SUN COMMUNITIES INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

Attached files

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8-K - 8-K EARNINGS RELEASE - SUN COMMUNITIES INC	form8-kearningsreleaseq320.htm

Table of Contents



Summary - Earnings Press Release	i - v

Investor Information	1

Portfolio Overview	2

Financial Information
Balance Sheets	3
Statements of Operations	4
Outstanding Securities	5
Reconciliations to Non-GAAP Financial Measures	6
Reconciliation of Net Income to Funds from Operations	7
Reconciliation of Recurring EBITDA to Net Income	8
Reconciliation of Net Operating Income to Net Income	9
Non-GAAP and Other Financial Measures	10
Financial Highlights	11
Debt Analysis	12

Selected Financial Information
Statement of Operations – Same Community and Percentage Growth	13
Rental Program Summary	14
Home Sales Summary	15
Acquisitions Summary	16

Other Information
Property Summary	17 - 18
Capital Improvements, Development, and Acquisitions	19
Operating Statistics for Manufactured Homes and Annual/Seasonal RV’s	20
Footnotes and Definitions	21 - 23

NEWS RELEASE

November 1, 2016

Sun Communities, Inc. Reports 2016 Third Quarter Results

Southfield, Michigan, November 1, 2016 - Sun Communities, Inc. (NYSE: SUI) (the "Company"), a real estate investment trust ("REIT") that owns and operates manufactured housing ("MH") and recreational vehicle ("RV") communities, today reported its third quarter results.

Financial Results for the Quarter and Nine Months Ended September 30, 2016

For the quarter ended September 30, 2016, total revenues increased $64.3 million, or 34.7 percent, to $249.7 million compared to $185.4 million for the same period in 2015. Net income available for Common Stockholders was $18.9 million, or $0.27 per diluted common share, as compared to $28.8 million, or $0.53 per diluted common share, for the same period in 2015.

For the nine months ended September 30, 2016, total revenues increased $108.6 million, or 21.4 percent, to $615.1 million compared to $506.5 million for the same period in 2015. Net income available for Common Stockholders for the nine months ended September 30, 2016 was $19.0 million, or $0.30 per diluted common share, as compared to $47.9 million, or $0.90 per diluted common share, for the same period in 2015.

“Our strong third quarter results demonstrate the consistent growth profile of our portfolio. With home sales solidly ahead of last year in both the third quarter and year to date, the ongoing demand for manufactured housing in our high quality communities is clearly evident,” said Gary A. Shiffman, Chairman and CEO. “I am pleased with the integration of the Carefree assets, which are performing ahead of expectations, as we employ our experience and expertise as a consolidator in this space. With both site expansion opportunities, and selective acquisitions such as the four communities purchased during and subsequent to the quarter, we continue to be well-positioned to drive ongoing growth across our platform.”

Non-GAAP Financial Measures and Portfolio Performance


•	For the quarter ended September 30, 2016, Funds from Operations (“FFO”)⁽¹⁾ excluding certain items was $1.13 per diluted share and OP unit ("Share") for the three months ended September 30, 2016, as compared to $1.05 in the prior year, an increase of 7.6 percent.


•	Home sales increased by 43.0 percent as compared to the third quarter of 2015.


•	Revenue producing sites increased by 292 sites for the quarter bringing total portfolio occupancy to 96.2 percent, up 250 basis points from the third quarter of 2015.


•	For the quarter, same community Net Operating Income ("NOI")⁽¹⁾ increased by 6.0 percent as compared to the three months ended September 30, 2015.

OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy increased to 96.2 percent at September 30, 2016 from 93.7 percent at September 30, 2015. During the third quarter of 2016, revenue producing sites increased by 292 sites, as compared to 358 revenue producing sites gained in the third quarter of 2015.

Revenue producing sites gained during the nine months ended September 30, 2016 were 1,385 as compared to 1,357 revenue producing sites gained during the nine months ended September 30, 2015.

Same Community Results

For the 219 communities owned throughout 2016 and 2015, third quarter 2016 total revenues increased 5.9 percent and total expenses increased 5.6 percent, resulting in an increase in NOI⁽¹⁾ of 6.0 percent over the third quarter of 2015. Same community occupancy increased to 96.4 percent at September 30, 2016 from 94.2 percent at September 30, 2015.

For the nine months ended September 30, 2016, total revenues increased 6.0 percent and total expenses increased 5.1 percent, resulting in an increase in NOI⁽¹⁾ of 6.4 percent over the nine months ended September 30, 2015.

Home Sales

Total home sales were 895 for the third quarter as compared to 626 homes sold during the third quarter of 2015, a 43.0 percent increase.

During the nine months ended September 30, 2016, the Company sold 2,410 homes as compared to the 1,745 homes sold during the same period ending 2015, resulting in an additional 665 homes sold during 2016, or a 38.1 percent increase.

Rental homes sales, which are included in total home sales, were 286 and 223 for the three months ended and 858 and 611 for the nine months ended September 30, 2016 and 2015, respectively.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

For the quarter ended September 30, 2016, the Company closed on $139.0 million of debt with a weighted average interest rate of 3.84 percent and maturities ranging between seven and ten years. Subsequent to quarter end, the Company completed a $58.5 million secured borrowing that bears interest at a fixed rate of 3.33 percent and has a seven-year term. During the quarter, the Company also repaid three mortgage loans totaling $62.1 million.

As of September 30, 2016, the Company had approximately $3.1 billion of debt outstanding. The weighted average interest rate was 4.56 percent and the weighted average maturity was 8.6 years. The Company had $69.8 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month EBITDA⁽¹⁾⁽⁷⁾ ratio was 7.7 times.

Equity Transactions

In September 2016, the Company completed an underwritten registered public equity offering of 3,737,500 shares at a net price of $75.89 per share for proceeds of $283.6 million. The Company used the proceeds of the offering to repay borrowings outstanding under the Company's revolving line of credit.

During the quarter the Company sold 620,828 shares of common stock through its At the Market equity sales program at a weighted average price of $76.81 per share. Net proceeds from the sales were $47.1 million.

PORTFOLIO ACTIVITY

Acquisitions ⁽²⁾

During the quarter and also subsequent to September 30, 2016, the Company acquired four communities for total consideration of $41.0 million. The communities, located in Colorado, Michigan, New York, and Virginia, contain 964 RV sites and have expansion potential of approximately 400 sites.

