[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

o TRANSITION PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes[ X ] No [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check one):

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

	March 31, 2009 (Unaudited)			December 31, 2008			(Unaudited) June 30, 2009			December 31, 2008
ASSETS
Investment property, net	$	1,084,128		$	1,089,304		$	1,080,973		$	1,099,020
Cash and cash equivalents		6,588			6,162			4,625			6,162
Inventory of manufactured homes		9,674			13,058			3,426			3,342
Investment in affiliates		3,799			3,772			3,282			3,772
Notes and other receivables		60,088			57,481			64,818			57,481
Other assets		33,250			37,152			35,106			37,152
Assets of discontinued operations		68			70			19			70
TOTAL ASSETS	$	1,197,595		$	1,206,999		$	1,192,249		$	1,206,999


LIABILITIES
Debt	$	1,141,911		$	1,139,152		$	1,150,198		$	1,139,152
Lines of credit		88,447			90,419			84,322			90,419
Other liabilities		35,904			37,240			39,276			37,240
Liabilities of discontinued operations		78			70			78			70
TOTAL LIABILITIES	$	1,266,340		$	1,266,881		$	1,273,874		$	1,266,881

Commitments and contingencies

STOCKHOLDERS’ DEFICIT
Preferred stock, $.01 par value, 10,000 shares authorized, none issued	$	—		$	—		$	—		$	—
Common stock, $.01 par value, 90,000 shares authorized (March 31, 2009 and December 31, 2008, 20,421 and 20,313 shares issued respectively)		204			203
Common stock, $.01 par value, 90,000 shares authorized (June 30, 2009 and December 31, 2008, 20,409 and 20,313 shares issued respectively)								204			203
Additional paid-in capital		460,164			459,847			461,441			459,847
Officer's notes		(5,427	)		(8,334	)		(5,296	)		(8,334	)
Accumulated other comprehensive loss		(2,855	)		(2,851	)		(1,666	)		(2,851	)
Distributions in excess of accumulated earnings		(455,957	)		(445,147	)		(469,928	)		(445,147	)
Treasury stock, at cost (March 31, 2009 and December 31, 2008, 1,802 shares)		(63,600	)		(63,600	)
Treasury stock, at cost (June 30, 2009 and December 31, 2008, 1,802 shares)								(63,600	)		(63,600	)
Total Sun Communities, Inc. stockholders' deficit		(67,471	)		(59,882	)		(78,845	)		(59,882	)
Noncontrolling interest		(1,274	)		—			(2,780	)		—
TOTAL STOCKHOLDERS’ DEFICIT		(68,745	)		(59,882	)		(81,625	)		(59,882	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,197,595		$	1,206,999		$	1,192,249		$	1,206,999

~~The~~See accompanying notes ~~are an integral part of the consolidated financial statements~~to Consolidated Financial Statements.

	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008			2009			2008
REVENUES
Income from real property	$	50,999		$	50,349		$	48,497		$	47,655		$	99,496		$	98,004
Revenue from home sales		7,461			7,503			8,218			8,768			15,679			16,271
Rental home revenue		5,200			4,996			5,187			5,136			10,387			10,132
Ancillary revenues, net		195			226			62			88			257			314
Interest		1,272			805			1,368			807			2,640			1,612
Other income		157			871
Other income (loss)								(60	)		2,829			97			3,700
Total revenues		65,284			64,750			63,272			65,283			128,556			130,033

COSTS AND EXPENSES
Property operating and maintenance		12,605			12,074			12,787			12,314			25,392			24,388
Real estate taxes		4,184			4,169			4,118			4,170			8,302			8,339
Cost of home sales		5,423			5,839			5,844			6,981			11,267			12,820
Rental home operating and maintenance		4,537			3,466			4,022			3,965			8,559			7,431
General and administrative - real property		4,166			4,158			4,900			4,697			9,066			8,855
General and administrative - home sales and rentals		1,826			1,612			1,816			1,715			3,642			3,327
Depreciation and amortization		16,204			15,861			15,915			16,211			32,119			32,072
Interest		14,245			15,380			14,739			14,570			28,984			29,950
Interest on mandatorily redeemable debt		835			844			835			844			1,670			1,688
Total expenses		64,025			63,403			64,976			65,467			129,001			128,870

Income before income taxes and net equity income (loss) from affiliates		1,259			1,347
Benefit (provision) for state income taxes		(133	)		235
Income (loss) from affiliates, net		27			(4,830	)
Income (loss) from continuing operations		1,153			(3,248	)
Income (loss) before income taxes and equity loss from affiliates								(1,704	)		(184	)		(445	)		1,163
Benefit (provision) for state income tax								(146	)		(128	)		(279	)		107
Equity loss from affiliates								(517	)		(7,720	)		(490	)		(12,550	)
Loss from continuing operations								(2,367	)		(8,032	)		(1,214	)		(11,280	)
Loss from discontinued operations		(172	)		(241	)		(160	)		(270	)		(332	)		(511	)
Net income (loss)		981			(3,489	)
Less: Net income (loss) attributable to noncontrolling interest		104			(394	)
Net income (loss) attributable to Sun Communities, Inc.	$	877		$	(3,095	)
Net loss								(2,527	)		(8,302	)		(1,546	)		(11,791	)
Less: Loss attributable to noncontrolling interest								(268	)		(934	)		(164	)		(1,328	)
Net loss attributable to Sun Communities, Inc.							$	(2,259	)	$	(7,368	)	$	(1,382	)	$	(10,463	)

Weighted average common shares outstanding:
Basic		18,511			18,077			18,469			18,162			18,399			18,119
Diluted		20,698			18,077			18,469			18,162			18,399			18,119

Basic and diluted income (loss) per share:
Basic and diluted loss per share:
Continuing operations	$	0.06		$	(0.16	)	$	(0.11	)	$	(0.39	)	$	(0.05	)	$	(0.55	)
Discontinued operations		(0.01	)		(0.01	)		(0.01	)		(0.02	)		(0.02	)		(0.03	)
Basic and diluted earnings (loss) per share	$	0.05		$	(0.17	)
Basic and diluted loss per share							$	(0.12	)	$	(0.41	)	$	(0.07	)	$	(0.58	)

Cash dividends per common share:	$	0.63		$	0.63		$	0.63		$	0.63		$	1.26		$	1.26

~~The~~See accompanying notes ~~are an integral part of the consolidated financial statements~~to Consolidated Financial Statements.

	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008			2009			2008
Amounts attributable to Sun Communities, Inc. common stockholders:
Income (loss) from continuing operations, net of state income taxes	$	1,031		$	(2,881	)
Loss from continuing operations, net of state income taxes							$	(2,116	)	$	(7,129	)	$	(1,085	)	$	(10,010	)
Loss from discontinued operations, net of state income taxes		(154	)		(214	)		(143	)		(239	)		(297	)		(453	)
Net income (loss) attributable to Sun Communities, Inc.	$	877		$	(3,095	)
Loss attributable to Sun Communities, Inc.							$	(2,259	)	$	(7,368	)	$	(1,382	)	$	(10,463	)

Common stock

Additional paid-in capital

Officer's notes

Accumulated other comprehensive loss

Distributions in excess of accumulated earnings

Treasury stock

Total Sun Communities stockholders' deficit

Non
controlling interest

Total stockholders’ deficit

Balance as of December 31, 2008

$
203

$
459,847

$
(8,334
)
$
(2,851
)
$
(445,147
)
$
(63,600
)
$
(59,882
)
$
—

$
(59,882
)
Cancellation of common stock, net

1

(132
)

—

—

—

—

(131
)

—

(131
)
Stock-based compensation - amortization and forfeitures

—

449

—

—

(25
)

—

424

—

424

Repayment of officer's notes

—

—

2,907

—

—

—

2,907

—

2,907

Net income

—

—

—

—

877

—

877

—

877

Unrealized loss on interest rate swaps

—

—

—

(4
)

—

—

(4
)

—

(4
)
Noncontrolling interest distribution

—

—

—

—

—

—

—

(1,378
)

(1,378
)
Net income attributable to noncontrolling interest

—

—

—

—

—

—

—

104

104

Cash distributions declared of $0.63 per share

—

—

—

—

(11,662
)

—

(11,662
)

—

(11,662
)
Balance as of March 31, 2009

$
204

$
460,164

$
(5,427
)
$
(2,855
)
$
(455,957
)
$
(63,600
)
$
(67,471
)
$
(1,274
)
$
(68,745
)

	Common stock		Additional paid-in capital			Officer's notes			Accumulated other comprehensive loss			Distributions in excess of accumulated earnings			Treasury stock			Total Sun Communities stockholders' deficit			Non controlling interest			Total stockholders’ deficit
Balance as of December 31, 2008	$	203	$	459,847		$	(8,334	)	$	(2,851	)	$	(445,147	)	$	(63,600	)	$	(59,882	)	$	—		$	(59,882	)
Issuance of common stock, net		1		(378	)		—			—			—			—			(377	)		—			(377	)
Stock-based compensation - amortization and forfeitures		—		1,972			—			—			(7	)		—			1,965			—			1,965
Repayment of officer's notes		—		—			3,038			—			—			—			3,038			—			3,038
Net loss		—		—			—			—			(1,382	)		—			(1,382	)		(164	)		(1,546	)
Unrealized gain on interest rate swaps		—		—			—			1,185			—			—			1,185			141			1,326
Cash distributions declared of $1.26 per share		—		—			—			—			(23,392	)		—			(23,392	)		(2,757	)		(26,149	)
Balance as of June 30, 2009	$	204	$	461,441		$	(5,296	)	$	(1,666	)	$	(469,928	)	$	(63,600	)	$	(78,845	)	$	(2,780	)	$	(81,625	)

~~The~~See accompanying notes ~~are an integral part of the consolidated financial statements~~to Consolidated Financial Statements.

