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Sun Communities, Inc. Reports 2020 Third Quarter Results


NEWS RELEASE

October 21, 2020

Southfield, Michigan, Oct. 21, 2020 (GLOBE NEWSWIRE) — Sun Communities, Inc. (NYSE: SUI) (the “Company”), a real estate investment trust (“REIT”) that owns and operates, or has an interest in, manufactured housing (“MH”) and recreational vehicle (“RV”) communities, today reported its third quarter results for 2020.

Financial Results for the Quarter and Nine Months Ended September 30, 2020

For the quarter ended September 30, 2020, total revenues increased $38.1 million, or 10.5 percent, to $400.5 million compared to $362.4 million for the same period in 2019. Net income attributable to common stockholders was $81.2 million, or $0.83 per diluted common share, for the quarter ended September 30, 2020, as compared to net income attributable to common stockholders of $57.0 million, or $0.63 per diluted common share, for the same period in 2019.

For the nine months ended September 30, 2020, total revenues increased $51.9 million, or 5.4 percent, to $1.0 billion compared to $962.2 million for the same period in 2019. Net income attributable to common stockholders was $124.0 million, or $1.29 per diluted common share, for the nine months ended September 30, 2020, as compared to net income attributable to common stockholders of $131.7 million, or $1.49 per diluted common share, for the same period in 2019.

Non-GAAP Financial Measures and Portfolio Performance

  • Core Funds from Operations (“Core FFO”)(1) for the quarter ended September 30, 2020, was $1.60 per diluted share and OP unit (“Share”) as compared to $1.46 in the corresponding period in 2019.
     
  • Same Community(2) Net Operating Income (“NOI”)(1) increased by 5.5 percent for the quarter ended September 30, 2020, as compared to the corresponding period in 2019, including the impact of $1.1 million of direct COVID-19 related expense.
     
  • Revenue Producing Sites increased by 776 sites for the quarter ended September 30, 2020, bringing total portfolio occupancy to 97.2 percent.
     
  • MH and Annual RV Rent Collections for the third quarter were approximately 97.0 percent and 98.0 percent, respectively.

Gary Shiffman, Chief Executive Officer of Sun Communities stated, “The growth we delivered in the third quarter demonstrated the resilience of our platform and our ongoing positive operational momentum. Once again, our results were ahead of expectations as solid top line revenue performance and certain expense savings continued to mitigate the impact of the pandemic. We achieved same community NOI growth of 5.5 percent and added 776 revenue producing sites, boosting our occupancy by 50 basis points. Our RV resorts were exceptionally strong, as travelers elected drive-to vacation options and took advantage of our varied vacation destinations featuring lakes, mountains and beaches.”

Mr. Shiffman continued, “Despite the present challenges of the pandemic, we remain focused on positioning Sun for the future. During the quarter we acquired five RV and two MH communities as we continue to expand our portfolio. We are particularly excited about our pending acquisition of Safe Harbor Marinas, LLC and the integration of marinas onto our platform which should further enhance Sun’s growth profile over the long term.”

OPERATING HIGHLIGHTS

Portfolio Occupancy

Total portfolio occupancy was 97.2 percent at September 30, 2020, compared to 96.7 percent at September 30, 2019. During the quarter ended September 30, 2020, revenue producing sites increased by 776 sites, as compared to 766 revenue producing sites gained during the third quarter of 2019, a 1.3 percent increase.

During the nine months ended September 30, 2020, revenue producing sites increased by 1,927 sites, as compared to an increase of 2,005 revenue producing sites during the nine months ended September 30, 2019.

Same Community(2) Results

For the 366 communities owned and operated by the Company since January 1, 2019, NOI(1) for the quarter ended September 30, 2020 increased 5.5 percent over the same period in 2019, resulting from a 5.4 percent increase in revenues, and a 5.2 percent increase in operating expenses. Adjusted to remove the impact of $1.1 million of direct COVID-19 related expense, Same Community NOI(1) growth was 6.2 percent for the quarter ended September 30, 2020. Same Community occupancy(3) increased to 98.8 percent at September 30, 2020 from 96.8 percent at September 30, 2019.

For the nine months ended September 30, 2020, NOI(1) increased 4.6 percent over the same period in 2019, as a result of a 3.0 percent increase in revenues and a 0.2 percent decrease in operating expenses. Adjusted to remove the impact of $2.1 million of direct COVID-19 related expense, Same Community NOI(1) growth was 5.0 percent for the nine months ended September 30, 2020.

Home Sales

During the quarter ended September 30, 2020, the Company sold 710 homes as compared to 906 homes sold during the same period in 2019. The Company sold 155 and 167 new homes for the quarters ended September 30, 2020 and 2019, respectively. Rental home sales, which are included in total home sales, were 225 and 317 for the quarters ended September 30, 2020 and 2019, respectively.

During the nine months ended September 30, 2020, 2,084 homes were sold as compared to 2,631 for the same period in 2019. Rental home sales, which are included in total home sales, were 581 and 859 for the nine months ended September 30, 2020 and 2019, respectively.

Rent Collections

For the third quarter of 2020, MH and annual RV rent collections were approximately 97.0 percent and 98.0 percent, respectively, after adjusting for the impact of hardship deferrals and prepaid rent balances.

PORTFOLIO ACTIVITY

Acquisitions and Dispositions

During the quarter ended September 30, 2020, the Company acquired the following communities:

Community Name   Type   Sites   Development Sites   State   Total Purchase Price (in millions)   Month Acquired
Flamingo Lake   RV   421      —      FL   $ 34.0      July
Woodsmoke   RV   300      —      FL   26.0      September
Jellystone Lone Star   RV   344      —      TX   21.0      September
El Capitan & Ocean Mesa(a)(b)   RV   266      109      CA   59.5      September
Highland Green Estates & Troy Villa(b)   MH   1,162      —      MI   64.7      September
        2,493      109          $ 205.2       

(a) In conjunction with the acquisition, the Company issued Series G preferred OP units. As of September 30, 2020, 260,710 Series G preferred OP units were outstanding.
(b) Contains two communities.

Year to date, the Company has acquired 11 communities totaling 3,517 sites for a total purchase price of $303.5 million.

During the quarter ended September 30, 2020, the Company sold a manufactured home community located in Montana, containing 226 sites, for $12.6 million. The gain from the sale of the property was approximately $5.6 million.

Pending Transaction – Safe Harbor Marinas

On September 29, 2020, the Company entered into a merger agreement to acquire Safe Harbor Marinas, LLC (“Safe Harbor”) for approximately $2.1 billion. As of September 30, 2020, Safe Harbor directly or indirectly owned 101 marinas and managed five other marinas for third-party owners. The marinas collectively contain approximately 30,000 wet slips and moorings and approximately 8,300 dry racks, with approximately 9,500 additional spaces available for outside land storage. The marinas are located in 22 states in the Northeast, South, Mid-Atlantic, West and Midwest Regions of the United States, with the majority of such marinas concentrated in coastal regions and others located in various inland regions. The purchase price will be paid through a combination of the assumption of debt owed by Safe Harbor, the issuance of common and preferred OP units by the Company’s Operating Partnership, and cash. We expect to acquire Safe Harbor no later than October 30, 2020. The consummation of the $2.1 billion acquisition is subject to the satisfaction of customary closing conditions. If these conditions are not satisfied or waived, or if the merger agreement is otherwise terminated in accordance with its terms, then the acquisition will not be consummated. As a result, there can be no assurances as to the actual closing or the timing of the closing.