These resorts are located in high demand destination locations and will undergo repositioning or expansion activities to fully realize the inherent value in the zoned and entitled land that was previously under-managed or under-utilized.

GUIDANCE 2016

The Company expects FFO⁽¹⁾ per Share excluding certain items for fourth quarter 2016 to be in the range of $0.89 to $0.91 per Share. This revised range includes a $0.03 to $0.04 per Share impact from the third quarter equity offerings, partially offset by a higher expected contribution from the Carefree portfolio. Guidance also includes expenses related to Hurricane Matthew as an adjustment to FFO⁽¹⁾ excluding certain items.

The Company anticipates full year same community NOI⁽¹⁾ growth of 6.7 percent to 6.9 percent. This revised outlook reflects transient RV revenues which were impacted by weather in a few communities in the third quarter, along with higher real estate tax assessments on a year to date basis.

Estimates of FFO⁽¹⁾ per Share excluding certain items assume certain non-core items are adjusted from

FFO⁽¹⁾. The estimates and assumptions presented above represent a range of possible outcomes and may differ materially from actual results. The estimates and assumptions are forward looking based on the Company's current assessment of economic and market conditions, as well as other risks outlined below under the caption "Forward-Looking Statements."

iii

EARNINGS CONFERENCE CALL

A conference call to discuss third quarter operating results will be held on Tuesday, November 1, 2016 at 11:00 A.M. (ET). To participate, call toll-free 877-407-4018. Callers outside the U.S. or Canada can access the call at 201-689-8471. A replay will be available following the call through November 15, 2016 and can be accessed toll-free by calling 877-870-5176 or by calling 858-384-5517. The Conference ID number for the call and the replay is 13646698. The conference call will be available live on Sun Communities' website www.suncommunities.com. Replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of September 30, 2016, owned or had an interest in a portfolio of 339 communities comprising approximately 117,000 developed sites in 29 states and Ontario.

For more information about Sun Communities, Inc., please visit the website at www.suncommunities.com.

CONTACT

Please address all inquiries to our investor relations department at our website www.suncommunities.com, by phone (248) 208-2500, by email investorrelations@suncommunities.com or by mail Sun Communities, Inc. Investor Relations, 27777 Franklin Road, Ste. 200, Southfield, MI 48034.

Forward-Looking Statements

This press release contains various "forward-looking statements" within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the Company intends that such forward-looking statements will be subject to the safe harbors created thereby. Forward-looking statements can be identified by words such as "will," "may," "could," "expect," "anticipate," "believes," "intends," "should," "plans," "estimates," "approximate," "guidance," and similar expressions in this press release that predict or indicate future events and trends and that do not report historical matters.

These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control. These risks, uncertainties, and other factors may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, the performance of recent acquisitions, the ability to integrate future acquisitions smoothly and efficiently, changes in market rates of interest, the ability of manufactured home buyers to obtain financing, the level of repossessions by manufactured home lenders and those risks and uncertainties referenced under the headings entitled "Risk Factors" contained in the Company's 2015 Annual Report on Form 10-K, the Company's Quarterly Report on Form 10-Q for the Quarter ended September 30, 2016, and the Company’s other periodic filings with the Securities and Exchange Commission.

The forward-looking statements contained in this press release speak only as of the date hereof and the Company expressly disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in the Company’s assumptions, expectations of future events, or trends.

Investor Information



RESEARCH COVERAGE

	BMO Capital Markets	Paul Adornato
		(212) 885-4170
		paul.adornato@bmo.com

	Citi Research	Michael Bilerman/Nicholas Joseph
		(212) 816-1383
		michael.bilerman@citi.com
		nicholas.joseph@citi.com

	Evercore ISI	Steve Sakwa
		(212) 446-9462
		steve.sakwa@evercoreisi.com

		Gwen Clark
		(212) 446-5611
		gwen.clark@evercoreisi.com

	Green Street Advisors	Dave Bragg
		(949) 640-9780
		dbragg@greenst.com

	Robert W. Baird & Co.	Drew Babin
		(215) 553-7816
		dbabin@rwbaird.com

	Wells Fargo	Todd Stender
		(212) 214-8067
		todd.stender@wellsfargo.com


INQUIRIES

Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media, or
any prospective investor. Please address all inquiries to our investor relations department.

	At Our Website	www.suncommunities.com

	By Email	investorrelations@suncommunities.com

	By Phone	(248) 208-2500

3rd Quarter 2016 Supplemental Information 1 Sun Communities, Inc.

Portfolio Overview

(As of September 30, 2016)

3rd Quarter 2016 Supplemental Information 2 Sun Communities, Inc.

Balance Sheets

(amounts in thousands)



	Quarter Ended
	9/30/2016			6/30/2016			3/31/2016			12/31/2015			9/30/2015
ASSETS:
Land	$	1,072,964		$	458,349		$	456,380		$	451,340		$	457,279
Land improvements and buildings	4,682,920			5,294,663			3,586,969			3,535,909			3,604,444
Rental homes and improvements	485,340			477,875			469,217			460,480			478,764
Furniture, fixtures and equipment	125,603			107,123			104,855			102,746			98,567
Land held for future development	23,497			23,497			23,047			23,047			23,659
Investment property	6,390,324			6,361,507			4,640,468			4,573,522			4,662,713
Accumulated depreciation	(977,486		)	(928,882		)	(889,941		)	(852,407		)	(879,184		)
Investment property, net	5,412,838			5,432,625			3,750,527			3,721,115			3,783,529
Cash and cash equivalents	69,829			31,441			410,408			45,086			23,917
Inventory of manufactured homes	24,147			29,044			16,636			14,828			15,263
Notes and other receivables, net	87,856			76,466			54,124			47,972			49,201
Collateralized receivables, net ⁽³⁾	143,888			144,017			142,944			139,768			138,241
Other assets, net	166,148			109,598			188,247			213,030			95,728
Total assets, net	$	5,904,706		$	5,823,191		$	4,562,886		$	4,181,799		$	4,105,879
LIABILITIES:
Mortgage loans payable	$	2,854,831		$	2,792,021		$	2,114,818		$	2,125,267		$	2,197,359
Secured borrowings ⁽³⁾	144,522			144,684			143,664			140,440			138,887
Preferred OP units - mandatorily redeemable	45,903			45,903			45,903			45,903			45,903
Lines of credit	57,737			357,721			58,065			24,687			166,677
Distributions payable	51,100			47,992			45,351			41,265			38,819
Other liabilities	275,650			257,423			184,102			184,859			190,284
Total liabilities	3,429,743			3,645,744			2,591,903			2,562,421			2,777,929
Series A-4 Preferred Stock	50,227			50,227			61,732			61,732			68,633
Series A-4 preferred OP units	19,906			20,266			20,762			21,065			20,982
STOCKHOLDERS' EQUITY:
Series A Preferred Stock	34			34			34			34			34
Common stock	730			686			646			584			545
Additional paid-in capital	3,313,905			2,980,382			2,706,657			2,319,314			2,079,139
Accumulated other comprehensive (loss) income	(4,876		)	1			—			—			—
Distributions in excess of accumulated earnings	(975,511		)	(947,988		)	(896,896		)	(864,122		)	(916,961		)
Total SUI stockholders' equity	2,334,282			2,033,115			1,810,441			1,455,810			1,162,757
Noncontrolling interests:
Common and preferred OP units	73,284			76,166			80,018			82,538			76,914
Consolidated variable interest entities	(2,736		)	(2,327		)	(1,970		)	(1,767		)	(1,336		)
Total noncontrolling interest	70,548			73,839			78,048			80,771			75,578
Total stockholders' equity	2,404,830			2,106,954			1,888,489			1,536,581			1,238,335
Total liabilities & stockholders' equity	$	5,904,706		$	5,823,191		$	4,562,886		$	4,181,799		$	4,105,879

