Southfield, Michigan, Oct. 23, 2019 (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 2019.

Financial Results for the Quarter and Nine Months Ended September 30, 2019

For the quarter ended September 30, 2019, total revenues increased $39.0 million, or 12.1 percent, to $362.4 million compared to $323.4 million for the same period in 2018. Net income attributable to common stockholders was $57.0 million, or $0.63 per diluted common share, for the quarter ended September 30, 2019, as compared to net income attributable to common stockholders of $46.1 million, or $0.56 per diluted common share, for the same period in 2018.

For the nine months ended September 30, 2019, total revenues increased $109.4 million, or 12.8 percent, to $962.2 million compared to $852.8 million for the same period in 2018. Net income attributable to common stockholders was $131.7 million, or $1.50 per diluted common share, for the nine months ended September 30, 2019, as compared to net income attributable to common stockholders of $96.5 million, or $1.19 per diluted common share, for the same period in 2018.

Non-GAAP Financial Measures and Portfolio Performance

  • Core Funds from Operations (“Core FFO”)(1) for the quarter ended September 30, 2019, was $1.46 per diluted share and OP unit (“Share”) as compared to $1.35 in the prior year, an increase of 8.1 percent.
     
  • Same Community(2) Net Operating Income (“NOI”)(1) increased by 7.2 percent for the quarter ended September 30, 2019, as compared to the same period in 2018.
     
  • Same Community(2) Occupancy increased by 210 basis points to 98.3 percent, as compared to 96.2 percent at September 30, 2018.
     
  • Revenue Producing Sites increased by 766 sites for the quarter ended September 30, 2019, bringing total portfolio occupancy to 96.7 percent.

Gary Shiffman, Chief Executive Officer of Sun Communities stated, “During the third quarter, we continued our consistent track record of delivering strong organic growth, as portfolio-wide occupancy gains along with tight cost controls contributed to 7.2 percent same community NOI growth. These results were further enhanced by the solid performance at our recent acquisitions. Despite a competitive acquisition environment, Sun has completed over $444.0 million of transactions year to date which will strengthen our growth over time.  We believe that our ability to address sellers’ needs for flexible exit and monetization strategies will continue to be a competitive advantage in our pursuit of accretive acquisitions.”


OPERATING HIGHLIGHTS

Portfolio Occupancy

Total portfolio occupancy was 96.7 percent at September 30, 2019, compared to 96.1 percent at September 30, 2018.

During the quarter ended September 30, 2019, revenue producing sites increased by 766 sites, as compared to 628 revenue producing sites gained during the third quarter of 2018, a 22.0 percent increase.

During the nine months ended September 30, 2019, revenue producing sites increased by 2,005 sites, as compared to an increase of 1,878 revenue producing sites during the nine months ended September 30, 2018, a 6.8 percent increase.


Same Community(2) Results

For the 345 communities owned and operated by the Company since January 1, 2018, NOI(1) for the quarter ended September 30, 2019, increased 7.2 percent over the same period in 2018, as a result of a 6.1 percent increase in revenues, and 3.9 percent increase in operating expenses. Same Community occupancy(3) increased to 98.3 percent at September 30, 2019 from 96.2 percent at September 30, 2018.

For the nine months ended September 30, 2019, NOI(1) increased 7.2 percent over the same period in 2018, as a result of a 6.2 percent increase in revenues, and a 3.9 percent increase in operating expenses.


Home Sales

During the quarter ended September 30, 2019, the Company sold 906 homes as compared to 971 homes sold during the same period in 2018.  New home sales volume increased 14.4 percent to 167 new home sales for the quarter ended September 30, 2019, as compared to 146 homes in the same period in 2018. Rental home sales, which are included in total home sales, were 317 in 2019, as compared to 316 sold during 2018.

During the nine months ended September 30, 2019, 2,631 homes were sold compared to 2,751 for the same period in 2018. New home sales volume increased 11.7 percent to 431 new home sales for the nine months ended September 30, 2019, as compared to 386 homes during the same period in 2018.  Rental home sales, which are included in total home sales, were 859 in 2019, an increase of 4.1 percent over the 825 sold during 2018.


PORTFOLIO ACTIVITY

Acquisitions

During the quarter ended September 30, 2019, the Company acquired the following communities:

Community Name Type Sites  Expansion Sites State Total Purchase Price (in millions) Month Acquired
Glen Ellis RV 244   40  NH $6.0  September
Leisure Point Resort MH / RV 502 (1)   DE $44.5  September
Chincoteague Island RV      VA $19.5  August
Reunion Lake RV 202   69  LA $23.5  July

(1) Contains 201 MH sites and 301 RV sites.

For the nine months ended September 30, 2019, the Company acquired 14 communities, totaling 5,058 sites, for a total purchase price of $444.2 million.

Pending Transaction - Jensen Portfolio

On August 22, 2019, the Company entered into an agreement to acquire a 31-community manufactured housing portfolio (the “Jensen Portfolio”) for $343.6 million. The Jensen Portfolio has 5,230 operating sites and 466 additional sites available for development. The 31 communities are located in eight states across the eastern United States.  The purchase price will be paid through a combination of $274.8 million shares of common stock and cash consideration. We expect to acquire the Jensen Portfolio no later than October 31, 2019. However, the closing is subject to the satisfaction of customary closing conditions, including obtaining certain third party consents. 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.

Construction Activity

During the quarter ended September 30, 2019, the Company completed the construction of 485 sites at the following ground-up developments:

Community Name Type State Completed Construction Sites Remaining Construction Sites (1)
Carolina Pines RV SC 105  460
Jellystone Golden Valley RV NC 113  202
River Run Ranch RV CO 215  929
Smith Creek Crossing MH CO 52  258

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

During the quarter ended September 30, 2019, the Company completed the construction of 177 expansion sites in three communities. Year to date, the Company has completed the construction of 365 expansion sites in 10 communities. The Company expects to complete the construction of an additional 800 to 1,000 expansion sites by year end.


BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Series A-4 Preferred Stock and Series A-4 Preferred OP Units Conversion

The Company intends to convert 1,051,501 shares of Series A-4 preferred stock and 405,656 Series A-4 preferred OP units issued by the Operating Partnership into its common stock and common OP units. Each share of Series A-4 preferred stock is convertible into approximately 0.4444 shares of common stock and each Series A-4 preferred OP unit is convertible into approximately 0.4444 common OP units. The Company has the right under its charter and the Operating Partnership’s partnership agreement to convert these securities, if at any time after November 26, 2019, the volume weighted average of the daily volume weighted average price of a share of its common stock on the New York Stock Exchange is equal to or greater than $64.97 for at least 20 trading days in a period of 30 consecutive trading days (the “Pricing Target”). On October 17, 2019, the Company’s Board of Directors approved the conversion of all of the Series A-4 preferred stock and Series A-4 preferred OP units into common stock and common OP units, respectively, provided that the Pricing Target is satisfied on November 27, 2019. If the Pricing target is satisfied, the conversion is expected to occur on December 13, 2019.

Debt Transactions

As of September 30, 2019, the Company had $3.3 billion of debt outstanding. The weighted average interest rate was 4.3 percent and the weighted average maturity was 9.8 years. The Company had $26.2 million of unrestricted cash on hand. At period-end the Company’s net debt to trailing twelve month Recurring EBITDA(1) ratio was 5.3 times.

During the quarter ended September 30, 2019, the Company completed a $250.0 million ten-year term loan transaction which carries an interest rate of 2.925 percent.  Concurrently, the Company repaid a $134.0 million term loan which was due to mature in May 2023.


GUIDANCE 2019

The Company is revising its 2019 guidance for the following metrics:

  Previous Range
 FY 2019E
 Revised Range
FY 2019E
 4Q 2019E
Net Income per fully diluted share $1.81 - $1.87 $1.77 - $1.81 $0.28 - $0.32
Core FFO (1) per fully diluted share $4.84 - $4.90 $4.86 - $4.90 $1.04 - $1.08

Same Community(2) Portfolio
Number of communities: 345

 2019E Change %
Income from real property6.0% - 6.2%
Total property operating expenses4.1% - 4.5%
Net operating income (1)6.8% - 7.2%

Guidance estimates include the 31-community Jensen Portfolio acquisition, which is expected to close by October 31, 2019, and exclude any other prospective acquisitions and capital markets activity.

Core FFO(1) per Share estimates assume certain gain and loss items that management considers unrelated to the operational and financial performance of our core business will be adjusted from FFO(1). The estimates and assumptions presented above represent a range of possible outcomes and may differ materially from actual results. The estimates and assumptions are forward looking based on the Company’s current assessment of economic and market conditions, as well as other risks outlined below under the caption “Forward-Looking Statements.”


EARNINGS CONFERENCE CALL

A conference call to discuss third quarter operating results will be held on Thursday, October 24, 2019 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 7, 2019 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 13694212. 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, 2019, owned, operated, or had an interest in a portfolio of 389 communities comprising over 134,000 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.


Forward-Looking Statements

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

These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, some of which are beyond the Company’s control. These risks, uncertainties, and other factors may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, the performance of recent acquisitions, the ability to integrate future acquisitions smoothly and efficiently, changes in market rates of interest, changes in foreign currency exchange rates, the ability of manufactured home buyers to obtain financing and the level of repossessions by manufactured home lenders. Further details of potential risks that may affect the Company are described in its periodic reports filed with the U.S. Securities and Exchange Commission, including in the “Risk Factors” section of the Company’s Annual Report on Form 10-K.

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


Investor Information                                                            



RESEARCH COVERAGE      
       
Firm Analyst Phone Email
Bank of America Merrill Lynch Joshua Dennerlein (646) 855-1681 joshua.dennerlein@baml.com
BMO Capital Markets John Kim (212) 885-4115 johnp.kim@bmo.com
Citi Research Michael Bilerman (212) 816-1383 michael.bilerman@citi.com
  Nicholas Joseph (212) 816-1909 nicholas.joseph@citi.com
Evercore ISI Steve Sakwa (212) 446-9462 steve.sakwa@evercoreisi.com
  Samir Khanal (212) 888-3796 samir.khanal@evercoreisi.com
Green Street Advisors John Pawlowski (949) 640-8780 jpawlowski@greenstreetadvisors.com
RBC Capital Markets Wes Golladay (440) 715-2650 wes.golladay@rbccm.com
Robert W. Baird & Co. Drew Babin (610) 238-6634 dbabin@rwbaird.com
Wells Fargo Todd Stender (562) 637-1371 todd.stender@wellsfargo.com
       
       
INQUIRIES      
       
Sun Communities welcomes questions or comments from stockholders, analysts, investment managers, media, or any prospective investor. Please address all inquiries to our Investor Relations department.
       
