Sun Communities, Inc. Reports 2018 Third Quarter Results

 

NEWS RELEASE
October 24, 2018

Southfield, Michigan, October 24, 2018 - 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 2018.

Financial Results for the Quarter and Nine Months Ended September 30, 2018

For the quarter ended September 30, 2018, total revenues increased $55.3 million, or 20.6 percent, to $323.5 million compared to $268.2 million for the same period in 2017. Net income attributable to common stockholders was $46.1 million, or $0.56 per diluted common share, for the quarter ended September 30, 2018, as compared to net income attributable to common stockholders of $24.1 million, or $0.31 per diluted common share, for the same period in 2017.

For the nine months ended September 30, 2018, total revenues increased $112.3 million, or 15.2 percent, to $852.9 million compared to $740.5 million for the same period in 2017. Net income attributable to common stockholders was $96.5 million, or $1.19 per diluted common share, as compared to net income attributable to common stockholders of $57.6 million, or $0.76 per diluted common share, for the same period in 2017.

Non-GAAP Financial Measures and Portfolio Performance

• Core Funds from Operations ("Core FFO")⁽¹⁾ for the quarter ended September 30, 2018, was $1.35 per diluted share and OP unit ("Share") as compared to $1.13 per Share in the prior year, an increase of 19.5 percent.
   
• Same Community⁽²⁾ Net Operating Income ("NOI")⁽¹⁾ increased by 6.2 percent for the quarter ended September 30, 2018, as compared to the same period in 2017.
   
• Same Community occupancy⁽³⁾ increased by 220 basis points to 97.8 percent, as compared to 95.6 percent at September 30, 2017.
   
• Home sales volume increased 20.6 percent to 971 homes for the quarter ended September 30, 2018, as compared to 805 homes in the same period in 2017.  New home sales volume increased 43.1 percent to 146 homes for the quarter ended September 30, 2018, as compared to 102 homes in the same period in 2017.
   
• Revenue producing sites increased by 628 sites for the quarter ended September 30, 2018, as compared to a 394 site increase in the same period in 2017.

Gary Shiffman, Chief Executive Officer of Sun Communities stated, "Our third quarter results demonstrate the ongoing strength of our platform. We delivered solid operational results and continued to position the Company for sustained long term growth.  Core FFO increased 19.5 percent driven by the strength of our MH and RV same community portfolio, 220 basis points in same community occupancy gains and the integration of communities acquired over the last twelve months.  Continued strength in our home sales provides evidence of the desirability of our communities and reinforces our commitment to pursue expansions and new developments - essential ingredients in providing sustained industry leading results."

OPERATING HIGHLIGHTS

Community Occupancy

Total portfolio occupancy was 96.1 percent at September 30, 2018, and 96.2 percent at September 30, 2017. The slight decline in occupancy was primarily attributable to recently constructed but vacant MH expansion sites.

During the quarter ended September 30, 2018, revenue producing sites increased by 628 sites, as compared to 394 revenue producing sites gained during the third quarter of 2017. During the nine months ended September 30, 2018, revenue producing sites increased by 1,878 sites, as compared to an increase of 1,833 revenue producing sites during the nine months ended September 30, 2017.

Same Community⁽²⁾ Results

For the 336 stabilized communities owned and operated by the Company since January 1, 2017, NOI⁽¹⁾ for the quarter ended September 30, 2018 increased 6.2 percent over the same period in 2017, as a result of a 6.3 percent increase in revenues and a 6.6 percent increase in operating expenses. Expenses were elevated primarily as a result of supply and repair costs as well as changes to certain insurance claim reserves. Same Community occupancy⁽³⁾ increased to 97.8 percent at September 30, 2018 from 95.6 percent at September 30, 2017.

For the nine months ended September 30, 2018, total revenues increased by 6.1 percent  while total expenses increased by 5.9 percent, resulting in an increase in NOI⁽¹⁾ of 6.2 percent over the nine months ended September 30, 2017.

Home Sales

During the quarter ended September 30, 2018, the Company sold 971 homes as compared to 805 homes sold during the same period in 2017, a 20.6 percent increase. Rental home sales, which are included in total home sales, were 316 and 286 for the quarters ended September 30, 2018 and 2017, respectively.

During the nine months ended September 30, 2018, 2,751 homes were sold compared to 2,432 homes sold for the same period in 2017, a 13.1 percent increase. Rental sales, which are included in total home sales, were 825 and 828 for the nine months ended September 30, 2018 and 2017, respectively.

PORTFOLIO ACTIVITY

Acquisitions

As previously disclosed, during the quarter ended September 30, 2018, the Company acquired a 507 site age-restricted RV resort located in Desert Hot Springs, California for total consideration of $14.3 million. Additionally, during the quarter, the Company acquired a 210 site RV resort located in Petoskey, Michigan for total consideration of $9.0 million and a 114 site RV resort located in Moab, Utah for total consideration of $14.6 million.

Hurricanes Florence and Michael

The Company has concluded its initial assessment of the communities impacted by Hurricanes Florence and Michael which indicated minor damage primarily comprised of downed trees, wind related debris and damage to certain outdoor fixtures.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

Debt Transactions

During the quarter ended September 30, 2018, the Company repaid one collateralized term loan of $30.5 million with an interest rate of 6.34 percent. The loan was due to mature on March 1, 2019.

