Sun Communities, Inc. Reports 2014 Third Quarter Results

NEWS RELEASE
October 30, 2014

Southfield, MI, October 30, 2014 - Sun Communities, Inc. (NYSE: SUI) (the "Company"), a real estate investment trust ("REIT") that owns and operates manufactured housing and recreational vehicle communities, today reported its third quarter results.

Highlights:  Three Months Ended September 30, 2014

• FFO⁽¹⁾ excluding transaction costs was $0.96 per diluted share and OP unit ("Share") for the three months ended September 30, 2014 as compared to $0.82 per Share for the three months ended September 30, 2013.
   
• Same site Net Operating Income ("NOI")⁽²⁾ increased by 9.2 percent as compared to the three months ended September 30, 2013.
   
• Revenue producing sites increased by 428 sites bringing total portfolio occupancy to 92.5 percent.
   
• Announced the American Land Lease ("ALL") 59 community portfolio acquisition for  approximately $1.32 billion.
   
• Sold six communities, three located in Michigan, two located in Indiana and one in Ohio for total proceeds of $44.6 million.
   
• Raised $349.1 million in  proceeds from a follow-on offering of 6.9 million shares of common stock.

"This has been a very significant quarter for the Company.  The ALL acquisition will strengthen our holdings with high quality communities in our best markets, provides additional opportunities for solid growth, and substantially increases our market cap," said Gary A. Shiffman, Chairman and CEO. "At the same time, key metrics, such as occupancy increases, revenue increases and same site NOI growth, are very strong and continue to trend in a positive direction, while applications to live in our communities are at a historical high."

Funds from Operations ("FFO")⁽¹⁾

FFO⁽¹⁾ excluding transaction costs was $42.1 million and $32.1 million, or $0.96 and $0.82 per Share for the three months ended September 30, 2014 and 2013, respectively.  For the nine months ended September 30, 2014 and 2013, FFO⁽¹⁾ excluding transaction costs was $113.2 million and $90.9 million, or $2.69 and $2.44 per Share, respectively.

Net Income Attributable to Common Stockholders

Net income attributable to common stockholders for the third quarter of 2014 was $22.7 million, or $0.54 per diluted common share, as compared to net income of  $3.7 million, or $0.10 per diluted common share, for the third quarter of 2013. 

Net income attributable to common stockholders for the nine months ended September 30, 2014 was $35.4 million, or $0.89 per diluted common share, as compared to net income of  $10.5 million, or $0.31 per diluted common share, for the nine months ended September 30, 2013.

Community Occupancy

Total portfolio occupancy increased to 92.5 percent at September 30, 2014 from 89.6 percent at September 30, 2013.  During the third quarter of 2014, revenue producing sites increased by 428 sites as compared to 197 revenue producing sites gained in the third quarter of 2013.

During the nine months ended September 30, 2014, revenue producing sites increased by 1,415 sites as compared to an increase of 1,312 sites during the nine months ended September 30, 2013. 

Same Site Results

For the 163 communities owned throughout 2014 and 2013, third quarter 2014 total revenues increased 6.5 percent and total expenses increased 0.7 percent, resulting in an increase in NOI⁽²⁾ of 9.2 percent over the third quarter of 2013.  Same site occupancy increased to 92.9 percent at September 30, 2014 from 91.4 percent at September 30, 2013.

For the nine months ended September 30, 2014, total revenues increased 6.6 percent and total expenses increased 3.0 percent, resulting in an increase in NOI⁽²⁾ of 8.2 percent over the nine months ended September 30, 2013.

Home Sales

During the third quarter of 2014, 524 homes were sold as compared to 487 homes sold during the third quarter of 2013.  Rental home sales, which are included in total home sales, were 208 and 239 for the third quarters of 2014 and 2013, respectively. 

During the nine months ended September 30, 2014, 1,414 homes were sold compared to 1,433 homes sold during the nine months ended September 30, 2013.  For the 80 new homes and 1,334 pre-owned homes sold during the first nine months of the year, the average selling price was $85,306 and $24,006, respectively.  Rental home sales, which are included in total home sales, were 562 and 689 for the nine months ended September 30, 2014 and 2013, respectively.

Acquisitions

As previously announced, the Company intends to acquire the ALL portfolio as well as other manufactured housing communities from Green Courte Partners and related funds for approximately $1.32 billion.  The portfolio  is primarily comprised of age-restricted manufactured home communities. The transaction is subject to limited confirmatory diligence and customary closing conditions including loan assumptions, and is expected to close in two stages, with 34 properties expected to close no later than December 31, 2014, and the remaining 25 properties by January 6, 2015.

"The acquisition marketplace continues to be very active. Our acquisitions team has identified those manufactured housing and RV community opportunities which meet our criteria presenting us with a full pipeline of properties to further the Company's growth strategies," Shiffman said.

Sale of Communities

The Company completed the sale of six manufactured housing communities during the quarter for proceeds totaling $44.6 million.  Three of the communities were located in Michigan, two communities were located in Indiana and one community was located in Ohio.