At Our Website www.suncommunities.com    
       
By Email investorrelations@suncommunities.com  
       
By Phone (248) 208-2500    
       
       
       
       
       
       
       
       


Portfolio Overview                                                                           
(As of September 30, 2019)




Balance Sheets                                                                                                                                              
(amounts in thousands)



  (Unaudited)  
  September 30, 2019 December 31, 2018
Assets    
Land $1,311,103  $1,201,945 
Land improvements and buildings 6,200,895  5,586,250 
Rental homes and improvements 614,002  571,661 
Furniture, fixtures and equipment 251,363  201,090 
Investment property 8,377,363  7,560,946 
Accumulated depreciation (1,619,924) (1,442,630)
Investment property, net 6,757,439  6,118,316 
Cash and cash equivalents 26,198  50,311 
Marketable securities 64,818  49,037 
Inventory of manufactured homes 55,234  49,199 
Notes and other receivables, net 174,934  160,077 
Collateralized receivables, net (4) 93,054  106,924 
Other assets, net 226,177  176,162 
Total Assets $7,397,854  $6,710,026 
Liabilities    
Mortgage loans payable $2,967,128  $2,815,957 
Secured borrowings on collateralized receivables (4) 93,669  107,731 
Preferred Equity - Sun NG Resorts - mandatorily redeemable 35,249  35,277 
Preferred OP units - mandatorily redeemable 34,663  37,338 
Lines of credit (5) 140,632  128,000 
Distributions payable 69,726  63,249 
Advanced reservation deposits and rent 137,797  133,698 
Other liabilities 242,119  157,862 
Total Liabilities 3,720,983  3,479,112 
Commitments and contingencies    
Series A-4 preferred stock 31,402  31,739 
Series A-4 preferred OP units 9,540  9,877 
Series D preferred OP units 51,248   
Equity Interests - NG Sun LLC and NG Whitewater 27,461  21,976 
Stockholders' Equity    
Common stock 907  864 
Additional paid-in capital 4,854,958  4,398,949 
Accumulated other comprehensive loss (2,825) (4,504)
Distributions in excess of accumulated earnings (1,353,214) (1,288,486)
Total Sun Communities, Inc. stockholders' equity 3,499,826  3,106,823 
Noncontrolling interests    
Common and preferred OP units 49,540  53,354 
Consolidated variable interest entities 7,854  7,145 
Total noncontrolling interests 57,394  60,499 
Total Stockholders' Equity 3,557,220  3,167,322 
Total Liabilities, Temporary Equity and Stockholders' Equity $7,397,854  $6,710,026 



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



 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 Change % Change September 30, 2019 September 30, 2018 Change % Change
Revenues               
Income from real property (excluding transient revenue)$202,205  $184,414  $17,791  9.6% $588,272  $536,704  $51,568  9.6%
Transient revenue54,218  45,193  9,025  20.0% 111,029  88,784  22,245  25.1%
Revenue from home sales49,805  46,131  3,674  8.0% 136,665  122,248  14,417  11.8%
Rental home revenue14,444  13,589  855  6.3% 42,827  39,957  2,870  7.2%
Ancillary revenue31,999  27,608  4,391  15.9% 57,746  46,207  11,539  25.0%
Interest income4,770  5,256  (486) (9.2)% 14,489  15,849  (1,360) (8.6)%
Brokerage commissions and other revenues, net5,002  1,222  3,780  309.3% 11,190  3,073  8,117  264.1%
Total Revenues362,443  323,413  39,030  12.1% 962,218  852,822  109,396  12.8%
Expenses               
Property operating and maintenance79,095  71,656  7,439  10.4% 202,892  181,977  20,915  11.5%
Real estate taxes15,399  14,533  866  6.0% 46,455  42,445  4,010  9.4%
Cost of home sales36,318  33,692  2,626  7.8% 100,030  91,195  8,835  9.7%
Rental home operating and maintenance6,008  6,236  (228) (3.7)% 15,887  16,778  (891) (5.3)%
Ancillary expenses18,707  15,361  3,346  21.8% 38,288  28,985  9,303  32.1%
Home selling expenses3,988  4,043  (55) (1.4)% 10,938  11,319  (381) (3.4)%
General and administrative expenses22,975  19,763  3,212  16.3% 68,559  60,972  7,587  12.4%
Catastrophic weather related charges, net341  173  168  97.1% 1,302  (1,987) 3,289  (165.5)%
Depreciation and amortization76,532  71,982  4,550  6.3% 229,241  206,192  23,049  11.2%
Loss on extinguishment of debt12,755  528  12,227  2,315.7% 13,478  1,255  12,223  973.9%
Interest expense32,219  33,932  (1,713) (5.0)% 99,894  98,321  1,573  1.6%
Interest on mandatorily redeemable preferred OP units / equity1,216  1,142  74  6.5% 3,491  2,551  940  36.8%
Total Expenses305,553  273,041  32,512  11.9% 830,455  740,003  90,452  12.2%
Income Before Other Items56,890  50,372  6,518  12.9% 131,763  112,819  18,944  16.8%
Remeasurement of marketable securities12,661    12,661  N/A 16,548    16,548  N/A
Other income / (expense), net (6)(4,408) 1,231  (5,639) (458.1)% (1,489) (3,214) 1,725  (53.7)%
Income from nonconsolidated affiliates77  126  (49) (38.9)% 814  59  755  1,279.7%
Current tax expense(420) (213) (207) 97.2% (906) (612) (294) 48.0%
Deferred tax benefit / (expense)(349) 199  (548) (275.4)% (36) 434  (470) (108.3)%
Net Income64,451  51,715  12,736  24.6% 146,694  109,486  37,208  34.0%
Less: Preferred return to preferred OP units / equity(1,599) (1,152) 447  38.8% (4,640) (3,335) 1,305  39.1%
Less: Amounts attributable to noncontrolling interests(5,422) (4,071) 1,351  33.2% (9,048) (8,392) 656  7.8%
Net Income attributable to Sun Communities, Inc.57,430  46,492  10,938  23.5% 133,006  97,759  35,247  36.1%
Less: Preferred stock distribution(428) (432) (4) (0.9)% (1,288) (1,305) (17) (1.3)%
Net Income attributable to Sun Communities, Inc. common stockholders$57,002  $46,060  $10,942  23.8% $131,718  $96,454  $35,264  36.6%
                