Construction Activity

During the quarter ended September 30, 2020, the Company completed the construction of nearly 660 sites in four ground-up developments and one redevelopment community, and nearly 25 expansion sites in one RV community.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

As of September 30, 2020, the Company had $3.3 billion of debt outstanding. The weighted average interest rate was 3.9 percent and the weighted average maturity was 11.4 years. The Company had $102.4 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve-month Recurring EBITDA(1) ratio was 5.0 times.

Subsequent to the quarter ended September 30, 2020, the Company entered into a new $260.0 million term loan secured by 11 properties. The loan term is 12-years and the interest rate is fixed at 2.64 percent.

Equity Transactions

On September 30, 2020, the Company entered into two forward sale agreements relating to an underwritten registered public offering of 9,200,000 shares of the Company’s common stock at a public offering price of $139.50 per share. The offering closed on October 5, 2020. The Company did not initially receive any proceeds from the sale of shares of its common stock in the offering. The Company expects to physically settle the forward sale agreements (by the delivery of shares of its common stock) and receive proceeds from the sale of those shares of its common stock upon one or more forward settlement dates no later than October 5, 2021. The Company may also elect to cash settle or net share settle all or a portion of its obligations under the forward sale agreements if it concludes it is in its best interest to do so. If the Company elects to cash settle or net settle the forward sale agreements it may not receive any proceeds. If the Company fully physically settles the forward sale agreements, it expects to receive net proceeds of approximately $1.23 billion. The Company intends to use the net proceeds, if any, received upon the settlement of the forward sale agreements to fund the cash component of the purchase price for the Safe Harbor acquisition. If for any reason the Safe Harbor acquisition is not consummated, or if the net proceeds, if any, received upon the future settlement of the forward sale agreements exceed the cash component of the purchase price, the Company intends to use any such net proceeds to repay borrowings outstanding under the revolving loan under its senior credit facility, to fund possible future acquisitions of properties and for working capital and general corporate purposes.

COVID-19 FINANCIAL IMPACT

Given the uncertainty surrounding the impact from the COVID-19 pandemic on its operations, the Company has withdrawn full year 2020 operational and financial guidance previously provided on February 19, 2020.

For the third quarter of 2020, the Company had a net benefit of approximately $4.6 million from its original budget as compared to a forecasted net reduction of up to $15.0 million outlined during the Company’s second quarter earnings release. The improvement was primarily due to better than expected transient RV revenues, ancillary activities gross profit and lower property level payroll.

The Company expects fourth quarter 2020 Core FFO to be in the range of $1.08 to $1.12 per share.

This estimate range is inclusive of the Company’s latest revenue expectations for transient RV revenue, the estimated two-month contribution from the Safe Harbor acquisition, the impact from the Company’s 9.2 million share forward equity offering and announced financing activities. The forecast does not include any additional prospective acquisition or capital market activity.

EARNINGS CONFERENCE CALL

A conference call to discuss third quarter operating results will be held on Thursday, October 22, 2020 at 11:00 A.M. (ET). To participate, call toll-free 877-407-9039. Callers outside the U.S. or Canada can access the call at 201-689-8470. A replay will be available following the call through November 5, 2020 and can be accessed toll-free by calling 844-512-2921 or 412-317-6671. The Conference ID number for the call and the replay is 13708698. The conference call will be available live on Sun Communities’ website located at www.suncommunities.com. The replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of September 30, 2020, owned, operated, or had an interest in a portfolio of 432 communities comprising nearly 146,000 developed sites in 32 states and Ontario, Canada.

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

CONTACT

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

CAUTIONARY STATEMENT REGARDING 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. For this purpose, any statements contained in this press release 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”, “target” and similar expressions are intended to identify forward-looking statements, although not all forward looking statements contain these words. 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, both general and specific to the matters discussed in or incorporated herein, some of which are beyond the Company’s control. These risks, uncertainties and other factors may cause the Company’s 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” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and the Company’s other filings with the Securities and Exchange Commission from time to time, such risks, uncertainties and other factors include but are not limited to:

  • outbreaks of disease, including the COVID 19 pandemic, and related stay at home orders, quarantine policies and restrictions on travel, trade and business operations;
  • changes in general economic conditions, the real estate industry and the markets in which the Company operates;
  • difficulties in the Company’s ability to evaluate, finance, complete and integrate acquisitions (including the acquisition of Safe Harbor), developments and expansions successfully;
  • the Company’s liquidity and refinancing demands;
  • the Company’s ability to obtain or refinance maturing debt;
  • the Company’s ability to maintain compliance with covenants contained in its debt facilities;
  • availability of capital;
  • changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian and Australian dollars;
  • the Company’s ability to maintain rental rates and occupancy levels;
  • the Company’s 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 the Company’s capital stock;
  • the Company’s failure to maintain its 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 purchasers of manufactured homes and boats to obtain financing; and
  • the level of repossessions by manufactured home and boat 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. The Company undertakes no obligation to publicly update or revise any forward-looking statements included in this press release, whether as a result of new information, future events, changes in its expectations or otherwise, except as required by law.

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

Investor Information                                                           

 

RESEARCH COVERAGE            
             
Firm   Analyst   Phone   Email
Bank of America Merrill Lynch   Joshua Dennerlein   (646) 855-1681   joshua.dennerlein@baml.com
Berenberg Capital Markets   Keegan Carl   (646) 949-9052   keegan.carl@berenberg-us.com
BMO Capital Markets   John Kim   (212) 885-4115   johnp.kim@bmo.com
Citi Research   Michael Bilerman   (212) 816-1383   michael.bilerman@citi.com
    Nicholas Joseph   (212) 816-1909   nicholas.joseph@citi.com
Evercore ISI   Steve Sakwa   (212) 446-9462   steve.sakwa@evercoreisi.com
    Samir Khanal   (212) 888-3796   samir.khanal@evercoreisi.com
Green Street Advisors   John Pawlowski   (949) 640-8780   jpawlowski@greenstreetadvisors.com
Wells Fargo   Todd Stender   (562) 637-1371   todd.stender@wellsfargo.com
             
             
INQUIRIES            
             
Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media, or any prospective investor. Please address all inquiries to our Investor Relations department.
             