3rd Quarter 2016 Supplemental Information 3 Sun Communities, Inc.

Statements of Operations

(amounts in thousands, except per share amounts)



	Three Months Ended
	9/30/2016			6/30/2016			3/31/2016			12/31/2015			9/30/2015
REVENUES:
Income from real property (excluding transient revenue)	$	158,020		$	129,117		$	119,084		$	117,604		$	119,784
Transient revenue	26,304			10,884			10,151			5,568			17,764
Revenue from home sales	31,211			26,039			24,737			25,169			18,991
Rental home revenue	12,031			11,957			11,708			11,756			11,856
Ancillary revenues	16,446			7,383			4,613			3,576			12,511
Interest	4,705			4,672			3,945			4,074			3,987
Brokerage commissions and other income, net	984			747			406			491			462
Total revenues	249,701			190,799			174,644			168,238			185,355

EXPENSES:
Property operating and maintenance	57,089			37,067			31,201			33,360			38,716
Real estate taxes	12,384			10,153			9,585			8,683			8,520
Cost of home sales	21,935			18,684			18,184			19,296			13,386
Rental home operating and maintenance	6,350			5,411			5,876			6,841			7,031
Ancillary expenses	8,539			5,201			3,508			3,888			6,936
Home selling expenses	3,553			2,858			2,278			2,079			1,910
General and administrative	16,575			16,543			13,792			10,511			12,670
Transaction costs	4,191			20,979			2,721			4,653			1,664
Depreciation and amortization	61,483			49,670			48,412			47,530			44,695
Interest	33,800			28,428			26,294			28,066			27,453
Interest on mandatorily redeemable preferred OP units	789			787			787			790			790
Total expenses	226,688			195,781			162,638			165,697			163,771
Income / (loss) before other items	23,013			(4,982		)	12,006			2,541			21,584
Gains on disposition of properties, net	—			—			—			98,430			18,190
Provision for income taxes	(283		)	(56		)	(228		)	71			(77		)
Income tax expense - reduction of deferred tax asset	—			—			—			(1,000		)	—
Income from affiliate transactions	500			—			—			—			—
Net income / loss	23,230			(5,038		)	11,778			100,042			39,697
Less: Preferred return to preferred OP units	(1,257		)	(1,263		)	(1,273		)	(1,281		)	(1,302		)
Less: Amounts attributable to noncontrolling interests	(879		)	695			(276		)	(6,922		)	(2,125		)
Less: Preferred stock distribution	(2,197		)	(2,197		)	(2,354		)	(2,440		)	(3,179		)
Less: Preferred stock redemption costs	—			—			—			—			(4,328		)
NET INCOME / (LOSS) ATTRIBUTABLE TO SUI	$	18,897		$	(7,803	)	$	7,875		$	89,399		$	28,763
Weighted average common shares outstanding:
Basic	68,655			64,757			57,736			56,181			53,220
Diluted	69,069			64,757			58,126			57,639			53,665
Earnings (loss) per share:
Basic	$	0.27		$	(0.12	)	$	0.14		$	1.57		$	0.53
Diluted	$	0.27		$	(0.12	)	$	0.14		$	1.56		$	0.53

3rd Quarter 2016 Supplemental Information 4 Sun Communities, Inc.

Summary of Securities Outstanding as of September 30, 2016

(units/stock/shares in thousands)



	Number of Units/Stock/Shares Outstanding	Conversion Rate	If Converted	Issuance Price per unit	Annual Distribution Rate
Convertible Securities
Series A-1 preferred OP Units	376	2.43902	917	$100	6.0%
Series A-3 preferred OP Units	40	1.8605	74	$100	4.5%
Series A-4 preferred OP Units	743	0.444444	330	$25	6.5%
Series C preferred OP Units	333	1.11	370	$100	4.0%
Common OP Units	2,838	1.0	2,838	N/A	Mirrors the Common Share distributions
Series A-4 cumulative convertible Preferred Stock	1,682	0.444444	748	$25	6.5%

Non-Convertible Securities
Preferred Stock ( SUI-PrA)	3,400	N/A	N/A	$25	7.125%

Common Shares	73,027	N/A	N/A	N/A	$2.60*
* Annual distribution is based on the last quarter distribution annualized.

3rd Quarter 2016 Supplemental Information 5 Sun Communities, Inc.

Reconciliations to Non-GAAP Financial Measures

3rd Quarter 2016 Supplemental Information 6 Sun Communities, Inc.

Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to Funds from Operations

(amounts in thousands except for per share data)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net income attributable to Sun Communities, Inc. common stockholders	$	18,897		$	28,763		$	18,969		$	47,926
Adjustments:
Preferred return to preferred OP units	616			—			1,858			—
Amounts attributable to noncontrolling interests	685			1,174			255			1,554
Preferred distribution to Series A-4 preferred stock	683			1,666			—			—
Depreciation and amortization	61,809			45,014			159,225			130,247
Gain on disposition of properties, net	—			(18,190		)	—			(26,946		)
Gain on disposition of assets, net	(4,667		)	(2,937		)	(12,226		)	(7,065		)
Funds from operations ("FFO") attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities ^{(1) (5)}	78,023			55,490			168,081			145,716
Adjustments:
Transaction costs	4,191			1,664			27,891			13,150
Other acquisition related costs ⁽⁴⁾	1,467			—			1,467			—
Income from affiliate transactions	(500		)	—			(500		)	(7,500		)
Preferred stock redemption costs	—			4,328			—			4,328
Extinguishment of debt	—			—			—			2,800
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items^{(1) (5)}	$	83,181		$	61,482		$	196,939		$	158,494

Weighted average common shares outstanding - basic:	68,655			53,220			63,716			52,855
Add:
Common stock issuable upon conversion of stock options	8			14			10			16
Restricted stock	406			431			437			400
Common stock issuable upon conversion of Series A-4 preferred stock	747			1,826			—			—
Common OP units	2,856			2,874			2,861			2,783
Common stock issuable upon conversion of Series A-1 preferred OP units	920			—			932			—
Common stock issuable upon conversion of Series A-3 preferred OP units	75			—			75			—
Weighted average common shares outstanding - fully diluted	73,667			58,365			68,031			56,054

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities ⁽⁵⁾ per Share - fully diluted	$	1.06		$	0.95		$	2.47		$	2.60
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities ⁽⁵⁾ per Share excluding certain items - fully diluted	$	1.13		$	1.05		$	2.89		$	2.83

3rd Quarter 2016 Supplemental Information 7 Sun Communities, Inc.

Reconciliation of Recurring EBITDA to Net Income Attributable to Sun Communities, Inc. Common Stockholders

(amounts in thousands)

The following table reconciles Recurring EBITDA to consolidated net income:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
RECURRING EBITDA ⁽¹⁾	$	123,276		$	96,186		$	308,378		$	264,293
Interest	33,800			27,453			88,522			79,593
Interest on mandatorily redeemable preferred OP units	789			790			2,363			2,429
Depreciation and amortization	61,483			44,695			159,565			130,107
Extinguishment of debt	—			—			—			2,800
Transaction costs	4,191			1,664			27,891			13,150
Gains on disposition of properties, net	—			(18,190		)	—			(26,946		)
Provision for income tax	283			77			567			229
Income from affiliate transactions	(500		)	—			(500		)	(7,500		)
Net income	23,230			39,697			29,970			70,431
Less: Preferred return to preferred OP units	1,257			1,302			3,793			3,692
Less: Amounts attributable to noncontrolling interests	879			2,125			460			3,132
Net income attributable to Sun Communities, Inc.	21,094			36,270			25,717			63,607
Less: Preferred stock distributions	2,197			3,179			6,748			11,353
Less: Preferred stock redemption costs	—			4,328			—			4,328
Net income attributable to Sun Communities, Inc., common stockholders	$	18,897		$	28,763		$	18,969		$	47,926

3rd Quarter 2016 Supplemental Information 8 Sun Communities, Inc.

Reconciliation of Net Operating Income to Net Income Attributable to Sun Communities, Inc. Common Stockholders

(amounts in thousands)

The following table reconciles net operating income to consolidated net income:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Real Property NOI	$	114,851		$	90,312		$	296,081		$	254,438
Rental Program NOI	21,213			20,587			64,223			62,805
Home Sales NOI/Gross profit	9,276			5,605			23,184			14,914
Ancillary NOI/Gross profit	7,907			5,575			11,194			7,325
Site rent from Rental Program (included in Real Property NOI) ⁽⁶⁾	(15,532		)	(15,762		)	(46,164		)	(46,440		)
NOI/Gross profit	137,715			106,317			348,518			293,042
Adjustments to arrive at net income:
Other revenues	5,689			4,449			15,459			13,592
Home selling expenses	(3,553		)	(1,910		)	(8,689		)	(5,397		)
General and administrative	(16,575		)	(12,670		)	(46,910		)	(36,944		)
Transaction costs	(4,191		)	(1,664		)	(27,891		)	(13,150		)
Depreciation and amortization	(61,483		)	(44,695		)	(159,565		)	(130,107		)
Extinguishment of debt	—			—			—			(2,800		)
Interest expense	(34,589		)	(28,243		)	(90,885		)	(82,022		)
Gain on disposition of properties, net	—			18,190			—			26,946
Provision for state income taxes	(283		)	(77		)	(567		)	(229		)
Income from affiliate transactions	500			—			500			7,500
Net income	23,230			39,697			29,970			70,431
Less: Preferred return to preferred OP units	1,257			1,302			3,793			3,692
Less: Amounts attributable to noncontrolling interests	879			2,125			460			3,132
Net income attributable to Sun Communities, Inc.	21,094			36,270			25,717			63,607
Less: Preferred stock distributions	2,197			3,179			6,748			11,353
Less: Preferred stock redemption costs	—			4,328			—			4,328
Net income attributable to Sun Communities, Inc., common stockholders	$	18,897		$	28,763		$	18,969		$	47,926

3rd Quarter 2016 Supplemental Information 9 Sun Communities, Inc.

Non-GAAP and Other Financial Measures

3rd Quarter 2016 Supplemental Information 10 Sun Communities, Inc.

Financial Highlights

(amounts in thousands, except per share data)



	Quarter Ended
	9/30/2016		6/30/2016			3/31/2016		12/31/2015		9/30/2015
OPERATING INFORMATION
Total revenues	$	249,701	$	190,799		$	174,644	$	168,238	$	185,355
Net income (loss)	$	23,230	$	(5,038	)	$	11,778	$	100,042	$	39,697
Net income (loss) available for Common Stockholders	$	18,897	$	(7,803	)	$	7,875	$	89,399	$	28,763
Earnings (loss) per share basic	$	0.27	$	(0.12	)	$	0.14	$	1.57	$	0.53
Earnings (loss) per share diluted	$	0.27	$	(0.12	)	$	0.14	$	1.56	$	0.53

Recurring EBITDA ⁽¹⁾	$	123,276	$	94,882		$	90,220	$	83,580	$	96,186
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities^{(1) (5)}	$	78,023	$	37,473		$	53,270	$	43,282	$	55,490
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items⁽¹⁾ ⁽⁵⁾	$	83,181	$	58,452		$	55,991	$	48,935	$	61,482
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities ⁽⁵⁾per Share - fully diluted	$	1.06	$	0.54		$	0.86	$	0.72	$	0.95
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities ⁽⁵⁾ per Share excluding certain items - fully diluted	$	1.13	$	0.85		$	0.90	$	0.81	$	1.05


BALANCE SHEET
Total assets	$	5,904,706	$	5,823,191		$	4,562,886	$	4,181,799	$	4,105,879
Total debt	$	3,102,993	$	3,340,329		$	2,362,450	$	2,336,297	$	2,548,826
Total liabilities	$	3,429,743	$	3,645,744		$	2,591,903	$	2,562,421	$	2,777,929

3rd Quarter 2016 Supplemental Information 11 Sun Communities, Inc.

