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SUN COMMUNITIES INC - Annual Report: 2019 (Form 10-K)




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019
Commission file number 1-12616

SUN COMMUNITIES INC.
(Exact Name of Registrant as Specified in its Charter)

Maryland
1-12616
38-2730780
(State of Incorporation)
Commission file number
(I.R.S. Employer Identification No.)
27777 Franklin Rd,
Suite 200,
Southfield,
Michigan
 
48034
(Address of Principal Executive Offices)
 
(Zip Code)

(248) 208-2500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.01 par value
 
SUI
 
New York Stock Exchange


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes   No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes No  

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   No

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No  





As of June 30, 2019, the aggregate market value of the Registrant’s stock held by non-affiliates was $11,363,494,077 (computed by reference to the closing sales price of the Registrant’s common stock as of June 30, 2019). For this computation, the Registrant has excluded the market value of all shares of common stock reported as beneficially owned by executive officers and directors of the Registrant; such exclusion shall not be deemed to constitute an admission that any such person is an affiliate of the Registrant.

Number of shares of common stock, $0.01 par value per share, outstanding as of February 13, 2020: 93,319,200

Documents Incorporated By Reference

Unless provided in an amendment to this Annual Report on Form 10-K, the information required by Part III is incorporated by reference to the registrant’s proxy statement to be filed pursuant to Regulation 14A, with respect to the registrant’s 2020 annual meeting of stockholders.





SUN COMMUNITIES, INC.

Table of Contents

Item
Description
Page
 
 
 
Part I.
 
 
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
 
 
 
Part II.
 
 
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.
Selected Financial Data
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
 
 
 
Part III.
 
 
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accountant Fees and Services
 
 
 
Part IV.
 
 
Item 15.
Exhibits and Financial Statement Schedules
Item 16.
Form 10-K Summary




SUN COMMUNITIES, INC.

PART I

ITEM 1. BUSINESS

GENERAL

Sun Communities, Inc., a Maryland corporation, and all wholly-owned or majority-owned and controlled subsidiaries, including Sun Communities Operating Limited Partnership, a Michigan limited partnership (the “Operating Partnership”) and Sun Home Services, Inc., a Michigan corporation (“SHS”) are referred to herein as the “Company,” “us,” “we,” and “our”. We are a self-administered and self-managed real estate investment trust (“REIT”).

We are a fully integrated real estate company which, together with our affiliates and predecessors, have been in the business of acquiring, operating, developing, and expanding manufactured housing (“MH”) and recreational vehicle (“RV”) communities since 1975. We lease individual parcels of land (“sites”) with utility access for placement of manufactured homes and RVs to our customers. We are also engaged through a taxable subsidiary, SHS, in the marketing, selling, and leasing of new and pre-owned homes to current and future residents in our communities. The operations of SHS support and enhance our occupancy levels, property performance and cash flows.

We own, operate, or have an interest in a portfolio of MH and RV communities. As of December 31, 2019, we owned, operated or had an interest in a portfolio of 422 properties in 33 states and Ontario, Canada (collectively, the “Properties” or “Communities”), including 266 MH communities, 122 RV communities, and 34 Properties containing both MH and RV sites. As of December 31, 2019, the Properties contained an aggregate of 141,293 developed sites comprised of 93,821 developed MH sites, 26,056 annual RV sites (inclusive of both annual and seasonal usage rights), and 21,416 transient RV sites. There are approximately 10,300 additional MH and RV sites suitable for development. We also own a 50 percent interest in a joint venture formed to establish and grow a manufactured housing community development program in Australia.

Our executive and principal property management office is located at 27777 Franklin Road, Suite 200, Southfield, Michigan 48034 and our telephone number is (248) 208-2500. We have regional property management offices located in Austin, Texas; Grand Rapids, Michigan; Denver, Colorado; Ft. Myers, Florida; and Orlando, Florida; and we employed an aggregate of 3,146 full and part time employees as of December 31, 2019.

Our website address is www.suncommunities.com and we make available, free of charge, on or through our website all of our periodic reports, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and current reports on Form 8-K, as soon as reasonably practicable after we file such reports with the Securities and Exchange Commission (the “SEC”).

STRUCTURE OF THE COMPANY

The Operating Partnership is structured as an umbrella partnership REIT, or UPREIT. In 1993, we contributed our net assets to the Operating Partnership in exchange for the sole general partner interest in the Operating Partnership and the majority of all the Operating Partnership’s initial capital. We conduct substantially all of our operations through the Operating Partnership. The Operating Partnership owns, either directly or indirectly through other subsidiaries, all of our assets. This UPREIT structure enables us to comply with certain complex requirements under the federal tax rules and regulations applicable to REITs, and to acquire MH and RV communities in transactions that defer some or all of the sellers’ tax consequences. The financial results of the Operating Partnership and our other subsidiaries are consolidated in our Consolidated Financial Statements. The financial results include certain activities that do not necessarily qualify as REIT activities under the Internal Revenue Code of 1986, as amended (the “Code”). We have formed taxable REIT subsidiaries, as defined in the Code, to engage in such activities. We use taxable REIT subsidiaries to offer certain services to our residents and engage in activities that would not otherwise be permitted under the REIT rules if provided directly by us or by the Operating Partnership. The taxable REIT subsidiaries include our home sales business, SHS, which provides manufactured home sales, leasing, and other services to current and prospective tenants of the Properties.

Under the partnership agreement, the Operating Partnership is structured to make distributions with respect to certain of the Operating Partnership units (“OP units”) at the same time that distributions are made to our common stockholders. The Operating Partnership is structured to permit limited partners holding certain classes or series of OP units to exchange those OP units for shares of our common stock (in a taxable transaction) and achieve liquidity for their investment.

As the sole general partner of the Operating Partnership, we generally have the power to manage and have complete control over the conduct of the Operating Partnership’s affairs and all decisions or actions made or taken by us as the general partner pursuant to the partnership agreement are generally binding upon all of the partners and the Operating Partnership.

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SUN COMMUNITIES, INC.

We do not own all of the OP units. As of December 31, 2019, the Operating Partnership had issued and outstanding:

1,283,819 preferred OP units (“Aspen preferred OP units”);
309,234 Series A-1 preferred OP units;
310,424 Series C preferred OP units;
488,958 Series D preferred OP units;
40,268 Series A-3 preferred OP units;
95,600,640 common OP units.

As of December 31, 2019, we held:

no Aspen preferred OP units, Series A-1 preferred OP units, Series C preferred OP units, Series D preferred OP units, or Series A-3 preferred OP units;
93,180,481 common OP units, or approximately 97.5 percent of the issued and outstanding common OP units;

In January 2019, we redeemed all 26,750 outstanding Series B-3 preferred OP units. The weighted average redemption price per unit, which included accrued and unpaid distributions, was $100.153424. In the aggregate, we paid $2.7 million to redeem all of the Series B-3 OP units.

In December 2019, we converted all outstanding shares of our 6.50 percent Series A-4 Cumulative Convertible Preferred Stock and Series A-4 preferred OP units 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) and all 405,656 Series A-4 preferred OP units were converted into 180,277 common OP units (net of fractional shares paid in cash).

On January 9, 2020, the Operating Partnership created a new class of OP units named Series E Preferred OP Units in conjunction with the acquisition of a MH community in East Falmouth, Massachusetts. As of February 13, 2020, 90,000 Series E Preferred OP Units were outstanding.

Ranking and Priority

The various classes and series of OP units issued by the Operating Partnership rank as follows with respect to rights to the payment of distributions and the distribution of assets in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Operating Partnership:

first, Aspen preferred OP units and Series A-1 preferred OP units, on parity with each other;
next, the Series C preferred OP units;
next, the Series D preferred OP units;
next, the Series E preferred OP units;
next, the Series A-3 preferred OP units; and
finally, the common OP units.

Common OP Units

Subject to certain limitations, the holder of each common OP unit at its option may convert such common OP unit at any time into one share of our common stock. Holders of common OP units are entitled to receive distributions from the Operating Partnership as and when declared by the general partner, provided that all accrued distributions payable on OP units ranking senior to the common OP units have been paid. The holders of common OP units generally receive distributions on the same dates and in amounts equal to the distributions paid to holders of our common stock.

Aspen Preferred OP Units

Subject to certain limitations, at any time prior to January 1, 2024 (or prior to January 1, 2034 with respect to the extended units discussed below), the holder of each Aspen preferred OP unit at its option may convert such Aspen preferred OP unit into: (a) if the average closing price of our common stock for the preceding ten trading days is $68.00 per share or less, 0.397 common OP units, or (b) if the average closing price of our common stock for the preceding ten trading days is greater than $68.00 per share, the number of common OP units determined by dividing (i) the sum of (A) $27.00 plus (B) 25 percent of the amount by which the average closing price of our common stock for the preceding ten trading days exceeds $68.00 per share, by (ii) the average closing price of our common stock for the preceding

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SUN COMMUNITIES, INC.

ten trading days. The holders of Aspen preferred OP units are entitled to receive distributions not less than quarterly. Distributions on Aspen preferred OP units are generally paid on the same dates as distributions are paid to holders of common OP units. Except for Extended Units as discussed below, each Aspen preferred OP unit is entitled to receive distributions in an amount equal to the product of (x) its original per unit issuance price of $27.00, multiplied by (y) an annual rate equal to the 10-year U.S. Treasury bond yield plus 239 basis points; provided, however, that the aggregate distribution rate shall not be less than 6.5 percent nor more than 9 percent. On January 2, 2024, (or on January 2, 2034, with respect to the Extended Units described below), we are required to redeem all Aspen preferred OP units that have not been converted to common OP units. In addition, we are required to redeem the Aspen preferred OP units of any holder thereof within five days after receipt of a written demand during the existence of certain uncured Aspen preferred OP unit defaults, including our failure to pay distributions on the Aspen preferred OP units when due and our failure to provide certain security for the payment of distributions on the Aspen preferred OP units. We may also redeem Aspen preferred OP units from time to time if we and the holder thereof agree to do so.

On January 13, 2020, at the election of certain Aspen preferred OP unit holders, the Operating Partnership extended the automatic redemption date and reduced the annual distribution rate for 270,000 of the Aspen preferred OP units (the “Extended Units”). The Extended Units may be converted at the holder’s election into common OP units at any time before January 1, 2034 using the same formula as for the other Aspen Units. All Extended Units then outstanding must be redeemed by the Operating Partnership on January 2, 2034 at the same redemption price as for the other Aspen preferred OP units. The Extended Units receive annual distributions at a rate of 3.8 percent on their original $27.00 per unit issuance price. As of February 13, 2020, 270,000 of the Extended Units and 1,013,813 other Aspen preferred OP units were outstanding.

Series A-1 Preferred OP Units

Subject to certain limitations, the holder of each Series A-1 preferred OP unit at its option may exchange such Series A-1 preferred OP unit at any time into approximately 2.4390 shares of our common stock (which exchange rate is subject to adjustment upon stock splits, recapitalizations, and similar events). The holders of Series A-1 preferred OP units are entitled to receive distributions not less than quarterly. Distributions on Series A-1 preferred OP units are generally paid on the last day of each quarter. Each Series A-1 preferred OP unit is entitled to receive distributions in an amount equal to the product of $100.00 multiplied by an annual rate equal to 6.0 percent. Series A-1 preferred OP units do not have any voting or consent rights on any matter requiring the consent or approval of the Operating Partnership’s limited partners.

Series A-3 Preferred OP Units

Subject to certain limitations, the holder of each Series A-3 preferred OP unit at its option may exchange such Series A-3 preferred OP unit at any time into approximately 1.8605 shares of our common stock (which exchange rate is subject to adjustment upon stock splits, recapitalizations, and similar events). The holders of Series A-3 preferred OP units are entitled to receive distributions not less than quarterly. Each Series A-3 preferred OP unit is entitled to receive distributions in an amount equal to the product of $100.00 multiplied by an annual rate equal to 4.5 percent. Series A-3 preferred OP units do not have any voting or consent rights on any matter requiring the consent or approval of the Operating Partnership’s limited partners.

Series C Preferred OP Units

Subject to certain limitations, the holder of each Series C preferred OP unit at its option may exchange such Series C preferred OP unit at any time into 1.11 shares of our common stock (which exchange rate is subject to adjustment upon stock splits, recapitalizations, and similar events). The holders of Series C preferred OP units are entitled to receive distributions not less than quarterly. Each Series C preferred OP unit is entitled to receive distributions in an amount equal to the product of $100.00 multiplied by an annual rate equal to (i) 4.5 percent until April 1, 2020, and (ii) 5.0 percent after April 2, 2020. Series C preferred OP units do not have any voting or consent rights on any matter requiring the consent or approval of the Operating Partnership’s limited partners.

Series D Preferred OP Units

Subject to certain limitations, each Series D preferred OP unit is exchangeable at any time after the first anniversary of its issuance date into 0.8 shares of the Company’s common stock (as such ratio is subject to adjustment for certain capital events). The Series D preferred OP units provide for quarterly distributions on the $100 per unit issue price of 3.75 percent per year until January 31, 2021, and 4.0 percent per year thereafter. Subject to certain limitations, the Series D preferred OP unit holders may cause the Operating Partnership to redeem all or a portion of their Series D preferred OP units for $100 per unit (plus any accrued but unpaid distributions) any time after the earlier of: (i) the fifth anniversary of the issuance of the Series D preferred OP units, or (ii) the Operating Partnership’s notice of the death of the principal of the initial holder of the Series D preferred OP units. The Series D preferred OP units have no voting rights.

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Series E Preferred OP Units

Subject to certain limitations, each Series E Preferred Unit is exchangeable at any time after the first anniversary of its issuance date into that number of shares of the Company’s common stock equal to the quotient obtained by dividing $100.00 by $145.00 (which ratio is subject to adjustment for certain capital events). The Series E Preferred Units provide for quarterly distributions of 5.25 percent per year until the second anniversary of their issuance date and 5.50 percent per year thereafter. The Series E preferred OP units have no voting rights.

REAL PROPERTY OPERATIONS

Properties are designed and improved for several home options of various sizes and designs that consist of both MH communities and RV communities.

An MH community is a residential subdivision designed and improved with sites for the placement of manufactured homes, related improvements, and amenities. Manufactured homes are detached, single‑family homes which are produced off‑site by manufacturers and installed on site within the community. Manufactured homes are available in a wide array of designs, providing owners with a level of customization generally unavailable in multi-family housing developments.

Modern MH communities contain improvements similar to other garden‑style residential developments, including centralized entrances, paved streets, curbs, gutters, and parkways. In addition, these communities also often provide a number of amenities, such as a clubhouse, a swimming pool, shuffleboard courts, tennis courts, and laundry facilities.

An RV community is a resort or park designed and improved with sites for the placement of RVs for varied lengths of time. Properties may also provide vacation rental homes. RV communities include a number of amenities such as restaurants, golf courses, swimming pools, tennis courts, fitness centers, planned activities, and spacious social facilities.

Renters at our Properties lease the site on which a manufactured home, vacation rental home, or RV is located. We typically own the underlying land, utility connections, streets, lighting, driveways, common area amenities, and other capital improvements and are responsible for enforcement of community guidelines and maintenance. In eight of our 422 communities, we do not own all of the underlying land and operate the communities pursuant to ground leases. Certain of the Properties provide water and sewer service through public or private utilities, while others provide these services to residents from on-site facilities. Each owner of a home within our Properties is responsible for the maintenance of the home and leased site. As a result, our capital expenditure needs tend to be less significant relative to multi-family rental apartment complexes.

We compete with other available MH and RV communities, and alternative forms of housing (such as on-site constructed homes, condominiums and townhouses) as they provide housing alternatives to potential tenants of MH and RV communities.

PROPERTY MANAGEMENT

Our property management strategy emphasizes intensive, hands-on management by dedicated, on-site community managers. We believe that this on-site focus enables us to continually monitor and address resident concerns, the performance of competitive properties, and local market conditions. As of December 31, 2019, we employed 3,146 full and part time employees, of which 2,742 were located on-site as property managers, support staff, or maintenance personnel.

Our community managers are overseen by John B. McLaren, our President and Chief Operating Officer, who has been in the MH industry since 1995, three Senior Vice Presidents of Operations and Sales, 10 Divisional Vice Presidents and 36 Regional Vice Presidents. Each Regional Vice President is responsible for regular property inspections, and oversight of property operations and sales functions, semi-annual market surveys of competitive communities, and interaction with local manufactured home dealers for eight to fifteen properties.

Each district or community manager performs regular inspections in order to continually monitor the Property’s physical condition and to effectively address tenant concerns. In addition to a district or community manager, each district or property has on-site maintenance personnel and management support staff. We hold mandatory training sessions for all new property management personnel to ensure that management policies and procedures are executed effectively and professionally. All of our property management personnel participate in on-going training to ensure that changes to management policies and procedures are implemented consistently. We offer approximately 350 trainings including books, online courses, webinars, and live sessions for our team members through our Sun University, which has led to increased knowledge and accountability for daily operations and policies and procedures.

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HOME SALES AND RENTALS

SHS is engaged in the marketing, selling and leasing of new and pre-owned homes to current and future residents in our communities. Because tenants often purchase a home already on-site within a community, such services enhance occupancy and property performance. Additionally, because many of the homes on the Properties are sold through SHS, better control of home quality in our communities can be maintained than if sales services were conducted solely through third-party brokers.

SHS also leases homes to prospective tenants. At December 31, 2019, SHS had 11,325 occupied leased homes in its portfolio. New and pre-owned homes are purchased for the Rental Program. Leases associated with the Rental Program generally have a term of one year. The Rental Program requires intensive management of costs associated with repair and refurbishment of these homes as the tenants vacate and the homes are re-leased, similar to apartment rentals. We received approximately 46,400 applications during 2019 to live in our Properties, providing a significant “resident boarding” system that allows us to market the purchase of a home to the qualified applicants. Through the Rental Program we are able to demonstrate our product and lifestyle to the renters, while monitoring their payment history and converting qualified renters to owners.

Our home sales and leasing operations compete with other local and national MH dealers and MH community owners.

REGULATIONS AND INSURANCE

General

MH and RV community properties are subject to various laws, ordinances and regulations, including regulations relating to recreational facilities such as swimming pools, clubhouses, and other common areas. Each Property has the necessary operating permits and approvals.

Insurance

Our management believes that the Properties are covered by adequate fire, property, business interruption, general liability, and (where appropriate) flood and earthquake insurance provided by reputable companies with commercially reasonable deductibles and limits. We maintain a blanket policy that covers all of our Properties. We have obtained title insurance insuring fee title to the Properties in an aggregate amount which we believe to be adequate. Claims made to our insurance carriers that are determined to be recoverable are classified in other receivables as incurred.

SITE LEASES OR USAGE RIGHTS

Typical tenant leases for MH sites are year-to-year or month-to-month, renewable upon the consent of both parties, or, in some instances, as provided by statute. Certain of our leases, mainly at our Florida and California properties, are tied to the consumer price index or other indices as they relate to rent increases. Generally, market rate adjustments are made on an annual basis. These leases are cancelable for non-payment of rent, violation of community rules and regulations or other specified defaults.

During the five calendar years ended December 31, 2019, on average 2.2 percent of the homes in our communities have been removed by their owners and 6.5 percent of the homes have been sold by their owners to a new owner who then assumes rental obligations as a community resident. The average cost to move a home is approximately $7,000. On average, our residents remain in our communities for approximately 12 years, while homes, which give rise to the rental stream, remain for over 40 years.

Please see the Risk Factors in Item 1A, and our accompanying Consolidated Financial Statements and related notes thereto beginning on page F-1 of this Annual Report on Form 10-K for more detailed information.

ACQUISITIONS

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.



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EXPANSION / DEVELOPMENT

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

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.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The persons listed below are our executive officers.
Name
 
Age
 
Title
Gary A. Shiffman
 
65
 
Chairman and Chief Executive Officer
John B. McLaren
 
49
 
President and Chief Operating Officer
Karen J. Dearing
 
55
 
Executive Vice President, Treasurer, Chief Financial Officer and Secretary
Jonathan M. Colman
 
64
 
Executive Vice President

Gary A. Shiffman is our Chairman and Chief Executive Officer and has been a director and an executive officer since our inception in 1993. He is a member of our Executive Committee. He has been actively involved in the management, acquisition, construction and development of manufactured housing communities and has developed an extensive network of industry relationships over the past thirty years. He has overseen the acquisition, rezoning, development, expansion and marketing of numerous manufactured home communities, as well as recreational vehicle communities. Additionally, Mr. Shiffman, through his family-related interests, has had significant direct holdings in various real estate asset classes, which include office, multi-family, industrial, residential and retail.

John B. McLaren has been in the manufactured housing industry since 1995. He has served as our President since 2014 and as our Chief Operating Officer since 2008. From 2008 to 2014, he served as an Executive Vice President of the Company. From 2005 to 2008, he was Senior Vice President of SHS with overall responsibility for home sales and leasing. Mr. McLaren spent approximately three years as Vice President of Leasing & Service for SHS with responsibility for developing and leading our Rental Program and also has experience in the multi-family REIT segment and the chattel lending industry.

Karen J. Dearing has served as our Chief Financial Officer and Executive Vice President since 2008. She joined us in 1998 as the Director of Finance where she worked extensively with accounting and finance matters related to our ground-up developments and expansions. Ms. Dearing became our Corporate Controller in 2002 and Senior Vice President in 2006. She is responsible for the overall management of our information technology, accounting, tax and finance departments, and all internal and external financial reporting. Prior to working for us, Ms. Dearing had over seven years of experience as the Financial Controller of a privately-owned automotive supplier and over four years of experience as a certified public accountant with Deloitte.

Jonathan M. Colman has served as an Executive Vice President since March 2003. He joined us in 1994 as Vice President-Acquisitions and became a Senior Vice President in 1995. A certified public accountant, Mr. Colman has over thirty-five years of experience in the manufactured housing community industry. Prior to joining Sun, he was involved in the acquisition, financing and management of over 75 manufactured housing communities for two of the 10 largest manufactured housing community owners, including Uniprop, Inc. during its syndication of over $90.0 million in public limited partnerships in the late 1980s. Mr. Colman is also a Vice President of all of our corporate subsidiaries.


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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains various “forward-looking statements” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this filing that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as “forecasts,” “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,” “plans,” “predicts,” “potential,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,” “will,” “designed to,” “foreseeable future,” “believe,” “believes,” “scheduled,” “guidance” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements reflect our current views with respect to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this filing. These risks and uncertainties may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. In addition to the risks disclosed under “Risk Factors” in this Annual Report on Form 10-K and our other filings with the SEC, such risks and uncertainties include, but are not limited to:

changes in general economic conditions, the real estate industry, and the markets in which we operate;
difficulties in our ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;
our liquidity and refinancing demands;
our ability to obtain or refinance maturing debt;
our ability to maintain compliance with covenants contained in our debt facilities;
availability of capital;
changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar and the Australian dollar;
our ability to maintain rental rates and occupancy levels;
our failure to maintain effective internal control over financial reporting and disclosure controls and procedures;
increases in interest rates and operating costs, including insurance premiums and real property taxes;
risks related to natural disasters such as hurricanes, earthquakes, floods and wildfires;
general volatility of the capital markets and the market price of shares of our capital stock;
our failure to maintain our status as a REIT;
changes in real estate and zoning laws and regulations;
legislative or regulatory changes, including changes to laws governing the taxation of REITs;
litigation, judgments or settlements;
competitive market forces;
the ability of manufactured home buyers to obtain financing; and
the level of repossessions by manufactured home lenders.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to publicly update or revise any forward-looking statements included or incorporated by reference into this filing, whether as a result of new information, future events, changes in our expectations or otherwise, except as required by law.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements.

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ITEM 1A. RISK FACTORS
Our prospects are subject to certain uncertainties and risks. Our future results could differ materially from current results, and our actual results could differ materially from those projected in forward-looking statements as a result of certain risk factors. These risk factors include, but are not limited to, those set forth below, other one-time events, and important factors disclosed previously and from time to time in our other filings with the SEC.
REAL ESTATE AND OPERATIONS RISKS

General economic conditions and the concentration of our properties in Florida, Michigan, Texas, and California may affect our ability to generate sufficient revenue.

The market and economic conditions in our current markets generally, and specifically in metropolitan areas of our current markets, may significantly affect manufactured home occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our revenues, and if our communities do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay or refinance our debt obligations could be adversely affected. We derive significant amounts of our rental income from properties located in Florida, Michigan, Texas, and California.

As of December 31, 2019, 125 properties, representing approximately 31.6 percent of developed sites, are located in Florida; 72 properties, representing approximately 20.2 percent of developed sites, are located in Michigan; 23 properties, representing approximately 6.5 percent of developed sites, are located in Texas; and 31 properties, representing approximately 5.6 percent of developed sites, are located in California. As a result of the geographic concentration of our Properties in Florida, Michigan, Texas and California, we are exposed to the risks of downturns in local economies or other local real estate market conditions which could adversely affect occupancy rates, rental rates, and property values in these markets.

Our revenue would also be adversely affected if tenants were unable to pay rent or if sites were unable to be rented on favorable terms. If we were unable to promptly relet or renew the leases for a significant number of the sites, or if the rental rates upon such renewal or reletting were significantly lower than expected rates, then our business and results of operations could be adversely affected. In addition, certain expenditures associated with each Property (such as real estate taxes and maintenance costs) generally are not reduced when circumstances cause a reduction in income from the Property. Furthermore, real estate investments are relatively illiquid and, therefore, will tend to limit our ability to vary our portfolio promptly in response to changes in economic or other conditions.

The following factors, among others, may adversely affect the revenues generated by our communities:

the national and local economic climate which may be adversely impacted by, among other factors, plant closings, and industry slowdowns;

local real estate market conditions such as the oversupply of MH and RV sites or a reduction in demand for MH and RV sites in an area;

changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar and Australian dollar;

the number of repossessed homes in a particular market;

the lack of an established dealer network;

the rental market which may limit the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates;

the perceptions by prospective tenants of the safety, convenience and attractiveness of our Properties and the neighborhoods where they are located;

zoning or other regulatory restrictions;

competition from other available MH and RV communities and alternative forms of housing (such as apartment buildings and site-built single-family homes);

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our ability to effectively manage, maintain and insure our Properties;

increased operating costs, including insurance premiums, real estate taxes, and utilities; and

the enactment of rent control laws or laws taxing the owners of manufactured homes.

Competition affects occupancy levels and rents which could adversely affect our revenues.

Our Properties are located in developed areas that include other MH and RV communities. The number of competitive MH and RV communities in a particular area could have a material adverse effect on our ability to lease sites and increase rents charged at our Properties or at any newly acquired properties. We may be competing with others with greater resources and whose officers and directors have more experience than our officers and directors. In addition, other forms of multi‑family residential properties, such as private and federally funded or assisted multi-family housing projects and single‑family housing, provide housing alternatives to potential tenants of MH and RV communities.

Our ability to sell or lease manufactured homes may be affected by various factors, which may in turn adversely affect our profitability.

SHS operates in the manufactured home market offering manufactured home sales and leasing services to tenants and prospective tenants of our communities. The market for the sale and lease of manufactured homes may be adversely affected by the following factors:

downturns in economic conditions which adversely impact the housing market;

an oversupply of, or a reduced demand for, manufactured homes;

the difficulty facing potential purchasers in obtaining affordable financing as a result of heightened lending criteria; and

an increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to new manufactured home sales.

Any of the above listed factors could adversely impact our rate of manufactured home sales and leases, which would result in a decrease in profitability.

The cyclical and seasonal nature of the RV industries may lead to fluctuations in our operating results.

The RV markets can experience cycles of growth and downturn due to seasonality patterns. In the RV market, certain Properties maintain higher occupancy during the summer months, while other Properties maintain higher occupancy during the winter months. The RV market typically shows a decline in demand over the winter months, yet usually produces higher growth in the spring and summer months due to higher use by vacationers. Our results on a quarterly basis can fluctuate due to this cyclicality and seasonality.

We may not be able to integrate or finance our acquisitions and our acquisitions may not perform as expected.

We have acquired and intend to continue to selectively acquire MH and RV properties. Our acquisition activities and their success are subject to the following risks:

we may be unable to acquire a desired property because of competition from other well-capitalized real estate investors, including both publicly traded REITs and institutional investment funds;

even if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing, including completion of due diligence investigations to our satisfaction, which may not be satisfied;

even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price;

we may be unable to finance acquisitions on favorable terms;

acquired properties may fail to perform as expected;


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acquired properties may be located in new markets where we face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, and unfamiliarity with local governmental and permitting procedures; and

we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations.

If any of the above risks occur, our business and results of operations could be adversely affected.

In addition, we may acquire properties subject to liabilities and we may be left with no, or limited, recourse, with respect to unknown liabilities. As a result, we may have to pay substantial sums to settle any liabilities asserted against us based upon ownership of newly acquired properties, which could adversely affect our cash flow.

Increases in taxes and regulatory compliance costs may reduce our results of operations.

Costs resulting from changes in real estate laws, income taxes, service or other taxes, generally are not passed through to tenants under leases and may adversely affect our results of operations and financial condition. Similarly, changes in laws increasing the potential liability for environmental conditions existing on Properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures, which would adversely affect our business and results of operations.

We may not be able to integrate or finance our expansion and development activities.

We engage in the construction and development of new communities or expansion of existing communities and intend to continue to engage in the development and construction business in the future. Our construction and development pipeline may be exposed to the following risks which are in addition to those risks associated with the ownership and operation of established MH and RV communities:

we may not be able to obtain financing with favorable terms for community development which may make us unable to proceed with the development;

we may be unable to obtain, or face delays in obtaining, necessary zoning, building and other governmental permits and authorizations, which could result in increased costs and delays, and even require us to abandon development of the community entirely if we are unable to obtain such permits or authorizations;

we may abandon development opportunities that we have already begun to explore and as a result we may not recover expenses already incurred in connection with exploring such development opportunities;

we may be unable to complete construction and lease‑up of a community on schedule resulting in increased debt service expense and construction costs;

we may incur construction and development costs for a community which exceed our original estimates due to increased materials, labor or other costs, which could make completion of the community uneconomical and we may not be able to increase rents to compensate for the increase in development costs which may impact our profitability;

we may be unable to secure long‑term financing on completion of development resulting in increased debt service and lower profitability; and

occupancy rates and rents at a newly developed community may fluctuate depending on several factors, including market and economic conditions, which may result in the community not being profitable.
If any of the above risks occur, our business and results of operations could be adversely affected.

Rent control legislation may harm our ability to increase rents.

State and local rent control laws in certain jurisdictions may limit our ability to increase rents to recover increases in operating expenses and the costs of capital improvements. Enactment of such laws has been considered from time to time in other jurisdictions. Certain Properties are located, and we may purchase additional properties, in markets that are either subject to rent control or in which rent-limiting legislation exists or may be enacted.


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Legislative requirements can limit accessibility of affordable financing for potential manufactured home buyers.

Legislation impacting third party loan originators, consumer protection laws and lender requirements to investigate a borrower's creditworthiness may restrict access to affordable financing to potential manufactured home buyers.

We may be subject to environmental liability.

Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate is liable for the costs of removal or remediation of certain hazardous substances at, on, under or in such property. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner’s ability to sell or rent the property, to borrow using the property as collateral or to develop the property. Persons who arrange for the disposal or treatment of hazardous substances also may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility owned or operated by another person. In addition, certain environmental laws impose liability for the management and disposal of asbestos‑containing materials and for the release of such materials into the air. These laws may permit third parties to seek recovery from owners or operators of real properties for personal injury associated with asbestos‑containing materials. In connection with the ownership, operation, management, and development of real properties, we may be considered an owner or operator of such properties and, therefore, are potentially liable for removal or remediation costs, and also may be liable for governmental fines and injuries to persons and property. When we arrange for the treatment or disposal of hazardous substances at landfills or other facilities owned by other persons, we may be liable for the removal or remediation costs at such facilities.

We subject our Properties to a Phase I or similar environmental audit (which involves general inspections without soil sampling or ground water analysis) completed by independent environmental consultants. These environmental audits have not revealed any significant environmental liability that would have a material adverse effect on our business. These audits cannot reflect conditions arising after the studies were completed, and no assurances can be given that existing environmental studies reveal all environmental liabilities, that any prior owner or operator of a property or neighboring owner or operator did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any one or more Properties.

Cybersecurity breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

We rely intensively on information technology to account for tenant transactions, manage the privacy of tenant data, communicate internally and externally, and analyze our financial and operating results. In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our tenants, clients, vendors and employees in our facilities and on our network. In addition, we engage third party service providers that may have access to such information in connection with providing necessary information technology and security and other business services to us. This information may include personally identifiable information such as social security numbers, banking information and credit card information.

We address potential breaches or disclosure of this confidential information by implementing a variety of security measures intended to protect the confidentiality and security of this information including (among others) engaging reputable, recognized firms to help us design and maintain our information technology and data security systems, including testing and verification of their proper and secure operations on a periodic basis. We also maintain cyber risk insurance to provide some coverage for certain risks arising out of data and network breaches.

Despite our security measures, our information technology and infrastructure, as well as that of our third-party vendors, may be vulnerable to attacks by hackers (including through malware, ransomware, computer viruses, and email phishing schemes) or breached due to employee error, malfeasance, fire, flood or other physical event, or other disruptions. Any such breach or disruption could compromise our or a third-party vendor’s network and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could:

result in legal claims or proceedings,
disrupt our operations, including our ability to service our tenants and our ability to analyze and report our financial and operating results,
decrease our revenues,
damage our reputation,
cause a loss of confidence,
increase our insurance premiums, or
have other material adverse effects on our business.

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We are dependent on continuous access to the internet to use our cloud-based applications. Damage to, or failure of our information technology systems, including as a result of any of the reasons described above, could adversely affect our results of operations as we may incur significant costs or data loss. We continually assess new and enhanced information technology solutions to manage the risk of system failure or interruption.

Expanding social media platforms present new challenges.

Social media outlets continue to grow and expand, which presents us with new risks. Adverse content about us and our Properties on social media platforms could result in damage to our reputation or brand. Improper posts by employees or others could result in disclosure of confidential or proprietary information regarding our operations.

Losses in excess of our insurance coverage or uninsured losses could adversely affect our operating results and cash flow.

We have a significant concentration of properties in Florida and California, where natural disasters or other catastrophic events such as hurricanes, earthquakes, floods and wildfires could negatively impact our operating results and cash flows. We maintain comprehensive liability, fire, property, business interruption, general liability, and (where appropriate) flood and earthquake insurance, provided by reputable companies with commercially reasonable deductibles and limits. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage and industry practice. However, certain types of losses including, but not limited to, riots or acts of war, may be either uninsurable or not economically insurable. In the event an uninsured loss occurs, we could lose both our investment in and anticipated profits and cash flow from the affected property. We would also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community. If an uninsured liability to a third party were to occur, we would incur the cost of defense and settlement with, or court ordered damages to, that third party. A significant uninsured property or liability loss could have a material adverse effect on our business and our financial condition and results of operations.

Investments through joint ventures involve risks not present for Properties in which we are the sole owner.

We have invested and may continue to invest as a joint venture partner in joint ventures. These investments involve risks, including, but not limited to, the possibility the other joint venture partner may have business goals which are inconsistent with ours, possess the ability to take or force action or withhold consent contrary to our requests, fail to provide capital or fulfill its obligations, or become insolvent and require us to assume and fulfill the joint venture’s financial obligations. Conflicts arising between us and our joint venture partners may be difficult to manage or resolve and it could be difficult to manage or otherwise monitor the existing business arrangements. We and our joint venture partners may each have the right to initiate a buy-sell arrangement, which could cause us to sell our interest, or acquire a joint venture partner’s interest, at a time when we otherwise would not have entered into such a transaction. Each joint venture agreement is individually negotiated, and our ability to operate, finance, or dispose of a Property in our sole discretion may be limited to varying degrees depending on the terms of the applicable joint venture agreement.

Climate change may adversely affect our business.

To the extent that significant changes in the climate occur in areas where our Properties are located, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Should the impact of climate change be material in nature, including significant property damage to or destruction of our Properties, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected. In addition, changes in federal, state and local legislation and regulation based on concerns about climate change could result in increased capital expenditures on our Properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our net income.

FINANCING AND INVESTMENT RISKS

Our significant amount of debt could limit our operational flexibility or otherwise adversely affect our financial condition.

We have a significant amount of debt. As of December 31, 2019, we had approximately $3.4 billion of total debt outstanding, consisting of approximately $3.2 billion in debt that is collateralized by mortgage liens on 188 of the Properties, $183.9 million on our lines of credit, $35.2 million of mandatorily redeemable interest, and $34.7 million that is preferred OP units - mandatorily redeemable. If we fail to meet our obligations under our secured debt, the lenders would be entitled to foreclose on all or some of the collateral securing such debt which could have a material adverse effect on us and our ability to make expected distributions, and could threaten our continued viability.


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We are subject to the risks normally associated with debt financing, including the following risks:

our cash flow may be insufficient to meet required debt payments, or we may need to dedicate a substantial portion of our cash flow to pay our debt rather than to other areas of our business;

our existing indebtedness may limit our operating flexibility due to financial and other restrictive covenants, including restrictions on incurring additional debt;

it may be more difficult for us to obtain additional financing for our operations, working capital requirements, capital expenditures, debt service or other general requirements;

we may be more vulnerable in the event of adverse economic and industry conditions or a downturn in our business;

we may be placed at a competitive disadvantage compared to our competitors that have less debt; and

we may not be able to refinance at all or on favorable terms, as our debt matures.

If any of the above risks occurred, our financial condition and results of operations could be materially adversely affected.

We may incur substantially more debt, which would increase the risks associated with our substantial leverage.

Despite our current indebtedness levels, we may incur substantially more debt in the future. If new debt is added to our current debt levels, an even greater portion of our cash flow will be needed to satisfy our debt service obligations. As a result, the related risks that we now face could intensify and increase the risk of a default on our indebtedness.

The phase out of the London Interbank Offered Rate (LIBOR), or the replacement of LIBOR with a different reference rate, may adversely affect interest rates.

On July 27, 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced that it would phase out LIBOR by the end of 2021. Many of our Property-level real estate loans have fixed interest rates which will not be impacted by any change in LIBOR. Certain of our other loans, including a majority of the borrowings under our $750.0 million senior credit facility, have interest rates based on LIBOR. Our senior credit facility provides that we and the administrative agent for the lenders will negotiate an interest rate to replace the current LIBOR-based rate, and if the parties do not negotiate a replacement interest rate, the new rate will be based on the prime rate. The replacement of LIBOR with an alternative rate or benchmark may adversely affect our interest rates and result in higher borrowing costs. This could materially and adversely affect our results of operations, cash flows and liquidity. 

TAX RISKS

We may suffer adverse tax consequences and be unable to attract capital if we fail to qualify as a REIT.

We believe that since our taxable year ended December 31, 1994, we have been organized and operated, and intend to continue to operate, so as to qualify for taxation as a REIT under the Code. Although we believe that we have been and will continue to be organized and have operated and will continue to operate so as to qualify for taxation as a REIT, we cannot be assured that we have been or will continue to qualify as a REIT. Qualification as a REIT involves the satisfaction of numerous requirements (some on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations and involves the determination of various factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation, which require us to continually monitor our tax status.

If we fail to qualify as a REIT in any taxable year, our taxable income could be subject to U.S. federal income tax at regular corporate rates. Moreover, unless entitled to relief under certain statutory provisions, we also would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. This treatment would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability to us for the years involved. In addition, distributions to stockholders would no longer be required to be made.


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Federal, state and foreign income tax laws governing REITs and related interpretations may change at any time, and any such legislative or other actions affecting REITs could have a negative effect on us.

Federal, state and foreign income tax laws governing REITs, or the administrative interpretations of those laws may be amended at any time. Federal, state, and foreign tax laws are under constant review by persons involved in the legislative process, at the Internal Revenue Service and the U.S. Department of the Treasury, and at various state and foreign tax authorities. Changes to tax laws, regulations, or administrative interpretations, which may be applied retroactively, could adversely affect us. We cannot predict whether, when, in what forms, or with what effective dates, the tax laws, regulations, and administrative interpretations applicable to us may be changed. Accordingly, we cannot assert that any such change will not significantly affect either our ability to qualify for taxation as a REIT or the income tax consequences to us.

The Tax Cut and Jobs Act (the “Tax Act”) was enacted into law in December 2017. The overall impact of the Tax Act is uncertain. In addition, there are a significant number of technical issues clarified with respect to the interpretation and application of the Tax Act which may or may not be clarified by future guidance. It is not possible to predict whether such clarifications will result in adverse consequences to the Company or its stockholders. Stockholders are urged to consult their tax advisors with respect to the effects of the Tax Act and any other potential amendments to relevant tax laws.

We intend for the Operating Partnership to be taxed as a partnership, but we cannot guarantee that it will qualify.

We believe that the Operating Partnership has been organized as a partnership and will qualify for treatment as such under the Code. However, if the Operating Partnership is deemed to be a “publicly traded partnership,” it will be treated as a corporation instead of a partnership for federal income tax purposes unless at least 90 percent of its income is qualifying income as defined in the Code. The income requirements applicable to REITs and the definition of “qualifying income” for purposes of this 90 percent test are similar in most respects. Qualifying income for the 90 percent test generally includes passive income, such as specified types of real property rents, dividends, and interest. We believe that the Operating Partnership has and will continue to meet this 90 percent test, but we cannot guarantee that it has or will. If the Operating Partnership were to be taxed as a regular corporation, it would incur substantial tax liabilities, we would fail to qualify as a REIT for federal income tax purposes, and our ability to raise additional capital could be significantly impaired.

Partnership tax audit rules could have a material adverse effect on us.

The Bipartisan Budget Act of 2015 changed the rules applicable to U.S. federal income tax audits of partnerships. Under the rules, effective for taxable years beginning in 2018, among other changes and subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and a partner’s allocable share thereof) is determined, and taxes, interest, and penalties attributable thereto are assessed and collected, at the partnership level. Unless the partnership makes an election permitted under the new law or takes certain steps to require the partners to pay their tax on their allocable shares of the adjustment, it is possible that partnerships in which we directly or indirectly invest, including the Operating Partnership, would be required to pay additional taxes, interest and penalties as a result of an audit adjustment. We, as a direct or indirect partner of the Operating Partnership and other partnerships, could be required to bear the economic burden of those taxes, interest, and penalties even though the Company, as a REIT, may not otherwise have been required to pay additional corporate-level tax. The changes created by these rules are significant for collecting tax in partnership audits and, accordingly, there can be no assurance that these rules will not have a material adverse effect on us.

Our ability to accumulate cash may be restricted due to certain REIT distribution requirements.

In order to qualify as a REIT, we must distribute to our stockholders at least 90 percent of our REIT taxable income (calculated without any deduction for dividends paid and excluding net capital gain) and to avoid federal income taxation, our distributions must not be less than 100 percent of our REIT taxable income, including capital gains. As a result of the distribution requirements, we do not expect to accumulate significant amounts of cash. Accordingly, these distributions could significantly reduce the cash available to us in subsequent periods to fund our operations and future growth.

Our taxable REIT subsidiaries, or TRSs, are subject to special rules that may result in increased taxes.

As a REIT, we must pay a 100 percent penalty tax on certain payments that we receive if the economic arrangements between us and any of our TRSs are not comparable to similar arrangements between unrelated parties. The Internal Revenue Service may successfully assert that the economic arrangements of any of our inter-company transactions are not comparable to similar arrangements between unrelated parties. This would result in unexpected tax liability which would adversely affect our cash flows.


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Dividends payable by REITs do not qualify for the reduced tax rates applicable to certain dividends.

The maximum federal tax rate for certain qualified dividends payable to domestic stockholders that are individuals, trusts and estates is 20 percent. Dividends payable by REITs, however, are generally not eligible for this reduced rate, although the new Tax Act permits a 20 percent deduction equal to the amount of qualifying REIT dividends received, thus bringing the maximum federal tax rate on qualifying REIT dividends to 29.6 percent. While this rule does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular qualified corporate dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less competitive than investments in stock of non-REIT corporations that pay dividends, which could adversely affect the comparative value of the stock of REITs, including our common stock and preferred stock.

Prospective investors should consult their own tax advisors regarding the effect of this change on their effective tax rate with respect to REIT dividends.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities.

To remain qualified as a REIT for federal income tax purposes, we must continually satisfy requirements and tests under the tax law concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. In order to meet these tests, we may be required to forego or limit attractive business or investment opportunities and distribute all of our net earnings rather than invest in attractive opportunities or hold larger liquid reserves. Therefore, compliance with the REIT requirements may hinder our ability to operate solely to maximize profits.

Our ability to use net operating loss carryforwards to reduce future tax payments may be limited if we experience a change in ownership, or if taxable income does not reach sufficient levels.

Under Section 382 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percent change (by value) in its equity ownership over a rolling three-year period), the corporation’s ability to use its pre-ownership-change net operating loss carryforwards to offset its post-ownership-change income may be limited. We may experience ownership changes in the future. If an ownership change were to occur, we would be limited in the portion of net operating loss carryforwards that we could use in the future to offset taxable income for U.S. federal income tax purposes.

BUSINESS RISKS

Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests.

Lease of Executive Offices. Gary A. Shiffman, together with certain of his family members, indirectly owns an equity interest of approximately 28.1 percent in American Center LLC, the entity from which we lease office space for our principal executive offices. Each of Brian M. Hermelin, Ronald A. Klein and Arthur A. Weiss indirectly owns a less than one percent interest in American Center LLC. Mr. Shiffman is our Chief Executive Officer and Chairman of the Board. Each of Mr. Hermelin, Mr. Klein and Mr. Weiss is a director of the Company. Under this agreement, we lease approximately 103,100 rentable square feet of permanent space. The initial term of the lease is until October 31, 2026, and the average gross base rent is $18.95 per square foot until October 31, 2020 with graduated rental increases thereafter. Each of Mr. Shiffman, Mr. Hermelin, Mr. Klein and Mr. Weiss may have a conflict of interest with respect to his obligations as our officer and/or director and his ownership interest in American Center LLC.

Legal Counsel. During 2017-2019, Jaffe, Raitt, Heuer, & Weiss, Professional Corporation acted as our general counsel and represented us in various matters. Arthur A. Weiss is the Chairman of the Board of Directors and a shareholder of such firm. We incurred legal fees and expenses owed to Jaffe, Raitt, Heuer, & Weiss of approximately $11.1 million, $7.1 million and $5 million in the years ended December 31, 2019, 2018 and 2017, respectively.

Use of Airplane. Gary A. Shiffman is the beneficial owner of an airplane that we use from time to time for business purposes. During the year ended December 31, 2019, we paid $0.4 million for the use of the airplane. Mr. Shiffman may have a conflict of interest with respect to his obligations as our officer and director and his ownership interest in the airplane.

Telephone Services. Brian M. Hermelin is a principal and a beneficial owner of an entity that installs and maintains emergency telephone systems at our Properties. During the year ended December 31, 2019, we paid $0.2 million for these services. Mr. Hermelin may have a conflict of interest with respect to his obligations as our director and his position with and ownership interest in the provider of these services.

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Tax Consequences Upon Sale of Properties. Gary A. Shiffman holds limited partnership interests in the Operating Partnership which were received in connection with the contribution of properties from partnerships previously affiliated with him. Prior to any redemption of these limited partnership interests for our common stock, Mr. Shiffman will have tax consequences different than our public stockholders upon the sale of any of these partnerships. Therefore, we and Mr. Shiffman may have different objectives regarding the appropriate pricing and timing of any sale of those properties.

We rely on key management.

We are dependent on the efforts of our executive officers, Gary A. Shiffman, John B. McLaren, Karen J. Dearing, and Jonathan M. Colman. The loss of services of one or more of these executive officers could have a temporary adverse effect on our operations. We do not currently maintain or contemplate obtaining any “key-man” life insurance on the Executive Officers.

Certain provisions in our governing documents may make it difficult for a third-party to acquire us.

9.8 percent Ownership Limit. In order to qualify and maintain our qualification as a REIT, not more than 50 percent of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals. Thus, ownership of more than 9.8 percent, in number of shares or value, of the issued and outstanding shares of our capital stock by any single stockholder has been restricted, with certain exceptions, for the purpose of maintaining our qualification as a REIT under the Code. Such restrictions in our charter do not apply to Milton M. Shiffman, Gary A. Shiffman, and Robert B. Bayer; trustees, personal representatives and agents to the extent acting for them or their respective estates; or certain of their respective relatives.

The 9.8 percent ownership limit, as well as our ability to issue additional shares of common stock or shares of other stock (which may have rights and preferences over the common stock), may discourage a change of control of the Company and may also: (a) deter tender offers for the common stock, which offers may be advantageous to stockholders; and (b) limit the opportunity for stockholders to receive a premium for their common stock that might otherwise exist if an investor were attempting to assemble a block of common stock in excess of 9.8 percent of our outstanding shares or otherwise effect a change of control of the Company.

Preferred Stock. Our charter authorizes the Board of Directors to issue up to 20,000,000 shares of preferred stock, none of which is currently outstanding, and to establish the preferences and rights (including the right to vote and the right to convert into shares of common stock) of any shares issued. The power to issue preferred stock could have the effect of delaying or preventing a change in control of the Company even if a change in control were in the stockholders’ interest.

Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest.

Certain provisions of the Maryland General Corporation Law (“MGCL”) may have the effect of inhibiting a third-party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our capital stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10 percent or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10 percent or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or supermajority and stockholder voting requirements on these combinations; and

“control share” provisions that provide that “control shares” of our company (defined as shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

The provisions of the MGCL relating to business combinations do not apply, however, to business combinations that are approved or exempted by our Board of Directors prior to the time that the interested stockholder becomes an interested stockholder. As permitted by the statute, our Board of Directors has by resolution exempted Milton M. Shiffman, Robert B. Bayer, and Gary A. Shiffman, their affiliates and all persons acting in concert or as a group with the foregoing, from the business combination provisions of the MGCL and, consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations between us and these persons.