At Our Website   www.suncommunities.com        
             
By Email   investorrelations@suncommunities.com    
             
By Phone   (248) 208-2500        
             
             
             
             
             
             
             
             

Portfolio Overview                                                                           
(As of September 30, 2020)

 


Financial and Operating Highlights                                                                                                            

(amounts in thousands, except for *)

 

  Quarter Ended
  9/30/2020   6/30/2020   3/31/2020   12/31/2019   9/30/2019
Financial Information                  
Total revenues $ 400,514      $ 303,266      $ 310,302        $ 301,819      $ 362,443   
Net income / (loss) $ 89,756      $ 63,355      $ (15,478 )     $ 30,685      $ 64,451   
Net income / (loss) attributable to Sun Communities Inc. common stockholders $ 81,204      $ 58,910      $ (16,086 )     $ 28,547      $ 57,002   
Basic earnings / (loss) per share* $ 0.83      $ 0.61      $ (0.17 )     $ 0.31      $ 0.63   
Diluted earnings / (loss) per share* $ 0.83      $ 0.61      $ (0.17 )     $ 0.31      $ 0.63   
                   
Cash distributions declared per common share* $ 0.79      $ 0.79      $ 0.79        $ 0.75      $ 0.75   
                   
Recurring EBITDA (1) $ 199,321      $ 148,650      $ 156,552        $ 144,738      $ 179,953   
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (4)

 $ 165,209      $ 118,092      $ 95,046        $ 105,533      $ 119,496   
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (4)

 $ 162,624      $ 110,325      $ 117,267        $ 104,534      $ 137,369   
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (4) per share – fully diluted* $ 1.63      $ 1.20      $ 0.98        $ 1.11      $ 1.27   
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (4) per share – fully diluted* $ 1.60      $ 1.12      $ 1.22        $ 1.10      $ 1.46   
                   
Balance Sheet                  
Total assets $ 8,335,717      $ 8,348,659      $ 8,209,047        $ 7,802,060      $ 7,397,854   
Total debt $ 3,340,613      $ 3,390,771      $ 3,926,494        $ 3,434,402      $ 3,271,341   
Total liabilities $ 3,791,922      $ 3,845,308      $ 4,346,127        $ 3,848,104      $ 3,720,983   

  Quarter Ended
  9/30/2020   6/30/2020   3/31/2020   12/31/2019   9/30/2019
Operating Information*                  
Communities 432      426      424      422      389   
                   
Manufactured home sites 95,209      94,232      93,834      93,821      88,024   
Annual RV sites 26,817      26,240      26,148      26,056      25,756   
Transient RV sites 23,728      22,360      21,880      21,416      20,882   
Total sites 145,754      142,832      141,862      141,293      134,662   
                   
MH occupancy 96.4  %   96.5  %   95.8  %   95.5  %   95.7  %
RV occupancy 100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
Total blended MH and RV occupancy 97.2  %   97.3  %   96.7  %   96.4  %   96.7  %
                   
New home sales 155      140      119      140      167   
Pre-owned home sales 555      471      644      668      739   
Total home sales 710      611      763      808      906   

  Quarter Ended
  9/30/2020   6/30/2020   3/31/2020   12/31/2019   9/30/2019
Net Leased Sites (5)                  
MH net leased sites 349      759      287      437      296   
RV net leased sites 427      92      13      232      470   
Total net leased sites 776      851      300      669      766   

Consolidated Balance Sheets
(amounts in thousands)

 

    (Unaudited)    
    September 30, 2020   December 31, 2019
Assets        
Land   $ 1,441,372        $ 1,414,279     
Land improvements and buildings   7,119,163        6,595,272     
Rental homes and improvements   649,004        627,175     
Furniture, fixtures and equipment   338,236        282,874     
Investment property   9,547,775        8,919,600     
Accumulated depreciation   (1,900,306 )     (1,686,980 )  
Investment property, net   7,647,469        7,232,620     
Cash, cash equivalents and restricted cash   115,529        34,830     
Marketable securities   107,083        94,727     
Inventory of manufactured homes   48,130        62,061     
Notes and other receivables, net   191,508        157,926     
Other assets, net   225,998        219,896     
Total Assets   $ 8,335,717        $ 7,802,060     
Liabilities        
Mortgage loans payable   $ 3,191,380        $ 3,180,592     
Preferred Equity – Sun NG Resorts – mandatorily redeemable   35,249        35,249     
Preferred OP units – mandatorily redeemable   34,663        34,663     
Lines of credit and other debt(6)   79,321        183,898     
Distributions payable   79,600        71,704     
Advanced reservation deposits and rent   146,909        133,420     
Accrued expenses and accounts payable   140,848        127,289     
Other liabilities   83,952        81,289     
Total Liabilities   3,791,922        3,848,104     
Commitments and contingencies        
Series D preferred OP units   50,034        50,913     
Series F preferred OP units   8,930        —     
Series G preferred OP units   26,072        —     
Equity Interests – NG Sun LLC and NG Sun Whitewater LLC   27,513        27,091     
Stockholders’ Equity        
Common stock   983        932     
Additional paid-in capital   5,851,380        5,213,264     
Accumulated other comprehensive loss   (2,226 )     (1,331 )  
Distributions in excess of accumulated earnings   (1,491,338 )     (1,393,141 )  
Total Sun Communities, Inc. stockholders’ equity   4,358,799        3,819,724     
Noncontrolling interests        
Common and preferred OP units   61,350        47,686     
Consolidated variable interest entities   11,097        8,542     
Total noncontrolling interests   72,447        56,228     
Total Stockholders’ Equity   4,431,246        3,875,952     
Total Liabilities, Temporary Equity and Stockholders’ Equity   $ 8,335,717        $ 7,802,060     

Statements of Operations – Quarter to Date and Year to Date Comparison
(In thousands, except per share amounts) (Unaudited)

 