Weighted average common shares outstanding - basic89,847  81,599  8,248  10.1% 87,499  80,022  7,477  9.3%
Weighted average common shares outstanding - diluted90,332  82,081  8,251  10.1% 87,931  80,024  7,907  9.9%
                
Basic earnings per share$0.63  $0.56  $0.07  12.5% $1.49  $1.19  $0.30  25.2%
Diluted earnings per share$0.63  $0.56  $0.07  12.5% $1.50  $1.19  $0.31  26.1

 

 

 

 
%


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

Outstanding Securities - As of September 30, 2019
          
 Number of Units/Shares Outstanding Conversion Rate* If Converted Issuance Price per unit* Annual Distribution Rate*
Non-convertible securities         
Common shares90,683 N/A N/A N/A $3.00^
          
Convertible securities         
Series A-1 preferred OP units316 2.4390 771 $100 6.0%
Series A-3 preferred OP units40 1.8605 75 $100 4.5%
Series A-4 preferred OP units406 0.4444 180 $25 6.5%
Series C preferred OP units310 1.1100 345 $100 4.5%
Series D preferred OP units489 0.8000 391 $100 3.8%
Common OP units2,282 1.0000 2,282 N/A Mirrors common shares distributions
Series A-4 preferred stock1,052 0.4444 468 $25 6.5%
^ Annual distribution is based on the last quarterly distribution annualized.


Capitalization - As of September 30, 2019      
       
Equity Shares Share Price* Total
Common shares 90,683  $148.45  $13,461,891 
Common OP units 2,282  $148.45  338,763 
Subtotal 92,965    $13,800,654 
       
Series A-1 preferred OP units 771  $148.45  $114,455 
Series A-3 preferred OP units 75  $148.45  11,134 
Series A-4 preferred OP units 180  $148.45  26,721 
Series C preferred OP units 345  $148.45  51,215 
Series D preferred OP units 391  $148.45  58,044 
Total diluted shares outstanding 94,727    $14,062,223 
 
Debt
Mortgage loans payable     $2,967,128 
Secured borrowings on collateralized receivables (4)     93,669 
Preferred Equity - Sun NG Resorts - mandatorily redeemable     35,249 
Preferred OP units - mandatorily redeemable     34,663 
Lines of credit (5)     140,632 
Total debt     $3,271,341 
 
Preferred
Series A-4 preferred stock 1,052  $25.00  $26,300 
Total Capitalization    

 

 

 

 

 

 

 

 

 

 

 
 $

 

 

 

 

 

 

 

 

 

 

 

 

 
17,359,864

 

 

 

 

 

 

 

 

 

 

 

 
 


Reconciliations to Non-GAAP Financial Measures


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



 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Net income attributable to Sun Communities, Inc. common stockholders$57,002  $46,060  $131,718  $96,454 
Adjustments       
Depreciation and amortization76,692  72,269  229,698  206,892 
Remeasurement of marketable securities(12,661)   (16,548)  
Amounts attributable to noncontrolling interests4,839  4,311  7,720  7,724 
Preferred return to preferred OP units530  549  1,594  1,654 
Preferred distribution to Series A-4 preferred stock428  432  1,288  1,305 
Gain on disposition of assets, net(7,334) (6,603) (21,083) (16,977)
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

$119,496  $117,018  $334,387  $297,052 
Adjustments       
Other acquisition related costs (8)375  345  902  781 
Loss on extinguishment of debt12,755  528  13,478  1,255 
Catastrophic weather related charges, net363  173  1,339  (1,987)
Loss of earnings - catastrophic weather related (9)(377) 325    975 
Other (income) / expense (6)4,408  (1,231) 1,489  3,214 
Ground lease intangible write-off      817 
Deferred tax (benefit) / expense349  (199) 36  (434)
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

$137,369  $116,959  $351,631  $301,673 
        
Weighted average common shares outstanding - basic89,847  81,599  87,499  80,022 
Add       
Common stock issuable upon conversion of stock options1  2  1  2 
Restricted stock484  480  431  633 
Common OP units2,284  2,731  2,498  2,735 
Common stock issuable upon conversion of Series A-4 preferred stock467  472  467  472 
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 units780  813  792  825 
Common stock issuable upon conversion of Aspen preferred OP units  448     
Weighted average common shares outstanding - fully diluted93,938  86,620  91,763  84,764 
        
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted

$1.27  $1.35  $3.64  $3.50 
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted

$1.46  $1.35  $3.83  $3.56 


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



 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Net Income attributable to Sun Communities, Inc. common stockholders$57,002  $46,060  $131,718  $96,454 
Adjustments       
Depreciation and amortization76,532  71,982  229,241  206,192 
Loss on extinguishment of debt12,755  528  13,478  1,255 
Interest expense33,435  35,074  103,385  100,872 
Current tax expense420  213  906  612 
Deferred tax (benefit) / expense349  (199) 36  (434)
Income from nonconsolidated affiliates(77) (126) (814) (59)
Less: Gain on dispositions of assets, net(7,334) (6,603) (21,083) (16,977)
EBITDAre (1)$173,082  $146,929  $456,867  $387,915 
Adjustments       
Catastrophic weather related charges, net341  173  1,302  (1,987)
Remeasurement of marketable securities(12,661)   (16,548)  
Other (income) / expense, net (6)4,408  (1,231) 1,489  3,214 
Preferred return to preferred OP units / equity1,599  1,152  4,640  3,335 
Amounts attributable to noncontrolling interests5,422  4,071  9,048  8,392 
Preferred stock distribution428  432  1,288  1,305 
Plus: Gain on dispositions of assets, net7,334  6,603  21,083  16,977 
Recurring EBITDA (1)$179,953  $158,129  $479,169  $419,151 