16

SUN COMMUNITIES, INC.

As a result, these persons may be able to enter into business combinations with us that may not be in the best interests of our stockholders without compliance by our company with the supermajority vote requirements and the other provisions of the statute.

Also, pursuant to a provision in our bylaws, we have exempted any acquisition of our stock from the control share provisions of the MGCL. However, our Board of Directors may by amendment to our bylaws opt into the control share provisions of the MGCL at any time in the future.

Additionally, Subtitle 8 of Title 3 of the MGCL permits our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring or preventing a transaction or a change of control of our company that might involve a premium to the market price of our common stock or otherwise be in our stockholders’ best interests. These provisions include a classified board; two-thirds vote to remove a director; that the number of directors may only be fixed by the Board of Directors; that vacancies on the board as a result of an increase in the size of the board or due to death, resignation or removal can only be filled by the board, and the director appointed to fill the vacancy serves for the remainder of the full term of the class of director in which the vacancy occurred; and a majority requirement for the calling by stockholders of special meetings. Other than a classified board, the filling of vacancies as a result of the removal of a director and a majority requirement for the calling by stockholders of special meetings, we are already subject to these provisions, either by provisions of our charter and bylaws unrelated to Subtitle 8 or by reason of an election to be subject to certain provisions of Subtitle 8. In the future, our Board of Directors may elect, without stockholder approval, to make us subject to the provisions of Subtitle 8 to which we are not currently subject.

Our Board of Directors has power to adopt, alter or repeal any provision of our bylaws or make new bylaws, provided, however, that our stockholders may alter or repeal any provision of our bylaws and adopt new bylaws if any such alteration, repeal or adoption is approved by the affirmative vote of a majority of all votes entitled to be cast on the matter.

Changes in our investment and financing policies may be made without stockholder approval.

Our investment and financing policies, and our policies with respect to certain other activities, including our growth, debt, capitalization, distributions, REIT status, and operating policies, are determined by our Board of Directors. Although the Board of Directors has no present intention to do so, these policies may be amended or revised from time to time at the discretion of the Board of Directors without notice to or a vote of our stockholders. Accordingly, stockholders may not have control over changes in our policies and changes in our policies may not fully serve the interests of all stockholders.

Substantial sales or issuances of our common or preferred stock could cause our stock price to fall.

The sale or issuance of substantial amounts of our common stock or preferred stock, whether directly by us or in the secondary market, the perception that such sales could occur or the availability of future issuances of shares of our common stock, preferred stock, OP units or other securities convertible into or exchangeable or exercisable for our common stock or preferred stock, could materially and adversely affect the market price of our common stock or preferred stock and our ability to raise capital through future offerings of equity or equity-related securities. In addition, we may issue capital stock that is senior to our common stock in the future for a number of reasons, including to finance our operations and business strategy, to adjust our ratio of debt to equity or for other reasons.

Based on the applicable conversion ratios then in effect, as of February 13, 2020, in the future we may issue to the limited partners of the Operating Partnership, up to approximately 4.4 million shares of our common stock in exchange for their OP units. The limited partners may sell such shares pursuant to registration rights, if available, or an available exemption from registration. As of February 13, 2020, options to purchase 1,500 shares of our common stock were outstanding under our equity incentive plans, and we currently have the authority to issue restricted stock awards or options to purchase up to an additional 1,041,758 shares of our common stock pursuant to our equity incentive plans. In addition, we entered into an At-the-Market Offering Sales Agreement in July 2017 to issue and sell shares of common stock. As of February 13, 2020, our Board of Directors had authorized us to sell an additional $286.3 million of common stock under this agreement. No prediction can be made regarding the effect that future sales of shares of our common stock or our other securities will have on the market price of shares.

An increase in interest rates may have an adverse effect on the price of our common stock.

One of the factors that may influence the price of our common stock in the public market will be the annual distributions to stockholders relative to the prevailing market price of the common stock. An increase in market interest rates may tend to make the common stock less attractive relative to other investments, which could adversely affect the market price of our common stock.

17

SUN COMMUNITIES, INC.

We may be adversely impacted by fluctuations in foreign currency exchange rates.

Our current and future investments in and operations of Canadian and Australian properties are or will be exposed to the effects of changes in the Canadian dollar and Australian dollar, respectively, against the U.S. dollar. Changes in foreign currency exchange rates cannot always be predicted; as a result, substantial unfavorable changes in exchange rates could have a material adverse effect on our financial condition and results of operations.

The volatility in economic conditions and the financial markets may adversely affect our industry, business and financial performance.

The U.S. interest rate environment, oil price fluctuations, uncertain tax and economic plans in the U.S. executive and legislative branches, and turmoil in emerging markets have created uncertainty and volatility in the U.S. and global economies. Continued economic uncertainty, both nationally and internationally, causes increased volatility in investor confidence thereby creating similar volatility in the availability of both debt and equity capital in the financial markets. The other risk factors presented in this Annual Report on Form 10-K discuss some of the principal risks inherent in our business, including liquidity risks, operational risks, and credit risks, among others. Turbulence in financial markets accentuates each of these risks and magnifies their potential effect on us. If such volatility is experienced in future periods, there could be an adverse impact on our access to capital, stock price and our operating results.

Our business operations may not generate the cash needed to make distributions on our capital stock or to service our indebtedness, and we may adjust our common stock distribution policy.

Our ability to make distributions on our common stock and preferred stock, and payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to make distributions on our common stock or preferred stock, to pay our indebtedness or to fund our other liquidity needs.

The decision to declare and pay distributions on shares of our common stock in the future, as well as the timing, amount and composition of any such future distributions, will be at the sole discretion of our Board of Directors in light of conditions then existing, including our earnings, financial condition, capital requirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions, general overall economic conditions and other factors. Any change in our distribution policy could have a material adverse effect on the market price of our common stock.

Our ability to pay distributions is limited by the requirements of Maryland law.

Our ability to pay distributions on our common stock and preferred stock is limited by the laws of Maryland. Under Maryland law, a Maryland corporation generally may not make a distribution if, after giving effect to the distribution, the corporation would not be able to pay its debts as they become due in the usual course of business, or the corporation’s total assets would be less than the sum of its total liabilities plus, unless the corporation’s charter provides otherwise, the amount that would be needed, if the corporation were dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution, provided, however, that a Maryland corporation may make a distribution from: (a) its net earnings for the fiscal year in which the distribution is made; (b) its net earnings for the preceding fiscal year; or (c) the sum of its net earnings for its preceding eight fiscal quarters even if, after such distribution, the corporation’s total assets would be less than its total liabilities. Accordingly, we generally may not make a distribution on our common stock or preferred stock if, after giving effect to the distribution, we would not be able to pay our debts as they become due in the usual course of business or, unless paid from one of the permitted sources of net earnings as described above, our total assets would be less than the sum of our total liabilities plus, unless the terms of such class or series of stock provide otherwise, the amount that would be needed to satisfy the preferential rights upon dissolution of the holders of shares of any class or series of stock then outstanding, if any, with preferential rights upon dissolution senior to those of our common stock or, if any, currently outstanding preferred stock.

We may not be able to pay distributions upon events of default under our financing documents.

Some of our financing documents contain restrictions on distributions upon the occurrence of events of default thereunder. If such an event of default occurs, such as our failure to pay principal at maturity or interest when due for a specified period of time, we would be prohibited from making payments on our common stock and preferred stock.


18

SUN COMMUNITIES, INC.

Our share price could be volatile and could decline, resulting in a substantial or complete loss on our stockholders’ investment.

The stock markets, including the New York Stock Exchange (“NYSE”), on which we list our common stock, have experienced significant price and volume fluctuations. As a result, the market price of our common stock and preferred stock could be similarly volatile, and investors in our common stock and preferred stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. The price of our common stock and preferred stock could be subject to wide fluctuations in response to a number of factors, including:

issuances of other equity securities in the future, including new series or classes of preferred stock;

our operating performance and the performance of other similar companies;

our ability to maintain compliance with covenants contained in our debt facilities;

actual or anticipated variations in our operating results, funds from operations, cash flows or liquidity;

changes in expectations of future financial performance or changes in our earnings estimates or those of analysts;

changes in our distribution policy;

publication of research reports about us or the real estate industry generally;

increases in market interest rates that lead purchasers of our common stock and preferred stock to demand a higher dividend yield;

changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian dollar and the Australian dollar;

changes in market valuations of similar companies;

adverse market reaction to the amount of our debt outstanding at any time, the amount of our debt maturing in the near-term and medium-term and our ability to refinance our debt, or our plans to incur additional debt in the future;

additions or departures of key management personnel;

speculation in the press or investment community;

equity issuances by us, or share resales by our stockholders or the perception that such issuances or resales may occur;

actions by institutional stockholders; and

general market and economic conditions.

Many of the factors listed above are beyond our control. Those factors may cause the market price of our common stock or preferred stock to decline significantly, regardless of our financial condition, results of operations and prospects. It is impossible to provide any assurance that the market price of our common stock or preferred stock will not fall in the future, and it may be difficult for holders to resell shares of our common stock or preferred stock at prices they find attractive, or at all. In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources.

ITEM 1B. UNRESOLVED STAFF COMMENTS
None.


19

SUN COMMUNITIES, INC.

ITEM 2. PROPERTIES

As of December 31, 2019, the Properties were located throughout the US and in Ontario, Canada and consisted of 266 MH communities, 122 RV communities, and 34 properties containing both MH and RV sites. As of December 31, 2019, the Properties contained an aggregate of 141,293 developed sites comprised of 93,821 developed manufactured home sites, 26,056 annual RV sites (inclusive of both annual and seasonal usage rights), and 21,416 transient RV sites. There are approximately 10,300 additional MH and RV sites suitable for development. Most of the Properties include amenities oriented toward family and retirement living. Of the 422 Properties, 194 each have more than 300 developed sites, with the largest having 2,341 developed MH and RV sites. See “Real Estate and Accumulated Depreciation, Schedule III”, included in our Consolidated Financial Statements, for detail on Properties that are encumbered.

As of December 31, 2019, the Properties had an occupancy rate of 96.4 percent excluding transient RV sites. Since January 1, 2019, the Properties have averaged an aggregate annual turnover of homes (where the home is moved out of the community) of approximately 2.8 percent and an average annual turnover of residents (where the resident-owned home is sold and remains within the community, typically without interruption of rental income) of approximately 7.0 percent. The average renewal rate for residents in our Rental Program was 63.2 percent for the year ended December 31, 2019.

We believe that our Properties’ high amenity levels, customer service loyalty, and customer retention program contribute to low turnover and generally high occupancy rates. All of the Properties provide residents with attractive amenities with most offering a clubhouse, a swimming pool, and laundry facilities. Many of the Properties offer additional amenities such as sauna/whirlpool spas, tennis courts, shuffleboard, basketball courts, and/or exercise rooms. Many RV communities offer incremental amenities including golf, pro shops, restaurants, zip lines, waterparks, watersports, and thematic experiences.

The Properties are principally located in the Midwestern, Southern, Northeastern, Southeastern regions of the U.S., and Ontario, Canada. We believe that geographic diversification helps to insulate the portfolio from regional economic influences. We have concentrated our properties within certain areas of the regions in order to achieve economies of scale in management and operation.

The following tables set forth certain information relating to the Properties as of December 31, 2019. The occupancy percentage includes MH sites and annual RV sites and excludes transient RV sites.
Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
UNITED STATES
 
 
 
 
 
 
 
 
 
MIDWEST
 
 
 
 
 
 
 
 
 
Michigan
 
 
 
 
 
 
 
 
 
Academy / West Point
MH
Canton
MI
441


98.2
%
 
97.5
%
 
Allendale Meadows Mobile Village
MH
Allendale
MI
352


98.9
%
 
94.9
%
 
Alpine Meadows Mobile Village
MH
Grand Rapids
MI
403


98.3
%
 
98.0
%
 
Apple Carr Village
MH
Muskegon
MI
716


78.5
%
(1) 
79.4
%
(1) 
Arbor Woods
MH
Ypsilanti
MI
458


99.1
%
 
96.1
%
 
Brentwood Mobile Village
MH
Kentwood
MI
195


97.4
%
 
98.5
%
 
Broadview Estates
MH
Davison
MI
474


82.3
%
 
77.6
%
 
Brookside Village
MH
Kentwood
MI
196


100.0
%
 
99.0
%
 
Byron Center Mobile Village
MH
Kentwood
MI
143


97.9
%
 
98.6
%
 
Camelot Villa
MH
Macomb
MI
712


99.0
%
 
98.6
%
 
Cider Mill Crossings
MH
Fenton
MI
621


74.6
%
(1) 
67.5
%
(1) 
Cider Mill Village
MH
Middleville
MI
258


98.4
%
 
98.4
%
 
Country Acres Mobile Village
MH
Cadillac
MI
182


95.1
%
 
99.5
%
 
Country Hills Village
MH
Hudsonville
MI
239


99.6
%
 
98.3
%
 
Country Meadows Mobile Village
MH
Flat Rock
MI
577


97.7
%
 
96.9
%
 
Country Meadows Village
MH
Caledonia
MI
395


99.5
%
 
98.5
%
 
Creekwood Meadows
MH
Burton
MI
336


94.0
%
 
97.6
%
 
Cutler Estates Mobile Village
MH
Grand Rapids
MI
259


98.8
%
 
98.1
%
 
Dutton Mill Village
MH
Caledonia
MI
307


99.7
%
 
99.0
%
 
East Village Estates
MH
Washington Twp.
MI
708


98.6
%
 
99.4
%
 

20

SUN COMMUNITIES, INC.

Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
Egelcraft
MH
Muskegon
MI
458


97.4
%
 
96.9
%
 
Fisherman's Cove
MH
Flint Twp.
MI
162


97.5
%
 
95.7
%
 
Frenchtown Villa / Elizabeth Woods
MH
Newport
MI
1,140


94.6
%
 
88.9
%
(1) 
Grand Mobile Estates
MH
Grand Rapids
MI
219


96.8
%
 
96.3
%
 
Hamlin
MH
Webberville
MI
230


95.7
%
 
98.7
%
 
Hickory Hills Village
MH
Battle Creek
MI
283


97.5
%
 
97.5
%
 
Hidden Ridge RV Resort (2)
RV
Hopkins
MI
188

147

100.0
%
 
100.0
%
 
Holiday West Village
MH
Holland
MI
341


100.0
%
 
99.7
%
 
Holly Village / Hawaiian Gardens
MH
Holly
MI
425


96.2
%
 
94.4
%
 
Hunters Crossing
MH
Capac
MI
114


98.2
%
 
99.1
%
 
Hunters Glen
MH
Wayland
MI
396


97.2
%
 
89.9
%
(1) 
Kensington Meadows
MH
Lansing
MI
290


94.8
%
 
96.9
%
 
Kimberly Estates
MH
Newport
MI
387


98.4
%
 
98.7
%
 
King's Court Mobile Village
MH
Traverse City
MI
802


90.6
%
 
84.4
%
(1) 
Knollwood Estates
MH
Allendale
MI
161


97.5
%
 
96.9
%
 
Lafayette Place
MH
Warren
MI
254


96.9
%
 
97.2
%
 
Lakeview
MH
Ypsilanti
MI
392


98.5
%
 
98.7
%
 
Leisure Village
MH
Belmont
MI
256


98.4
%
 
94.9
%
 
Lincoln Estates
MH
Holland
MI
191


99.5
%
 
99.0
%
 
Meadow Lake Estates
MH
White Lake
MI
425


98.6
%
 
99.1
%
 
Meadowbrook Estates
MH
Monroe
MI
453


96.5
%
 
95.4
%
 
Meadowlands of Gibraltar
MH
Gibraltar
MI
320


100.0
%
 
99.7
%
 
Northville Crossing
MH
Northville
MI
756


99.1
%
 
99.7
%
 
Oak Island Village
MH
East Lansing
MI
250


97.6
%
 
98.4
%
 
Petoskey KOA RV Resort (2)
RV
Petoskey
MI
48

162

100.0
%
 
100.0
%
 
Petoskey RV Resort (2)
RV
Petoskey
MI
3

149

N/A

 
N/A

 
Pinebrook Village
MH
Kentwood
MI
185


97.8
%
 
100.0
%
 
Presidential Estates Mobile Village
MH
Hudsonville
MI
364


97.8
%
 
98.1
%
 
Richmond Place
MH
Richmond
MI
117


94.9
%
 
95.7
%
 
River Haven Village
MH
Grand Haven
MI
721


90.7
%
 
85.4
%
 
Rudgate Clinton
MH
Clinton Township
MI
667


98.4
%
 
99.0
%
 
Rudgate Manor
MH
Sterling Heights
MI
931


97.6
%
 
97.9
%
 
Scio Farms Estates
MH
Ann Arbor
MI
913


98.9
%
 
99.5
%
 
Sheffield Estates
MH
Auburn Hills
MI
228


98.2
%
 
100.0
%
 
Shelby Forest
MH
Shelby Twp.
MI
664


99.1
%
 
N/A

(5) 
Shelby West
MH
Shelby Twp.
MI
644


98.9
%
 
N/A

(5) 
Silver Creek RV Resort (2)
RV
Mears
MI
157

107

100.0
%
 
100.0
%
 
Silver Springs
MH
Clinton Township
MI
547


98.7
%
 
99.5
%
 
Southwood Village
MH
Grand Rapids
MI
394


99.0
%
 
98.0
%
 
St. Clair Place
MH
St. Clair
MI
100


90.0
%
 
97.0
%
 
Sunset Ridge
MH
Portland
MI
388


78.1
%
(1) 
65.7
%
(1) 
Sycamore Village
MH
Mason
MI
396


98.7
%
 
99.7
%
 
Tamarac Village
MH
Ludington
MI
301


99.7
%
 
98.7
%
 
Tamarac Village RV Resort (2)
RV
Ludington
MI
109

5

100.0
%
 
100.0
%
 
Timberline Estates
MH
Coopersville
MI
296


96.6
%
 
98.3
%
 
Town & Country Mobile Village
MH
Traverse City
MI
192


99.0
%
 
99.0
%
 
Warren Dunes Village
MH
Bridgman
MI
314


89.2
%
(1) 
87.6
%
(1) 
Waverly Shores Village
MH
Holland
MI
415


100.0
%
 
96.4
%
 
West Village Estates
MH
Romulus
MI
628


99.0
%
 
99.4
%
 

21

SUN COMMUNITIES, INC.

Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
White Lake Mobile Home Village
MH
White Lake
MI
315


98.7
%
 
98.4
%
 
Windham Hills Estates
MH
Jackson
MI
469


95.5
%
 
88.9
%
(1) 
Windsor Woods Village
MH
Wayland
MI
314


99.7
%
 
98.4
%
 
Woodhaven Place
MH
Woodhaven
MI
220


98.6
%
 
95.5
%
 
Michigan Total
 
 
 
27,905

570

96.0
%
 
94.6
%
 
 
 
 
 
 
 
 
 
 
 
Indiana
 
 
 
 
 
 
 
 
 
Brookside Mobile Home Village
MH
Goshen
IN
570


95.6
%
 
93.0
%
 
Carrington Pointe
MH
Fort Wayne
IN
468


93.3
%
 
73.5
%
(1) 
Clear Water Mobile Village
MH
South Bend
IN
227


95.2
%
 
97.8
%
 
Cobus Green Mobile Home Park
MH
Osceola
IN
386


96.6
%
 
93.8
%
 
Deerfield Run
MH
Anderson
IN
175


93.7
%
 
86.3
%
 
Four Seasons
MH
Elkhart
IN
218


95.0
%
 
93.6
%
 
Lake Rudolph Campground & RV Resort (2)
RV
Santa Claus
IN

534

N/A

 
N/A

 
Liberty Farm
MH
Valparaiso
IN
220


95.9
%
 
95.9
%
 
Pebble Creek
MH
Greenwood
IN
296


93.2
%
 
80.5
%
(1) 
Pine Hills
MH
Middlebury
IN
129


98.4
%
 
93.8
%
 
Roxbury Park
MH
Goshen
IN
398


98.2
%
 
97.2
%
 
Indiana Total
 
 
 
3,087

534

93.9
%
 
89.7
%
 
 
 
 
 
 
 
 
 
 
 
Ohio
 
 
 
 
 
 
 
 
 
Apple Creek
MH
Amelia
OH
176


98.3
%
 
98.9
%
 
East Fork Crossing
MH
Batavia
OH
350


99.4
%
 
99.1
%
 
Indian Creek RV & Camping Resort (2)
RV
Geneva on the Lake
OH
425

150

100.0
%
 
100.0
%
 
Oakwood Village
MH
Miamisburg
OH
511


98.2
%
 
99.0
%
 
Orchard Lake
MH
Milford
OH
147


97.3
%
 
95.9
%
 
Westbrook Senior Village
MH
Toledo
OH
112


100.0
%
 
98.2
%
 
Westbrook Village
MH
Toledo
OH
344


98.8
%
 
95.6
%
 
Willowbrook Place
MH
Toledo
OH
266


98.1
%
 
97.4
%
 
Woodside Terrace
MH
Holland
OH
439


93.8
%
 
91.6
%
 
Ohio Total
 
 
 
2,770

150

98.1
%
 
97.2
%
 
 
 
 
 
 
 
 
 
 
 
SOUTH
 
 
 
 
 
 
 
 
 
Texas
 
 
 
 
 
 
 
 
 
Austin Lone Star RV Resort (2)
RV
Austin
TX
50

107

100.0
%
 
100.0
%
 
Blazing Star (2)
RV
San Antonio
TX
126

136

100.0
%
 
100.0
%
 
Boulder Ridge
MH
Pflugerville
TX
1,220


78.9
%
(1) 
80.2
%
(1) 
Branch Creek Estates
MH
Austin
TX
400


98.0
%
 
100.0
%
 
Chisholm Point Estates
MH
Pflugerville
TX
427


97.7
%
 
100.0
%
 
Comal Farms
MH
New Braunfels
TX
367


99.7
%
 
99.5
%
 
Hill Country Cottage and RV Resort (2)
RV
New Braunfels
TX
27

342

100.0
%

100.0
%
 
Jellystone Park™ at Guadalupe River (2)
RV
Kerrville
TX

250

N/A

 
N/A

 
Jellystone Park™ at Hill Country (2)
RV
Canyon Lake
TX

175

N/A

 
N/A

 
La Hacienda RV Resort (2)
RV
Austin
TX

244

N/A

 
N/A

 
Oak Crest
MH
Austin
TX
654


76.3
%
(1) 
99.1
%
 
Pecan Branch
MH
Georgetown
TX
229


78.6
%
(1) 
49.3
%
(1) 
Pine Trace
MH
Houston
TX
680


98.4
%
 
98.8
%
 
River Ranch
MH
Austin
TX
848


98.5
%
 
99.3
%
 
River Ridge Estates
MH
Austin
TX
515


99.4
%
 
99.2
%
 

22

SUN COMMUNITIES, INC.

Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
Saddlebrook
MH
San Marcos
TX
562


97.9
%
 
87.7
%
(1) 
Sandy Lake
MH
Carrollton
TX
54


98.1
%
 
100.0
%
 
Sandy Lake RV Resort (2)
RV
Carrollton
TX
108

112

100.0
%
 
100.0
%
 
Stonebridge
MH
San Antonio
TX
335


96.7
%
 
98.8
%
 
Summit Ridge
MH
Converse
TX
446


96.2
%
 
97.3
%
 
Sunset Ridge
MH
Kyle
TX
171


98.2
%
 
97.7
%
 
Travelers World
MH
San Antonio
TX
8


100.0
%
 
100.0
%
 
Travelers World RV Resort (2)
RV
San Antonio
TX
24

131

100.0
%
 
100.0
%
 
Treetops RV Resort (2)
RV
Arlington
TX
48

126

100.0
%
 
100.0
%
 
Woodlake Trails
MH
San Antonio
TX
316


82.0
%
(1) 
72.2
%
(1) 
Texas Total
 
 
 
7,615

1,623

92.0
%
 
92.9
%
 
 
 
 
 
 
 
 
 
 
 
SOUTHEAST
 
 
 
 
 
 
 
 
 
Florida
 
 
 
 
 
 
 
 
 
Arbor Terrace RV Park (2)
RV
Brandenton
FL
227

134

100.0
%
 
100.0
%
 
Ariana Village
MH
Lakeland
FL
207


98.6
%
 
97.1
%
 
Bahia Vista Estates
MH
Sarasota
FL
251


99.6
%
 
99.2
%
 
Baker Acres RV Resort
RV
Zephyrhills
FL
279

73

100.0
%
 
100.0
%
 
Big Tree RV Resort
RV
Arcadia
FL
367

44

100.0
%
 
100.0
%
 
Blue Heron Pines
MH
Punta Gorda
FL
408


97.1
%
 
96.3
%
 
Blue Jay
MH
Dade City
FL
206


99.5
%
 
98.5
%
 
Blue Jay RV Resort (2)
RV
Dade City
FL
32

23

100.0
%
 
100.0
%
 
Blueberry Hill (2)
RV
Bushnell
FL
279

126

100.0
%
 
100.0
%
 
Brentwood Estates
MH
Hudson
FL
191


99.0
%
 
97.9
%
 
Buttonwood Bay
MH
Sebring
FL
407


99.5
%
 
99.8
%
 
Buttonwood Bay RV Resort
RV
Sebring
FL
365

167

100.0
%
 
100.0
%
 
Candlelight Manor
MH
South Daytona
FL
128


96.1
%
 
94.5
%
 
Carriage Cove
MH
Sanford
FL
467


99.6
%
 
99.1
%
 
Central Park
MH
Haines City
FL
113


90.3
%
 
92.6
%
 
Central Park Resort RV Resort (2)
RV
Haines City
FL
187

178

100.0
%
 
100.0
%
 
Citrus Hill RV Resort (2)
RV
Dade City
FL
136

46

100.0
%
 
100.0
%
 
Club Naples (2)
RV
Naples
FL
234

70

100.0
%
 
100.0
%
 
Club Wildwood
MH
Hudson
FL
478


99.8
%
 
98.5
%
 
Colony in the Wood
MH
Port Orange
FL
383


98.4
%
 
97.7
%
 
Compass RV Resort (2)
RV
St. Augustine
FL

175

N/A

 
N/A

 
Country Squire
MH
Paisley
FL
97


97.9
%
 
90.7
%
 
Country Squire RV Resort (2)
RV
Paisley
FL
25


100.0
%
 
100.0
%
 
Cypress Greens
MH
Lake Alfred
FL
259


98.1
%
 
96.5
%
 
Daytona Beach RV Resort (2)
RV
Port Orange
FL
150

82

100.0
%
 
100.0
%
 
Deerwood
MH
Orlando
FL
569


99.5
%
 
98.9
%
 
Dunedin RV Resort (2)
RV
Dunedin
FL
195

44

100.0
%
 
100.0
%
 
Ellenton Gardens RV Resort (2)
RV
Ellenton
FL
146

48

100.0
%
 
100.0
%
 
Emerald Coast
MH
Panama City Beach
FL
42


92.9
%
 
88.1
%
 
Emerald Coast RV Resort (2)
RV
Panama City Beach
FL
4

155

100.0
%
 
100.0
%
 
Fairfield Village
MH
Ocala
FL
293


98.6
%
 
98.3
%
 
Forest View
MH
Homosassa
FL
300


98.7
%
 
97.0
%
 
Glen Haven
MH
Zephyrhills
FL
52


98.1
%
 
100.0
%
 
Glen Haven RV Resort (2)
RV
Zephyrhills
FL
161

57

100.0
%
 
100.0
%
 
Goldcoaster
MH
Homestead
FL
522


99.8
%
 
94.9
%
 

23

SUN COMMUNITIES, INC.

Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
Goldcoaster RV Resort (2)
RV
Homestead
FL
11

12

100.0
%
 
100.0
%
 
Grand Bay
MH
Dunedin
FL
135


99.3
%
 
98.5
%
 
Grand Lakes RV Resort (2)
RV
Citra
FL
319

90

100.0
%
 
100.0
%
 
Grove Ridge RV Resort (2)
RV
Dade City
FL
161

85

100.0
%
 
100.0
%
 
Groves RV Resort (2)
RV
Fort Myers
FL
236

33

100.0
%
 
100.0
%
 
Gulfstream Harbor
MH
Orlando
FL
974


99.2
%
 
97.5
%
 
Hacienda Del Rio
MH
Edgewater
FL
730


98.9
%
 
N/A

(5) 
Hidden River RV Resort (2)
RV
Riverview
FL
185

128

98.6
%
 
100.0
%
 
Holly Forest Estates
MH
Holly Hill
FL
402


100.0
%
 
100.0
%
 
Homosassa River RV Resort (2)
RV
Homosassa Springs
FL
104

120

100.0
%
 
100.0
%
 
Horseshoe Cove RV Resort (2)
RV
Bradenton
FL
340

136

100.0
%
 
100.0
%
 
Indian Creek Park
MH
Ft. Myers Beach
FL
353


99.7
%
 
100.0
%
 
Indian Creek RV Park (2)
RV
Ft. Myers Beach
FL
975

102

100.0
%
 
100.0
%
 
Island Lakes
MH
Merrit Island
FL
301


100.0
%
 
99.7
%
 
King’s Lake
MH
DeBary
FL
245


100.0
%
 
100.0
%
 
Kings Manor
MH
Lakeland
FL
239


95.8
%
 
92.5
%
 
King’s Pointe
MH
Lake Alfred
FL
226


98.7
%
 
99.6
%
 
Kissimmee Gardens
MH
Kissimmee
FL
239


100.0
%
 
99.6
%
 
Kissimmee South
MH
Davenport
FL
142


91.5
%
 
90.1
%
 
Kissimmee South RV Resort (2)
RV
Davenport
FL
112

89

100.0
%
 
100.0
%
 
La Costa Village
MH
Port Orange
FL
658


100.0
%
 
99.8
%
 
Lake Josephine RV Resort (2)
RV
Sebring
FL
111

67

100.0
%
 
100.0
%
 
Lake Juliana Landings
MH
Auburndale
FL
274


98.2
%
 
98.2
%
 
Lake Pointe Village
MH
Mulberry
FL
362


99.4
%
 
99.2
%
 
Lake San Marino RV Park (2)
RV
Naples
FL
264

143

100.0
%
 
100.0
%
 
Lakeland RV Resort (2)
RV
Lakeland
FL
196

35

100.0
%
 
100.0
%
 
Lakeshore Landings
MH
Orlando
FL
306


99.3
%
 
99.3
%
 
Lakeshore Villas
MH
Tampa
FL
280


99.6
%
 
98.6
%
 
Lamplighter
MH
Port Orange
FL
260


99.2
%
 
96.5
%
 
Majestic Oaks RV Resort (2)
RV
Zephyrhills
FL
207

47

100.0
%
 
100.0
%
 
Marco Naples RV Resort (2)
RV
Naples
FL
221

80

100.0
%
 
100.0
%
 
Meadowbrook Village
MH
Tampa
FL
257


100.0
%
 
100.0
%
 
Mill Creek
MH
Kissimmee
FL
34


91.2
%
 
96.9
%
 
Mill Creek RV Resort (2)
RV
Kissimmee
FL
133

23

100.0
%
 
100.0
%
 
Naples RV Resort (2)
RV
Naples
FL
108

59

100.0
%
 
100.0
%
 
New Ranch
MH
Clearwater
FL
94


97.9
%
 
97.9
%
 
North Lake Estates (2)
RV
Moor Haven
FL
209

63

100.0
%
 
100.0
%
 
Oakview Estates
MH
Arcatia
FL
119


100.0
%
 
99.2
%
 
Ocean Breeze
MH
Marathon
FL
47


8.5
%
(1) 
%
(4) 
Ocean Breeze RV Resort
RV
Marathon
FL


%
 
%
(4) 
Ocean Breeze - Jensen Beach
MH
Jensen Beach
FL
244


76.2
%
(1) 
64.0
%
(1) 
Ocean Breeze - Jensen Beach RV Resort (2)
RV
Jensen Beach
FL
77

168

100.0
%
 
100.0
%
 
Orange City
MH
Orange City
FL
4


100.0
%
 
100.0
%
 
Orange City RV Resort (2)
RV
Orange City
FL
345

176

100.0
%
 
100.0
%
 
Orange Tree Village
MH
Orange City
FL
246


100.0
%
 
99.6
%
 
Paddock Park South
MH
Ocala
FL
188


79.3
%
 
78.7
%
 
Palm Key Village
MH
Davenport
FL
204


100.0
%
 
99.5
%
 
Palm Village
MH
Bradenton
FL
146


100.0
%
 
97.9
%
 
Park Place
MH
Sebastian
FL
475


94.9
%
 
94.7
%
 

24

SUN COMMUNITIES, INC.

Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
Park Royale
MH
Pinellas Park
FL
309


100.0
%
 
99.7
%
 
Pecan Park RV Resort (2)
RV
Jacksonville
FL
15

226

N/A

 
N/A

 
Pelican Bay
MH
Micco
FL
216


98.6
%
 
99.5
%
 
Pelican RV Resort & Marina (2)
RV
Marathon
FL
71

15

100.0
%
 
100.0
%
 
Plantation Landings
MH
Haines City
FL
394


99.2
%
 
99.2
%
 
Pleasant Lake RV Resort (2)
RV
Jacksonville
FL
281

60

100.0
%
 
100.0
%
 
Rainbow
MH
Frostproof
FL
37


100.0
%
 
100.0
%
 
Rainbow RV Resort (2)
RV
Frostproof
FL
396

66

100.0
%
 
100.0
%
 
Rainbow Village of Largo (2)
RV
Largo
FL
267

42

100.0
%
 
100.0
%
 
Rainbow Village of Zephyrhills (2)
RV
Zephyrhills
FL
334

48

100.0
%
 
100.0
%
 
Red Oaks
MH
Bushnell
FL
103


92.2
%
 
92.2
%
 
Red Oaks RV Resort (2)
RV
Bushnell
FL
502

415

100.0
%
 
100.0
%
 
Regency Heights
MH
Clearwater
FL
391


98.2
%
 
97.4
%
 
Riptide RV Resort & Marina (2)
RV
Key Largo
FL
23

17

100.0
%
 
100.0
%
 
Riverside Club
MH
Ruskin
FL
728


84.2
%
 
82.6
%
 
Rock Crusher Canyon RV Resort (2)
RV
Crystal River
FL
169

226

100.0
%
 
100.0
%
 
Royal Country
MH
Miami
FL
864


99.9
%
 
99.8
%
 
Royal Palm Village
MH
Haines City
FL
395


84.3
%
 
86.1
%
 
Saddle Oak Club
MH
Ocala
FL
376


99.7
%
 
99.5
%
 
San Pedro Marina
MH
Islamorada
FL


%
 
%
(4) 
San Pedro RV Resort & Marina
RV
Islamorada
FL


%
 
%
(4) 
Saralake Estates
MH
Sarasota
FL
202


100.0
%
 
100.0
%
 
Savanna Club
MH
Port St. Lucie
FL
1,069


98.4
%
 
98.0
%
 
Seabreeze
MH
Islamorada
FL


%
 
%
(4) 
Seabreeze RV Resort
RV
Islamorada
FL


%
 
%
(4) 
Serendipity
MH
North Fort Myers
FL
338


97.9
%
 
97.0
%
 
Settler's Rest RV Resort (2)
RV
Zephyrhills
FL
303

75

100.0
%
 
100.0
%
 
Shadow Wood Village
MH
Hudson
FL
215


73.0
%
(1) 
99.4
%
 
Shady Road Villas
MH
Ocala
FL
130


70.0
%
 
61.5
%
 
Shell Creek Marina
MH
Punta Gorda
FL
54


98.1
%
 
100.0
%
 
Shell Creek RV Resort & Marina (2)
RV
Punta Gorda
FL
154

31

100.0
%
 
100.0
%
 
Siesta Bay RV Park (2)
RV
Fort Myers
FL
738

59

100.0
%
 
100.0
%
 
Southern Charm
MH
Zephyrhills
FL
1


100.0
%
 
100.0
%
 
Southern Charm RV Resort
RV
Zephyrhills
FL
403

93

100.0
%
 
100.0
%
 
Southern Pines
MH
Bradenton
FL
107


97.2
%
 
96.3
%
 
Southport Springs Golf & Country Club
MH
Zephyrhills
FL
547


98.9
%
 
98.9
%
 
Spanish Main
MH
Thontosassa
FL
56


87.5
%
 
91.1
%
 
Spanish Main RV Resort (2)
RV
Thontosassa
FL
235

44

100.0
%
 
100.0
%
 
Stonebrook
MH
Homosassa
FL
215


92.1
%
 
92.1
%
 
Sun N Fun RV Resort (2)
RV
Sarasota
FL
1,018

501

100.0
%
 
100.0
%
 
Suncoast Gateway
MH
Port Richey
FL
173


98.8
%
 
98.8
%
 
Sundance
MH
Zephyrhills
FL
332


100.0
%
 
99.7
%
 
Sunlake Estates
MH
Grand Island
FL
408


96.1
%
 
94.7
%
 
Sunset Harbor at Cow Key Marina
MH
Key West
FL
77


98.7
%
 
98.7
%
 
Sweetwater RV Resort (2)
RV
Zephyrhills
FL
212

79

100.0
%
 
100.0
%
 
Tallowwood Isle
MH
Coconut Creek
FL
273


95.6
%
 
95.2
%
 
Tampa East
MH
Dover
FL
31


100.0
%
 
96.8
%
 
Tampa East RV Resort (2)
RV
Dover
FL
434

235

100.0
%
 
100.0
%
 
The Hamptons Golf & Country Club
MH
Auburndale
FL
829


98.6
%
 
98.4
%
 

25

SUN COMMUNITIES, INC.

Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
The Hideaway
MH
Key West
FL
13


84.6
%
 
92.3
%
 
The Hills
MH
Apopka
FL
97


100.0
%
 
99.0
%
 
The Ridge
MH
Davenport
FL
481


99.0
%
 
99.2
%
 
The Valley
MH
Apopka
FL
148


100.0
%
 
100.0
%
 
Three Lakes (2)
RV
Hudson
FL
237

70

100.0
%
 
100.0
%
 
Vista del Lago
MH
Bradenton
FL
136


97.8
%
 
96.3
%
 
Vista del Lago RV Resort (2)
RV
Bradenton
FL
32

8

100.0
%
 
100.0
%
 
Vizcaya Lakes
MH
Port Charlotte
FL
108


91.7
%
 
86.7
%
 
Walden Woods
MH
Homosassa
FL
213


100.0
%
 
100.0
%
 
Walden Woods II
MH
Homosassa
FL
213


99.1
%
 
99.1
%
 
Water Oak Country Club Estates
MH
Lady Lake
FL
1,310


91.9
%
(1 
) 
89.5
%
(1) 
Waters Edge RV Resort (2)
RV
Zephyrhills
FL
140

77

100.0
%
 
100.0
%
 
Westside Ridge
MH
Auburndale
FL
219


99.5
%
 
99.1
%
 
Windmill Village
MH
Davenport
FL
509


99.6
%
 
98.8
%
 
Woodlands at Church Lake
MH
Groveland
FL
291


78.4
%
 
73.9
%
 
Florida Total
 
 
 
39,230

5,465

97.7
%
 
97.3
%
 
 
 
 
 
 
 
 
 
 
 
SOUTHWEST
 
 
 
 
 
 
 
 
 
California
 
 
 
 
 
 
 
 
 
49'er Village RV Resort (2)
RV
Plymouth
CA
51

275

100.0
%
 
100.0
%
 
Alta Laguna
MH
Rancho Cucamonga
CA
296


99.3
%
 
99.7
%
 
Caliente Sands
MH
Cathedral City
CA
118


98.3
%
 
99.2
%
 
Cava Robles RV Resort (2)
RV
Paso Robles
CA

332

N/A

 
N/A

 
Chula Vista RV Resort (2)
RV
San Diego
CA

237

N/A

 
N/A

 
Friendly Village of La Habra
MH
La Habra
CA
330


99.7
%
 
99.7
%
 
Friendly Village of Modesto
MH
Modesto
CA
289


98.6
%
 
97.2
%
 
Friendly Village of Simi
MH
Simi Valley
CA
222


100.0
%
 
100.0
%
 
Friendly Village of West Covina
MH
West Covina
CA
157


100.0
%
 
100.0
%
 
Heritage
MH
Temecula
CA
196


100.0
%
 
100.0
%
 
Indian Wells RV Resort (2)
RV
Indio
CA
158

144

100.0
%
 
100.0
%
 
Jellystone Park™ at Tower Park (2)
RV
Lodi
CA

360

N/A

 
N/A

 
Lakefront
MH
Lakeside
CA
295


100.0
%
 
99.7
%
 
Lazy J Ranch
MH
Arcata
CA
220


98.6
%
 
99.1
%
 
Lemon Wood
MH
Ventura
CA
231


99.6
%
 
100.0
%
 
Napa Valley
MH
Napa
CA
257


100.0
%
 
100.0
%
 
Oak Creek
MH
Coarsegold
CA
198


98.0
%
 
97.0
%
 
Ocean West
MH
McKinleyville
CA
130


99.2
%
 
97.7
%
 
Palos Verdes Shores MH & Golf Community
MH
San Pedro
CA
242


100.0
%
 
100.0
%
 
Pembroke Downs
MH
Chino
CA
163


100.0
%
 
100.0
%
 
Pismo Dunes RV Resort (2)
RV
Pismo Beach
CA
330

1

100.0
%
 
100.0
%
 
Rancho Alipaz
MH
San Juan Capistrano
CA
132


100.0
%
 
99.2
%
 
Rancho Caballero
MH
Riverside
CA
303


100.0
%
 
99.7
%
 
Royal Palms
MH
Cathedral City
CA
439


95.7
%
 
99.6
%
 
Royal Palms RV Resort
RV
Cathedral City
CA
38


100.0
%
 
100.0
%
 
The Colony
MH
Oxnard
CA
150


100.0
%
 
100.0
%
 
The Sands RV & Golf Resort (2)
RV
Desert Hot Springs
CA
244

270

100.0
%
 
100.0
%
 
Vallecito
MH
Newbury Park
CA
303


100.0
%
 
100.0
%
 
Victor Villa
MH
Victorville
CA
287


99.0
%
 
99.0
%
 
Vines RV Resort (2)
RV
Paso Robles
CA

130

N/A

 
N/A

 

26

SUN COMMUNITIES, INC.

Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
Vista del Lago
MH
Scotts Valley
CA
202


100.0
%
 
100.0
%
 
Wine Country RV Resort (2)
RV
Paso Robles
CA

203

N/A

 
N/A

 
California Total
 
 
 
5,981

1,952

99.3
%
 
99.3
%
 
 
 
 
 
 
 
 
 
 
 
Arizona
 
 
 
 
 
 
 
 
 
Blue Star / Lost Dutchman
MH
Apache Junction
AZ
175


96.6
%
 
95.9
%
 
Blue Star / Lost Dutchman RV Resort (2)
RV
Apache Junction
AZ
97

103

100.0
%
 
100.0
%
 
Brentwood West
MH
Mesa
AZ
350


99.1
%
 
98.9
%
 
Buena Vista
MH
Buckeye
AZ
400


75.5
%
 
N/A

(5) 
Desert Harbor
MH
Apache Junction
AZ
205


99.5
%
 
99.5
%
 
Fiesta Village
MH
Mesa
AZ
154


85.1
%
 
83.8
%
 
Fiesta Village RV Resort (2)
RV
Mesa
AZ
2

8

100.0
%
 
100.0
%
 
La Casa Blanca
MH
Apache Junction
AZ
198


100.0
%
 
100.0
%
 
Leaf Verde RV Resort (2)
RV
Buckeye
AZ

377

N/A

 
N/A

 
Mountain View
MH
Mesa
AZ
170


97.6
%
 
99.4
%
 
Palm Creek Golf
MH
Casa Grande
AZ
506


60.7
%
(1) 
57.0
%
(1) 
Palm Creek Golf & RV Resort (2)
RV
Casa Grande
AZ
926

909

100.0
%
 
100.0
%
 
Rancho Mirage
MH
Apache Junction
AZ
312


100.0
%
 
100.0
%
 
Reserve at Fox Creek
MH
Bullhead City
AZ
311


99.0
%
 
97.7
%
 
Sun Valley
MH
Apache Junction
AZ
268


95.9
%
 
94.0
%
 
Verde Plaza
MH
Tucson
AZ
189


87.8
%
 
93.1
%
 
Arizona Total
 
 
 
4,263

1,397

91.3
%
 
92.4
%
 
 
 
 
 
 
 
 
 
 
 
Colorado
 
 
 
 
 
 
 
 
 
Cave Creek
MH
Evans
CO
447


98.9
%
 
98.7
%
 
Eagle Crest
MH
Firestone
CO
441


99.5
%
 
99.8
%
 
Jellystone Park™ at Larkspur (2)
RV
Lakespur
CO


N/A

 
N/A

 
North Point Estates
MH
Pueblo
CO
108


99.1
%
 
97.2
%
 
River Run Ranch
MH
Granby
CO
36


2.8
%
(1) 
%
 
River Run Ranch RV Resort (2)
RV
Granby
CO

291

N/A

 
N/A

 
Skyline
MH
Fort Collins
CO
170


97.6
%
 
100.0
%
 
Smith Creek Crossing
MH
Granby
CO
52


5.8
%
(1) 
%
 
Swan Meadow Village
MH
Dillon
CO
175


100.0
%
 
99.4
%
 
The Grove at Alta Ridge
MH
Thornton
CO
409


99.5
%
 
99.5
%
 
Timber Ridge
MH
Fort Collins
CO
585


99.5
%
 
99.7
%
 
Colorado Total
 
 
 
2,423

291

95.8
%
 
99.4
%
 
 
 
 
 
 
 
 
 
 
 
OTHER
 
 
 
 
 
 
 
 
 
Pandion Ridge RV Resort (2)
RV
Orange Beach
AL

142

N/A

 
N/A

 
Beechwood
MH
Killingworth
CT
297


98.7
%
 
N/A

(5) 
Cedar Springs
MH
Southington
CT
190


90.0
%
 
N/A

(5) 
Forest Hill
MH
Southington
CT
188


97.9
%
 
N/A

(5) 
Grove Beach
MH
Westbrook
CT
136


97.8
%
 
N/A

(5) 
Hillcrest
MH
Uncasville
CT
208


98.1
%
 
N/A

(5) 
Lakeside
MH
Terryville
CT
76


93.4
%
 
N/A

(5) 
Lakeview CT
MH
Danbury
CT
179


86.6
%
 
N/A

(5) 
Laurel Heights
MH
Uncasville
CT
49


98.0
%
 
N/A

(5) 
Marina Cove
MH
Uncasville
CT
25


80.0
%
 
N/A

(5) 
Millwood
MH
Uncasville
CT
45


%
(1) 
N/A

(5) 

27

SUN COMMUNITIES, INC.

Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
New England Village
MH
Westbrook
CT
60


100.0
%
 
N/A

(5) 
Oak Grove
MH
Plainville
CT
45


100.0
%
 
N/A

(5) 
Rolling Hills
MH
Storrs
CT
200


79.5
%
 
N/A

(5) 
Seaport RV Resort (2)
RV
Old Mystic
CT
36

113

100.0
%
 
100.0
%
 
Three Gardens
MH
Southington
CT
135


89.6
%
 
N/A

(5) 
Yankee Village
MH
Old Saybrook
CT
23


100.0
%
 
N/A

(5) 
High Point Park
MH
Frederica
DE
409


97.3
%
 
96.3
%
 
Leisure Point Resort
MH
Millsboro
DE
201


90.0
%
 
N/A

(5) 
Leisure Point RV Resort (2)
RV
Millsboro
DE
277

24

100.0
%
 
%
 
Massey’s Landing RV Resort (2)
RV
Millsboro
DE

291

%
 
%
 
Sea Air Village
MH
Rehoboth Beach
DE
373


99.2
%
 
100.0
%
 
Sea Air Village RV Resort (2)
RV
Rehoboth Beach
DE
119

15

100.0
%
 
100.0
%
 
Countryside Village of Atlanta
MH
Lawrenceville
GA
261


100.0
%
 
87.4
%
(1) 
Countryside Village of Gwinnett
MH
Buford
GA
331


99.1
%
 
98.2
%
 
Countryside Village of Lake Lanier
MH
Buford
GA
548


99.8
%
 
99.5
%
 
Wymberly
MH
Martinez
GA
215


99.5
%
 
N/A

(5) 
Autumn Ridge
MH
Ankeny
IA
413


97.1
%
 
96.6
%
 
Candlelight Village
MH
Sauk Village
IL
309


92.2
%
 
93.2
%
 
Maple Brook
MH
Matteson
IL
441


99.3
%
 
99.5
%
 
Oak Ridge
MH
Manteno
IL
426


95.1
%
 
93.2
%
 
Sunset Lakes RV Resort (2)
RV
Hillsdale
IL
225

273

100.0
%
 
100.0
%
 
Wildwood Community
MH
Sandwich
IL
476


98.7
%
 
99.2
%
 
Reunion Lake RV Resort (2)
RV
Ponchatoula
LA

201

%
 
%
 
Campers Haven RV Resort (2)
RV
Dennisport
MA
224

41

100.0
%
 
100.0
%
 
Peter's Pond RV Resort (2)
RV
Sandwich
MA
328

78

100.0
%
 
100.0
%
 
Castaways RV Resort & Campground (2)
RV
Berlin
MD
1

392

100.0
%
 
100.0
%
 
Fort Whaley RV Resort & Campground (2)
RV
Whaleyville
MD

183

N/A

 
N/A

 
Frontier Town RV Resort & Campground (2)
RV
Berlin
MD

685

N/A

 
N/A

 
Hyde Park
MH
Easton
MD
240


98.3
%
 
N/A

(5) 
Jellystone Park™ at Maryland (2)
RV
Williamsport
MD

228

N/A

 
N/A

 
Southside Landing
MH
Cambridge
MD
96


81.3
%
 
N/A

(5) 
Hid'n Pines RV Resort (2)
RV
Old Orchard Beach
ME
66

255

100.0
%
 
N/A

 
Maplewood Manor
MH
Brunswick
ME
296


98.3
%
 
99.7
%
 
Merrymeeting
MH
Brunswick
ME
43


100.0
%
 
93.0
%
 
Saco / Old Orchard Beach KOA (2)
RV
Saco
ME

191

N/A

 
N/A

 
Town & Country Village
MH
Lisbon
ME
144


97.9
%
 
95.8
%
 
Wagon Wheel RV Resort & Campground (2)
RV
Old Orchard Beach
ME
237

49

100.0
%
 
100.0
%
 
Wild Acres RV Resort & Campground (2)
RV
Old Orchard Beach
ME
314

316

100.0
%
 
100.0
%
 
Southern Hills / Northridge Place
MH
Stewartville
MN
475


98.5
%
 
98.1
%
(1) 
Pin Oak Parc
MH
O'Fallon
MO
502


99.2
%
 
98.0
%
 
Southfork
MH
Belton
MO
474


67.7
%
 
68.6
%
 
Countryside Village
MH
Great Falls
MT
226


94.7
%
 
97.3
%
 
Coastal Plantation
MH
Hampstead
NC
101


100.0
%
 
N/A

(5) 
Fort Tatham RV Resort & Campground (2)
RV
Sylva
NC
59

31

100.0
%
 
100.0
%
 
Glen Laurel
MH
Concord
NC
260


100.0
%
 
99.2
%
 
Jellystone Park™ at Golden Valley (2)
RV
Bostic
NC

182

N/A

 
N/A

 
Meadowbrook
MH
Charlotte
NC
321


100.0
%
 
99.7
%
 
Brook Ridge
MH
Hooksett
NH
91


100.0
%
 
N/A

(5) 
Crestwood
MH
Concord
NH
320


98.4
%
 
N/A

(5) 

28

SUN COMMUNITIES, INC.

Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
Farmwood Village
MH
Dover
NH
159


98.7
%
 
N/A

(5) 
Glen Ellis Family Campground (2)
RV
Glen
NH
40

238

100.0
%
 
N/A

(5) 
Hannah Village
MH
Lebanon
NH
81


100.0
%
 
N/A

(5) 
Hemlocks
MH
Tilton
NH
103


99.0
%
 
N/A

(5) 
Mi-Te-Jo Campground (2)
RV
Milton
NH
107

117

100.0
%
 
100.0
%
 
River Pines
MH
Nashua
NH
480


98.8
%
 
N/A

(5) 
Strafford / Lake Winnipesaukee South KOA
RV
Strafford
NH


N/A

 
N/A

 
Westward Shores Cottages & RV Resort (2)
RV
West Ossipee
NH
386

114

100.0
%
 
100.0
%
 
Big Timber Lake RV Camping Resort
RV
Cape May Court House
NJ
325

203

100.0
%
 
100.0
%
 
Cape May Crossing
MH
Cape May
NJ
28


100.0
%
 
100.0
%
 
Deep Run
MH
Cream Ridge
NJ
243


100.0
%
 
N/A

(5) 
Driftwood RV Resort & Campground (2)
RV
Clemont
NJ
630

77

100.0
%
 
100.0
%
 
Lake Laurie RV and Camping Resort
RV
Cape May
NJ
374

255

100.0
%
 
100.0
%
 
Long Beach RV Resort & Campground (2)
RV
Barnegat
NJ
170

44

100.0
%
 
100.0
%
 
Seashore Campsites & RV Resort (2)
RV
Cape May
NJ
434

242

100.0
%
 
100.0
%
 
Shady Pines
MH
Galloway Twp.
NJ
39


100.0
%
 
100.0
%
 
Shady Pines RV Resort (2)
RV
Galloway Twp.
NJ
52

43

100.0
%
 
100.0
%
 
Sun Villa Estates
MH
Reno
NV
324


99.7
%
 
99.7
%
 
Adirondack Gateway RV Resort & Campground (2)
RV
Gansevoort
NY
302

40

100.0
%
 
100.0
%
 
Cherrywood
MH
Clinton
NY
176


80.7
%
 
N/A

(5) 
Jellystone Park™ at Birchwood Acres
MH
Greenfield Park
NY
1


100.0
%
 
100.0
%
 
Jellystone Park™ at Birchwood Acres RV Resort (2)
RV
Greenfield Park
NY
103

201

100.0
%
 
100.0
%
 
Jellystone Park™ at Gardiner (2)
RV
Gardiner
NY

338

N/A

 
N/A

 
Jellystone Park™ of Western New York (2)
RV
North Java
NY
15

344

100.0
%
 
100.0
%
 
Parkside Village
MH
Cheektowaga
NY
156


100.0
%
 
100.0
%
 
Sky Harbor
MH
Cheektowaga
NY
522


98.3
%
 
96.7
%
 
The Villas at Calla Pointe
MH
Cheektowaga
NY
116


100.0
%
 
98.3
%
 
Country Village Estates
MH
Oregon City
OR
518


99.8
%
 
N/A

(5) 
Forest Meadows
MH
Philomath
OR
75


100.0
%
 
98.7
%
 
Oceanside RV Resort & Campground (2)
RV
Coos Bay
OR

86

N/A

 
N/A

 
Woodland Park Estates
MH
Eugene
OR
398


100.0
%
 
99.7
%
 
Countryside Estates
MH
Mckean
PA
304


95.4
%
 
98.0
%
 
Jellystone Park™ at Quarryville (2)
RV
Quarryville
PA

256

N/A

 
N/A

 
Lake in Wood RV Resort (2)
RV
Narvon
PA
276

145

100.0
%
 
100.0
%
 
Pheasant Ridge
MH
Lancaster
PA
553


100.0
%
 
100.0
%
 
Carolina Pines RV Resort (2)
RV
Conway
SC
75

420

100.0
%
 
%
 
Country Lakes
MH
Little River
SC
136


95.6
%
 
N/A

(5) 
Crossroads
MH
Aiken
SC
171


25.7
%
 
N/A

(5) 
Crossroads RV Resort (2)
RV
Aiken
SC
17

5

100.0
%
 
%
 
Lakeside Crossing
MH
Conway
SC
688


76.6
%
(1) 
82.7
%
(1) 
Ocean Pines
MH
Garden City
SC
579


99.5
%
 
N/A

(5) 
Southern Palms
MH
Ladson
SC
194


100.0
%

N/A

(5) 
Bell Crossing
MH
Clarksville
TN
237


98.7
%
 
97.5
%
 
Jellystone Park™ at Memphis (2)
RV
Horn Lake
TN

155

N/A

 
N/A

 
River Plantation RV Resort (2)
RV
Sevierville
TN

308

N/A

 
N/A

 
Archview RV Resort & Campground (2)
RV
Moab
UT

113

N/A

 
N/A

 
Canyonlands RV Resort & Campground (2)
RV
Moab
UT

131

N/A

 
N/A

 
Moab Valley RV Resort & Campground (2)
RV
Moab
UT

131

N/A

 
N/A

 
Pony Express RV Resort & Campground (2)
RV
North Salt Lake
UT

185

N/A

 
N/A

 

29

SUN COMMUNITIES, INC.

Property
MH/RV
City
State
MH and Annual RV Sites as of 12/31/19
Transient RV Sites as of 12/31/19
Occupancy as of 12/31/19
Occupancy as of 12/31/18
Slickrock RV Resort & Campground (2)
RV
Moab
UT

193

N/A

 
N/A

 
Chincoteague Island KOA RV Resort (3)
RV
Chincoteague
VA


N/A

 
N/A

 
Gwynn's Island RV Resort & Campground (2)
RV
Gwynn
VA
107

22

100.0
%
 
100.0
%
 
Jellystone Park™ at Luray (2)
RV
East Luray
VA

255

N/A

 
N/A

 
New Point RV Resort (2)
RV
New Point
VA
277

47

100.0
%
 
100.0
%
 
Pine Ridge
MH
Prince George
VA
376


90.2
%
(1) 
82.4
%
(1) 
Sunset Beach RV Resort (3)
RV
Cape Charles
VA


N/A

 
N/A

 
Thunderhill Estates
MH
Sturgeon Bay
WI
266


98.5
%
 
93.6
%
 
Westward Ho RV Resort & Campground (2)
RV
Glenbeulah
WI
225

97

100.0
%
 
100.0
%
 
Other Total
 
 
 
22,572

8,495

96.0
%
 
96.7
%
 
 
 
 
 
 
 
 
 
 
 
US TOTAL / AVERAGE
 
 
 
115,846

20,477

96.3
%
 
96.0
%
 
 
 
 
 
 
 
 
 
 
 
CANADA
 
 
 
 
 
 
 
 
 
Arran Lake RV Resort & Campground (2)
RV
Allenford
ON
166

23

100.0
%
 
100.0
%
 
Craigleith RV Resort & Campground (2)
RV
Clarksburg
ON
85

26

100.0
%
 
100.0
%
 
Deer Lake RV Resort & Campground (2)
RV
Huntsville
ON
179

62

100.0
%
 
100.0
%
 
Grand Oaks RV Resort & Campground (2)
RV
Cayuga
ON
234

44

100.0
%
 
100.0
%
 
Gulliver's Lake RV Resort & Campground (2)
RV
Millgrove
ON
198


100.0
%
 
100.0
%
 
Hidden Valley RV Resort & Campground (2)
RV
Normandale
ON
204

41

100.0
%
 
100.0
%
 
Lafontaine RV Resort & Campground (2)
RV
Tiny
ON
210

53

100.0
%
 
100.0
%
 
Lake Avenue RV Resort & Campground (2)
RV
Cherry Valley
ON
124

12

100.0
%
 
100.0
%
 
Pickerel Park RV Resort & Campground (2)
RV
Napanee
ON
148

61

100.0
%
 
100.0
%
 
Sherkston Shores Beach Resort & Campground (2)
RV
Sherkston
ON
1,454

327

100.0
%
 
100.0
%
 
Silver Birches RV Resort & Campground (2)
RV
Lambton Shores
ON
133

29

100.0
%
 
100.0
%
 
Trailside RV Resort & Campground (2)
RV
Seguin
ON
197

40

100.0
%
 
100.0
%
 
Willow Lake RV Resort & Campground (2)
RV
Scotland
ON
371

2

100.0
%
 
100.0
%
 
Willowood RV Resort & Campground (2)
RV
Amherstburg
ON
139

188

100.0
%
 
100.0
%
 
Woodland Lake RV Resort & Campground (2)
RV
Bornholm
ON
189

31

100.0
%
 
100.0
%
 
CANADA TOTAL / AVERAGE
 
 
 
4,031

939

100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
COMPANY TOTAL / AVERAGE
 
 
 
119,877

21,416

96.4
%
 
96.1
%
 
(1) Occupancy in these Properties reflects the fact that these communities are in a lease-up phase following an expansion, redevelopment or initial construction.
(2) Occupancy percentage excludes transient RV sites. Percentage calculated by dividing revenue producing sites by developed sites. A revenue producing site is defined as a site that is occupied by a paying resident or reserved by a customer with annual or seasonal usage rights. A developed site is defined as an adequate sized parcel of land that has road and utility access which is zoned and licensed (if required) for use as a home site.
(3) We have an ownership interest in Sunset Beach, Strafford, and Chincoteague Island, but do not maintain and operate the property.
(4) Occupancy in these Properties at 12/31/2019 reflects redevelopment following asset impairments resulting from Hurricane Irma in September 2017.
(5) No occupancy in 2018 as communities were acquired in 2019.

30

SUN COMMUNITIES, INC.

ITEM 3. LEGAL PROCEEDINGS

We are involved in various legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to have a material adverse impact on our results of operations or financial condition.

ITEM 4. MINE SAFETY DISCLOSURES

None.



31

SUN COMMUNITIES, INC.

PART II

ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock has been listed on the NYSE since December 8, 1993, and traded under the symbol “SUI”. On February 13, 2020, the closing share price of our common stock was 165.97 per share on the NYSE, and there were 283 holders of record for the 93,319,200 outstanding shares of common stock.

On February 13, 2020, the following OP units of the Operating Partnership were outstanding:
OP Units
 
OP units
issued and outstanding
 
Exchangeable
shares of common stock
Aspen preferred OP units
 
1,283,819

 
399,872

Series A-1 preferred OP units
 
307,634

 
750,327

Series C preferred OP units
 
310,424

 
344,571

Series D preferred OP units
 
488,958

 
391,166

Series E preferred OP units
 
90,000

 
62,069

Series A-3 preferred OP units
 
40,268

 
74,917

Common OP units
 
2,408,210

 
2,408,210

 
 
4,929,313

 
4,431,132


We have historically paid regular quarterly distributions to holders of our common stock and common OP units. In addition, we are obligated to make distributions to holders of shares of Aspen preferred OP units, Series A-1 preferred OP units, Series C preferred OP units, Series D preferred OP units, Series E preferred OP units, and Series A-3 preferred OP units. See “Structure of the Company” under Part I, Item 1 of this Annual Report on Form 10-K. Our ability to make distributions on our common stock and preferred OP units, payments on our indebtedness, and to fund planned capital expenditures will depend on our ability to generate cash in the future. The decision to declare and pay distributions on shares of our common stock and common OP units in the future, as well as the timing, amount, and composition of any such future distributions, will be at the sole discretion of our Board of Directors in light of conditions then existing, including our earnings, financial condition, capital requirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions, general overall economic conditions, and other factors.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table reflects information about the securities authorized for issuance under our equity compensation plans as of December 31, 2019:
 
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights
 
Weighted-average exercise price of outstanding options, warrants and rights
 
Number of shares of common stock remaining available for future issuance under equity compensation plans (excluding securities reflected in column a)
 Plan Category
 
(a)
 
(b)
 
(c)
Equity compensation plans approved by stockholders
 
1,500

 
$
37.35

 
974,864

Equity compensation plans not approved by stockholders
 

 

 

Total
 
1,500

 

 
974,864





32

SUN COMMUNITIES, INC.

Recent Sales of Unregistered Securities

From time to time, we may issue shares of common stock in exchange for OP units that may be tendered to the Operating Partnership for redemption in accordance with the terms and provisions of the limited partnership agreement of the Operating Partnership. Such shares are issued based on the exchange ratios and formulas described in “Structure of the Company” under Part I, Item 1 of this Annual Report on Form 10-K. Below is the activity of conversions for the quarter and year ended December 31, 2019:
 
 
 
 
Three Months Ended December 31, 2019
 
Year Ended December 31, 2019
OP units
 
Conversion Rate
 
Units / Shares
Common Stock
 
Units / Shares
Common Stock
Common OP units
 
1.0000
 
42,471

42,471

 
485,629

485,629

Series A-1 preferred OP units
 
2.4390
 
6,975

17,007

 
22,707

55,370

Series A-4 preferred OP units
 
0.4444
 


 
4,708

2,092

Series A-4 preferred stock
 
0.4444
 
1,051,501

467,320

 
1,062,789

472,366

Series C preferred OP units
 
1.1100
 


 
4,014

4,455


In addition to the shares of common stock issued pursuant to OP unit conversions above, we issued 1,972,876 shares of common stock on October 30, 2019 in connection with an acquisition.

All of the securities described above were issued in private placements in reliance on Section 4(a)(2) of the Securities Act, including Regulation D promulgated thereunder, based on certain investment representations made by the parties to whom the securities were issued. No underwriters were used in connection with any of such issuances.

Performance Graph

Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on our common stock against the cumulative total return of a broad market index composed of all issuers listed on the NYSE and an industry index comprised of 13 publicly traded REITs, for the five year period ending on December 31, 2019. This line graph assumes a $100 investment on December 31, 2014, a reinvestment of distributions and actual increase of the market value of our common stock relative to an initial investment of $100.The comparisons in this table are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock.

Peer Group

We utilize peer group data for quantitative benchmarking against external market participants. We select our peer group based on a number of quantitative and qualitative factors including, but not limited to, revenues, total assets, market capitalization, industry, sub-industry, location, total shareholder return history, executive compensation components, and peer decisions made by other companies. From time to time, we update our peer group based on analysis of the aforementioned factors and application of judgment. During 2019, we updated our peer group, as shown in the “SUI New Peer Group” caption in the table below.


33

SUN COMMUNITIES, INC.

item5sunperformance.jpg
 
 
Year Ended
Index
 
December 31, 2014
 
December 31, 2015
 
December 31, 2016
 
December 31, 2017
 
December 31, 2018
 
December 31, 2019
Sun Communities, Inc.
 
$
100.00

 
$
117.89

 
$
136.51

 
$
170.55

 
$
192.54

 
$
290.57

SNL U.S. REIT Residential Index
 
$
100.00

 
$
116.35

 
$
122.15

 
$
132.87

 
$
135.24

 
$
172.60

NYSE Composite Index
 
$
100.00

 
$
95.91

 
$
107.36

 
$
127.46

 
$
116.06

 
$
145.66

SUI New Peer Group (1)
 
$
100.00

 
$
118.97

 
$
120.98

 
$
128.53

 
$
127.38

 
$
159.20

SUI Old Peer Group (2)
 
$
100.00

 
$
114.52

 
$
117.98

 
$
120.65

 
$
117.90

 
$
146.89

(1) SUI new peer group includes: American Campus Communities, Inc., Apartment Investment and Management Company, AvalonBay Communities, Inc., Camden Property Trust, CubeSmart, Equity Lifestyles Properties, Inc., Essex Property Trust, Inc., Extra Space Storage Inc., Federal Realty Investment Trust, Invitation Homes, Inc., Mid-America Apartment Communities, Inc., The Macerich Company, and UDR, Inc.
(2) SUI old peer group included: American Campus Communities, Inc., Apartment Investment and Management Company, AvalonBay Communities, Inc., Brandywine Realty Trust, Camden Property Trust, CubeSmart, Equity Lifestyles Properties, Inc., Essex Property Trust, Inc., Federal Realty Investment Trust, Kimco Realty Corp., The Macerich Company, Mid-America Apartment Communities, Inc., UDR, Inc., and Weingarten Realty Investors.

The information included under the heading “Performance Graph” is not to be treated as “soliciting material” or as “filed” with the SEC, and is not incorporated by reference into any filing by the Company under the Securities Act or the Exchange Act that is made on, before or after the date of filing of this Annual Report on Form 10-K.



34

SUN COMMUNITIES, INC.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected financial information on a historical basis. The historical financial data has been derived from our historical financial statements. The following information should be read in conjunction with the information included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the Consolidated Financial Statements and the Notes thereto. In addition to the results presented in accordance with GAAP below, we have provided funds from operations (“FFO”) as a supplemental performance measure. Refer to Non-GAAP Financial Measures in Item 7 below for additional information.
 
Year Ended
 
December 31, 2019
 
December 31, 2018 (1)
 
December 31, 2017 (1)
 
December 31, 2016 (1)
 
December 31, 2015 (1)
 
(In thousands, except for share related data)
Financial Information
 
 
 
 
 
 
 
 
 
Total revenues
$
1,264,037

 
$
1,126,825

 
$
982,570

 
$
833,778

 
$
674,731

Net income
$
177,379

 
$
120,158

 
$
81,819

 
$
31,471

 
$
170,473

Net Income attributable to Sun Communities Inc. common stockholders
$
160,265

 
$
105,493

 
$
65,021

 
$
17,369

 
$
137,325

Basic earnings per share
$
1.80

 
$
1.29

 
$
0.85

 
$
0.27

 
$
2.53

Diluted earnings per share
$
1.80

 
$
1.29

 
$
0.85

 
$
0.26

 
$
2.52

 
 
 
 
 
 
 
 
 
 
Cash distributions declared per common share
$
3.00

 
$
2.84

 
$
2.68

 
$
2.60

 
$
2.60

 
 
 
 
 
 
 
 
 
 
FFO common stockholders and dilutive convertible securities
$
440,687

 
$
385,615

 
$
320,119

 
$
225,653

 
$
192,128

Core FFO common stockholders and dilutive convertible securities
$
456,932

 
$
394,369

 
$
337,384

 
$
266,131

 
$
210,559

FFO common stockholders and dilutive convertible securities per share - fully diluted
$
4.75

 
$
4.48

 
$
3.95

 
$
3.22

 
$
3.31

Core FFO common stockholders and dilutive convertible securities per share - fully diluted
$
4.92

 
$
4.58

 
$
4.17

 
$
3.79

 
$
3.63

 
 
 
 
 
 
 
 
 
 
Balance Sheets
 
 
 
 
 
 
 
 
 
Total assets
$
7,802,060

 
$
6,710,026


$
6,111,957

 
$
5,870,776

 
$
4,181,799

Total debt
$
3,434,402

 
$
3,124,303


$
3,079,238

 
$
3,110,042

 
$
2,336,297

Total liabilities
$
3,848,104

 
$
3,479,112


$
3,405,204

 
$
3,441,605

 
$
2,562,421

(1) Financial information has been revised to reflect certain reclassifications in prior periods to conform to current period presentation.


35

SUN COMMUNITIES, INC.

ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and accompanying footnotes thereto included in this Annual Report on Form 10-K. In addition to the results presented in accordance with GAAP below, we have provided NOI and FFO as supplemental performance measures. Refer to Non-GAAP Financial Measures in this Item 7 for additional information.

OVERVIEW

We are a fully integrated, self-administered and self-managed REIT. As of December 31, 2019, we owned and operated or held an interest in a portfolio of 422 developed properties located in 33 states throughout the United States and one province in Canada, including 266 MH communities, 122 RV communities, and 34 properties containing both MH and RV sites. We have been in the business of acquiring, operating, developing, and expanding MH and RV communities since 1975. We lease individual sites with utility access for placement of manufactured homes and RVs to our customers. We are also engaged through SHS in the marketing, selling, and leasing of new and pre-owned homes to current and future residents in our communities. The operations of SHS support and enhance our occupancy levels, property performance, and cash flows.

EXECUTIVE SUMMARY

2019 Accomplishments

Total revenues for 2019 increased 12.2 percent to $1.3 billion.
Core FFO for 2019 was $4.92 per diluted share and OP unit, an increase of 7.4 percent over 2018.
Achieved Same Community NOI growth of 7.3 percent.
Gained 2,674 revenue producing sites.
Reached Same Community occupancy of 98.4 percent.
Brokered homes sales increased by 3.9 percent to 2,231 in 2019 as compared to 2,147 in 2018.
Achieved 1-year, 3-year and 5-year total shareholder return of 50.9 percent, 112.8 percent and 190.2 percent, respectively, outperforming the MSCI US REIT, Russell 1000, U.S. REIT Residential, and S&P 500 indexes.
Delivered 1,230 expansion sites in 16 communities.
Completed the construction of approximately 1,100 sites at four ground-up developments and one re-development community.
Acquired the Jensen Portfolio containing 31 MH communities in desirable areas along the Atlantic Coast.
Including the Jensen Portfolio, acquired 47 communities, totaling over 10,000 sites, for a total purchase price of $815.2 million.

Property Operations

Occupancy in our Properties, as well as our ability to increase rental rates, directly affect revenues. Our revenue streams are predominantly derived from customers renting our sites on a long-term basis. Our Same Community properties continue to achieve revenue and occupancy increases which drive continued NOI growth. We continue to sell homes at a high level in our communities and expect this trend to continue.
 
 
Year Ended
Portfolio Information:
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Occupancy % - Total Portfolio - MH and RV blended (1)
 
96.4
%
 
96.1
%
 
95.8
%
Occupancy % - Same Community - MH and RV blended (1)(2)(3)
 
98.4
%
 
98.0
%
 
97.3
%
Core FFO
 
$
4.92

 
$
4.58

 
$
4.17

NOI - Total Portfolio (in thousands)
 
$
597,406

 
$
533,321

 
$
479,662

NOI - Same Community (in thousands)
 
$
558,296

 
$
539,511

 
$
386,807

Homes Sold
 
3,439

 
3,629

 
3,282

Number of Occupied Rental Homes
 
11,325

 
10,994

 
11,074

(1)  Occupancy percent includes annual RV sites and excludes transient RV sites.
(2) Occupancy percent excludes recently completed but vacant expansion sites.
(3) Same community is based on the as reported year end same community count for each respective year.


36

SUN COMMUNITIES, INC.

Acquisition Activity

During the past three years, we have completed acquisitions of over 75 properties with approximately 18,000 sites located in high growth areas and retirement and vacation destinations such as California, Florida, Texas, Arizona and the Eastern United States coastal areas.

During 2019, we acquired 47 (1) communities, as detailed below:
Community Name
 
Type
 
Sites
 
Development Sites
 
State
 
Month Acquired
Slickrock Campground
 
RV
 
193

 

 
UT
 
December
Pandion Ridge
 
RV
 
142

 
351

 
AL
 
November
Jensen Portfolio (2)
 
MH
 
5,230

 
466

 
Various
 
October
Glen Ellis
 
RV
 
244

 
40

 
NH
 
September
Leisure Point Resort (3)
 
MH / RV
 
502

 

 
DE
 
September
Reunion Lake
 
RV
 
202

 
69

 
LA
 
July
River Plantation
 
RV
 
309

 

 
TN
 
May
Massey’s Landing RV
 
RV
 
291

 

 
DE
 
February
Shelby Properties (4)
 
MH
 
1,308

 

 
MI
 
February
Buena Vista
 
MH
 
400

 

 
AZ
 
February
Country Village Estates (5)
 
MH
 
518

 

 
OR
 
January
Hid’n Pines RV
 
RV
 
321

 

 
ME
 
January
Hacienda del Rio
 
MH (Age-Restricted)
 
730

 

 
FL
 
January
 
 
Total
 
10,390

 
926

 
 
 
 
(1) Refer to Note 3, “Acquisitions” for information on the Chula Vista, Chincoteague Island KOA RV Resort, and Strafford/Lake Winnipesaukee South KOA RV Resort ground leases not included in the table above.
(2) Contains 31 communities located in CT, GA, MD, NH, NJ, NY, NC and SC. In conjunction with the acquisition, we issued 1,972,876 shares of common stock, net of fractional shares paid in cash.
(3) Contains 201 MH sites and 301 RV sites.
(4) Contains two MH communities.
(5) In conjunction with the acquisition, we issued Series D Preferred OP units. As of December 31, 2019, 488,958 Series D Preferred OP units were outstanding.

Construction Activity

Ground-up Developments - During the year ended December 31, 2019, we constructed nearly 1,100 sites at four ground-up development communities and one re-development located in Colorado, Florida, North Carolina and South Carolina. We expect to construct 550 - 750 sites in 2020.

Expansions - We have been focused on expansion opportunities adjacent to our existing communities, and we have developed over 4,600 sites within the past three years. We have expanded approximately 1,230 sites at 16 communities in 2019. We continue to expand our Properties utilizing our inventory of owned and entitled land (approximately 10,300 sites available for development in 84 communities) and expect to construct 1,000 - 1,200 additional expansion sites in 2020.

Markets

Our Properties are largely concentrated in Florida, Michigan, Texas and California. We have expanded our market share in multiple states through recent acquisitions and increased our property holdings in high growth areas of the U.S. including retirement and vacation destinations.

We have also experienced strong revenue growth through recent acquisitions of RV communities. The age demographic of RV communities is attractive, as the population of retirement age baby boomers in the U.S. is growing. RV communities have become a trending vacation opportunity not only for the retiree population, but as an affordable vacation alternative for families and millennials.


37

SUN COMMUNITIES, INC.

The following table identifies our markets by total sites:
 
 
December 31, 2019
 
December 31, 2018
Major Market
 
Number of Properties
 
Total Sites
 
% of Total Sites
 
Number of Properties
 
Total Sites
 
% of Total Sites
Florida
 
125

 
44,695

 
31.6
%
 
124

 
43,791

 
34.1
%
Michigan
 
72

 
28,475

 
20.2
%
 
70

 
27,080

 
21.1
%
Texas
 
23

 
9,238

 
6.5
%
 
23

 
8,674

 
6.8
%
California
 
31

 
7,933

 
5.6
%
 
30

 
7,706

 
6.0
%
Arizona
 
13

 
5,660

 
4.0
%
 
12

 
5,259

 
4.1
%
Ontario, Canada
 
15

 
4,970

 
3.5
%
 
15

 
4,891

 
3.8
%
Indiana
 
11

 
3,621

 
2.6
%
 
11

 
3,608

 
2.8
%
New Jersey
 
8

 
3,159

 
2.2
%
 
7

 
2,916

 
2.3
%
Ohio
 
9

 
2,920

 
2.1
%
 
9

 
2,920

 
2.3
%
Colorado
 
10

 
2,714

 
1.9
%
 
8

 
2,472

 
1.9
%
New York
 
8

 
2,314

 
1.6
%
 
7

 
2,118

 
1.6
%
South Carolina
 
6

 
2,285

 
1.6
%
 
1

 
588

 
0.5
%
New Hampshire
 
10

 
2,236

 
1.6
%
 
2

 
682

 
0.5
%
Illinois
 
5

 
2,150

 
1.5
%
 
5

 
2,150

 
1.6
%
Connecticut
 
16

 
2,005

 
1.4
%
 
1

 
149

 
0.1
%
Maine
 
7

 
1,911

 
1.4
%
 
6

 
1,595

 
1.2
%
Maryland
 
6

 
1,825

 
1.3
%
 
4

 
1,382

 
1.1
%
Delaware
 
4

 
1,709

 
1.2
%
 
2

 
916

 
0.7
%
Pennsylvania
 
4

 
1,534

 
1.1
%
 
4

 
1,519

 
1.2
%
Georgia
 
4

 
1,355

 
1.0
%
 
3

 
1,140

 
0.9
%
Virginia
 
6

 
1,084

 
0.8
%
 
5

 
1,031

 
0.8
%
Oregon
 
4

 
1,077

 
0.8
%
 
3

 
561

 
0.4
%
Missouri
 
2

 
976

 
0.7
%
 
2

 
976

 
0.8
%
North Carolina
 
5

 
954

 
0.7
%
 
3

 
671

 
0.5
%
Utah
 
5

 
753

 
0.5
%
 
4

 
562

 
0.4
%
Tennessee
 
3

 
700

 
0.5
%
 
2

 
392

 
0.3
%
Massachusetts
 
2

 
671

 
0.5
%
 
2

 
679

 
0.5
%
Wisconsin
 
2

 
588

 
0.4
%
 
2

 
588

 
0.5
%
Minnesota
 
1

 
475

 
0.3
%
 
1

 
475

 
0.4
%
Iowa
 
1

 
413

 
0.3
%
 
1

 
413

 
0.3
%
Nevada
 
1

 
324

 
0.2
%
 
1

 
324

 
0.3
%
Montana
 
1

 
226

 
0.2
%
 
1

 
226

 
0.2
%
Louisiana
 
1

 
201

 
0.1
%
 

 

 
%
Alabama
 
1

 
142

 
0.1
%
 

 

 
%
 
 
422

 
141,293

 
 
 
371

 
128,454

 
 

38

SUN COMMUNITIES, INC.

NON-GAAP FINANCIAL MEASURES

In addition to the results reported in accordance with GAAP in our “Results of Operations” below, we have provided information regarding NOI and FFO as supplemental performance measures. We believe NOI and FFO are appropriate measures given their wide use by and relevance to investors and analysts following the real estate industry. NOI provides a measure of rental operations and does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses. FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation/amortization of real estate assets. In addition, NOI and FFO are commonly used in various ratios, pricing multiples/yields and returns and valuation calculations used to measure financial position, performance and value.

NOI is derived from revenues minus property operating expenses and real estate taxes. NOI is a non-GAAP financial measure that we believe 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. We use 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 our properties rather than of the Company overall.

We believe 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 our financial performance or GAAP cash flow from operating activities as a measure of our liquidity; nor is it indicative of funds available for our cash needs, including our 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.

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 our 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. We also use FFO excluding certain gain and loss items that management considers unrelated to the operational and financial performance of our core business (“Core FFO”). We believe that Core FFO provides enhanced comparability for investor evaluations of period-over-period results.

We believe 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 our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that interpret the NAREIT definition differently.



39

SUN COMMUNITIES, INC.

RESULTS OF OPERATIONS

We report operating results under two segments: Real Property Operations and Home Sales and Rentals. The Real Property Operations segment owns, operates, develops, or has an interest in, a portfolio of MH and RV communities throughout the U.S. and in Canada, and is in the business of acquiring, operating, and expanding MH and RV communities. The Home Sales and Rentals segment offers MH and RV park model sales and leasing services to tenants and prospective tenants of our communities. We evaluate segment operating performance based on NOI and gross profit. Refer to Note 12, “Segment Reporting,” in our accompanying Consolidated Financial Statements for additional information.

Summary Statements of Operations

The following tables reconcile the Net income attributable to Sun Communities, Inc. common stockholders to NOI and summarize our consolidated financial results for the years ended December 31, 2019, 2018, and 2017 (in thousands):
 
 
Year Ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Net Income attributable to Sun Communities, Inc. common stockholders
 
$
160,265

 
$
105,493

 
$
65,021

Other revenues
 
(31,984
)
 
(27,057
)
 
(24,874
)
Home selling expenses
 
14,690

 
15,722

 
12,457

General and administrative expenses
 
93,964

 
81,429

 
83,973

Catastrophic weather related charges, net
 
1,737

 
92

 
8,352

Depreciation and amortization
 
328,067

 
287,262

 
261,536

Loss on extinguishment of debt
 
16,505

 
1,190

 
4,676

Interest expense
 
137,851

 
134,250

 
131,585

(Gain) / loss on remeasurement of marketable securities
 
(34,240
)
 
3,639

 

Other (income) / expense, net
 
(3,457
)
 
6,453

 
(8,982
)
Income from nonconsolidated affiliates
 
(1,374
)
 
(790
)
 

Current tax expense
 
1,095

 
595

 
446

Deferred tax benefit
 
(222
)
 
(507
)
 
(582
)
Preferred return to preferred OP units / equity
 
6,058

 
4,486

 
4,581

Amounts attributable to noncontrolling interests
 
9,768

 
8,443

 
5,055

Preferred stock distribution
 
1,288

 
1,736

 
7,162

NOI / Gross Profit
 
$
700,011

 
$
622,436

 
$
550,406


 
 
Year Ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Real Property NOI
 
$
597,406

 
$
533,321

 
$
479,662

Home Sales NOI / Gross Profit
 
47,579

 
42,698

 
32,294

Rental Program NOI
 
104,382

 
95,968

 
92,222

Ancillary NOI / Gross Profit
 
19,449

 
16,064

 
10,061

Site rent from Rental Program (included in Real Property NOI) (1)
 
(68,805
)
 
(65,615
)
 
(63,833
)
NOI / Gross Profit
 
$
700,011

 
$
622,436

 
$
550,406

(1)   The renter’s monthly payment includes the site rent and an amount attributable to the home lease. The site rent is reflected in Real Property Operations’ segment revenue. For purposes of management analysis, site rent is included in Rental Program revenue to evaluate the incremental revenue gains associated with the 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.



40

SUN COMMUNITIES, INC.

Comparison of the Years Ended December 31, 2019, 2018 and 2017

Real Property Operations - Total Portfolio

The following tables reflect certain financial and other information for our Total Portfolio as of and for the years ended December 31, 2019, 2018 and 2017:
 
Year Ended
 
Year Ended
Financial Information
(in thousands)
December 31, 2019
 
December 31, 2018
 
Change
 
% Change
 
December 31, 2018
 
December 31, 2017
 
Change
 
% Change
Income from real property
$
925,664

 
$
825,973

 
$
99,691

 
12.1
%
 
$
825,973

 
$
742,228

 
$
83,745

 
11.3
%
Property operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and benefits
88,085

 
74,653

 
13,432

 
18.0
%
 
74,653

 
67,075

 
7,578

 
11.3
%
Legal, taxes, and insurance
10,778

 
9,524

 
1,254

 
13.2
%
 
9,524

 
7,264

 
2,260

 
31.1
%
Utilities
101,910

 
93,205

 
8,705

 
9.3
%
 
93,205

 
83,550

 
9,655

 
11.6
%
Supplies and repairs
34,663

 
28,594

 
6,069

 
21.2
%
 
28,594

 
25,871

 
2,723

 
10.5
%
Other
30,942

 
30,121

 
821

 
2.7
%
 
30,121

 
26,518

 
3,603

 
13.6
%
Real estate taxes
61,880

 
56,555

 
5,325

 
9.4
%
 
56,555

 
52,288

 
4,267

 
8.2
%
Property operating expenses
328,258

 
292,652

 
35,606

 
12.2
%
 
292,652

 
262,566

 
30,086

 
11.5
%
Real Property NOI
$
597,406

 
$
533,321

 
$
64,085

 
12.0
%
 
$
533,321

 
$
479,662

 
$
53,659

 
11.2
%

 
 
As of
 
 
 
 
As of
 
 
 
Other Information
 
December 31, 2019
 
December 31, 2018
 
 
Change
 
December 31, 2018
 
December 31, 2017
 
 
Change
Number of properties
 
422

 
371

 
 
51

 
371

 
350

 
 
21

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MH occupancy
 
95.5
%
 
 
 
 
 
 


 
 
 
 
 
RV occupancy
 
100.0
%
 
 
 
 
 
 


 
 
 
 
 
MH & RV blended occupancy (1)
 
96.4
%
 
96.1
%
 
 
0.3
%
 
96.1
%
 
95.8
%
 
 
0.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sites available for development
 
10,293

 
11,258

 
 
(965
)
 
11,258

 
9,617

 
 
1,641

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Monthly base rent per site - MH
 
$
571

 
$
554

 
 
$
17

 
$
554

 
$
533

 
 
$
21

Monthly base rent per site - RV (2)
 
$
485

 
$
458

(3) 
 
$
27

 
$
455

 
$
435

(3) 
 
$
20

Monthly base rent per site - Total
 
$
551

 
$
532

(3) 
 
$
19

 
$
532

 
$
512

(3) 
 
$
20

(1)  Overall occupancy percentage includes MH and annual RV sites and excludes transient RV sites.
(2) Monthly base rent pertains to annual RV sites and excludes transient RV sites.
(3) Canadian currency figures included within the year ended December 31, 2018 and 2017 have been translated at 2019 and 2018 average exchange rates, respectively.

The $64.1 million increase in Real Property NOI from 2018 to 2019 consists of $38.0 million from Same Communities as detailed below and $26.1 million from recently acquired properties in the year ended December 31, 2019 as compared to 2018.

The $53.7 million increase in Real Property NOI from 2017 to 2018 consists of $35.6 million from Same Communities as detailed below and $18.1 million from recently acquired properties in the years ended December 31, 2018 as compared to 2017.


41

SUN COMMUNITIES, INC.

Real Property Operations - Same Communities

A key management tool used when evaluating performance and growth of our properties is a comparison of Same Communities. The Same Community data may change from time-to-time depending on acquisitions, dispositions, management discretion, significant transactions, or unique situations. In order to evaluate the growth of the Same Communities, management has classified certain items differently than our GAAP statements. The reclassification difference between our GAAP statements and our Same Community portfolio is the reclassification of water and sewer revenues from income from real property to utilities. A significant portion of our utility charges are re-billed to our residents.

 
Year Ended
 
Year Ended
Financial Information
(in thousands)
December 31, 2019
 
December 31, 2018
 
Change
 
% Change
 
December 31, 2018
 
December 31, 2017
 
Change
 
% Change
Income from real property (1)
$
805,982

 
$
758,853

 
$
47,129

 
6.2
 %
 
$
770,470

 
$
724,196

 
$
46,274

 
6.4
%
Property operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and benefits
72,519

 
68,630

 
3,889

 
5.7
 %
 
66,502

 
65,524

 
978

 
1.5
%
Legal, taxes, and insurance
9,579

 
9,212

 
367

 
4.0
 %
 
9,026

 
7,152

 
1,874

 
26.2
%
Utilities
58,044

 
57,309

 
735

 
1.3
 %
 
54,949

 
51,480

 
3,469

 
6.7
%
Supplies and repairs (2)
30,025

 
27,158

 
2,867

 
10.6
 %
 
26,476

 
25,347

 
1,129

 
4.5
%
Other
19,966

 
20,535

 
(569
)
 
(2.8
)%
 
19,908

 
19,091

 
817

 
4.3
%
Real estate taxes
57,553

 
55,667

 
1,886

 
3.4
 %
 
54,098

 
51,695

 
2,403

 
4.6
%
Property operating expenses
247,686

 
238,511

 
9,175

 
3.8
 %
 
230,959

 
220,289

 
10,670

 
4.8
%
Real Property NOI
$
558,296

 
$
520,342

 
$
37,954

 
7.3
 %
 
$
539,511

 
$
503,907

 
$
35,604

 
7.1
%

 
 
As of
 
 
 
As of
 
 
Other Information
 
December 31, 2019
 
December 31, 2018
 
Change
 
December 31, 2018
 
December 31, 2017
 
Change
Number of properties
 
345

 
345

 

 
336

 
336

 

 
 
 
 
 
 
 
 
 
 
 
 
 
MH occupancy (3)
 
97.9
%
 
 
 
 
 
97.4
%
 
 
 
 
RV occupancy (3)
 
100.0
%
 
 
 
 
 
100.0
%
 
 
 
 
MH & RV blended occupancy (3)
 
98.4
%
 
96.2
%
(4) 
2.2
%
 
98.0
%
 
95.8
%
(4) 
2.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Sites available for development
 
6,314

 
7,348

 
(1,034
)
 
7,348

 
5,087

 
2,261

 
 
 
 
 
 
 
 
 
 
 
 
 
Monthly base rent per site - MH
 
$
577

 
$
554

 
$
23

 
$
554

 
$
533

 
$
21

Monthly base rent per site - RV (5)
 
$
489

 
$
461

 
$
28

 
$
455

 
$
431

 
$
24

Monthly base rent per site - Total
 
$
557

 
$
533

 
$
24

 
$
532

 
$
511

 
$
21

(1) The Company adopted ASC 842, the new lease accounting 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.
(2) For the comparative periods December 31, 2019 and 2018, the year ended 2018 excludes $0.7 million of expenses incurred for recently acquired properties to bring the properties up to our operating standards. For the comparative periods December 31, 2018 and 2017, the year ended 2017 excludes $2.6 million of expenses incurred for recently acquired properties to bring the properties up to our operating standards. These costs did not meet the Company’s capitalization policy.
(3) The occupancy percentages include MH and annual RV sites and exclude recently completed but vacant expansion sites and transient RV sites.
(4) The occupancy percentages for 2018 and 2017 have been adjusted to reflect incremental growth period-over-period from filled MH expansion sites and the conversion of transient RV sites to annual RV sites.
(5) Monthly base rent pertains to annual RV sites and excludes transient RV sites.

42

SUN COMMUNITIES, INC.

Year ended December 31, 2019 and 2018

The Same Community data includes all properties which we have owned and operated continuously since January 1, 2018, exclusive of properties under construction. The amounts in the table above reflect constant currency for comparative purposes. Canadian currency figures included within the year ended December 31, 2018 have been translated at 2019 average exchange rates. We have reclassified $34.7 million and $32.7 million for the years ended December 31, 2019 and 2018, respectively, to reflect the utility expenses associated with our Same Community portfolio net of recovery.

The 7.3 percent growth in NOI is primarily due to increased Income from real property of $47.1 million, or 6.2 percent. The 6.2 percent increase is primarily attributable to a 2.2 percent increase in MH & RV blended occupancy and a 4.5 percent increase in total monthly base rent per site when compared to 2018. The increase in Income from real property was partially offset by a $9.2 million, or 3.8 percent, increase in Property operating expenses, primarily attributable to increases in payroll and benefits, supplies and repairs and real estate taxes.

Year ended December 31, 2018 and 2017

The Same Community data includes all properties which we have owned and operated continuously since January 1, 2017, exclusive of properties under construction. The amounts in the table above reflect constant currency for comparative purposes. Canadian currency figures included within the year ended December 31, 2017 have been translated at 2018 average exchange rates. We have reclassified $32.2 million and $30.6 million for the years ended December 31, 2018 and 2017, respectively, to reflect the utility expenses associated with our Same Community portfolio net of recovery.

The 7.1 percent growth in NOI is primarily due to a 6.4 percent increase in Income from real property. The 6.4 percent increase in Income from real property is primarily due to a 2.2 percent increase in MH & RV blended occupancy and a 4.1 percent increase in total monthly base rent per site. The increase in Income from real property was partially offset by a 4.8 percent increase in Property operating expenses compared to 2017, which was primarily due to higher utilities, real estate taxes, and legal, taxes, and insurance in 2018.


43

SUN COMMUNITIES, INC.

Home Sales Summary

We purchase new homes and acquire pre-owned and repossessed manufactured homes, generally located within our communities, from lenders, dealers, and former residents to lease or sell to current and prospective residents.

The following table reflects certain financial and statistical information for our Home Sales Program for the years ended December 31, 2019, 2018 and 2017 (in thousands, except for average selling prices and statistical information):
 
Year Ended
 
Year Ended
Financial Information
December 31, 2019
 
December 31, 2018
 
Change
 
% Change
 
December 31, 2018
 
December 31, 2017
 
Change
 
% Change
New homes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New home sales
$
71,760

 
$
59,578

 
$
12,182

 
20.4
 %
 
$
59,578

 
$
36,915

 
$
22,663

 
61.4
%
New home cost of sales
61,557

 
51,913

 
9,644

 
18.6
 %
 
51,913

 
31,578

 
20,335

 
64.4
%
NOI / Gross Profit –
new homes
$
10,203

 
$
7,665

 
$
2,538

 
33.1
 %
 
$
7,665

 
$
5,337

 
$
2,328

 
43.6
%
Gross margin % –
new homes
14.2
%
 
12.9
%
 
1.3
%
 
 
 
12.9
%
 
14.5
%
 
(1.6
)%
 
 
Average selling price – new homes
$
125,674

 
$
113,266

 
$
12,408

 
11.0
 %
 
$
113,266

 
$
101,975

 
$
11,291

 
11.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-owned homes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-owned home sales
$
110,176

 
$
106,453

 
$
3,723

 
3.5
 %
 
$
106,453

 
$
90,493

 
$
15,960

 
17.6
%
Pre-owned home cost of sales
72,800

 
71,420

 
1,380

 
1.9
 %
 
71,420

 
63,536

 
7,884

 
12.4
%
NOI / Gross Profit –
pre-owned homes
$
37,376

 
$
35,033

 
$
2,343

 
6.7
 %
 
$
35,033

 
$
26,957

 
$
8,076

 
30.0
%
Gross margin % –
 pre-owned homes
33.9
%
 
32.9
%
 
1.0
%
 
 
 
32.9
%
 
29.8
%
 
3.1
 %
 
 
Average selling price – pre-owned homes
$
38,416

 
$
34,306

 
$
4,110

 
12.0
 %
 
$
34,306

 
$
30,991

 
$
3,315

 
10.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total home sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from home sales
$
181,936

 
$
166,031

 
$
15,905

 
9.6
 %
 
$
166,031

 
$
127,408

 
$
38,623

 
30.3
%
Cost of home sales
134,357

 
123,333

 
11,024

 
8.9
 %
 
123,333

 
95,114

 
28,219

 
29.7
%
NOI / Gross Profit –
home sales
$
47,579

 
$
42,698

 
$
4,881

 
11.4
 %
 
$
42,698

 
$
32,294

 
$
10,404

 
32.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statistical Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New home sales volume
571

 
526

 
45

 
8.6
 %
 
526

 
362

 
164

 
45.3
%
Pre-owned home sales volume
2,868

 
3,103

 
(235
)
 
(7.6
)%
 
3,103

 
2,920

 
183

 
6.3
%
Total home sales volume
3,439

 
3,629

 
(190
)
 
(5.2
)%
 
3,629

 
3,282

 
347

 
10.6
%

Gross Profit - new homes - For the year ended December 31, 2019, the $2.5 million, or 33.1 percent, increase in gross profit is primarily the result of a 8.6 percent increase in new home sales volume coupled with a 11.0 percent increase in the average selling price, as compared to 2018.
For the year ended December 31, 2018, the $2.3 million, or 43.6 percent, increase in gross profit is primarily the result of a 45.3 percent increase in new home sales volume coupled with a 11.1 percent increase in the average selling price, as compared to 2017.
Gross Profit - pre-owned homes - For the year ended December 31, 2019, the $2.3 million, or 6.7 percent, increase in gross profit is primarily the result of a 12.0 percent increase in the average selling price, which is partially offset by a 7.6 percent decrease in pre-owned home sales volume, as compared to 2018.
For the year ended December 31, 2018, the $8.1 million, or 30.0 percent, increase in gross profit is primarily the result of a 10.7 percent increase in the average selling price coupled with a 6.3 percent increase in pre-owned home sales volume as compared to 2017.

44

SUN COMMUNITIES, INC.

Rental Program Summary

The following table reflects certain financial and other information for our Rental Program for the years ended December 31, 2019, 2018 and 2017 (in thousands, except for statistical information):

 
Year Ended
 
Year Ended
Financial Information
December 31, 2019
 
December 31, 2018
 
Change
 
% Change
 
December 31, 2018
 
December 31, 2017
 
Change
 
% Change
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental home revenue
$
57,572

 
$
53,657

 
$
3,915

 
7.3
 %
 
$
53,657

 
$
50,549

 
$
3,108

 
6.1
 %
Site rent from Rental Program (1)
68,805

 
65,615

 
3,190

 
4.9
 %
 
65,615

 
63,833

 
1,782

 
2.8
 %
Rental Program revenue
126,377

 
119,272

 
7,105

 
6.0
 %
 
119,272

 
114,382

 
4,890

 
4.3
 %
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repairs and refurbishment
12,591

 
10,456

 
2,135

 
20.4
 %
 
10,456

 
9,864

 
592

 
6.0
 %
Taxes and insurance
7,488

 
6,425

 
1,063

 
16.5
 %
 
6,425

 
6,149

 
276

 
4.5
 %
Other
1,916

 
6,423

 
(4,507
)
 
(70.2
)%
 
6,423

 
6,147

 
276

 
4.5
 %
Rental Program operating and maintenance
21,995

 
23,304

 
(1,309
)
 
(5.6
)%
 
23,304

 
22,160

 
1,144

 
5.2
 %
Rental Program NOI
$
104,382

 
$
95,968

 
$
8,414

 
8.8
 %
 
$
95,968

 
$
92,222

 
$
3,746

 
4.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of sold rental homes
1,140

 
1,122

 
18

 
1.6
 %
 
1,122

 
1,168

 
(46
)
 
(3.9
)%
Number of occupied rentals,
end of period
11,325

 
10,994

 
331

 
3.0
 %
 
10,994

 
11,074

 
(80
)
 
(0.7
)%
Investment in occupied rental homes, end of period
$
584,771

 
$
530,006

 
$
54,765

 
10.3
 %
 
$
530,006

 
$
494,945

 
$
35,061

 
7.1
 %
Weighted average monthly rental rate, end of period
$
997

 
$
949

 
$
48

 
5.1
 %
 
$
949

 
$
901

 
$
48

 
5.3
 %
(1)   The renter’s monthly payment includes the site rent and an amount attributable to the home lease. The site rent is reflected in Real Property Operations’ segment revenue. For purposes of management analysis, site rent is included in Rental Program revenue to evaluate the incremental revenue gains associated with the 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.