  Three Months Ended   Nine Months Ended
  September 30, 2020   September 30, 2019   Change   % Change   September 30, 2020   September 30, 2019   Change   % Change
Revenues                              
Income from real property (excluding transient revenue) $ 223,905        $ 202,205        $ 21,700        10.7    %   $ 646,880        $ 588,273        $ 58,607        10.0    %
Transient revenue 60,468        48,958        11,510        23.5    %   106,762        101,617        5,145        5.1    %
Revenue from home sales 47,662        49,805        (2,143 )     (4.3 ) %   126,779        136,665        (9,886 )     (7.2 ) %
Rental home revenue 16,171        14,444        1,727        12.0    %   46,611        42,827        3,784        8.8    %
Ancillary revenue 43,803        37,259        6,544        17.6    %   66,373        67,157        (784 )     (1.2 ) %
Interest income 2,624        4,770        (2,146 )     (45.0 ) %   7,609        14,489        (6,880 )     (47.5 ) %
Brokerage commissions and other revenues, net 5,881        5,002        879        17.6    %   13,068        11,190        1,878        16.8    %
Total Revenues 400,514        362,443        38,071        10.5    %   1,014,082        962,218        51,864        5.4    %
Expenses                              
Property operating and maintenance 90,647        79,095        11,552        14.6    %   219,908        202,892        17,016        8.4    %
Real estate taxes 17,442        15,399        2,043        13.3    %   52,341        46,455        5,886        12.7    %
Cost of home sales 36,237        36,318        (81 )     (0.2 ) %   95,450        100,030        (4,580 )     (4.6 ) %
Rental home operating and maintenance 5,949        6,444        (495 )     (7.7 ) %   16,128        16,453        (325 )     (2.0 ) %
Ancillary expenses 20,023        18,752        1,271        6.8    %   35,731        38,333        (2,602 )     (6.8 ) %
Home selling expenses 3,652        3,972        (320 )     (8.1 ) %   10,508        10,922        (414 )     (3.8 ) %
General and administrative expenses 27,243        22,946        4,297        18.7    %   79,493        68,530        10,963        16.0    %
Catastrophic weather-related charges, net 14        341        (327 )     (95.9 ) %   54        1,302        (1,248 )     (95.9 ) %
Depreciation and amortization 88,499        76,532        11,967        15.6    %   259,453        229,241        30,212        13.2    %
Loss on extinguishment of debt —        12,755        (12,755 )     (100.0 ) %   5,209        13,478        (8,269 )     (61.4 ) %
Interest expense 30,214        32,219        (2,005 )     (6.2 ) %   94,058        99,894        (5,836 )     (5.8 ) %
Interest on mandatorily redeemable preferred OP units / equity 1,047        1,216        (169 )     (13.9 ) %   3,130        3,491        (361 )     (10.3 ) %
Total Expenses 320,967        305,989        14,978        4.9    %   871,463        831,021        40,442        4.9    %
Income Before Other Items 79,547        56,454        23,093        40.9    %   142,619        131,197        11,422        8.7    %
Gain / (loss) on remeasurement of marketable securities 1,492        12,661        (11,169 )     (88.2 ) %   (2,636 )     16,548        (19,184 )     (115.9 ) %
Gain / (loss) on foreign currency translation 4,664        (3,046 )     7,710        N/M   (2,441 )     35        (2,476 )     N/M
Gain on disposition of property 5,595        —        5,595        N/A   5,595        —        5,595        N/A
Other expense, net (7) (2,524 )     (1,362 )     (1,162 )     85.3    %   (3,378 )     (1,524 )     (1,854 )     121.7    %
Loss on remeasurement of notes receivable (445 )     —        (445 )     N/A   (2,311 )     —        (2,311 )     N/A
Income from nonconsolidated affiliates 1,204        513        691        134.7    %   1,348        1,380        (32 )     (2.3 ) %
Loss on remeasurement of investment in nonconsolidated affiliates (446 )     —        (446 )     N/A   (1,505 )     —        (1,505 )     N/A
Current tax benefit / (expense) 107        (420 )     527        (125.5 ) %   (462 )     (906 )     444        (49.0 ) %
Deferred tax benefit / (expense) 562        (349 )     911        N/M   804        (36 )     840        N/M
Net Income 89,756        64,451        25,305        39.3    %   137,633        146,694        (9,061 )     (6.2 ) %
Less: Preferred return to preferred OP units / equity 1,645        1,599        46        2.9    %   4,799        4,640        159        3.4    %
Less: Income attributable to noncontrolling interests 6,907        5,422        1,485        27.4    %   8,806        9,048        (242 )     (2.7 ) %
Net Income Attributable to Sun Communities, Inc. 81,204        57,430        23,774        41.4    %   124,028        133,006        (8,978 )     (6.8 ) %
Less: Preferred stock distribution —        428        (428 )     (100.0 ) %   —        1,288        (1,288 )     (100.0 ) %
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 81,204        $ 57,002        $ 24,202        42.5    %   $ 124,028        $ 131,718        $ (7,690 )     (5.8 ) %
                               
Weighted average common shares outstanding – basic 97,542        89,847        7,695        8.6    %   95,270        87,499        7,771        8.9    %
Weighted average common shares outstanding – diluted 97,549        90,332        7,217        8.0    %   95,273        87,500        7,773        8.9    %
                               
Basic earnings per share $ 0.83        $ 0.63        $ 0.20        31.7    %   $ 1.29        $ 1.49        $ (0.20 )     (13.4 ) %
Diluted earnings per share $ 0.83        $ 0.63        $ 0.20        31.7    %   $ 1.29        $ 1.49        $ (0.20 )     (13.4 ) %

  N/M = Percentage change is not meaningful.

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

 

Outstanding Securities – As of September 30, 2020
                   
  Number of Units / Shares Outstanding   Conversion Rate*   If Converted   Issuance Price Per Unit*   Annual Distribution Rate*
Non-convertible Securities                  
Common shares 98,280   N/A   N/A   N/A   $3.16^
                   
Convertible Securities                  
Series A-1 preferred OP units 299   2.4390   728   $ 100   6.0 %
Series A-3 preferred OP units 40   1.8605   75   $ 100   4.5 %
Series C preferred OP units 309   1.1100   343   $ 100   4.5 %
Series D preferred OP units 489   0.8000   391   $ 100   3.8 %
Series E preferred OP units 90   0.6897   62   $ 100   5.25 %
Series F preferred OP units 90   0.6250   56   $ 100   3.0 %
Series G preferred OP units 261   0.6452   168   $ 100   3.2 %
Common OP units 2,473   1.0000   2,473   N/A   Mirrors common shares distributions

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

Capitalization – As of September 30, 2020            
             
Equity   Shares   Share Price*   Total
Common shares   98,280      $ 140.61      $ 13,819,151   
Common OP units   2,473      $ 140.61      347,729   
Subtotal   100,753          $ 14,166,880   
             
Preferred OP units as converted   1,823      $ 140.61      $ 256,332   
Total diluted shares outstanding   102,576          14,423,212   
             
Debt            
Mortgage loans payable           $ 3,191,380   
Preferred Equity – Sun NG Resorts – mandatorily redeemable           35,249   
Preferred OP units – mandatorily redeemable           34,663   
Lines of credit and other debt(6)           79,321   
Total debt           $ 3,340,613   
             
Total Capitalization           $ 17,763,825   

Reconciliations to Non-GAAP Financial Measures

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

 

  Three Months Ended   Nine Months Ended
  September 30, 2020   September 30, 2019   September 30, 2020   September 30, 2019
Net Income Attributable To Sun Communities, Inc. Common Stockholders $ 81,204        $ 57,002        $ 124,028        $ 131,718     
Adjustments              
Depreciation and amortization 88,495        76,692        259,543        229,698     
Depreciation on nonconsolidated affiliates 9        —        28        —     
Gain / (loss) on remeasurement of marketable securities (1,492 )     (12,661 )     2,636        (16,548 )  
Loss on remeasurement of investment in nonconsolidated affiliates 446        —        1,505        —     
Loss on remeasurement of notes receivable 445        —        2,311        —     
Income attributable to noncontrolling interests 6,196        4,839        7,725        7,720     
Preferred return to preferred OP units 498        530        1,498        1,594     
Interest Expense on Aspen preferred OP units 514        —        1,542        —     
Preferred distribution to Series A-4 preferred stock —        428        —        1,288     
Gain on disposition of properties (5,595 )     —        (5,595 )     —     
Gain on disposition of assets, net (5,511 )     (7,334 )     (15,251 )     (21,083 )  
FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4)

 $ 165,209        $ 119,496        $ 379,970        $ 334,387     
Adjustments              
Other acquisition related costs (8) 402        375        1,291        902     
Loss on extinguishment of debt —        12,755        5,209        13,478     
Catastrophic weather-related charges, net 15        363        54        1,339     
Loss of earnings – catastrophic weather related (9) (300 )     (377 )     —        —     
(Gain) / loss on foreign currency translation (4,664 )     3,046        2,441        (35 )  
Other expense, net (7) 2,524        1,362        3,378        1,524     
Other adjustments (a) (562 )     349        (504 )     36     
Core FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4)

 $ 162,624        $ 137,369        $ 391,839        $ 351,631     
               
Weighted average common shares outstanding – basic 97,542        89,847        95,270        87,499     
Add              
Common shares dilutive effect from forward sale agreement 6        —        2        —     
Common stock issuable upon conversion of stock options 1        1        1        1     
Restricted stock 390        484        395        431     
Common OP units 2,476        2,284        2,445        2,498     
Common stock issuable upon conversion of Aspen preferred OP units 408        —        408        —     
Common stock issuable upon conversion of Series A-3 preferred OP units 75        75        75        75     
Common stock issuable upon conversion of Series A-1 preferred OP units 730        780        737        792     
Common stock issuable upon conversion of Series A-4 preferred stock —        467        —        467     
Weighted Average Common Shares Outstanding – Fully Diluted 101,628        93,938        99,333        91,763     
               
FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4) Per Share – Fully Diluted

 $ 1.63        $ 1.27        $ 3.83        $ 3.64     
               
Core FFO Attributable To Sun Communities, Inc. Common Stockholders And Dilutive Convertible Securities (1) (4) Per Share – Fully Diluted

 $ 1.60        $ 1.46        $ 3.94        $ 3.83     

(a) Adjustments include deferred compensation amortization upon retirement and deferred tax (benefit) / expense.