	Three Months Ended March 31,						Six Months Ended June 30,
	2009			2008			2009			2008
OPERATING ACTIVITIES:
Net income (loss)	$	877		$	(3,095	)
Net loss							$	(1,546	)	$	(11,791	)
Less: Loss from discontinued operations, net of tax		(154	)		(241	)		(332	)		(511	)
Income (loss) from continuing operations		1,031			(2,854	)
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:
Noncontrolling interest allocation of income (loss)		104			(394	)
Gain from land disposition		—			(673	)
Gain on disposal of other assets		(17	)		(39	)
Loss (gain) on valuation of derivative instruments		(3	)		4
Loss from continuing operations								(1,214	)		(11,280	)
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities:
Loss (gain) from land disposition								4			(3,303	)
Gain on disposal of other assets and depreciated homes, net								(2,695	)		(1,966	)
Gain on valuation of derivative instruments								(12	)		(2	)
Stock compensation expense		418			439			1,986			1,354
Depreciation and amortization		16,789			16,861			34,319			34,095
Amortization of deferred financing costs		395			370			796			749
Net equity (income) loss from affiliates		(27	)		4,830
Change in notes receivable from sales of financed homes, net of repurchases		(410	)		504
Equity loss from affiliates								490			12,550
Change in notes receivables from financed sales of inventory homes, net of repayments								(1,716	)		(1,696	)
Change in inventory, other assets and other receivables, net		(1,599	)		(5,516	)		(248	)		(2,894	)
Change in accounts payable and other liabilities		(862	)		(1,506	)		2,904			4,093
Net cash provided by operating activities of continuing operations		15,819			12,026			34,614			31,700
Net cash used for operating activities of discontinued operations		(144	)		(84	)		(273	)		(222	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		15,675			11,942			34,341			31,478

INVESTING ACTIVITIES:
Investment in properties		(5,916	)		(6,202	)		(18,132	)		(20,031	)
Proceeds related to disposition of land		2			2,708			9			6,461
Proceeds related to disposition of other assets		32			90
Proceeds (financing) related to disposition of other assets and depreciated homes, net								167			(160	)
Payment of notes receivable and officer's notes, net		3,027			182			4,132			1,187
NET CASH USED FOR INVESTING ACTIVITIES		(2,855	)		(3,222	)		(13,824	)		(12,543	)

FINANCING ACTIVITIES:
Cancellation of common stock and Common OP Units, net		(131	)		(80	)
Redemption of common stock and OP units, net								(377	)		(360	)
Borrowings on lines of credit		39,406			25,614			80,456			49,544
Payments on lines of credit		(41,378	)		(18,750	)		(86,553	)		(59,749	)
Proceeds from issuance of notes payable and other debt		7,593			—			31,111			27,000
Payments on notes payable and other debt		(4,834	)		(2,951	)		(20,065	)		(10,112	)
Payments for deferred financing costs		(10	)		(16	)		(477	)		(308	)
Distributions to stockholders and OP unit holders		(13,040	)		(12,999	)		(26,149	)		(26,052	)
NET CASH USED FOR FINANCING ACTIVITIES		(12,394	)		(9,182	)		(22,054	)		(20,037	)

Net increase (decrease) in cash and cash equivalents		426			(462	)
Net decrease in cash and cash equivalents								(1,537	)		(1,102	)
Cash and cash equivalents, beginning of period		6,162			5,415			6,162			5,415
Cash and cash equivalents, end of period	$	6,588		$	4,953		$	4,625		$	4,313

SUPPLEMENTAL INFORMATION:
Cash paid for interest	$	12,368		$	14,065		$	25,970		$	28,248
Cash paid for interest on mandatorily redeemable debt	$	834		$	896		$	1,670		$	1,740
Noncash investing and financing activities:
Unrealized loss on interest rate swaps	$	(4	)	$	(1,416	)
Rental homes transferred from inventory to investment property for use in Rental Program	$	7,358		$	5,033
Financed home sales transferred from inventory and investment property to notes receivable	$	4,142		$	3,209
Unrealized gain (loss) on interest rate swaps							$	1,326		$	(68	)

~~The~~See accompanying ~~notes are an integral part of the consolidated financial statements~~to Consolidated Financial Statements.

These unaudited ~~consolidated financial statements~~interim Consolidated Financial Statements of Sun Communities, Inc., a Maryland corporation, ~~(the “Company”)~~ and all majority-owned or wholly-owned and controlled subsidiaries, including Sun Communities Operating Limited Partnership (the “Operating Partnership”), SunChamp LLC (“SunChamp”), and Sun Home Services, Inc. (“SHS”), have been prepared pursuant to the Securities and Exchange Commission (“SEC”) rules and regulations and in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the ~~consolidated financial statements~~Consolidated Financial Statements and accompanying notes ~~of the Company~~ included in our Annual Report on Form 10-K for the year ended December 31, 2008 as filed with the SEC on March 13, 2009, as amended on March 30, 2009 (the “2008 Annual Report”).

Reference in this report to Sun Communities, Inc., “we”, “our” and “us” and the “Company” refer to Sun Communities, Inc. and its subsidiaries, unless the context indicates otherwise.

The ~~Company’s~~accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature.

Our cable television services are held for sale and presented as discontinued operations in the ~~consolidated financial statements~~Consolidated Financial Statements and related notes. See Note 2 for additional information.

The following Notes to Consolidated Financial Statements present interim disclosures as required by the SEC. These statements have been prepared on a basis that is substantially consistent with the accounting principles applied in our 2008 Annual Report, with the exception of the impact of our adoption in the first quarter of 2009 of Statement of Financial Accounting Standards (SFAS) No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”) and FASB Staff Position Emerging Issues Task Force (“EITF”) No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (“FSP EITF 03-6-1”). See Recent Accounting Pronouncements in Note 1716 for further information on our adoption of SFAS 160 and FSP EITF 03-6-1. The accompanying consolidated financial statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature.

Certain reclassifications have been made to prior periods’ financial statements in order to conform to current period presentation.

~~The Company has~~We have investments in certain land improvements and equipment that ~~provides~~provide cable television services to certain communities within the Real Property Operations segment. In December 2008, ~~the Company~~we determined that the cable television assets could not provide the necessary return on investment to justify the capital investment required to keep up with the technological advances in the offered product. In the fourth quarter of fiscal 2008, ~~the Company~~we announced ~~its~~our intention to exit the cable television service business and recorded a $4.1 million impairment charge on the cable television assets. This impairment charge was recognized in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”).

SFAS 144 also provides criteria to evaluate if a component of an entity is deemed to be held for sale and eligible for presentation as a discontinued operation. ~~Based on the Company’s plan~~We are under contract to sell and exit the cable television services business within the next ~~twelve~~six months, the cable television services business is reported as a discontinued operation in the ~~consolidated financial statements~~Consolidated Financial Statements for all periods presented.

The following tables set forth certain summarized financial information of the discontinued operation (in thousands):

	March 31, 2009		December 31, 2008		June 30, 2009		December 31, 2008
ASSETS
Accounts receivable, net	$	14	$	16	$	19	$	16
Other assets		54		54		—		54
Total assets	$	68	$	70	$	19	$	70
LIABILITIES
Accounts payable	$	19	$	16	$	22	$	16
Deferred income		36		38		34		38
Other liabilities		23		16		22		16
Total liabilities	$	78	$	70	$	78	$	70

The following table sets forth certain information regarding investment property (in thousands):

	March 31, 2009			December 31, 2008			June 30, 2009			December 31, 2008
Land	$	116,289		$	116,292		$	116,279		$	116,292
Land improvements and buildings		1,179,703			1,177,362			1,182,359			1,177,362
Rental homes and improvements		191,232			184,933			198,233			194,649
Furniture, fixtures, and equipment		34,094			34,050			34,230			34,050
Land held for future development		26,986			26,986			26,986			26,986
Investment property		1,548,304			1,539,623			1,558,087			1,549,339
Less: Accumulated depreciation		(464,176	)		(450,319	)		(477,114	)		(450,319	)
Investment property, net	$	1,084,128		$	1,089,304		$	1,080,973		$	1,099,020

Land improvements and buildings consist primarily of infrastructure, roads, landscaping, clubhouses, maintenance buildings and amenities.

