
    (in Millions)   Change %
Income from real property (excluding transient revenue)   $ 740.7     6.3% - 6.5%
Transient revenue   116.9     2.4% - 3.0%
Income from real property(iii)   $ 857.6     5.7% - 6.0%
Property operating and maintenance(iii)(iv)   217.0     3.6% - 4.6%
Real estate taxes   59.8     7.2% - 8.0%
Total property operating expenses   $ 276.8     4.4% - 5.3%
NOI(1)   $ 580.8     6.0% - 6.8%


Weighted average monthly rental rate increase               4.0 %
                 
    1Q20   2Q20   3Q20   4Q20
Same Community NOI(1) Seasonality   24.4 %   24.1 %   27.1 %   24.4 %

Total Company Supplementary Information:

    2019 Actual   2020E
    (in Millions)   Change %
Rental program, net   $ 35.6     6.5% - 7.9%
Ancillary revenues, net   $ 19.4     11.3% - 13.4%
Home sales contribution to Core FFO(v), net of home selling expenses   $ 6.5     27.7% - 33.8%
Interest income   $ 17.9     (51.4)% - (50.8)%
Brokerage commissions and other revenues, net, and income from nonconsolidated affiliates   $ 15.5     7.1% - 9.0%
General and administrative expenses   $ 94.0     11.7% - 14.1%
Loss of earnings from Florida Keys included in core FFO   $ 1.4     (13.5 )%


    2020E
Increase in revenue producing sites   2,500 - 2,700
Vacant expansion site deliveries   1,000 - 1,200
Vacant ground-up development site deliveries   550 - 750
     
New home sales volume   650 - 700
Pre-owned home sales volume   2,550 - 2,750

(i) Certain securities that are dilutive to the computation of Core FFO 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.
(ii) The amounts in the table reflect constant currency, as Canadian currency figures included within the 2019 actual amounts have been translated at the assumed exchange rate used for 2020 guidance.
(iii) Water and sewer utility revenue of $34.7 million and $36.2 million has been reclassified from Income from real property to net against the related expense in Property operating maintenance for 2019 and 2020 guidance, respectively.
(iv) For 2019, property operating and maintenance expense excludes $0.7 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.
(v) Includes gross profit from new and certain pre-owned home sales. Gross profit from pre-owned home sales of depreciated rental homes is excluded.


EARNINGS CONFERENCE CALL

A conference call to discuss fourth quarter operating results will be held on Thursday, February 20, 2020 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 5, 2020 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 13697139. The conference call will be available live on Sun Communities’ website located at www.suncommunities.com. The replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of December 31, 2019, owned, operated, or had an interest in a portfolio of 422 communities comprising over 141,000 developed sites in 33 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 December 31, 2019)



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


  Quarter Ended
  12/31/2019   9/30/2019   6/30/2019   3/31/2019   12/31/2018
Financial Information                  
Total revenues $ 301,819     $ 362,443     $ 312,445     $ 287,330     $ 274,003  
Net income $ 30,685     $ 64,451     $ 45,116     $ 37,127     $ 10,672  
Net Income attributable to Sun Communities Inc. common stockholders $ 28,547     $ 57,002     $ 40,385     $ 34,331     $ 9,039  
Basic earnings per share* $ 0.31     $ 0.63     $ 0.46     $ 0.40     $ 0.11  
Diluted earnings per share* $ 0.31     $ 0.63     $ 0.46     $ 0.40     $ 0.11  
                   
Cash distributions declared per common share* $ 0.75     $ 0.75     $ 0.75     $ 0.75     $ 0.71  
                   
Recurring EBITDA (1) $ 144,738     $ 179,953     $ 151,502     $ 147,714     $ 133,335  
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

$ 105,533     $ 119,496     $ 108,112     $ 106,779     $ 88,562  
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

$ 104,534     $ 137,369     $ 108,002     $ 106,259     $ 92,695  
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted* $ 1.11     $ 1.27     $ 1.18     $ 1.19     $ 0.98  
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted* $ 1.10     $ 1.46     $ 1.18     $ 1.18     $ 1.03  
                   
Balance Sheet                  
Total assets $ 7,802,060     $ 7,397,854     $ 7,222,084     $ 7,098,662     $ 6,710,026  
Total debt $ 3,434,402     $ 3,271,341     $ 3,107,775     $ 3,448,117     $ 3,124,303  
Total liabilities $ 3,848,104     $ 3,720,983     $ 3,542,188     $ 3,846,325     $ 3,479,112  