As of September 30, 2018, the Company had $3.0 billion of debt outstanding. The weighted average interest rate was 4.50 percent and the weighted average maturity was 9.4 years. The Company had $113.6 million of unrestricted cash on hand. At period-end the Company's net debt to trailing twelve month Recurring EBITDA⁽¹⁾ ratio was 5.4 times.

As previously disclosed, during the quarter ended September 30, 2018, the Company entered into a $228.0 million collateralized term loan with a 4.10 percent fixed rate and a 20 year term.

Equity Transactions

During the quarter ended September 30, 2018, the Company closed an underwritten registered public offering of 5,060,000 shares of common stock. Proceeds from the offering were $499.9 million after deducting expenses related to the offering. The Company used the net proceeds of this offering to repay borrowings under the revolving loan and the term loan under our senior credit facility.

During the quarter ended September 30, 2018, the Company issued 398,516 shares of common stock through its At-the-Market ("ATM") equity sales program at a weighted average price of $100.19 per share. Net proceeds from the sales were $39.4 million.

GUIDANCE 2018

The Company is updating full year 2018 total portfolio guidance to take into account the contribution from closed acquisitions and the impact of completed equity share issuances during the quarter. Updated guidance is as follows:

Total Portfolio
Number of communities: 370

The Company is adjusting its 2018 Same Community NOI⁽¹⁾ growth guidance range for the year to 6.75 percent to 7.0 percent, from the prior range of 6.75 percent to 7.25 percent, reflecting the impact of third quarter same community expenses. Guidance does not include prospective acquisitions or 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 25, 2018 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 8, 2018 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 13682866. The conference call will be available live on Sun Communities' website www.suncommunities.com. Replay will also be available on the website.

Sun Communities, Inc. is a REIT that, as of September 30, 2018, owned, operated, or had an interest in a portfolio of 370 communities comprising over 127,000 developed sites in 31 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
		Ryan Lumb		(949) 640-8780		rlumb@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, 2018)

 

Balance Sheets                                                                                                                                              
(amounts in thousands)

		9/30/2018				12/31/2017
ASSETS:
Land		$	1,187,502			$	1,107,838
Land improvements and buildings		5,523,554				5,102,014
Rental homes and improvements		559,290				528,074
Furniture, fixtures and equipment		174,315				144,953
Investment property		7,444,661				6,882,879
Accumulated depreciation		(1,390,684		)		(1,237,525		)
Investment property, net		6,053,977				5,645,354
Cash and cash equivalents		113,556				10,127
Inventory of manufactured homes		41,030				30,430
Notes and other receivables, net		167,698				163,496
Collateralized receivables, net (4)		112,228				128,246
Other assets, net		165,237				134,304
Total assets		$	6,653,726			$	6,111,957
LIABILITIES:
Mortgage loans payable		$	2,819,225			$	2,867,356
Secured borrowings (4)		113,089				129,182
Preferred Equity - Sun NG Resorts - mandatorily redeemable		35,277				-
Preferred OP units - mandatorily redeemable		37,338				41,443
Lines of credit (5)		-				41,257
Distributions payable		63,250				55,225
Advanced reservation deposits and rent		135,647				132,205
Other liabilities		163,459				138,536
Total liabilities		3,367,285				3,405,204
Commitments and contingencies		-				-
Series A-4 preferred stock		31,739				32,414
Series A-4 preferred OP units		10,026				10,652
Equity Interests - NG Sun LLC		21,976				-
STOCKHOLDERS' EQUITY:
Common stock		864				797
Additional paid-in capital		4,396,092				3,758,533
Accumulated other comprehensive (loss) / income		(390		)		1,102
Distributions in excess of accumulated earnings		(1,237,428		)		(1,162,001		)
Total SUI stockholders' equity		3,159,138				2,598,431
Noncontrolling interests:
Common and preferred OP units		56,018				60,971
Consolidated variable interest entities		7,544				4,285
Total noncontrolling interests		63,562				65,256
Total stockholders' equity		3,222,700				2,663,687
Total liabilities & stockholders' equity		$	6,653,726			$	6,111,957

