Sun Communities, Inc. Reports 2014 Fourth Quarter Results and 2015 Guidance

NEWS RELEASE
February 24, 2015

Southfield, MI, February 24, 2015 - 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 fourth quarter results.

Highlights:  Three Months Ended December 31, 2014

• Funds from operations ("FFO")⁽¹⁾ excluding transaction costs was $0.69 per diluted share and OP unit ("Share") for the three months ended December 31, 2014.
   
• Same site Net Operating Income ("NOI")⁽²⁾ increased by 6.2 percent as compared to the three months ended December 31, 2013.
   
• Revenue producing sites increased by 475 sites bringing total portfolio occupancy to 92.6 percent.
   
• Home sales increased 11.3 percent as compared to the fourth quarter of 2013.
   
• Completed the purchase of the first phase of the American Land Lease ("ALL") 59 community portfolio acquisition in November 2014 and the second phase on January 6, 2015, for approximately $1.33 billion.

"The last half of 2014 was spent planning for and executing the on-boarding of the American Land Lease portfolio.  The transition was executed swiftly and we are encouraged by the early contribution the properties are making to our expanded portfolio," said Gary A. Shiffman, Chairman and CEO.  "With our core portfolio continuing to produce strong results, we believe we have successfully created an enhanced platform that is positioned to provide both short term and long term future growth," Shiffman added.

Funds from  Operations ("FFO")⁽¹⁾

FFO⁽¹⁾ excluding certain items was $35.2 million and $30.7 million, or $0.69 and $0.78 per Share, for the three months ended December 31, 2014 and 2013, respectively.  For the twelve months ended December 31, 2014 and 2013, FFO⁽¹⁾ excluding certain items was $148.4 million and $121.5 million, or $3.37 and $3.22 per Share, respectively.

Net Income/(Loss) Attributable to Common Stockholders

Net loss attributable to common stockholders for the fourth quarter of 2014 was $(13.1) million, or $(0.28) per diluted common share, as compared to net income of  $0.1 million, for the fourth quarter of 2013. 

Net income attributable to common stockholders for the year ended December 31, 2014 was $22.4 million, or $0.54 per diluted common share, as compared to net income of  $10.6 million, or $0.31 per diluted common share, for the year ended December 31, 2013.

Community Occupancy

Total portfolio occupancy increased to 92.6 percent at December 31, 2014 from 89.7 percent at December 31, 2013.  During the fourth quarter of 2014, revenue producing sites increased by 475 sites as compared to 573 revenue producing sites gained in the fourth quarter of 2013.

During the year ended December 31, 2014, revenue producing sites increased by 1,890 sites as compared to an increase of 1,885 sites during the year ended December 31, 2013. 

Same Site Results

For the 163 communities owned throughout 2014 and 2013, fourth quarter 2014 total revenues increased 6.6 percent and total expenses increased 7.6 percent, resulting in an increase in NOI⁽²⁾ of 6.2 percent over the fourth quarter of 2013.  Same site occupancy increased to 93.2 percent at December 31, 2014 from 91.5 percent at December 31, 2013.

For the year ended December 31, 2014, total revenues increased 6.6 percent and total expenses increased 4.1 percent, resulting in an increase in NOI⁽²⁾ of 7.7 percent over the year ended December 31, 2013.

Home Sales

During the fourth quarter of 2014, 552 homes were sold as compared to 496 homes sold during the fourth quarter of 2013.  Rental home sales, which are included in total home sales, were 237 and 235 for the fourth quarters of 2014 and 2013, respectively. 

During the year ended December 31, 2014, 1,966 homes were sold compared to 1,929 homes sold during the year ended December 31, 2013.  For the 113 new homes and 1,853 pre-owned homes sold during the year, the average selling price was $83,750 and $24,010, respectively.  Rental home sales, which are included in total home sales, were 799 and 924 for the year ended December 31, 2014 and 2013, respectively.

Acquisitions

As previously announced, the Company completed the acquisition of the 59 ALL communities (and the associated manufactured homes and notes receivable) in two closings; one on November 26, 2014 and one on January 6, 2015. The aggregate consideration was $1.33 billion, consisting of assumed and new debt of $731.6  million, $161.3 million in cash, the issuance of $262.1 million in a combination of the Company's common stock and common OP units of the Company's subsidiary Sun Communities Operating Limited Partnership ("SCOLP"), and the issuance of $175.0 million in a combination of the Company's newly-created 6.50% Series A-4 Cumulative Convertible Preferred Stock and SCOLP's Series A-4 preferred OP units.

Concurrent with the transaction one of the selling entities purchased 150,000 shares of the Company's common stock and 200,000 Series A-4 Preferred OP Units of SCOLP, for an aggregate purchase price of $12.5 million.

On December 19, 2014, the Company purchased Oak Creek manufactured housing community in Coarsegold, California at a purchase price of $15.8 million, consisting of  the assumption of  $9.9 million of debt and $5.9 million in cash.  The community contains 198 sites.