For the year ended December 31, 2019, Rental Program NOI increased $8.4 million, or 8.8 percent, as compared to 2018. The increase is primarily due to (a) an increase in Rental Program revenue of $7.1 million, or 6.0 percent, primarily attributable to a 5.1 percent increase in the weighted average monthly rental rate and a 3.0 percent increase in the number of occupied rentals, and (b) a decrease in Rental Program operating and maintenance expenses of $1.3 million, or 5.6 percent, resulting primarily from the capitalization of commission expenses under ASC 842 in the year ended December 31, 2019 as compared to 2018.

For the year ended December 31, 2018, Rental Program NOI increased $3.7 million, or 4.1 percent, as compared to 2017. The increase is primarily due to (a) an increase in Rental Program revenue of $4.9 million, or 4.3 percent, primarily attributable to a 5.3 percent increase in weighted average monthly rental rates, partially offset by (b) an increase in Rental Program operating and maintenance expenses of $1.1 million, or 5.2 percent, primarily due to higher repairs and refurbishment expense in 2018 as compared to 2017.


45

SUN COMMUNITIES, INC.

Other Items - Statements of Operations (1)

The following table summarizes other income and expenses for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands):
 
Year Ended
 
Year Ended
 
December 31, 2019
 
December 31, 2018
 
Change
 
% Change
 
December 31, 2018
 
December 31, 2017
 
Change
 
% Change
Ancillary revenues, net
$
19,449

 
$
16,064

 
$
3,385

 
21.1
 %
 
$
16,064

 
$
10,061

 
$
6,003

 
59.7
 %
Interest income
$
17,857

 
$
20,852

 
$
(2,995
)
 
(14.4
)%
 
$
20,852

 
$
21,179

 
$
(327
)
 
(1.5
)%
Brokerage commissions and other revenues, net
$
14,127

 
$
6,205

 
$
7,922

 
127.7
 %
 
$
6,205

 
$
3,695

 
$
2,510

 
67.9
 %
Home selling expenses
$
14,690

 
$
15,722

 
$
(1,032
)
 
(6.6
)%
 
$
15,722

 
$
12,457

 
$
3,265

 
26.2
 %
General and administrative expenses
$
93,964

 
$
81,429

 
$
12,535

 
15.4
 %
 
$
81,429

 
$
83,973

 
$
(2,544
)
 
(3.0
)%
Catastrophic weather related charges, net
$
1,737

 
$
92

 
$
1,645

 
1,788.0
 %
 
$
92

 
$
8,352

 
$
(8,260
)
 
(98.9
)%
Depreciation and amortization
$
328,067

 
$
287,262

 
$
40,805

 
14.2
 %
 
$
287,262

 
$
261,536

 
$
25,726

 
9.8
 %
Loss on extinguishment of debt
$
16,505

 
$
1,190

 
$
15,315

 
1,287.0
 %
 
$
1,190

 
$
4,676

 
$
(3,486
)
 
(74.6
)%
Interest expense (2)
$
137,851

 
$
134,250

 
$
3,601

 
2.7
 %
 
$
134,250

 
$
131,585

 
$
2,665

 
2.0
 %
Gain / (loss) on remeasurement of marketable securities
$
34,240

 
$
(3,639
)
 
$
37,879

 
(1,040.9
)%
 
$
(3,639
)
 
$

 
$
(3,639
)
 
N/A

Other income / (expense), net
$
3,457

 
$
(6,453
)
 
$
9,910

 
(153.6
)%
 
$
(6,453
)
 
$
8,982

 
$
(15,435
)
 
(171.8
)%
Income from nonconsolidated affiliates
$
1,374

 
$
790

 
$
584

 
73.9
 %
 
$
790

 
$

 
$
790

 
N/A

Current tax expense
$
(1,095
)
 
$
(595
)
 
$
(500
)
 
84.0
 %
 
$
(595
)
 
$
(446
)
 
$
(149
)
 
33.4
 %
Deferred tax benefit
$
222

 
$
507

 
$
(285
)
 
(56.2
)%
 
$
507

 
$
582

 
$
(75
)
 
(12.9
)%
Preferred return to preferred OP units / equity
$
6,058

 
$
4,486

 
$
1,572

 
35.0
 %
 
$
4,486

 
$
4,581

 
$
(95
)
 
(2.1
)%
Amounts attributable to noncontrolling interests
$
9,768

 
$
8,443

 
$
1,325

 
15.7
 %
 
$
8,443

 
$
5,055

 
$
3,388

 
67.0
 %
Preferred stock distribution
$
1,288

 
$
1,736

 
$
(448
)
 
(25.8
)%
 
$
1,736

 
$
7,162

 
$
(5,426
)
 
(75.8
)%
(1) Only items judgmentally determined by management to be material are explained.
(2) Includes interest expense and interest on mandatorily redeemable preferred OP units / equity.

Ancillary revenues, net - for the year ended December 31, 2019, increased primarily due to increases in golf course, restaurant, and resort activity revenues as compared to 2018. For the year ended December 31, 2018, the increase is primarily due to RV vacation home rental income as a result of acquisition activities, in addition to an increase in golf course, restaurant, and resort activity net profit as compared to 2017.

Interest income - for the year ended December 31, 2019, decreased primarily due to lower balances on our notes receivable and derecognition of collateralized notes receivable in 2019 as we satisfied the criteria of paragraph ASC 860-10-40-5 to be accounted for as a sale. Refer to Note 4, “Collateralized Receivables and Transfers of Financial Assets,” in our accompanying Consolidated Financial Statements for additional information.

Brokerage commissions and other revenues, net - for the year ended December 31, 2019, increased primarily due to a $3.1 million increase in brokerage commissions, and a $1.8 million increase in dividend income from our investment in marketable securities, as compared to 2018. For the year ended December 31, 2018, the increase is primarily due to a higher number of broker homes sold during the year as compared to 2017, in addition to a $1.9 million insurance proceeds from business interruption related to Hurricane Irma.

Home selling expenses - for the year ended December 31, 2018, increased primarily due to higher commissions driven by a higher home sales volume for the year as compared to 2017.

General and administrative expenses - for the year ended December 31, 2019, increased primarily due to an increase in wages and incentives driven by growth in acquisitions and the Company’s performance as compared to 2018.

Catastrophic weather related charges, net - for the year ended December 31, 2019, increased primarily due to estimated damage losses for recent weather events. For the year ended December 31, 2018, the decrease is primarily due to a smaller impact from Hurricanes Florence and Michael as compared to a larger impact from Hurricane Irma in 2017.


46

SUN COMMUNITIES, INC.

Depreciation and amortization - for the year ended December 31, 2019, increased as a result of our recent property acquisitions and ongoing expansion and development activities. Refer to Note 3, “Real Estate Acquisitions” of our accompanying Consolidated Financial Statements for additional information.

Loss on extinguishment of debt - for the year ended December 31, 2019, increased primarily due to higher prepayment penalties related to debt and financing activity as compared to 2018. For the year ended December 31, 2018, the decrease is primarily due to lower prepayment penalties related to debt and financing activity as compared to 2017. Refer to Note 9, “Debt and Lines of Credit,” in our accompanying Consolidated Financial Statements for additional information.

Gain / (loss) on remeasurement of marketable securities - for the year ended December 31, 2019, increased primarily due to a $34.2 million gain on the remeasurement of our investment in marketable securities as compared to a $3.6 million remeasurement loss in 2018. For the year ended December 31, 2018, the decrease is primarily due to a $3.6 million loss on the remeasurement of our investment in marketable securities.
  
Other income / (expense), net - for the year ended December 31, 2019, increased primarily due to a $4.5 million foreign currency translation gain as compared to a $8.4 million loss in 2018, partially offset by a $3.8 million decrease resulting from a $1.5 million loss on the remeasurement of contingent liability in 2019 as compared to a $2.3 million gain in 2018. For the year ended December 31, 2018, the decrease is primarily due to an $8.4 million foreign currency translation loss as compared to a $5.9 million gain in 2017.

Preferred return to preferred OP units / equity - for the year ended December 31, 2019 increased primarily as a result of issuing 488,958 Series D Preferred OP units in conjunction with an acquisition in January 2019. Refer to Note 3, “Acquisitions,” and Note 10, “Equity and Temporary Equity,” of our accompanying Consolidated Financial Statements for additional information.

Amounts attributable to noncontrolling interests - for the year ended December 31, 2019 increased primarily as a result of increased performance in our Sun NG Resorts portfolio as compared to 2018. For the year ended December 31, 2018, the increase is due to the acquisition of our Sun NG Resorts portfolio in June 2018 as compared to 2017.

Preferred stock distributions - for the year ended December 31, 2018 distributions decreased as compared to 2017 as a result of the redemption of 3.4 million outstanding shares of our 7.125% Series A Cumulative Redeemable Preferred Stock in November 2017.

47

SUN COMMUNITIES, INC.

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO SUN COMMUNITIES, INC. COMMON STOCKHOLDERS TO FFO

The following table reconciles Net income attributable to Sun Communities, Inc. common stockholders to FFO for the years ended December 31, 2019, 2018, and 2017 (in thousands, except per share amounts):
 
 
Year Ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Net income attributable to Sun Communities, Inc. common stockholders
 
$
160,265

 
$
105,493

 
$
65,021

Adjustments
 
 
 
 
 
 
Depreciation and amortization
 
328,646

 
288,206

 
262,211

(Gain) / loss on remeasurement of marketable securities
 
(34,240
)
 
3,639

 

Amounts attributable to noncontrolling interests
 
8,474

 
7,740

 
4,535

Preferred return to preferred OP units
 
2,610

 
2,206

 
2,320

Preferred distribution to Series A-4 preferred stock
 
1,288

 
1,737

 
2,107

Gain on disposition of assets, net
 
(26,356
)
 
(23,406
)
 
(16,075
)
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (4)
 
$
440,687

 
$
385,615

 
$
320,119

Adjustments:
 
 
 
 
 
 
Transaction costs (1)
 

 

 
9,801

Other acquisition related costs (2)
 
1,146

 
1,001

 
2,810

(Gain) / loss on extinguishment of debt
 
16,505

 
1,190

 
4,676

Catastrophic weather related charges, net
 
1,737

 
92

 
8,352

Loss of earnings - catastrophic weather related (3)
 

 
(292
)
 
292

Other (income) / expense, net
 
(3,457
)
 
6,453

 
(8,982
)
Other adjustments (4)
 
314

 
310

 
316

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (5)
 
$
456,932

 
$
394,369

 
$
337,384

 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
88,460

 
81,387

 
76,084

Add
 
 
 
 
 
 
Common stock issuable upon conversion of stock options
 
1

 
2

 
2

Restricted stock
 
454

 
651

 
625

Common stock issuable upon conversion of Series A-4 preferred stock
 
423

 
472

 
585

Common stock issuable upon conversion of Series A-4 preferred OP units
 
172

 

 

Common OP units
 
2,448

 
2,733

 
2,756

Common stock issuable upon conversion of Series A-3 preferred OP units
 
75

 
75

 
75

Common stock issuable upon conversion of Series A-1 preferred OP units
 
784

 
821

 
869

Weighted average common shares outstanding - fully diluted
 
92,817

 
86,141

 
80,996

 
 
 
 
 
 
 
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per share - fully diluted
 
$
4.75

 
$
4.48

 
$
3.95

Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per share - fully diluted
 
$
4.92

 
$
4.58

 
$
4.17

(1)  In January 2018, we adopted ASU 2017-01. Under previous guidance, substantially all of our property acquisitions were accounted for as business combinations with acquisition related costs expensed as incurred and reported as Transaction costs. Under ASU 2017-01, direct acquisition related costs are capitalized as part of the purchase price. Acquisitions costs that do not meet the criteria for capitalization are expensed as incurred.
(2) These costs represent the expenses incurred to bring recently acquired properties up to our operating standards, including items such as tree trimming and painting costs that do not meet our capitalization policy.
(3)  During 2018, the adjustment was for the previously estimated FFO impact of the income related to the loss of earnings in excess of the applicable business interruption deductible in relation to our Florida Keys communities, impaired by Hurricane Irma, that was not recognized as income in those respective periods. The income related to the loss of earnings was recognized during the three months ended December 31, 2018 upon notification of payment by the insurance company. During 2017, the adjustment represented the related estimated loss of earnings in excess of the applicable business interruption deductible.
(4) Other adjustments include early retirement compensation expense, ground lease intangible write-off, and deferred tax benefits.
(5) The effect of certain anti-dilutive convertible securities is excluded from these items.

48

SUN COMMUNITIES, INC.

LIQUIDITY AND CAPITAL RESOURCES

Our principal liquidity demands have historically been, and are expected to continue to be, distributions to our stockholders and the unit holders of the Operating Partnership, capital improvement of properties, the purchase of new and pre-owned homes, property acquisitions, development and expansion of properties, and debt repayment.

Subject to market conditions, we intend to continue to identify opportunities to expand our development pipeline and acquire existing communities. We finance acquisitions through available cash, secured financing, draws on our lines of credit, the assumption of existing debt on properties, and the issuance of equity securities. We will continue to evaluate acquisition opportunities that meet our criteria. Refer to Note 3, “Real Estate Acquisitions” in our accompanying Consolidated Financial Statements for information regarding recent community acquisitions.

We also intend to continue to strengthen our capital and liquidity positions by focusing on our core fundamentals, which are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our liquidity requirements through available cash balances, cash flows generated from operations, draws on our lines of credit, and the use of debt and equity offerings under our shelf registration statement. Refer to Note 9, “Debt and Lines of Credit” and Note 10, “Equity and Temporary Equity” in our accompanying Consolidated Financial Statements for additional information.

Capital Expenditures

Our capital expenditures include expansion sites and development construction costs, lot modifications, recurring capital expenditures and rental home purchases.

For the years ended December 31, 2019 and 2018, expansion and development activities of $281.8 million and $152.7 million, respectively, related to costs consisting primarily of construction of sites and other costs necessary to complete home site improvements. The increase is primarily driven by the ground-up developments and redevelopment at five communities.

For the years ended December 31, 2019 and 2018, lot modification expenditures were $31.1 million and $22.9 million, respectively. These expenditures improve asset quality in our communities and are incurred when an existing home is removed 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 codes, include items such as new foundations, driveways, and utility upgrades.

For the years ended December 31, 2019 and 2018, recurring capital expenditures were $30.4 million and $24.3 million, respectively, related to our continued commitment to the upkeep of our properties.

We invest in the acquisition of homes intended for the Rental Program. Expenditures for these investments depend upon the condition of the markets for repossessions and new home sales, as well as rental homes. We finance certain of our new home purchases with a $12.0 million manufactured home floor plan facility. Our ability to purchase homes for sale or rent may be limited by cash received from third-party financing of our home sales, available manufactured home floor plan financing and working capital available on our lines of credit.

Cash Flow Activities

Our cash flow activities are summarized as follows (in thousands):
 
 
Year Ended
 
 
December 31,
2019
 
December 31,
2018
 
December 31,
2017
Net Cash Provided By Operating Activities
 
$
476,734

 
$
363,114

 
$
257,983

Net Cash Used For Investing Activities
 
$
(1,010,457
)
 
$
(733,743
)
 
$
(401,642
)
Net Cash Provided By Financing Activities
 
$
505,880

 
$
409,905

 
$
141,557

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
 
$
411

 
$
(523
)
 
$
298


Cash, cash equivalents, and restricted cash decreased by approximately by $27.5 million from $62.3 million as of December 31, 2018, to $34.8 million as of December 31, 2019.


49

SUN COMMUNITIES, INC.

Operating Activities - Net cash provided by operating activities increased by $113.6 million from $363.1 million for the year ended December 31, 2018 to $476.7 million for the year ended December 31, 2019.

Our net cash flows provided by operating activities from continuing operations may be adversely impacted by, among other things: (a) the market and economic conditions in our current markets generally, and specifically in metropolitan areas of our current markets; (b) lower occupancy and rental rates of our properties; (c) increased operating costs, such as wage and benefit costs, insurance premiums, real estate taxes and utilities, that cannot be passed on to our tenants; (d) decreased sales of manufactured homes; and (e) current volatility in economic conditions and the financial markets. See “Risk Factors” in Part I, Item 1A in this Annual Report on Form 10-K.

Investing Activities - Net cash used for investing activities was $1.0 billion for the year ended December 31, 2019, compared to $733.7 million for year ended December 31, 2018. Refer to Note 3, “Real Estate Acquisitions” in our accompanying Consolidated Financial Statements for additional information.

Financing Activities - Net cash provided by financing activities was $505.9 million for the year ended December 31, 2019, compared to $409.9 million for the year ended December 31, 2018. Refer to Note 9, “Debt and Lines of Credit” and Note 10, “Equity and Temporary Equity” in our accompanying Consolidated Financial Statements for additional information.

Financial Flexibility

In July 2017, we entered into an at the market offering sales agreement (as amended, the “Sales Agreement”) with certain sales agents (collectively, the “Sales Agents”), whereby we may offer and sell shares of our common stock, having an aggregate offering price of up to $450.0 million, from time to time through the Sales Agents. The Sales Agents are entitled to compensation in an agreed amount not to exceed 2.0 percent of the gross price per share for any shares sold from time to time under the Sales Agreement. Through December 31, 2019, we have sold shares of our common stock for gross proceeds of $163.8 million under the Sales Agreement. Refer to Note 10, “Equity and Temporary Equity” in our accompanying Consolidated Financial Statements for additional information.

In October 2019, we assumed a term loan facility with Citibank N.A. (“Citibank”), in the amount of $58.0 million. The term loan has a four-year term ending October 29, 2023, and bears interest at a floating rate based on the Eurodollar rate or Prime rate. The outstanding balance was $57.0 million at December 31, 2019.

In May 2019, we amended and restated our credit agreement with Citibank, N.A. and certain other lenders. Pursuant to the credit agreement, we entered into a senior credit facility with Citibank and certain other lenders in the amount of $750.0 million, comprised of a $650.0 million revolving loan, with the ability to use up to $100.0 million for advances in Australian dollars, and a $100.0 million term loan (the “A&R Facility”). We have until March 17, 2020 to draw on the term loan. As of December 31, 2019, we had not drawn any funds on the term loan. The credit agreement has a four-year term ending May 21, 2023, which can be extended for two additional six-month periods, subject to the satisfaction of certain conditions as defined in the credit agreement. The credit agreement also provides for, subject to the satisfaction of certain conditions, additional commitments in an amount not to exceed $350.0 million. If additional borrowings are made pursuant to any such additional commitments, the aggregate borrowing limit under the A&R Facility may be increased up to $1.1 billion.
 
The A&R Facility bears interest at a floating rate based on the Eurodollar rate or Bank Bill Swap Bid Rate plus a margin that is determined based on our leverage ratio calculated in accordance with the credit agreement, which margin can range from 1.20 percent to 2.10 percent for the revolving loan and 1.20 percent to 2.05 percent for the term loan. As of December 31, 2019, the margin based on our leverage ratio was 1.20 percent on the revolving loan and 1.20 percent on the term loan. We had $123.6 million and zero of borrowings on the revolving loan and the term loan, respectively, as of December 31, 2019.

The A&R Facility provides us with the ability to issue letters of credit. Our issuance of letters of credit does not increase our borrowings outstanding under our line of credit, but does reduce the borrowing amount available. At December 31, 2019 and December 31, 2018, approximately $2.8 million and $3.9 million of availability was used to back standby letters of credit.

Pursuant to the terms of the A&R Facility, we are subject to various financial and other covenants. We are currently in compliance with these covenants. The most restrictive financial covenants for the A&R Facility are as follows:
Covenant
 
Requirement
 
As of December 31, 2019
Maximum Leverage Ratio
 
<65.0%
 
26.8%
Minimum Fixed Charge Coverage Ratio
 
>1.40
 
3.52
Minimum Tangible Net Worth
 
>$3,257,121
 
$5,633,050
Maximum Dividend Payout Ratio
 
<95.0%
 
58.0%

50

SUN COMMUNITIES, INC.

We anticipate meeting our long-term liquidity requirements, such as scheduled debt maturities, large property acquisitions, expansion and development of communities, and Operating Partnership unit redemptions through the issuance of certain debt or equity securities and/or the collateralization of our properties. At December 31, 2019, we had 234 unencumbered properties, of which 65 support the borrowing base for our $650.0 million revolving loan in our A&R Facility and 31 support the borrowing base for a term loan facility.

From time to time, we may also issue shares of our capital stock, issue equity units in our Operating Partnership, obtain debt financing, or sell selected assets. Our ability to finance our long-term liquidity requirements in such a manner will be affected by numerous economic factors affecting the MH and RV community industry at the time, including the availability and cost of mortgage debt, our financial condition, the operating history of the properties, the state of the debt and equity markets, and the general national, regional, and local economic conditions. When it becomes necessary for us to approach the credit markets, the volatility in those markets could make borrowing more difficult to secure, more expensive, or effectively unavailable. See “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. If we are unable to obtain additional debt or equity financing on acceptable terms, our business, results of operations and financial condition would be adversely impacted.

As of December 31, 2019, our net debt to enterprise value was approximately 19.0 percent (assuming conversion of all common OP units, Series A-1 preferred OP units, Series A-3 preferred OP units, Series C preferred OP units and Series D preferred OP units to shares of common stock). Our debt has a weighted average maturity of approximately 11.1 years and a weighted average interest rate of 4.0 percent.

Off-Balance Sheet Arrangements

Our off-balance sheet investments include nonconsolidated affiliates. These investments all have varying ownership structures. Substantially all of our nonconsolidated affiliates are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control, over the operating and financial decisions of these joint venture arrangements. Refer to Note 7,"Investments in Nonconsolidated Affiliates" and Note 9, "Debt and Lines of Credit" in the accompanying consolidated financial statements, for additional information on our off-balance sheet investments.

Nonconsolidated Affiliate Indebtedness - During September 2019, GTSC, LLC entered into a warehouse line of credit with a maximum loan amount of $125.0 million. As of December 31, 2019, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by GTSC was approximately $123.4 million (of which our proportionate share is approximately $49.4 million). The debt bears interest at a variable rate based on LIBOR plus 1.65 percent per annum and matures on September 15, 2023. Refer to Note 7,"Investments in Nonconsolidated Affiliates" for additional information on our nonconsolidated affiliates.


51

SUN COMMUNITIES, INC.

Contractual Cash Obligations

Our primary long-term liquidity needs are principal payments on outstanding indebtedness. As of December 31, 2019, our outstanding contractual obligations, including interest expense, were as follows:
 
 
 
 
Payments Due By Period
 
 
 
 
(In thousands)
Contractual Cash Obligations (1)
 
Total Due
 
<1 year
 
1-3 years
 
3-5 years
 
After 5 years
Collateralized term loans - Life Companies
 
$
1,716,587

 
$
36,319

 
$
93,232

 
$
82,444

 
$
1,504,592

Collateralized term loans - FNMA
 
697,449

 
29,623

 
56,375

 
78,349

 
533,102

Collateralized term loans - CMBS
 
397,963

 
8,075

 
189,243

 
198,524

 
2,121

Collateralized term loans - FMCC
 
376,473

 
6,502

 
13,883

 
259,317

 
96,771

Preferred Equity - Sun NG Resorts - mandatory redeemable
 
35,249

 

 
35,249

 

 

Preferred OP units - mandatorily redeemable
 
34,663

 

 

 
34,663

 

Lines of credit
 
183,898

 
10,000

 
23,293

 
150,605

 

Total principal payments
 
$
3,442,282

 
$
90,519

 
$
411,275

 
$
803,902

 
$
2,136,586

 
 
 
 
 
 
 
 
 
 
 
Interest expense (2)
 
$
1,202,326

 
$
138,025

 
$
250,970

 
$
206,271

 
$
607,060

Operating leases
 
45,083

 
2,397

 
4,929

 
5,465

 
32,292

Finance lease
 
4,540

 
120

 
240

 
4,180

 

Total contractual cash obligations
 
$
4,694,231

 
$
231,061

 
$
667,414

 
$
1,019,818

 
$
2,775,938

(1) Contractual cash obligations in this table exclude debt premiums, discounts and deferred financing costs, as applicable.
(2) Our contractual cash obligations related to interest expense are calculated based on the current debt levels, rates and maturities as of December 31, 2019 (including finance leases), and actual payments required in future periods may be different than the amounts included above. Perpetual securities include one year of interest expense in the “After 5 years” category.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.
 
The critical accounting estimates that affect the Consolidated Financial Statements and that use judgments and assumptions are listed below. In addition, the likelihood that materially different amounts could be reported under varied conditions and assumptions is discussed.

Refer to Note 1, “Significant Accounting Policies,” in our accompanying Consolidated Financial Statements for information regarding our critical accounting estimates.

Impact of New Accounting Standards

Refer to Note 17, “Recent Accounting Pronouncements,” in our accompanying Consolidated Financial Statements for information regarding new accounting pronouncements.

Off-Balance Sheet Arrangements

Nonconsolidated Affiliate Indebtedness - During September 2019, GTSC entered into a warehouse line of credit with a maximum loan amount of $125.0 million. As of December 31, 2019, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by GTSC was approximately $123.4 million (of which our proportionate share is approximately $49.4 million). The debt bears interest at a variable rate based on LIBOR plus 1.65 percent per annum and matures on September 15, 2023.



52

SUN COMMUNITIES, INC.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the exposure to loss resulting from changes in market factors such as interest rates, foreign currency exchange rates, commodity prices, and equity prices.

Interest Rate Risk

Our principal market risk exposure is interest rate risk. We mitigate this risk by maintaining prudent amounts of leverage, minimizing capital costs, and interest expense while continuously evaluating all available debt and equity resources and following established risk management policies and procedures, which include the periodic use of derivatives. Our primary strategy in entering into derivative contracts is to minimize the variability that interest rate changes could have on our future cash flows. From time to time, we employ derivative instruments that effectively convert a portion of our variable rate debt to fixed rate debt. We do not enter into derivative instruments for speculative purposes.

Our variable rate debt totaled $183.9 million and $128.0 million as of December 31, 2019 and 2018, respectively, and bears interest based on Prime or various LIBOR rates. If Prime or LIBOR increased or decreased by 1.0 percent, our interest expense would have increased or decreased by approximately $2.6 million and $2.4 million for the years ended December 31, 2019 and 2018, respectively, based on the $259.4 million and $235.9 million average balances outstanding under our variable rate debt facilities, respectively.

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate risk is the risk that fluctuations in currencies against the U.S. dollar will negatively impact our results of operations. We are exposed to foreign currency exchange rate risk as a result of remeasurement and translation of the assets and liabilities of our Canadian properties, and our Australian equity investment and joint venture into U.S. dollars. Fluctuations in foreign currency exchange rates can therefore create volatility in our results of operations and may adversely affect our financial condition.

At December 31, 2019 and 2018, our stockholder’s equity included $202.5 million and $141.4 million from our Canadian subsidiaries and Australian equity investments, respectively, which represented 5.2 percent and 4.6 percent of total equity, respectively. Based on our sensitivity analysis, a 10.0 percent strengthening of the U.S. dollar against the Canadian and Australian dollars would have caused a reduction of $20.2 million and $14.1 million to our total stockholder’s equity at December 31, 2019 and 2018, respectively.
 


53

SUN COMMUNITIES, INC.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial statements and supplementary data are filed herewith under Item 15.

ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.     CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (pursuant to Rules 13a-15(e) or 15d-15(e) of the Exchange Act) at December 31, 2019. Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2019.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, misstatements due to error or fraud may not be prevented or detected on a timely basis.

Our management performed an assessment of the effectiveness of our internal control over financial reporting at December 31, 2019, utilizing the criteria discussed in the “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. The objective of this assessment was to determine whether our internal control over financial reporting was effective at December 31, 2019. Based on management’s assessment, we have concluded that our internal control over financial reporting was effective at December 31, 2019.
 
The effectiveness of our internal control over financial reporting has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in its report which is included herein.

Changes in Internal Control Over Financial Reporting

There were no material changes in our internal control over financial reporting during the year ended December 31, 2019.

ITEM 9B.    OTHER INFORMATION

None.

54

SUN COMMUNITIES, INC.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Pursuant to the general instructions of Item 401 of Regulation S-K, certain information regarding our executive officers is contained in Part I of this Form 10-K. Unless provided in an amendment to this Annual Report on Form 10-K, the other information required by this Item is incorporated herein by reference to the applicable information in the proxy statement for our 2020 annual meeting (the “Proxy Statement,”) including the information set forth under the captions “Proposal No.1 Election of Directors - Consideration of Director Nominees,” “Corporate Governance - Board of Directors,” “Corporate Governance - Committees of the Board of Directors,” “Security Ownership Information - Section 16(a) Beneficial Ownership Reporting Compliance,” and “ Information About Executive Officers - Executive Officers Biography.”

ITEM 11. EXECUTIVE COMPENSATION

Unless provided in an amendment to this Annual Report on Form 10-K, the information required by this Item is incorporated by reference to the applicable information in the Proxy Statement, including the information set forth under the captions “Proposal No.1 Election of Directors - Director Compensation,” “Corporate Governance - Compensation Committee Interlocks and Insider Participation,” and “Executive Compensation.” The information in the section captioned “Executive Compensation - Compensation Committee Report” in the Proxy Statement or an amendment to this Annual Report on Form 10-K is incorporated by reference herein but shall be deemed furnished, not filed, and shall not be deemed to be incorporated by reference into any filing we make under the Securities Act or the Exchange Act.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Unless provided in an amendment to this Annual Report on Form 10-K, the information required by this Item is incorporated by reference to the applicable information in the Proxy Statement, including the information set forth under the captions “Security Ownership Information”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Unless provided in an amendment to this Annual Report on Form 10-K, the information required by this Item is incorporated by reference to the Proxy Statement, including the information set forth under the captions “Corporate Governance - Board of Directors,” “Corporate Governance - Committees of the Board of Directors,” “Corporate Governance - Board Leadership Structure and Independence of Non-Employee Directors,” and “Corporate Governance - Certain Relationships and Related Party Transactions.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Unless provided in an amendment to this Annual Report on Form 10-K, the information required by this Item is incorporated by reference to the Proxy Statement, including the information set forth under the caption “ Proposal No.3 - Ratification of Selection of Grant Thornton LLP.”


55

SUN COMMUNITIES, INC.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed herewith as part of this Form 10-K:

1.    Financial Statements
A list of the financial statements required to be filed as a part of this Annual Report on Form 10‑K is shown in the “Index to the Consolidated Financial Statements and Financial Statement Schedules” filed herewith.

2.    Financial Schedule
The financial statement schedule required to be filed as a part of this Annual Report on Form 10‑K is shown in the “Index to the Consolidated Financial Statements and Financial Statement Schedules” filed herewith.

3.    Exhibits
A list of the exhibits required by Item 601 of Regulation S‑K to be filed as a part of this Annual Report on Form 10-K is filed herewith.

ITEM 16. FORM 10-K SUMMARY

None.


56

SUN COMMUNITIES, INC.

EXHIBITS

Exhibit Number
Description
Method of Filing
2.1
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on August 22, 2019
3.1
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 10-K filed on February 22, 2018
3.2
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on May 12, 2017
4.1
Filed herewith
10.8
Incorporated by reference to Sun Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, December 31, 2002, as amended
10.9
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 10-K filed on February 21, 2019
10.10
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed February 5, 2019
10.11
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 25, 2012
10.12
Incorporate by reference to Exhibit A to Sun Communities, Inc.’s Definitive Proxy Statement filed on March 29, 2018
10.13
Incorporated by reference to Sun Communities, Inc.’s Proxy Statement dated April 29, 2015 for the Annual meeting of Stockholders held July 20, 2015
10.14
Incorporated by reference to Sun Communities, Inc.’s Registration Statement No. 33 69340
10.15
Incorporated by reference to Sun Communities, Inc.’s Registration Statement No. 33 80972
10.16
Incorporated by reference to Sun Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004
10.17
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 15, 2014
10.18
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed June 24, 2013
10.19
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 15, 2014
10.20
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on March 8, 2017
10.21
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed May 20, 2015
10.22
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on March 8, 2017
10.23
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 17, 2015
10.24
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on March 8, 2017
10.25
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed July 15, 2014
10.29
Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K filed on May 24, 2019

21.1
Filed herewith
23.1
Filed herewith

57

SUN COMMUNITIES, INC.

31.1
Filed herewith
31.2
Filed herewith
32.1
Furnished herewith
101.INS
XBRL Instance Document
The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
XBRL Taxonomy Extension Schema Document
Filed herewith
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
Filed herewith
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
Filed herewith
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
Filed herewith
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
Filed herewith


#
Management contract or compensatory plan or arrangement.

58

SUN COMMUNITIES, INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
SUN COMMUNITIES, INC.
(Registrant)
Dated: February 20, 2020
By
/s/
Gary A. Shiffman
 
 
 
Gary A. Shiffman
Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 
Name
 
Capacity
 
Date
/s/
Gary A. Shiffman
 
Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
 
February 20, 2020
 
Gary A. Shiffman
 
 
 
 
/s/
Karen J. Dearing
 
Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer)
 
February 20, 2020
 
Karen J. Dearing
 
 
 
 
/s/
Meghan G. Baivier
 
Director
 
February 20, 2020
 
Meghan G. Baivier
 
 
 
 
/s/
Stephanie W. Bergeron
 
Director
 
February 20, 2020
 
Stephanie W. Bergeron
 
 
 
 
/s/
Brian M. Hermelin
 
Director
 
February 20, 2020
 
Brian M. Hermelin
 
 
 
 
/s/
Ronald A. Klein
 
Director
 
February 20, 2020
 
Ronald A. Klein
 
 
 
 
/s/
Clunet R. Lewis
 
Director
 
February 20, 2020
 
Clunet R. Lewis
 
 
 
 
/s/
Arthur A. Weiss
 
Director
 
February 20, 2020
 
Arthur A. Weiss
 
 
 
 




59

SUN COMMUNITIES, INC.

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE



 
Page
Reports of Independent Registered Public Accounting Firm
F-2
Financial Statements:
 
Consolidated Balance Sheets as of December 31, 2019 and 2018
F-5
Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017
F-6
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2018 and 2017
F-7
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017
F-8
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2019, 2018 and 2017
F-10
Notes to Consolidated Financial Statements
F-11
Real Estate and Accumulated Depreciation, Schedule III
F-45



F - 1

SUN COMMUNITIES, INC.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Sun Communities, Inc.

Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Sun Communities, Inc. (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 20, 2020 expressed an unqualified opinion.

Change in accounting principle
As discussed in Note 17 to the consolidated financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of ASC Topic 842, Leases.

Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for Acquisitions
The Company's strategy includes growth by acquisition. As described in footnote 3, during 2019, the Company completed forty-four community acquisitions for total consideration of $854 million. The principal considerations for our determination that the accounting for acquisitions is a critical audit matter is that it involves a high degree of subjectivity in evaluating the reasonableness of management's estimates and related assumptions related to the accounting for the recognition of the fair value of assets acquired and liabilities assumed. We performed the following procedures, among others, in connection with forming our overall opinion on the financial statements. We tested management’s controls over the accounting for acquisitions, such as controls over the recognition and measurement of assets acquired, liabilities assumed, and consideration paid. For each of the acquisitions, we read the purchase agreements, evaluated the significant assumptions and methods used in developing the fair value estimates and tested the recognition of the assets acquired and liabilities assumed at fair value.

More specifically, for each acquisition, we assessed, through the use of our internal valuation specialist, whether (1) the values assigned to the tangible assets appeared reasonable based on a cost or market approach for similar properties in each geographic area, (2) intangible assets were properly considered and identified, and (3) the significant assumptions used in valuing the assets and liabilities were reasonable

F - 2

SUN COMMUNITIES, INC.

and (4) if applicable, the value assigned to and accounting for, equity interests in the Company or its subsidiaries that was issued as consideration in the transaction.

As described in footnote 10, the purchase consideration for the acquisition of Country Village Estate also reflected, in part, the estimated fair value of preferred equity interests. In testing the valuation of the equity interests, we considered management’s estimated amount that would be paid upon the ultimate redemption of the securities and the discount rate. We also evaluated management's classification of the equity consideration as either debt, temporary equity or equity on the consolidated balance sheet based on the characteristics of the equity instrument.

Impairment of Investment Properties
As described in footnote 1, the Company reviews the carrying value of investment properties on a quarterly basis or whenever events or changes in circumstances indicate a possible impairment. Events or circumstances that may prompt a review of the carrying value of investment properties may include a significant decrease in the anticipated market price of the investment property, an adverse change to the extent or manner in which an asset may be used, or a significant change in its physical condition or damage due to catastrophic event.

The Company reviews its investment properties for potential impairment through an analysis of net operating income trends period over period. In the event that any impairment indicators are present, the Company undertakes additional analyses utilizing expected undiscounted future cash flows and expected disposition proceeds for a given asset. Forecasting of cash flows requires management to make estimates and assumptions about such variables as the anticipated holding period, rental revenues and operating expenses during the holding period, capital expenditures and rates of return.

In 2019, the Company’s net operating income trend analysis resulted in 10 properties requiring additional analysis. No impairments were identified as a result of the quarterly analysis nor events occurring in 2019.

The principal consideration for our determination that the impairment of investment properties is a critical audit matter is that it involves a high degree of subjectivity in evaluating management's estimates used in determining the undiscounted cash flow estimates. We performed the following procedures, among others, in connection with forming our overall opinion on the financial statements. We tested management’s internal controls over the identification of potential investment property impairments, such as controls over the Company’s quarterly analysis of net operating income trends, as well management review controls to identify potential events which could indicate impairment We examine and evaluate the Company’s net operating income trend analysis and its assessment of other events, and if additional analysis is necessary, we evaluated the significant assumptions and methods used in developing the undiscounted cash flow estimates.

More specifically, when the net operating income analysis indicated that additional analysis was required, we assessed whether the significant assumptions, including estimated holding period, rental revenues and operating expenses during the holding period, capital expenditures and rates of return used in determining the future undiscounted cash flows were reasonable.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2003.

Southfield, Michigan
February 20, 2020

F - 3

SUN COMMUNITIES, INC.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Sun Communities, Inc.

Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Sun Communities, Inc. (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2019, and our report dated February 20, 2020 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Southfield, Michigan
February 20, 2020


F - 4



SUN COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
 
As of
 
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 (including $344,300 and $308,171 for consolidated VIEs at December 31, 2019 and December 31, 2018; see Note 8)
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

 
106,924

Other assets, net (including $23,894 and $19,809 for consolidated VIEs at December 31, 2019 and December 31, 2018; see Note 8)
219,896

 
164,211

Total Assets
$
7,802,060

 
$
6,710,026

Liabilities
 
 
 
Mortgage loans payable (including $46,993 and $44,172 for consolidated VIEs at December 31, 2019 and December 31, 2018; see Note 8)
$
3,180,592

 
$
2,815,957

Secured borrowings on collateralized receivables

 
107,731

Preferred Equity - Sun NG RV Resorts LLC - mandatorily redeemable (fully attributable to consolidated VIEs; see Note 8)
35,249

 
35,277

Preferred OP units - mandatorily redeemable
34,663

 
37,338

Lines of credit
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 (including $13,631 and $6,914 for consolidated VIEs at December 31, 2019 and December 31, 2018; see Note 8)
81,289

 
51,581

Total Liabilities
3,848,104

 
3,479,112

Commitments and contingencies (see Note 18)
 
 
 
Series A-4 preferred stock, $0.01 par value. Issued and outstanding:1,063 December 31, 2018

 
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 (fully attributable to consolidated VIEs; see Note 8)
27,091

 
21,976

Stockholders' Equity
 
 
 
Common stock, $0.01 par value. Authorized: 180,000 shares; Issued and outstanding: 93,180 December 31, 2019 and 86,357 December 31, 2018
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


See accompanying Notes to Consolidated Financial Statements.

F - 5


SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

 
 
Year Ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Revenues
 
 
 
 
 
 
Income from real property
 
$
925,664

 
$
825,973

 
$
742,228

Revenue from home sales
 
181,936

 
166,031

 
127,408

Rental home revenue
 
57,572

 
53,657

 
50,549

Ancillary revenue
 
66,881

 
54,107

 
37,511

Interest income
 
17,857

 
20,852

 
21,179

Brokerage commissions and other revenues, net
 
14,127

 
6,205

 
3,695

Total Revenues
 
1,264,037

 
1,126,825

 
982,570

Expenses
 
 
 
 
 
 
Property operating and maintenance
 
266,378

 
236,097

 
210,278

Real estate taxes
 
61,880

 
56,555

 
52,288

Cost of home sales
 
134,357

 
123,333

 
95,114

Rental home operating and maintenance
 
21,995

 
23,304

 
22,160

Ancillary expenses
 
47,432

 
38,043

 
27,450

Home selling expenses
 
14,690

 
15,722

 
12,457

General and administrative expenses
 
93,964

 
81,429

 
83,973

Catastrophic weather related charges, net
 
1,737

 
92

 
8,352

Depreciation and amortization
 
328,067

 
287,262

 
261,536

Loss on extinguishment of debt
 
16,505

 
1,190

 
4,676

Interest expense
 
133,153

 
130,556

 
128,471

Interest on mandatorily redeemable preferred OP units / equity
 
4,698

 
3,694

 
3,114

Total Expenses
 
1,124,856

 
997,277

 
909,869

Income Before Other Items
 
139,181

 
129,548

 
72,701

Gain / (loss) on remeasurement of marketable securities
 
34,240

 
(3,639
)
 

Other income / (expense), net
 
3,457

 
(6,453
)
 
8,982

Income from nonconsolidated affiliates
 
1,374

 
790

 

Current tax expense
 
(1,095
)
 
(595
)
 
(446
)
Deferred tax benefit
 
222

 
507

 
582

Net Income
 
177,379

 
120,158

 
81,819

Less: Preferred return to preferred OP units / equity
 
(6,058
)
 
(4,486
)
 
(4,581
)
Less: Amounts attributable to noncontrolling interests
 
(9,768
)
 
(8,443
)
 
(5,055
)
Net Income attributable to Sun Communities, Inc.
 
161,553

 
107,229

 
72,183

Less: Preferred stock distribution
 
(1,288
)
 
(1,736
)
 
(7,162
)
Net Income attributable to Sun Communities, Inc. common stockholders
 
$
160,265

 
$
105,493

 
$
65,021

 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
88,460

 
81,387

 
76,084

Weighted average common shares outstanding - diluted
 
88,915

 
82,040

 
76,711

 
 
 
 
 
 
 
Basic earnings per share (see Note 14)
 
$
1.80

 
$
1.29

 
$
0.85

Diluted earnings per share (see Note 14)
 
$
1.80

 
$
1.29

 
$
0.85


See accompanying Notes to Consolidated Financial Statements.

F - 6


SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)


 
Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Net Income
$
177,379

 
$
120,158

 
$
81,819

Foreign currency translation gain / (loss) adjustment
3,328

 
(5,878
)
 
4,527

Total Comprehensive Income
180,707

 
114,280

 
86,346

Less: Comprehensive Income attributable to noncontrolling interests
(9,923
)
 
(8,171
)
 
(5,299
)
Comprehensive Income attributable to Sun Communities, Inc.
$
170,784

 
$
106,109

 
$
81,047


See accompanying Notes to Consolidated Financial Statements.


F - 7


SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Operating Activities
 
 
 
 
 
Net income
$
177,379

 
$
120,158

 
$
81,819

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Gain on disposition of assets
(11,085
)
 
(9,376
)
 
(9,338
)
Unrealized foreign currency translation (gain) / loss
(4,557
)
 
8,234

 
(6,146
)
Remeasurement of marketable securities
(34,240
)
 
3,639

 

Contingent liability remeasurement (gain) / loss
1,503

 
(2,336
)
 
(3,035
)
Asset impairment charges

 

 
742

Share-based compensation
17,482

 
15,066

 
12,695

Depreciation and amortization
313,966

 
274,432

 
256,193

Deferred tax benefit
(222
)
 
(507
)
 
(582
)
Amortization of below market lease
(7,442
)
 
(7,399
)
 
(7,402
)
Amortization of debt premium
(4,962
)
 
(6,353
)
 
(8,205
)
Amortization of deferred financing costs
2,988

 
3,233

 
2,910

Amortization of ground lease intangibles
752

 
1,638

 
1,914

Loss on extinguishment of debt
16,505

 
1,190

 
4,676

Income from nonconsolidated affiliates
(1,374
)
 
(790
)
 

Distributions from nonconsolidated affiliates
3,049

 

 

Change in notes receivable from financed sales of inventory homes, net of repayments
2,988

 
(2,299
)
 
(26,193
)
Change in inventory, other assets and other receivables, net
(44,322
)
 
(39,514
)
 
(33,031
)
Change in other liabilities
48,326

 
4,098

 
(9,034
)
Net Cash Provided By Operating Activities
476,734

 
363,114

 
257,983

Investing Activities
 
 
 
 
 
Investment in properties
(569,261
)
 
(389,399
)
 
(288,537
)
Acquisitions of properties, net of cash acquired
(472,681
)
 
(320,268
)
 
(120,377
)
Proceeds from dispositions of assets and depreciated homes, net
61,337

 
55,855

 
8,575

Issuance of notes and other receivables
(18,122
)
 
(216
)
 
(3,918
)
Repayments of notes and other receivables
4,542

 
4,312

 
2,615

Investments in nonconsolidated affiliates
(60,742
)
 
(84,997
)
 

Distributions from nonconsolidated affiliates
44,470

 
970

 

Net Cash Used For Investing Activities
(1,010,457
)
 
(733,743
)
 
(401,642
)
Financing Activities
 
 
 
 
 
Issuance of common stock, OP units, and preferred OP units, net
440,782

 
623,540

 
487,677

Redemption of Series B-3 preferred OP units
(2,675
)
 
(4,105
)
 
(4,460
)
Borrowings on lines of credit
3,881,543

 
1,542,677

 
661,000

Payments on lines of credit
(3,883,950
)
 
(1,456,486
)
 
(719,536
)
Proceeds from issuance of other debt
923,721

 
250,000

 
185,153

Payments on other debt
(552,868
)
 
(298,754
)
 
(124,427
)
Prepayment penalty on debt
(18,838
)
 
(2,024
)
 
(6,019
)
Redemption of Series A-4 cumulative convertible preferred stock

 

 
(85,000
)
Proceeds received from return of prepaid deferred financing costs
1,618

 

 

Redemption of Series A-4 preferred stock and OP units

 

 
(24,698
)
Distributions to stockholders, OP unit holders, and preferred OP unit holders
(276,697
)
 
(242,813
)
 
(224,483
)
Payments for deferred financing costs
(6,756
)
 
(2,130
)
 
(3,650
)
Net Cash Provided By Financing Activities
505,880

 
409,905

 
141,557

Effect of exchange rate changes on cash, cash equivalents and restricted cash
411

 
(523
)
 
298

Net change in cash, cash equivalents and restricted cash
(27,432
)
 
38,753

 
(1,804
)
Cash, cash equivalents and restricted cash, beginning of period
62,262

 
23,509

 
25,313

Cash, cash equivalents and restricted cash, end of period
$
34,830

 
$
62,262

 
$
23,509


F - 8


 
Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Supplemental Information
 
 
 
 
 
Cash paid for interest (net of capitalized interest of $7,943, $4,328 and $2,755 respectively)
$
134,990

 
$
126,153

 
$
124,046

Cash paid for interest on mandatorily redeemable debt
$
4,698

 
$
2,551

 
$
3,114

Cash paid (refunds) for income taxes
$
948

 
$
461

 
$
(194
)
Noncash investing and financing activities
 
 
 
 
 
Reduction in secured borrowing balance
$
107,731

 
$
21,451

 
$
23,449

Change in distributions declared and outstanding
$
8,452

 
$
7,889

 
$
3,267

Conversion of common and preferred OP units
$
11,310

 
$
1,515

 
$
3,556

Conversion of Series A-4 preferred stock
$
31,739

 
$
675

 
$
4,720

Capital lease
$

 
$

 
$
4,114

Noncash investing and financing activities at the date of acquisition
 
 
 
 
 
Acquisitions - Common stock and OP units issued
$
313,391

 
$

 
$
28,410

Acquisitions - Equity Interests - NG Sun LLC (see Note 8)
$

 
$
21,976

 
$

Acquisitions - Preferred Equity - Sun NG RV Resorts LLC (see Note 8)
$

 
$
35,277

 
$

Acquisitions - Debt
$
61,900

 
$
3,120

 
$
4,592

Acquisitions - Series D preferred interest
$
51,930

 
$

 
$

Acquisitions - Escrow
$
392

 
$

 
$


See accompanying Notes to Consolidated Financial Statements.


