Sun Communities, Inc. Reports 2020 Third Quarter Results

Wednesday, 21. October 2020 22:46


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*         
Communities432   426   424   422   389  
          
Manufactured home sites95,209   94,232   93,834   93,821   88,024  
Annual RV sites26,817   26,240   26,148   26,056   25,756  
Transient RV sites23,728   22,360   21,880   21,416   20,882  
Total sites145,754   142,832   141,862   141,293   134,662  
          
MH occupancy96.4 % 96.5 % 95.8 % 95.5 % 95.7 %
RV occupancy100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Total blended MH and RV occupancy97.2 % 97.3 % 96.7 % 96.4 % 96.7 %
          
New home sales155   140   119   140   167  
Pre-owned home sales555   471   644   668   739  
Total home sales710   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 sites349   759   287   437   296  
RV net leased sites427   92   13   232   470  
Total net leased sites776   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 revenue60,468    48,958    11,510    23.5  % 106,762    101,617    5,145    5.1  %
Revenue from home sales47,662    49,805    (2,143)  (4.3)% 126,779    136,665    (9,886)  (7.2)%
Rental home revenue16,171    14,444    1,727    12.0  % 46,611    42,827    3,784    8.8  %
Ancillary revenue43,803    37,259    6,544    17.6  % 66,373    67,157    (784)  (1.2)%
Interest income2,624    4,770    (2,146)  (45.0)% 7,609    14,489    (6,880)  (47.5)%
Brokerage commissions and other revenues, net5,881    5,002    879    17.6  % 13,068    11,190    1,878    16.8  %
Total Revenues400,514    362,443    38,071    10.5  % 1,014,082    962,218    51,864    5.4  %
Expenses               
Property operating and maintenance90,647    79,095    11,552    14.6  % 219,908    202,892    17,016    8.4  %
Real estate taxes17,442    15,399    2,043    13.3  % 52,341    46,455    5,886    12.7  %
Cost of home sales36,237    36,318    (81)  (0.2)% 95,450    100,030    (4,580)  (4.6)%
Rental home operating and maintenance5,949    6,444    (495)  (7.7)% 16,128    16,453    (325)  (2.0)%
Ancillary expenses20,023    18,752    1,271    6.8  % 35,731    38,333    (2,602)  (6.8)%
Home selling expenses3,652    3,972    (320)  (8.1)% 10,508    10,922    (414)  (3.8)%
General and administrative expenses27,243    22,946    4,297    18.7  % 79,493    68,530    10,963    16.0  %
Catastrophic weather-related charges, net14    341    (327)  (95.9)% 54    1,302    (1,248)  (95.9)%
Depreciation and amortization88,499    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 expense30,214    32,219    (2,005)  (6.2)% 94,058    99,894    (5,836)  (5.8)%
Interest on mandatorily redeemable preferred OP units / equity1,047    1,216    (169)  (13.9)% 3,130    3,491    (361)  (10.3)%
Total Expenses320,967    305,989    14,978    4.9  % 871,463    831,021    40,442    4.9  %
Income Before Other Items79,547    56,454    23,093    40.9  % 142,619    131,197    11,422    8.7  %
Gain / (loss) on remeasurement of marketable securities1,492    12,661    (11,169)  (88.2)% (2,636)  16,548    (19,184)  (115.9)%
Gain / (loss) on foreign currency translation4,664    (3,046)  7,710    N/M (2,441)  35    (2,476)  N/M
Gain on disposition of property5,595    —    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 affiliates1,204    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 Income89,756    64,451    25,305    39.3  % 137,633    146,694    (9,061)  (6.2)%
Less: Preferred return to preferred OP units / equity1,645    1,599    46    2.9  % 4,799    4,640    159    3.4  %
Less: Income attributable to noncontrolling interests6,907    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 - basic97,542    89,847    7,695    8.6  % 95,270    87,499    7,771    8.9  %
Weighted average common shares outstanding - diluted97,549    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 shares98,280 N/A N/A N/A $3.16^
          