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



 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Net Income attributable to Sun Communities, Inc. common stockholders$57,002  $46,060  $131,718  $96,454 
Other revenues(9,772) (6,478) (25,679) (18,922)
Home selling expenses3,988  4,043  10,938  11,319 
General and administrative expenses22,975  19,763  68,559  60,972 
Catastrophic weather related charges, net341  173  1,302  (1,987)
Depreciation and amortization76,532  71,982  229,241  206,192 
Loss on extinguishment of debt12,755  528  13,478  1,255 
Interest expense33,435  35,074  103,385  100,872 
Remeasurement of marketable securities(12,661)   (16,548)  
Other (income) / expense, net (6)4,408  (1,231) 1,489  3,214 
Income from nonconsolidated affiliates(77) (126) (814) (59)
Current tax expense420  213  906  612 
Deferred tax (benefit) / expense349  (199) 36  (434)
Preferred return to preferred OP units / equity1,599  1,152  4,640  3,335 
Amounts attributable to noncontrolling interests5,422  4,071  9,048  8,392 
Preferred stock distribution428  432  1,288  1,305 
NOI (1) / Gross Profit$197,144  $175,457  $532,987  $472,520 


 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Real Property NOI (1)$161,929  $143,418  $449,954  $401,066 
Home Sales NOI (1) / Gross Profit13,487  12,439  36,635  31,053 
Rental Program NOI (1)25,706  23,750  78,266  72,424 
Ancillary NOI (1) / Gross Profit13,292  12,247  19,458  17,222 
Site rent from Rental Program (included in Real Property NOI) (1) (10)(17,270) (16,397) (51,326) (49,245)
NOI (1) / Gross Profit$197,144  $175,457  $532,987  $472,520 



Non-GAAP and Other Financial Measures


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



 Quarter Ended
 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018
Financial Information         
Total revenues$362,443  $312,445  $287,330  $274,004  $323,538 
Net income$64,451  $45,116  $37,127  $10,672  $51,715 
Net Income attributable to Sun Communities Inc.$57,002  $40,385  $34,331  $9,039  $46,060 
Basic earnings per share*$0.63  $0.46  $0.40  $0.11  $0.56 
Diluted earnings per share*$0.63  $0.46  $0.40  $0.11  $0.56 
          
Cash distributions declared per common share*$0.75  $0.75  $0.75  $0.71  $0.71 
          
Recurring EBITDA (1)$179,953  $151,502  $147,714  $133,335  $158,129 
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

$119,496  $108,112  $106,779  $88,562  $117,018 
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7)

$137,369  $108,002  $106,259  $92,695  $116,959 
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted*$1.27  $1.18  $1.19  $0.98  $1.35 
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (7) per share - fully diluted*$1.46  $1.18  $1.18  $1.03  $1.35 
          
Balance Sheet         
Total assets$7,397,854  $7,222,084  $7,098,662  $6,710,026  $6,653,726 
Total debt$3,271,341  $3,107,775  $3,448,117  $3,124,303  $3,004,929 
Total liabilities$3,720,983  $3,542,188  $3,846,325  $3,479,112  $3,367,285 


 Quarter Ended
 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018
Operating Information*         
Communities389  382  379  371  370 
          
Manufactured home sites88,024  87,555  87,425  84,428  84,033 
Annual RV sites25,756  25,009  24,750  24,535  24,109 
Transient RV sites20,882  20,585  20,173  19,491  19,432 
Total sites134,662  133,149  132,348  128,454  127,574 
          
MH occupancy95.7% 95.7% 95.4% 95.0% 94.9%
RV occupancy100.0% 100.0% 100.0% 100.0% 100.0%
Total blended MH and RV occupancy96.7% 96.6% 96.4% 96.1% 96.1%
          
New home sales167  139  125  140  146 
Pre-owned home sales739  788  673  738  825 
Total home sales906  927  798  878  971 


 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2019
Net Lease Sites (24)   
MH net lease sites296  1,104 
RV net lease sites470  901 
Total net leased sites766  2,005 


Debt Analysis
(amounts in thousands)



 Quarter Ended
 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018
Debt Outstanding         
Mortgage loans payable$2,967,128  $2,863,485  $2,879,017  $2,815,957  $2,819,225 
Secured borrowings on collateralized receivables (4)93,669  98,299  102,676  107,731  113,089 
Preferred Equity - Sun NG Resorts - mandatorily redeemable35,249  35,249  35,249  35,277  35,277 
Preferred OP units - mandatorily redeemable34,663  34,663  34,663  37,338  37,338 
Lines of credit (5)140,632  76,079  396,512  128,000   
Total debt$3,271,341  $3,107,775  $3,448,117  $3,124,303  $3,004,929 
          
% Fixed / Floating         
Fixed95.7% 97.6% 88.5% 95.9% 100.0%
Floating4.3% 2.4% 11.5% 4.1% %
Total100.0% 100.0% 100.0% 100.0% 100.0%
          
Weighted Average Interest Rates         
Mortgage loans payable4.13% 4.24% 4.24% 4.22% 4.23%
Preferred Equity - Sun NG Resorts - mandatorily redeemable6.00% 6.00% 6.00% 6.00% 6.00%
Preferred OP units - mandatorily redeemable6.50% 6.50% 6.50% 6.61% 6.61%
Lines of credit (5)3.23% 3.34% 3.73% 3.77% %
Average before Secured borrowings (4)4.14% 4.27% 4.22% 4.25% 4.28%
Secured borrowings on collateralized receivables (4)9.92% 9.93% 9.94% 9.94% 9.95%
Total average4.30% 4.44% 4.39% 4.45% 4.40%
          