F - 9


SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
 
 
 
Stockholders’ Equity
 
 
 
Temporary Equity
 
7.125% Series A Cumulative Redeemable Preferred Stock
 
Common Stock
 
Additional Paid-in Capital
 
Distributions in Excess of Accumulated Earnings
 
Accumulated Other Comprehensive Income / (Loss)
 
Non-controlling Interests
 
Total Stockholders’ Equity
 
Total Equity
Balance at December 31, 2016
$
66,944

 
$
34

 
$
732

 
$
3,321,441

 
$
(1,023,415
)
 
$
(3,181
)
 
$
66,616

 
$
2,362,227

 
$
2,429,171

Issuance of common stock and common OP units, net

 

 
63

 
514,024

 

 

 
2,001

 
516,088

 
516,088

Conversion of OP units
(259
)
 

 
1

 
3,556

 

 

 
(3,298
)
 
259

 

Redemption of series A-4 preferred stock
(13,093
)
 

 

 
(3,867
)
 

 

 

 
(3,867
)
 
(16,960
)
Conversion of series A-4 preferred stock
(4,720
)
 

 
1

 
4,719

 

 

 

 
4,720

 

Redemption of Series A-4 preferred OP units
(5,166
)
 

 

 
(2,571
)
 

 

 

 
(2,571
)
 
(7,737
)
Redemption of Series A cumulative convertible preferred stock

 
(34
)
 

 
(84,966
)
 

 

 

 
(85,000
)
 
(85,000
)
Share-based compensation - amortization and forfeitures

 

 

 
12,398

 
297

 

 

 
12,695

 
12,695

Acquisition of noncontrolling interest

 

 

 
(6,201
)
 

 

 
6,101

 
(100
)
 
(100
)
Foreign currency translation gain

 

 

 

 

 
4,283

 
244

 
4,527

 
4,527

Net income
205

 

 

 

 
76,765

 

 
4,849

 
81,614

 
81,819

Distributions
(845
)
 

 

 

 
(215,648
)
 

 
(11,257
)
 
(226,905
)
 
(227,750
)
Balance at December 31, 2017
$
43,066

 
$

 
$
797

 
$
3,758,533

 
$
(1,162,001
)
 
$
1,102

 
$
65,256

 
$
2,663,687

 
$
2,706,753

Issuance of common stock and common OP units, net

 

 
66

 
623,474

 

 

 

 
623,540

 
623,540

Conversion of OP units
(342
)
 

 
1

 
1,514

 

 

 
(1,173
)
 
342

 

Conversion of Series A-4 preferred stock
(675
)
 

 

 
675

 

 

 

 
675

 

Equity Interests - NG Sun LLC
21,976

 

 

 

 

 

 

 

 
21,976

Share-based compensation - amortization and forfeitures

 

 

 
14,753

 
313

 

 

 
15,066

 
15,066

Foreign currency translation

 

 

 

 

 
(5,606
)
 
(272
)
 
(5,878
)
 
(5,878
)
Net income
241

 

 

 

 
111,715

 

 
8,202

 
119,917

 
120,158

Distributions
(674
)
 

 

 

 
(238,513
)
 

 
(11,514
)
 
(250,027
)
 
(250,701
)
Balance at December 31, 2018
$
63,592

 
$

 
$
864

 
$
4,398,949

 
$
(1,288,486
)
 
$
(4,504
)
 
$
60,499

 
$
3,167,322

 
$
3,230,914

Issuance of common stock and common OP units, net

 

 
58

 
754,116

 

 

 

 
754,174

 
754,174

Conversion of OP units
(9,652
)
 

 
5

 
11,305

 

 

 
(1,658
)
 
9,652

 

Conversion of Series A-4 preferred stock
(31,739
)
 

 
5

 
31,734

 

 

 

 
31,739

 

Equity Interests - NG Sun LLC & Whitewater
4,451

 

 

 

 
(553
)
 

 

 
(553
)
 
3,898

Share-based compensation - amortization and forfeitures

 

 

 
17,160

 
322

 

 

 
17,482

 
17,482

Issuance of Series preferred D OP units
51,930

 

 

 

 

 

 

 

 
51,930

Foreign currency translation

 

 

 

 

 
3,173

 
155

 
3,328

 
3,328

Net income
1,599

 

 

 

 
167,611

 

 
8,169

 
175,780

 
177,379

Distributions
(2,177
)
 

 

 

 
(272,035
)
 

 
(10,937
)
 
(282,972
)
 
(285,149
)
Balance at December 31, 2019
$
78,004

 
$

 
$
932

 
$
5,213,264

 
$
(1,393,141
)
 
$
(1,331
)
 
$
56,228

 
$
3,875,952

 
$
3,953,956


See accompanying Notes to Consolidated Financial Statements.

F - 10

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. Significant Accounting Policies

Business

Sun Communities, Inc., a Maryland corporation, and all wholly-owned or majority-owned and controlled subsidiaries, including Sun Communities Operating Limited Partnership, a Michigan limited partnership (the “Operating Partnership”), and Sun Home Services, Inc., a Michigan corporation (“SHS”) are referred to herein as the “Company,” “us,” “we,” and “our”. We are a fully integrated, self-administered and self-managed real estate investment trust (“REIT”).

We own, operate, or have an interest in a portfolio, and develop manufactured housing (“MH”) and recreational vehicle (“RV”) communities throughout the United States (“U.S.”). As of December 31, 2019, we owned, operated or had an interest in a portfolio of 422 developed properties located in 33 states and Ontario, Canada (collectively the “Properties”), including 266 MH communities, 122 RV communities, and 34 communities containing both MH and RV sites. As of December 31, 2019, the Properties contained an aggregate of 141,293 developed sites comprised of 93,821 developed MH sites, 26,056 annual RV sites, and 21,416 transient RV sites. There are approximately 10,300 additional MH and RV sites suitable for development.

Principles of Consolidation

We consolidate our majority-owned subsidiaries in which we have the ability to control the operations of our subsidiaries and all variable interest entities with respect to which we are the primary beneficiary.  We also consolidate entities in which we have a direct or indirect controlling or voting interest. All significant inter-company transactions have been eliminated. Any subsidiaries in which we have an ownership percentage equal to or greater than 50%, but less than 100%, or considered a VIE, represent subsidiaries with a noncontrolling interest. The noncontrolling interests in our subsidiaries are allocated their proportionate share of the subsidiaries’ financial results. This allocation is recorded as the noncontrolling interest in our Consolidated Financial Statements.

Certain prior period amounts have been reclassified on our Consolidated Financial Statements to conform with current year presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions related to the reported amounts included in our Consolidated Financial Statements and accompanying footnotes thereto. Actual results could differ from those estimates.

Investment Property

Investment property is recorded at cost, less accumulated depreciation. We review the carrying value of long-lived assets to be held and used for impairment quarterly or whenever events or changes in circumstances indicate a possible impairment. Our primary indicator for potential impairment is based on NOI trends period over period. Circumstances that may prompt a test of recoverability may include a significant decrease in the anticipated market price, an adverse change to the extent or manner in which an asset may be used or in its physical condition or other such events that may significantly change the value of the long-lived asset. An impairment loss is recognized when a long-lived asset’s carrying value is not recoverable and exceeds estimated fair value. We estimate the fair value of our long-lived assets based on discounted future cash flows and any potential disposition proceeds for a given asset. Forecasting cash flows requires management to make estimates and assumptions about such variables as the estimated holding period, rental rates, occupancy, development, and operating expenses during the holding period, as well as disposition proceeds. Management uses its best judgment when developing these estimates and assumptions, but the development of the projected future cash flows is based on subjective variables. Future events could occur which would cause us to conclude that impairment indicators exist, and significant adverse changes in national, regional, or local market conditions or trends may cause us to change the estimates and assumptions used in our impairment analysis. The results of an impairment analysis could be material to our financial statements.

We periodically receive offers from interested parties to purchase certain of our properties. These offers may be the result of an active program initiated by us to sell the property, or from an unsolicited offer to purchase the property. The typical sale process involves a significant negotiation and due diligence period between us and the potential purchaser. As the intent of this process is to determine if there are items that would cause the purchaser to be unwilling to purchase or we would be unwilling to sell, it is not unusual for such potential offers of sale/purchase to be withdrawn as such issues arise. We classify assets as “held for sale” when it is probable, in our opinion, that a sale transaction will be completed within one year. This typically occurs when all significant contingencies surrounding the closing have been resolved, which often corresponds with the closing date.

F - 11

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


We allocate the purchase price of properties to net tangible and identified intangible assets acquired based on their fair values. In making estimates of fair values for purposes of allocating purchase price, we utilize an independent third-party to value the net tangible and identified intangible assets in connection with the acquisition of the respective property. We provide historical and pro forma financial information obtained about each property, as well as any other information needed in order for the third-party to ascertain the fair value of the tangible and intangible assets (including in-place leases) acquired.

On January 1, 2018, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. Upon adoption of this standard, substantially all of our property acquisitions are accounted for as asset acquisitions. We allocate the purchase price of these properties on a relative fair value basis and capitalize direct acquisition related costs as part of the purchase price. Acquisition costs that do not meet the criteria to be capitalized are expensed as incurred and presented as General and administrative costs in our Consolidated Statements of Operations.

Capitalized Costs

We capitalize certain costs incurred in connection with the development, redevelopment, capital enhancement and leasing of our properties. Management is required to use professional judgment in determining whether such costs meet the criteria for immediate expense or capitalization. The amounts are dependent on the volume and timing of such activities and the costs associated with such activities. Maintenance, repairs and minor improvements to properties are expensed when incurred. Renovations and improvements to properties are capitalized and depreciated over their estimated useful lives and real estate project costs related to the development of new community or expansion sites are capitalized until the property is substantially complete and available for occupancy. Costs incurred to initially renovate pre-owned and repossessed homes that we acquire for our Rental Program are capitalized and the majority of costs incurred to refurbish the homes at turnover and repair the homes while occupied are expensed, unless they extend the life of the home. Certain expenditures to dealers and residents related to obtaining lessees in our communities are capitalized and amortized based on the anticipated term of occupancy of a resident. Costs associated with implementing our computer systems are capitalized and amortized over the estimated useful lives of the related software and hardware. Costs incurred to obtain new debt financing are capitalized and amortized over the terms of the related loan agreement using the straight-line method (which approximates the effective interest method).

Cash and Cash Equivalents

We consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash and cash equivalents. At December 31, 2019 and 2018, $22.1 million and $50.3 million of Cash and Cash Equivalents, respectively, was included as a component of Cash, cash equivalents and restricted cash on the Consolidated Balance Sheets. The maximum amount of credit risk arising from cash deposits in excess of federally insured amounts was approximately $22.9 million and $49.5 million as of December 31, 2019 and 2018, respectively.

Restricted Cash

Restricted cash consists of amounts primarily held in deposit for tax, insurance and repair escrows held by lenders in accordance with certain debt agreements. At December 31, 2019 and 2018, $12.7 million and $12.0 million of restricted cash, respectively, was included as a component of Cash, cash equivalents and restricted cash on the Consolidated Balance Sheets

On January 1, 2018, we adopted ASU 2016-18 “Statement of Cash Flows (Topic 230): Restricted Cash.” This update required inclusion of restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Upon adoption of this standard, changes in restricted cash are reported in our Consolidated Statements of Cash Flows as operating, investing or financing activities based on the nature of the underlying activity.

Marketable Securities

Marketable securities are recorded at fair value with changes in fair value recorded in Remeasurement of marketable securities within the Consolidated Statement of Operations. We hold less than 10 percent ownership in Ingenia Communities Group. The value of marketable securities as of December 31, 2019 was $94.7 million and is disclosed on the Consolidated Balance Sheet.

Inventory

Inventory of manufactured homes is stated at lower of specific cost or market based on the specific identification method.

F - 12

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Investments in Nonconsolidated Affiliates

We apply the equity method of accounting to entities in which we do not have a direct or indirect controlling interest or for variable interest entities where we are not considered the primary beneficiary but can exercise influence over the entity with respect to its operations and major decisions. The cost method is applied when (i) the investment is minimal (typically less than 5.0%) and (ii) our investment is passive. Our exposure to losses associated with unconsolidated joint ventures is primarily limited to the carrying value of these investments. Accordingly, distributions from a joint venture in excess of our carrying value are recognized in earnings. We review the carrying value of our investments in nonconsolidated affiliates for other than temporary impairment whenever events or changes in circumstances indicate a possible impairment. Financial condition, operational performance, and other economic trends are among the factors we consider when we evaluate the existence of impairment indicators. Refer to Note 7, “Investments in Nonconsolidated Affiliates,” for additional information.

Notes and Other Receivables

Notes receivable includes both installment loans for manufactured homes purchased by the Company as well as transferred loans that have not met the requirements for sale accounting which are presented herein as collateralized receivables. The notes are collateralized by the underlying manufactured home sold. For purposes of accounting policy, all notes receivable are considered one homogeneous segment, as the notes are typically underwritten using the same requirements and terms. Notes receivable are reported at their outstanding unpaid principal balance adjusted for an allowance for loan loss. Interest income is accrued based upon the unpaid principal balance of the loans.

Past due status of our notes receivable is determined based upon the contractual terms of the note. When a note receivable becomes 60 days delinquent, we stop accruing interest on the note receivable. The interest on nonaccrual loans is accounted for on the cash basis until qualifying for return to accrual. Loans are returned to accrual when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. The ability to collect our notes receivable is measured based on current and historical information and events. We consider numerous factors including: length of delinquency, estimated costs to lease or sell, and repossession history. Our experience supports a high recovery rate for notes receivable; however, there is some degree of uncertainty about the recoverability of our investment in these notes receivable. We are generally able to recover our recorded investment in uncollectible notes receivable by repossessing the homes on the notes retained by us and repurchasing the homes on the collateralized receivables, and subsequently selling or leasing these homes to potential residents in our communities. We have established a loan loss reserve based on our estimated unrecoverable costs associated with repossessed/repurchased homes. We estimate our unrecoverable costs to be the repurchase price of the home collateralizing the note receivable plus repair and remarketing costs in excess of the estimated selling price of the home being repossessed. A historical average of this excess cost is calculated based on prior repossessions/repurchases and is applied to our estimated annual future repossessions to create the allowance for both installment and collateralized notes receivable.

We evaluate the collectability of a loan based on our ability to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. We generally see that if the obligor is delinquent on the loan they are also delinquent on site rent. If the scheduled payment is delinquent beyond the grace period required by law or by the loan agreement, notice is given to start the collection process. A specific allowance is estimated on the past due loans based on historical delinquency data and current delinquency levels.

Credit quality is evaluated at the inception of the receivable. Factors that are considered in order to determine the credit quality of the applicant include, but are not limited to: rental payment history; home debt to income ratio; loan value to the collateralized asset; total debt to income ratio; length of employment; previous landlord references; and FICO scores.

Other receivables are generally comprised of amounts due from residents for rent and related charges, home sale proceeds receivable from sales near year end and various other miscellaneous receivables. Accounts receivable from residents are typically due within 30 days and stated at amounts due from residents net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. We evaluate the recoverability of our receivables whenever events occur or there are changes in circumstances such that management believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan and lease agreements. Receivables related to community rents are reserved when we believe that collection is less than probable, which is generally after a resident balance reaches 60 to 90 days past due.

Intangible Assets

The Company amortizes identified intangible assets that are determined to have finite lives over the period the assets are expected to contribute directly or indirectly to the future cash flows of the property or business. The carrying amounts of the identified intangible assets are included in Other assets, net on our Consolidated Balance Sheets. Refer to Note 6, “Intangible Assets,” for additional information.

F - 13

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Deferred Taxes

We are subject to certain state taxes that are considered to be income taxes and have certain subsidiaries that are taxed as regular corporations for U.S. (i.e., federal, state, local, etc.) and non-U.S. income tax purposes. Deferred tax assets or liabilities are recognized for temporary differences between the tax basis of assets and liabilities and their carrying amounts in the financial statements and net operating loss carryforwards in certain subsidiaries, including those domiciled in foreign jurisdictions, which may be realized in future periods if the respective subsidiary generates sufficient taxable income. Deferred tax assets and liabilities are measured using currently enacted tax rates. A valuation allowance is established if, based on the available evidence, it is considered more likely than not that some portion or all of the deferred tax assets will not be realized. Refer to Note 13, “Income Taxes,” for additional information.

Deferred Financing Costs

Deferred financing costs include fees and costs incurred to obtain long-term financing. The costs are amortized over the terms of the respective loans. Unamortized deferred financing costs are written off when debt is retired before the maturity date. Upon amendment of the line of credit or refinancing of mortgage debt, unamortized deferred financing costs and discount and premium costs are accounted for in accordance with FASB Accounting Standards Codification (“ASC”) 470-50-40, “Modifications and Extinguishments.” At December 31, 2019 and 2018, $4.5 million and $4.7 million of line of credit deferred financing costs, respectively, were presented as a component of Other asset, net on the Consolidated Balance Sheets. At December 31, 2019 and 2018, $7.9 million and $2.4 million of deferred financing costs and discount and premium costs, respectively, were netted and presented as a component of Mortgage loans payable on the Consolidated Balance Sheets.

Temporary Equity

Temporary equity includes preferred securities that are redeemable for cash at the option of the holder or upon the occurrence of an event that is not solely within our control based on a fixed or determinable price. These preferred securities are not mandatorily redeemable for cash nor do they contain a fixed maturity date. Temporary equity is classified between Liabilities and Stockholders’ Equity on the Consolidated Balance Sheets.

Share-Based Compensation

Share-based compensation cost for service vesting restricted stock awards is measured based on the closing share price of our common stock on the date of grant. We measure the fair value of awards with performance conditions based on an estimate of shares expected to vest using the closing price of our common stock as of the grant date. If it is not probable that the performance conditions will be satisfied, we do not recognize compensation expense. We estimate the fair value of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. We recognize compensation cost ratably over each tranche of shares based on the fair value estimated by the model.

Share-based compensation cost for stock options is estimated at the grant date based on each option’s fair-value as calculated by the Binomial (lattice) option-pricing model. The Binomial (lattice) option-pricing model incorporates various assumptions including expected volatility, expected life, dividend yield, and interest rates. Refer to Note 11, “Share-Based Compensation” for additional information.

Fair Value of Financial Instruments

Our financial instruments consist of cash, cash equivalents and restricted cash, accounts and notes receivable, marketable securities, accounts payable, debt, and contingent consideration liability. We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures, pursuant to FASB ASC 820, “Fair Value Measurements and Disclosures.” Refer to Note 16, “Fair Value of Financial Instruments,” for additional information regarding the estimates and assumptions used to estimate the fair value of each financial instrument class.


F - 14

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Revenue Recognition

Rental income attributable to site and home leases is recorded on a straight-line basis when earned from tenants. The majority of our leases entered into by tenants are generally for one year terms, but may range from month-to-month to two years and are renewable by mutual agreement from us and the resident, or in some cases, as provided by state statute. A small portion of tenant leases are for greater than two years. Revenue from the sale of manufactured homes is recognized upon transfer of title at the closing of the sales transaction. Interest income on notes receivable is recorded on a level yield basis over the life of the notes. We report real estate taxes collected from residents and remitted to taxing authorities in revenue. On January 1, 2018, we adopted ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)” and the related updates subsequently issued by the FASB. The adoption of ASU 2014-09 did not result in any changes to our accounting policies for revenue recognition. Refer to Note 2, “Revenue,” for additional information.

Advertising Costs

Advertising costs are expensed as incurred. As of December 31, 2019, 2018 and 2017, we had advertising costs of $6.7 million, $6.2 million and $5.9 million, respectively.

Depreciation and Amortization

Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets. Useful lives are thirty years for land improvements and buildings, ten years for rental homes, seven years for furniture, fixtures and equipment, four years for computer hardware and software, and seven years to twenty years for intangible assets.

Foreign Currency

The assets and liabilities of our Australian and Canadian operations, where the functional currency is the Australian dollar and Canadian dollar, are translated into U.S. dollars using the exchange rate in effect as of the balance sheet date. Income statement amounts are translated at the average exchange rate prevailing during the period. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss). Foreign currency exchange gains and losses arising from fluctuations in currency exchange rates on transactions and the effects of remeasurement of monetary balances denominated in currencies other than the functional currency are recorded in earnings.

For the year ended December 31, 2019, we recorded a foreign currency translation gain of $4.5 million within Other income / (expense), net on our Consolidated Statements of Operations, as compared to a foreign currency translation loss of $8.4 million, for the year ended December 31, 2018 and $5.9 million foreign currency translation gain for the year ended December 31, 2017.

Accounting for leases

We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for executive office spaces, ground leases at certain communities, and certain equipment leases. The ROU asset and liabilities are included within Other assets, net and Other liabilities on the Consolidated Balance Sheets.

For operating leases with a term greater than one year, the company recognizes the ROU assets and liabilities related to the lease payments on the Consolidated Balance Sheets. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The ROU assets represent our right to use the underlying assets for the term of the lease and the lease liabilities represent our obligation to make lease payments arising for the agreements. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus unamortized initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The ROU asset is periodically reduced by impairment losses. As of December 31, 2019, we have not encountered any impairment losses. Variable lease payments, except for the ones that depend on index or rate, are excluded from the calculation of the ROU assets and lease liabilities and are recognized as variable lease expense in the Consolidated Statements of Operations in the period in which they are incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Many of our lessee agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. The lease liability costs are amortized over the straight-line method over the term of the lease. Operating leases with a term of less than one year are recognized as a lease expense over the term of the lease, with no asset or liability recognized on the Consolidated Balance Sheets.

F - 15

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Finance leases where we are the lessee are included in Other assets, net and Other liabilities on our Consolidated Balance Sheets. The lease liabilities are initially measured in the same manner as operating leases and are subsequently measured at amortized cost using the effective interest method. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For finance leases the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to us, or we are reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability. ROU assets are periodically reduced by impairment losses. As of December 31, 2019, we have not encountered any impairment losses. Refer to Note 19, “Leases” for information regarding leasing activities.

2. Revenue
        
Disaggregation of Revenue

The following table disaggregates our revenue by major source (in thousands):
 
Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
 
Real Property Operations
 
Home Sales and Rentals
 
Consolidated
 
Real Property Operations
 
Home Sales and Rentals
 
Consolidated
 
Real Property Operations
 
Home Sales and Rentals
 
Consolidated
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from
real property
$
925,664

 
$

 
$
925,664

 
$
825,973

 
$

 
$
825,973

 
$
742,228

 
$

 
$
742,228

Revenue from home sales

 
181,936

 
181,936

 

 
166,031

 
166,031

 

 
127,408

 
127,408

Rental home revenue

 
57,572

 
57,572

 

 
53,657

 
53,657

 

 
50,549

 
50,549

Ancillary revenue
66,881

 

 
66,881

 
54,107

 

 
54,107

 
37,511

 

 
37,511

Interest income
17,857

 

 
17,857

 
20,852

 

 
20,852

 
21,180

 
(1
)
 
21,179

Brokerage commissions and other revenues, net
14,127

 

 
14,127

 
6,205

 

 
6,205

 
3,695

 

 
3,695

Total Revenues
$
1,024,529

 
$
239,508

 
$
1,264,037

 
$
907,137

 
$
219,688

 
$
1,126,825

 
$
804,614

 
$
177,956

 
$
982,570


Revenue Recognition Policies and Performance Obligations
On January 1, 2018, we adopted FASB Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers” and the other related ASUs and amendments to the codification (collectively “ASC 606”). The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. A five-step transactional analysis is required to determine how and when to recognize revenue. ASC 606 applies to all contracts with customers, except those that are within the scope of other topics in the FASB accounting standards codification.
As a real estate owner and operator, the majority of our revenue is derived from site and home leases that are accounted for pursuant to ASC 842 “Leases.” For transactions in the scope of ASC 606, we recognize revenue when control of goods or services transfers to the customer, in the amount that we expect to receive for the transfer of goods or provision of services. The adoption of ASC 606 did not result in any change to the timing and pattern of revenue recognition. Accordingly, retrospective application to prior periods or a cumulative catch-up adjustment was unnecessary.
Income from real property - Residents in our communities lease the site on which their home is located, and either own or lease their home. Resident leases are generally for one-year or month-to-month terms and are renewable by mutual agreement from us and the resident, or in some cases, as provided by jurisdictional statute. Lease revenues for sites and homes fall under the scope of ASC 842, and are accounted for as operating leases with straight-line recognition. Income from real property includes income from site leases for annual MH residents, site leases for annual recreational vehicle RV residents and site rentals to transient RV residents. Non-lease components of our site lease contracts, which are primarily provision of utility services, are accounted for with the site lease as a single lease under ASC 842. Additionally, we include collections of real estate taxes from residents within Income from real property.

F - 16

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Revenue from home sales - Our taxable REIT subsidiary, SHS, sells manufactured homes to current and prospective residents in our communities. Prior to adoption of ASC 606, we recognized revenue for home sales pursuant to ASC 605 “Revenue Recognition,” as manufactured homes are tangible personal property that can be located on any land parcel. Manufactured homes are not permanent fixtures or improvements to the underlying real estate and were therefore not considered to be subject to the guidance in ASC 360-20 “Real Estate Sales” by the Company. In accordance with the core principle of ASC 606, we recognize revenue from home sales at the time of closing when control of the home transfers to the customer. After closing of the sale transaction, we have no remaining performance obligation.

Rental home revenue - is comprised of rental agreements whereby we lease homes to residents in our communities. We account for these revenues under ASC 842.
Ancillary revenue - is primarily composed of proceeds from restaurant, golf, merchandise and other activities at our RV communities and is included in the scope of ASC 606. Revenues are recognized at point of sale when control of the good or service transfers to the customer and our performance obligation is satisfied. In addition, leasing of short-term vacation home rentals is included within Ancillary revenue and falls within the scope of ASC 842. Sales and other taxes that we collect concurrent with revenue-producing activities are excluded from the transaction price.
Interest income - is earned primarily on our notes receivables, which includes installment loans for manufactured homes purchased by the Company from loan originators. Interest income on these receivables is accrued based on the unpaid principal balances of the underlying loans on a level yield basis over the life of the loans. Interest income is not in the scope of ASC 606. Refer to Note 5, “Notes and Other Receivables” for additional information.
Broker commissions and other revenues, net - is primarily comprised of brokerage commissions for sales of manufactured homes, where we act as agent and arrange for a third party to transfer a manufactured home to a customer within one of our communities. Brokerage commission revenues are recognized on a net basis at closing, when the transaction is completed and our performance obligations have been fulfilled. Loan loss reserve expenses for our notes receivables are also included herein. Refer to Note 5, “Notes and Other Receivables” for additional information regarding our loan loss reserves.

Contract Balances

As of December 31, 2019, and December 31, 2018, we had $20.9 million and $16.1 million, respectively, of receivables from contracts with customers. Receivables from contracts with customers are presented as a component of Notes and other receivables, net on our Consolidated Balance Sheets. These receivables represent balances owed to us for previously completed performance obligations for sales of manufactured homes. Due to the nature of our revenue from contracts with customers, we do not have material contract assets or liabilities that fall under the scope of ASC 606.
  

F - 17

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3. Real Estate Acquisitions

2019 Acquisitions

Communities

For the year ended December 31, 2019, we acquired the following communities and portfolios:
Community Name
 
Type
 
Sites
 
Development Sites
 
State
 
Month Acquired
Slickrock Campground
 
RV
 
193

 

 
UT
 
December
Pandion Ridge
 
RV
 
142

 
351

 
AL
 
November
Jensen Portfolio (1)
 
MH
 
5,230

 
466

 
Various
 
October
Glen Ellis
 
RV
 
244

 
40

 
NH
 
September
Leisure Point Resort (2)
 
MH / RV
 
502

 

 
DE
 
September
Reunion Lake
 
RV
 
202

 
69

 
LA
 
July
River Plantation
 
RV
 
309

 

 
TN
 
May
Massey’s Landing RV
 
RV
 
291

 

 
DE
 
February
Shelby Properties (3)
 
MH
 
1,308

 

 
MI
 
February
Buena Vista
 
MH
 
400

 

 
AZ
 
February
Country Village Estates (4)
 
MH
 
518

 

 
OR
 
January
Hid’n Pines RV
 
RV
 
321

 

 
ME
 
January
Hacienda del Rio
 
MH (Age-Restricted)
 
730

 

 
FL
 
January
 
 
Total
 
10,390

 
926

 
 
 
 
(1) Contains 31 communities located in CT, GA, MD, NH, NJ, NY, NC and SC. In conjunction with the acquisition, we issued 1,972,876 shares of common stock, net of fractional shares paid in cash.
(2) Contains 201 MH sites and 301 RV sites.
(3) Contains two MH communities.
(4) In conjunction with the acquisition, we issued Series D Preferred OP Units. As of December 31, 2019, 488,958 Series D Preferred OP Units were outstanding.

The following table summarizes the amounts of assets acquired net of liabilities assumed at the acquisition date and the consideration paid for the acquisitions completed for the year ended December 31, 2019 (in thousands):
 
At Acquisition Date
 
Consideration
 
Investment in property
 
Inventory of manufactured homes
 
In-place leases and other intangible assets
 
Other assets (liabilities), net
 
Total identifiable assets acquired net of liabilities assumed
 
Cash and escrow
 
Debt assumed
 
Temporary and permanent equity
 
Total consideration
Slickrock Campground
$
8,250

 
$

 
$

 
$
8

 
$
8,258

 
$
8,258

 
$

 
$

 
$
8,258

Pandion Ridge
19,070

 

 

 
(92
)
 
$
18,978

 
18,978

 

 

 
18,978

Jensen Portfolio
374,402

 
3,605

 
7,752

 
3,938

 
$
389,697

 
18,306

 
58,000

 
313,391

 
389,697

Glen Ellis
5,955

 

 

 
(79
)
 
5,876

 
1,976

 
3,900

 

 
5,876

Leisure Point Resort
43,632

 
18

 
850

 
(678
)
 
43,822

 
43,822

 

 

 
43,822

Reunion Lake
23,493

 

 

 
(1,153
)
 
22,340

 
22,340

 

 

 
22,340

River Plantation
22,589

 
75

 

 

 
22,664

 
22,664

 

 

 
22,664

Massey's Landing
36,250

 

 
220

 
(446
)
 
36,024

 
36,024

 

 

 
36,024

Shelby Properties
85,969

 
2,011

 
6,520

 
(1,015
)
 
93,485

 
93,485

 

 

 
93,485

Buena Vista
20,221

 
439

 
1,590

 
(93
)
 
22,157

 
22,157

 

 

 
22,157

Country Village
62,784

 

 
2,020

 
31

 
64,835

 
12,905

 

 
51,930

 
64,835

Hid'n Pines
10,680

 

 
70

 
(233
)
 
10,517

 
10,517

 

 

 
10,517

Hacienda del Rio
111,971

 
15

 
3,280

 
(237
)
 
115,029

 
115,029

 

 

 
115,029

Total
$
825,266

 
$
6,163

 
$
22,302

 
$
(49
)
 
$
853,682

 
$
426,461

 
$
61,900

 
$
365,321

 
$
853,682


As of December 31, 2019, the Company incurred $19.3 million of transaction costs which have been capitalized and allocated among the various categories above.

F - 18

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Land for Expansion / Development

During the year ended December 31, 2019, the Company acquired four land parcels which are located in New Braunfels, Texas; Petoskey, Michigan; Uhland, Texas and Hudson, Florida for total consideration of $7.7 million. Two of the land parcels are adjacent to existing communities. The land acquired for expansion and development have potential to add approximately 900 usable sites once constructed.

Ground Leases

In September 2019, the Company entered into a 66-year Temporary Occupancy and Use Permit with the Port of San Diego to construct and operate a new RV resort in Chula Vista. Refer to Note 19, “ Leases” for disclosures on accounting treatment.

In August 2019, the Company acquired Chincoteague Island KOA RV Resort (“Chincoteague”), in Chincoteague Island, Virginia for total consideration of $19.5 million. The sellers of Chincoteague continue to operate the property. Refer to Note 19, “Leases” for disclosures on accounting treatment.

In April 2019, the Company acquired Strafford/Lake Winnipesaukee South KOA RV Resort ("Strafford") in Strafford, New Hampshire for total consideration of $2.7 million. The sellers of Strafford continue to operate the property. Refer to Note 19, “Leases” for disclosures on accounting treatment.

In March 2019, the Company entered into a four-year Temporary Occupancy and Use Permit with the Port of San Diego to operate a RV resort located in Chula Vista, CA until such time as the Company constructs a new RV resort in the area. Concurrent with the transaction, we purchased tangible personal property from the prior owner of the RV resort for $0.3 million. Refer to Note 19. “Leases ” for disclosures on accounting treatment.

Refer to Note 21, “Subsequent Events” for information regarding real estate acquisition activity after December 31, 2019.

The total amount of revenues and net income included in the Consolidated Statements of Operations for the year ended December 31, 2019 related to the acquisitions completed in 2019 are set forth in the following table (in thousands):
 
 
Year Ended December 31, 2019
 
 
(unaudited)
Total revenues
 
$
42,715

Net income
 
$
10,050



The following unaudited pro forma financial information presents the results of our operations for the years ended December 31, 2019 and 2018, as if the properties acquired in 2019 had been acquired on January 1, 2018. The unaudited pro forma results reflect certain adjustments for items that are not expected to have a continuing impact, such as adjustments for transaction costs incurred, management fees, and purchase accounting.

The information presented below has been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations that would have actually occurred had the acquisition been consummated on January 1, 2018 (in thousands, except per-share data):
 
 
Year Ended
 
 
(unaudited)
 
 
December 31, 2019
 
December 31, 2018
Total revenues
 
$
1,298,096

 
$
1,194,093

Net income attributable to Sun Communities, Inc. common stockholders
 
$
166,446

 
$
120,891

Net income per share attributable to Sun Communities, Inc. common stockholders - basic
 
$
1.88

 
$
1.49

Net income per share attributable to Sun Communities, Inc. common stockholders - diluted
 
$
1.87

 
$
1.47



F - 19

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2018 Acquisitions

For the year ended December 31, 2018 we acquired the following communities:
Community Name
 
Type
 
Sites
 
Development Sites
 
State
 
Month Acquired
Leaf Verde RV Resort
 
RV
 
376

 

 
AZ
 
October
Archview
 
RV
 
114

 
50

 
UT
 
August
Petoskey KOA
 
RV
 
210

 

 
MI
 
August
The Sands RV and Golf Resort
 
RV (Age Restricted)
 
507

 

 
CA
 
July
Sun NG RV Resorts LLC (1)(2)
 
RV
 
2,700

 
940

 
Various
 
June
Silver Creek
 
RV
 
264

 
176

 
MI
 
June
Highway West (1)
 
RV
 
536

 

 
UT & OR
 
June
Compass RV
 
RV
 
175

 

 
FL
 
May
 
 
Total
 
4,882

 
1,166

 
 
 
 
(1) Highway West and Sun NG RV Resorts LLC are comprised of 4 RV and 10 RV resorts, respectively.
(2) Refer to Note 8, “Consolidated Variable Interest Entities,” Note 9, “Debt and Lines of Credit,” and Note 10, “Equity and Temporary Equity” in our accompanying Consolidated Financial Statements for additional information.

The following table summarizes the amounts of assets acquired net of liabilities assumed at the acquisition date and the consideration paid for the acquisitions completed in 2018 (in thousands):
 
At Acquisition Date
 
Consideration
 
Investment in property
 
In-place leases and other intangible assets
 
Debt assumed
 
Other liabilities, net
 
Total identifiable assets acquired net of liabilities assumed
 
Cash
 
Preferred Equity - Sun NG Resorts
 
Equity Interests - NG Sun LLC
 
Total consideration
Leaf Verde
$
11,587

 
$
60

 
$

 
$

 
$
11,647

 
$
11,647

 
$

 
$

 
$
11,647

Archview
14,550

 

 

 

 
14,550

 
14,550

 

 

 
14,550

Petoskey KOA
8,730

 
270

 

 

 
9,000

 
9,000

 

 

 
9,000

Sands
13,790

 
460

 

 

 
14,250

 
14,250

 

 

 
14,250

Sun NG Resorts
240,649

 
16,339

 
(3,120
)
 
(11,990
)
 
241,878

 
184,625

 
35,277

 
21,976

 
241,878

Silver Creek
7,250

 

 

 

 
7,250

 
7,250

 

 

 
7,250

Highway West
36,500

 

 

 

 
36,500

 
36,500

 

 

 
36,500

Compass
13,930

 
70

 

 

 
14,000

 
14,000

 

 

 
14,000

Total
$
346,986

 
$
17,199

 
$
(3,120
)
 
$
(11,990
)
 
$
349,075

 
$
291,822

 
$
35,277

 
$
21,976

 
$
349,075


For the year ended December 31, 2018, we acquired the following land for expansion / development:
Name
 
Location
 
Type
 
Expansion / Development Sites
 
Cost (millions)
 
Month Acquired
Ocean West
 
McKinleyville, CA
 
MH
 
26

 
$
0.2

 
December
Water Oak Country Club Estates
 
Lady Lake, FL
 
MH
 
296

 
1.9

 
November
Oak Crest
 
Austin, TX
 
MH
 
220

 
4.2

 
October
Pecan Park
 
Jacksonville, FL
 
RV
 
158

 
1.3

 
September
Smith Creek Crossing
 
Granby, CO
 
MH
 
310

 
0.9

 
September
Apple Carr
 
Egelston, MI
 
MH
 
121

 
0.2

 
May
River Run
 
Granby, CO
 
MH / RV
 
1,144

 
5.3

 
May
 
 
 
 
Total
 
2,275

 
$
14.0

 
 



F - 20

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4. Collateralized Receivables and Transfers of Financial Assets

Prior to November 2019, we completed various transactions with an unrelated entity involving our notes receivable under which we received cash proceeds in exchange for relinquishing our right, title, and interest in certain notes receivable. We had no further obligations or rights with respect to the control, management, administration, servicing, or collection of the installment notes receivable. However, we were subject to certain recourse provisions requiring us to purchase the underlying homes collateralizing such notes, in the event of a note default and subsequent repossession of the home by the unrelated entity. The recourse provisions were considered to be a form of continuing involvement which precluded establishing legal isolation, a necessary condition for derecognition of a financial asset, and therefore these transferred loans did not meet the requirements for sale accounting. We continued to recognize these transferred loans and we also recognized the cash proceeds on our Consolidated Balance Sheets and referred to them as collateralized receivables and as secured borrowings on collateralized receivables respectively.

In November 2019, the facts and circumstances regarding the recourse provisions, to which we remain subject, evolved such that the purchasers become subject to substantive economic risk.  Accordingly, we reassessed the legal isolation analysis in consultation with legal counsel, and concluded that the transaction now achieved the sale accounting requirements for the transferred notes receivable. Following the derecognition guidance, we (a) derecognized the transferred financial assets, (b) applied the guidance in ASC paragraphs 860-20-25-1 and 860-20-30-1 on recognition and measurement of assets obtained and liabilities incurred in the sale, and (c) recognized in earnings a $0.6 million gain on sale.

There was no balance of collateralized receivables at December 31, 2019. The balance of the collateralized receivables was $106.9 million (net of allowance of $0.8 million) as of December 31, 2018. The receivables had a weighted average interest rate and maturity of 9.9 percent and 14.1 years as of December 31, 2018.

There was no balance of secured borrowing as of December 31, 2019. The balance of the secured borrowing was $107.7 million as of December 31, 2018.

The amount of interest income and expense recognized was $8.0 million, $11.2 million and $13.2 million for the years ended December 31, 2019, 2018, and 2017, respectively.
  
The change in the aggregate gross principal balance of the collateralized receivables is as follows (in thousands):
 
December 31, 2019
 
December 31, 2018
Beginning balance
$
107,731

 
$
129,182

Principal payments and payoffs from our customers
(11,408
)
 
(12,577
)
Principal reduction from repurchased homes
(5,973
)
 
(8,874
)
Derecognition of collateralized receivables
(90,350
)
 

Total activity
(107,731
)
 
(21,451
)
Ending balance
$

 
$
107,731



The following table sets forth the allowance for the collateralized receivables (in thousands):
 
December 31, 2019
 
December 31, 2018
Beginning balance
$
(807
)
 
$
(936
)
Lower of cost or market write-downs
140

 
660

(Increase) / decrease to reserve balance
80

 
(531
)
Gain on derecognition of collaterized receivables
587

 

Total activity
807

 
129

Ending balance
$

 
$
(807
)



F - 21

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5. Notes and Other Receivables

The following table sets forth certain information regarding notes and other receivables (in thousands):
 
 
December 31, 2019
 
December 31, 2018
Installment notes receivable on manufactured homes, net
 
$
95,580

 
$
112,798

Notes receivable from real estate developers
 
18,960

 

Other receivables, net
 
43,386

 
47,279

Total notes and other receivables, net
 
$
157,926

 
$
160,077



Installment Notes Receivable on Manufactured Homes

The installment notes of $95.6 million (net of allowance of $0.6 million) and $112.8 million (net of allowance of $0.7 million) as of December 31, 2019 and December 31, 2018, respectively, are collateralized by manufactured homes. The notes represent financing provided to purchasers of manufactured homes primarily located in our communities and require monthly principal and interest payments. The notes have a weighted average interest rate (net of servicing costs) and maturity of 8.0 percent and 15.8 years as of December 31, 2019, and 8.0 percent and 16.6 years as of December 31, 2018.

The change in the aggregate gross principal balance of the installment notes receivable is as follows (in thousands):
 
December 31, 2019
 
December 31, 2018
Beginning balance
$
113,495

 
$
116,174

Financed sales of manufactured homes
341

 
14,237

Principal payments and payoffs from our customers
(8,710
)
 
(8,966
)
Principal reduction from repossessed homes
(8,901
)
 
(7,950
)
Total activity
(17,270
)
 
(2,679
)
Ending balance
$
96,225

 
$
113,495



Allowance for Losses for Installment Notes Receivable

The following table sets forth the allowance change for the installment notes receivable (in thousands):
 
December 31, 2019
 
December 31, 2018
Beginning balance
$
(697
)
 
$
(377
)
Lower of cost or market write-downs
203

 
678

Increase to reserve balance
(151
)
 
(998
)
Total activity
52

 
(320
)
Ending balance
$
(645
)
 
$
(697
)


Notes Receivable from Real Estate Developers

As of December 31, 2019, the notes receivables balance of $19.0 million primarily comprise short term construction loans provided to real estate developers.

Other Receivables

As of December 31, 2019, other receivables were comprised of amounts due from: residents for rent, utility charges, fees and other pass through charges of $7.8 million (net of allowance of $2.2 million); home sale proceeds of $20.9 million; insurance receivables of $9.9 million, and other receivables of $4.8 million. As of December 31, 2018, other receivables were comprised of amounts due from: residents for rent, utility charges, fees and other pass through charges of $7.1 million (net of allowance of $1.5 million); home sale proceeds of $16.1 million; and insurance and other receivables of $24.1 million.

F - 22

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6. Intangible Assets

Our intangible assets include in-place leases, franchise agreements and other intangible assets. These intangible assets are recorded in Other assets, net on the Consolidated Balance Sheets. In accordance with FASB ASC Topic 842, below market leases are now classified as a right of use asset.

The gross carrying amounts and accumulated amortization are as follows (in thousands):
 
 
 
 
December 31, 2019
 
December 31, 2018
Intangible Asset
 
Useful Life
 
Gross Carrying Amount
 
Accumulated Amortization
 
Gross Carrying Amount
 
Accumulated Amortization
In-place leases
 
7 years
 
$
127,313

 
$
(73,980
)
 
$
103,547

 
$
(59,068
)
Franchise agreements and other intangible assets
 
7 - 20 years
 
16,943

 
(2,760
)
 
16,641

 
(1,942
)
Total
 
 
 
$
144,256


$
(76,740
)

$
120,188

 
$
(61,010
)


Total amortization expenses related to our intangible assets are as follows (in thousands):
 
 
Year Ended
Intangible Asset
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
In-place leases
 
$
14,912

 
$
12,913

 
$
13,812

Franchise fees and other intangible assets
 
818

 
507

 
301

Total
 
$
15,730

 
$
13,420

 
$
14,113



We anticipate amortization expense for our intangible assets to be as follows for the next five years (in thousands):
 
 
2020
 
2021
 
2022
 
2023
 
2024
Estimated expense
 
$
15,522

 
$
15,130

 
$
10,529

 
$
7,154

 
$
4,791




F - 23

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


7. Investments in Nonconsolidated Affiliates

Investments in joint ventures that are not consolidated, nor recorded at cost, are accounted for using the equity method of accounting as prescribed in FASB ASC Topic 323, “Investments - Equity Method and Joint Ventures.” Investments in nonconsolidated affiliates are recorded within Other assets, net on the Consolidated Balance Sheets. Equity income and loss are recorded in the Income / (loss) from nonconsolidated affiliates on the Consolidated Statements of Operations.

RezPlot Systems LLC (“Rezplot”)
At December 31, 2019, the Company had a 50 percent ownership interest in RezPlot, a RV reservation software technology company, acquired in January 2019.

Sungenia JV
At December 31, 2019 and December 31, 2018, the Company had a 50 percent interest in Sungenia JV, a joint venture (“JV”) formed between the Company and Ingenia Communities Group in November 2018, to establish and grow a manufactured housing community development program in Australia.

GTSC LLC (“GTSC”)
At December 31, 2019 and December 31, 2018, the Company had a 40 percent ownership interest in GTSC, which engages in acquiring, holding and selling loans secured, directly or indirectly, by manufactured homes located in communities of Sun Communities.

Origen Financial Services, LLC (“OFS”)
At December 31, 2019 and December 31, 2018, the Company had a 22.9 percent ownership interest in OFS, an end-to-end online resident screening and document management suite.

The investment balance in each nonconsolidated affiliate is as follows (in millions):
Investment
 
December 31, 2019
 
December 31, 2018
Investment in RezPlot
 
$
4.2

 
$

Investment in Sungenia JV
 
12.0

 
0.7

Investment in GTSC (1)
 
18.5

 
29.8

Investment in OFS
 
0.1

 
0.1

Total
 
$
34.8

 
$
30.6

(1) The decrease in investment balance is primarily due to return of capital.

The year to date Equity income / (loss) from each nonconsolidated affiliate is as follows (in thousands):
Equity income
 
December 31, 2019
 
December 31, 2018
RezPlot equity loss
 
$
(1,344
)
 
$

Sungenia JV equity loss
 
(290
)
 

GTSC equity income
 
2,803

 
604

OFS equity income
 
205

 
186

Total equity income
 
$
1,374

 
$
790


Investments in joint ventures in which we do not have a controlling direct or indirect voting interest, but can exercise significant influence over the entity with respect to our operations and major decisions, are accounted for using the equity method of accounting whereby the cost of an investment is adjusted for our share of the equity in net income or loss from the date of acquisition, reduced by distributions received and increased by contributions made. The income or loss of each entity is allocated in accordance with the provisions of the applicable operating agreements. The allocation provisions in these agreements may differ from the ownership interests held by each investor.

F - 24

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8. Consolidated Variable Interest Entities

The Operating Partnership
We consolidate the Operating Partnership under the guidance set forth in FASB ASC Topic 810 “Consolidation.” ASU 2015-02 modified the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities. We evaluated the application of ASU 2015-02 and concluded that the Operating Partnership now meets the criteria of a VIE. Our significant asset is our investment in the Operating Partnership, and consequently, substantially all of our assets and liabilities represent those assets and liabilities of the Operating Partnership. We are the sole general partner and generally have the power to manage and have complete control over the Operating Partnership and the obligation to absorb its losses or the right to receive its benefits.

Sun NG RV Resorts LLC (“Sun NG Resorts”); Rudgate Village SPE, LLC, Rudgate Clinton SPE, LLC, and Rudgate Clinton Estates SPE, LLC (collectively, “Rudgate”); Sun NG Whitewater RV LLC (“Whitewater Resorts”);
We consolidate Sun NG Resorts, Rudgate, and Whitewater Resorts, under the guidance set forth in FASB ASC Topic 810 “Consolidation.” We concluded that each of them is a VIE where we are the primary beneficiary, as we have the power to direct the significant activities, absorb the significant losses and receive the significant benefits from the entity. Refer to Note 3, “Real Estate Acquisitions,” Note 9, “Debt and Lines of Credit,” and Note 10, “Equity and Temporary Equity” for additional information on Sun NG Resorts.

The following table summarizes the assets and liabilities included in our Consolidated Balance Sheets after appropriate eliminations have been made (in thousands):
 
December 31, 2019
 
December 31, 2018
Assets
 
 
 
Investment property, net
$
344,300

 
$
308,171

Other assets
23,894

 
19,809

   Total Assets
$
368,194

 
$
327,980

 
 
 
 
Liabilities and Other Equity
 
 
 
Debt
$
46,993

 
$
44,172

Preferred Equity - Sun NG Resorts - mandatorily redeemable
35,249

 
35,277

Other liabilities
13,631

 
6,914

   Total Liabilities
95,873

 
86,363

Equity Interest - NG Sun LLC & NG Whitewater
27,091

 
21,976

Noncontrolling interests
8,542

 
7,145

   Total Liabilities and Other Equity
$
131,506

 
$
115,484



Investment property, net and other assets, net related to the consolidated VIEs, with the exception of SCOLP, comprised approximately 4.7 percent and 4.9 percent of our consolidated total assets at December 31, 2019 and December 31, 2018, respectively. Debt, Preferred Equity and other liabilities comprised approximately 2.5 percent and 2.6 percent of our consolidated total liabilities at December 31, 2019 and December 31, 2018, respectively. Equity Interests and Noncontrolling interests related to the consolidated VIEs, on an absolute basis, comprised approximately less than 1.0 percent of our consolidated total equity at December 31, 2019 and at December 31, 2018.