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

 

  Three Months Ended   Nine Months Ended
  September 30, 2020   September 30, 2019   September 30, 2020   September 30, 2019
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 81,204        $ 57,002        $ 124,028        $ 131,718     
Adjustments              
Depreciation and amortization 88,499        76,532        259,453        229,241     
Loss on extinguishment of debt —        12,755        5,209        13,478     
Interest expense 30,214        32,219        94,058        99,894     
Interest on mandatorily redeemable preferred OP units / equity 1,047        1,216        3,130        3,491     
Current tax (benefit) / expense (107 )     420        462        906     
Deferred tax (benefit) / expense (562 )     349        (804 )     36     
Income from nonconsolidated affiliates (1,204 )     (513 )     (1,348 )     (1,380 )  
Less: Gain on dispositions of assets, net (5,511 )     (7,334 )     (15,251 )     (21,083 )  
Less: Gain on disposition of properties (5,595 )     —        (5,595 )     —     
EBITDAre (1) $ 187,985        $ 172,646        $ 463,342        $ 456,301     
Adjustments              
Catastrophic weather related charges, net 14        341        54        1,302     
(Gain) / loss on remeasurement of marketable securities (1,492 )     (12,661 )     2,636        (16,548 )  
(Gain) / loss on foreign currency translation (4,664 )     3,046        2,441        (35 )  
Other expense, net (6) 2,524        1,362        3,378        1,524     
Loss on remeasurement of notes receivable 445        —        2,311        —     
Loss on remeasurement of investment in nonconsolidated affiliates 446        —        1,505        —     
Preferred return to preferred OP units / equity 1,645        1,599        4,799        4,640     
Income attributable to noncontrolling interests 6,907        5,422        8,806        9,048     
Preferred stock distribution —        428        —        1,288     
Plus: Gain on dispositions of assets, net 5,511        7,334        15,251        21,083     
Recurring EBITDA (1) $ 199,321        $ 179,517        $ 504,523        $ 478,603     

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

 

  Three Months Ended   Nine Months Ended
  September 30, 2020   September 30, 2019   September 30, 2020   September 30, 2019
Net Income Attributable to Sun Communities, Inc. Common Stockholders $ 81,204        $ 57,002        $ 124,028        $ 131,718     
Interest income (2,624 )     (4,770 )     (7,609 )     (14,489 )  
Brokerage commissions and other revenues, net (5,881 )     (5,002 )     (13,068 )     (11,190 )  
Home selling expenses 3,652        3,972        10,508        10,922     
General and administrative expenses 27,243        22,946        79,493        68,530     
Catastrophic weather-related charges, net 14        341        54        1,302     
Depreciation and amortization 88,499        76,532        259,453        229,241     
Loss on extinguishment of debt —        12,755        5,209        13,478     
Interest expense 30,214        32,219        94,058        99,894     
Interest on mandatorily redeemable preferred OP units / equity 1,047        1,216        3,130        3,491     
(Gain) / loss on remeasurement of marketable securities (1,492 )     (12,661 )     2,636        (16,548 )  
(Gain) / loss on foreign currency translation (4,664 )     3,046        2,441        (35 )  
Gain on disposition of property (5,595 )     —        (5,595 )     —     
Other expense, net (7) 2,524        1,362        3,378        1,524     
Loss on remeasurement of notes receivable 445        —        2,311        —     
Income from nonconsolidated affiliates (1,204 )     (513 )     (1,348 )     (1,380 )  
Loss on remeasurement of investment in nonconsolidated affiliates 446        —        1,505        —     
Current tax (benefit) / expense (107 )     420        462        906     
Deferred tax (benefit) / expense (562 )     349        (804 )     36     
Preferred return to preferred OP units / equity 1,645        1,599        4,799        4,640     
Income attributable to noncontrolling interests 6,907        5,422        8,806        9,048     
Preferred stock distribution —        428        —        1,288     
NOI (1) / Gross Profit $ 221,711        $ 196,663        $ 573,847        $ 532,376     

  Three Months Ended   Nine Months Ended
  September 30, 2020   September 30, 2019   September 30, 2020   September 30, 2019
Real Property NOI (1) $ 176,284        $ 156,669        $ 481,393        $ 440,543     
Home Sales NOI (1) / Gross Profit 11,425        13,487        31,329        36,635     
Rental Program NOI (1) 29,323        25,270        86,182        77,700     
Ancillary NOI (1) / Gross Profit 23,780        18,507        30,642        28,824     
Site rent from Rental Program (included in Real Property NOI) (1) (10) (19,101 )     (17,270 )     (55,699 )     (51,326 )  
NOI (1) / Gross Profit $ 221,711        $ 196,663        $ 573,847        $ 532,376     

Non-GAAP and Other Financial Measures

Debt Analysis 
(amounts in thousands)

 

  Quarter Ended
  9/30/2020   6/30/2020   3/31/2020   12/31/2019   9/30/2019
Debt Outstanding                  
Mortgage loans payable $ 3,191,380      $ 3,205,507      $ 3,273,808      $ 3,180,592      $ 2,967,128   
Secured borrowings on collateralized receivables (11) —      —      —      —      93,669   
Preferred Equity – Sun NG Resorts – mandatorily redeemable 35,249      35,249      35,249      35,249      35,249   
Preferred OP units – mandatorily redeemable 34,663      34,663      34,663      34,663      34,663   
Lines of credit and other debt (6) 79,321      115,352      582,774      183,898      140,632   
Total debt $ 3,340,613      $ 3,390,771      $ 3,926,494      $ 3,434,402      $ 3,271,341   
                   
% Fixed / Floating                  
Fixed 97.6  %   96.6  %   85.2  %   94.7  %   95.7  %
Floating 2.4  %   3.4  %   14.8  %   5.3  %   4.3  %
Total 100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
                   
Weighted Average Interest Rates                  
Mortgage loans payable 3.88  %   3.88  %   3.91  %   4.05  %   4.13  %
Preferred Equity – Sun NG Resorts – mandatorily redeemable 6.00  %   6.00  %   6.00  %   6.00  %   6.00  %
Preferred OP units – mandatorily redeemable 5.93  %   5.93  %   5.93  %   6.50  %   6.50  %
Lines of credit and other debt (6) 1.32  %   2.03  %   1.85  %   2.71  %   3.23  %
Average before secured borrowings (11) 3.86  %   3.86  %   3.64  %   4.03  %   4.14  %
Secured borrowings on collateralized receivables (11) —  %   —  %   —  %   —  %   9.92  %
Total average 3.86  %   3.86  %   3.64  %   4.03  %   4.30  %
                   