Debt Ratios         
Net Debt / Recurring EBITDA (1) (TTM)5.3  5.2  6.0  5.6  5.4 
Net Debt / Enterprise Value18.7% 20.2% 24.1% 25.2% 24.1%
Net Debt / Gross Assets36.0% 35.1% 39.8% 37.7% 35.9%
          
Coverage Ratios         
Recurring EBITDA (1) (TTM) / Interest4.4 4.2 4.1 4.0 3.9
Recurring EBITDA (1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution4.2 4.0 3.9 3.9 3.8


Maturities / Principal Amortization Next Five YearsRemaining 2019 2020 2021 2022 2023
Mortgage loans payable         
Maturities$  $58,078  $270,680  $82,155  $185,618 
Principal amortization14,185  56,702  55,804  53,726  52,693 
Secured borrowings on collateralized receivables (4)1,220  5,166  5,553  5,747  5,756 
Preferred Equity - Sun NG Resorts - mandatorily redeemable      35,249   
Lines of credit (5)  3,632      137,000 
Total$15,405  $123,578  $332,037  $176,877  $381,067 
          
Weighted average rate of maturities% 5.92% 5.53% 4.46% 4.08%


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

 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 Change % Change September 30, 2019 September 30, 2018 Change % Change
Financial Information               
Income from real property(11)$214,452  $202,133  $12,319  6.1% $609,841  $574,491  $35,350  6.2%
                
Property operating expenses               
Payroll and benefits20,418  19,244  1,174  6.1% 55,512  52,387  3,125  6.0%
Legal, taxes, and insurance2,589  2,600  (11) (0.4)% 6,911  7,118  (207) (2.9)%
Utilities (11)17,382  16,958  424  2.5% 45,060  44,746  314  0.7%
Supplies and repair (12)9,492  8,575  917  10.7% 23,683  21,473  2,210  10.3%
Other5,670  6,013  (343) (5.7)% 15,536  16,103  (567) (3.5)%
Real estate taxes14,607  14,110  497  3.5% 44,093  41,772  2,321  5.6%
Property operating expenses70,158  67,500  2,658  3.9% 190,795  183,599  7,196  3.9%
Real Property NOI(1)$144,294  $134,633  $9,661  7.2% $419,046  $390,892  $28,154  7.2%


 As of 
 September 30, 2019 September 30, 2018 Change % Change 
Other Information        
Number of properties345     
         
MH occupancy (3)97.8%       
RV occupancy (3)100.0%       
MH & RV blended occupancy (3)98.3% 96.2% 2.1%   
         
Monthly base rent per site - MH$573  $551  $22  4.2%(14)
Monthly base rent per site - RV (13)$475  $448  $27  6.1%(14)
Monthly base rent per site - Total (13)$551  $527  $24  4.5%(14)



Home Sales Summary           
(amounts in thousands except for *)



 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 Change % Change September 30, 2019 September 30, 2018 Change % Change
Financial Information               
New homes               
New home sales$19,775  $16,433  $3,342  20.3% $51,860  $42,978  $8,882  20.7%
New home cost of sales16,761  14,278  2,483  17.4% 44,740  37,187  7,553  20.3%
NOI / Gross Profit (1)  – new homes3,014  2,155  859  39.9% 7,120  5,791  1,329  22.9%
Gross margin % – new homes15.2% 13.1% 2.1%   13.7% 13.5% 0.2%  
Average selling price – new homes*$118,413  $112,555  $5,858  5.2% $120,325  $111,342  $8,983  8.1%
                
Pre-owned homes               
Pre-owned home sales$30,030  $29,698  $332  1.1% $84,805  $79,270  $5,535  7.0%
Pre-owned home cost of sales19,557  19,414  143  0.7% 55,290  54,008  1,282  2.4%
NOI / Gross Profit (1) – pre-owned homes10,473  10,284  189  1.8% 29,515  25,262  4,253  16.8%
Gross margin % – pre-owned homes34.9% 34.6% 0.3%   34.8% 31.9% 2.9%  
Average selling price – pre-owned homes*$40,636  $35,998  $4,638  12.9% $38,548  $33,518  $5,030  15.0%
                
Total home sales               
Revenue from home sales49,805  46,131  3,674  8.0% 136,665  122,248  14,417  11.8%
Cost of home sales36,318  33,692  2,626  7.8% 100,030  91,195  8,835  9.7%
NOI / Gross Profit (1) – home sales$13,487  $12,439  $1,048  8.4% $36,635  $31,053  $5,582  18.0%
                
Statistical Information               
New home sales volume*167  146  21  14.4% 431  386  45  11.7%
Pre-owned home sales volume*739  825  (86) (10.4)% 2,200  2,365  (165) (7.0)%
Total home sales volume *906  971  (65) (6.7)% 2,631  2,751  (120) (4.4)%

               


Rental Program Summary    
(amounts in thousands except for *)



 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 Change % Change September 30, 2019 September 30, 2018 Change % Change
Financial Information               
Revenues               
Rental home revenue$14,444  $13,589  $855  6.3% $42,827  $39,957  $2,870  7.2%
Site rent from Rental Program (1) (10)17,270  16,397  873  5.3% 51,326  49,245  2,081  4.2%
Rental Program revenue31,714  29,986  1,728  5.8% 94,153  89,202  4,951  5.6%
                