Debt Analysis

(amounts in thousands)



	Quarter Ended
	9/30/2016		6/30/2016		3/31/2016		12/31/2015		9/30/2015
DEBT OUTSTANDING
Lines of credit	$	57,737	$	357,721	$	58,065	$	24,687	$	166,677
Mortgage loans payable	2,854,831		2,792,021		2,114,818		2,125,267		2,197,359
Preferred OP units - mandatorily redeemable	45,903		45,903		45,903		45,903		45,903
Secured borrowing⁽³⁾	144,522		144,684		143,664		140,440		138,887
Total debt	$	3,102,993	$	3,340,329	$	2,362,450	$	2,336,297	$	2,548,826

% FIXED/FLOATING
Fixed	93.1%		84.5%		90.7%		92.0%		87.0%
Floating	6.9%		15.5%		9.3%		8.0%		13.0%
Total	100.0%		100.0%		100.0%		100.0%		100.0%

WEIGHTED AVERAGE INTEREST RATES
Lines of credit	1.93%		1.89%		1.87%		1.62%		1.66%
Mortgage loans payable	4.30%		4.38%		4.67%		4.65%		4.69%
Preferred OP units - mandatorily redeemable	6.87%		6.87%		6.87%		6.87%		6.87%
Average before Secured borrowing	4.29%		4.13%		4.64%		4.66%		4.52%
Secured borrowing ⁽³⁾	10.06%		10.09%		10.12%		10.17%		10.23%
Total average	4.56%		4.39%		4.98%		4.99%		4.83%

DEBT RATIOS
Net Debt/Recurring EBITDA ^{(1) (7)}	7.7		9.1		5.5		6.6		7.8

Net Debt/Enterprise Value	32.8%		36.6%		27.7%		34.0%		37.9%

Net Debt + Preferred Stock/Enterprise Value	34.2%		38.0%		29.7%		36.1%		40.1%

Net Debt/Gross Assets	44.1%		49.0%		35.8%		45.6%		50.7%

COVERAGE RATIOS
Recurring EBITDA/ Interest ^{(1) (7)}	3.1		3.1		3.0		3.1		3.1

Recurring EBITDA/ Interest + Pref. Distributions + Pref. Stock Distribution ^{(1) (7)}	2.9		2.8		2.7		2.6		2.7



MATURITIES/PRINCIPAL AMORTIZATION NEXT FIVE YEARS	2016			2017			2018			2019			2020
Lines of credit	$	—		$	—		$	—		$	—		$	58,000
Mortgage loans payable:
Maturities	—			87,489			49,109			64,314			49,003
Weighted average rate of maturities	—		%	5.96		%	6.02		%	6.24		%	5.82		%
Principal amortization	11,399			53,144			53,353			54,035			63,650
Preferred OP units - mandatorily redeemable	3,670			7,570			—			—			—
Secured borrowing ⁽³⁾	1,357			5,752			6,291			6,838			7,459
Total	$	16,426		$	153,955		$	108,753		$	125,187		$	178,112

3rd Quarter 2016 Supplemental Information 12 Sun Communities, Inc.

Statements of Operations – Same Community

(amounts in thousands except for percentages and other information)



	Three Months Ended September 30,										Nine Months Ended September 30,
	2016		2015			Change			% Change		2016		2015			Change			% Change
REVENUES:
Income from real property	$	124,274	$	117,337		$	6,937		5.9	%	$	353,083	$	332,978		$	20,105		6.0	%

PROPERTY OPERATING EXPENSES:
Payroll and benefits	11,029		9,716			1,313			13.5	%	29,879		27,521			2,358			8.6	%
Legal, taxes & insurance	1,116		1,892			(776		)	(41.0	)%	4,174		5,221			(1,047		)	(20.1	)%
Utilities	7,954		7,564			390			5.2	%	20,400		19,716			684			3.5	%
Supplies and repair	5,352		5,270		⁽⁸⁾	82			1.6	%	12,733		12,503		⁽⁸⁾	230			1.8	%
Other	3,603		3,619			(16		)	(0.5	)%	9,662		9,490			172			1.8	%
Real estate taxes	8,575		7,557			1,018			13.5	%	26,303		23,683			2,620			11.1	%
Property operating expenses	37,629		35,618			2,011			5.6	%	103,151		98,134			5,017			5.1	%
NET OPERATING INCOME (NOI)⁽¹⁾	$	86,645	$	81,719		$	4,926		6.0	%	$	249,932	$	234,844		$	15,088		6.4	%



	As of September 30,
	2016			2015				Change			% Change
OTHER INFORMATION
Number of properties	219			219				—

Overall occupancy⁽⁹⁾	96.4		%	94.2		%	⁽¹⁰⁾	2.2		%

Sites available for development	6,608			6,174				434			7.0	%

Monthly base rent per site - MH	$	495		$	478			$	17		3.5	%
Monthly base rent per site - RV ⁽¹¹⁾	$	432		$	417			$	15		3.6	%
Monthly base rent per site - Total	$	487		$	470			$	17		3.6	%

3rd Quarter 2016 Supplemental Information 13 Sun Communities, Inc.