F - 25

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9. Debt and Lines of Credit

The following table sets forth certain information regarding debt including premiums, discounts, and deferred financing costs (in thousands):
 
Carrying Amount
 
Weighted Average
Years to Maturity
 
Weighted Average
Interest Rates
 
December 31, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
Collateralized term loans - Life Companies
$
1,710,408

 
$
1,259,158

 
17.1
 
14.4
 
4.0
%
 
3.9
%
Collateralized term loans - FNMA
697,589

 
770,417

 
7.0
 
5.1
 
3.7
%
 
4.4
%
Collateralized term loans - CMBS
397,868

 
405,702

 
3.1
 
4.1
 
5.1
%
 
5.1
%
Collateralized term loans - FMCC
374,727

 
380,680

 
4.9
 
5.9
 
3.9
%
 
3.9
%
Secured borrowings

 
107,731

 
0.0
 
14.4
 
%
 
9.9
%
Preferred equity - Sun NG Resorts - mandatorily redeemable
35,249

 
35,277

 
2.8
 
3.8
 
6.0
%
 
6.0
%
Preferred OP units - mandatorily redeemable
34,663

 
37,338

 
4.0
 
4.7
 
6.5
%
 
6.6
%
Lines of credit
183,898

 
128,000

 
3.5
 
2.3
 
2.7
%
 
3.8
%
Total debt
$
3,434,402

 
$
3,124,303

 
11.1
 
9.0
 
4.0
%
 
4.5
%


Collateralized Term Loans

All of our collateralized term loans are mortgage loans.

During the years ended December 31, 2019 and 2018, we repaid the following collateralized term loans:
Three months ended
 
Repayment amount
(in millions)
 
Fixed
Interest
rate
 
Maturity
date
 
(Gain) / loss on extinguishment of debt
(in millions)
 
Encumbered communities released
December 31, 2019
 
$
17.0

 
5.62
%
 
March 1, 2020
 
$

 

 
$
127.3

 
5.10
%
 
November 1, 2021
 
$
3.2

 

 
$
21.5

(1) 
6.24
%
(4) 
March 1, 2020
April 1, 2020
 
$
(0.2
)
 
3

September 30, 2019
 
$
134.0

 
4.3
%
 
May 1, 2023
 
$
12.8

 

March 31, 2019
 
$
186.8

 
3.83
%
 
January 1, 2030
 
$
0.7

 

December 31, 2018
 
$
10.2

 
5.66
%
 
February 28, 2019
 
$

 

September 30, 2018
 
$
30.5

 
6.34
%
 
March 1, 2019
 
$
0.9

 
1

June 30, 2018 (2)
 
$
177.7

 
4.53
%
(4) 
August 1, 2018 May 1, 2023
 
$
1.5

 
11

March 31, 2018 (3)
 
$
24.4

 
6.36
%
(4) 
March 1, 2019
 
$
0.2

 
3


(1) Includes four collateralized term loans, three due to mature on March 1, 2020 and one due to mature on April 1, 2020.
(2) Includes three collateralized term loans, one due to mature on August 1, 2018 and two due to mature on May 1, 2023.
(3) Includes four collateralized term loans, all due to mature on March 1, 2019.
(4) The interest rate represents the weighted average interest rate on collateralized term loans.

During the years ended December 31, 2019 and 2018, we entered into the following collateralized term loans:
Three months ended
 
Loan amount
(in millions)
 
Term
(in years)
 
Interest
rate
 
Maturity
date
December 31, 2019
 
$
400.0

(1) 
21
 
4.026
%
 
December 15, 2039
December 15, 2041
September 30, 2019
 
$
250.0

 
10
 
2.925
%
 
October 1, 2029
March 31, 2019
 
$
265.0

 
25
 
4.170
%
 
January 15, 2044
December 31, 2018
 
$
21.7

 
20
 
4.100
%
 
August 15, 2038
September 30, 2018
 
$
228.0

 
20
 
4.100
%
 
August 15, 2038

(1) Includes two collateralized term loans one due to mature on December 15, 2039 and the other on December 1, 2041.


F - 26

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The collateralized term loans totaling $3.2 billion as of December 31, 2019, are secured by 188 properties comprised of 74,170 sites representing approximately $3.3 billion of net book value.
Secured Borrowings

See Note 4, “Collateralized Receivables and Transfers of Financial Assets,” for information regarding our collateralized receivables and secured borrowing transactions.

Preferred OP Units - mandatorily redeemable

Preferred OP units at December 31, 2019 and December 31, 2018 include $34.7 million of Aspen preferred OP units issued by the Operating Partnership. As of December 31, 2019, these units are convertible indirectly into 407,190 shares of our common stock. Subject to certain limitations, at any time prior to January 1, 2024, the holder of each Aspen preferred OP unit at its option may convert such Aspen preferred OP unit into: (a) if the market price of our common stock is $68.00 per share or less, 0.397 common OP units; or (b) if the market price of our common stock is greater than $68.00 per share, the number of common OP units is determined by dividing (i) the sum of (A) $27.00 plus (B) 25 percent of the amount by which the market price of our common stock exceeds $68.00 per share, by (ii) the per share market price of our common stock. The current preferred distribution rate is 6.5 percent. On January 2, 2024, we are required to redeem all Aspen preferred OP units that have not been converted to common OP units. Refer to Note 21, “Subsequent Events,” for additional information regarding revisions to the terms of certain of the Aspen preferred OP units.

Preferred OP units also include $2.7 million of Series B-3 preferred OP units at December 31, 2018, which are not convertible. In January 2019, we redeemed all remaining 26,750 Series B-3 preferred OP units. The weighted average redemption price per unit, which included accrued and unpaid distributions, was $100.153424. In the aggregate, we paid $2.7 million to redeem these units.

Preferred Equity - Sun NG Resorts - mandatorily redeemable

In June 2018, in connection with the investment in Sun NG Resorts, $35.3 million of mandatorily redeemable Preferred Equity (“Preferred Equity - Sun NG Resorts”) was purchased by unrelated third parties. The Preferred Equity - Sun NG Resorts carries a preferred rate of return of 6.0 percent per annum. The Preferred Equity - Sun NG Resorts has a 7-year term and can be redeemed in the fourth quarter of 2022 at the holders’ option. The Preferred Equity - Sun NG Resorts balance was $35.2 million and $35.3 million at December 31, 2019 and December 31, 2018. Refer to Note 3, “Real Estate Acquisitions,” Note 8, “Consolidated Variable Interest Entities,” and Note 10, “Equity and Temporary Equity” for additional information.

Lines of Credit (“LOC”)

Credit agreement - In May 2019, we amended and restated our credit agreement with Citibank and certain other lenders. Pursuant to the credit agreement, we entered into a senior credit facility with Citibank and certain other lenders in the amount of $750.0 million, comprised of a $650.0 million revolving loan, with the ability to use up to $100.0 million for advances in Australian dollars, and a $100.0 million term loan (the “A&R Facility”). We have until March 17, 2020 to draw on the term loan. As of December 31, 2019, we had not drawn any funds on the term loan. The credit agreement has a four-year term ending May 21, 2023, which can be extended for two additional six-month periods, subject to the satisfaction of certain conditions as defined in the credit agreement. The credit agreement also provides for, subject to the satisfaction of certain conditions, additional commitments in an amount not to exceed $350.0 million. If additional borrowings are made pursuant to any such additional commitments, the aggregate borrowing limit under the A&R Facility may be increased up to $1.1 billion.

The A&R Facility bears interest at a floating rate based on the Eurodollar rate or Bank Bill Swap Bid Rate plus a margin that is determined based on our leverage ratio calculated in accordance with the credit agreement, which margin can range from 1.20 percent to 2.10 percent for the revolving loan and 1.20 percent to 2.05 percent for the term loan. As of December 31, 2019, the margin based on our leverage ratio was 1.20 percent on the revolving loan and 1.20 percent on the term loan. We had $123.6 million and zero of borrowings on the revolving loan and the term loan, respectively, as of December 31, 2019.

The A&R Facility provides us with the ability to issue letters of credit. Our issuance of letters of credit does not increase our borrowings outstanding under our line of credit but does reduce the borrowing amount available. At December 31, 2019 and December 31, 2018, approximately $2.8 million and $3.9 million of availability was used to back standby letters of credit.

Floor plan - We have a $12.0 million manufactured home floor plan facility renewable indefinitely until our lender provides us at least a twelve month notice of their intent to terminate the agreement. The interest rate is 100 basis points over the greater of the prime rate as quoted in the Wall Street Journal on the first business day of each month or 6.0 percent. At December 31, 2019, the effective interest rate was 7.0 percent. The outstanding balance was $3.3 million and zero as of December 31, 2019 and December 31, 2018, respectively.

F - 27

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Jensen - In October 2019, we assumed a term loan facility with Citibank N.A. (“Citibank”), in the amount of $58.0 million. The term loan has a four-year term ending October 29, 2023, and bears interest at a floating rate based on the Eurodollar rate or Prime rate. The outstanding balance was $57.0 million at December 31, 2019.

Covenants

Pursuant to the terms of the A&R Facility, we are subject to various financial and other covenants. The most restrictive of our debt agreements place limitations on secured borrowings and contain minimum fixed charge coverage, leverage, distribution, and net worth requirements. At December 31, 2019, we were in compliance with all covenants.

In addition, certain of our subsidiary borrowers own properties that secure loans. These subsidiaries are consolidated within our accompanying Consolidated Financial Statements, however, each of these subsidiaries’ assets and credit are not available to satisfy the debts and other obligations of the Company, any of its other subsidiaries or any other person or entity.

Long-term Debt Maturities

As of December 31, 2019, the total of maturities and amortization of our debt (excluding premiums and discounts) and lines of credit during the next five years were as follows (in thousands):
 
Maturities and Amortization By Year
 
Total Due
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
Mortgage loans payable
 
 
 
 
 
 
 
 
 
 
 
 
 
Maturities
$
2,161,615

 
$
19,796

 
$
148,378

 
$
82,155

 
$
185,618

 
$
315,331

 
$
1,410,337

Principal amortization
1,026,857

 
60,723

 
60,873

 
61,326

 
60,604

 
57,082

 
726,249

Preferred Equity - Sun NG Resorts - mandatorily redeemable
35,249

 

 

 
35,249

 

 

 

Preferred OP units - mandatorily redeemable
34,663

 

 

 

 

 
34,663

 

Lines of credit
183,898

 
10,000

 
13,293

 
10,000

 
150,605

 

 

Total
$
3,442,282

 
$
90,519

 
$
222,544

 
$
188,730

 
$
396,827

 
$
407,076

 
$
2,136,586



Off-Balance Sheet Arrangements - Nonconsolidated Affiliate Indebtedness

We have a 40 percent investment in GTSC, a nonconsolidated affiliate. During September 2019, GTSC entered into a warehouse line of credit with a maximum loan amount of $125.0 million. As of December 31, 2019, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by GTSC was approximately $123.4 million (of which our proportionate share is approximately $49.4 million). The debt bears interest at a variable rate based on LIBOR plus 1.65 percent per annum and matures on September 15, 2023.

10. Equity and Temporary Equity

Public Equity Offerings

In May 2019, we closed an underwritten registered public offering of 3,737,500 shares of common stock. Proceeds from the offering were $452.1 million after deducting expenses related to the offering. We used the net proceeds of this offering to repay borrowings outstanding under the revolving loan under our senior credit facility.

At the Market Offering Sales Agreement

In July 2017, we entered into a new at the market offering sales agreement (as amended, the “Sales Agreement”) with certain sales agents (collectively, the “Sales Agents”), whereby we may offer and sell shares of our common stock, having an aggregate offering price of up to $450.0 million, from time to time through the Sales Agents. The Sales Agents are entitled to compensation in an agreed amount not to exceed 2.0 percent of the gross price per share for any shares sold from time to time under the Sales Agreement. Through December 31, 2019 we have sold shares of our common stock for gross proceeds of $163.8 million under the Sales Agreement.

F - 28

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


There was no issuance of common stock under the Sales Agreement in 2019. Issuances of common stock under the Sales Agreement through December 31, 2018, and 2017 were as shown in the table below:
Quarter Ended
 
Common stock
issued
 
Weighted average
sales price
 
Net proceeds
(in millions)
September 30, 2018
 
398,516

 
$
100.19

 
$
39.4

June 30, 2018
 
1,008,699

 
$
92.98

 
$
92.6

December 31, 2017
 
321,800

 
$
93.33

 
$
29.7


Issuances of common stock under our previous at the market offering sales agreement during 2017 were as follows:
Quarter Ended
 
Common stock
issued
 
Weighted average
sales price
 
Net proceeds
(in millions)
June 30, 2017
 
400,000

 
$
85.01

 
$
33.6

March 31, 2017
 
280,502

 
$
76.47

 
$
21.2



Temporary Equity

Equity Interests - NG Sun Whitewater RV LLC - In August 2019, in connection with the investment in land at the property known as Whitewater, NG Sun Whitewater LLC purchased $2.4 million of common equity interest in Sun NG Whitewater RV LLC Resorts (referred to as “Equity Interests - NG Sun Whitewater RV LLC”). The Equity Interests - NG Sun Whitewater RV LLC do not have a fixed maturity date and can be redeemed any time after the last day of the third full year that the RV park has been operated as a recreational vehicle park, or last day of the third full year that the RV park has been operated as a recreational vehicle park after the completion of the development of phase two (the “buy-sell trigger date”). Sun NG LLC, our subsidiary, has the right to terminate the agreement after the buy-sell trigger date. If either party exercises their option, the property management agreement will be terminated, and Sun NG LLC is required to purchase the remaining interests of NG Sun Whitewater LLC and the property management agreement at fair value. Refer to Note 3, “Real Estate Acquisitions,” and Note 8, “Consolidated Variable Interest Entities,” for additional information.

Issuance of Series D Preferred OP Units - In February 2019, we issued 488,958 Series D Preferred OP Units in connection with the acquisition of Country Village Estates. The Series D preferred OP units have a stated issuance price of $100.00 per OP Unit and carry a preferred return of 3.75 percent until the second anniversary of the issuance date. Commencing with the second anniversary of the issuance date, the Series D Preferred OP Units carry a preferred return of 4.0 percent. Commencing with the first anniversary of the issuance date, each Series D Preferred OP Unit can be exchanged for 0.8 shares of our common stock at the holder’s option. The holders may require redemption in cash after the fifth anniversary of the Series D issuance date or upon the holder’s death. Refer to Note 3, “Real Estate Acquisitions” for additional information.

Equity Interests - NG Sun LLC - In June 2018, in connection with the investment in Sun NG Resorts, unrelated third parties purchased $6.5 million of Series B preferred equity interests and $15.4 million of common equity interest in Sun NG Resorts (herein jointly referred to as “Equity Interest - NG Sun LLC”). The Series B preferred equity interests carry a preferred return at a rate that, at any time, is equal to the interest rate on Sun NG Resorts’ indebtedness at such time. The current rate of return is 5.0 percent. The Equity Interests - NG Sun LLC do not have a fixed maturity date and can be redeemed in the fourth quarter of 2022 at the holders’ option. Sun NG LLC, our subsidiary, has the right during certain periods each year, with or without cause, or for cause at any time, to elect to buy NG Sun LLC’s interest. During a limited period in 2022, NG Sun LLC has the right to put its interest to Sun NG LLC. If either party exercises their option, the property management agreement will be terminated, and the Company is required to purchase the remaining interests of NG Sun LLC and the property management agreement at fair value. Refer to Note 3, “Real Estate Acquisitions,” Note 8, “Consolidated Variable Interest Entities,” and Note 9, “Debt and Lines of Credit” for additional information.

Series A-4 Preferred OP Units

On December 13, 2019, all outstanding shares of the Company’s 6.50% Series A-4 Cumulative Convertible Preferred Stock, and all of the 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). The Series A-4 preferred shares and units were issued to the sellers of the American Land Lease portfolio which we acquired in 2014 and 2015.


F - 29

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Issuances of Common Stock and Common OP Units

In October 2019, in connection with the acquisition of the Jensen Portfolio, we issued 1,972,876 shares of common stock, net of fractional shares paid in cash.

Conversions

Conversions to Common Stock - Subject to certain limitations, holders can convert certain series of stock and OP units to shares of our common stock at any time. Below is the activity of conversions during 2019 and 2018:
 
 
 
 
Year Ended
 
 
 
 
December 31, 2019
 
December 31, 2018
Series
 
Conversion Rate
 
Units/Shares
Common Stock
 
Units/Shares
Common Stock
Common OP unit
 
1.0000

 
485,629

485,629

 
20,608

20,608

Series A-1 preferred OP unit
 
2.4390

 
22,707

55,370

 
13,430

32,752

Series A-4 preferred OP unit
 
0.4444

 
4,708

2,092

 
13,765

6,116

Series A-4 preferred stock
 
0.4444

 
1,062,789

472,366

 
22,576

10,033

Series C preferred OP unit
 
1.1100

 
4,014

4,455

 
1,919

2,130



Conversions to Common OP Units - Subject to certain limitations, holders can convert certain series OP units to other series of OP units. There was no such conversion in 2018. Below is the activity of conversions during 2019:
 
 
Year Ended
 
 
December 31, 2019
Series
 
Units/Shares
Common OP units
Series A-4 preferred OP units
 
405,656

180,277



Dividends

Dividend distributions declared for the quarter ended December 31, 2019 are as follows:
Dividend
 
Record Date
Payment Date
Distribution per Share
Total Distribution (in Thousands)
Common Stock, Common OP units and Restricted Stock
 
12/31/2019
1/15/2020
$
0.75

$
71,704



11. Share-Based Compensation

As of December 31, 2019, we had two share-based compensation plans; the Sun Communities, Inc. 2015 Equity Incentive Plan (“2015 Equity Incentive Plan”) and the First Amended and Restated 2004 Non-Employee Director Option Plan (“2004 Non-Employee Director Option Plan”). We believe granting equity awards will provide certain executives, key employees and directors additional incentives to promote our financial success and promote employee and director retention by providing an opportunity to acquire or increase the direct proprietary interest of those individuals in our operations and future.


F - 30

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Restricted Stock

The majority of our share-based compensation is awarded as service vesting restricted stock grants to executives and key employees. We have also awarded restricted stock to our non-employee directors. We measure the fair value associated with these awards using the closing price of our common stock as of the grant date to calculate compensation cost. Employee awards typically vest over several years and are subject to continued employment by the employee. Award recipients receive distribution payments on unvested shares of restricted stock.

2015 Equity Incentive Plan

At the Annual Meeting of Stockholders held on July 20, 2015, the stockholders approved the 2015 Equity Plan. The 2015 Equity Plan had been adopted by the Board and was effective upon approval by our stockholders. The maximum number of shares of common stock that may be issued under the 2015 Equity Plan is 1,750,000 shares of our common stock, with 974,864 shares remaining for future issuance.

2004 Non-Employee Director Option Plan

The director plan was approved by our stockholders at the Annual Meeting of Stockholders held on July 19, 2012. The director plan amended and restated in its entirety our 2004 Non-Employee Director Stock Option Plan. At the Annual Meeting of the Stockholders held on May 17, 2018, the stockholders approved the First Amendment to Sun Communities, Inc. First Amended and Restated 2004 Non-Employee Director Option Plan to increase the number of authorized shares under the plan by 200,000 shares.

The types of awards that may be granted under the director plan are options, restricted stock and OP units. Only non-employee directors are eligible to participate in the director plan. The maximum number of options, restricted stock and OP units that may be issued under the Director Plan is 375,000 shares, with 191,774 shares remaining for future issuance.

During the year ended December 31, 2019 and 2018, shares were granted as follows:
Grant Period
Type
Plan
Shares Granted
 
Grant Date Fair Value Per Share
 
Vesting Type
Vesting Anniversary
 
Percentage
2019
Executive Officers
2015 Equity Incentive Plan
44,000

 
$
115.39

(1) 
Time Based
20.0% annually over 5 years
2019
Executive Officers
2015 Equity Incentive Plan
66,000

(2) 
$
115.39

(2) 
Market Condition
3rd
 
100.0
%
2019
Directors
2004 Non-Employee Director Option Plan
18,000

 
$
113.68

(1) 
Time Based
3rd
 
100.0
%
2019
Key Employees
2015 Equity Incentive Plan
55,770

 
$
120.01

(1) 
Time Based
20.0% annually over 5 years
2019
Key Employees
2015 Equity Incentive Plan
6,250

 
$
142.48

(1) 
Time Based
20.0% annually over 5 years
2018
Key Employees
2015 Equity Incentive Plan
16,500

 
$
88.30

(1) 
Time Based
2nd
 
35.0
%
 
 
 
 
 
 
 
 
3rd
 
35.0
%
 
 
 
 
 
 
 
 
4th
 
20.0
%
 
 
 
 
 
 
 
 
5th
 
5.0
%
 
 
 
 
 
 
 
 
6th
 
5.0
%
2018
Key Employees
2015 Equity Incentive Plan
50,100

 
$
86.97

(1) 
Time Based
20.0% annually over 5 years
2018
Executive Officers
2015 Equity Incentive Plan
60,000

 
$
87.24

(1) 
Time Based
20.0% annually over 5 years
2018
Executive Officers
2015 Equity Incentive Plan
90,000

 
$
65.24

(3) 
Market Condition
3rd
 
100.0
%
2018
Directors
2004 Non-Employee Director Option Plan
16,800

 
$
85.28

(1) 
Time Based
3rd
 
100.0
%
(1) Grant date fair value is measured based on the closing price of our common stock on the date(s) shares are issued.
(2) Share-based compensation for restricted stock awards with market and performance conditions is measured based on an estimate of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. At the grant date, our common stock price was $115.39. Based on the Monte Carlo simulation we expect 75.1% of the 66,000 shares to vest.
(3) Share-based compensation for restricted stock awards with market conditions is measured based on an estimate of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. At the grant date, our common stock price was $87.24. Based on the Monte Carlo simulation we expect 74.8% of the 90,000 shares to vest.




F - 31

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following table summarizes our restricted stock activity for the years ended December 31, 2019, 2018, and 2017:
 
Number of Shares
 
Weighted Average Grant Date Fair Value
Unvested restricted shares at January 1, 2017
841,634

 
$
56.38

Granted
219,400

 
$
79.38

Vested
(196,412
)
 
$
47.60

Forfeited
(4,769
)
 
$
56.43

Unvested restricted shares at December 31, 2017
859,853

 
$
64.25

Granted
233,400

 
$
87.12

Vested
(214,111
)
 
$
54.69

Forfeited
(8,025
)
 
$
72.16

Unvested restricted shares at December 31, 2018
871,117

 
$
72.65

Granted
190,020

 
$
117.47

Vested
(237,406
)
 
$
64.46

Forfeited
(10,690
)
 
$
79.58

Unvested restricted shares at December 31, 2019
813,041

 
$
85.43



Total compensation cost recognized for restricted stock was $17.5 million, $15.1 million, and $12.7 million for the years ended December 31, 2019, 2018, and 2017, respectively. The total fair value of shares vested was $15.3 million, $11.7 million, and $9.3 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The remaining share-based compensation cost, net related to our unvested restricted shares outstanding as of December 31, 2019 is approximately $39.0 million. The following table summarizes our expected share-based compensation cost, net related to our unvested restricted shares, in millions:
 
2020
 
2021
 
2022
 
Thereafter
Expected share-based compensation costs, net
$
16.6

 
$
11.3

 
$
7.1

 
$
4.0



Options

During 2019, 1,500 non-employee director options exercised for net proceeds of less than $0.2 million. There were no non-employee director options exercised during 2018. At December 31, 2019, 1,500 fully vested non-employee director options remained outstanding with an intrinsic value of less than $0.1 million. These options had a weighted average exercise price of $37.35 and a weighted average contractual term of approximately 1.6 years. No options have been granted, and there has been no compensation expense associated with non-vested stock option awards for the years ended December 31, 2019, 2018, or 2017.

12. Segment Reporting

We group our operating segments into reportable segments that provide similar products and services. Each operating segment has discrete financial information evaluated regularly by our chief operating decision maker in evaluating and assessing performance. We have two reportable segments: (i) Real Property Operations and (ii) Home Sales and Rentals. The Real Property Operations segment owns, operates, has an interest in a portfolio, and develops MH communities and RV communities and is in the business of acquiring, operating, and expanding MH and RV communities. The Home Sales and Rentals segment offers manufactured home sales and leasing services to tenants and prospective tenants of our communities.

Transactions between our segments are eliminated in consolidation. Transient RV revenue is included in the Real Property Operations segment revenues and is approximately $132.3 million for the year ended December 31, 2019. In 2019, transient RV revenue was recognized 19.8 percent in the first quarter, 23.1 percent in the second quarter, 41.0 percent in the third quarter, and 16.1 percent in the fourth quarter.



F - 32

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A presentation of our segment financial information is summarized as follows (amounts in thousands):
 
Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
 
Real Property Operations
 
Home Sales
and Rentals
 
Consolidated
 
Real Property Operations
 
Home Sales
and Rentals
 
Consolidated
 
Real Property Operations
 
Home Sales
and Rentals
 
Consolidated
Revenues
$
992,545

 
$
239,508

 
$
1,232,053

 
$
880,080

 
$
219,688

 
$
1,099,768

 
$
779,739

 
$
177,957

 
$
957,696

Operating expenses / Cost of sales
375,690

 
156,352

 
532,042

 
330,695

 
146,637

 
477,332

 
290,016

 
117,274

 
407,290

Net operating income / Gross profit
616,855

 
83,156

 
700,011

 
549,385

 
73,051

 
622,436

 
489,723

 
60,683

 
550,406

Adjustments to arrive at net income / (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and other revenues, net
31,984

 

 
31,984

 
27,057

 

 
27,057

 
24,875

 
(1
)
 
24,874

Home selling expenses

 
(14,690
)
 
(14,690
)
 

 
(15,722
)
 
(15,722
)
 

 
(12,457
)
 
(12,457
)
General and administrative expenses
(82,320
)
 
(11,644
)
 
(93,964
)
 
(70,512
)
 
(10,917
)
 
(81,429
)
 
(74,548
)
 
(9,425
)
 
(83,973
)
Catastrophic weather related charges, net
(1,729
)
 
(8
)
 
(1,737
)
 
140

 
(232
)
 
(92
)
 
(7,856
)
 
(496
)
 
(8,352
)
Depreciation and amortization
(250,686
)
 
(77,381
)
 
(328,067
)
 
(218,617
)
 
(68,645
)
 
(287,262
)
 
(199,960
)
 
(61,576
)
 
(261,536
)
Loss on extinguishment of debt
(16,505
)
 

 
(16,505
)
 
(1,190
)
 

 
(1,190
)
 
(4,676
)
 

 
(4,676
)
Interest on mandatorily redeemable preferred OP units / equity
(4,698
)
 

 
(4,698
)
 
(3,694
)
 

 
(3,694
)
 
(3,114
)
 

 
(3,114
)
Interest expense
(133,125
)
 
(28
)
 
(133,153
)
 
(130,535
)
 
(21
)
 
(130,556
)
 
(128,456
)
 
(15
)
 
(128,471
)
Gain / (loss) on remeasurement of marketable securities
34,240

 

 
34,240

 
(3,639
)
 

 
(3,639
)
 

 

 

Other income / (expense), net
3,604

 
(147
)
 
3,457

 
(6,414
)
 
(39
)
 
(6,453
)
 
8,983

 
(1
)
 
8,982

Income from nonconsolidated affiliates

 
1,374

 
1,374

 

 
790

 
790

 

 

 

Current tax expense
(746
)
 
(349
)
 
(1,095
)
 
(372
)
 
(223
)
 
(595
)
 
(62
)
 
(384
)
 
(446
)
Deferred tax benefit
222

 

 
222

 
507

 

 
507

 
582

 

 
582

Net income / (loss)
197,096

 
(19,717
)
 
177,379

 
142,116

 
(21,958
)
 
120,158

 
105,491

 
(23,672
)
 
81,819

Less: Preferred return to preferred OP units / equity
(6,058
)
 

 
(6,058
)
 
(4,486
)
 

 
(4,486
)
 
(4,581
)
 

 
(4,581
)
Less: Amounts attributable to noncontrolling interests
(10,659
)
 
891

 
(9,768
)
 
(9,512
)
 
1,069

 
(8,443
)
 
(6,319
)
 
1,264

 
(5,055
)
Net income / (loss) attributable to Sun Communities, Inc.
180,379

 
(18,826
)
 
161,553

 
128,118

 
(20,889
)
 
107,229

 
94,591

 
(22,408
)
 
72,183

Less: Preferred stock distribution
(1,288
)
 

 
(1,288
)
 
(1,736
)
 

 
(1,736
)
 
(7,162
)
 

 
(7,162
)
Net income / (loss) attributable to Sun Communities, Inc. common stockholders
$
179,091

 
$
(18,826
)
 
$
160,265

 
$
126,382

 
$
(20,889
)
 
$
105,493

 
$
87,429

 
$
(22,408
)
 
$
65,021





F - 33

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 
December 31, 2019
 
December 31, 2018
 
Real Property Operations
 
Home Sales and Rentals
 
Consolidated
 
Real Property Operations
 
Home Sales and Rentals
 
Consolidated
Identifiable assets
 
 
 
 
 
 
 
 
 
 
 
Investment property, net
$
6,651,275

 
$
581,345

 
$
7,232,620

 
$
5,586,444

 
$
531,872

 
$
6,118,316

Cash, cash equivalents and restricted cash
(8,346
)
 
43,176

 
34,830

 
36,294

 
25,968

 
62,262

Marketable securities
94,727

 

 
94,727

 
49,037

 

 
49,037

Inventory of manufactured homes

 
62,061

 
62,061

 

 
49,199

 
49,199

Notes and other receivables, net
142,509

 
15,417

 
157,926

 
145,673

 
14,404

 
160,077

Collateralized receivables, net

 

 

 
106,924

 

 
106,924

Other assets, net
167,804

 
52,092

 
219,896

 
128,076

 
36,135

 
164,211

Total assets
$
7,047,969

 
$
754,091

 
$
7,802,060

 
$
6,052,448

 
$
657,578

 
$
6,710,026


13. Income Taxes

We have elected to be taxed as a REIT pursuant to Section 856(c) of the Internal Revenue Code of 1986, as amended (“Code”). In order for us to qualify as a REIT, at least 95.0 percent of our gross income in any year must be derived from qualifying sources. In addition, a REIT must distribute annually at least 90.0 percent of its REIT taxable income (calculated without any deduction for dividends paid and excluding capital gain) to its stockholders and meet other tests.

Qualification as a REIT involves the satisfaction of numerous requirements (on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are limited judicial or administrative interpretations and involves the determination of various factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation, which requires us to continually monitor our tax status. We analyzed the various REIT tests and confirmed that we continued to qualify as a REIT for the year ended December 31, 2019.

As a REIT, we generally will not be subject to U.S. federal income taxes at the corporate level on the ordinary taxable income we distribute to our stockholders as dividends. If we fail to qualify as a REIT in any taxable year, our taxable income could be subject to U.S. federal income tax at regular corporate rates (including any applicable alternative minimum tax (“AMT”) in 2017 as AMT is no longer applicable for years beginning after 2017). Even if we qualify as a REIT, we may be subject to certain state and local income taxes as well as U.S. federal income and excise taxes on our undistributed income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries (“TRSs”) is subject to federal, state and local income taxes. The Company is also subject to income taxes in Canada as a result of the acquisition of Carefree in 2016 and in Australia as a result of our investment in Ingenia Communities Group in 2018. We do not provide for withholding taxes on our undistributed earnings from our Canadian subsidiaries as they are reinvested and will continue to be reinvested indefinitely outside the United States. However, we did incur $0.2 million of withholding taxes on distributions from our investment in Ingenia Communities Group.

For income tax purposes, distributions paid to common stockholders consist of ordinary income, capital gains, and return of capital. For the years ended December 31, 2019, 2018, and 2017, distributions paid per share were taxable as follows (unaudited / rounded):
 
Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
 
Amount
 
Percentage
 
Amount
 
Percentage
 
Amount
 
Percentage
Ordinary income (1)
$
1.66

 
56.0
%
 
$
1.58

 
56.4
%
 
$
0.83

 
31.2
%
Capital gain

 
%
 
0.13

 
4.8
%
 

 
%
Return of capital
1.30

 
44.0
%
 
1.09

 
38.8
%
 
1.83

 
68.8
%
Total distributions declared
$
2.96

 
100.0
%
 
$
2.80

 
100.0
%
 
$
2.66

 
100.0
%

(1) 98.8276%% of the ordinary taxable dividend qualifies as Section 199A dividend for 2019 and 1.1724% of the ordinary taxable dividend qualifies as a Qualified Dividend for 2019.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law. Under the Tax Act, the corporate income tax rate is reduced from a maximum marginal rate of 35.0 percent to a flat 21.0 percent. In accordance with ASC 740, “Accounting for Income Taxes,” we recognized the effect of tax law changes in the period of enactment even though the effective date of most provisions of the Tax Act was January 1, 2018.


F - 34

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The components of our provision / (benefit) for income taxes attributable to continuing operations for the year ended December 31, 2019 and 2018 are as follows (amounts in thousands):
 
 
Year Ended
 
 
December 31, 2019
 
December 31, 2018
Federal
 
 
 
 
Current
 
$
(3
)
 
$
(102
)
State and Local
 
 
 
 
Current
 
919

 
701

Deferred
 

 
11

Foreign
 
 
 
 
Current
 
179

 
(4
)
Deferred
 
(222
)
 
(518
)
 
 
 
 
 
Total (benefit) / provision
 
$
873

 
$
88



A reconciliation of the provision / (benefit) for income taxes with the amount computed by applying the statutory federal income tax rate to income before provision for income taxes for the year ended December 31, 2019 and 2018 is as follows (amounts in thousands):
 
 
Year Ended
 
 
December 31, 2019
 
December 31, 2018
Pre-tax loss attributable to taxable subsidiaries
 
$
(4,122
)
 
 
 
$
(7,299
)
 
 
 
 
 
 
 
 
 
 
 
Federal (benefit) / provision at statutory tax rate
 
(866
)
 
21.0
 %
 
(1,534
)
 
21.0
 %
State and local taxes, net of federal benefit
 
42

 
(1.0
)%
 

 
 %
Alternative minimum tax
 

 
 %
 

 
 %
Rate differential
 
(73
)
 
1.8
 %
 
(112
)
 
1.5
 %
Change in valuation allowance
 
526

 
(12.7
)%
 
2,885

 
(39.5
)%
Change in deferred tax asset
 

 
 %
 

 
 %
Others
 
692

 
(16.8
)%
 
(1,576
)
 
21.6
 %
Tax (benefit) / provision - taxable subsidiaries
 
321

 
(7.7
)%
 
(337
)
 
4.6
 %
Other state taxes - flow through subsidiaries
 
552

 
 
 
425

 
 
Total (benefit) / provision
 
$
873

 
 
 
$
88

 
 


Our deferred tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the bases of such assets and liabilities as measured by tax laws. Deferred tax assets are reduced, if necessary, by a valuation allowance to the amount where realization is more likely than not assured after considering all available evidence. Our temporary differences primarily relate to net operating loss carryforwards, and depreciation and basis differences between tax and U.S. GAAP.

At December 31, 2017, we re-measured the deferred tax assets and liabilities of our U.S. TRSs to reflect the effect of the enacted change in the tax rate under the Tax Act. We have also considered the new tax rate in assessing the need for and change to our existing valuation allowance and adjusted accordingly. Since we have recorded a full valuation allowance against substantially all of our deferred tax assets related to the U.S. TRSs, no material impact on the net deferred tax asset and the provision for income taxes was noted.


F - 35

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The deferred tax assets and liabilities included in the consolidated balance sheets are comprised of the following tax effects of temporary differences and based on the Tax Act (amounts in thousands):
 
As of
 
December 31, 2019
 
December 31, 2018
Deferred Tax Assets
 
 
 
NOL carryforwards
$
18,009

 
$
18,071

Depreciation and basis differences
28,787

 
28,140

Other
395

 
784

Gross deferred tax assets
47,191

 
46,995

Valuation allowance
(45,342
)
 
(44,817
)
Net deferred tax assets
1,849

 
2,178

 
 
 
 
Deferred Tax Liabilities
 
 
 
Basis differences - foreign investment
(22,813
)
 
(22,406
)
Gross deferred tax liabilities
(22,813
)
 
(22,406
)
 
 
 
 
Net Deferred Tax Liability (1)
$
(20,964
)
 
$
(20,228
)

(1) Net deferred tax liability is included within Other liabilities in our Consolidated Balance Sheets.

Our U.S. TRS operating loss carryforwards are $75.3 million, or $15.6 million after tax, including SHS loss carryforwards of $73.0 million, or $15.3 million after tax, as of December 31, 2019. The loss carryforwards will begin to expire in 2023 through 2035 if not offset by future taxable income. In addition, our Canadian subsidiaries have operating loss carryforwards of $9.1 million, or $2.4 million after tax, as of December 31, 2019. The loss carryforwards will begin to expire in 2033 through 2038 if not offset by future taxable income.

We had no unrecognized tax benefits as of December 31, 2019 and 2018. We expect no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2019.

We classify certain state taxes as income taxes for financial reporting purposes. We recorded a provision for state income taxes of $0.9 million for the year ended December 31, 2019, $0.7 million for the year ended December 31, 2018, and $0.7 million for the year ended December 31, 2017.

As previously noted, certain of our subsidiaries are subject to income taxes in the U.S. and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require application of significant judgment. With few exceptions, we are no longer subject to U.S. federal, state and local, examinations by tax authorities for the tax years ended December 31, 2011 and prior. In addition, our Canadian subsidiaries are subject to taxes in Canada and in the province of Ontario. We are no longer subject to examination by the Canadian tax authorities for the tax years ended December 31, 2012 and prior.

Our policy is to report income tax penalties and income tax related interest expense as a component of income tax expense. No interest or penalty associated with any unrecognized income tax benefit or provision was accrued, nor was any income tax related interest or penalty recognized during the years ended December 31, 2019, 2018 and 2017.

In 2017, SHS underwent an audit by the Internal Revenue Service for the 2015 tax year. Upon conclusion of the audit, no adjustment was required.




F - 36

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


14. Earnings Per Share

We have outstanding stock options and unvested restricted common shares. Our Operating Partnership has outstanding common OP units, Series A-1 preferred OP units, Series A-3 preferred OP units, Series C preferred OP units, Series D preferred OP units and Aspen preferred OP Units, which, if converted or exercised, may impact dilution.

Computations of basic and diluted earnings per share were as follows (in thousands, except per share data):
 
 
Year Ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Numerator
 
 
 
 
 
 
Net Income attributable to Sun Communities, Inc. common stockholders
 
$
160,265

 
$
105,493

 
$
65,021

Less allocation to restricted stock awards
 
(1,170
)
 
(831
)
 
(455
)
Basic earnings - Net income attributable to common stockholders after allocation to restricted stock awards
 
$
159,095

 
$
104,662

 
$
64,566

Add allocation to restricted stock awards
 
1,170

 
831

 
455

Diluted earnings - Net income attributable to common stockholders after allocation to restricted stock awards
 
$
160,265

 
$
105,493

 
$
65,021

Denominator
 
 
 
 

 
 

Weighted average common shares outstanding
 
88,460

 
81,387

 
76,084

Add: dilutive stock options
 
1

 
2

 
2

Add: dilutive restricted stock
 
454

 
651

 
625

Diluted weighted average common shares and securities
 
88,915

 
82,040

 
76,711

Earnings per share available to common stockholders after allocation
 
 
 
 
 
 
Basic earnings per share
 
$
1.80

 
$
1.29

 
$
0.85

Diluted earnings per share
 
$
1.80

 
$
1.29

 
$
0.85



We have excluded certain securities from the computation of diluted earnings per share because the inclusion of these securities would have been anti-dilutive for the periods presented. The following table presents the outstanding securities that were excluded from the computation of diluted earnings per share for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands):
 
 
Year Ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Common OP units
 
2,420

 
2,726

 
2,746

Series A-4 preferred stock
 

 
1,063

 
1,085

A-3 preferred OP units
 
40

 
40

 
40

A-1 preferred OP units
 
309

 
332

 
345

A-4 preferred OP units
 

 
410

 
424

Aspen preferred OP units
 
1,284

 
1,284

 
1,284

Series C preferred OP units
 
310

 
314

 
316

Series D preferred OP units
 
489

 

 

Total securities
 
4,852

 
6,169

 
6,240




F - 37

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15. Selected Quarterly Financial Information (Unaudited)

The following is a condensed summary of our unaudited quarterly results for years ended 2019 and 2018 (in thousands, except per share data):
 
 
2019 Quarters
 
2018 Quarters
 
 
March 31, 2019
 
June 30, 2019
 
September 30, 2019
 
December 31, 2019
 
March 31, 2018
 
June 30, 2018
 
September 30, 2018
 
December 31, 2018
Total Revenues
 
$
287,330

 
$
312,445

 
$
362,443

 
$
301,819

 
$
257,975

 
$
271,434

 
$
323,413

 
$
274,003

Total Expenses
 
252,759

 
272,273

 
305,989

 
293,835

 
221,871

 
245,125

 
273,119

 
257,162

Income Before Other Items
 
$
34,571

 
$
40,172

 
$
56,454

 
$
7,984

 
$
36,104

 
$
26,309

 
$
50,294

 
$
16,841

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income attributable to Sun Communities, Inc. common stockholders
 
$
34,331

 
$
40,385

 
$
57,002

 
$
28,547

 
$
29,986

 
$
20,408

 
$
46,060

 
$
9,039

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.40

 
$
0.46

 
$
0.63

 
$
0.31

 
$
0.38

 
$
0.25

 
$
0.56

 
$
0.11

Diluted earnings per share
 
$
0.40

 
$
0.46

 
$
0.63

 
$
0.31

 
$
0.38

 
$
0.25

 
$
0.56

 
$
0.11


(1) Earnings per share for the year may not equal the sum of the fiscal quarters’ earnings per share due to changes in basic and diluted shares outstanding.


16. Fair Value of Financial Instruments

Our financial instruments consist primarily of cash, cash equivalents and restricted cash, marketable securities, accounts and notes receivable, accounts payable, and debt.

ASC Topic 820 “Fair Value Measurements and Disclosures,” requires disclosure regarding determination of fair value for assets and liabilities and establishes a hierarchy under which these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumption. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair value hierarchy:

Level 1—Quoted unadjusted prices for identical instruments in active markets;

Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The following methods and assumptions were used in order to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:


F - 38

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Marketable Securities

Marketable securities held by us and accounted for under the ASC 321 “Investment Equity Securities” are measured at fair value. Any change in fair value is recognized in the Consolidated Statement of Operations in Remeasurement of marketable securities in accordance with ASU 2016-01 “Financial Instruments - Overall (Subtopic 825-10): Recognition and measurement of financial assets and financial liabilities.” The fair value is measured by the quoted unadjusted share price which is readily available in active markets (Level 1).

Installment Notes Receivable on Manufactured Homes

The net carrying value of the installment notes receivable on manufactured homes estimates the fair value as the interest rates in the portfolio are comparable to current prevailing market rates (Level 2). Refer Note 5, “Notes and Other Receivables.”

Notes Receivable from Real Estate Developers

The net carrying value of the notes receivable from real estate developers estimates the fair value as the interest rates in the portfolio are comparable to current prevailing market rates (Level 2). Refer Note 5, “Notes and Other Receivables.”

Long Term Debt and Lines of Credit

The fair value of long-term debt (excluding the secured borrowing) is based on the estimates of management and on rates currently quoted, rates currently prevailing for comparable loans, and instruments of comparable maturities (Level 2). Refer to Note 9, “Debt and Lines of Credit.”

Collateralized Receivables and Secured Borrowing

The fair value of these financial instruments offset each other as our collateralized receivables represent a transfer of financial assets and the cash proceeds received from these transactions have been classified as a secured borrowing on the Consolidated Balance Sheets. The net carrying value of the collateralized receivables estimates the fair value as the interest rates in the portfolio are comparable to current prevailing market rates (Level 2). Refer to Note 4, “Collateralized Receivables and Transfers of Financial Assets.”

Financial Liabilities

We estimate the fair value of our contingent consideration liability based on discounting of future cash flows using market interest rates and adjusting for nonperformance risk over the remaining term of the liability (Level 2).

Other Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair market values due to the short-term nature of those instruments.


F - 39

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The table below sets forth our financial assets and liabilities that required disclosure of fair value on a recurring basis as of December 31, 2019. The table presents the carrying values and fair values of our financial instruments as of December 31, 2019 and December 31, 2018, that were measured using the valuation techniques described above (in thousands). The table excludes other financial instruments such as cash and cash equivalents, accounts receivable, and accounts payable as the carrying values associated with these instruments approximate fair value since their maturities are less than one year.
 
 
December 31, 2019
 
December 31, 2018
Financial assets
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Marketable securities
 
$
94,727

 
$
94,727

 
$
49,037

 
$
49,037

Installment notes receivable on manufactured homes, net
 
95,580

 
95,580

 
112,798

 
112,798

Collateralized receivables, net
 

 

 
106,924

 
106,924

Notes receivable from real estate developers
 
18,960

 
18,960

 

 

Total
 
$
209,267

 
$
209,267

 
$
268,759

 
$
268,759

 
 
 
 
 
 
 
 
 
Financial liabilities
 
 
 
 
 
 
 
 
Debt (excluding secured borrowings)
 
$
3,250,504

 
$
3,270,544

 
$
2,888,572

 
$
2,757,649

Secured borrowings
 

 

 
107,731

 
107,731

Lines of credit
 
183,898

 
183,898

 
128,000

 
128,000

Other liabilities (contingent consideration)
 
6,134

 
6,134

 
4,640

 
4,640

Total
 
$
3,440,536

 
$
3,460,576

 
$
3,128,943

 
$
2,998,020



17. Recent Accounting Pronouncements

Recent Accounting Pronouncements - Adopted

In February 2016, the FASB issued ASC 2016-02 codified in ASC Topic 842, Leases, which amends the guidance in former ASC Topic 840, Leases. On January 1, 2019, we adopted ASC 2016-02. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right of-use (“ROU”) assets and lease liabilities on the balance sheet for those leases classified as operating leases and disclose key information about leasing arrangements. As amended by ASU 2018-11, comparative reporting periods are presented in accordance with Topic 840, while periods subsequent to the effective date are presented in accordance with Topic 842. The Company elected the package of practical expedients, which permits the Company not to reassess expired or existing contracts containing a lease, the lease classification for expired or existing contracts, initial direct costs for any existing leases. The Company elected not to allocate lease obligation between lease and non-lease components of our agreements for both leases where we are a lessor and leases where we are a lessee. The Company did not elect the hindsight practical expedient, which permits the company to use hindsight in determining the lease terms and impairment implications. The Company did not elect to use a portfolio approach in the valuation of ROU assets and corresponding liabilities. Some ROU assets include an extension option, which is included in the ROU assets and liabilities only if we are reasonably certain to exercise.

Lessor Accounting

Our income from real property and rental home revenue streams are derived from rental agreements where we are the lessor. Our recognition of rental revenue remains mainly consistent with previous guidance, apart from the narrower definition of initial direct costs that can be capitalized. ASC 842 limits the definition of initial direct costs to only the incremental costs of signing a lease. Internal sales employees’ compensation, payroll-related fringe benefits, certain legal fees rendered prior to the execution of a lease, negotiation costs, advertising and other origination effort costs no longer meet the definition of initial direct costs under the new standard, and will be accounted for as general and administrative expense in our consolidated statements of operations. ASC 842 permits the capitalization of direct commission costs. The application of ASC 842 resulted in an immaterial impact on the statement of consolidated operations.

Our leases with customers are classified as operating leases. Lease income from tenants is recognized on a straight-line basis over the terms of the relevant lease agreement and is included within income from real property, rental home revenue and ancillary revenue on the Consolidated Statements of Operations. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the resident is placed on non-accrual status and revenue is recognized when cash payments are received.


F - 40

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Lessee Accounting

We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for executive office spaces, ground leases at certain communities, and certain equipment leases. The ROU asset and ROU liabilities are included within Other assets, net and Other liabilities on the Consolidated Balance Sheets. For operating leases with a term greater than one year, the company recognizes the ROU assets and liabilities related to the lease payments on the Consolidated Balance Sheets. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The ROU assets represent our right to use the underlying assets for the term of the lease and the lease liabilities represent our obligation to make lease payments arising for the agreements. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus unamortized initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The ROU asset is periodically reduced by impairment losses. As of December 31, 2019, we have not encountered any impairment losses. Variable lease payments, except for the ones that depend on index or rate, are excluded from the calculation of the ROU assets and lease liabilities and are recognized as variable lease expense in the Consolidated Statements of Operations in the period in which they are incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Many of our lessee agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. The lease liability costs are amortized over the straight-line method over the term of the lease. Operating leases with a term of less than one year are recognized as a lease expense over the term of the lease, with no asset or liability recognized on the Consolidated Balance Sheets. Finance leases where we are the lessee are included in Other assets, net and Other liabilities on our Consolidated Balance Sheets. The lease liabilities are initially measured in the same manner as operating leases and are subsequently measured at amortized cost using the effective interest method. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received.

For finance leases the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to us, or we are reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability. ROU assets are periodically reduced by impairment losses. As of December 31, 2019, we have not encountered any impairment losses. Refer to Note 19, “Leases” for information regarding leasing activities.

Recent Accounting Pronouncements - Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” “CECL” This update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. As of January 1, 2020, we adopted the fair value option for our installment notes receivable and the notes receivable within the GTSC joint venture which resulted in fair value adjustments of $0.3 million and $0.6 million, respectively. We do not expect the impact of the adoption of CECL on the remaining in scope financial instruments to be material.

18. Commitments and Contingencies

Legal Proceedings

We are involved in various legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to have a material adverse impact on our results of operations or financial condition.