Debt Ratios                  
Net Debt / Recurring EBITDA (1) (TTM) 5.0      4.8      5.6      5.5      5.3   
Net Debt / Enterprise Value 18.3  %   17.8  %   22.6  %   19.0  %   18.7  %
Net Debt / Gross Assets 31.6  %   29.7  %   35.6  %   36.0  %   36.0  %
                   
Coverage Ratios                  
Recurring EBITDA (1) (TTM) / Interest 4.8   4.5   4.5   4.4   4.4
Recurring EBITDA (1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution 4.6   4.4   4.3   4.2   4.2

Maturities / Principal Amortization Next Five Years 2020   2021   2022   2023   2024
Mortgage loans payable                  
Maturities $ —      $ —      $ 82,155      $ 185,618      $ 315,330   
Principal amortization 14,554      59,615      61,326      60,604      57,082   
Preferred Equity – Sun NG Resorts – mandatorily redeemable —      —      35,249      —      —   
Preferred OP units – mandatorily redeemable —      —      —      —      27,373   
Lines of credit and other debt (6) 546      13,645      10,000      55,130      —   
Total $ 15,100      $ 73,260      $ 188,730      $ 301,352      $ 399,785   
                   
Weighted average rate of maturities —  %   —  %   4.46  %   4.08  %   4.47  %

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

 

                               
  Three Months Ended   Nine Months Ended
  September 30, 2020   September 30, 2019   Change   % Change   September 30, 2020   September 30, 2019   Change   % Change
Financial Information                              
Income from real property (12) $ 243,373      $ 230,983      $ 12,390        5.4    %   $ 661,984      $ 642,809      $ 19,175        3.0    %
                               
Property operating expenses                              
Payroll and benefits 23,720      23,642      78        0.3    %   60,457      63,255      (2,798 )     (4.4 ) %
Legal, taxes, and insurance 2,385      2,829      (444 )     (15.7 ) %   7,690      7,432      258        3.5    %
Utilities (12) 21,269      19,102      2,167        11.3    %   49,814      49,290      524        1.1    %
Supplies and repair (13) 10,920      10,617      303        2.9    %   25,223      26,227      (1,004 )     (3.8 ) %
Other (a) 9,774      8,626      1,148        13.3    %   21,607      21,276      331        1.6    %
Real estate taxes 15,937      15,066      871        5.8    %   47,920      45,610      2,310        5.1    %
Property operating expenses 84,005      79,882      4,123        5.2    %   212,711      213,090      (379 )     (0.2 ) %
Real Property NOI (1) $ 159,368      $ 151,101      $ 8,267        5.5    %   $ 449,273      $ 429,719      $ 19,554        4.6    %

(a) Includes COVID-19 personal protective equipment expense of $1,130 and $2,065 for the three and nine months ended September 30, 2020, respectively.

  As of        
  September 30, 2020   September 30, 2019   Change   % Change
Other Information              
Number of properties 366      366      —       
               
MH occupancy (3) 97.2  %            
RV occupancy (3) 100.0  %            
MH & RV blended occupancy (3) 97.8  %            
               
Adjusted MH occupancy (3) 98.4  %            
RV occupancy (3) 100.0  %            
Adjusted MH & RV blended occupancy (3) 98.8  %   96.8  %   2.0  %    
               
Monthly base rent per site – MH $ 594      $ 576      $ 18      3.2% (15)
Monthly base rent per site – RV (14) $ 444      $ 420      $ 24      5.5% (15)
Monthly base rent per site – Total (14) $ 559      $ 539      $ 20      3.6% (15)

Home Sales Summary           
(amounts in thousands except for *)

 

                               
  Three Months Ended   Nine Months Ended
  September 30, 2020   September 30, 2019   Change   % Change   September 30, 2020   September 30, 2019   Change   % Change
Financial Information                              
New Homes                              
New home sales $ 23,734      $ 19,775      $ 3,959        20.0    %   $ 58,536      $ 51,860      $ 6,676        12.9    %
New home cost of sales 19,294      16,761      2,533        15.1    %   47,611      44,740      2,871        6.4    %
NOI (1) / Gross Profit  – new homes 4,440      3,014      1,426        47.3    %   10,925      7,120      3,805        53.4    %
Gross margin % – new homes 18.7  %   15.2  %   3.5    %       18.7  %   13.7  %   5.0    %    
Average selling price – new homes* $ 153,123      $ 118,413      $ 34,710        29.3    %   $ 141,391      $ 120,325      $ 21,066        17.5    %
                               
Pre-owned Homes                              
Pre-owned home sales $ 23,928      $ 30,030      $ (6,102 )     (20.3 ) %   $ 68,243      $ 84,805      $ (16,562 )     (19.5 ) %
Pre-owned home cost of sales 16,943      19,557      (2,614 )     (13.4 ) %   47,839      55,290      (7,451 )     (13.5 ) %
NOI (1) / Gross Profit – pre-owned homes 6,985      10,473      (3,488 )     (33.3 ) %   20,404      29,515      (9,111 )     (30.9 ) %
Gross margin % – pre-owned homes 29.2  %   34.9  %   (5.7 ) %       29.9  %   34.8  %   (4.9 ) %    
Average selling price – pre-owned homes* $ 43,114      $ 40,636      $ 2,478        6.1    %   $ 40,864      $ 38,548      $ 2,316        6.0    %
                               
Total Home Sales                              
Revenue from home sales $ 47,662      $ 49,805      $ (2,143 )     (4.3 ) %   $ 126,779      $ 136,665      $ (9,886 )     (7.2 ) %
Cost of home sales 36,237      36,318      (81 )     (0.2 ) %   95,450      100,030      (4,580 )     (4.6 ) %
NOI (1) / Gross Profit – home sales $ 11,425      $ 13,487      $ (2,062 )     (15.3 ) %   $ 31,329      $ 36,635      $ (5,306 )     (14.5 ) %
                               
Statistical Information                              
New home sales volume* 155      167      (12 )     (7.2 ) %   414      431      (17 )     (3.9 ) %
Pre-owned home sales volume* 555      739      (184 )     (24.9 ) %   1,670      2,200      (530 )     (24.1 ) %
Total home sales volume * 710      906      (196 )     (21.6 ) %   2,084      2,631      (547 )     (20.8 ) %

               

Rental Program Summary    
(amounts in thousands except for *)

 

                               
  Three Months Ended   Nine Months Ended
  September 30, 2020   September 30, 2019   Change   % Change   September 30, 2020   September 30, 2019   Change   % Change
Financial Information                              
Revenues                              
Rental home revenue $ 16,171      $ 14,444      $ 1,727        12.0    %   $ 46,611      $ 42,827      $ 3,784        8.8    %
Site rent from Rental Program (1) (10) 19,101      17,270      1,831        10.6    %   55,699      51,326      4,373        8.5    %
Rental Program revenue 35,272      31,714      3,558        11.2    %   102,310      94,153      8,157        8.7    %
                               