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

	Three Months Ended September 30,
	2018				2017				Change				% Change
REVENUES:
Income from real property (excluding transient revenue)	$	184,414			$	169,533			$	14,881			8.8	%
Transient revenue	45,193				28,730				16,463				57.3	%
Revenue from home sales	46,131				33,197				12,934				39.0	%
Rental home revenue	13,589				12,757				832				6.5	%
Ancillary revenues	27,608				17,017				10,591				62.2	%
Interest	5,256				5,920				(664		)		(11.2	)%
Brokerage commissions and other revenues, net	1,347				1,091				256				23.5	%
Total revenues	323,538				268,245				55,293				20.6	%
EXPENSES:
Property operating and maintenance	71,364				59,249				12,115				20.4	%
Real estate taxes	14,533				13,053				1,480				11.3	%
Cost of home sales	33,692				25,094				8,598				34.3	%
Rental home operating and maintenance	6,139				6,775				(636		)		(9.4	)%
Ancillary expenses	15,361				10,086				5,275				52.3	%
Home selling expenses	4,043				3,290				753				22.9	%
General and administrative	20,127				18,174				1,953				10.7	%
Transaction costs (6)	24				2,167				(2,143		)		(98.9	)%
Catastrophic weather related charges, net	173				7,756				(7,583		)		(97.8	)%
Depreciation and amortization	71,982				64,232				7,750				12.1	%
Loss on extinguishment of debt	939				-				939				N/A
Interest	33,521				32,085				1,436				4.5	%
Interest on mandatorily redeemable preferred OP units / equity	1,142				790				352				44.6	%
Total expenses	273,040				242,751				30,289				12.5	%
Income before other items	50,498				25,494				25,004				98.1	%
Other income, net (7)	1,231				3,345				(2,114		)		(63.2	)%
Current tax (expense) / benefit	(213		)		38				(251		)		(660.5	)%
Deferred tax benefit	199				81				118				145.7	%
Net income	51,715				28,958				22,757				78.6	%
Less: Preferred return to preferred OP units / equity	(1,152		)		(1,112		)		(40		)		3.6	%
Less: Amounts attributable to noncontrolling interests	(4,071		)		(1,776		)		(2,295		)		129.2	%
Less: Preferred stock distribution	(432		)		(1,955		)		1,523				(77.9	)%
NET INCOME ATTRIBUTABLE TO SUI	$	46,060			$	24,115			$	21,945			91.0	%
Weighted average common shares outstanding:
Basic	81,599				78,369				3,230				4.1	%
Diluted	82,081				78,808				3,273				4.2	%
Earnings per share:
Basic	$	0.56			$	0.31			$	0.25			80.6	%
Diluted	$	0.56			$	0.31			$	0.25			80.6	%

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

		Nine Months Ended September 30,
		2018				2017				Change				% Change
REVENUES:
Income from real property (excluding transient revenue)		$	536,704			$	495,179			$	41,525			8.4	%
Transient revenue		88,784				65,599				23,185				35.3	%
Revenue from home sales		122,248				91,319				30,929				33.9	%
Rental home revenue		39,957				37,774				2,183				5.8	%
Ancillary revenues		46,207				32,086				14,121				44.0	%
Interest		15,849				15,609				240				1.5	%
Brokerage commissions and other revenues, net		3,131				2,978				153				5.1	%
Total revenues		852,880				740,544				112,336				15.2	%
EXPENSES:
Property operating and maintenance		181,579				159,861				21,718				13.6	%
Real estate taxes		42,445				39,322				3,123				7.9	%
Cost of home sales		91,195				67,999				23,196				34.1	%
Rental home operating and maintenance		16,577				16,821				(244		)		(1.5	)%
Ancillary expenses		28,985				21,995				6,990				31.8	%
Home selling expenses		11,319				9,391				1,928				20.5	%
General and administrative		61,432				55,912				5,520				9.9	%
Transaction costs (6)		138				6,990				(6,852		)		(98.0	)%
Catastrophic weather related charges, net		(1,987		)		8,124				(10,111		)		(124.5	)%
Depreciation and amortization		206,192				189,719				16,473				8.7	%
Loss on extinguishment of debt		2,657				759				1,898				250.1	%
Interest		96,919				95,765				1,154				1.2	%
Interest on mandatorily redeemable preferred OP units / equity		2,551				2,361				190				8.0	%
Total expenses		740,002				675,019				64,983				9.6	%
Income before other items		112,878				65,525				47,353				72.3	%
Other (expense) / income, net (7)		(3,214		)		5,340				(8,554		)		(160.2	)%
Current tax expense		(612		)		(133		)		(479		)		(360.2	)%
Deferred tax benefit		434				745				(311		)		(41.7	)%
Net income		109,486				71,477				38,009				53.2	%
Less: Preferred return to preferred OP units / equity		(3,335		)		(3,482		)		147				(4.2	)%
Less: Amounts attributable to noncontrolling interests		(8,392		)		(4,179		)		(4,213		)		100.8	%
Less: Preferred stock distribution		(1,305		)		(6,233		)		4,928				(79.1	)%
NET INCOME ATTRIBUTABLE TO SUI		$	96,454			$	57,583			$	38,871			67.5	%
Weighted average common shares outstanding:
Basic		80,022				75,234				4,788				6.4	%
Diluted		80,024				75,846				4,178				5.5	%
Earnings per share:
Basic		$	1.19			$	0.76			$	0.43			56.6	%
Diluted		$	1.19			$	0.76			$	0.43			56.6	%

Outstanding Securities and Capitalization 
(in thousands except for *)

Outstanding Securities - As of September 30, 2018
	Number of Units/Shares Outstanding		Conversion Rate*		If Converted		Issuance Price per unit*		Annual Distribution Rate*
Convertible Securities
Series A-1 preferred OP units	332		2.4390		810		$100		6.0%
Series A-3 preferred OP units	40		1.8605		74		$100		4.5%
Series A-4 preferred OP units	410		0.4444		182		$25		6.5%
Series C preferred OP units	314		1.1100		349		$100		4.5%
Common OP units	2,729		1.0000		2,729		N/A		Mirrors common shares distributions
Series A-4 cumulative convertible preferred stock	1,063		0.4444		472		$25		6.5%
Non-Convertible Securities
Common shares	86,355		N/A		N/A		N/A		$2.84^
^ Annual distribution is based on the last quarterly distribution annualized.