  Quarter Ended
  12/31/2019   9/30/2019   6/30/2019   3/31/2019   12/31/2018
Operating Information*                  
Communities 422     389     382     379     371  
                   
Manufactured home sites 93,821     88,024     87,555     87,425     84,428  
Annual RV sites 26,056     25,756     25,009     24,750     24,535  
Transient RV sites 21,416     20,882     20,585     20,173     19,491  
Total sites 141,293     134,662     133,149     132,348     128,454  
                   
MH occupancy 95.5 %   95.7 %   95.7 %   95.4 %   95.0 %
RV occupancy 100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
Total blended MH and RV occupancy 96.4 %   96.7 %   96.6 %   96.4 %   96.1 %
                   
New home sales 140     167     139     125     140  
Pre-owned home sales 668     739     788     673     738  
Total home sales 808     906     927     798     878  


  Three Months Ended   Year Ended
  December 31, 2019   December 31, 2019
Net Leased Sites (24)      
MH net leased sites 437     1,541  
RV net leased sites 232     1,133  
Total net leased sites 669     2,674  


Balance Sheets                                                                                                                                              
(amounts in thousands)


    December 31, 2019   December 31, 2018
Assets        
Land   $ 1,414,279     $ 1,201,945  
Land improvements and buildings   6,595,272     5,586,250  
Rental homes and improvements   627,175     571,661  
Furniture, fixtures and equipment   282,874     201,090  
Investment property   8,919,600     7,560,946  
Accumulated depreciation   (1,686,980 )   (1,442,630 )
Investment property, net   7,232,620     6,118,316  
Cash, cash equivalents and restricted cash   34,830     62,262  
Marketable securities   94,727     49,037  
Inventory of manufactured homes   62,061     49,199  
Notes and other receivables, net   157,926     160,077  
Collateralized receivables, net (4)       106,924  
Other assets, net   219,896     164,211  
Total Assets   $ 7,802,060     $ 6,710,026  
Liabilities        
Mortgage loans payable   $ 3,180,592     $ 2,815,957  
Secured borrowings on collateralized receivables (4)       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)   183,898     128,000  
Distributions payable   71,704     63,249  
Advanced reservation deposits and rent   133,420     133,698  
Accrued expenses and accounts payable   127,289     106,281  
Other liabilities   81,289     51,581  
Total Liabilities   3,848,104     3,479,112  
Commitments and contingencies        
Series A-4 preferred stock       31,739  
Series A-4 preferred OP units       9,877  
Series D preferred OP units   50,913      
Equity Interests - NG Sun LLC and NG Whitewater   27,091     21,976  
Stockholders' Equity        
Common stock   932     864  
Additional paid-in capital   5,213,264     4,398,949  
Accumulated other comprehensive loss   (1,331 )   (4,504 )
Distributions in excess of accumulated earnings   (1,393,141 )   (1,288,486 )
Total Sun Communities, Inc. stockholders' equity   3,819,724     3,106,823  
Noncontrolling interests        
Common and preferred OP units   47,686     53,354  
Consolidated variable interest entities   8,542     7,145  
Total noncontrolling interests   56,228     60,499  
Total Stockholders' Equity   3,875,952     3,167,322  
Total Liabilities, Temporary Equity and Stockholders' Equity   $ 7,802,060     $ 6,710,026  