Expenses                              
Repairs and refurbishment 3,414      4,080      (666 )     (16.3 ) %   8,623      9,317      (694 )     (7.4 ) %
Taxes and insurance 2,059      1,940      119        6.1    %   6,078      5,631      447        7.9    %
Other 476      424      52        12.3    %   1,427      1,505      (78 )     (5.2 ) %
Rental Program operating and maintenance 5,949      6,444      (495 )     (7.7 ) %   16,128      16,453      (325 )     (2.0 ) %
Rental Program NOI (1) $ 29,323      $ 25,270      $ 4,053        16.0    %   $ 86,182      $ 77,700      $ 8,482        10.9    %
                               
Other Information                              
Number of sold rental homes* 225      317      (92 )     (29.0 ) %   581      859      (278 )     (32.4 ) %
Number of occupied rentals, end of period*                 11,729      11,170      559        5.0    %
Investment in occupied rental homes, end of period                 $ 625,922      $ 570,053      $ 55,869        9.8    %
Weighted average monthly rental rate, end of period*                 $ 1,032      $ 987      $ 45        4.6    %

Acquisitions and Other Summary (16)
(amounts in thousands except for statistical data)

 

         
    Three Months Ended   Nine Months Ended
    September 30, 2020   September 30, 2020
Financial Information        
Revenues        
Income from real property   $ 30,921      $ 63,257   
         
Property and Operating Expenses        
Payroll and benefits   4,241      9,557   
Legal, taxes & insurance   246      780   
Utilities   3,375      6,815   
Supplies and repairs   1,570      3,871   
Other   3,068      5,693   
Real estate taxes   1,505      4,421   
Property operating expenses   14,005      31,137   
Net operating income (NOI) (1)   $ 16,916      $ 32,120   
         
         
Other Information       September 30, 2020
Number of properties       66   
Occupied sites       9,171   
Developed sites       10,188   
Occupancy %       90.0  %
Transient sites       5,403   

               

Property Summary                    
(includes MH and Annual RVs)
                     
                     
COMMUNITIES   9/30/2020   6/30/2020   3/31/2020   12/31/2019   9/30/2019
FLORIDA                    
Communities   127      125      125      125      125   
Developed sites (17)   39,517      39,241      39,380      39,230      39,067   
Occupied (17)   38,743      38,453      38,526      38,346      38,155   
Occupancy % (17)   98.0  %   98.0  %   97.8  %   97.7  %   97.7  %
Sites for development   1,427      1,427      1,527      1,527      1,633   
MICHIGAN                    
Communities   74      72      72      72      72   
Developed sites (17)   29,086      27,901      27,883      27,905      27,906   
Occupied (17)   28,033      27,191      26,863      26,785      26,677   
Occupancy % (17)   96.4  %   97.5  %   96.3  %   96.0  %   95.6  %
Sites for development   1,182      1,182      1,115      1,115      1,115   
TEXAS                    
Communities   24      23      23      23      23   
Developed sites (17)   7,659      7,641      7,627      7,615      7,098   
Occupied (17)   7,427      7,289      7,076      7,006      6,834   
Occupancy % (17)   97.0  %   95.4  %   92.8  %   92.0  %   96.3  %
Sites for development   1,378      565      555      555      1,086   
CALIFORNIA                    
Communities   34      32      31      31      31   
Developed sites (17)   6,372      6,364      5,986      5,981      5,963   
Occupied (17)   6,290      6,272      5,948      5,941      5,917   
Occupancy % (17)   98.7  %   98.6  %   99.4  %   99.3  %   99.2  %
Sites for development   373      264      302      302      302   
ARIZONA                    
Communities   13      13      13      13      13   
Developed sites (17)   4,274      4,259      4,268      4,263      4,239   
Occupied (17)   3,957      3,932      3,923      3,892      3,852   
Occupancy % (17)   92.6  %   92.3  %   91.9  %   91.3  %   90.9  %
Sites for development   —      —      —      —      —   
ONTARIO, CANADA                    
Communities   15      15      15      15      15   
Developed sites (17)   4,067      3,980      3,977      4,031      4,022   
Occupied (17)   4,067      3,980      3,977      4,031      4,022   
Occupancy % (17)   100.0  %   100.0  %   100.0  %   100.0  %   100.0  %
Sites for development   1,593      1,593      1,608      1,611      1,675   
INDIANA                    
Communities   11      11      11      11      11   
Developed sites (17)   3,087      3,087      3,087      3,087      3,089   
Occupied (17)   2,957      2,961      2,914      2,900      2,870   
Occupancy % (17)   95.8  %   95.9  %   94.4  %   93.9  %   92.9  %
Sites for development   277      277      277      277      277   
OHIO                    
Communities   9      9      9      9      9   
Developed sites (17)   2,790      2,778      2,768      2,770      2,770   
Occupied (17)   2,758      2,736      2,702      2,716      2,703   
Occupancy % (17)   98.9  %   98.5  %   97.6  %   98.1  %   97.6  %
Sites for development   22      22      59      59      59   
                     
COLORADO                    
Communities   10      10      10      10      10   
Developed sites (16)   2,453      2,441      2,423      2,423      2,423   
Occupied (17)   2,365      2,327      2,318      2,322      2,325   
Occupancy % (17)   96.4  %   95.3  %   95.7  %   95.8  %   96.0  %
Sites for development   1,282      1,566      1,867      1,867      1,973   
OTHER STATES                    
Communities   115      116      115      113      80   
Developed sites (17)   22,721      22,780      22,583      22,572      17,203   
Occupied (17)   21,995      22,024      21,749      21,678      16,657   
Occupancy % (17)   96.8  %   96.7  %   96.3  %   96.0  %   96.8  %
Sites for development   2,596      2,846      2,980      2,980      2,437   
TOTAL – PORTFOLIO                    
Communities   432      426      424      422      389   
Developed sites (17)   122,026      120,472      119,982      119,877      113,780   
Occupied (17)   118,592      117,165      115,996      115,617      110,012   
Occupancy % (17)   97.2  % (18) 97.3  %   96.7  %   96.4  %   96.7  %
Sites for development (19)   10,130      9,742      10,290      10,293      10,557   
% Communities age restricted   33.6  %   34.0  %   34.0  %   34.1  %   30.8  %
                     
TRANSIENT RV PORTFOLIO SUMMARY                    
Location                    
Florida   5,993      5,547      5,311      5,465      5,506   
California   2,236      1,978      1,947      1,952      1,970   
Texas   1,917      1,590      1,612      1,623      1,642   
Maryland   1,515      1,515      1,488      1,488      1,426   
Arizona   1,386      1,401      1,392      1,397      1,421   
Colorado   930      574      291      291      185   
Ontario, Canada   920      1,007      1,009      939      937   
New York   900      911      916      923      924   
New Jersey   828      857      875      864      868   
Maine   819      837      828      811      821   
Utah   750      750      750      753      560   
Virginia   564      598      630      324      329   
Other states   4,970      4,795      4,831      4,586      4,293   
Total Transient RV Sites   23,728      22,360      21,880      21,416      20,882   

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

 