Reconciliations to Non-GAAP Financial Measures

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

	Three Months Ended  September 30,								Nine Months Ended  September 30,
	2018				2017				2018				2017
Net income attributable to Sun Communities, Inc. common stockholders:	$	46,060			$	24,115			$	96,454			$	57,583
Adjustments:
Depreciation and amortization	72,269				64,484				206,892				190,143
Amounts attributable to noncontrolling interests	4,311				1,608				7,724				3,710
Preferred return to preferred OP units	549				578				1,654				1,750
Preferred distribution to Series A-4 preferred stock	432				441				1,305				1,666
Gain on disposition of assets, net	(6,603		)		(4,309		)		(16,977		)		(11,342		)
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)	$	117,018			$	86,917			$	297,052			$	243,510
Adjustments:
Transaction costs (6)	-				2,167				-				6,990
Other acquisition related costs (9)	345				343				781				2,712
Loss on extinguishment of debt	939				-				2,657				759
Catastrophic weather related charges, net	173				7,756				(1,987		)		8,124
Loss of earnings - catastrophic weather related (10)	325				-				975				-
Other (income) / expense, net (7)	(1,231		)		(3,345		)		3,214				(5,340		)
Debt premium write-off	(411		)		-				(1,402		)		(438		)
Ground lease intangible write-off	-				-				817				-
Deferred tax benefit	(199		)		(81		)		(434		)		(745		)
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)	$	116,959			$	93,757			$	301,673			$	255,572
Weighted average common shares outstanding - basic:	81,599				78,369				80,022				75,234
Add:
Common stock issuable upon conversion of stock options	2				2				2				2
Restricted stock	480				437				633				610
Common OP units	2,731				2,761				2,735				2,758
Common stock issuable upon conversion of Series A-1 preferred OP units	813				858				825				877
Common stock issuable upon conversion of Series A-4 preferred stock	472				482				472				620
Common stock issuable upon conversion of Aspen preferred OP units	448				-				-				-
Common stock issuable upon conversion of Series A-3 preferred OP units	75				75				75				75
Weighted average common shares outstanding - fully diluted	86,620				82,984				84,764				80,176
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted	$	1.35			$	1.05			$	3.50			$	3.04
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted	$	1.35			$	1.13			$	3.56			$	3.19

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

	Three Months Ended  September 30,								Nine Months Ended  September 30,
	2018				2017				2018				2017
Net income attributable to Sun Communities, Inc., common stockholders:	$	46,060			$	24,115			$	96,454			$	57,583
Adjustments:
Interest expense	34,663				32,875				99,470				98,126
Loss on extinguishment of debt	939				-				2,657				759
Current tax (benefit) / expense	213				(38		)		612				133
Deferred tax benefit	(199		)		(81		)		(434		)		(745		)
Depreciation and amortization	71,982				64,232				206,192				189,719
Gain on disposition of assets, net	(6,603		)		(4,309		)		(16,977		)		(11,342		)
EBITDAre (1)	$	147,055			$	116,794			$	387,974			$	334,233
Adjustments:
Transaction costs (6)	24				2,167				138				6,990
Other (income) / expense, net (7)	(1,231		)		(3,345		)		3,214				(5,340		)
Catastrophic weather related charges, net	173				7,756				(1,987		)		8,124
Preferred return to preferred OP units / equity	1,152				1,112				3,335				3,482
Amounts attributable to noncontrolling interests	4,071				1,776				8,392				4,179
Preferred stock distribution	432				1,955				1,305				6,233
Plus: Gain on dispositions of assets, net	6,603				4,309				16,977				11,342
Recurring EBITDA (1)	$	158,279			$	132,524			$	419,348			$	369,243

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

	Three Months Ended  September 30,								Nine Months Ended  September 30,
	2018				2017				2018				2017
Net income attributable to Sun Communities, Inc., common stockholders:	$	46,060			$	24,115			$	96,454			$	57,583
Other revenues	(6,603		)		(7,011		)		(18,980		)		(18,587		)
Home selling expenses	4,043				3,290				11,319				9,391
General and administrative	20,127				18,174				61,432				55,912
Transaction costs (6)	24				2,167				138				6,990
Depreciation and amortization	71,982				64,232				206,192				189,719
Loss on extinguishment of debt	939				-				2,657				759
Interest expense	34,663				32,875				99,470				98,126
Catastrophic weather related charges, net	173				7,756				(1,987		)		8,124
Other (income) / expense, net (7)	(1,231		)		(3,345		)		3,214				(5,340		)
Current tax expense / (benefit)	213				(38		)		612				133
Deferred tax benefit	(199		)		(81		)		(434		)		(745		)
Preferred return to preferred OP units / equity	1,152				1,112				3,335				3,482
Amounts attributable to noncontrolling interests	4,071				1,776				8,392				4,179
Preferred stock distribution	432				1,955				1,305				6,233
NOI(1) / Gross Profit	$	175,846			$	146,977			$	473,119			$	415,959

	Three Months Ended  September 30,								Nine Months Ended  September 30,
	2018				2017				2018				2017
Real Property NOI (1)	$	143,710			$	125,961			$	401,464			$	361,595
Rental Program NOI (1)	23,847				22,060				72,625				68,759
Home Sales NOI (1) / Gross Profit	12,439				8,103				31,053				23,320
Ancillary NOI (1) / Gross Profit	12,247				6,931				17,222				10,091
Site rent from Rental Program (included in Real Property NOI) (1)(11)	(16,397		)		(16,078		)		(49,245		)		(47,806		)
NOI (1) / Gross profit	$	175,846			$	146,977			$	473,119			$	415,959