~~The Company has~~We have completed various transactions involving ~~its~~our installment notes since the third quarter of fiscal 2008. ~~The Company has~~We have received a total of ~~$35.1~~$40.1 million of cash proceeds in exchange for relinquishing ~~its~~our right, title and interest in the installment notes. ~~The Company is~~We are subject to certain recourse provisions requiring ~~the Company~~us to purchase the underlying homes collateralizing such notes, in the event of a note default and subsequent repossession of the home.

FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities” (“SFAS 140”) sets forth the criteria that must be met for control over transferred assets to be considered to have been surrendered, which includes, amongst other things: (1) the transferred assets have been isolated from the transferor, including put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee must obtain the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the transferor cannot maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. When a company transfers financial assets and fails any one of the SFAS 140 criteria, the company is prevented from derecognizing the transferred financial assets and the transaction is accounted for as a secured borrowing. The determination about whether the isolation criteria of SFAS 140 have been met to support a conclusion regarding surrender of control is largely a matter of law. As such, the evidence required for testing whether or not the first criteria of SFAS 140 has been satisfied requires a legal "true sale" opinion analyzing the treatment of the transfer under state laws as if ~~the Company was~~we were a debtor under the bankruptcy code. A "true sale" legal opinion includes several legally relevant factors, including the nature of retained interests in the loans sold. Legal opinions as to a "true sale" are never absolute and unconditional, but contain qualifications based on the inherent equitable powers of a bankruptcy court, as well as the unsettled state of the common law.

It was the intent of both parties for these transactions to qualify for sale accounting under SFAS 140 and the terms of the agreements clearly stipulate that ~~the Company has~~we have no further obligations or rights with respect to the control, management, administration, servicing, or collection of the installment notes. In addition, the transferee has obtained the right to pledge or exchange the installment notes. For federal tax purposes, ~~the Company treats~~we treat the transfers of loans which do not qualify as “true sales” under SFAS 140, as sales.

Notwithstanding these facts, ~~the Company was~~we were unable to satisfy the first criteria for sale accounting treatment under SFAS 140 and therefore, ~~the Company has~~we have recorded these transactions as a transfer of financial assets. The transferred assets have been classified as collateralized receivables and the cash proceeds received from these transactions have been classified as a secured borrowing in the Consolidated Balance ~~Sheet.~~Sheets.

The collateralized receivables earn interest income and the secured borrowings accrue borrowing costs at the same interest rates. The amount of interest income and expense recognized was ~~$0.7~~$0.9 million and $1.6 million for the three and six months ended ~~March 31, 2009.~~June 30, 2009, respectively. The collateralized receivables and secured borrowings are reduced as the related installment notes are collected from the customers. The balance of the collateralized receivables was ~~$32.5~~$36.4 million, net of a loan loss provision of $0.1 million as of ~~March 31,~~June 30, 2009. The balance of the collateralized receivables was $26.1 million, net of a loan loss provision of $0.1 million as of December 31, 2008. The outstanding balance on the secured borrowing was ~~$32.6~~$36.5 million and $26.2 million as of ~~March 31,~~June 30, 2009 and December 31, 2008, respectively.

In the event of note default, and subsequent repossession of a manufactured home, the terms of the agreement require ~~the Company~~us to repurchase the manufactured home. Default is defined as the failure to repay the installment note according to contractual terms. If default on the installment note results in repossession of the home, the home is repurchased. The repurchase price is calculated as a percentage of the outstanding principal balance of the installment note, plus any outstanding late fees, accrued interest, legal fees and escrow advances associated with the installment note. The percentage used to determine the repurchase price of the outstanding principal balance on the installment note is based on the number of payments made on the note. In general, based on the number of payments made since the loan origination date, the repurchase price is determined as follows:

The following table sets forth certain information regarding notes and other receivables (in thousands):

	March 31, 2009		December 31, 2008		June 30, 2009		December 31, 2008
Installment notes receivable on manufactured homes, net	$	19,260	$	21,232	$	20,146	$	21,232
Collateralized receivables, net (see Note 4)		32,498		26,159		36,412		26,159
Other receivables, net		8,330		10,090		8,260		10,090
Total notes and other receivables, net	$	60,088	$	57,481	$	64,818	$	57,481

The installment notes of ~~$19.3~~$20.1 million and $21.2 million as of ~~March 31,~~June 30, 2009 and December 31, 2008, respectively, are collateralized by manufactured homes. The installment notes are presented net of allowance for losses of $0.1 million as of ~~March 31,~~June 30, 2009 and December 31, 2008. The installment notes represent financing provided by ~~the Company~~us to purchasers of manufactured homes located in ~~its~~our communities. The installment notes receivable have interest payable monthly at a net weighted average interest rate and a maturity of ~~7.4~~7.8 percent and 13.1 years and 7.6 percent and 13.8 years at ~~March 31,~~June 30, 2009 and December 31, 2008, respectively.

~~The Company has~~We have completed various transactions involving ~~its~~our installment ~~notes. The Company has~~notes since the third quarter of fiscal 2008. We have received a total of ~~$35.1~~$40.1 million of cash proceeds in exchange for relinquishing ~~its~~our right, title and interest in the installment notes. These transactions were recorded as a transfer of financial assets. The transferred assets have been classified as collateralized receivables with a net balance of ~~$32.5~~$36.4 million and $26.1 million as of ~~March 31,~~June 30, 2009 and December 31, 2008, respectively. The collateralized receivables are presented net of allowance for losses of $0.1 million as of ~~March 31,~~June 30, 2009 and December 31, 2008. The collateralized receivables have interest payable monthly at a weighted average interest rate and maturity of ~~10.4~~10.7 percent and 13.7 years and 10.1 percent and 14.0 years, as of ~~March 31,~~June 30, 2009 and December 31, 2008, respectively. See Note 4 for additional information.

The net increase of $10.3 million during 2009 in the aggregate gross principal balance of the collateralized receivables ~~of $32.5 million during 2009~~ is ~~due to the following items:~~as follows (in thousands):

Other receivables were comprised of amounts due from residents of ~~$1.1~~$1.3 million (net of allowance of $0.2 million), home sale proceeds of ~~$3.5~~$3.7 million, an employee loan of $0.5 million, insurance proceeds of ~~$0.3~~$0.1 million, and rebates and other receivables of ~~$2.9~~$2.7 million as of ~~March 31,~~June 30, 2009. Other receivables were comprised of amounts due from residents of $1.6 million (net of allowance of $0.3 million), home sale proceeds of $3.7 million, an employee loan of $0.5 million, insurance proceeds of $0.3 million, and rebates and other receivables of $4.0 million as of December 31, 2008.

Officer’s notes, presented as a portion of the stockholders’ deficit in the balance sheet, are 10 year, LIBOR + 1.75% notes, with a minimum and maximum interest rate of 6% and 9%, respectively. The following table sets forth certain information regarding officer’s notes as of ~~March 31,~~June 30, 2009 and December 31, 2008 (in thousands except for shares and units):

	March 31, 2009				December 31, 2008				June 30, 2009				December 31, 2008
			Secured by				Secured by				Secured by				Secured by
Promissory Notes	Outstanding Principal Balance		Common Stock	Common OP Units	Outstanding Principal Balance		Common Stock	Common OP Units	Outstanding Principal Balance		Common Stock	Common OP Units	Outstanding Principal Balance		Common Stock	Common OP Units
Secured - $1.3 million	$	627	38,591	—	$	963	59,263	—	$	612	37,661	—	$	963	59,263	—
Secured - $6.6 million		3,187	85,690	61,646		4,894	131,591	94,669		3,110	83,625	60,161		4,894	131,591	94,669
Secured - $1.0 million		493	45,620	—		757	70,057	—		481	44,520	—		757	70,057	—
Subtotal secured notes		4,307	169,901	61,646		6,614	260,911	94,669		4,203	165,806	60,161		6,614	260,911	94,669

Unsecured - $1.0 million		493	—	—		757	—	—		481	—	—		757	—	—
Unsecured - $1.3 million		627	—	—		963	—	—		612	—	—		963	—	—
Subtotal unsecured notes		1,120	—	—		1,720	—	—		1,093	—	—		1,720	—	—
Total promissory notes	$	5,427	169,901	61,646	$	8,334	260,911	94,669	$	5,296	165,806	60,161	$	8,334	260,911	94,669

The officer’s personal liability on the secured promissory notes is limited to all accrued interest on such notes plus fifty percent of the deficiency, if any, after application of the proceeds from the sale of the secured shares and/or the secured units to the then outstanding principal balance of the promissory notes. The value of secured shares and secured OP Units total approximately ~~$2.7~~$3.1 million based on the closing price of ~~the Company’s~~our shares on the New York Stock Exchange of ~~$11.83~~$13.78 as of ~~March 31,~~June 30, 2009. The unsecured notes are fully recourse to the officer.