Convertible Securities         
Series A-1 preferred OP units299 2.4390 728 $100 6.0%
Series A-3 preferred OP units40 1.8605 75 $100 4.5%
Series C preferred OP units309 1.1100 343 $100 4.5%
Series D preferred OP units489 0.8000 391 $100 3.8%
Series E preferred OP units90 0.6897 62 $100 5.25%
Series F preferred OP units90 0.6250 56 $100 3.0%
Series G preferred OP units261 0.6452 168 $100 3.2%
Common OP units2,473 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 amortization88,495    76,692    259,543    229,698   
Depreciation on nonconsolidated affiliates   —    28    —   
Gain / (loss) on remeasurement of marketable securities(1,492)  (12,661)  2,636    (16,548) 
Loss on remeasurement of investment in nonconsolidated affiliates446    —    1,505    —   
Loss on remeasurement of notes receivable445    —    2,311    —   
Income attributable to noncontrolling interests6,196    4,839    7,725    7,720   
Preferred return to preferred OP units498    530    1,498    1,594   
Interest Expense on Aspen preferred OP units514    —    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, net15    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 - basic97,542    89,847    95,270    87,499   
Add       
Common shares dilutive effect from forward sale agreement   —       —   
Common stock issuable upon conversion of stock options           
Restricted stock390    484    395    431   
Common OP units2,476    2,284    2,445    2,498   
Common stock issuable upon conversion of Aspen preferred OP units408    —    408    —   
Common stock issuable upon conversion of Series A-3 preferred OP units75    75    75    75   
Common stock issuable upon conversion of Series A-1 preferred OP units730    780    737    792   
Common stock issuable upon conversion of Series A-4 preferred stock—    467    —    467   
Weighted Average Common Shares Outstanding - Fully Diluted101,628    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 amortization88,499    76,532    259,453    229,241   
Loss on extinguishment of debt—    12,755    5,209    13,478   
Interest expense30,214    32,219    94,058    99,894   
Interest on mandatorily redeemable preferred OP units / equity1,047    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, net14    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 receivable445    —    2,311    —   
Loss on remeasurement of investment in nonconsolidated affiliates446    —    1,505    —   
Preferred return to preferred OP units / equity1,645    1,599    4,799    4,640   
Income attributable to noncontrolling interests6,907    5,422    8,806    9,048   
Preferred stock distribution—    428    —    1,288   
Plus: Gain on dispositions of assets, net5,511    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 expenses3,652    3,972    10,508    10,922   
General and administrative expenses27,243    22,946    79,493    68,530   
Catastrophic weather-related charges, net14    341    54    1,302   
Depreciation and amortization88,499    76,532    259,453    229,241   
Loss on extinguishment of debt—    12,755    5,209    13,478   
Interest expense30,214    32,219    94,058    99,894   
Interest on mandatorily redeemable preferred OP units / equity1,047    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 receivable445    —    2,311    —   
Income from nonconsolidated affiliates(1,204)  (513)  (1,348)  (1,380) 
Loss on remeasurement of investment in nonconsolidated affiliates446    —    1,505    —   
Current tax (benefit) / expense(107)  420    462    906   
Deferred tax (benefit) / expense(562)  349    (804)  36   
Preferred return to preferred OP units / equity1,645    1,599    4,799    4,640   
Income attributable to noncontrolling interests6,907    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 Profit11,425    13,487    31,329    36,635   
Rental Program NOI (1)29,323    25,270    86,182    77,700   
Ancillary NOI (1) / Gross Profit23,780    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 redeemable35,249   35,249   35,249   35,249   35,249  
Preferred OP units - mandatorily redeemable34,663   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         
Fixed97.6 % 96.6 % 85.2 % 94.7 % 95.7 %
Floating2.4 % 3.4 % 14.8 % 5.3 % 4.3 %
Total100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
          
Weighted Average Interest Rates         
Mortgage loans payable3.88 % 3.88 % 3.91 % 4.05 % 4.13 %
Preferred Equity - Sun NG Resorts - mandatorily redeemable6.00 % 6.00 % 6.00 % 6.00 % 6.00 %
Preferred OP units - mandatorily redeemable5.93 % 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 average3.86 % 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 Value18.3 % 17.8 % 22.6 % 19.0 % 18.7 %
Net Debt / Gross Assets31.6 % 29.7 % 35.6 % 36.0 % 36.0 %
          
Coverage Ratios         
Recurring EBITDA (1) (TTM) / Interest4.8 4.5 4.5 4.4 4.4
Recurring EBITDA (1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution4.6 4.4 4.3 4.2 4.2


Maturities / Principal Amortization Next Five Years2020 2021 2022 2023 2024
Mortgage loans payable         
Maturities$—   $—   $82,155   $185,618   $315,330  
Principal amortization14,554   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 benefits23,720   23,642   78    0.3  % 60,457   63,255   (2,798)  (4.4)%
Legal, taxes, and insurance2,385   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 taxes15,937   15,066   871    5.8  % 47,920   45,610   2,310    5.1  %
Property operating expenses84,005   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 properties366   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 sales19,294   16,761   2,533    15.1  % 47,611   44,740   2,871    6.4  %
NOI (1) / Gross Profit  – new homes4,440   3,014   1,426    47.3  % 10,925   7,120   3,805    53.4  %
Gross margin % – new homes18.7 % 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 sales16,943   19,557   (2,614)  (13.4)% 47,839   55,290   (7,451)  (13.5)%
NOI (1) / Gross Profit – pre-owned homes6,985   10,473   (3,488)  (33.3)% 20,404   29,515   (9,111)  (30.9)%
Gross margin % – pre-owned homes29.2 % 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 sales36,237   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 revenue35,272   31,714   3,558    11.2  % 102,310   94,153   8,157    8.7  %
                
Expenses               
Repairs and refurbishment3,414   4,080   (666)  (16.3)% 8,623   9,317   (694)  (7.4)%
Taxes and insurance2,059   1,940   119    6.1  % 6,078   5,631   447    7.9  %
Other476   424   52    12.3  % 1,427   1,505   (78)  (5.2)%
Rental Program operating and maintenance5,949   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          
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     143   11  
Ohio 85   42   —   67    
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.

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