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


  Three Months Ended   Year Ended
  December 31, 2019   December 31, 2018   Change   % Change   December 31, 2019   December 31, 2018   Change   % Change
Revenues                              
Income from real property
(excluding transient revenue)
$ 205,131     $ 183,059     $ 22,072     12.1 %   $ 793,403     $ 719,763     $ 73,640     10.2 %
Transient revenue 21,232     17,426     3,806     21.8 %   132,261     106,210     26,051     24.5 %
Revenue from home sales 45,271     43,783     1,488     3.4 %   181,936     166,031     15,905     9.6 %
Rental home revenue 14,745     13,700     1,045     7.6 %   57,572     53,657     3,915     7.3 %
Ancillary revenue 9,135     7,900     1,235     15.6 %   66,881     54,107     12,774     23.6 %
Interest income 3,368     5,003     (1,635 )   (32.7 )%   17,857     20,852     (2,995 )   (14.4 )%
Brokerage commissions and other revenues, net 2,937     3,132     (195 )   (6.2 )%   14,127     6,205     7,922     127.7 %
Total Revenues 301,819     274,003     27,816     10.2 %   1,264,037     1,126,825     137,212     12.2 %
Expenses                              
Property operating and maintenance 63,486     54,120     9,366     17.3 %   266,378     236,097     30,281     12.8 %
Real estate taxes 15,425     14,110     1,315     9.3 %   61,880     56,555     5,325     9.4 %
Cost of home sales 34,327     32,138     2,189     6.8 %   134,357     123,333     11,024     8.9 %
Rental home operating and maintenance 5,542     6,414     (872 )   (13.6 )%   21,995     23,304     (1,309 )   (5.6 )%
Ancillary expenses 9,144     9,058     86     0.9 %   47,432     38,043     9,389     24.7 %
Home selling expenses 3,752     4,403     (651 )   (14.8 )%   14,690     15,722     (1,032 )   (6.6 )%
General and administrative expenses 25,405     20,457     4,948     24.2 %   93,964     81,429     12,535     15.4 %
Catastrophic weather related charges, net 435     2,079     (1,644 )   (79.1 )%   1,737     92     1,645     1,788.0 %
Depreciation and amortization 98,826     81,070     17,756     21.9 %   328,067     287,262     40,805     14.2 %
(Gain) / loss on extinguishment of debt 3,027     (65 )   3,092     (4,756.9 )%   16,505     1,190     15,315     1,287.0 %
Interest expense 33,259     32,235     1,024     3.2 %   133,153     130,556     2,597     2.0 %
Interest on mandatorily redeemable preferred OP units / equity 1,207     1,143     64     5.6 %   4,698     3,694     1,004     27.2 %
Total Expenses 293,835     257,162     36,673     14.3 %   1,124,856     997,277     127,579     12.8 %
Income Before Other Items 7,984     16,841     (8,857 )   (52.6 )%   139,181     129,548     9,633     7.4 %
Gain / (loss) on remeasurement of marketable securities 17,692     (3,639 )   21,331     (586.2 )%   34,240     (3,639 )   37,879     (1,040.9 )%
Other income / (expense), net (6) 4,946     (3,239 )   8,185     (252.7 )%   3,457     (6,453 )   9,910     (153.6 )%
Income / (loss) from nonconsolidated affiliates (6 )   619     (625 )   (101.0 )%   1,374     790     584     73.9 %
Current tax benefit / (expense) (189 )   17     (206 )   (1,211.8 )%   (1,095 )   (595 )   (500 )   84.0 %
Deferred tax benefit 258     73     185     253.4 %   222     507     (285 )   (56.2 )%
Net Income 30,685     10,672     20,013     187.5 %   177,379     120,158     57,221     47.6 %
Less: Preferred return to preferred OP units / equity (1,418 )   (1,151 )   267     23.2 %   (6,058 )   (4,486 )   1,572     35.0 %
Less: Amounts attributable to noncontrolling interests (720 )   (51 )   669     1,311.8 %   (9,768 )   (8,443 )   1,325     15.7 %
Net Income attributable to Sun Communities, Inc. 28,547     9,470     19,077     201.4 %   161,553     107,229     54,324     50.7 %
Less: Preferred stock distribution     (431 )   (431 )   (100.0 )%   (1,288 )   (1,736 )   (448 )   (25.8 )%
Net Income attributable to Sun Communities, Inc. common stockholders $ 28,547     $ 9,039     $ 19,508     215.8 %   $ 160,265     $ 105,493     $ 54,772     51.9 %
                               
Weighted average common shares outstanding - basic 91,342     85,481     5,861     6.9 %   88,460     81,387     7,073     8.7 %
Weighted average common shares outstanding - diluted 91,893     85,982     5,911     6.9 %   88,915     82,040     6,875     8.4 %
                               
Basic earnings per share $ 0.31     $ 0.11     $ 0.20     181.8 %   $ 1.80     $ 1.29     $ 0.51     39.5 %
Diluted earnings per share $ 0.31     $ 0.11     $ 0.20     181.8 %   $ 1.80     $ 1.29     $ 0.51     39.5 %