Expenses               
Repairs and refurbishment3,644  2,818  826  29.3% 8,751  7,339  1,412  19.2%
Taxes and insurance1,940  1,593  347  21.8% 5,631  4,708  923  19.6%
Other424  1,825  (1,401) (76.8)% 1,505  4,731  (3,226) (68.2)%
Rental Program operating and maintenance6,008  6,236  (228) (3.7)% 15,887  16,778  (891) (5.3)%
Rental Program NOI (1)$25,706  $23,750  $1,956  8.2% $78,266  $72,424  $5,842  8.1%
                
Other Information               
Number of sold rental homes*317  316  1  0.3% 859  825  34  4.1%
Number of occupied rentals, end of period* 11,170  10,913  257  2.4%
Investment in occupied rental homes, end of period $570,053  $517,321  $52,732  10.2%
Weighted average monthly rental rate, end of period* $987  $940  $47  5.0%



Acquisitions and Other Summary (15)
(amounts in thousands except for statistical data)



  Three Months Ended Nine Months Ended
  September 30, 2019 September 30, 2019
Financial Information    
Revenues    
Income from real property $33,035  $63,548 
     
Property and operating expenses    
Payroll and benefits 5,007  10,881 
Legal, taxes & insurance 379  805 
Utilities 3,066  6,490 
Supplies and repairs 1,474  3,366 
Other 4,682  8,736 
Real estate taxes 792  2,362 
Property operating expenses 15,400  32,640 
Net operating income (NOI) (1) $17,635  $30,908 
     
    September 30, 2019
Other Information    
Number of properties   44 
Occupied sites   4,329 
Developed sites   4,608 
Occupancy %   93.9%
Transient sites   6,515 



Property Summary          
(includes MH and Annual RVs)
           
COMMUNITIES 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018
FLORIDA          
Communities 125  125  125  124  124 
Developed sites (16) 39,067  38,879  38,878  37,874  37,879 
Occupied (16) 38,155  37,944  37,932  36,868  36,822 
Occupancy % (16) 97.7% 97.6% 97.6% 97.3% 97.2%
Sites for development 1,633  1,638  1,685  1,684  1,494 
MICHIGAN          
Communities 72  72  72  70  70 
Developed sites (16) 27,906  27,891  27,777  26,504  26,116 
Occupied (16) 26,677  26,591  26,430  25,075  24,830 
Occupancy % (16) 95.6% 95.3% 95.2% 94.6% 95.1%
Sites for development 1,115  1,115  1,202  1,202  1,533 
TEXAS          
Communities 23  23  23  23  23 
Developed sites (16) 7,098  6,997  6,953  6,922  6,905 
Occupied (16) 6,834  6,683  6,529  6,428  6,301 
Occupancy % (16) 96.3% 95.5% 93.9% 92.9% 91.3%
Sites for development 1,086  1,100  1,107  1,121  907 
CALIFORNIA          
Communities 31  31  31  30  30 
Developed sites (16) 5,963  5,946  5,949  5,941  5,932 
Occupied (16) 5,917  5,896  5,902  5,897  5,881 
Occupancy % (16) 99.2% 99.2% 99.2% 99.3% 99.1%
Sites for development 302  56  56  56  59 
ARIZONA          
Communities 13  13  13  12  11 
Developed sites (16) 4,239  4,235  4,238  3,836  3,826 
Occupied (16) 3,852  3,842  3,830  3,545  3,515 
Occupancy % (16) 90.9% 90.7% 90.4% 92.4% 91.9%
Sites for development          
ONTARIO, CANADA          
Communities 15  15  15  15  15 
Developed sites (16) 4,022  3,929  3,832  3,845  3,832 
Occupied (16) 4,022  3,929  3,832  3,845  3,832 
Occupancy % (16) 100.0% 100.0% 100.0% 100.0% 100.0%
Sites for development 1,675  1,675  1,675  1,682  1,662 
INDIANA          
Communities 11  11  11  11  11 
Developed sites (16) 3,089  3,089  3,089  3,089  3,089 
Occupied (16) 2,870  2,849  2,823  2,772  2,778 
Occupancy % (16) 92.9% 92.2% 91.4% 89.7% 89.9%
Sites for development 277  277  277  277  277 
OHIO          
Communities 9  9  9  9  9 
Developed sites (16) 2,770  2,770  2,770  2,770  2,770 
Occupied (16) 2,703  2,705  2,704  2,693  2,694 
Occupancy % (16) 97.6% 97.7% 97.6% 97.2% 97.3%
Sites for development 59  59  59  59  59 
           
COLORADO          
Communities 10  8  8  8  8 
Developed sites (16) 2,423  2,335  2,335  2,335  2,335 
Occupied (16) 2,325  2,323  2,323  2,320  2,313 
Occupancy % (16) 96.0% 99.5% 99.5% 99.4% 99.1%
Sites for development 1,973  2,129  2,129  2,129  2,129 
OTHER STATES          
Communities 80  75  72  69  69 
Developed sites (16) 17,203  16,493  16,354  15,847  15,458 
Occupied (16) 16,657  16,026  15,826  15,323  14,932 
Occupancy % (16) 96.8% 97.2% 96.8% 96.7% 96.6%
Sites for development 2,437  2,705  2,987  3,048  3,195 
TOTAL - PORTFOLIO          
Communities 389  382  379  371  370 
Developed sites (16) 113,780  112,564  112,175  108,963  108,142 
Occupied (16) 110,012  108,788  108,131  104,766  103,898 
Occupancy % (16) 96.7%(17)96.6% 96.4% 96.1% 96.1%
Sites for development (18) 10,557  10,754  11,177  11,258  11,315 
% Communities age restricted 30.8% 31.4% 31.7% 32.1% 32.2%
           