Non-GAAP and Other Financial Measures

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

	Quarter Ended
	9/30/2018				6/30/2018				3/31/2018				12/31/2017				9/30/2017
FINANCIAL INFORMATION
Total revenues	$	323,538			$	271,426			$	257,916			$	242,026			$	268,245
Net income	51,715				24,170				33,601				10,342				28,958
Net income attributable to common stockholders	46,060				20,408				29,986				7,438				24,115
Earnings per share basic*	$	0.56			$	0.25			$	0.38			$	0.09			$	0.31
Earnings per share diluted*	0.56				0.25				0.38				0.09				0.31
Recurring EBITDA (1)	$	158,279			$	128,790			$	132,222			$	119,408			$	132,524
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)	117,018				85,623				94,976				76,609				86,917
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8)	116,959				90,372				94,907				81,812				93,757
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted*	$	1.35			$	1.02			$	1.14			$	0.92			$	1.05
Core FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities (1) (8) per share - fully diluted*	1.35				1.07				1.14				0.98				1.13
BALANCE SHEETS
Total assets	$	6,653,726			$	6,492,348			$	6,149,653			$	6,111,957			$	6,157,836
Total debt	3,004,929				3,364,081				3,129,440				3,079,238				3,003,427
Total liabilities	3,367,285				3,736,621				3,471,096				3,405,204				3,351,021

	Quarter Ended
	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017
OPERATING INFORMATION*
New home sales	146			134			106			103			102
Pre-owned home sales	825			809			731			747			703
Total homes sold	971			943			837			850			805
Communities	370			367			350			350			348
Developed sites	108,142			107,192			106,617			106,036			104,359
Transient RV sites	19,432			19,007			15,693			15,856			15,915
Total sites	127,574			126,199			122,310			121,892			120,274
MH occupancy	94.9	%		95.0	%		94.7	%		94.6	%		95.2	%
RV occupancy	100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Total blended MH and RV occupancy	96.1	%		96.1	%		95.8	%		95.8	%		96.2	%

Debt Analysis
(amounts in thousands)

	Quarter Ended
	9/30/2018				6/30/2018				3/31/2018				12/31/2017				9/30/2017
DEBT OUTSTANDING
Mortgage loans payable	$	2,819,225			$	2,636,847			$	2,826,225			$	2,867,356			$	2,822,640
Secured borrowings (4)	113,089				118,242				124,077				129,182				134,884
Preferred Equity - Sun NG Resorts - mandatorily redeemable	35,277				35,277				-				-				-
Preferred OP units - mandatorily redeemable	37,338				37,338				37,338				41,443				45,903
Lines of credit (5)	-				536,377				141,800				41,257				-
Total debt	$	3,004,929			$	3,364,081			$	3,129,440			$	3,079,238			$	3,003,427
% FIXED/FLOATING
Fixed	100.0		%		84.0		%		90.6		%		93.7		%		94.9		%
Floating	-		%		16.0		%		9.4		%		6.3		%		5.1		%
Total	100.0		%		100.0		%		100.0		%		100.0		%		100.0		%
WEIGHTED AVERAGE INTEREST RATES
Mortgage loans payable	4.23		%		4.27		%		4.25		%		4.25		%		4.26		%
Preferred Equity - Sun NG Resorts - mandatorily redeemable	6.00		%		6.00		%		-		%		-		%		-		%
Preferred OP units - mandatorily redeemable	6.61		%		6.61		%		6.61		%		6.75		%		6.87		%
Lines of credit (5)	-		%		3.31		%		3.01		%		2.79		%		-		%
Average before Secured borrowings (4)	4.28		%		4.15		%		4.22		%		4.26		%		4.30		%
Secured borrowings (4)	9.95		%		9.96		%		9.97		%		9.97		%		9.98		%
Total average	4.50		%		4.36		%		4.45		%		4.50		%		4.56		%
DEBT RATIOS
Net Debt / Recurring EBITDA (1) (TTM)	5.4				6.5				6.2				6.3				6.0
Net Debt / Enterprise Value	23.9		%		28.6		%		28.8		%		28.2		%		28.3		%
Net Debt / Gross Assets	35.9		%		42.7		%		41.9		%		41.8		%		39.0		%
COVERAGE RATIOS
Recurring EBITDA (1) (TTM) / Interest	3.9				3.7				3.6				3.6				3.5
Recurring EBITDA (1) (TTM) / Interest + Pref. Distributions + Pref. Stock Distribution	3.8				3.6				3.4				3.3				3.2

MATURITIES/PRINCIPAL AMORTIZATION NEXT FIVE YEARS	Remaining 2018				2019				2020				2021				2022
Mortgage loans payable:
Maturities	$	-			$	10,141			$	58,078			$	270,680			$	82,544
Weighted average rate of maturities	-		%		5.66		%		5.92		%		5.53		%		4.46		%
Principal amortization	13,310				57,868				59,240				58,437				56,011
Secured borrowings (4)	1,296				5,471				5,970				6,410				6,606
Preferred Equity - Sun NG Resorts - mandatorily redeemable	-				-				-				-				35,277
Preferred OP units - mandatorily redeemable	1,500				1,175				-				-				-
Lines of credit (5)	-				-				-				-				-
Total	$	16,106			$	74,655			$	123,288			$	335,527			$	180,438