During the fourth quarter of 2014 the Company announced that it entered into agreements with a group of related selling entities ("Berger") to acquire a portfolio of seven manufactured housing communities, including associated manufactured homes and certain intangibles. After acquisition the communities will be operated as six communities. The communities are located in the Orlando, Florida area, are comprised of approximately 3,150 manufactured housing sites (approximately 60% are in age-restricted communities) and are 96% occupied. In addition to the developed sites, there are approximately 380 potential expansion sites in the communities. Total consideration for the acquisition is approximately $257.6 million, including the assumption of approximately $157.5 million of debt. The balance of the consideration will be paid in a combination of up to approximately $41.8 million in cash, common OP Units of SCOLP (at an issuance price of $61 per unit) and newly-created Series C preferred OP units in SCOLP (at an issuance price of $100 per unit).

The transaction is subject to the Company's satisfaction with its due diligence investigation and customary closing conditions, including consent of the existing lenders and is expected to close in the second quarter of 2015.

Dispositions

On January 14, 2015, the Company completed the sale of one manufactured home community located in Indiana for proceeds of $18.0 million.

The Company continues to actively evaluate the portfolio for potential future dispositions in 2015, seeking to redeploy capital to geographic locations providing greater future returns to our stockholders.

Debt Transactions

During the quarter, in addition to the debt transactions related to the ALL acquisition, the Company entered into a fifteen year loan agreement under which it borrowed $74.0 million at a blended fixed interest rate of 3.65%. The loan is collateralized by one recreational vehicle community which was unencumbered and one manufactured home community whose previous debt was extinguished in the third quarter of 2014.

Equity Transaction

Between  December 23, 2014 and January 8, 2015 the Company sold 500,000 shares of its common stock through its at the market  sales program at a weighted average price of $63.46 per share. Net proceeds from the transactions were $31.3 million.

2015 Guidance

The Company anticipates 2015 FFO⁽¹⁾ per Share will be in the range of  $3.53 to 3.63 per Share.

Revenues and expenses contain a component of seasonality; therefore, FFO⁽¹⁾ per Share is not earned evenly throughout the year.  The Company expects estimated FFO⁽¹⁾ to be earned, 24%, 23% , 28% and 25% in the first, second, third and fourth quarters, respectively.

FFO⁽¹⁾ guidance for the first quarter of 2015 is $0.84-$0.86 per Share.

The Company's guidance is based on several key variables and assumptions, which are summarized below.

• Rent Increase: The weighted average site rental increase for the total portfolio is expected to be 3.4%.
   
• Occupancy: Revenue producing sites in the Company's total portfolio are expected to increase by approximately 2,100 sites, bringing total portfolio occupancy to 93.9%.
   
• Recreational Vehicle Revenue: Revenue from the Company's recreational vehicle communities contains a component of transient revenue from guest stays that are other than a full year or full season.  Transient revenue is expected to be approximately $34.1 million and is expected to be earned 25%, 18.8%, 43.2%, 13% in the first, second, third and fourth quarters, respectively.
   
• Same Site Portfolio: The Company's same site property portfolio of 177 communities is expected to generate revenue growth of approximately 6.3% and operating expense growth of 2.6% resulting in NOI⁽²⁾  growth of approximately 7.9%. Revenue producing sites are expected to increase by approximately 1,600 sites in our same site portfolio.

^* The foregoing table nets $20.9 million of utility revenue against the related utility expense in property operating and maintenance expense.

• Acquisition Portfolio:  Information pertaining to the 73 properties excluded from the Company's same site portfolio is presented in the table below.

• Home Sales: the table below details our 2015 projected home sales.

 The gain on sale of the rental homes, which is included in the table above and excluded from FFO ⁽¹⁾, is expected to approximate $7.5 million.

Other Income: Interest income, ancillary revenues, net, brokerage commissions and other income, net, is expected to approximate $23.0 million.
  

• Rental Home Program: Guidance assumes an increase of approximately 1,000 occupied rental units; approximately 72% of these additions are expected to be in communities acquired or expanded.

• General and Administrative Expenses-real property: These expenses are estimated at $36.0 - $37.0 million.
   
• General and Administrative Expenses-home sales and rental: These expenses are estimated at $13.0 -$13.5 million.
   
• Expansions: The Company continues to expand communities that are near 95% occupied and which continue to exhibit strong demand. Guidance includes the expansion of 8 communities located in Texas, California, Ohio and Maryland which will add approximately 800 developed sites by year end. The expansions have an estimated fill rate of 6-8 sites per month.
   
• Acquisitions: Guidance includes acquisitions completed through the date of this release, a $5.5 million MH acquisition and  the Berger transaction as described above. No additional prospective acquisitions are included. The Company continues to evaluate additional acquisition opportunities. All transaction related costs are assumed to be added back in the calculation of FFO⁽¹⁾.
   
• Dispositions: Guidance includes the effect of dispositions completed through the date of this release.  No prospective dispositions are included.
   
•  Weighted Average Shares : Guidance assumes the following fully diluted weighted average shares.

The estimates and assumptions presented above represent the mid-point of 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 fourth quarter operating results will be held on Tuesday, February 24th, 2015 at 11:00 A.M. (EST). To participate, call toll-free 888-539-3696. Callers outside the U.S. or Canada can access the call at 719-325-2469.  A replay will be available following the call through March 10, 2015, 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 8682902.  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 242 communities comprising approximately 88,900 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, 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 (Loss) 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.