Total interest received was $0.1 million for the three months ended June 30, 2009 and 2008. Total interest received was $0.2 million and $0.3 million for the six months ended June 30, 2009 and 2008, respectively.

The reduction in the aggregate principal balance of these notes was ~~$2.9~~$3.0 million and ~~$0.1~~$0.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2009 and 2008, respectively. ~~Total interest received was $0.1 million for the three months ended March 31, 2009 and 2008.~~ The notes are due in two remaining installments on December 31, 2009 and 2010.

In October 2003, we purchased 5,000,000 shares of common stock of Origen Financial, Inc. (“Origen”). We own approximately 19 percent of Origen as of June 30, 2009, and our investment is accounted for using the equity method of accounting. As of June 30, 2009, our investment in Origen had a market value of approximately $4.5 million based on a quoted market closing price of $0.90 per share from the “Pink Sheet Electronic OTC Trading System”.

We recorded our equity allocation of the reported losses from Origen of $0.5 million and $7.7 million for the three months ended June 30, 2009 and 2008, respectively. We recorded our equity allocation of the reported losses from Origen of $0.4 million and $12.6 million for the six months ended June 30, 2009 and 2008, respectively.

In October 2003, the Company purchased 5,000,000 shares of common stock of Origen Financial, Inc. (“Origen”). The Company owns approximately 19% of Origen as of March 31, 2009, and its investment is accounted for using the equity method of accounting. As of March 31, 2009, the Company’s investment in Origen had a market value of approximately $3.8 million based on a quoted market closing price of $0.75 per share from the “Pink Sheet Electronic OTC Trading System”.

The Company recorded its equity allocation of the anticipated earnings from Origen of $0.1 million for the three months ended March 31, 2009. The Company recorded its equity allocation of the reported losses from Origen of $4.8 million for the three months ended March 31, 2008.

Summarized consolidated financial information of Origen at ~~March 31,~~June 30, 2009 and 2008 is presented below before elimination of inter-company transactions (amounts in thousands):

Three Months Ended
March 31,

2009

2008

Revenues

$
22,815

$
25,718

Expenses

(22,302
)

(29,051
)
Loss on sale of loan portfolio

—

(21,659
)
Net income (loss)

513

(24,992
)

Equity income (loss) from Origen affiliate

$
99

$
(4,830
)

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Revenues	$	21,042		$	21,211		$	42,747		$	45,730
Less:
Expenses		23,499			26,262			44,691			56,237
Loss on sale of loans		—			718			—			22,377
Investment impairment		—			11			—			11
Loss from continuing operations		(2,457	)		(5,780	)		(1,944	)		(32,895	)
Income from discontinued operations		—			1,006			—			3,129
Net loss	$	(2,457	)	$	(4,774	)	$	(1,944	)	$	(29,766	)

In August 2008, ~~the Company~~we entered into an agreement with four unrelated companies (“Members”) to form a new limited liability company, Origen Financial Services, LLC (the “LLC”). ~~The Company~~We contributed cash of $0.5 million toward the formation of the limited liability company. The LLC purchased the origination platform of Origen. The purpose of the venture is to originate manufactured housing installment contracts for its Members thereby eliminating the need for ~~the Company~~us to become licensed to originate loans in each of the 18 states in which ~~it does~~we do business. ~~The Company owns~~We own 25.0 percent of the LLC as of ~~March 31,~~June 30, 2009, and the investment is accounted for using the equity method of accounting. ~~The Company~~We recorded ~~a $0.1 million loss~~an insignificant amount of losses associated with our equity allocation of the LLC’s financial results for the three months ended ~~March 31,~~June 30, 2009. We recorded losses of $0.1 million associated with our equity allocation of the LLC’s financial results for the six months ended June 30, 2009.

The following table sets forth certain information regarding debt (in thousands):

The collateralized term loans totaling ~~$853.6~~$850.7 million as of ~~March 31,~~June 30, 2009, are secured by 87 properties comprising of ~~31,195~~31,199 sites representing approximately ~~$551.2 million of net book value. The mortgage notes totaling $206.8 million as of March 31, 2009, are collateralized by 18 communities comprising of 6,445 sites representing approximately $177.0~~$547.8 million of net book value.

~~The Company~~We recently exercised ~~its~~our option to extend the due date of approximately ~~$152.0~~$152.4 million of secured, variable rate borrowings to May 1, 2014. In connection with this extension, the lender increased the facility fee resulting in an increase of the effective interest rate on the borrowings, which ~~could result~~resulted in higher interest expense. ~~The Company does~~We do not believe that the lender had the right to increase the facility fee and ~~has~~have reserved all of ~~its~~our rights with respect to the increased fee. ~~The Company is~~We are considering all of ~~its~~our available remedies to challenge the validity of the increased fee.

Our Operating Partnership had $13.7 million of ~~credit facility with~~Series B-3 Preferred OP Units that were redeemable at various dates from December 1, 2009 through January 1, 2011. In October 2008, our Operating Partnership completed a ~~maximum borrowing capacity of $115.0 million, subject to certain borrowing base calculations. The outstanding balance~~three year extension on the ~~line of credit as of March 31, 2009 and December 31, 2008 was $83.0 million and $85.8 million, respectively. In addition, $3.3~~redemption dates for $11.9 million of ~~availability was used to back standby letters~~these units; the remaining $1.8 million of ~~credit as of March 31, 2009 and December 31, 2008. Borrowings under~~these units mature in accordance with the line of credit bear an interest rate of LIBOR plus 165 basis points, or prime plus 40 basis points at the Company’s option. Prime means for any month, the prevailing “prime rate” as quoted in the Wall Street Journal on last day of such calendar month. The weighted average interest rate on the outstanding borrowings was 2.20 percent as of March 31, 2009. The borrowings under the line of credit mature October 1, 2011 assuming the election of a one year extension that is available at the Company’s discretion. As of March 31, 2009 and December 31, 2008, $28.7 million and $25.9 million, respectively, were available to be drawn under the facility based on the calculation of the borrowing base at each date.original agreement.

In ~~March~~January 2009, we redeemed $0.5 million of the ~~Company entered into a $10.0~~$1.8 million ~~manufactured home floor plan facility. The floor plan facility has a committed term~~ of ~~1 year; thereafter, advances are discretionary and terms are subject to change. The interest rate is 100 basis points over~~ the ~~greater of prime or 6.0 percent (7.0 percent at March 31, 2009). The outstanding balance as of March 31, 2009 was $5.4 million.~~Series B-3 Preferred OP Units.

~~The Company’s $40.0 million floor plan facility matured on March 1, 2009. As of December 31, 2008, the outstanding balance on the floor plan was $4.6 million.~~Secured Borrowing

Since the third quarter of fiscal 2008, ~~the Company has~~we have completed various transactions involving ~~its~~our installment notes. These transactions were recorded as a transfer of financial assets, and the cash proceeds related to these transactions were recorded as a secured borrowing. See Note 4 for additional ~~information.~~information regarding our collateralized receivables and secured borrowing transactions.

The mortgage notes totaling $214.0 million as of June 30, 2009, are collateralized by 19 communities comprising of 6,390 sites representing approximately $184.8 million of net book value.

During the quarter, we completed a financing of $18.5 million with Bank of America. The loan has a three year term. The interest rate is 400 basis points over LIBOR, with a minimum rate of 5.0 percent (5.0 percent at June 30, 2009). Proceeds of $11.2 million were used to repay mortgage notes that matured during the quarter. The remaining proceeds were used to pay down our unsecured line of credit.

In June 2008, ~~the Company~~we completed a financing of $27.0 million with Bank of America (formally LaSalle Bank Midwest). The loan has a three year term, with a two year extension at ~~the Company’s~~our option. The terms of the loan require interest only payments for the first year, with the remainder of the term being amortized based on a 30 year table. The interest rate is 205 basis points over LIBOR, or prime plus 25 basis points ~~(3.5~~(2.4 percent at ~~March 31,~~June 30, 2009). The proceeds from the financing were used to repay an existing mortgage note of $4.3 million with the remainder used to pay down ~~the Company’s~~our lines of credit.