Rental Program Summary

(amounts in thousands except for *)



	Three Months Ended September 30,									Nine Months Ended September 30,
	2016		2015		Change			% Change		2016		2015		Change			% Change
REVENUES:
Rental home revenue	$	12,031	$	11,856	$	175		1.5	%	$	35,696	$	34,480	$	1,216		3.5	%
Site rent included in Income from real property	15,532		15,762		(230		)	(1.5	)%	46,164		46,440		(276		)	(0.6	)%
Rental Program revenue	27,563		27,618		(55		)	(0.2	)%	81,860		80,920		940			1.2	%

EXPENSES:
Commissions	551		855		(304		)	(35.6	)%	1,710		2,441		(731		)	(30.0	)%
Repairs and refurbishment	3,349		3,389		(40		)	(1.2	)%	9,288		8,127		1,161			14.3	%
Taxes and insurance	1,446		1,645		(199		)	(12.1	)%	4,178		4,665		(487		)	(10.4	)%
Marketing and other	1,004		1,142		(138		)	(12.1	)%	2,461		2,882		(421		)	(14.6	)%
Rental Program operating and maintenance	6,350		7,031		(681		)	(9.7	)%	17,637		18,115		(478		)	(2.6	)%
NET OPERATING INCOME (NOI) ⁽¹⁾	$	21,213	$	20,587	$	626		3.0	%	$	64,223	$	62,805	$	1,418		2.3	%

Occupied rental home information as of September 30, 2016 and 2015:
Number of occupied rentals, end of period*										10,797		11,443		(646		)	(5.6	)%
Investment in occupied rental homes, end of period										$	453,521	$	456,027	$	(2,506	)	(0.6	)%
Number of sold rental homes*										858		611		247			40.4	%
Weighted average monthly rental rate, end of period*										$	879	$	843	$	36		4.3	%

3rd Quarter 2016 Supplemental Information 14 Sun Communities, Inc.

Homes Sales Summary

(amounts in thousands except for *)



	Three Months Ended September 30,											Nine Months Ended September 30,
	2016			2015			Change			% Change		2016			2015			Change			% Change
New home sales	$	9,391		$	4,469		$	4,922		110.1	%	$	20,472		$	14,890		$	5,582		37.5	%
Pre-owned home sales	21,820			14,522			7,298			50.3	%	61,515			39,669			21,846			55.1	%
Revenue from home sales	31,211			18,991			12,220			64.3	%	81,987			54,559			27,428			50.3	%

New home cost of sales	7,896			3,739			4,157			111.2	%	17,513			12,348			5,165			41.8	%
Pre-owned home cost of sales	14,039			9,647			4,392			45.5	%	41,290			27,297			13,993			51.3	%
Cost of home sales	21,935			13,386			8,549			63.9	%	58,803			39,645			19,158			48.3	%

NOI / Gross Profit ⁽¹⁾	$	9,276		$	5,605		$	3,671		65.5	%	$	23,184		$	14,914		$	8,270		55.5	%

Gross profit – new homes	$	1,495		$	730		$	765		104.8	%	$	2,959		$	2,542		$	417		16.4	%
Gross margin % – new homes	15.9		%	16.3		%	(0.4		)%			14.5		%	17.1		%	(2.6		)%
Average selling price - new homes*	$	90,298		$	74,483		$	15,815		21.2	%	$	89,397		$	77,958		$	11,439		14.7	%

Gross profit – pre-owned homes	$	7,781		$	4,875		$	2,906		59.6	%	$	20,225		$	12,372		$	7,853		63.5	%
Gross margin % – pre-owned homes	35.7		%	33.6		%	2.1		%			32.9		%	31.2		%	1.7		%
Average selling price - pre-owned homes*	$	27,585		$	25,657		$	1,928		7.5	%	$	28,205		$	25,527		$	2,678		10.5	%

Home sales volume:
New home sales*	104			60			44			73.3	%	229			191			38			19.9	%
Pre-owned home sales*	791			566			225			39.8	%	2,181			1,554			627			40.3	%
Total homes sold*	895			626			269			43.0	%	2,410			1,745			665			38.1	%

3rd Quarter 2016 Supplemental Information 15 Sun Communities, Inc.

Acquisitions Summary - Properties Acquired in 2015 and 2016

(amounts in thousands except for statistical data)



	Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
REVENUES:
Income from real property (excluding transient revenue)	$	58,609	$	82,283
Transient revenue	10,653		15,993
Revenue from home sales	9,644		14,018
Rental home revenue	276		475
Ancillary revenues	7,508		10,101
Total revenues	86,690		122,870
COSTS AND EXPENSES:
Property operating and maintenance	37,898		46,308
Real estate taxes	3,745		5,819
Cost of home sales	6,671		9,824
Rental home operating and maintenance	80		125
Ancillary expense	3,034		4,724
Total expenses	51,428		66,800

NET OPERATING INCOME (NOI)⁽¹⁾	$	35,262	$	56,070

			As of September 30, 2016
Other information:
Number of properties			120
Occupied sites ⁽¹²⁾			24,191
Developed sites ⁽¹²⁾			24,982
Occupancy % ⁽¹²⁾			96.8		%
Transient sites			8,907
Monthly base rent per site - MH			$	590
Monthly base rent per site - RV ⁽¹¹⁾			$	398
Monthly base rent per site - Total ⁽¹¹⁾			$	506

Home sales volume:
New homes sales			63
Pre-owned homes sales			190

Occupied rental home information:
Number of occupied rentals, end of period			291
Investment in occupied rental homes (in thousands)			$	7,582
Weighted average monthly rental rate			$	863

3rd Quarter 2016 Supplemental Information 16 Sun Communities, Inc.



Property Summary
(includes MH and Annual/Seasonal RV’s)