TRANSIENT RV PORTFOLIO SUMMARY          
 Location          
Florida 5,506  5,693  5,650  5,917  5,786 
California 1,970  1,985  1,975  1,765  1,774 
Texas 1,642  1,693  1,717  1,752  1,758 
Maryland 1,426  1,380  1,375  1,381  1,386 
Arizona 1,421  1,424  1,421  1,423  1,057 
Ontario, Canada 937  1,043  1,131  1,046  1,056 
New York 924  935  929  925  910 
New Jersey 868  875  906  884  893 
Maine 821  848  857  572  578 
Michigan 569  584  611  576  629 
Utah 560  562  562  562  562 
Indiana 519  519  519  519  519 
Other states 3,719  3,044  2,520  2,169  2,524 
Total transient RV sites 20,882  20,585  20,173  19,491  19,432 



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



  Recurring Capital Expenditures
Average/Site*
Recurring
Capital Expenditures (19)
 Lot Modifications (20)Acquisitions (21) Expansion &
Development (22)
Revenue Producing (23)
YTD 2019$192 $16,922 $22,163 $497,123 $203,940 $8,159 
2018$263 $24,265 $22,867 $414,840 $152,672 $3,864 
2017$214 $14,166 $18,049 $204,375 $88,331 $1,990 



Operating Statistics for MH and Annual RVs



LOCATIONS Resident Move-outs Net Leased Sites (24) New Home Sales Pre-owned Home Sales Brokered  Re-sales
Florida 1,253  571  189  247  1,001 
Michigan 401  365  49  1,056  135 
Ontario, Canada 467  177  29  21  219 
Texas 245  406  37  267  48 
Arizona 62  43  32  9  125 
Indiana 45  98  6  191  16 
Ohio 71  10    106  8 
California 63  20  22  6  55 
Colorado 2  5  8  52  35 
Other states 677  310  59  245  81 
Nine Months Ended September 30, 2019 3,286  2,005  431  2,200  1,723 


TOTAL FOR YEAR ENDED Resident Move-outs Net Leased Sites (24) New Home Sales Pre-owned Home Sales Brokered  Re-sales
2018 3,435  2,600  526  3,103  2,147 
2017 2,739  2,406  362  2,920  2,006 


PERCENTAGE TRENDS Resident Move-outs Resident  Re-sales
2019 (TTM) 2.7% 7.1%
2018 2.4% 7.2%
2017 1.9% 6.6%


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 unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company’s operating performance. 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 unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated 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 2019 actual exchange rates.

(3)  The Same Community occupancy percentage for 2019 is derived from 107,553 developed sites, of which 105,683 were occupied. The number of developed sites excludes RV transient sites and approximately 1,700 recently completed but vacant MH expansion sites. Without the adjustment for vacant expansion sites, the Same Community occupancy percentage is 95.9 percent for MH, 100.0 percent for RV, and 96.8 percent for the blended MH and RV. The MH and RV blended occupancy is derived from 109,172 developed sites, of which 105,683 were occupied. The Same Community occupancy percentage for 2018 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.

(4)  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.

(5)  Lines of credit includes the Company’s MH floor plan facility. The effective interest rate on the MH floor plan facility was 7.0 percent for all periods presented. However, the Company pays no interest if the floor plan balance is repaid within 60 days.

(6)   Other income / (expense), net was as follows (in thousands):

 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Foreign currency translation gain / (loss)$(3,121) $1,547  $(26) $(2,640)
Contingent liability remeasurement loss(1,287) (97) (1,421) (285)
Long term lease termination expense  (219) (42) (289)
Other income / (expense), net$(4,408) $1,231  $(1,489) $(3,214)

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

(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 $(0.4) million and zero for the three and nine months ended September 30, 2019 and $0.3 million and $1.0 million for the three and nine months ended September 30, 2018 for estimated loss of earnings in excess of the applicable business interruption deductible in relation to our Florida Keys communities that require redevelopment due to damages sustained from Hurricane Irma in September 2017, as previously announced. Amounts recognized in 2018 were received in 2019.

(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) Same Community results net $8.9 million and $8.5 million of utility revenue against the related utility expense in property operating and maintenance expense for the quarter ended September 30, 2019 and 2018, respectively. Same Community results net $25.8 million and $24.5 million of utility revenue against the related utility expense in property operating and maintenance expense for the nine months ended September 30, 2019 and 2018, respectively. Additionally, the Company adopted ASC 842, the new leasing standard, as of January 1, 2019 which required the reclassification of bad debt expense from Property operating expense to Income from real property. To assist with comparability within Same Community results, bad debt expense has been reclassified to be shown as a reduction of Income from real property for all periods presented.

(12) Same Community supplies and repair expense excludes $0.3 million and $1.8 million for the three and nine months ended September 30, 2018, respectively, 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.

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

(14) Calculated using actual results without rounding.

(15) Acquisitions and other is comprised of eleven properties acquired, one property being operated under a temporary use permit, and two properties that we have an interest in, but do not operate in 2019, twenty properties acquired in 2018, three Florida Keys properties that require redevelopment as a result of damage sustained from Hurricane Irma in 2017, five recently opened ground-up development properties, one property undergoing redevelopment, three properties that we have an interest in, but do not operate, and other miscellaneous transactions and activity.

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

(17) As of September 30, 2019, total portfolio MH occupancy was 95.7 percent inclusive of the impact of approximately 1,700 recently constructed but vacant MH expansion sites, and annual RV occupancy was 100.0 percent.

(18) Total sites for development were comprised of approximately 74.2 percent for expansion, 19.8 percent for greenfield development and 6.0 percent for redevelopment.

(19) 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.

(20) 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.

(21) 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, 2019 include $36.6 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, 2018 and 2017, these costs were $94.6 million and $84.0 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.

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

(23) 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.

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

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

Attachment