We have an unsecured revolving line of credit facility with a maximum borrowing capacity of $115.0 million, subject to certain borrowing base calculations. The ~~Company’s Operating Partnership had $13.7~~outstanding balance on the line of credit as of June 30, 2009 and December 31, 2008 was $81.2 million and $85.8 million, respectively. In addition, $3.3 million of ~~Series B-3 Preferred OP Units that were redeemable~~availability was used to back standby letters of credit as of June 30, 2009 and December 31, 2008. Borrowings under the line of credit bear an interest rate of LIBOR plus 165 basis points, or prime plus 40 basis points at ~~various dates from December~~our option. Prime means for any month, the prevailing “prime rate” as quoted in the Wall Street Journal on last day of such calendar month. The weighted average interest rate on the outstanding borrowings was 2.0 percent as of June 30, 2009. The borrowings under the line of credit mature October 1, ~~2009 through January 1, 2011. In October 2008,~~2011 assuming the ~~Company’s Operating Partnership completed~~election of a ~~three~~one year extension that is available at our discretion. As of June 30, 2009 and December 31, 2008, $30.5 million and $25.9 million, respectively, were available to be drawn under the facility based on the ~~redemption dates for $11.9 million~~calculation of ~~these units;~~ the ~~remaining $1.8 million of these units mature in accordance with the original agreement.~~borrowing base at each date.

In ~~January~~March 2009, we entered into a $10.0 million manufactured home floor plan facility. The floor plan facility has a committed term of one year; thereafter, advances are discretionary and terms are subject to change. The interest rate is 100 basis points over the ~~Company redeemed $0.5 million~~greater of ~~the $1.8 million~~prime or 6.0 percent (7.0 percent at June 30, 2009). The outstanding balance as of ~~the Series B-3 Preferred OP Units.~~June 30, 2009 was $3.1 million.

Our $40.0 million floor plan facility matured on March 1, 2009. As of December 31, 2008, the outstanding balance on the floor plan was $4.6 million.

As of ~~March 31,~~June 30, 2009, the total of maturities and amortization of debt and lines of credit during the next five years, are as follows (in thousands):

	Maturities and Amortization By Year														Maturities and Amortization By Year
	Total Due		April 2009 – March 2010		April 2010 – March 2011		April 2011 – March 2012		April 2012 – March 2013		April 2013 – March 2014		After 5 years		Total Due		Remainder of 2009		2010		2011		2012		2013		After 5 years
Lines of credit	$	88,447	$	5,447	$	—	$	83,000	$	—	$	—	$	—	$	84,322	$	—	$	3,140	$	81,182	$	—	$	—	$	—
Mortgage loans payable:
Maturities		981,258		11,200		—		103,707		14,133		26,880		825,338		988,095		—		—		103,708		31,623		26,788		825,976
Principal amortization		79,114		12,846		13,918		13,053		12,997		13,200		13,100		76,615		6,595		14,053		13,859		13,024		13,228		15,856
Preferred OP Units		48,947		1,295		—		—		7,645		40,007		—		48,947		470		825		—		4,300		3,345		40,007
Secured borrowing		32,592		1,321		1,452		1,598		1,736		1,824		24,661		36,541		710		1,528		1,681		1,849		1,958		28,815
Total	$	1,230,358	$	32,109	$	15,370	$	201,358	$	36,511	$	81,911	$	863,099	$	1,234,520	$	7,775	$	19,546	$	200,430	$	50,796	$	45,319	$	910,654

The most restrictive of ~~the Company’s~~our debt agreements place limitations on secured and unsecured borrowings and contain minimum debt service coverage, leverage, distribution and net worth requirements. As of ~~March 31,~~June 30, 2009, ~~the Company was~~we were in compliance with all covenants.

The Company’s primary share-based compensation is restricted stock. In February 2008, the Company issued twenty five thousand shares of restricted stock to certain key employees. The awards vest over a 10 year period beginning on the fourth anniversary of the grant date and have a weighted average grant date fair value of $19.92 per share.

In November 2004, ~~the~~our Board of Directors authorized ~~the Company~~us to repurchase up to 1,000,000 shares of ~~its~~our common stock. ~~The Company has~~We have 400,000 common shares remaining in the repurchase program. No common shares were repurchased during 2009 or 2008.

In March 2009, ~~the~~our Operating Partnership issued 110,444 Common OP Units to Water Oak, Ltd which were immediately converted to common stock. In May 2009, a holder of Common OP Units converted 1,824 units to common stock.

The ~~Company’s~~vesting requirements for 56,515 restricted shares granted to our employees were satisfied during the six months ended June 30, 2009.

Our shelf registration for up to $300.0 million of common stock, preferred stock and debt securities expired December 31, 2008. In March 2009, ~~the Company~~we filed a new shelf registration statement on Form S-3 with the SEC to replace the previous shelf registration for a proposed offering of up to $300.0 million of our common stock, preferred stock and debt securities. ~~Although our new shelf registration statement has been filed, the~~The SEC ~~has not~~ declared the new shelf registration ~~statement~~ effective ~~as of the date of this Form 10-Q filing.~~in May 2009.

	Three Months Ended March 31,					Three Months Ended June 30,						Six Months Ended June 30,
	2009		2008			2009			2008			2009			2008
Brokerage commissions	$	135	$	192		$	138		$	168		$	273		$	360
Gain on disposition of land and other assets, net		17		712
Gain (loss) on sale of land							(4	)		2,604			(4	)		3,303
Gain (loss) on disposition of assets, net							(128	)		74			(111	)		87
Other, net		5		(33	)		(66	)		(17	)		(61	)		(50	)
Total other income	$	157	$	871
Total other income (loss)						$	(60	)	$	2,829		$	97		$	3,700

~~The~~Our consolidated operations ~~of the Company~~ can be segmented into Real Property Operations and Home Sales and Rentals. Transactions between ~~the Company’s~~our segments are recorded at cost. Seasonal recreational vehicle revenue is included in Real Property Operations’ revenues and is approximately $5.5 million annually. This seasonal revenue is recognized approximately 50% in the first quarter, 6.5% in both the second and third quarters and 37% in the fourth quarter of each fiscal year.

	Three Months Ended March 31, 2009									Three Months Ended June 30, 2009									Six Months Ended June 30, 2009
	Real Property Operations			Home Sales and Home Rentals			Consolidated			Real Property Operations			Home Sales and Home Rentals			Consolidated			Real Property Operations			Home Sales and Home Rentals			Consolidated
Revenues	$	50,999		$	12,661		$	63,660		$	48,497		$	13,405		$	61,902		$	99,496		$	26,066		$	125,562
Operating expenses/Cost of sales		16,789			9,960			26,749			16,905			9,866			26,771			33,694			19,826			53,520
Net operating income/Gross profit		34,210			2,701			36,911
Net operating income/gross profit											31,592			3,539			35,131			65,802			6,240			72,042
Adjustments to arrive at net income (loss):
Other revenues		1,429			195			1,624			1,309			61			1,370			2,738			256			2,994
General and administrative		(4,166	)		(1,826	)		(5,992	)		(4,900	)		(1,816	)		(6,716	)		(9,066	)		(3,642	)		(12,708	)
Depreciation and amortization		(11,120	)		(5,084	)		(16,204	)		(11,153	)		(4,762	)		(15,915	)		(22,273	)		(9,846	)		(32,119	)
Interest expense		(15,015	)		(65	)		(15,080	)		(15,488	)		(86	)		(15,574	)		(30,503	)		(151	)		(30,654	)
Equity income (loss) from affiliates, net		99			(72	)		27
Provision for state income tax		(133	)		—			(133	)
Equity loss from affiliates, net											(474	)		(43	)		(517	)		(375	)		(115	)		(490	)
Provision for state income taxes											(146	)		—			(146	)		(279	)		—			(279	)
Income (loss) from continuing operations		5,304			(4,151	)		1,153			740			(3,107	)		(2,367	)		6,044			(7,258	)		(1,214	)
Loss from discontinued operations		(172	)		—			(172	)		(160	)		—			(160	)		(332	)		—			(332	)
Net income (loss)		5,132			(4,151	)		981			580			(3,107	)		(2,527	)		5,712			(7,258	)		(1,546	)
Less: Net income (loss) attributable to noncontrolling interest		547			(443	)		104			60			(328	)		(268	)		607			(771	)		(164	)
Net income (loss) attributable to Sun Communities, Inc.	$	4,585		$	(3,708	)	$	877		$	520		$	(2,779	)	$	(2,259	)	$	5,105		$	(6,487	)	$	(1,382	)