Debt Transactions

During the quarter, the Company entered into a ten year loan agreement under which it borrowed $63.5 million at a blended interest rate of 4.56%. The loan is collateralized by five recreational vehicle communities. The proceeds were used to pay down the Company's line of credit.

Also during the quarter, the Company paid in full $74.9 million of debt, unencumbering eight manufactured home communities.

Equity Transaction

On September 23, 2014, the Company completed a follow-on offering of 6,900,000 shares of common stock at a price of $50.60 per share. Proceeds from the offering were $349.1 million. The Company used the proceeds to pay down the Company's line of credit and intends to use the remainder towards the portfolio acquisition described above and working capital.

2014 Guidance

Guidance for the remainder of 2014, as presented below, assumes the completion of the acquisition of the first 34 ALL properties in mid- November 2014, excludes transactions and debt extinguishment costs and includes dilution from the Company's recently completed equity offering.

• Same Site Portfolio: Updated same site portfolio performance is being provided to remove recently completed dispositions.

*The foregoing table nets $18.8 million of utility revenue against the related utility expense in property operating and maintenance expense.

• Acquisition Portfolio: Information pertaining to the 55 properties excluded from the Company's same site portfolio is presented in the table below, including estimated operating results from 34 of the ALL properties expected to close in 2014.

The estimates and assumptions are forward looking based on the Company's current assessment of economic and market conditions,  but may be affected by the risks outlined below under the caption "Forward-Looking Statements" and may differ materially from actual results.

Earnings Conference Call

A conference call to discuss third quarter operating results will be held on Thursday, October 30, 2014 at 11:00 A.M. (EDT). To participate, call toll-free 888-539-3696. Callers outside the U.S. or Canada can access the call at 719-325-2452.  A replay will be available following the call through November 13, 2014, and can be accessed toll-free by calling 888-203-1112 or by calling 719-457-0820.  The Conference ID number for the call and the replay is 5390763.  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 currently owns and operates a portfolio of 184 communities comprising approximately 70,000 developed sites.

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

Contact

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

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

These forward-looking statements reflect the Company's current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, some of which are beyond our 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 the recent acquisitions, the ability to integrate future acquisitions smoothly and efficiently, the closing of the ALL acquisition on expected time frames and terms, changes in market rates of interest, the ability of manufactured home buyers to obtain financing, the level of repossessions by manufactured home lenders and those risks and uncertainties referenced under the headings entitled "Risk Factors" contained in our 2013 Annual Report, and the Company's other periodic filings with the Securities and Exchange Commission.

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

⁽¹⁾      Funds from operations ("FFO") is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as net income (loss) (computed in accordance with generally accepted accounting principles "GAAP"), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company's operating performance. Management generally considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not readily apparent from net loss. Management believes that the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. FFO is computed in accordance with the Company's interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company.

Because FFO excludes significant economic components of net income (loss) including depreciation and amortization, FFO should be used as an adjunct to net income (loss) and not as an alternative to net income (loss). The principal limitation of FFO is that it does not represent cash flow from operations as defined by GAAP and is a supplemental measure of performance that does not replace net income (loss) as a measure of performance or net cash provided by operating activities as a measure of liquidity. In addition, FFO is not intended as a measure of a REIT's ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO only provides investors with an additional performance measure.

⁽²⁾      Investors in and analysts following the real estate industry utilize NOI as a supplemental performance measure. NOI is derived from revenues minus property operating expenses and real estate taxes. NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity; nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions. The Company believes that net income (loss) is the most directly comparable GAAP measurement to NOI. Net income (loss) includes interest and depreciation and amortization which often have no effect on the market value of a property and therefore limit its use as a performance measure. In addition, such expenses are often incurred at a parent company level and therefore are not necessarily linked to the performance of a real estate asset. The Company believes that NOI is helpful to investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key management tool when evaluating performance and growth of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense, and non-property specific expenses such as general and administrative expenses, all of which are significant costs, and therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.

Consolidated Balance Sheets
(in thousands, except per share amounts)

Consolidated Statements of Operations
(in thousands, except per share amounts)

Reconciliation of Net Income to FFO⁽¹⁾
(in thousands, except per share amounts)

Statement of Operations - Same Site
(in thousands except for Other Information)

⁽³⁾       Includes manufactured housing and annual/seasonal recreational vehicle sites, and excludes transient recreational vehicle sites, which are included in total developed sites.
⁽⁴⁾       Occupancy %  excludes recently completed but vacant expansion sites.
⁽⁵⁾       Weighted average rent pertains to annual/seasonal RV sites and excludes transient RV sites.

Rental Program Summary
(amounts in thousands except for *)

Homes Sales Summary
(amounts in thousands except for *)

Acquisition Summary - Properties Acquired in 2013 and 2014
(amounts in thousands except for statistical data)

⁽³⁾       Includes manufactured housing and annual/seasonal recreational vehicle sites, and excludes transient recreational vehicle sites, which are included in total developed sites.
⁽⁵⁾       Weighted average rent pertains to annual/seasonal RV sites and excludes transient RV sites.