COMMUNITIES	9/30/2016		6/30/2016		3/31/2016		12/31/2015		9/30/2015
FLORIDA
Communities	121		121		61		61		62
Sites for development	1,259		1,259		823		823		823
Developed sites ⁽¹²⁾	36,116		36,119		24,312		24,216		24,528
Occupied ⁽¹²⁾	34,817		34,720		23,359		23,201		23,427
Occupancy % ⁽¹²⁾	96.4	%	96.1	%	96.1	%	95.8	%	95.5	%
MICHIGAN
Communities	67		66		66		65		70
Sites for development	2,628		2,248		2,105		2,105		2,262
Developed sites ⁽¹²⁾	24,388		24,387		24,363		23,966		24,657
Occupied ⁽¹²⁾	23,218		23,198		23,079		22,677		23,179
Occupancy % ⁽¹²⁾	95.2	%	95.1	%	94.7	%	94.6	%	94.0	%
TEXAS
Communities	21		21		17		16		19
Sites for development	1,455		1,347		1,347		1,347		1,599
Developed sites ⁽¹²⁾	6,088		6,071		5,970		5,965		6,507
Occupied ⁽¹²⁾	5,774		5,771		5,602		5,517		6,034
Occupancy % ⁽¹²⁾	94.8	%	95.1	%	93.8	%	92.5	%	92.7	%
CALIFORNIA
Communities	22		22		3		3		3
Sites for development	332		332		332		332		332
Developed sites ⁽¹²⁾	4,797		4,864		198		198		198
Occupied ⁽¹²⁾	4,720		4,796		192		192		191
Occupancy % ⁽¹²⁾	98.4	%	98.6	%	97.0	%	97.0	%	96.5	%
ARIZONA
Communities	11		11		10		10		11
Sites for development	358		358		393		393		393
Developed sites ⁽¹²⁾	3,567		3,532		3,302		3,301		3,279
Occupied ⁽¹²⁾	3,305		3,281		3,102		3,078		3,043
Occupancy % ⁽¹²⁾	92.7	%	92.9	%	93.9	%	93.2	%	92.8	%
ONTARIO
Communities	15		15		—		—		—
Sites for development	2,029		2,029		—		—		—
Developed sites ⁽¹²⁾	3,453		3,375		—		—		—
Occupied ⁽¹²⁾	3,453		3,375		—		—		—
Occupancy % ⁽¹²⁾	100.0	%	100.0	%	—	%	—	%	—	%
INDIANA
Communities	11		11		11		11		16
Sites for development	316		316		363		363		522
Developed sites ⁽¹²⁾	2,900		2,900		2,900		2,900		4,913
Occupied ⁽¹²⁾	2,712		2,700		2,674		2,628		3,865
Occupancy % ⁽¹²⁾	93.5	%	93.1	%	92.2	%	90.6	%	78.7	%

3rd Quarter 2016 Supplemental Information 17 Sun Communities, Inc.



Property Summary
(includes MH and Annual/Seasonal RV’s)

COMMUNITIES	9/30/2016		6/30/2016		3/31/2016		12/31/2015		9/30/2015
OHIO
Communities	9		9		9		9		9
Sites for development	—		—		—		—		—
Developed sites ⁽¹²⁾	2,719		2,718		2,700		2,703		2,703
Occupied ⁽¹²⁾	2,602		2,616		2,585		2,560		2,565
Occupancy % ⁽¹²⁾	95.7	%	96.2	%	95.7	%	94.7	%	94.9	%
COLORADO
Communities	7		7		7		7		7
Sites for development	304		304		304		304		304
Developed sites ⁽¹²⁾	2,335		2,335		2,335		2,335		2,335
Occupied ⁽¹²⁾	2,323		2,320		2,319		2,315		2,289
Occupancy % ⁽¹²⁾	99.5	%	99.4	%	99.3	%	99.1	%	98.0	%
OTHER STATES
Communities	55		54		49		49		54
Sites for development	1,823		1,728		1,514		1,514		1,514
Developed sites ⁽¹²⁾	14,415		14,337		13,683		13,657		14,705
Occupied ⁽¹²⁾	13,991		13,912		13,237		13,142		13,938
Occupancy % ⁽¹²⁾	97.1	%	97.0	%	96.7	%	96.2	%	94.8	%
TOTAL - PORTFOLIO
Communities	339		337		233		231		251
% Community age restricted	33.3	%	33.5	%	26.2	%	26.4	%	25.9	%
Sites for development	10,504		9,921		7,181		7,181		7,749
Developed sites ⁽¹²⁾	100,778		100,638		79,763		79,241		83,825
Occupied ⁽¹²⁾	96,915		96,689		76,149		75,310		78,531
Occupancy % ⁽¹²⁾	96.2	%	96.1	%	95.5	%	95.0	%	93.7	%

TRANSIENT RV PORTFOLIO SUMMARY
Location
Florida	7,232		6,990		2,664		2,823		2,915
Michigan	203		126		150		160		165
Texas	1,446		1,455		799		414		864
California	478		518		296		296		296
Arizona	1,047		1,055		1,096		1,087		1,053
Ontario	1,485		1,657		—		—		—
Indiana	501		501		501		501		501
Ohio	194		195		213		210		237
Maine	556		571		575		604		605
New York	484		483		489		499		511
New Jersey	1,047		1,084		995		981		987
Other States	1,801		1,864		2,099		2,092		2,055
Total transient RV sites	16,474		16,499		9,877		9,667		10,189

3rd Quarter 2016 Supplemental Information 18 Sun Communities, Inc.

Capital Improvements, Development, and Acquisitions

(amounts in thousands except for *)



	Recurring
	Capital			Recurring
	Expenditures			Capital			Lot					Expansion &			Revenue
		Average/Site*			Expenditures ⁽¹³⁾			Modifications ⁽¹⁴⁾		Acquisitions ⁽¹⁵⁾			Development ⁽¹⁶⁾			Producing ⁽¹⁷⁾
2014		$	227		$	18,077		$	9,414	$	785,624		$	22,196		$	1,454
2015		$	230		$	20,344		$	13,961	$	1,214,482		$	28,660		$	4,497
YTD 2016		$	149		$	13,252		$	13,799	$	1,757,151		$	34,346		$	1,853

3rd Quarter 2016 Supplemental Information 19 Sun Communities, Inc.

Operating Statistics for Manufactured Homes and Annual/Seasonal RV’s



	Resident		Net Leased		New Home		Pre-owned		Brokered
MARKETS	Move-outs		Sites ⁽¹⁸⁾		Sales		Home Sales		Re-sales
Michigan		326		251		6		986		112
Florida		232		494		119		229		653
Texas		106		162		9		290		39
Indiana		44		84		—		160		5
Ohio		80		42		1		85		4
Arizona		37		94		26		17		93
Colorado		8		8		15		158		32
Other states		346		250		53		256		350
YTD ended September 30, 2016		1,179		1,385		229		2,181		1,288



	Resident		Net Leased		New Home		Pre-owned		Brokered
TOTAL FOR YEAR ENDED	Move-outs		Sites ⁽¹⁸⁾		Sales		Home Sales		Re-sales
2015		1,344		1,905		273		2,210		1,244
2014		1,504		1,890		113		1,853		618



	Resident			Resident
PERCENTAGE TRENDS	Move-outs			Re-sales
YTD 2016		1.9	%		6.5	%
2015		2.0	%		5.9	%
2014		2.6	%		5.0	%

3rd Quarter 2016 Supplemental Information 20 Sun Communities, Inc.