   Recurring
Capital Expenditures
Average / Site*		 Recurring
Capital Expenditures (20) 		 Lot
Modifications (21) 		 Acquisitions (22)  Expansion
and
Development (23) 		Revenue Producing /Expense Reduction Projects (24)
YTD 2020 $ 147    $ 17,426    $ 21,837    $ 333,011    $ 197,669    $ 15,188   
2019 $ 345    $ 30,382    $ 31,135    $ 930,668    $ 281,808    $ 9,638   
2018 $ 263    $ 24,265    $ 22,867    $ 414,840    $ 152,672    $ 3,864   

Operating Statistics for MH and Annual RVs

 

Locations   Resident Move-outs   Net Leased Sites (5)   New Home Sales   Pre-owned Home Sales   Brokered
Re-sales
Florida   1,744      247      123      154      910   
Michigan   351      533      32      808      113   
Ontario, Canada   647      36      25      15      334   
Texas   298      421      55      189      47   
Arizona   64      65      26      20      91   
Indiana   57      57      4      143      11   
Ohio   85      42      —      67      9   
California   89      31      19      11      67   
Colorado   21      43      25      20      34   
Other states   1,076      452      105      243      236   
Nine Months Ended September 30, 2020   4,432      1,927      414      1,670      1,852   

Total For Year Ended   Resident Move-outs   Net Leased Sites (5)   New Home Sales   Pre-owned Home Sales   Brokered
Re-sales
2019   4,139      2,674      571      2,868      2,231   
2018   3,435      2,600      526      3,103      2,147   

Percentage Trends   Resident Move-outs   Resident
Re-sales
2020 (TTM)   3.2  %   6.6  %
2019   2.6  %   6.6  %
2018   2.4  %   7.2  %

Footnotes and Definitions                                                                

 
  1. Investors in and analysts following the real estate industry utilize funds from operations (“FFO”), net operating income (“NOI”), and earnings before interest, tax, depreciation and amortization (“EBITDA”) as supplemental performance measures. The Company believes that FFO, NOI, and EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. Additionally, FFO, NOI, and EBITDA are commonly used in various ratios, pricing multiples, yields and returns and valuation calculations used to measure financial position, performance and value.
    • FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of generally accepted accounting principles (“GAAP”) depreciation and amortization of real estate assets.
    • NOI provides a measure of rental operations that does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses.
    • EBITDA provides a further measure to evaluate ability to incur and service debt and to fund dividends and other cash needs.

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

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

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

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

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

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

(2)   Same Community results reflect constant currency for comparative purposes. Canadian currency figures in the prior comparative period have been translated at 2020 average exchange rates.

(3)   The Same Community occupancy percentage is 97.2 percent for MH, 100.0 percent for RV, and 97.8 percent for the blended MH and RV. The MH and RV blended occupancy is derived from 111,838 developed sites, of which 109,421 were occupied. The Same Community occupancy percentage for 2019 has been adjusted to reflect incremental period-over-period growth from filled expansion sites and the conversion of transient RV sites to annual RV sites. The adjusted Same Community occupancy percentage for 2020 is derived from 110,773 developed sites, of which 109,421 were occupied. The number of developed sites excludes RV transient sites and approximately 1,100 recently completed but vacant MH expansion sites.

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

(5)  Net leased sites do not include occupied sites acquired during that year.

(6)  Lines of credit and other debt includes the Company’s MH floor plan facility. The effective interest rate on the MH floor plan facility was 6.0 percent for the quarters ended September 30 and June 30, 2020, and 7.0 percent for the quarters ended March 31, 2020, and December 31 and September 30, 2019. However, the Company pays no interest if the floor plan balance is repaid within 60 days.

(7)   Other expense, net was as follows (in thousands):

  Three Months Ended   Nine Months Ended
  September 30, 2020   September 30, 2019   September 30, 2020   September 30, 2019
Foreign currency remeasurement gain / (loss) $ 360        $ (107 )     $ (55 )     $ (92 )  
Collateralized receivables derecognition gain —        31        —        31     
Contingent consideration value expense (2,724 )     (1,286 )     (2,890 )     (1,421 )  
Long term lease termination expense (160 )     —        (433 )     (42 )  
Other expense, net $ (2,524 )     $ (1,362 )     $ (3,378 )     $ (1,524 )  

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

(9)   Core FFO(1) includes an adjustment of $(0.3) million and zero for the three and nine months ended September 30, 2020 and $(0.4) million and zero for the three and nine months ended September 30, 2019, respectively, for estimated loss of earnings in excess of the applicable business interruption deductible in relation to the Company’s Florida Keys communities that required redevelopment due to damages sustained from Hurricane Irma in September 2017.

(10) 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 Rental Program, and to assess the overall growth and performance of the Rental Program and financial impact on the Company’s operations.

(11) This is a transferred asset transaction which has been classified as collateralized receivables and the cash received from this transaction has been classified as a secured borrowing. The interest income and interest expense accrue at the same rate and amount. In November 2019, the Company derecognized the transferred financial assets and secured borrowing as legal isolation criteria to be accounted for as a true sale were satisfied pursuant to the terms of the purchase agreement.

(12) Same Community results net $10.1 million and $8.9 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the three months ended September 30, 2020 and 2019, respectively. Same Community results net $28.4 million and $25.8 million of utility revenue against the related utility expense in property operating and maintenance expense for the nine months ended September 30, 2020 and 2019, respectively.

(13) Same Community supplies and repair expense excludes $0.2 million and $0.6 million for the three and nine months ended September 30, 2019, of expenses incurred for recently acquired properties to bring the properties up to the Company’s operating standards, including items such as tree trimming and painting costs that do not meet the Company’s capitalization policy.

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

(15) Calculated using actual results without rounding.

(16) Acquisitions and other is comprised of 11 properties acquired and three properties that the Company has an interest in, but does not operate in 2020, 42 properties acquired in 2019, one property being operated under a temporary use permit, three Florida Keys properties that require redevelopment as a result of damage sustained from Hurricane Irma in 2017, five recently opened ground-up developments, one property undergoing redevelopment, and other miscellaneous transactions and activity.

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

(18) As of September 30, 2020, total portfolio MH occupancy was 96.4 percent inclusive of the impact of approximately 1,400 recently constructed but vacant MH expansion sites, and annual RV occupancy was 100.0 percent.

(19) Total sites for development were comprised of approximately 76.1 percent for expansion, 22.2 percent for greenfield development and 1.7 percent for redevelopment.

(20) Recurring capital expenditures are necessary to maintain asset quality, including purchasing and replacing assets used to operate the community. These capital expenditures include items such as: major road, driveway, pool improvements; clubhouse renovations; adding or replacing street lights; playground equipment; signage; maintenance facilities; manager housing and property vehicles. The minimum capitalized amount is five hundred dollars.

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

(22) Capital expenditures related to acquisitions represent the purchase price of existing operating communities and land parcels to develop expansions or new communities. These costs for the nine months ended September 30, 2020 include $28.5 million of capital improvements identified during due diligence that are necessary to bring the communities to the Company’s operating standards. For the years ended December 31, 2019 and 2018, these costs were $50.7 million and $94.6 million, respectively. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, often require 24 to 36 months after closing to complete.

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

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

Certain financial information has been revised to reflect reclassifications in prior periods to conform to current period presentation.

Attachment

  • Exhibit 99.1 Press Release and Supplemental 2020.09.30

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