Statements of Operations - Same Community⁽²⁾                                                       
(amounts in thousands except for Other Information)

	Three Months Ended September 30,															Nine Months Ended September 30,
	2018				2017				Change				% Change			2018				2017				Change				% Change
REVENUES:
Income from real property (12)	$	198,883			$	187,056			$	11,827			6.3	%		$	565,213			$	532,707			$	32,506			6.1	%
PROPERTY OPERATING EXPENSES:
Payroll and benefits	18,662				18,595				67				0.4	%		50,795				50,193				602				1.2	%
Legal, taxes & insurance	2,546				1,882				664				35.3	%		6,973				5,267				1,706				32.4	%
Utilities (12)	16,274				15,396				878				5.7	%		42,949				39,884				3,065				7.7	%
Supplies and repair (13)	8,370				7,408				962				13.0	%		20,945				19,341				1,604				8.3	%
Other	6,869				6,217				652				10.5	%		18,429				16,871				1,558				9.2	%
Real estate taxes	13,761				12,862				899				7.0	%		40,627				39,027				1,600				4.1	%
Total property operating expenses	66,482				62,360				4,122				6.6	%		180,718				170,583				10,135				5.9	%
NET OPERATING INCOME (NOI)(1)	$	132,401			$	124,696			$	7,705			6.2	%		$	384,495			$	362,124			$	22,371			6.2	%

	As of September 30,
	2018				2017				Change				% Change
OTHER INFORMATION
Communities	336				336				-
MH occupancy (3)	97.2		%
RV occupancy (3)	100.0		%
MH & RV blended occupancy % (3)	97.8		%		95.6		%		2.2		%
Sites available for development	7,250				6,003				1,247				20.8	%
Monthly base rent per site - MH	$	551			$	530			$	21			3.9	%	(15)
Monthly base rent per site - RV (14)	$	447			$	425			$	22			5.0	%	(15)
Monthly base rent per site - Total (14)	$	527			$	507			$	20			4.0	%	(15)

Rental Program Summary    
(amounts in thousands except for *)

	Three Months Ended September 30,															Nine Months Ended September 30,
	2018				2017				Change				% Change			2018				2017				Change				% Change
REVENUES:
Rental home revenue	$	13,589			$	12,757			$	832			6.5	%		$	39,957			$	37,774			$	2,183			5.8	%
Site rent included in Income from real property	16,397				16,078				319				2.0	%		49,245				47,806				1,439				3.0	%
Rental program revenue	29,986				28,835				1,151				4.0	%		89,202				85,580				3,622				4.2	%
EXPENSES:
Commissions	481				891				(410		)		(46.0	)%		1,500				1,902				(402		)		(21.1	)%
Repairs and refurbishment	2,818				3,306				(488		)		(14.8	)%		7,339				7,950				(611		)		(7.7	)%
Taxes and insurance	1,580				1,546				34				2.2	%		4,673				4,489				184				4.1	%
Marketing and other	1,260				1,032				228				22.1	%		3,065				2,480				585				23.6	%
Rental program operating and maintenance	6,139				6,775				(636		)		(9.4	)%		16,577				16,821				(244		)		(1.5	)%
NET OPERATING INCOME (NOI) (1)	$	23,847			$	22,060			$	1,787			8.1	%		$	72,625			$	68,759			$	3,866			5.6	%

		As of September 30,
Occupied rental homes information:		2018				2017				Change				% Change
Number of occupied rental homes, end of period*		10,913				10,960				(47		)		(0.4	)%
Investment in occupied rental homes, end of period		$	517,321			$	482,591			$	34,730			7.2	%
Number of sold rental homes (YTD)*		825				828				(3		)		(0.4	)%
Weighted average monthly rental rate, end of period*		$	940			$	895			$	45			5.0	%

Home Sales Summary           
(amounts in thousands except for *)

	Three Months Ended September 30,															Nine Months Ended September 30,
	2018				2017				Change				% Change			2018				2017				Change				% Change
REVENUES AND EXPENSES:
New home sales	$	16,433			$	10,331			$	6,102			59.1	%		$	42,978			$	24,760			$	18,218			73.6	%
Pre-owned home sales	29,698				22,866				6,832				29.9	%		79,270				66,559				12,711				19.1	%
Revenue from home sales	46,131				33,197				12,934				39.0	%		122,248				91,319				30,929				33.9	%
New home cost of sales	14,278				8,699				5,579				64.1	%		37,187				21,044				16,143				76.7	%
Pre-owned home cost of sales	19,414				16,395				3,019				18.4	%		54,008				46,955				7,053				15.0	%
Cost of home sales	33,692				25,094				8,598				34.3	%		91,195				67,999				23,196				34.1	%
NOI / Gross Profit (1)	$	12,439			$	8,103			$	4,336			53.5	%		$	31,053			$	23,320			$	7,733			33.2	%
Gross profit - new homes	$	2,155			$	1,632			$	523			32.0	%		$	5,791			$	3,716			$	2,075			55.8	%
Gross margin % - new homes	13.1		%		15.8		%		(2.7		)%					13.5		%		15.0		%		(1.5		)%
Average selling price - new homes*	$	112,555			$	101,284			$	11,271			11.1	%		$	111,342			$	95,598			$	15,744			16.5	%
Gross profit - pre-owned homes	$	10,284			$	6,471			$	3,813			58.9	%		$	25,262			$	19,604			$	5,658			28.9	%
Gross margin % - pre-owned homes	34.6		%		28.3		%		6.3		%					31.9		%		29.5		%		2.4		%
Average selling price - pre-owned homes*	$	35,998			$	32,526			$	3,472			10.7	%		$	33,518			$	30,630			$	2,888			9.4	%
Home sales volume:
New home sales*	146				102				44				43.1	%		386				259				127				49.0	%
Pre-owned home sales*	825				703				122				17.4	%		2,365				2,173				192				8.8	%
Total homes sold*	971				805				166				20.6	%		2,751				2,432				319				13.1	%