Footnotes and Definitions

(1)

Investors in and analysts following the real estate industry utilize funds from operations (FFO), net operating income (NOI), and recurring earnings before interest, tax, depreciation and amortization (Recurring EBITDA) as supplemental performance measures. We believe FFO, NOI, and Recurring EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. 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. 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. Recurring EBITDA, a metric calculated as EBITDA exclusive of certain nonrecurring items, provides a further tool to evaluate ability to incur and service debt and to fund dividends and other cash needs. In addition, FFO, NOI, and Recurring EBITDA are commonly used in various ratios, pricing multiples/yields and returns and valuation calculations used to measure financial position, performance and value.

FFO is defined by the National Association of Real Estate Investment Trusts (NAREIT) as net income (loss) computed in accordance with generally accepted accounting principles (GAAP), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company's operating performance. Management generally considers FFO to be a useful measure for reviewing comparative operating and financial performance because, 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 net income (loss). Management believes that 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. FFO is computed in accordance with the Company's interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company. The Company also uses FFO excluding certain items, which excludes certain gain and loss items that management considers unrelated to the operational and financial performance of our core business. We believe that this provides investors with another financial measure of our operating performance that is more comparable when evaluating period over period results.

Because FFO excludes significant economic components of net income (loss) including depreciation and amortization, FFO should be used as an adjunct to net income (loss) and not as an alternative to net income (loss). The principal limitation of FFO is that it does not represent cash flow from operations as defined by GAAP and is a supplemental measure of performance that does not replace net income (loss) as a measure of performance or net cash provided by operating activities as a measure of liquidity. In addition, 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 only provides investors with an additional performance measure that, when combined with measures computed in accordance with GAAP such as net income (loss), cash flow from operating activities, investing activities and financing activities, provide investors with an indication of our ability to service debt and to fund acquisitions and other expenditures. Other REITs may use different methods for calculating FFO, accordingly, our FFO may not be comparable to other REITs.

NOI is derived from revenues minus property operating expenses and real estate taxes. NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity; nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions. The Company believes that net income (loss) is the most directly comparable GAAP measurement to NOI. Because of the inclusion of items such as interest, depreciation, and amortization, the use of 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. The Company believes that NOI is helpful to investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key management tool 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

3rd Quarter 2016 Supplemental Information 21 Sun Communities, Inc.

costs, therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.

EBITDA is defined as NOI plus other income, plus (minus) equity earnings (loss) from affiliates, minus general and administrative expenses. EBITDA includes EBITDA from discontinued operations. The Company believes that net income (loss) is the most directly comparable GAAP measurement to EBITDA.

FFO, NOI, and EBITDA do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the repayment of principal on debt and payment of dividends and distributions. FFO, NOI, and EBITDA should not be considered as alternatives to net income (loss) (calculated in accordance with GAAP) for purposes of evaluating our operating performance, or cash flows (calculated in accordance with GAAP) as a measure of liquidity. FFO, NOI, and EBITDA as calculated by us may not be comparable to similarly titled, but differently calculated, measures of other REITs or to the definition of FFO published by NAREIT.

(2) The consideration amounts presented with respect to acquired communities represent the economic transaction and do not contemplate the fair value purchase accounting required by GAAP.

(3) This is a transferred asset transaction which has been classified as collateralized receivables and the cash received from this transaction has been classified as a secured borrowing. The interest income and interest expense accrue at the same rate/amount.

(4) These costs represent the first year expenses incurred to bring acquired properties up to the Company's operating standards, including items such as tree trimming and painting costs that do not meet the Company's capitalization policy. These costs are expected to become more significant in connection with the size of our acquisitions, and are therefore included as an adjustment to FFO in the three and nine months ended September 30, 2016. The Company incurred $0.5 million and $1.7 million of these first year expenses in the three and nine month periods ended September 30, 2015, respectively, and had a similar adjustment been made, FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per share excluding certain items would have been $1.06 and $2.86 for the three and nine months ended September 30, 2015, respectively.

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

(6) The renter's monthly payment includes the site rent and an amount attributable to the leasing of the home. The site rent is reflected in Real Property NOI. For purposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the Rental Program, and to assess the overall growth and performance of the Rental Program and financial impact on our operations.

(7) The coverage ratios are calculated using the trailing 12 months for the period ended and have been adjusted to exclude: depreciation and amortization; income taxes; interest expense; transaction costs; extinguishment of debt; income from affiliate transactions; gain on dispositions; and gain on settlement. See Statement of Operations on page 4 for detailed amounts.

(8) Three and nine months ended September 30, 2015 excludes $0.5 million and $1.7 million of first year expenses for properties acquired in late 2014 and 2015 incurred to bring the properties up to Sun's operating standards. These costs did not meet the Company's capitalization policy.

(9) Includes manufactured housing (MH) and annual/seasonal recreational vehicle (RV) sites, and excludes transient RV sites and recently completed but vacant expansion sites.

(10) Occupancy reflects current year gains from expansion sites and the conversion of transient RV guests to annual/seasonal RV contracts as vacant in 2015.

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

(12) Includes MH and annual/seasonal RV sites, and excludes transient RV sites.

(13) Includes capital expenditures necessary to maintain asset quality, including purchasing and replacing assets used to operate the community. These capital expenditures include items such as: major road, driveway, and pool improvements; clubhouse

3rd Quarter 2016 Supplemental Information 22 Sun Communities, Inc.

renovations; adding or replacing street lights; playground equipment; signage; maintenance facilities; manager housing and property vehicles. The minimum capitalized amount is five hundred dollars.

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

(15) Acquisitions represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. Acquisitions also include deferred maintenance identified during due diligence and those capital improvements necessary to bring the community up to Sun’s standards. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, they sometimes require up to twelve months after closing to complete.

(16) Expansion and development costs consist primarily of construction costs and costs necessary to complete home site improvements.


(17)	Capital costs related to revenue generating activities, consisting primarily of garages, sheds, and sub-metering of water, sewer and electricity. Revenue generating attractions at our RV resorts are also included here and, occasionally, a special capital project requested by residents and accompanied by an extra rental increase will be classified as revenue producing.

(18) Net leased sites do not include occupied sites acquired in that year.

3rd Quarter 2016 Supplemental Information 23 Sun Communities, Inc.

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