	Three Months Ended March 31, 2008									Three Months Ended June 30, 2008									Six Months Ended June 30, 2008
	Real Property Operations			Home Sales and Home Rentals			Consolidated			Real Property Operations			Home Sales and Home Rentals			Consolidated			Real Property Operations			Home Sales and Home Rentals			Consolidated
Revenues	$	50,349		$	12,499		$	62,848		$	47,655		$	13,904		$	61,559		$	98,004		$	26,403		$	124,407
Operating expenses/Cost of sales		16,243			9,305			25,548			16,484			10,946			27,430			32,727			20,251			52,978
Net operating income/Gross profit		34,106			3,194			37,300
Net operating income/gross profit											31,171			2,958			34,129			65,277			6,152			71,429
Adjustments to arrive at net income (loss):
Other revenues		967			935			1,902			3,640			84			3,724			4,607			1,019			5,626
General and administrative		(4,158	)		(1,612	)		(5,770	)		(4,697	)		(1,715	)		(6,412	)		(8,855	)		(3,327	)		(12,182	)
Depreciation and amortization		(11,306	)		(4,555	)		(15,861	)		(11,553	)		(4,658	)		(16,211	)		(22,859	)		(9,213	)		(32,072	)
Interest expense		(16,185	)		(39	)		(16,224	)		(15,330	)		(84	)		(15,414	)		(31,515	)		(123	)		(31,638	)
Equity loss from affiliate		—			(4,830	)		(4,830	)
Benefit for state income tax		235			—			235
Equity loss from affiliates, net											(7,720	)		—			(7,720	)		(12,550	)		—			(12,550	)
Benefit (provision) for state income taxes											(128	)		—			(128	)		107			—			107
Income (loss) from continuing operations		3,659			(6,907	)		(3,248	)		(4,617	)		(3,415	)		(8,032	)		(5,788	)		(5,492	)		(11,280	)
Loss from discontinued operations		(241	)		—			(241	)		(270	)		—			(270	)		(511	)		—			(511	)
Net income (loss)		3,418			(6,907	)		(3,489	)		(4,887	)		(3,415	)		(8,302	)		(6,299	)		(5,492	)		(11,791	)
Less: Net income (loss) attributable to noncontrolling interest		386			( 780	)		(394	)		(1,095	)		161			(934	)		(709	)		(619	)		(1,328	)
Net income (loss) attributable to Sun Communities, Inc.	$	3,032		$	(6,127	)	$	(3,095	)	$	(3,792	)	$	(3,576	)	$	(7,368	)	$	(5,590	)	$	(4,873	)	$	(10,463	)

	June 30, 2009						December 31, 2008
	Real Property Operations		Home Sales and Home Rentals		Consolidated		Real Property Operations		Home Sales and Home Rentals		Consolidated
Identifiable assets:
Investment property, net	$	938,811	$	142,162	$	1,080,973	$	954,196	$	144,824	$	1,099,020
Cash and cash equivalents		4,493		132		4,625		6,138		24		6,162
Inventory of manufactured homes		—		3,426		3,426		—		3,342		3,342
Investment in affiliate		2,925		357		3,282		3,300		472		3,772
Notes and other receivables		60,829		3,989		64,818		52,697		4,784		57,481
Other assets		32,822		2,284		35,106		34,744		2,408		37,152
Assets of discontinued operations		19		—		19		70		—		70
Total assets	$	1,039,899	$	152,350	$	1,192,249	$	1,051,145	$	155,854	$	1,206,999

March 31, 2009

December 31, 2008

Real
Property
Operations

Home Sales
and Home
Rentals

Consolidated

Real
Property
Operations

Home Sales
and Home
Rentals

Consolidated

Identifiable assets:

Investment property, net

$
946,193

$
137,935

$
1,084,128

$
954,196

$
135,108

$
1,089,304

Cash and cash equivalents

6,256

332

6,588

6,138

24

6,162

Inventory of manufactured homes

—

9,674

9,674

—

13,058

13,058

Investment in affiliate

3,398

401

3,799

3,300

472

3,772

Notes and other receivables

55,926

4,162

60,088

52,697

4,784

57,481

Other assets

30,863

2,387

33,250

34,744

2,408

37,152

Assets of discontinued operations

68

—

68

70

—

70

Total assets

$
1,042,704

$
154,891

$
1,197,595

$
1,051,145

$
155,854

$
1,206,999

~~The Company’s~~Our objectives in using interest rate derivatives are to add stability to interest expense, manage exposure to interest rate movements, and minimize the variability that changes in interest rates could have on future cash flows. Interest rate swaps and caps are used to accomplish this objective. ~~The Company requires that~~We require hedging derivative instruments ~~need~~ to be highly effective in reducing the risk exposure that they are designated to hedge. ~~The Company~~We formally ~~designates~~designate any instrument that meets these hedging criteria as a hedge at the inception of the derivative contract.

As of ~~March 31,~~June 30, 2009, ~~the Company~~we had five derivative contracts consisting of four interest rate swap agreements with a total notional amount of $95.0 million and an interest rate cap agreement with a notional amount of $152.4 million. In April 2009, the Company entered a new interest cap agreement based on 90-day LIBOR with a cap rate of 11.0 percent, a notional amount of $152.4 million, and a termination date of May 1, 2012. The CompanyWe generally ~~employs~~employ derivative instruments that effectively convert a portion of ~~its~~our variable rate debt to fixed rate debt and to cap the maximum interest rate on certain variable rate borrowings. ~~The Company does~~We do not enter into derivative instruments for speculative purposes.

The following table provides the terms of ~~the Company’s~~our interest rate derivative contracts that were in effect as of ~~March 31,~~June 30, 2009:

Type	Purpose	Effective Date	Maturity Date	Notional (in millions)	Based on	Variable Rate %	Fixed Rate %	Spread %	Effective Fixed Rate %	Purpose	Effective Date	Maturity Date	Notional (in millions)	Based on	Variable Rate %	Fixed Rate %	Spread %	Effective Fixed Rate %
Swap	Floating to Fixed Rate	09/04/02	07/03/09	25.0	3 Month LIBOR	1.425%	4.260%	0.580%	4.840%	Floating to Fixed Rate	09/04/02	07/03/09	25.0	3 Month LIBOR	1.177%	4.260%	2.000%	6.260%
Swap	Floating to Fixed Rate	09/04/02	07/03/12	25.0	3 Month LIBOR	1.425%	4.700%	0.580%	5.280%	Floating to Fixed Rate	09/04/02	07/03/12	25.0	3 Month LIBOR	1.177%	4.700%	2.000%	6.700%
Swap	Floating to Fixed Rate	01/02/09	01/02/14	20.0	3 Month LIBOR	1.435%	2.145%	0.580%	2.725%	Floating to Fixed Rate	01/02/09	01/02/14	20.0	3 Month LIBOR	1.192%	2.145%	2.000%	4.145%
Swap	Floating to Fixed Rate	02/13/09	02/13/11	25.0	1 Month LIBOR	0.557%	1.570%	2.050%	3.620%	Floating to Fixed Rate	02/13/09	02/13/11	25.0	1 Month LIBOR	0.319%	1.570%	2.050%	3.620%
Cap	Cap Floating Rate	04/03/06	04/28/09	152.4	3 Month LIBOR	1.250%	9.900%	0.000%	9.900%	Cap Floating Rate	04/28/09	05/01/12	152.4	3 Month LIBOR	1.590%	11.000%	0.000%	N/A

~~The Company’s~~Our financial derivative instruments are designated and qualify as a cash flow hedges and the effective portion of the gain or loss on such ~~hedge is~~hedges are reported as a component of accumulated other comprehensive loss (“AOCL”) in ~~the~~our Consolidated Balance Sheets. To the extent that the hedging relationship is not effective, the ineffective portion is recorded in interest expense. Hedges that received designated hedge accounting treatment are evaluated for effectiveness at the time that they are designated as well as through the hedging period.

In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), ~~which requires all~~we have recorded the fair value of our derivative instruments designated as cash flow hedges ~~to be carried at fair value~~ on the balance ~~sheet, the Company has recorded a liability of $2.9 million as of March 31, 2009 and December 31, 2008.~~sheet. See Note 1615 for information on the determination of fair value for the derivative instruments. The following table summarizes the fair value of derivative instruments ~~as recorded~~included in ~~the~~our Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008 (in thousands):

	Liability Derivatives					Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Fair Value				Balance Sheet Location	Fair Value				Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments under SFAS 133		March 31, 2009		December 31, 2008			June 30, 2009		December 31, 2008			June 30, 2009		December 31, 2008
Interest rate swaps and cap agreement	Other liabilities	$	2,866	$	2,865	Other assets	$	607	$	—	Other liabilities	$	2,135	$	2,865
Total derivatives designated as hedging instruments under SFAS 133		$	2,866	$	2,865		$	607	$	—		$	2,135	$	2,865

These valuation adjustments will only be realized under certain situations. For example, if ~~the Company terminates~~we terminate the swaps prior to maturity or if the derivatives fail to qualify for hedge accounting, then ~~the Company~~we would need to amortize amounts currently included in other comprehensive loss into interest expense over the terms of the derivative contracts. ~~The Company does~~We do not intend to terminate the swaps prior to maturity and, therefore, the net of valuation adjustments through the various maturity dates will approximate zero, unless the derivatives fail to ~~quality~~qualify for hedge accounting.