               

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

		Three Months Ended  September 30, 2018				Nine Months Ended  September 30, 2018
REVENUES:
Income from real property		$	22,355			$	36,136
PROPERTY AND OPERATING EXPENSES:
Payroll and benefits		3,421				5,617
Legal, taxes & insurance		197				338
Utilities(12)		2,561				4,275
Supplies and repair		913				1,426
Other		3,076				5,693
Real estate taxes		772				1,818
Property operating expenses		10,940				19,167
NET OPERATING INCOME (NOI) (1)		$	11,415			$	16,969
						As of September 30, 2018
Other information:
Number of properties						34
Occupied sites						2,520
Developed sites						2,581
Occupancy %						97.6		%
Transient sites						5,063

Property Summary
(includes MH and Annual RVs)
COMMUNITIES		9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017
FLORIDA
Communities		124			124			123			123			121
Developed sites (17)		37,879			37,723			37,726			37,254			36,587
Occupied (17)		36,822			36,602			36,546			36,170			35,414
Occupancy % (17)		97.2	%		97.0	%		96.9	%		97.1	%		96.8	%
Sites for development		1,494			1,335			1,397			1,485			1,469
MICHIGAN
Communities		70			69			68			68			68
Developed sites (17)		26,116			26,039			25,881			25,881			25,498
Occupied (17)		24,830			24,709			24,319			24,147			23,996
Occupancy % (17)		95.1	%		94.9	%		94.0	%		93.3	%		94.1	%
Sites for development		1,533			1,668			1,371			1,371			1,752
TEXAS
Communities		23			23			21			21			21
Developed sites (17)		6,905			6,622			6,614			6,601			6,410
Occupied (17)		6,301			6,251			6,191			6,152			6,041
Occupancy % (17)		91.3	%		94.4	%		93.6	%		93.2	%		94.2	%
Sites for development		907			1,168			1,100			1,100			1,277
CALIFORNIA
Communities		30			29			27			27			27
Developed sites (17)		5,932			5,694			5,692			5,692			5,693
Occupied (17)		5,881			5,647			5,646			5,639			5,630
Occupancy % (17)		99.1	%		99.2	%		99.2	%		99.1	%		98.9	%
Sites for development		59			177			389			389			379
ONTARIO, CANADA
Communities		15			15			15			15			15
Developed sites (17)		3,832			3,752			3,650			3,634			3,620
Occupied (17)		3,832			3,752			3,650			3,634			3,620
Occupancy % (17)		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Sites for development		1,662			1,662			1,664			1,696			1,628
ARIZONA
Communities		11			11			11			11			11
Developed sites (17)		3,826			3,804			3,797			3,786			3,602
Occupied (17)		3,515			3,485			3,468			3,446			3,410
Occupancy % (17)		91.9	%		91.6	%		91.3	%		91.0	%		94.7	%
Sites for development		-			-			-			-			269
INDIANA
Communities		11			11			11			11			11
Developed sites (17)		3,089			3,089			3,048			2,900			2,900
Occupied (17)		2,778			2,791			2,785			2,756			2,759
Occupancy % (17)		89.9	%		90.4	%		91.4	%		95.0	%		95.1	%
Sites for development		277			277			318			466			330
OHIO
Communities		9			9			9			9			9
Developed sites (17)		2,770			2,767			2,756			2,759			2,757
Occupied (17)		2,694			2,698			2,672			2,676			2,676
Occupancy % (17)		97.3	%		97.5	%		97.0	%		97.0	%		97.1	%
Sites for development		59			59			75			75			75
COLORADO
Communities		8			8			8			8			8
Developed sites (17)		2,335			2,335			2,335			2,335			2,335
Occupied (17)		2,313			2,319			2,327			2,325			2,318
Occupancy % (17)		99.1	%		99.3	%		99.7	%		99.6	%		99.3	%
Sites for development		2,129			1,819			650			650			670
OTHER STATES
Communities		69			68			57			57			57
Developed sites (17)		15,458			15,367			15,118			15,194			14,957
Occupied (17)		14,932			14,786			14,544			14,587			14,532
Occupancy % (17)		96.6	%		96.2	%		96.2	%		96.0	%		97.2	%
Sites for development		3,195			3,233			2,381			2,385			2,540
TOTAL - PORTFOLIO
Communities		370			367			350			350			348
Developed sites (17)		108,142			107,192			106,617			106,036			104,359
Occupied (17)		103,898			103,040			102,148			101,532			100,396
Occupancy % (17)(18)		96.1	%		96.1	%		95.8	%		95.8	%		96.2	%
Sites for development		11,315			11,398			9,345			9,617			10,389
% Communities age restricted		32.2	%		32.2	%		33.7	%		33.7	%		33.6	%
TRANSIENT RV PORTFOLIO SUMMARY
Location
Florida		5,786			5,942			5,870			6,074			6,133
California		1,774			1,377			806			806			808
Texas		1,758			1,776			1,360			1,373			1,392
Arizona		1,057			1,079			1,085			1,096			1,012
Ontario, Canada		1,056			1,133			1,234			1,248			1,262
New York		910			928			610			614			623
New Jersey		893			906			931			917			1,016
Michigan		629			350			256			256			258
Maine		578			591			591			596			529
Indiana		519			519			519			520			520
Ohio		150			153			148			145			147
Other locations		4,322			4,253			2,283			2,211			2,215
Total transient RV sites		19,432			19,007			15,693			15,856			15,915