F - 41

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


19. Leases
Lessee accounting
Future minimum lease payments under non-cancellable leases as of the year ended December 31, 2019 where we are the lessee include:
Maturity of lease liabilities (in thousands)
 
 
 
 
 
 
Operating Leases
 
Finance Leases
 
Total
2020
$
2,397

 
$
120

 
$
2,517

2021
2,446

 
120

 
2,566

2022
2,483

 
120

 
2,603

2023
2,572

 
120

 
2,692

2024
2,868

 
4,060

 
6,928

Thereafter
32,277

 

 
32,277

Total lease payments
$
45,043

 
$
4,540

 
$
49,583

Less: Imputed interest
(20,821
)
 
(459
)
 
(21,280
)
Present value of lease liabilities
$
24,222

 
$
4,081

 
$
28,303


ROU assets and lease liabilities for finance and operating leases as included in our Consolidated Financial Statements are as follows:
Lease asset and liabilities (in thousands)

 
 
 
 
 
 
 
 
 
 
Description
 
Financial Statement Classification
 
December 31, 2019
 
Description
 
Financial Statement Classification
 
December 31, 2018
Lease assets
 
 
 
 
 
 
 
 
 
 
Right-of-use asset obtained in exchange for new finance lease liabilities
 
Other asset, net
 
$
4,081

 
Capital lease asset
 
Land
 
$
4,098

Right-of-use asset obtained in exchange for new operating lease liabilities
 
Other asset, net
 
$
23,751

 
n/a
Right-of-use asset obtained relative to below market operating lease
 
Other asset, net
 
$
28,366

 
Below market Lease intangible asset
 
Other Asset, net
 
$
29,118

Lease liabilities
 
 
 
 
 
 
 
 
 
 
Finance lease liabilities
 
Other liabilities
 
$
4,081

 
Capital lease liabilities
 
Other Liabilities
 
$
4,098

Operating lease liabilities
 
Other liabilities
 
$
24,222

 
n/a


Lease expense for finance and operating leases as included in our Consolidated Financial Statements are as follows:
Lease expense (in thousands)

 
Year Ended
 
 
 
 
December 31,
Description
 
Financial Statement Classification
 
2019
Finance lease expense
 
 
 
 
Amortization of right-of-use assets
 
Interest expense
 
$
17

Interest on lease liabilities
 
Interest expense
 
103

Operating lease cost
 
General and administrative expense, Property operating and maintenance
 
3,474

Variable lease cost
 
Property operating and maintenance
 
1,584

Total lease expense
 
 
 
$
5,178

 
 
Year Ended
Description
 
Financial Statement Classification
 
December 31, 2018
 
December 31, 2017
Capital lease expense
 
 
 
 
 
 
Amortization of lease
 
Interest expense
 
$
16

 
$

Interest on lease liabilities
 
Interest expense
 
104

 

Operating lease expense
 
General and administrative expense, Property operating and maintenance
 
3,310

 
3,303

Below market ground lease amortization expense
 
Property operating and maintenance
 
821

 
1,017

Total lease expense
 
 
 
$
4,251

 
$
4,320



F - 42

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



In June 2018, we acquired 50 percent of a land parcel that was previously subject to a ground lease at one of our California communities for $8.0 million. As a result of the transaction, we wrote off $1.1 million of the gross carrying amount of the ground lease intangible and $0.3 million of the related accumulated amortization. The $0.8 million net write off is included within the Property operating and maintenance expenses in our Consolidated Statements of Operations for the year ended December 31, 2018.

Lease term, discount rates and additional information for finance and operating leases are as follows:
Lease term and discount rate

 
 
 
 
December 31, 2019
Weighted-average remaining lease terms (years)
 
 
Finance lease
 
4.50

Operating lease
 
27.15

Weighted-average discount rate
 
 
Finance lease
 
2.50
%
Operating lease
 
4.15
%
Other Information (in thousands)
 
Year Ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Cash paid for amounts included in the measurement of lease liabilities
 
 
 
 
 
 
Operating Cash Flow from Operating leases
 
$
2,199

 
$
3,340

 
$
3,182

Financing Cash Flow from Finance leases
 
120

 
120

 
121

Total Cash paid on lease liabilities
 
$
2,319

 
$
3,460

 
$
3,303


As of the year ended December 31, 2019, we have an additional executive office space operating lease for $2.9 million which will commence in January 2020 with a lease term of seven years.
Lessor Accounting
We are not the lessor for any finance leases as of December 31, 2019. Over 95 percent of our operating leases where we are the lessor are either month to month or for a time period not to exceed one year.  As of the reporting date, future minimum lease payments would not exceed twelve months. Similarly, over 95 percent of our investment property, net on the Consolidated Balance Sheets, and related depreciation amounts relate to assets whereby we are the lessor under an operating lease.

20. Related Party Transactions

Lease of Executive Offices. Gary A. Shiffman, together with certain of his family members, indirectly owns an equity interest of approximately 28.1 percent in American Center LLC, the entity from which we lease office space for our principal executive offices. Each of Brian M. Hermelin, Ronald A. Klein and Arthur A. Weiss indirectly owns a less than one percent interest in American Center LLC. Mr. Shiffman is our Chief Executive Officer and Chairman of the Board. Each of Mr. Hermelin, Mr. Klein and Mr. Weiss is a director of the Company. Under this agreement, we lease approximately 103,100 rentable square feet of permanent space. The initial term of the lease is until October 31, 2026, and the average gross base rent is $18.95 per square foot until October 31, 2020 with graduated rental increases thereafter. Each of Mr. Shiffman, Mr. Hermelin, Mr. Klein and Mr. Weiss may have a conflict of interest with respect to his obligations as our officer and/or director and his ownership interest in American Center LLC.

Use of Airplane. Gary A. Shiffman is the beneficial owner of an airplane that we use from time to time for business purposes. During the year ended December 31, 2019, we paid $0.4 million for the use of the airplane. Mr. Shiffman may have a conflict of interest with respect to his obligations as our officer and director and his ownership interest in the airplane.

Telephone Services. Brian M. Hermelin is a principal and a beneficial owner of an entity that installs and maintains emergency telephone systems at our Properties. During the year ended December 31, 2019, we paid $0.2 million for these services. Mr. Hermelin may have a conflict of interest with respect to his obligations as our director and his position with and ownership interest in the provider of these services.

F - 43

SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Legal Counsel. During 2017-2019, Jaffe, Raitt, Heuer, & Weiss, Professional Corporation acted as our general counsel and represented us in various matters. Arthur A. Weiss is the Chairman of the Board of Directors and a shareholder of such firm. We incurred legal fees and expenses owed to Jaffe, Raitt, Heuer, & Weiss of approximately $11.1 million, $7.1 million and $5.0 million in the years ended December 31, 2019, 2018 and 2017, respectively.

Tax Consequences Upon Sale of Properties. Gary A. Shiffman holds limited partnership interests in the Operating Partnership which were received in connection with the contribution of properties from partnerships previously affiliated with him. Prior to any redemption of these limited partnership interests for our common stock, Mr. Shiffman will have tax consequences different from those on us and our public stockholders upon the sale of any of these partnerships. Therefore, we and Mr. Shiffman may have different objectives regarding the appropriate pricing and timing of any sale of those properties.

21. Subsequent Events

Subsequent to the quarter ended December 31, 2019, we acquired one MH community located in East Falmouth, Massachusetts for $13.5 million, containing 230 RV sites. In conjunction with the acquisition, the Operating Partnership created a new class of OP units named Series E preferred OP units. As of February 13, 2020, 90,000 Series E preferred OP units were outstanding. The Series E preferred OP units provide for quarterly distributions on the $100 per unit issue price of 5.3 percent per year until January 9, 2022, and 5.5 percent per year thereafter. Subject to certain limitations, each Series E Preferred Unit is exchangeable at any time after the first anniversary of its issuance date into that number of shares of the Company’s common stock equal to the quotient obtained by dividing $100.00 by $145.00 (as such ratio is subject to adjustment for certain capital events). 

On January 13, 2020, the Operating Partnership’s partnership agreement was amended to revise the terms of 270,000 of the operating partnership’s outstanding 1,283,819 Aspen preferred OP units. With respect to those 270,000 units, the automatic redemption date was extended to January 2, 2034 (as compared to January 2, 2024 for the other Aspen preferred OP units) and the annual distribution rate was reduced to 3.8 percent (as compared to a rate determined by a formula, currently 6.5 percent, for the other Aspen preferred OP units).

We have evaluated our Consolidated Financial Statements for subsequent events through the date that this Form 10-K was issued.


F - 44

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
49’er Village RV Resort
 
Plymouth, CA
 
 C
 
$

 
$
2,180

 
$
10,710

 
$

 
$
2,252

 
$
2,180

 
$
12,962

 
$
15,142

 
$
(1,251
)
 
2017
 
(A)
Academy / West Point
 
Canton, MI
 
 

 
1,485

 
14,278

 

 
9,496

 
1,485

 
23,774

 
25,259

 
(12,715
)
 
2000
 
(A)
Adirondack Gateway RV Resort & Campground
 
Gansevoort, NY
 
 

 
620

 
1,970

 

 
2,577

 
620

 
4,547

 
5,167

 
(599
)
 
2016
 
(A)
Allendale Meadows Mobile Village
 
Allendale, MI
 
 

 
366

 
3,684

 

 
10,928

 
366

 
14,612

 
14,978

 
(8,782
)
 
1996
 
(A)
Alpine Meadows Mobile Village
 
Grand Rapids, MI
 
 A
 
10,895

 
729

 
6,692

 

 
10,072

 
729

 
16,764

 
17,493

 
(10,114
)
 
1996
 
(A&C)
Alta Laguna
 
Rancho Cucamonga, CA
 
 D
 
28,090

 
23,736

 
21,088

 

 
1,687

 
23,736

 
22,775

 
46,511

 
(2,768
)
 
2016
 
(A)
Apple Carr Village
 
Muskegon, MI
 
 

 
800

 
6,172

 
336

 
18,359

 
1,136

 
24,531

 
25,667

 
(5,138
)
 
2011
 
(A&C)
Apple Creek
 
Amelia, OH
 
 B
 
7,582

 
543

 
5,480

 

 
2,901

 
543

 
8,381

 
8,924

 
(4,546
)
 
1999
 
(A)
Arbor Terrace RV Park
 
Bradenton, FL
 
 C
 

 
456

 
4,410

 

 
5,412

 
456

 
9,822

 
10,278

 
(5,142
)
 
1996
 
(A)
Arbor Woods
 
Ypsilanti, MI
 
 

 
3,340

 
12,385

 

 
11,303

 
3,340

 
23,688

 
27,028

 
(2,707
)
 
2017
 
(A)
Archview RV Resort & Campground
 
Moab, UT
 
 

 
6,289

 
8,419

 
5

 
305

 
6,294

 
8,724

 
15,018

 
(490
)
 
2018
 
(A)
Ariana Village
 
Lakeland, FL
 
 D
 
5,340

 
240

 
2,195

 

 
1,873

 
240

 
4,068

 
4,308

 
(2,364
)
 
1994
 
(A)
Arran Lake RV Resort & Campground
 
Allenford, ON
 
 

 
1,190

 
1,175

 
(28
)
(1 
) 
387

 
1,162

 
1,562

 
2,724

 
(203
)
 
2016
 
(A)
Austin Lone Star RV Resort
 
Austin, TX
 
 C
 

 
630

 
7,913

 

 
2,104

 
630

 
10,017

 
10,647

 
(1,257
)
 
2016
 
(A)
Autumn Ridge
 
Ankeny, IA
 
 D
 
24,344

 
890

 
8,054

 
(33
)
(3 
) 
5,835

 
857

 
13,889

 
14,746

 
(7,992
)
 
1996
 
(A)
Bahia Vista Estates
 
Sarasota, FL
 
 

 
6,810

 
17,650

 

 
1,804

 
6,810

 
19,454

 
26,264

 
(2,277
)
 
2016
 
(A)
Baker Acres RV Resort
 
Zephyrhills, FL
 
 E
 
7,218

 
2,140

 
11,880

 

 
2,520

 
2,140

 
14,400

 
16,540

 
(1,743
)
 
2016
 
(A)
Beechwood (4)
 
Killingworth, CT
 
 C
 

 
7,897

 
18,400

 

 
5

 
7,897

 
18,405

 
26,302

 
(307
)
 
2019
 
(A)
Bell Crossing
 
Clarksville, TN
 
 B
 
9,425

 
717

 
1,916

 
(13
)
(3 
) 
8,330

 
704

 
10,246

 
10,950

 
(6,134
)
 
1999
 
(A&C)
Big Timber Lake RV Camping Resort
 
Cape May Court House, NJ
 
 A
 
10,833

 
590

 
21,308

 

 
2,195

 
590

 
23,503

 
24,093

 
(5,827
)
 
2013
 
(A)
Big Tree RV Resort
 
Arcadia, FL
 
 

 
1,250

 
13,534

 

 
2,627

 
1,250

 
16,161

 
17,411

 
(1,991
)
 
2016
 
(A)
Blazing Star
 
San Antonio, TX
 
 C
 

 
750

 
6,163

 

 
1,764

 
750

 
7,927

 
8,677

 
(2,407
)
 
2012
 
(A)
Blue Heron Pines
 
Punta Gorda, FL
 
 E
 
18,066

 
410

 
35,294

 

 
5,043

 
410

 
40,337

 
40,747

 
(5,829
)
 
2015
 
(A&C)
Blue Jay MH & RV Resort
 
Dade City, FL
 
 

 
2,040

 
9,679

 

 
1,703

 
2,040

 
11,382

 
13,422

 
(1,343
)
 
2016
 
(A)
Blue Star / Lost Dutchman MH & RV Resort
 
Apache Junction, AZ
 
 E
 
6,406

 
5,120

 
12,720

 

 
5,627

 
5,120

 
18,347

 
23,467

 
(3,497
)
 
2014
 
(A)
Blueberry Hill
 
Bushnell, FL
 
 C
 

 
3,830

 
3,240

 

 
3,646

 
3,830

 
6,886

 
10,716

 
(2,285
)
 
2012
 
(A)
Boulder Ridge
 
Pflugerville, TX
 
 B
 
26,945

 
1,000

 
500

 
3,324

 
49,478

 
4,324

 
49,978

 
54,302

 
(13,237
)
 
1998
 
(C)
Branch Creek Estates
 
Austin, TX
 
 D
 
23,249

 
796

 
3,716

 

 
7,047

 
796

 
10,763

 
11,559

 
(6,525
)
 
1995
 
(A&C)
Brentwood Estates
 
Hudson, FL
 
 B
 
5,838

 
1,150

 
9,359

 

 
3,049

 
1,150

 
12,408

 
13,558

 
(2,035
)
 
2015
 
(A)
Brentwood Mobile Village
 
Kentwood, MI
 
 E
 
10,308

 
385

 
3,592

 

 
2,004

 
385

 
5,596

 
5,981

 
(3,571
)
 
1996
 
(A)

F - 45

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Brentwood West
 
Mesa, AZ
 
 D
 
28,800

 
13,620

 
24,202

 

 
1,052

 
13,620

 
25,254

 
38,874

 
(4,911
)
 
2014
 
(A)
Broadview Estates
 
Davison, MI
 
 A
 
4,805

 
749

 
6,089

 

 
17,136

 
749

 
23,225

 
23,974

 
(12,158
)
 
1996
 
(A&C)
Brook Ridge (4)
 
Hooksett, NH
 
 C
 

 
959

 
5,971

 

 

 
959

 
5,971

 
6,930

 
(100
)
 
2019
 
(A)
Brookside Mobile Home Village
 
Goshen, IN
 
 

 
260

 
1,080

 
386

 
19,555

 
646

 
20,635

 
21,281

 
(10,050
)
 
1985
 
(A&C)
Brookside Village
 
Kentwood, MI
 
 D
 
6,886

 
170

 
5,564

 

 
392

 
170

 
5,956

 
6,126

 
(1,650
)
 
2011
 
(A)
Buena Vista (4)
 
Buckeye, AZ
 
 

 
9,190

 
14,363

 

 
59

 
9,190

 
14,422

 
23,612

 
(313
)
 
2019
 
(A)
Buttonwood Bay MH & RV Resort
 
Sebring, FL
 
 D
 
32,107

 
1,952

 
18,294

 

 
7,341

 
1,952

 
25,635

 
27,587

 
(14,582
)
 
2001
 
(A)
Byron Center Mobile Village
 
Byron Center, MI
 
 A
 
3,235

 
253

 
2,402

 

 
1,815

 
253

 
4,217

 
4,470

 
(2,684
)
 
1996
 
(A)
Caliente Sands
 
Cathedral City, CA
 
 

 
1,930

 
6,710

 

 
640

 
1,930

 
7,350

 
9,280

 
(612
)
 
2017
 
(A)
Camelot Villa
 
Macomb, MI
 
 A
 
16,442

 
910

 
21,211

 

 
12,349

 
910

 
33,560

 
34,470

 
(8,482
)
 
2013
 
(A)
Campers Haven RV Resort
 
Dennisport, MA
 
 D
 
16,300

 
14,260

 
11,915

 

 
8,230

 
14,260

 
20,145

 
34,405

 
(1,874
)
 
2016
 
(A)
Candlelight Manor
 
South Daytona, FL
 
 

 
3,140

 
3,867

 

 
2,650

 
3,140

 
6,517

 
9,657

 
(708
)
 
2016
 
(A)
Candlelight Village
 
Sauk Village, IL
 
 A
 
7,222

 
600

 
5,623

 

 
11,926

 
600

 
17,549

 
18,149

 
(10,139
)
 
1996
 
(A)
Canyonlands RV Resort & Campground
 
Moab, UT
 
 

 
3,661

 
7,415

 
1

 
519

 
3,662

 
7,934

 
11,596

 
(469
)
 
2018
 
(A)
Cape May Crossing
 
Cape May, NJ
 
 

 
270

 
1,693

 

 
494

 
270

 
2,187

 
2,457

 
(260
)
 
2016
 
(A)
Cape May KOA
 
Cape May, NJ
 
 C
 

 
650

 
7,736

 

 
7,950

 
650

 
15,686

 
16,336

 
(4,287
)
 
2013
 
(A)
Carolina Pines RV Resort
 
Longs, SC
 
 

 
5,900

 

 
694

 

 
6,594

 
63,828

 
70,422

 
(966
)
 
2017
 
(A)
Carriage Cove
 
Sanford, FL
 
 E
 
16,716

 
6,050

 
21,235

 

 
1,977

 
6,050

 
23,212

 
29,262

 
(4,426
)
 
2014
 
(A)
Carrington Pointe
 
Ft. Wayne, IN
 
 

 
1,076

 
3,632

 
(1
)
(3 
) 
18,984

 
1,075

 
22,616

 
23,691

 
(7,753
)
 
1997
 
(A&C)
Castaways RV Resort & Campground
 
Berlin, MD
 
 A
 
20,607

 
14,320

 
22,277

 

 
5,150

 
14,320

 
27,427

 
41,747

 
(6,131
)
 
2014
 
(A&C)
Cava Robles RV Resort
 
Paso Robles, CA
 
 

 
1,396

 

 

 

 
1,396

 
39,084

 
40,480

 
(2,668
)
 
2014
 
(C)
Cave Creek
 
Evans, CO
 
 B
 
24,811

 
2,241

 
15,343

 

 
9,338

 
2,241

 
24,681

 
26,922

 
(9,921
)
 
2004
 
(C)
Cedar Springs (4)
 
Southington, CT
 
 C
 

 
2,899

 
10,253

 

 
22

 
2,899

 
10,275

 
13,174

 
(171
)
 
2019
 
(A)
Central Park MH & RV Resort
 
Haines City, FL
 
 C
 

 
2,600

 
10,405

 

 
3,507

 
2,600

 
13,912

 
16,512

 
(1,525
)
 
2016
 
(A)
Cherrywood (4)
 
Clinton, NY
 
 C
 

 
662

 
9,629

 

 
57

 
662

 
9,686

 
10,348

 
(160
)
 
2019
 
(A)
Chisholm Point Estates
 
Pflugerville, TX
 
 D
 
23,200

 
609

 
5,286

 

 
6,131

 
609

 
11,417

 
12,026

 
(6,327
)
 
1995
 
(A&C)
Chincoteague Island KOA (2)
 
Chincoteague, VA
 
 

 
5,750

 
13,836

 

 

 
5,750

 
13,836

 
19,586

 
(273
)
 
2019
 
(A)
Chula Vista RV Resort (2) (4)
 
Chula Vista, CA
 
 

 

 

 

 
1,125

 

 
1,125

 
1,125

 
(25
)
 
2019
 
(A&C)
Cider Mill Crossings
 
Fenton, MI
 
 C
 

 
520

 
1,568

 

 
39,810

 
520

 
41,378

 
41,898

 
(9,046
)
 
2011
 
(A&C)
Cider Mill Village
 
Middleville, MI
 
 A
 
4,590

 
250

 
3,590

 

 
2,621

 
250

 
6,211

 
6,461

 
(2,283
)
 
2011
 
(A)
Citrus Hill RV Resort
 
Dade City, FL
 
 C
 

 
1,170

 
2,422

 

 
1,486

 
1,170

 
3,908

 
5,078

 
(431
)
 
2016
 
(A)

F - 46

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Clear Water Mobile Village
 
South Bend, IN
 
 B
 
12,249

 
80

 
1,270

 
61

 
6,335

 
141

 
7,605

 
7,746

 
(4,378
)
 
1986
 
(A)
Club Naples
 
Naples, FL
 
 C
 

 
5,780

 
4,952

 

 
3,139

 
5,780

 
8,091

 
13,871

 
(2,694
)
 
2011
 
(A)
Club Wildwood
 
Hudson, FL
 
 E
 
22,629

 
14,206

 
21,275

 

 
2,133

 
14,206

 
23,408

 
37,614

 
(2,690
)
 
2016
 
(A)
Coastal Plantation (4)
 
Hampstead, NC
 
 C
 

 
3,264

 
6,469

 

 
223

 
3,264

 
6,692

 
9,956

 
(108
)
 
2019
 
(A)
Costa Vista (4)
 
San Diego, CA
 
 

 

 

 

 
4,777

 

 
4,777

 
4,777

 

 
2019
 
 
Cobus Green Mobile Home Park
 
Osceola, IN
 
 A
 
8,864

 
762

 
7,037

 

 
8,002

 
762

 
15,039

 
15,801

 
(9,274
)
 
1993
 
(A)
Colony in the Wood
 
Port Orange, FL
 
 

 
5,650

 
26,828

 
29

 
2,065

 
5,679

 
28,893

 
34,572

 
(1,426
)
 
2017
 
(A&C)
Comal Farms
 
New Braunfels, TX
 
 C
 

 
1,455

 
1,732

 

 
9,458

 
1,455

 
11,190

 
12,645

 
(5,422
)
 
2000
 
(A&C)
Compass RV Resort
 
St. Augustine, FL
 
 

 
4,151

 
10,480

 
2

 
406

 
4,153

 
10,886

 
15,039

 
(593
)
 
2018
 
(A)
Country Acres Mobile Village
 
Cadillac, MI
 
 A
 
4,309

 
380

 
3,495

 

 
3,652

 
380

 
7,147

 
7,527

 
(4,558
)
 
1996
 
(A)
Country Hills Village
 
Hudsonville, MI
 
 A
 
5,971

 
340

 
3,861

 

 
543

 
340

 
4,404

 
4,744

 
(1,208
)
 
2011
 
(A)
Country Lakes (4)
 
Little River, SC
 
 C
 

 
1,746

 
5,522

 

 
2

 
1,746

 
5,524

 
7,270

 
(92
)
 
2019
 
(A)
Country Meadows Mobile Village
 
Flat Rock, MI
 
 B
 
42,427

 
924

 
7,583

 
296

 
20,185

 
1,220

 
27,768

 
28,988

 
(17,041
)
 
1994
 
(A&C)
Country Meadows Village
 
Caledonia, MI
 
 C
 

 
550

 
5,555

 

 
7,440

 
550

 
12,995

 
13,545

 
(2,816
)
 
2011
 
(A&C)
Country Squire MH & RV Resort
 
Paisley, FL
 
 

 
520

 
1,719

 

 
2,113

 
520

 
3,832

 
4,352

 
(433
)
 
2016
 
(A)
Country Village Estates (4)
 
Oregon City, OR
 
 

 
22,020

 
42,615

 

 
36

 
22,020

 
42,651

 
64,671

 
(757
)
 
2019
 
(A)
Countryside Estates
 
Mckean, PA
 
 E
 
6,648

 
320

 
11,610

 

 
1,898

 
320

 
13,508

 
13,828

 
(2,524
)
 
2014
 
(A)
Countryside Village
 
Great Falls, MT
 
 

 
430

 
7,157

 

 
987

 
430

 
8,144

 
8,574

 
(1,556
)
 
2014
 
(A)
Countryside Village of Atlanta
 
Lawrenceville, GA
 
 C
 

 
1,274

 
10,957

 

 
11,931

 
1,274

 
22,888

 
24,162

 
(6,998
)
 
2004
 
(A&C)
Countryside Village of Gwinnett
 
Buford, GA
 
 A
 
9,241

 
1,124

 
9,539

 

 
1,862

 
1,124

 
11,401

 
12,525

 
(5,247
)
 
2004
 
(A)
Countryside Village of Lake Lanier
 
Buford, GA
 
 B
 
27,216

 
1,916

 
16,357

 

 
7,921

 
1,916

 
24,278

 
26,194

 
(11,963
)
 
2004
 
(A)
Craigleith RV Resort & Campground
 
Clarksburg, ON
 
 

 
420

 
705

 
(10
)
(1 
) 
671

 
410

 
1,376

 
1,786

 
(118
)
 
2016
 
(A)
Creeks Crossing (4) (5)
 
Uhland, TX
 
 

 
3,484

 
2

 

 

 
3,484

 
2

 
3,486

 

 
2019
 
(C)
Creekwood Meadows
 
Burton, MI
 
 A
 
3,124

 
808

 
2,043

 
404

 
14,561

 
1,212

 
16,604

 
17,816

 
(9,889
)
 
1997
 
(C)
Crestwood (4)
 
Concord, NH
 
 C
 

 
1,849

 
22,367

 

 
39

 
1,849

 
22,406

 
24,255

 
(373
)
 
2019
 
(A)
Crossroads (4)
 
Aiken, SC
 
 C
 

 
822

 
3,675

 

 
69

 
822

 
3,744

 
4,566

 
(210
)
 
2019
 
(A&C)
Cutler Estates Mobile Village
 
Grand Rapids, MI
 
 B
 
14,175

 
749

 
6,941

 

 
3,741

 
749

 
10,682

 
11,431

 
(6,871
)
 
1996
 
(A)
Cypress Greens
 
Lake Alfred, FL
 
 E
 
7,498

 
960

 
17,518

 

 
2,295

 
960

 
19,813

 
20,773

 
(3,021
)
 
2015
 
(A)
Daytona Beach RV Resort
 
Port Orange, FL
 
 C
 

 
2,300

 
7,158

 

 
3,930

 
2,300

 
11,088

 
13,388

 
(1,266
)
 
2016
 
(A)
Deep Run (4)
 
Cream Ridge, NJ
 
 C
 

 
2,020

 
13,053

 

 
3

 
2,020

 
13,056

 
15,076

 
(218
)
 
2019
 
(A)
Deer Lake RV Resort & Campground
 
Huntsville, ON
 
 

 
2,830

 
4,260

 
(67
)
(1 
) 
666

 
2,763

 
4,926

 
7,689

 
(590
)
 
2016
 
(A)

F - 47

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Deerfield Run
 
Anderson, IN
 
 

 
990

 
1,607

 

 
6,918

 
990

 
8,525

 
9,515

 
(4,422
)
 
1999
 
(A&C)
Deerwood
 
Orlando, FL
 
 D
 
38,125

 
6,920

 
37,593

 

 
5,017

 
6,920

 
42,610

 
49,530

 
(6,856
)
 
2015
 
(A)
Desert Harbor
 
Apache Junction, AZ
 
 E
 
11,222

 
3,940

 
14,891

 

 
350

 
3,940

 
15,241

 
19,181

 
(2,904
)
 
2014
 
(A)
Driftwood RV Resort & Campground
 
Clermont, NJ
 
 D
 
17,328

 
1,450

 
29,851

 

 
3,134

 
1,450

 
32,985

 
34,435

 
(6,962
)
 
2014
 
(A)
Dunedin RV Resort
 
Dunedin, FL
 
 E
 
10,051

 
4,400

 
16,923

 

 
2,782

 
4,400

 
19,705

 
24,105

 
(2,396
)
 
2016
 
(A)
Dutton Mill Village
 
Caledonia, MI
 
 A
 
9,096

 
370

 
8,997

 

 
2,035

 
370

 
11,032

 
11,402

 
(3,302
)
 
2011
 
(A)
Eagle Crest
 
Firestone, CO
 
 D
 
32,194

 
2,015

 
150

 

 
30,738

 
2,015

 
30,888

 
32,903

 
(16,620
)
 
1998
 
(C)
East Fork Crossing
 
Batavia, OH
 
 C
 

 
1,280

 
6,302

 

 
18,904

 
1,280

 
25,206

 
26,486

 
(11,822
)
 
2000
 
(A&C)
East Village Estates
 
Washington Twp, MI
 
 A
 
19,058

 
1,410

 
25,413

 

 
5,245

 
1,410

 
30,658

 
32,068

 
(8,385
)
 
2012
 
(A)
Egelcraft
 
Muskegon, MI
 
 D
 
19,195

 
690

 
22,596

 

 
2,713

 
690

 
25,309

 
25,999

 
(5,026
)
 
2014
 
(A)
Ellenton Gardens RV Resort
 
Ellenton, FL
 
 E
 
4,710

 
2,130

 
7,755

 

 
2,660

 
2,130

 
10,415

 
12,545

 
(1,268
)
 
2016
 
(A)
Emerald Coast MH & RV Resort (2)
 
Panama City Beach, FL
 
 D
 
15,250

 
10,330

 
9,070

 

 
638

 
10,330

 
9,708

 
20,038

 
(886
)
 
2017
 
(A)
Fairfield Village
 
Ocala, FL
 
 B
 
10,714

 
1,160

 
18,673

 

 
749

 
1,160

 
19,422

 
20,582

 
(3,002
)
 
2015
 
(A)
Farmwood Village (4)
 
Dover, NH
 
 C
 

 
1,232

 
12,348

 

 
7

 
1,232

 
12,355

 
13,587

 
(206
)
 
2019
 
(A)
Fiesta Village MH & RV Resort
 
Mesa, AZ
 
 

 
2,830

 
4,475

 

 
1,523

 
2,830

 
5,998

 
8,828

 
(1,128
)
 
2014
 
(A)
Fisherman’s Cove
 
Flint Twp, MI
 
 A
 
4,784

 
380

 
3,438

 

 
4,395

 
380

 
7,833

 
8,213

 
(5,276
)
 
1993
 
(A)
Forest Hill (4)
 
Southington, CT
 
 C
 

 
5,170

 
10,775

 

 
17

 
5,170

 
10,792

 
15,962

 
(180
)
 
2019
 
(A)
Forest Meadows
 
Philomath, OR
 
 A
 
2,508

 
1,031

 
2,050

 

 
754

 
1,031

 
2,804

 
3,835

 
(1,519
)
 
1999
 
(A)
Forest View
 
Homosassa, FL
 
 

 
1,330

 
22,056

 

 
1,239

 
1,330

 
23,295

 
24,625

 
(3,597
)
 
2015
 
(A)
Fort Tatham RV Resort & Campground
 
Sylva, NC
 
 

 
110

 
760

 

 
946

 
110

 
1,706

 
1,816

 
(206
)
 
2016
 
(A)
Fort Whaley RV Resort & Campground
 
Whaleyville, MD
 
 C
 

 
510

 
5,194

 

 
8,817

 
510

 
14,011

 
14,521

 
(1,479
)
 
2015
 
(A)
Four Seasons
 
Elkhart, IN
 
 A
 
3,984

 
500

 
4,811

 

 
3,479

 
500

 
8,290

 
8,790

 
(4,263
)
 
2000
 
(A)
Frenchtown Villa / Elizabeth Woods
 
Newport, MI
 
 E
 
29,333

 
1,450

 
52,327

 

 
28,838

 
1,450

 
81,165

 
82,615

 
(14,657
)
 
2014
 
(A&C)
Friendly Village of La Habra
 
La Habra, CA
 
 D
 
33,205

 
26,956

 
25,202

 

 
1,403

 
26,956

 
26,605

 
53,561

 
(3,323
)
 
2016
 
(A)
Friendly Village of Modesto
 
Modesto, CA
 
 D
 
17,244

 
6,260

 
20,885

 

 
1,630

 
6,260

 
22,515

 
28,775

 
(2,645
)
 
2016
 
(A)
Friendly Village of Simi
 
Simi Valley, CA
 
 D
 
16,928

 
14,906

 
15,986

 

 
975

 
14,906

 
16,961

 
31,867

 
(2,062
)
 
2016
 
(A)
Friendly Village of West Covina
 
West Covina, CA
 
 D
 
13,022

 
14,520

 
5,221

 

 
930

 
14,520

 
6,151

 
20,671

 
(776
)
 
2016
 
(A)
Frontier Town RV Resort & Campground
 
Berlin, MD
 
 C
 

 
18,960

 
43,166

 

 
28,633

 
18,960

 
71,799

 
90,759

 
(8,946
)
 
2015
 
(A)
Glen Ellis Family Campground (4)
 
Glen, NH
 
 D
 
3,900

 
448

 
5,798

 

 
1,511

 
448

 
7,309

 
7,757

 
(104
)
 
2019
 
(A)
Glen Haven RV Resort
 
Zephyrhills, FL
 
 E
 
5,322

 
1,980

 
8,373

 

 
1,454

 
1,980

 
9,827

 
11,807

 
(1,248
)
 
2016
 
(A)

F - 48

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Glen Laurel
 
Concord, NC
 
 C
 

 
1,641

 
453

 

 
12,562

 
1,641

 
13,015

 
14,656

 
(7,063
)
 
2001
 
(A&C)
Gold Coaster MH & RV Resort
 
Homestead, FL
 
 A
 
13,427

 
446

 
4,234

 
172

 
6,658

 
618

 
10,892

 
11,510

 
(5,560
)
 
1997
 
(A)
Grand Bay
 
Dunedin, FL
 
 B
 
9,580

 
3,460

 
6,314

 
(3,086
)
(3 
) 
1,466

 
374

 
7,780

 
8,154

 
(4,127
)
 
2016
 
(A)
Grand Lakes RV Resort
 
Citra, FL
 
 

 
5,280

 
4,501

 
(1,820
)
(3 
) 
4,923

 
3,460

 
9,424

 
12,884

 
(1,313
)
 
2012
 
(A)
Grand Mobile Estates
 
Grand Rapids, MI
 
 C
 

 
374

 
3,587

 
4,906

 
4,043

 
5,280

 
7,630

 
12,910

 
(2,174
)
 
1996
 
(A)
Grand Oaks RV Resort & Campground
 
Cayuga, ON
 
 

 
970

 
4,220

 
(23
)
(1 
) 
2,396

 
947

 
6,616

 
7,563

 
(618
)
 
2016
 
(A)
Grove Beach (4)
 
Westbrook, CT
 
 C
 

 
1,221

 
10,225

 

 
22

 
1,221

 
10,247

 
11,468

 
(170
)
 
2019
 
(A)
Grove Ridge RV Resort
 
Dade City, FL
 
 E
 
3,331

 
1,290

 
5,387

 

 
1,926

 
1,290

 
7,313

 
8,603

 
(894
)
 
2016
 
(A)
Groves RV Resort
 
Ft. Myers, FL
 
 A
 
6,108

 
249

 
2,396

 

 
4,215

 
249

 
6,611

 
6,860

 
(3,179
)
 
1997
 
(A)
Gulfstream Harbor
 
Orlando, FL
 
 

 
14,510

 
78,930

 

 
5,464

 
14,510

 
84,394

 
98,904

 
(13,105
)
 
2015
 
(A)
Gulliver’s Lake RV Resort & Campground
 
Millgrove, ON
 
 

 
2,950

 
2,950

 
(70
)
(1 
) 
1,044

 
2,880

 
3,994

 
6,874

 
(432
)
 
2016
 
(A)
Gwynn’s Island RV Resort & Campground
 
Gwynn, VA
 
 C
 

 
760

 
595

 

 
1,778

 
760

 
2,373

 
3,133

 
(690
)
 
2013
 
(A)
Hacienda Del Rio (4)
 
Edgewater, FL
 
 

 
33,309

 
80,310

 

 
437

 
33,309

 
80,747

 
114,056

 
(1,411
)
 
2019
 
(A)
Hamlin
 
Webberville, MI
 
 B
 
10,720

 
125

 
1,675

 
536

 
12,949

 
661

 
14,624

 
15,285

 
(7,220
)
 
1984
 
(A&C)
Hannah Village (4)
 
Lebanon, NH
 
 C
 

 
365

 
4,705

 

 

 
365

 
4,705

 
5,070

 
(78
)
 
2019
 
(A)
Hemlocks (4)
 
Tilton, NH
 
 C
 

 
1,016

 
7,151

 

 
4

 
1,016

 
7,155

 
8,171

 
(119
)
 
2019
 
(A)
Heritage
 
Temecula, CA
 
 D
 
13,208

 
13,200

 
7,877

 

 
1,090

 
13,200

 
8,967

 
22,167

 
(1,115
)
 
2016
 
(A)
Hickory Hills Village
 
Battle Creek, MI
 
 

 
760

 
7,697

 

 
2,441

 
760

 
10,138

 
10,898

 
(3,357
)
 
2011
 
(A)
Hid'n Pines RV Resort (4)
 
Old Orchard Beach, ME
 
0
 

 
1,956

 
10,020

 

 
215

 
1,956

 
10,235

 
12,191

 
(197
)
 
2019
 
(A)
Hidden Ridge RV Resort
 
Hopkins, MI
 
 C
 

 
440

 
893

 

 
3,788

 
440

 
4,681

 
5,121

 
(1,209
)
 
2011
 
(A)
Hidden River RV Resort
 
Riverview, FL
 
 C
 

 
3,950

 
6,376

 

 
2,988

 
3,950

 
9,364

 
13,314

 
(1,038
)
 
2016
 
(A)
Hidden Valley RV Resort & Campground
 
Normandale, ON
 
 

 
2,610

 
4,170

 
(62
)
(1 
) 
1,763

 
2,548

 
5,933

 
8,481

 
(655
)
 
2016
 
(A)
High Point Park
 
Frederica, DE
 
0
 

 
898

 
7,031

 
(42
)
(3 
) 
7,715

 
856

 
14,746

 
15,602

 
(7,216
)
 
1997
 
(A)
Hill Country Cottage and RV Resort
 
New Braunfels, TX
 
 C
 

 
3,790

 
27,200

 

 
3,239

 
3,790

 
30,439

 
34,229

 
(4,246
)
 
2016
 
(A&C)
Hillcrest (4)
 
Uncasville, CT
 
 C
 

 
10,670

 
9,607

 

 
4

 
10,670

 
9,611

 
20,281

 
(160
)
 
2019
 
(A)
Holiday West Village
 
Holland, MI
 
 B
 
14,109

 
340

 
8,067

 

 
556

 
340

 
8,623

 
8,963

 
(2,477
)
 
2011
 
(A)
Holly Forest Estates
 
Holly Hill, FL
 
 D
 
24,733

 
920

 
8,376

 

 
1,194

 
920

 
9,570

 
10,490

 
(6,623
)
 
1997
 
(A)
Holly Village / Hawaiian Gardens
 
Holly, MI
 
 B
 
19,865

 
1,514

 
13,596

 

 
7,455

 
1,514

 
21,051

 
22,565

 
(9,310
)
 
2004
 
(A)
Homosassa River RV Resort
 
Homosassa Springs, FL
 
 C
 

 
1,520

 
5,020

 

 
2,693

 
1,520

 
7,713

 
9,233

 
(882
)
 
2016
 
(A)

F - 49

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Horseshoe Cove RV Resort
 
Bradenton, FL
 
 E
 
19,880

 
9,466

 
32,612

 

 
3,387

 
9,466

 
35,999

 
45,465

 
(4,464
)
 
2016
 
(A)
Hunters Crossing
 
Capac, MI
 
 C
 

 
430

 
1,092

 

 
1,461

 
430

 
2,553

 
2,983

 
(612
)
 
2012
 
(A)
Hunters Glen
 
Wayland, MI
 
 C
 

 
1,102

 
11,926

 

 
16,790

 
1,102

 
28,716

 
29,818

 
(10,020
)
 
2004
 
(C)
Hyde Park (4)
 
Easton, MD
 
 C
 

 
6,585

 
18,256

 

 
5

 
6,585

 
18,261

 
24,846

 
(304
)
 
2019
 
(A)
Indian Creek Park
 
Ft. Myers Beach, FL
 
 D
 
62,296

 
3,832

 
34,660

 

 
12,720

 
3,832

 
47,380

 
51,212

 
(31,761
)
 
1996
 
(A)
Indian Creek RV & Camping Resort
 
Geneva on the Lake, OH
 
 C
 

 
420

 
20,791

 
(5
)
(5 
) 
8,738

 
415

 
29,529

 
29,944

 
(6,246
)
 
2013
 
(A&C)
Indian Wells RV Resort
 
Indio, CA
 
 D
 
11,534

 
2,880

 
19,470

 

 
4,599

 
2,880

 
24,069

 
26,949

 
(2,817
)
 
2016
 
(A)
Island Lakes
 
Merritt Island, FL
 
 D
 
11,569

 
700

 
6,431

 

 
1,020

 
700

 
7,451

 
8,151

 
(5,495
)
 
1995
 
(A)
Jellystone Park™ at Birchwood Acres MH & RV Resort
 
Greenfield Park, NY
 
 A
 
3,821

 
560

 
5,527

 

 
9,540

 
560

 
15,067

 
15,627

 
(3,513
)
 
2013
 
(A)
Jellystone Park™ at Gardiner
 
Gardiner, NY
 
 

 
873

 
28,406

 

 
3,807

 
873

 
32,213

 
33,086

 
(2,090
)
 
2018
 
(A)
Jellystone Park™ at Golden Valley
 
Bostic, NC
 
 

 
4,829

 
4,260

 
(9
)
(3 
) 
24,740

 
4,820

 
29,000

 
33,820

 
(1,107
)
 
2018
 
(A&C)
Jellystone Park™ at Guadalupe River
 
Kerrville, TX
 
 

 
2,519

 
23,939

 
(2
)
(3 
) 
2,718

 
2,517

 
26,657

 
29,174

 
(1,761
)
 
2018
 
(A)
Jellystone Park™ at Hill Country
 
Canyon Lake, TX
 
 

 
1,991

 
20,709

 

 
821

 
1,991

 
21,530

 
23,521

 
(1,287
)
 
2018
 
(A)
Jellystone Park™ at Larkspur
 
Larkspur, CO
 
 

 
1,880

 
5,521

 

 
35,067

 
1,880

 
40,588

 
42,468

 
(134
)
 
2016
 
(A)
Jellystone Park™ at Luray
 
East Luray, VA
 
 

 
3,164

 
29,588

 
(1
)
(3 
) 
1,058

 
3,163

 
30,646

 
33,809

 
(1,938
)
 
2018
 
(A)
Jellystone Park™ at Maryland
 
Williamsport, MD
 
 

 
2,096

 
23,737

 

 
1,486

 
2,096

 
25,223

 
27,319

 
(1,655
)
 
2018
 
(A)
Jellystone Park™ at Memphis
 
Horn Lake, TN
 
 A
 
2,830

 
889

 
6,846

 
3

 
132

 
892

 
6,978

 
7,870

 
(447
)
 
2018
 
(A)
Jellystone Park™ at Quarryville
 
Quarryville, PA
 
 

 
3,882

 
33,781

 

 
1,297

 
3,882

 
35,078

 
38,960

 
(2,197
)
 
2018
 
(A)
Jellystone Park™ at Tower Park
 
Lodi, CA
 
 

 
2,560

 
29,819

 
(1
)
(3 
) 
6,917

 
2,559

 
36,736

 
39,295

 
(2,139
)
 
2018
 
(A)
Jellystone Park™ of Western New York
 
North Java, NY
 
 A
 
6,537

 
870

 
8,884

 

 
6,912

 
870

 
15,796

 
16,666

 
(4,306
)
 
2013
 
(A)
Kensington Meadows
 
Lansing, MI
 
 B
 
17,725

 
250

 
2,699

 

 
8,932

 
250

 
11,631

 
11,881

 
(7,199
)
 
1995
 
(A&C)
Kimberly Estates
 
Newport, MI
 
 C
 

 
1,250

 
6,160

 

 
11,017

 
1,250

 
17,177

 
18,427

 
(2,788
)
 
2016
 
(A)
King’s Court Mobile Village
 
Traverse City, MI
 
 

 
1,473

 
13,782

 
269

 
17,941

 
1,742

 
31,723

 
33,465

 
(13,441
)
 
1996
 
(A&C)
King’s Lake
 
DeBary, FL
 
 D
 
8,899

 
280

 
2,542

 

 
2,943

 
280

 
5,485

 
5,765

 
(3,641
)
 
1994
 
(A)
Kings Manor
 
Lakeland, FL
 
 

 
2,270

 
5,578

 

 
4,985

 
2,270

 
10,563

 
12,833

 
(1,283
)
 
2016
 
(A)
King’s Pointe
 
Lake Alfred, FL
 
 B
 
7,847

 
510

 
16,763

 

 
517

 
510

 
17,280

 
17,790

 
(2,664
)
 
2015
 
(A)
Kissimmee Gardens
 
Kissimmee, FL
 
 

 
3,270

 
14,402

 

 
1,479

 
3,270

 
15,881

 
19,151

 
(1,918
)
 
2016
 
(A)
Kissimmee South MH & RV Resort
 
Davenport, FL
 
 

 
3,740

 
6,819

 

 
4,329

 
3,740

 
11,148

 
14,888

 
(1,195
)
 
2016
 
(A)
Knollwood Estates
 
Allendale, MI
 
 A
 
2,418

 
400

 
4,061

 

 
3,472

 
400

 
7,533

 
7,933

 
(4,115
)
 
2001
 
(A)

F - 50

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
La Casa Blanca
 
Apache Junction, AZ
 
 B
 
7,758

 
4,370

 
14,142

 

 
616

 
4,370

 
14,758

 
19,128

 
(2,821
)
 
2014
 
(A)
La Costa Village
 
Port Orange, FL
 
 D
 
51,088

 
3,640

 
62,315

 

 
2,025

 
3,640

 
64,340

 
67,980

 
(9,854
)
 
2015
 
(A)
La Hacienda RV Resort
 
Austin, TX
 
 C
 

 
3,670

 
22,225

 

 
965

 
3,670

 
23,190

 
26,860

 
(4,396
)
 
2015
 
(A)
Lafayette Place
 
Warren, MI
 
 A
 
2,069

 
669

 
5,979

 

 
7,864

 
669

 
13,843

 
14,512

 
(8,178
)
 
1998
 
(A)
Lafontaine RV Resort & Campground
 
Tiny, ON
 
 

 
1,290

 
2,075

 
(31
)
(1 
) 
2,561

 
1,259

 
4,636

 
5,895

 
(386
)
 
2016
 
(A)
Lake Avenue RV Resort & Campground
 
Cherry Valley, ON
 
 

 
670

 
1,290

 
(16
)
(1 
) 
725

 
654

 
2,015

 
2,669

 
(242
)
 
2016
 
(A)
Lake in Wood RV Resort
 
Narvon, PA
 
 A
 
10,066

 
7,360

 
7,097

 

 
2,834

 
7,360

 
9,931

 
17,291

 
(2,703
)
 
2012
 
(A)
Lake Josephine RV Resort
 
Sebring, FL
 
 C
 

 
490

 
2,830

 

 
1,025

 
490

 
3,855

 
4,345

 
(310
)
 
2016
 
(A)
Lake Juliana Landings
 
Auburndale, FL
 
 A
 
7,935

 
335

 
3,048

 

 
1,880

 
335

 
4,928

 
5,263

 
(3,327
)
 
1994
 
(A)
Lake Pointe Village
 
Mulberry, FL
 
 D
 
18,211

 
480

 
29,795

 

 
516

 
480

 
30,311

 
30,791

 
(4,642
)
 
2015
 
(A)
Lake Rudolph Campground & RV Resort
 
Santa Claus, IN
 
 A
 
16,788

 
2,340

 
28,113

 

 
9,197

 
2,340

 
37,310

 
39,650

 
(9,933
)
 
2014
 
(A&C)
Lake San Marino RV Park
 
Naples, FL
 
 A
 
9,371

 
650

 
5,760

 

 
5,134

 
650

 
10,894

 
11,544

 
(6,033
)
 
1996
 
(A)
Lakefront
 
Lakeside, CA
 
 D
 
26,751

 
21,556

 
17,440

 

 
1,078

 
21,556

 
18,518

 
40,074

 
(2,273
)
 
2016
 
(A)
Lakeland RV Resort
 
Lakeland, FL
 
 C
 

 
1,730

 
5,524

 

 
2,889

 
1,730

 
8,413

 
10,143

 
(924
)
 
2016
 
(A)
Lakeshore Landings
 
Orlando, FL
 
 D
 
13,395

 
2,570

 
19,481

 

 
1,395

 
2,570

 
20,876

 
23,446

 
(3,987
)
 
2014
 
(A)
Lakeshore Villas
 
Tampa, FL
 
 

 
3,080

 
18,983

 

 
1,085

 
3,080

 
20,068

 
23,148

 
(3,065
)
 
2015
 
(A)
Lakeside (4)
 
Terryville, CT
 
 C
 

 
1,278

 
3,445

 

 
13

 
1,278

 
3,458

 
4,736

 
(57
)
 
2019
 
(A)
Lakeside Crossing
 
Conway, SC
 
 D
 
13,056

 
3,520

 
31,615

 

 
13,044

 
3,520

 
44,659

 
48,179

 
(5,531
)
 
2015
 
(A&C)
Lakeview
 
Ypsilanti, MI
 
 

 
1,156

 
10,903

 
(1
)
(3 
) 
7,594

 
1,155

 
18,497

 
19,652

 
(8,868
)
 
2004
 
(A)
Lakeview CT (4)
 
Danbury, CT
 
 C
 

 
2,545

 
8,884

 

 
34

 
2,545

 
8,918

 
11,463

 
(148
)
 
2019
 
(A)
Lamplighter
 
Port Orange, FL
 
 B
 
7,276

 
1,330

 
12,846

 

 
961

 
1,330

 
13,807

 
15,137

 
(2,098
)
 