Our hedges were highly effective and had minimal effect on income. The following table summarizes the impact of derivative instruments for the three months ended ~~March 31,~~June 30, 2009 and 2008 as recorded in the Consolidated Statements of Operations (in thousands).:

Derivatives in SFAS 133 cash flow hedging	Amount of Gain or (Loss) Recognized in AOCL (Effective Portion)						Location of Gain or (Loss) Reclassified from AOCL into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCL into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)					Amount of Gain or (Loss) Recognized in AOCL (Effective Portion)				Location of Gain or (Loss)Reclassified from AOCL into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCL into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Three Months Ended March 31,							Three Months Ended March 31,					Three Months Ended March 31,					Three Months Ended June 30,					Three Months Ended June 30,					Three Months Ended June 30,
	2009			2008				2009		2008			2009		2008			2009		2008			2009		2008			2009		2008
Interest rate swaps and cap agreement	$	(4	)	$	(1,416	)	Interest expense	$	—	$	—	Interest income (expense)	$	3	$	(4	)	$	1,330	$	1,348	Interest expense	$	—	$	—	Interest expense	$	9	$	6
Total	$	(4	)	$	(1,416	)	Total	$	—	$	—	Total	$	3	$	(4	)	$	1,330	$	1,348	Total	$	—	$	—	Total	$	9	$	6

The following table summarizes the impact of derivative instruments for the six months ended June 30, 2009 and 2008 as recorded in the Consolidated Statements of Operations (in thousands):

Certain of ~~the Company’s~~our derivative instruments contain provisions that require ~~the Company~~us to provide ongoing collateralization on derivative instruments in a liability position. As of ~~March 31,~~June 30, 2009 and December 31, 2008, ~~the Company~~we had collateral deposits recorded in other assets of ~~$4.5~~$3.0 million and $4.4 million, respectively.

~~The Company has~~We have elected to be taxed as a real estate investment trust (“REIT”) as defined under Section 856(c) of the Internal Revenue Code of 1986, as amended. In order for ~~the Company~~us to qualify as a REIT, at least ninety-five percent (95%) of ~~the Company’s~~our gross income in any year must be derived from qualifying sources. In addition, a REIT must distribute at least ninety percent (90%) of its REIT ordinary taxable income to its stockholders.

Qualification as a REIT involves the satisfaction of numerous requirements (some on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within ~~the Company’s~~our control. In addition, frequent changes occur in the area of REIT taxation which requires ~~the Company~~us to continually monitor ~~its~~our tax status. ~~The Company~~We analyzed the various REIT tests and confirmed that itwe continued to qualify as a REIT for the quarter ended ~~March 31,~~June 30, 2009.

As a REIT, we generally will not be subject to U.S. federal income taxes at the corporate level on the ordinary taxable income we distribute to our stockholders as dividends. If we fail to qualify as a REIT in any taxable year, our taxable income will be subject to U.S. federal income tax at regular corporate rates (including any applicable alternative minimum tax). Even if we qualify as a REIT, we may be subject to certain state and local income taxes and to U.S. federal income and excise taxes on our undistributed income.

As a REIT, the Company generally will not be subject to U.S. federal income taxes at the corporate level on the ordinary taxable income it distributes to its stockholders as dividends. If the Company fails to qualify as a REIT in any taxable year, its taxable income will be subject to U.S. federal income tax at regular corporate rates (including any applicable alternative minimum tax). Even if the Company qualifies as a REIT, it may be subject to certain state and local income taxes and to U.S. federal income and excise taxes on its undistributed income.

SHS, ~~the Company’s~~our taxable REIT subsidiary, is subject to U.S. federal income taxes. ~~The Company's~~Our deferred tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the bases of such assets and liabilities as measured by tax laws. Deferred tax assets are reduced, if necessary, by a valuation allowance to the amount where realization is more likely than not assured after considering all available evidence. ~~The Company’s~~Our temporary differences primarily relate to net operating loss carryforwards and depreciation. A federal deferred tax asset of $1.0 million is included in other assets in ~~the consolidated balance sheets~~our Consolidated Balance Sheets as of ~~March 31,~~June 30, 2009 and December 31, 2008.

~~The Company~~We had no unrecognized tax benefits as defined by FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109” as of ~~March 31,~~June 30, 2009 and 2008. ~~The Company expects~~We expect no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of ~~March 31,~~June 30, 2009.

~~The Company classifies~~We classify certain state taxes as income taxes for financial reporting purposes in accordance with SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”). ~~The Company records~~We record the Michigan Business Tax and Texas Margin Tax as income taxes in ~~its~~our financial statements. ~~Total~~The provision for state income ~~tax expense reported in the financial statements~~taxes was approximately $0.2 million and $0.1 million for the three months ended ~~March 31,~~June 30, 2009 isand 2008, respectively. We recorded a provision for state income taxes of approximately ~~$0.1 million. The Company recorded~~$0.3 million and a benefit of approximately ~~$0.2~~$0.1 million ~~related to state income taxes~~ in the ~~three~~six months ended ~~March 31, 2008.~~June 30, 2009 and 2008, respectively.

~~The Company recorded a~~A deferred tax liability is included in our Consolidated Balance Sheets of $0.5 million, as of ~~March 31,~~June 30, 2009 and December 31, 2008, in relation to the Michigan Business Tax Act. No deferred tax liability is recorded in relation to the Texas Margin Tax as of ~~March 31,~~June 30, 2009 and December 31, 2008.

~~The Company~~We and ~~its~~our subsidiaries are subject to income taxes in the U.S. and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, ~~the Company is~~we are no longer subject to U.S. Federal, State and Local, examinations by tax authorities before 2004.

~~The Company’s~~Our policy is to report penalties and tax-related interest expense as a component of income tax expense. No interest or penalty associated with any unrecognized tax benefit was accrued, nor was any interest or penalty recognized during the ~~three~~six months ended ~~March 31,~~June 30, 2009.

The noncontrolling interest in ~~the Company’s~~our Operating Partnership consists of approximately 2.2 million Common Operating Partnership Units (“Common OP Units”). Holders of Common OP Units receive dividend distributions on a 1:1 ratio to the dividend distributions provided to common shareholders. During fiscal year 2008, the net equity position of the Common OP Units declined below zero due to accumulated distributions in excess of allocated accumulated earnings (losses). ~~The Company~~We accounted for ~~its~~our noncontrolling equity interest in accordance with the guidance in EITF No. 95-7, “Implementation Issues Related to the Treatment of Minority Interests in Certain Real Estate Investment Trusts” (“EITF 95-7”). ~~The Company~~We recognized the net equity position as a zero balance within the ~~consolidated balance sheet~~Consolidated Balance Sheets since there was no legal obligation for the unit holders to restore deficit capital accounts, and the deficit balance was charged to ~~the Company’s consolidated statement~~our Consolidated Statements of ~~operations.~~Operations.

In December 2007 the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB 51” (“SFAS 160”), which nullified EITF 95-7. SFAS 160 was effective on a prospective basis for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, except for the presentation and disclosure requirements, which apply retrospectively. ~~The Company~~We applied the provisions of SFAS 160 beginning January 1, 2009. SFAS 160 required that losses be allocated to the noncontrolling interest even when such allocation results in a deficit balance, reducing the losses attributed to the controlling interest.

~~The~~We provided dividend distributions ~~provided~~and allocated a proportionate share of our net loss to holders of Common OP Units ~~were in excess of their portion of earnings recognized in~~for the three and six months ended ~~March 31,~~June 30, 2009. The dividend ~~distribution was~~distributions and the proportionate share of our net loss were recorded as a deficit balance to the equity position of the noncontrolling interest in ~~the Company’s consolidated balance sheet~~our Consolidated Balance Sheets as of ~~March 31,~~June 30, 2009. Prior to the adoption of SFAS 160, ~~the Company~~we would have been required to record the deficit balance to the ~~consolidated statement~~Consolidated Statements of ~~operations~~Operations as a charge to noncontrolling interest dividend distributions. Additionally, the Company would not have allocated any of the Company’s current period earnings to the noncontrolling interest. The noncontrolling interest did not participate in the allocation of prior year losses. The noncontrolling interest would only be able to participate in the allocation of current year earnings if their allocation exceeded their allocation of prior year losses.

~~The adoption of SFAS 160 had a significant impact to the Company’s results of operations and financial position.~~ The provisions of SFAS 160 require that if an entity’s results are ~~significantly~~ different due to the adoption of the new guidance that the entity must disclose selected pro forma financial information as if the deficit balance continued to be charged ~~to the Company’s consolidated statement~~our Consolidated Statements of ~~operations.~~Operations.