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 2018	$	161		$	14,716		$	15,485		$	379,323		$	96,246		$	1,926
2017	$	214		$	14,166		$	18,049		$	204,375		$	88,331		$	1,990
2016	$	211		$	17,613		$	19,040		$	1,822,564		$	47,958		$	2,631

Operating Statistics for Manufactured Homes and Annual RVs 

LOCATIONS		Resident Move-outs			Net Leased Sites (24)			New Home Sales			Pre-owned Home Sales			Brokered  Re-sales
Florida		1,007			652			175			220			996
Michigan		324			526			58			1,178			115
Ontario, Canada		446			198			34			21			191
Texas		173			149			20			280			32
Arizona		57			69			24			13			122
Indiana		40			22			4			184			8
Ohio		65			18			1			117			8
California		26			11			14			5			63
Colorado		4			(12	)		2			69			51
Other locations		639			245			54			278			97
Nine Months Ended September 30, 2018		2,781			1,878			386			2,365			1,683

TOTAL FOR YEAR ENDED		Resident Move-outs			New Leased Sites (24)			New Home Sales			Pre-owned Home Sales			Brokered  Re-sales
2017		2,739			2,406			362			2,920			2,006
2016		1,722			1,686			329			2,843			1,655

PERCENTAGE TRENDS		Resident Move-outs			Resident  Re-sales
2018 (TTM)		2.4	%		7.3	%
2017		1.9	%		6.6	%
2016		2.0	%		6.1	%

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 2018 actual exchange rates.

(3)  The Same Community occupancy percentage for 2018 is derived from 103,634 developed sites, of which 101,378 were occupied. The number of developed sites excludes RV transient sites and approximately 1,900 recently completed but vacant MH expansion sites.  The Same Community occupancy percentage for 2017 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)   In January 2018, new accounting guidance became effective, which clarified the definition of a business with the objective of assisting entities in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. Under previous guidance, substantially all of the Company's property acquisitions were accounted for as business combinations with identifiable assets and liabilities measured at fair value, and acquisition related costs expensed as incurred and reported as Transaction costs. Under the new guidance, substantially all of the Company's property acquisitions are accounted for as asset acquisitions. The purchase price of these properties are allocated on a relative fair value basis and direct acquisition related costs are capitalized as part of the purchase price.  Acquisitions costs that do not meet the criteria for capitalization are expensed as incurred.

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

	Three Months Ended  September 30,								Nine Months Ended  September 30,
	2018				2017				2018				2017
Foreign currency translation gain / (loss)	$	1,547			$	3,494			$	(2,640	)		$	6,444
Contingent liability remeasurement gain / (loss)	(97		)		(149		)		(285		)		(1,104		)
Long term lease termination expense	(219		)		-				(289		)		-
Other income / (expense), net	$	1,231			$	3,345			$	(3,214	)		$	5,340

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

(9)   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.

(10) Core FFO⁽¹⁾ includes an adjustment of $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.

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

(12) Same Community results net $8.4 million and $7.9 million of utility revenue against the related utility expense in property operating and maintenance expense for the three months ended September 30, 2018 and 2017, respectively and net $24.1 million and $22.9 million for the nine months ended September 30, 2018 and 2017, respectively.

(13) Same Community supplies and repair expense excludes $0.3 million and $2.6 million for the three and nine months ended September 30, 2017, 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.

(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 19 properties acquired in 2018, nine properties acquired in 2017, three Florida Keys properties that require redevelopment as a result of damage sustained from Hurricane Irma in 2017, one recently opened ground-up development, one property undergoing redevelopment, one property that we have an interest in but do not operate, and other miscellaneous transactions and activity.

(17) Includes MH and annual RV sites, and excludes transient RV sites, as applicable. Total sites for development were comprised of approximately 71.9 percent for expansion, 23.1percent for greenfield development and 5.0 percent for redevelopment.

(18) At September 30, 2018, total portfolio MH occupancy was 94.9 percent (including the impact of approximately 1,900 recently constructed but vacant MH expansion sites) and annual RV occupancy was 100.0 percent.

(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, 2018 include $73.6 million of capital improvements identified during due diligence that are necessary to bring a community to the Company's operating standards. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, 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.

(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.