2015
 
(A)
Laurel Heights (4)
 
Uncasville, CT
 
 C
 

 
1,678

 
693

 

 

 
1,678

 
693

 
2,371

 
(12
)
 
2019
 
(A)
Lazy J Ranch
 
Arcata, CA
 
 

 
7,100

 
6,838

 

 
134

 
7,100

 
6,972

 
14,072

 
(628
)
 
2017
 
(A)
Leaf Verde RV Resort
 
Buckeye, AZ
 
 

 
3,417

 
8,437

 
12

 
534

 
3,429

 
8,971

 
12,400

 
(475
)
 
2018
 
(A)
Leisure Point Resort (4)
 
Millsboro, DE
 
 

 
3,628

 
41,291

 

 
17

 
3,628

 
41,308

 
44,936

 
(713
)
 
2019
 
(A)
Leisure Village
 
Belmont, MI
 
 

 
360

 
8,219

 
113

 
2,138

 
473

 
10,357

 
10,830

 
(2,593
)
 
2011
 
(A)
Lemon Wood
 
Ventura, CA
 
 D
 
19,434

 
19,540

 
6,918

 

 
1,162

 
19,540

 
8,080

 
27,620

 
(990
)
 
2016
 
(A)
Liberty Farm
 
Valparaiso, IN
 
 C
 

 
66

 
1,201

 
116

 
4,168

 
182

 
5,369

 
5,551

 
(2,936
)
 
1985
 
(A&C)
Lincoln Estates
 
Holland, MI
 
 

 
455

 
4,201

 

 
2,148

 
455

 
6,349

 
6,804

 
(3,910
)
 
1996
 
(A)
Long Beach RV Resort & Campground
 
Barnegat, NJ
 
 

 
710

 
3,414

 

 
1,268

 
710

 
4,682

 
5,392

 
(548
)
 
2016
 
(A)

F - 51

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Majestic Oaks RV Resort
 
Zephyrhills, FL
 
 E
 
4,465

 
3,940

 
4,725

 
28

 
1,972

 
3,968

 
6,697

 
10,665

 
(867
)
 
2016
 
(A)
Maple Brook
 
Matteson, IL
 
 D
 
41,935

 
8,460

 
48,865

 

 
642

 
8,460

 
49,507

 
57,967

 
(9,375
)
 
2014
 
(A)
Maplewood Manor
 
Brunswick, ME
 
 E
 
7,884

 
1,770

 
12,982

 

 
1,798

 
1,770

 
14,780

 
16,550

 
(2,747
)
 
2014
 
(A)
Marco Naples RV Resort
 
Naples, FL
 
 

 
2,790

 
10,458

 

 
3,543

 
2,790

 
14,001

 
16,791

 
(1,601
)
 
2016
 
(A)
Marina Cove
 
Uncasville, CT
 
 C
 

 
262

 
365

 

 

 
262

 
365

 
627

 
(6
)
 
2019
 
(A)
Massey's Landing RV Resort (4)
 
Millsboro, DE
 
 

 
2,755

 
17,948

 

 
16,507

 
2,755

 
34,455

 
37,210

 
(321
)
 
2019
 
(A)
Meadow Lake Estates
 
White Lake, MI
 
 

 
1,188

 
11,498

 
127

 
7,899

 
1,315

 
19,397

 
20,712

 
(14,011
)
 
1994
 
(A)
Meadowbrook
 
Charlotte, NC
 
 C
 

 
1,310

 
6,570

 

 
14,017

 
1,310

 
20,587

 
21,897

 
(10,131
)
 
2000
 
(A&C)
Meadowbrook Estates
 
Monroe, MI
 
 A
 
13,050

 
431

 
3,320

 
379

 
15,646

 
810

 
18,966

 
19,776

 
(11,101
)
 
1986
 
(A)
Meadowbrook Village
 
Tampa, FL
 
 B
 
11,738

 
519

 
4,728

 

 
1,209

 
519

 
5,937

 
6,456

 
(4,499
)
 
1994
 
(A)
Meadowlands of Gibraltar
 
Gibraltar, MI
 
 A
 
5,087

 
640

 
7,673

 

 
4,739

 
640

 
12,412

 
13,052

 
(2,353
)
 
2015
 
(A)
Merrymeeting
 
Brunswick, ME
 
 C
 

 
250

 
1,020

 

 
1,147

 
250

 
2,167

 
2,417

 
(432
)
 
2014
 
(A)
Mi-Te-Jo Campground
 
Milton, NH
 
 

 
1,416

 
7,580

 

 
1,594

 
1,416

 
9,174

 
10,590

 
(599
)
 
2018
 
(A)
Mill Creek MH & RV Resort
 
Kissimmee, FL
 
 

 
1,400

 
4,839

 

 
3,815

 
1,400

 
8,654

 
10,054

 
(975
)
 
2016
 
(A)
Millwood (4)
 
Uncasville, CT
 
 C
 

 
2,425

 
8

 

 

 
2,425

 
8

 
2,433

 

 
2019
 
(A&C)
Moab Valley RV Resort & Campground
 
Moab, UT
 
 

 
3,693

 
8,732

 
1

 
526

 
3,694

 
9,258

 
12,952

 
(542
)
 
2018
 
(A)
Mountain View
 
Mesa, AZ
 
 B
 
10,709

 
5,490

 
12,325

 

 
451

 
5,490

 
12,776

 
18,266

 
(2,456
)
 
2014
 
(A)
Napa Valley
 
Napa, CA
 
 D
 
19,067

 
17,740

 
11,675

 

 
1,024

 
17,740

 
12,699

 
30,439

 
(1,566
)
 
2016
 
(A)
Naples RV Resort
 
Naples, FL
 
 C
 

 
3,640

 
2,020

 

 
2,223

 
3,640

 
4,243

 
7,883

 
(1,257
)
 
2011
 
(A)
New England Village (4)
 
Westbrook, CT
 
 C
 

 
4,188

 
1,444

 

 
42

 
4,188

 
1,486

 
5,674

 
(24
)
 
2019
 
(A)
New Point RV Resort
 
New Point, VA
 
 C
 

 
1,550

 
5,259

 

 
4,315

 
1,550

 
9,574

 
11,124

 
(2,602
)
 
2013
 
(A)
New Ranch
 
Clearwater, FL
 
 

 
2,270

 
2,723

 

 
1,486

 
2,270

 
4,209

 
6,479

 
(431
)
 
2016
 
(A)
North Lake Estates
 
Moore Haven, FL
 
 C
 

 
4,150

 
3,486

 

 
2,014

 
4,150

 
5,500

 
9,650

 
(1,880
)
 
2011
 
(A)
North Point Estates
 
Pueblo, CO
 
 

 
1,582

 
3,027

 
1

 
4,065

 
1,583

 
7,092

 
8,675

 
(3,778
)
 
2001
 
(C)
Northville Crossing
 
Northville, MI
 
 B
 
17,546

 
1,236

 
29,564

 

 
7,235

 
1,236

 
36,799

 
38,035

 
(11,335
)
 
2012
 
(A)
Oak Creek
 
Coarsegold, CA
 
 B
 
8,953

 
4,760

 
11,185

 

 
1,643

 
4,760

 
12,828

 
17,588

 
(2,441
)
 
2014
 
(A)
Oak Crest
 
Austin, TX
 
 B
 
21,917

 
4,311

 
12,611

 
4,365

 
15,949

 
8,676

 
28,560

 
37,236

 
(9,158
)
 
2002
 
(C)
Oak Grove (4)
 
Plainville, CT
 
 C
 

 
1,004

 
1,660

 

 
1

 
1,004

 
1,661

 
2,665

 
(28
)
 
2019
 
(A)
Oak Island Village
 
East Lansing, MI
 
 

 
320

 
6,843

 

 
3,112

 
320

 
9,955

 
10,275

 
(3,061
)
 
2011
 
(A)
Oak Ridge
 
Manteno, IL
 
 D
 
30,121

 
1,090

 
36,941

 

 
3,762

 
1,090

 
40,703

 
41,793

 
(7,846
)
 
2014
 
(A)
Oakview Estates
 
Arcadia, FL
 
 

 
850

 
3,881

 

 
1,470

 
850

 
5,351

 
6,201

 
(613
)
 
2016
 
(A)
Oakwood Village
 
Miamisburg, OH
 
 B
 
31,451

 
1,964

 
6,401

 
(1
)
(3 
) 
13,880

 
1,963

 
20,281

 
22,244

 
(12,178
)
 
1998
 
(A&C)

F - 52

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Ocean Breeze Jensen Beach MH & RV Resort
 
Jensen Beach, FL
 
 

 
19,026

 
13,862

 

 
27,223

 
19,026

 
41,085

 
60,111

 
(3,574
)
 
2016
 
(A&C)
Ocean Breeze MH & RV Resort (6)
 
Marathon, FL
 
 C
 

 
2,330

 
1,770

 

 
4,406

 
2,330

 
6,176

 
8,506

 
(78
)
 
2016
 
(A)
Ocean Pine (4)
 
Garden City, SC
 
 C
 

 
7,623

 
35,333

 

 
1

 
7,623

 
35,334

 
42,957

 
(735
)
 
2019
 
(A)
Ocean West
 
McKinleyville, CA
 
 B
 
4,592

 
5,040

 
4,413

 
349

 
509

 
5,389

 
4,922

 
10,311

 
(407
)
 
2017
 
(A)
Oceanside RV Resort & Campground
 
Coos Bay, OR
 
 

 
2,718

 
3,244

 
1

 
986

 
2,719

 
4,230

 
6,949

 
(243
)
 
2018
 
(A)
Orange City MH & RV Resort
 
Orange City, FL
 
 C
 

 
920

 
5,540

 

 
3,913

 
920

 
9,453

 
10,373

 
(2,356
)
 
2011
 
(A)
Orange Tree Village
 
Orange City, FL
 
 D
 
10,373

 
283

 
2,530

 
15

 
1,300

 
298

 
3,830

 
4,128

 
(2,764
)
 
1994
 
(A)
Orchard Lake
 
Milford, OH
 
 C
 

 
395

 
4,025

 
(15
)
(3 
) 
2,544

 
380

 
6,569

 
6,949

 
(3,307
)
 
1999
 
(A)
Paddock Park South
 
Ocala, FL
 
 

 
630

 
6,601

 

 
1,544

 
630

 
8,145

 
8,775

 
(936
)
 
2016
 
(A)
Palm Creek Golf & RV Resort
 
Casa Grande, AZ
 
 D
 
96,555

 
11,836

 
76,143

 

 
24,577

 
11,836

 
100,720

 
112,556

 
(27,933
)
 
2012
 
(A&C)
Palm Key Village
 
Davenport, FL
 
 D
 
15,900

 
3,840

 
15,661

 

 
811

 
3,840

 
16,472

 
20,312

 
(2,602
)
 
2015
 
(A)
Palm Village
 
Bradenton, FL
 
 

 
2,970

 
2,849

 

 
1,716

 
2,970

 
4,565

 
7,535

 
(485
)
 
2016
 
(A)
Palos Verdes Shores MH & Golf Community (2)
 
San Pedro, CA
 
 D
 
25,446

 

 
21,815

 

 
2,221

 

 
24,036

 
24,036

 
(2,818
)
 
2016
 
(A)
Pandion Ridge RV Resort (4)
 
Orange Beach, AL
 
 

 
12,719

 
7,515

 

 

 
12,719

 
7,515

 
20,234

 
(146
)
 
2019
 
(A)
Park Place
 
Sebastian, FL
 
 D
 
17,650

 
1,360

 
48,678

 
67

 
3,037

 
1,427

 
51,715

 
53,142

 
(7,747
)
 
2015
 
(A)
Park Royale
 
Pinellas Park, FL
 
 D
 
15,722

 
670

 
29,046

 

 
384

 
670

 
29,430

 
30,100

 
(4,532
)
 
2015
 
(A)
Parkside Village
 
Cheektowaga, NY
 
 

 
550

 
10,402

 

 
307

 
550

 
10,709

 
11,259

 
(2,021
)
 
2014
 
(A)
Pebble Creek
 
Greenwood, IN
 
 C
 

 
1,030

 
5,074

 

 
11,486

 
1,030

 
16,560

 
17,590

 
(7,161
)
 
2000
 
(A&C)
Pecan Branch
 
Georgetown, TX
 
 C
 

 
1,379

 

 
235

 

 
1,614

 
18,016

 
19,630

 
(2,970
)
 
1999
 
(C)
Pecan Park RV Resort
 
Jacksonville, FL
 
 

 
2,000

 
5,000

 
1,420

 
5,872

 
3,420

 
10,872

 
14,292

 
(813
)
 
2016
 
(A)
Pelican Bay
 
Micco, FL
 
 D
 
6,580

 
470

 
10,543

 

 
1,753

 
470

 
12,296

 
12,766

 
(1,896
)
 
2015
 
(A)
Pelican RV Resort & Marina
 
Marathon, FL
 
 C
 

 
4,760

 
4,742

 

 
1,658

 
4,760

 
6,400

 
11,160

 
(877
)
 
2016
 
(A)
Pembroke Downs
 
Chino, CA
 
 D
 
10,905

 
9,560

 
7,269

 

 
791

 
9,560

 
8,060

 
17,620

 
(927
)
 
2016
 
(A)
Peter’s Pond RV Resort
 
Sandwich, MA
 
 C
 

 
4,700

 
22,840

 

 
4,056

 
4,700

 
26,896

 
31,596

 
(7,513
)
 
2013
 
(A)
Petoskey KOA RV Resort
 
Petoskey, MI
 
 

 
214

 
8,676

 
652

 
929

 
866

 
9,605

 
10,471

 
(507
)
 
2018
 
(A)
Petoskey RV Resort
 
Petoskey, MI
 
 

 
230

 
3,270

 

 
4,439

 
230

 
7,709

 
7,939

 
(846
)
 
2016
 
(A)
Pheasant Ridge
 
Lancaster, PA
 
 A
 
20,833

 
2,044

 
19,279

 

 
1,083

 
2,044

 
20,362

 
22,406

 
(11,475
)
 
2002
 
(A)
Pickerel Park RV Resort & Campground
 
Napanee, ON
 
 

 
900

 
2,125

 
(21
)
(1 
) 
2,010

 
879

 
4,135

 
5,014

 
(406
)
 
2016
 
(A)
Pin Oak Parc
 
O’Fallon, MO
 
 

 
1,038

 
3,250

 
467

 
16,211

 
1,505

 
19,461

 
20,966

 
(9,676
)
 
1994
 
(A&C)
Pine Hills
 
Middlebury, IN
 
 A
 
2,616

 
72

 
544

 
60

 
3,473

 
132

 
4,017

 
4,149

 
(2,415
)
 
1980
 
(A)

F - 53

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Pine Ridge
 
Prince George, VA
 
 B
 
11,802

 
405

 
2,397

 
1

 
22,207

 
406

 
24,604

 
25,010

 
(5,299
)
 
1986
 
(A&C)
Pine Trace
 
Houston, TX
 
 

 
2,907

 
17,169

 
(212
)
(3 
) 
15,896

 
2,695

 
33,065

 
35,760

 
(14,406
)
 
2004
 
(A&C)
Pinebrook Village
 
Kentwood, MI
 
 

 
130

 
5,692

 

 
1,443

 
130

 
7,135

 
7,265

 
(2,358
)
 
2011
 
(A)
Pismo Dunes RV Resort
 
Pismo Beach, CA
 
 D
 
19,725

 
11,070

 
10,190

 

 
1,101

 
11,070

 
11,291

 
22,361

 
(964
)
 
2017
 
(A)
Plantation Landings
 
Haines City, FL
 
 D
 
12,314

 
3,070

 
30,973

 

 
2,419

 
3,070

 
33,392

 
36,462

 
(5,048
)
 
2015
 
(A)
Pleasant Lake RV Resort
 
Bradenton, FL
 
 E
 
12,625

 
5,220

 
20,403

 

 
3,592

 
5,220

 
23,995

 
29,215

 
(2,898
)
 
2016
 
(A)
Pony Express RV Resort & Campground
 
North Salt Lake, UT
 
 

 
3,429

 
4,643

 
1

 
66

 
3,430

 
4,709

 
8,139

 
(347
)
 
2018
 
(A)
Presidential Estates Mobile Village
 
Hudsonville, MI
 
 B
 
23,007

 
680

 
6,314

 

 
5,755

 
680

 
12,069

 
12,749

 
(7,522
)
 
1996
 
(A)
Rainbow MH & RV Resort
 
Frostproof, FL
 
 A
 
4,508

 
1,890

 
5,682

 

 
4,461

 
1,890

 
10,143

 
12,033

 
(2,905
)
 
2012
 
(A)
Rainbow Village of Largo
 
Largo, FL
 
 E
 
9,070

 
4,420

 
12,529

 

 
3,431

 
4,420

 
15,960

 
20,380

 
(2,005
)
 
2016
 
(A)
Rainbow Village of Zephyrhills
 
Zephyrhills, FL
 
 D
 
9,200

 
1,800

 
9,884

 

 
2,179

 
1,800

 
12,063

 
13,863

 
(1,464
)
 
2016
 
(A)
Rancho Alipaz (2)
 
San Juan Capistrano, CA
 
 D
 
12,915

 

 
2,856

 
16,168

 
891

 
16,168

 
3,747

 
19,915

 
(443
)
 
2016
 
(A)
Rancho Caballero
 
Riverside, CA
 
 D
 
15,626

 
16,560

 
12,446

 

 
1,213

 
16,560

 
13,659

 
30,219

 
(1,588
)
 
2016
 
(A)
Rancho Mirage
 
Apache Junction, AZ
 
 B
 
12,291

 
7,510

 
22,238

 

 
947

 
7,510

 
23,185

 
30,695

 
(4,340
)
 
2014
 
(A)
Red Oaks MH & RV Resort (2)
 
Bushnell, FL
 
 

 
5,180

 
20,499

 

 
5,555

 
5,180

 
26,054

 
31,234

 
(3,140
)
 
2016
 
(A)
Regency Heights
 
Clearwater, FL
 
 D
 
27,525

 
11,330

 
15,734

 

 
2,402

 
11,330

 
18,136

 
29,466

 
(2,035
)
 
2016
 
(A)
Reserve at Fox Creek
 
Bullhead City, AZ
 
 D
 
15,848

 
1,950

 
20,074

 

 
1,386

 
1,950

 
21,460

 
23,410

 
(4,033
)
 
2014
 
(A)
Reunion Lake RV Resort (4)
 
Ponchatoula, LA
 
 

 
7,726

 
16,146

 

 
136

 
7,726

 
16,282

 
24,008

 
(302
)
 
2019
 
(A)
Richmond Place
 
Richmond, MI
 
 A
 
1,510

 
501

 
2,040

 
(31
)
(3 
) 
3,482

 
470

 
5,522

 
5,992

 
(2,743
)
 
1998
 
(A)
Riptide RV Resort & Marina
 
Key Largo, FL
 
 

 
2,440

 
991

 

 
1,748

 
2,440

 
2,739

 
5,179

 
(327
)
 
2016
 
(A)
River Haven Village
 
Grand Haven, MI
 
 

 
1,800

 
16,967

 

 
15,766

 
1,800

 
32,733

 
34,533

 
(14,666
)
 
2001
 
(A)
River Pines (4)
 
Nashua, NH
 
 C
 

 
2,739

 
37,802

 

 
6

 
2,739

 
37,808

 
40,547

 
(630
)
 
2019
 
(A)
River Plantation RV Resort (4)
 
Sevierville, TN
 
 

 
3,730

 
19,736

 

 
225

 
3,730

 
19,961

 
23,691

 
(366
)
 
2019
 
(A)
River Ranch
 
Austin, TX
 
 C
 

 
4,690

 
843

 
182

 
41,585

 
4,872

 
42,428

 
47,300

 
(12,285
)
 
2000
 
(A&C)
River Ridge Estates
 
Austin, TX
 
 A
 
8,745

 
3,201

 
15,090

 

 
8,023

 
3,201

 
23,113

 
26,314

 
(12,035
)
 
2002
 
(C)
River Run
 
Granby, CO
 
 

 
8,642

 

 
130

 

 
8,772

 
82,667

 
91,439

 
(798
)
 
2018
 
(C)
Riverside Club
 
Ruskin, FL
 
 D
 
39,768

 
1,600

 
66,207

 

 
7,688

 
1,600

 
73,895

 
75,495

 
(10,799
)
 
2015
 
(A)
Rock Crusher Canyon RV Resort
 
Crystal River, FL
 
 C
 

 
420

 
5,542

 
168

 
4,046

 
588

 
9,588

 
10,176

 
(1,394
)
 
2015
 
(A)
Rolling Hills (4)
 
Storrs, CT
 
 C
 

 
3,960

 
3,755

 

 
8

 
3,960

 
3,763

 
7,723

 
(63
)
 
2019
 
(A)
Roxbury Park
 
Goshen, IN
 
 

 
1,057

 
9,870

 
1

 
4,643

 
1,058

 
14,513

 
15,571

 
(7,647
)
 
2001
 
(A)

F - 54

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Royal Country
 
Miami, FL
 
 E
 
58,500

 
2,290

 
20,758

 

 
2,999

 
2,290

 
23,757

 
26,047

 
(18,859
)
 
1994
 
(A)
Royal Palm Village
 
Haines City, FL
 
 E
 
11,305

 
1,730

 
27,446

 

 
3,559

 
1,730

 
31,005

 
32,735

 
(4,788
)
 
2015
 
(A)
Royal Palms MH & RV Resort (2)
 
Cathedral City, CA
 
 

 

 
21,660

 

 
2,184

 

 
23,844

 
23,844

 
(2,753
)
 
2016
 
(A)
Rudgate Clinton
 
Clinton Township, MI
 
 A
 
25,221

 
1,090

 
23,664

 

 
9,213

 
1,090

 
32,877

 
33,967

 
(9,065
)
 
2012
 
(A)
Rudgate Manor
 
Sterling Heights, MI
 
 A
 
15,091

 
1,440

 
31,110

 

 
12,629

 
1,440

 
43,739

 
45,179

 
(11,860
)
 
2012
 
(A)
Saco / Old Orchard Beach KOA
 
Saco, ME
 
 C
 

 
790

 
3,576

 

 
5,404

 
790

 
8,980

 
9,770

 
(2,010
)
 
2014
 
(A)
Saddle Oak Club
 
Ocala, FL
 
 D
 
19,894

 
730

 
6,743

 

 
1,778

 
730

 
8,521

 
9,251

 
(6,322
)
 
1995
 
(A)
Saddlebrook
 
San Marcos, TX
 
 

 
1,703

 
11,843

 

 
26,740

 
1,703

 
38,583

 
40,286

 
(12,744
)
 
2002
 
(C)
San Pedro RV Resort & Marina (6)
 
Islamorada, FL
 
 

 
3,110

 
2,416

 

 
(1,146
)
 
3,110

 
1,270

 
4,380

 
(1
)
 
2016
 
(A)
Sandy Lake MH & RV Resort
 
Carrolton, TX
 
 

 
730

 
17,837

 

 
1,605

 
730

 
19,442

 
20,172

 
(2,319
)
 
2016
 
(A)
Saralake Estates
 
Sarasota, FL
 
 

 
6,540

 
11,403

 

 
1,218

 
6,540

 
12,621

 
19,161

 
(1,519
)
 
2016
 
(A)
Savanna Club
 
Port St. Lucie, FL
 
 D
 
67,035

 
12,810

 
79,887

 

 
373

 
12,810

 
80,260

 
93,070

 
(12,418
)
 
2015
 
(A&C)
Scio Farms Estates
 
Ann Arbor, MI
 
 B
 
56,802

 
2,300

 
22,659

 
(11
)
(3 
) 
15,698

 
2,289

 
38,357

 
40,646

 
(25,128
)
 
1995
 
(A&C)
Sea Air Village
 
Rehoboth Beach, DE
 
 

 
1,207

 
10,179

 

 
2,586

 
1,207

 
12,765

 
13,972

 
(7,032
)
 
1997
 
(A)
Sea Breeze MH & RV Resort (6)
 
Islamorada, FL
 
 

 
7,390

 
4,616

 
2,312

 
(2,426
)
 
9,702

 
2,190

 
11,892

 
(3
)
 
2016
 
(A)
Seaport RV Resort
 
Old Mystic, CT
 
 C
 

 
120

 
290

 

 
2,497

 
120

 
2,787

 
2,907

 
(1,252
)
 
2013
 
(A)
Seashore Campsites & RV Resort
 
Cape May, NJ
 
 D
 
15,515

 
1,030

 
23,228

 

 
2,951

 
1,030

 
26,179

 
27,209

 
(5,486
)
 
2014
 
(A)
Serendipity
 
North Fort Myers, FL
 
 B
 
10,142

 
1,160

 
23,522

 

 
3,404

 
1,160

 
26,926

 
28,086

 
(4,289
)
 
2015
 
(A)
Settler’s Rest RV Resort
 
Zephyrhills, FL
 
 C
 

 
1,760

 
7,685

 

 
1,864

 
1,760

 
9,549

 
11,309

 
(1,141
)
 
2016
 
(A)
Shadow Wood Village
 
Hudson, FL
 
 

 
4,520

 
3,898

 
664

 
4,103

 
5,184

 
8,001

 
13,185

 
(625
)
 
2016
 
(A)
Shady Pines MH & RV Resort
 
Galloway Township, NJ
 
 

 
1,060

 
3,768

 

 
1,329

 
1,060

 
5,097

 
6,157

 
(610
)
 
2016
 
(A)
Shady Road Villas
 
Ocala, FL
 
 

 
450

 
2,819

 

 
1,887

 
450

 
4,706

 
5,156

 
(499
)
 
2016
 
(A)
Sheffield Estates
 
Auburn Hills, MI
 
 C
 

 
778

 
7,165

 

 
2,204

 
778

 
9,369

 
10,147

 
(4,474
)
 
2006
 
(A)
Shelby Forest (4)
 
Shelby Twp, MI
 
 

 
4,050

 
42,362

 

 
87

 
4,050

 
42,449

 
46,499

 
(895
)
 
2019
 
(A)
Shelby West (4)
 
Shelby Twp, MI
 
 

 
5,676

 
38,933

 

 
7

 
5,676

 
38,940

 
44,616

 
(714
)
 
2019
 
(A)
Shell Creek RV Resort & Marina
 
Punta Gorda, FL
 
 E
 
6,423

 
2,200

 
9,662

 

 
2,455

 
2,200

 
12,117

 
14,317

 
(1,366
)
 
2016
 
(A)
Sherkston Shores Beach Resort & Campground
 
Sherkston, ON
 
 

 
22,750

 
97,164

 
(110
)
(1 
) 
8,899

 
22,640

 
106,063

 
128,703

 
(12,728
)
 
2016
 
(A)
Siesta Bay RV Park
 
Ft. Myers, FL
 
 A
 
30,733

 
2,051

 
18,549

 
5

 
5,041

 
2,056

 
23,590

 
25,646

 
(16,378
)
 
1996
 
(A)

F - 55

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Silver Birches RV Resort & Campground
 
Lambton Shores, ON
 
 

 
880

 
1,540

 
(21
)
(1 
) 
516

 
859

 
2,056

 
2,915

 
(259
)
 
2016
 
(A)
Silver Creek RV Resort
 
Mears, MI
 
 

 
605

 
7,014

 
3

 
1,062

 
608

 
8,076

 
8,684

 
(448
)
 
2018
 
(C)
Silver Springs
 
Clinton Township, MI
 
 B
 
6,938

 
861

 
16,595

 

 
3,521

 
861

 
20,116

 
20,977

 
(5,954
)
 
2012
 
(A)
Sky Harbor
 
Cheektowaga, NY
 
 A
 
13,705

 
2,318

 
24,253

 

 
6,058

 
2,318

 
30,311

 
32,629

 
(5,427
)
 
2014
 
(A)
Skyline
 
Fort Collins, CO
 
 E
 
9,882

 
2,260

 
12,120

 

 
759

 
2,260

 
12,879

 
15,139

 
(2,490
)
 
2014
 
(A)
Slickrock RV Resort & Campground (4)
 
Moab, UT
 
 

 

 

 

 
8,515

 

 
8,515

 
8,515

 

 
2019
 
(A)
Smith Creek Crossing
 
Granby, CO
 
 

 
1,395

 

 
20

 

 
1,415

 
11,986

 
13,401

 
(1
)
 
2018
 
(C)
Southern Charm MH & RV Resort
 
Zephyrhills, FL
 
 E
 
11,767

 
4,940

 
17,366

 

 
2,691

 
4,940

 
20,057

 
24,997

 
(2,482
)
 
2016
 
(A)
Southern Hills / Northridge Place
 
Stewartville, MN
 
 E
 
7,576

 
360

 
12,723

 

 
12,551

 
360

 
25,274

 
25,634

 
(4,739
)
 
2014
 
(A&C)
Southern Palms (4)
 
Ladson, SC
 
 C
 

 
2,351

 
9,441

 

 
15

 
2,351

 
9,456

 
11,807

 
(597
)
 
2019
 
(A)
Southern Pines
 
Bradenton, FL
 
 

 
1,710

 
3,337

 

 
1,323

 
1,710

 
4,660

 
6,370

 
(570
)
 
2016
 
(A)
Southfork
 
Belton, MO
 
 A
 
6,894

 
1,000

 
9,011

 

 
9,350

 
1,000

 
18,361

 
19,361

 
(9,230
)
 
1997
 
(A)
Southport Springs Golf & Country Club
 
Zephyrhills, FL
 
 D
 
34,500

 
15,060

 
17,229

 

 
3,551

 
15,060

 
20,780

 
35,840

 
(3,110
)
 
2015
 
(A&C)
Southside Landing (4)
 
Cambridge, MD
 
 C
 

 
1,004

 
2,535

 

 
6

 
1,004

 
2,541

 
3,545

 
(42
)
 
2019
 
(A)
Southwood Village
 
Grand Rapids, MI
 
 

 
300

 
11,517

 

 
1,876

 
300

 
13,393

 
13,693

 
(3,870
)
 
2011
 
(A)
Spanish Main MH & RV Resort
 
Thonotasassa, FL
 
 

 
2,390

 
8,159

 

 
4,663

 
2,390

 
12,822

 
15,212

 
(1,320
)
 
2016
 
(A)
St. Clair Place
 
St. Clair, MI
 
 A
 
1,647

 
501

 
2,029

 

 
2,376

 
501

 
4,405

 
4,906

 
(2,313
)
 
1998
 
(A)
Strafford/Lake Winnipesaukee South KOA (2) (4)
 
Strafford, NH
 
 

 

 

 
304

 
2,943

 
304

 
2,943

 
3,247

 
(52
)
 
2019
 
(A)
Stonebridge (MI)
 
Richfield Twp, MI
 
 

 
2,044

 

 
246

 

 
2,290

 
2,231

 
4,521

 
(61
)
 
1998
 
(C)
Stonebridge (TX)
 
San Antonio, TX
 
 C
 

 
2,515

 
2,096

 
(615
)
(3 
) 
6,332

 
1,900

 
8,428

 
10,328

 
(4,690
)
 
2000
 
(A&C)
Stonebrook
 
Homosassa, FL
 
 

 
650

 
14,063

 

 
1,006

 
650

 
15,069

 
15,719

 
(2,254
)
 
2015
 
(A)
Summit Ridge
 
Converse, TX
 
 C
 

 
2,615

 
2,092

 
(883
)
(3 
) 
21,067

 
1,732

 
23,159

 
24,891

 
(9,639
)
 
2000
 
(A&C)
Sun N Fun RV Resort
 
Sarasota, FL
 
 D
 
74,567

 
50,952

 
117,457

 
(138
)
(3 
) 
8,517

 
50,814

 
125,974

 
176,788

 
(16,768
)
 
2016
 
(A)
Sun Valley
 
Apache Junction, AZ
 
 D
 
12,244

 
2,750

 
18,408

 

 
1,933

 
2,750

 
20,341

 
23,091

 
(3,776
)
 
2014
 
(A)
Sun Villa Estates
 
Reno, NV
 
 B
 
24,565

 
2,385

 
11,773

 
(1,100
)
(3 
) 
2,313

 
1,285

 
14,086

 
15,371

 
(8,911
)
 
1998
 
(A)
Suncoast Gateway
 
Port Richey, FL
 
 

 
594

 
300

 

 
818

 
594

 
1,118

 
1,712

 
(335
)
 
2016
 
(A)
Sundance
 
Zephyrhills, FL
 
 B
 
12,700

 
890

 
25,306

 

 
1,080

 
890

 
26,386

 
27,276

 
(4,056
)
 
2015
 
(A)
Sunlake Estates
 
Grand Island, FL
 
 D
 
21,288

 
6,290

 
24,084

 

 
2,491

 
6,290

 
26,575

 
32,865

 
(4,032
)
 
2015
 
(A)
Sunset Beach RV Resort
 
Cape Charles, VA
 
 

 
3,800

 
24,030

 

 

 
3,800

 
24,030

 
27,830

 
(2,965
)
 
2016
 
(A)
Sunset Harbor at Cow Key Marina
 
Key West, FL
 
 

 
8,570

 
7,636

 

 
1,491

 
8,570

 
9,127

 
17,697

 
(973
)
 
2016
 
(A)

F - 56

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Sunset Lakes RV Resort
 
Hillsdale, IL
 
 

 
1,840

 
5,995

 

 
2,777

 
1,840

 
8,772

 
10,612

 
(799
)
 
2017
 
(A)
Sunset Ridge (MI)
 
Portland, MI
 
 

 
2,044

 

 
(9
)
(3 
) 

 
2,035

 
28,713

 
30,748

 
(9,623
)
 
1998
 
(C)
Sunset Ridge (TX)
 
Kyle, TX
 
 C
 

 
2,190

 
2,775

 

 
6,987

 
2,190

 
9,762

 
11,952

 
(4,981
)
 
2000
 
(A&C)
Swan Meadow Village
 
Dillon, CO
 
 E
 
13,566

 
2,140

 
19,734

 

 
444

 
2,140

 
20,178

 
22,318

 
(3,478
)
 
2014
 
(A)
Sweetwater RV Resort
 
Zephyrhills, FL
 
 E
 
5,505

 
1,340

 
9,113

 

 
2,090

 
1,340

 
11,203

 
12,543

 
(1,360
)
 
2016
 
(A)
Sycamore Village
 
Mason, MI
 
 

 
390

 
13,341

 

 
4,246

 
390

 
17,587

 
17,977

 
(5,569
)
 
2011
 
(A)
Tallowwood Isle
 
Coconut Creek, FL
 
 C
 

 
13,796

 
20,797

 

 
1,289

 
13,796

 
22,086

 
35,882

 
(2,568
)
 
2016
 
(A)
Tamarac Village MH & RV Resort
 
Ludington, MI
 
 D
 
19,125

 
300

 
12,028

 
85

 
3,809

 
385

 
15,837

 
16,222

 
(4,326
)
 
2011
 
(A)
Tampa East MH & RV Resort
 
Dover, FL
 
 A
 
8,400

 
734

 
6,310

 

 
7,486

 
734

 
13,796

 
14,530

 
(5,511
)
 
2005
 
(A)
The Colony (2)
 
Oxnard, CA
 
 

 

 
6,437

 

 
959

 

 
7,396

 
7,396

 
(896
)
 
2016
 
(A)
The Grove at Alta Ridge
 
Thornton, CO
 
 E
 
27,122

 
5,370

 
37,116

 

 
99

 
5,370

 
37,215

 
42,585

 
(6,978
)
 
2014
 
(A)
The Hamptons Golf & Country Club
 
Auburndale, FL
 
 D
 
69,000

 
15,890

 
67,555

 

 
3,040

 
15,890

 
70,595

 
86,485

 
(10,786
)
 
2015
 
(A)
The Hideaway
 
Key West, FL
 
 

 
2,720

 
972

 

 
938

 
2,720

 
1,910

 
4,630

 
(204
)
 
2016
 
(A)
The Hills
 
Apopka, FL
 
 

 
1,790

 
3,869

 

 
1,269

 
1,790

 
5,138

 
6,928

 
(607
)
 
2016
 
(A)
The Ridge
 
Davenport, FL
 
 D
 
37,350

 
8,350

 
35,463

 

 
3,121

 
8,350

 
38,584

 
46,934

 
(6,188
)
 
2015
 
(A)
The Sands RV & Golf Resort
 
Desert Hot Springs, CA
 
 

 
3,071

 
12,611

 
1

 
1,915

 
3,072

 
14,526

 
17,598

 
(905
)
 
2018
 
(A)
The Valley
 
Apopka, FL
 
 

 
2,530

 
5,660

 

 
1,666

 
2,530

 
7,326

 
9,856

 
(808
)
 
2016
 
 (A)
The Villas at Calla Pointe
 
Cheektowaga, NY
 
A
 
3,690

 
380

 
11,014

 

 
171

 
380

 
11,185

 
11,565

 
(2,094
)
 
2014
 
(A)
Three Gardens (4)
 
Southington, CT
 
C
 

 
2,031

 
6,686

 

 
5

 
2,031

 
6,691

 
8,722

 
(111
)
 
2019
 
(A)
Three Lakes
 
Hudson, FL
 
C
 

 
5,050

 
3,361

 

 
3,240

 
5,050

 
6,601

 
11,651

 
(2,055
)
 
2012
 
(A)
Thunderhill Estates
 
Sturgeon Bay, WI
 
E
 
5,469

 
640

 
9,008

 
439

 
2,568

 
1,079

 
11,576

 
12,655

 
(2,147
)
 
2014
 
(A)
Timber Ridge
 
Ft. Collins, CO
 
D
 
39,258

 
990

 
9,231

 

 
3,388

 
990

 
12,619

 
13,609

 
(8,288
)
 
1996
 
(A)
Timberline Estates
 
Coopersville, MI
 
B
 
18,812

 
535

 
4,867

 
1

 
4,295

 
536

 
9,162

 
9,698

 
(5,913
)
 
1994
 
(A)
Town & Country Mobile Village
 
Traverse City, MI
 
A
 
5,294

 
406

 
3,736

 

 
1,860

 
406

 
5,596

 
6,002

 
(3,412
)
 
1996
 
(A)
Town & Country Village
 
Lisbon, ME
 
E
 
2,557

 
230

 
4,539

 

 
1,260

 
230

 
5,799

 
6,029

 
(1,132
)
 
2014
 
(A)
Trailside RV Resort & Campground
 
Seguin, ON
 
 

 
3,690

 
3,650

 
(87
)
(1 
) 
853

 
3,603

 
4,503

 
8,106

 
(551
)
 
2016
 
(A)
Traveler’s World MH & RV Resort
 
San Antonio, TX
 
 

 
790

 
7,952

 

 
2,008

 
790

 
9,960

 
10,750

 
(1,280
)
 
2016
 
(A)
Treetops RV Resort
 
Arlington, TX
 
C
 

 
730

 
9,831

 

 
1,802

 
730

 
11,633

 
12,363

 
(1,413
)
 
2016
 
(A)
Vallecito
 
Newbury Park, CA
 
D
 
22,044

 
25,766

 
9,814

 

 
1,138

 
25,766

 
10,952

 
36,718

 
(1,260
)
 
2016
 
(A)
Verde Plaza
 
Tucson, AZ
 
 

 
710

 
7,069

 

 
2,971

 
710

 
10,040

 
10,750

 
(1,276
)
 
2016
 
(A)

F - 57

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Victor Villa
 
Victorville, CA
 
D
 
11,977

 
2,510

 
20,408

 

 
2,107

 
2,510

 
22,515

 
25,025

 
(2,701
)
 
2016
 
(A)
Vines RV Resort
 
Paso Robles, CA
 
C
 

 
890

 
7,110

 

 
2,032

 
890

 
9,142

 
10,032

 
(2,250
)
 
2013
 
(A)
Vista Del Lago
 
Scotts Valley, CA
 
D
 
18,129

 
17,830

 
9,456

 

 
1,319

 
17,830

 
10,775

 
28,605

 
(1,173
)
 
2016
 
(A)
Vista Del Lago MH & RV Resort
 
Bradenton, FL
 
E
 
4,221

 
3,630

 
5,329

 

 
2,007

 
3,630

 
7,336

 
10,966

 
(805
)
 
2016
 
(A)
Vizcaya Lakes
 
Port Charlotte, FL
 
C
 

 
670

 
4,221

 

 
579

 
670

 
4,800

 
5,470

 
(700
)
 
2015
 
(A)
Wagon Wheel RV Resort & Campground
 
Old Orchard Beach, ME
 
C
 

 
590

 
7,703

 

 
2,833

 
590

 
10,536

 
11,126

 
(3,120
)
 
2013
 
(A)
Walden Woods
 
Homosassa, FL
 
D
 
19,206

 
1,550

 
26,375

 

 
1,410

 
1,550

 
27,785

 
29,335

 
(4,243
)
 
2015
 
(A)
Warren Dunes Village
 
Bridgman, MI
 
C
 

 
310

 
3,350

 

 
11,275

 
310

 
14,625

 
14,935

 
(2,528
)
 
2011
 
(A&C)
Water Oak Country Club Estates
 
Lady Lake, FL
 
D
 
46,725

 
2,834

 
16,706

 
2,666

 
34,141

 
5,500

 
50,847

 
56,347

 
(22,950
)
 
1993
 
(A&C)
Waters Edge RV Resort
 
Zephyrhills, FL
 
E
 
3,670

 
1,180

 
5,450

 

 
2,308

 
1,180

 
7,758

 
8,938

 
(937
)
 
2016
 
(A)
Waverly Shores Village
 
Holland, MI
 
B
 
14,660

 
340

 
7,267

 
450

 
6,508

 
790

 
13,775

 
14,565

 
(2,614
)
 
2011
 
(A&C)
West Village Estates
 
Romulus, MI
 
B
 
5,582

 
884

 
19,765

 

 
4,154

 
884

 
23,919

 
24,803

 
(6,361
)
 
2012
 
(A)
Westbrook Senior Village
 
Toledo, OH
 
D
 
5,852

 
355

 
3,295

 

 
694

 
355

 
3,989

 
4,344

 
(2,271
)
 
2001
 
(A)
Westbrook Village
 
Toledo, OH
 
B
 
23,983

 
1,110

 
10,462

 

 
5,301

 
1,110

 
15,763

 
16,873

 
(9,255
)
 
1999
 
(A)
Westside Ridge
 
Auburndale, FL
 
D
 
8,564

 
760

 
10,714

 

 
851

 
760

 
11,565

 
12,325

 
(1,785
)
 
2015
 
(A)
Westward Ho RV Resort & Campground
 
Glenbeulah, WI
 
C
 

 
1,050

 
5,642

 

 
2,590

 
1,050

 
8,232

 
9,282

 
(2,208
)
 
2013
 
(A)
Westward Shores Cottages & RV Resort
 
West Ossipee, NH
 
 

 
1,901

 
15,326

 

 
3,470

 
1,901

 
18,796

 
20,697

 
(938
)
 
2018
 
(A)
White Lake Mobile Home Village
 
White Lake, MI
 
B
 
24,178

 
672

 
6,179

 
1

 
11,017

 
673

 
17,196

 
17,869

 
(10,011
)
 
1997
 
(A&C)
Whitewater RV Resort (4) (5)
 
Mountain View, AR
 
 

 
5,163

 

 
15

 
1,842

 
5,178

 
1,842

 
7,020

 

 
2019
 
(C)
Wild Acres RV Resort & Campground
 
Old Orchard Beach, ME
 
C
 

 
1,640

 
26,786

 

 
4,845

 
1,640

 
31,631

 
33,271

 
(9,439
)
 
2013
 
(A)
Wildwood Community
 
Sandwich, IL
 
D
 
24,441

 
1,890

 
37,732

 

 
1,023

 
1,890

 
38,755

 
40,645

 
(7,319
)
 
2014
 
(A)
Willow Lake RV Resort & Campground
 
Scotland, ON
 
 

 
1,260

 
2,275

 
(30
)
(1 
) 
824

 
1,230

 
3,099

 
4,329

 
(327
)
 
2016
 
(A)
Willowbrook Place
 
Toledo, OH
 
B
 
17,392

 
781

 
7,054

 
1

 
5,486

 
782

 
12,540

 
13,322

 
(7,005
)
 
1997
 
(A)
Willowood RV Resort & Campground
 
Amherstburg, ON
 
 

 
1,160

 
1,490

 
(27
)
(1 
) 
770

 
1,133

 
2,260

 
3,393

 
(278
)
 
2016
 
(A)
Windham Hills Estates
 
Jackson, MI
 
 

 
2,673

 
2,364

 

 
21,878

 
2,673

 
24,242

 
26,915

 
(11,777
)
 
1998
 
(A&C)
Windmill Village
 
Davenport, FL
 
 D
 
46,000

 
7,560

 
36,294

 

 
1,880

 
7,560

 
38,174

 
45,734

 
(5,949
)
 
2015
 
(A)
Windsor Woods Village
 
Wayland, MI
 
C
 

 
270

 
5,835

 

 
3,260

 
270

 
9,095

 
9,365

 
(3,321
)
 
2011
 
(A)
Wine Country RV Resort
 
Paso Robles, CA
 
C
 

 
1,740

 
11,510

 

 
3,881

 
1,740

 
15,391

 
17,131

 
(3,311
)
 
2014
 
(A&C)
Woodhaven Place
 
Woodhaven, MI
 
B
 
13,700

 
501

 
4,541

 

 
6,648

 
501

 
11,189

 
11,690

 
(5,611
)
 
1998
 
(A)
Woodlake Trails
 
San Antonio, TX
 
C
 

 
1,186

 
287

 
(56
)
(3 
) 
18,407

 
1,130

 
18,694

 
19,824

 
(5,782
)
 
2000
 
(A&C)

F - 58

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

 
 
 
 
Encumbrance
 
Initial Cost to Company
 
Costs Capitalized Subsequent to Acquisition (Improvements)
 
Gross Amount Carried at December 31, 2019
 
 
 
 
 
 
Property Name
 
Location
 
Group
 
Amount
 
Land
 
Depreciable  Assets
 
Land
 
Depreciable Assets
 
Land
 
Depreciable  Assets
 
Total
 
Accumulated Depreciation
 
Date
 
Acquired (A) or Constructed (C)
Woodland Lake RV Resort & Campground
 
Bornholm, ON
 
 

 
1,650

 
2,165

 
(47
)
(1 
) 
562

 
1,603

 
2,727

 
4,330

 
(339
)
 
2016
 
(A)
Woodland Park Estates
 
Eugene, OR
 
 

 
1,592

 
14,398

 
1

 
996

 
1,593

 
15,394

 
16,987

 
(10,645
)
 
1998
 
(A)
Woodlands at Church Lake
 
Groveland, FL
 
 

 
2,480

 
9,072

 

 
2,812

 
2,480

 
11,884

 
14,364

 
(1,697
)
 
2015
 
(A)
Woodside Terrace
 
Holland, OH
 
B
 
25,076

 
1,063

 
9,625

 

 
11,438

 
1,063

 
21,063

 
22,126

 
(10,972
)
 
1997
 
(A)
Wymberly (4)
 
Martinez, GA
 
C
 

 
3,058

 
14,451

 

 
5

 
3,058

 
14,456

 
17,514

 
(241
)
 
2019
 
(A)
Yankee Village (4)
 
Old Saybrook, CT
 
C
 

 
1,552

 
364

 

 

 
1,552

 
364

 
1,916

 
(6
)
 
2019
 
(A)
 
 
 
 
 
 
$
3,188,472

 
$
1,379,317

 
$
5,238,831

 
$
34,962

 
$
1,929,108

 
$
1,414,279

 
$
7,414,464

 
$
8,828,743

 
$
(1,663,277
)
 
 
 
 
Corporate Headquarters and Other (7)
 
Southfield, MI
 
 

 

 

 

 
91,589

 

 
90,857

 
90,857

 
(23,703
)
 
 
 
 
 
 
 
 
 
 
$
3,188,472

 
$
1,379,317

 
$
5,238,831

 
$
34,962

 
$
2,020,697

 
$
1,414,279

 
$
7,505,321

 
$
8,919,600

 
$
(1,686,980
)
 
 
 
 
A These communities collateralize $398.0 million of secured debt.
B These communities collateralize $697.4 million of secured debt.
C These communities support the borrowing base for our secured line of credit, which had $180.6 million outstanding.
D These communities collateralize $1.7 billion of secured debt.
E These communities collateralize $376.5 million of secured debt.

(1) Gross amount carried at December 31, 2019, at our Canadian properties, reflects the impact of foreign currency translation.
(2) All or part of this property is subject to ground lease.
(3) Gross amount carried at December 31, 2019 has decreased at this property due to a partial disposition of land or depreciable assets, as applicable.
(4) This property was acquired during 2019.
(5) This property was not included in our community count as of December 31, 2019 as it was not fully developed.
(6) This property was impaired as a result of Hurricane Irma in September 2017.
(7) Corporate Headquarters and other fixed assets.


F - 59

SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III
DECEMBER 31, 2019
(amounts in thousands)

The change in investment property for the years ended December 31, 2019, 2018, and 2017 is as follows (in thousands):

 
Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Beginning balance
$
7,560,946

 
$
6,882,879

 
$
6,496,339

Community and land acquisitions, including immediate improvements
930,668

 
414,840

 
204,375

Community expansion and development
281,808

 
152,672

 
88,331

Improvements
233,984

 
205,006

 
168,315

Asset impairment

 

 
(10,511
)
Dispositions and other
(87,806
)
 
(94,451
)
 
(63,970
)
Ending balance
$
8,919,600

 
$
7,560,946

 
$
6,882,879



The change in accumulated depreciation for the years ended December 31, 2019, 2018, and 2017 is as follows (in thousands):

 
Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Beginning balance
$
1,442,630

 
$
1,237,525

 
$
1,026,858

Depreciation for the period
291,605

 
253,952

 
236,422

Asset impairment

 

 
(405
)
Dispositions and other
(47,255
)
 
(48,847
)
 
(25,350
)
Ending balance
$
1,686,980

 
$
1,442,630

 
$
1,237,525




F - 60