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

Outstanding Securities - As of December 31, 2019
                   
  Number of Units/Shares Outstanding   Conversion Rate*   If Converted   Issuance Price per unit*   Annual Distribution Rate*
Non-convertible securities                  
Common shares 93,180   N/A   N/A   N/A   $3.00^
                   
Convertible securities                  
Series A-1 preferred OP units 309   2.4390   754   $ 100   6.0 %
Series C preferred OP units 310   1.1100   345   $ 100   4.5 %
Series D preferred OP units 489   0.8000   392   $ 100   3.8 %
Series A-3 preferred OP units 40   1.8605   75   $ 100   4.5 %
Common OP units 2,420   1.0000   2,420   N/A   Mirrors common shares distributions
^ Annual distribution is based on the last quarterly distribution annualized.


Capitalization - As of December 31, 2019            
             
Equity   Shares   Share Price*   Total
Common shares   93,180     $ 150.10     $ 13,986,318  
Common OP units   2,420     $ 150.10     363,242  
Subtotal   95,600         $ 14,349,560  
             
Series A-1 preferred OP units   754     $ 150.10     $ 113,175  
Series C preferred OP units   345     $ 150.10     51,785  
Series D preferred OP units   392     $ 150.10     58,839  
Series A-3 preferred OP units   75     $ 150.10     11,258  
Total diluted shares outstanding   97,166         $ 14,584,617  
             
Debt            
Mortgage loans payable           $ 3,180,592  
Preferred Equity - Sun NG Resorts - mandatorily redeemable           35,249  
Preferred OP units - mandatorily redeemable           34,663  
Lines of credit (5)           183,898  
Total debt           $ 3,434,402  
             
Total Capitalization           $ 18,019,019  


Reconciliations to Non-GAAP Financial Measures


Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to FFO(1)
(amounts in thousands except for per share data)


  Three Months Ended   Year Ended
  December 31, 2019   December 31, 2018   December 31, 2019   December 31, 2018
Net income attributable to Sun Communities, Inc. common stockholders $ 28,547     $ 9,039     $ 160,265     $ 105,493  
Adjustments              
Depreciation and amortization 98,950     81,314     328,646     288,206  
(Gain) / loss on remeasurement of marketable securities (17,692 )   3,639     (34,240 )   3,639  
Amounts attributable to noncontrolling interests 482     15     8,474     7,740  
Preferred return to preferred OP units 519     552     2,610     2,206  
Preferred distribution to Series A-4 preferred stock     432     1,288     1,737  
Gain on disposition of assets, net (5,273 )   (6,429 )   (26,356 )   (23,406 )
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

$ 105,533     $ 88,562     $ 440,687     $ 385,615  
Adjustments              
Other acquisition related costs (8) 244     220     1,146     1,001  
(Gain) / loss on extinguishment of debt 3,027     (65 )   16,505     1,190  
Catastrophic weather related charges, net 398     2,079     1,737     92  
Loss of earnings - catastrophic weather related (9)     (1,267 )       (292 )
Other (income) / expense (6) (4,946 )   3,239     (3,457 )   6,453  
Other adjustments (a) 278     (73 )   314     310  
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

$ 104,534     $ 92,695     $ 456,932     $ 394,369  
               
Weighted average common shares outstanding - basic 91,342     85,481     88,460     81,387  
Add              
Common stock issuable upon conversion of stock options 1     2     1     2  
Restricted stock 550     499     454     651  
Common stock issuable upon conversion of Series A-4 preferred stock 292     472     423     472  
Common stock issuable upon conversion of Series A-4 preferred OP units 143         172      
Common OP units 2,300     2,727     2,448     2,733  
Common stock issuable upon conversion of Series A-3 preferred OP units 75     75     75     75  
Common stock issuable upon conversion of Series A-1 preferred OP units 760     810     784     821  
Weighted average common shares outstanding - fully diluted 95,463     90,066     92,817     86,141  
               
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted

$ 1.11     $ 0.98     $ 4.75     $ 4.48  
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted

$ 1.10     $ 1.03     $ 4.92     $ 4.58  

(a) Other adjustments include early retirement compensation expense, ground lease intangible write-off, and deferred tax benefits.


Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to Recurring EBITDA (1)
(amounts in thousands)


  Three Months Ended   Year Ended
  December 31, 2019   December 31, 2018   December 31, 2019   December 31, 2018
Net Income attributable to Sun Communities, Inc. common stockholders $ 28,547     $ 9,039     $ 160,265     $ 105,493  
Adjustments              
Depreciation and amortization 98,826     81,070     328,067     287,262  
(Gain) / loss on extinguishment of debt 3,027     (65 )   16,505     1,190  
Interest expense 34,466     33,378     137,851     134,250  
Current tax (benefit) / expense 189     (17 )   1,095     595  
Deferred tax benefit (258 )   (73 )   (222 )   (507 )
(Income) / loss from nonconsolidated affiliates 6     (619 )   (1,374 )   (790 )
Less: Gain on dispositions of assets, net (5,273 )   (6,429 )   (26,356 )   (23,406 )
EBITDAre (1) $ 159,530     $ 116,284     $ 615,831     $ 504,087  
Adjustments              
Catastrophic weather related charges, net 435     2,079     1,737     92  
(Gain) / loss on remeasurement of marketable securities (17,692 )   3,639     (34,240 )   3,639  
Other (income) / expense, net (6) (4,946 )   3,239     (3,457 )   6,453  
Preferred return to preferred OP units / equity 1,418     1,151     6,058     4,486  
Amounts attributable to noncontrolling interests 720     51     9,768     8,443  
Preferred stock distribution     431     1,288     1,736  
Plus: Gain on dispositions of assets, net 5,273     6,429     26,356     23,406  
Recurring EBITDA (1) $ 144,738     $ 133,303     $ 623,341     $ 552,342  



Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to NOI (1)
(amounts in thousands)


  Three Months Ended   Year Ended
  December 31, 2019   December 31, 2018   December 31, 2019   December 31, 2018
Net Income attributable to Sun Communities, Inc. common stockholders $ 28,547     $ 9,039     $ 160,265     $ 105,493  
Other revenues (6,305 )   (8,135 )   (31,984 )   (27,057 )
Home selling expenses 3,752     4,403     14,690     15,722  
General and administrative expenses 25,405     20,457     93,964     81,429  
Catastrophic weather related charges, net 435     2,079     1,737     92  
Depreciation and amortization 98,826     81,070     328,067     287,262  
Gain / (loss) on extinguishment of debt 3,027     (65 )   16,505     1,190  
Interest expense 34,466     33,378     137,851     134,250  
(Gain) / loss on remeasurement of marketable securities (17,692 )   3,639     (34,240 )   3,639  
Other (income) / expense, net (6) (4,946 )   3,239     (3,457 )   6,453  
(Income) / loss from nonconsolidated affiliates 6     (619 )   (1,374 )   (790 )
Current tax (benefit) / expense 189     (17 )   1,095     595  
Deferred tax benefit (258 )   (73 )   (222 )   (507 )
Preferred return to preferred OP units / equity 1,418     1,151     6,058     4,486  
Amounts attributable to noncontrolling interests 720     51     9,768     8,443  
Preferred stock distribution     431     1,288     1,736  
NOI (1) / Gross Profit $ 167,590     $ 150,028     $ 700,011     $ 622,436  


  Three Months Ended   Year Ended
  December 31, 2019   December 31, 2018   December 31, 2019   December 31, 2018
Real Property NOI (1) $ 147,452     $ 132,255     $ 597,406     $ 533,321  
Home Sales NOI (1) / Gross Profit 10,944     11,645     47,579     42,698  
Rental Program NOI (1) 26,682     23,656     104,382     95,968  
Ancillary NOI (1) / Gross Profit (9 )   (1,158 )   19,449     16,064  
Site rent from Rental Program (included in Real Property NOI) (1) (10) (17,479 )   (16,370 )   (68,805 )   (65,615 )
NOI (1) / Gross Profit $ 167,590     $ 150,028     $ 700,011     $ 622,436  



Non-GAAP and Other Financial Measures


Debt Analysis
(amounts in thousands)


  Quarter Ended
  12/31/2019   9/30/2019   6/30/2019   3/31/2019   12/31/2018
Debt Outstanding                  
Mortgage loans payable $ 3,180,592     $ 2,967,128     $ 2,863,485     $ 2,879,017     $ 2,815,957  
Secured borrowings on collateralized receivables (4)     93,669     98,299     102,676     107,731  
Preferred Equity - Sun NG Resorts - mandatorily redeemable 35,249     35,249...