If ~~the Company~~we had recorded the deficit balance to ~~the Company’s consolidated statement~~our Consolidated Statement of ~~operations,~~Operations, the result would have been aan additional net loss ~~attributable to~~of approximately $1.4 million and $2.8 million for the ~~Company.~~three and six months ended June 30, 2009, respectively. The ~~result~~additional net loss would ~~also~~not impact the calculation of diluted shares outstanding. ~~The Company~~We would not include the impact of dilutive securities to the calculation of loss per share since the inclusion of dilutive securities in a net loss period would reduce the net loss per share.

~~The Company’s~~Our proforma results for the three and six months ended ~~March 31,~~June 30, 2009 are as follows (in thousands):

	Three Months Ended March 31, 2009			Three Months Ended June 30, 2009			Six Months Ended June 30, 2009
Income from continuing operations	$	1,153
Loss from continuing operations				$	(2,367	)	$	(1,214	)
Loss from discontinued operations		(172	)		(160	)		(332	)
Net income		981
Net loss					(2,527	)		(1,546	)
Noncontrolling interest dividend distributions		(1,378	)		(1,378	)		(2,756	)
Net loss attributable to Sun Communities, Inc.	$	(397	)	$	(3,905	)	$	(4,302	)

Basic and diluted weighted average common shares outstanding		18,511			18,469			18,399

Basic and diluted loss per share	$	(0.02	)	$	(0.21	)	$	(0.23	)

We have outstanding stock options and unvested restricted shares, and our Operating Partnership has Common OP Units, and convertible Preferred OP Units, which if converted or exercised, may impact dilution. On January 1, 2009, ~~the Company~~we adopted ~~FASB Staff Position~~FSP EITF 03-6-1, which ~~addresses~~addressed whether instruments granted in share-based payment transactions ~~are~~were participating securities prior to vesting and, therefore, ~~need~~needed to be included in earnings allocation in computing basic earnings per share under the two-class method. ~~The Company has~~Our unvested restricted shares qualified as participating securities as defined by FSP EITF 03-6-1. We adjusted ~~its~~our calculation of basic and diluted earnings per share (“EPS”) to conform to the guidance provided in FSP EITF 03-6-1, which also required retrospective application for all periods presented. ~~The change in calculating basic and diluted earnings per share pursuant to the adoption of~~ FSP 03-6-1 did not ~~have a material effect on the~~affect per share amounts ~~previously reported~~ for the ~~periods presented.~~three and six months ended June 30, 2009 and 2008, because we reported net losses in these periods.

Computations of basic and diluted EPS from continuing operations calculated in accordance with SFAS No. 128 “Earnings per Share” and FSP 03-6-1 were as follows (in thousands, expect per share data):

The Company has outstanding stock options and unvested restricted shares, and the Company’s Operating Partnership has Common OP Units, and convertible Preferred OP Units, which if converted or exercised, may impact dilution. The Company’s unvested restricted shares qualify as participatingWe excluded securities as defined by FSP 03-6-1. The Company included the weighted average unvested restricted stock outstanding as of March 31, 2009 in the calculation of basic earnings per share for the three months ended March 31, 2009. The Company included net income attributable to the noncontrolling interest recognized, as well as the impact of Common OP Units as part of diluted earnings per share calculation for the three months ended March 31, 2009. The Company did not adjust the basic or diluted loss per share for participating securities outstanding during the three months ended March 31, 2008 because the result was anti-dilutive.

Computations of basic and diluted earnings per share for continuing operations in accordance with SFAS No. 128, “Earnings per Share” and FSP 03-6-1 (in thousands, except share data) were as follows:

~~For the three months ended March 31, 2009, certain of the Company’s securities were not included in~~from the computation of diluted ~~earnings per share~~EPS because ~~their~~the inclusion ~~had an~~of these securities would have been anti-dilutive ~~effect. Due to the fact that the Company has reported a net loss~~ for the three months ended March 31, 2008, the potential dilutive effects of the securities were excluded from the diluted earnings (loss) per share calculation because their inclusion in a net loss period would reduce the net loss per share.periods presented. The following table presents the number of outstanding potentially dilutive securities that were excluded from the computation of diluted ~~earnings per share~~EPS as of June 30, 2009 and 2008 (amounts in thousands) ~~as of March 31, 2009 and 2008:~~:

	March 31,		June 30,
	2009	2008	2009	2008
Stock options	205	215	205	214
Unvested restricted stock	—	282	120	221
Common OP Units	—	2,301	2,186	2,301
Convertible Preferred OP Units	526	526	526	526
Total securities	731	3,324	3,037	3,262

The figures above represent the total number of potentially dilutive securities, and do not reflect the incremental impact to the number of diluted weighted average shares outstanding that would be computed if the impact to ~~the Company~~us had been dilutive to the calculation of earnings (loss) per share available to common stockholders.

~~The Company utilizes~~Our financial instruments consist primarily of cash and cash equivalents, accounts and notes receivable, accounts payable, derivative instruments, and debt. We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

The derivative instruments held by ~~the Company~~us are interest rate swaps and cap agreements for which quoted market prices are ~~not readily~~indirectly available. For those derivatives, ~~the Company uses~~we use model-derived valuations in which all observable inputs and significant value drivers are observable in active markets provided by brokers or dealers to determine the fair values of derivative instruments on a recurring basis.

The net carrying value of the installment notes on manufactured homes reasonably estimates the fair value of the underlying collateral (manufactured home) which would be placed into service for use in our Rental Program.

The fair value of long term debt (excluding the secured borrowing) is based on the estimates of management and on rates currently quoted and rates currently prevailing for comparable loans and instruments of comparable maturities.

The fair value of these financial instruments offset each other as our collateralized receivables represent a transfer of financial assets and the cash proceeds received from these transactions have been classified as a secured borrowing in the Consolidated Balance Sheets

The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair market values due to the short-term nature of these instruments.

The table below sets forth our financial assets and liabilities that required disclosure of their fair values on a recurring basis as of June 30, 2009. The table presents the carrying values and fair values of our financial instruments as of June 30, 2009 that were measured using the valuation techniques described above. The table does not include financial instruments with maturities less than one year because the carrying values associated with these instruments approximate fair value.

SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) establishes a fair value hierarchy that requires the use of observable market data, when available, and prioritizes the inputs to valuation techniques used to measure fair value in the following categories:

Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all observable inputs and significant value drivers are observable in active markets.

Level 3—Model derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developed by ~~the Company.~~us.

~~All of the fair values of the Company’s derivative instruments were based on level 2 inputs as described above.~~ The table below ~~presents the recorded amount of~~sets forth, by level, our financial assets and liabilities ~~measured at fair value on a recurring basis as of March 31, 2009. The Company does not have any material financial assets~~ that were required to be ~~measured~~carried at fair value ~~on a recurring basis at March 31,~~in the Consolidated Balance Sheets as of June 30, 2009.

									Total Fair Value		Level 1		Level 2		Level 3
Assets
Derivative instruments									$	607	$	—	$	607	$	—
Total assets									$	607	$	—	$	607	$	—
	Total Fair Value		Level 1		Level 2		Level 3
Liabilities
Derivative instruments	$	2,866	$	—	$	2,866	$	—		2,135		—		2,135		—
Total liabilities									$	2,135	$	—	$	2,135	$	—

In February 2008, the FASB issued Staff Position No. FAS 157-2 which provided for a one-year deferral of the effective date of SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) for non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. The adoption of SFAS 157 as it pertains to non-financial assets and liabilities did not have a material impact on our results of operations or financial position as ~~the Company has~~we have not elected the fair value option for any ~~of its~~or our non-financial assets or liabilities.

In December 2007, the FASB issued Statement No. 141R (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R significantly changed the accounting for business combinations. Under SFAS 141R, an acquiring entity is required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS 141R changed the accounting treatment for certain specific acquisition related items and also included a substantial number of new disclosure requirements. SFAS 141R was effective for business combinations for which the acquisition date is on or after the first annual reporting period beginning on or after December 15, 2008. ~~The Company~~We will apply SFAS 141R prospectively to business combinations for which the acquisition date is on or after January 1, 2009.

In December 2007 the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB 51” (“SFAS 160”), which amended Accounting Research Bulletin (ARB) No. 51, “Consolidated Financial Statements”, to establish new standards that govern the accounting for and reporting of noncontrolling interests in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Also, SFAS 160 required that: (1) noncontrolling interest, previously referred to as minority interest, be reported as part of equity in the ~~consolidated financial statements;~~Consolidated Financial Statements; (2) losses be allocated to the noncontrolling interest even when such allocation might result in a deficit balance, reducing the losses attributed to the controlling interest; (3) changes in ownership interests be treated as equity transactions if control is maintained; (4) upon a loss of control, any gain or loss on the interest sold be recognized in earnings; and (5) the noncontrolling interest’s share be recorded at the fair value of net assets acquired, plus its share of goodwill. SFAS 160 was effective on a prospective basis for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, except for the presentation and disclosure requirements, which apply retrospectively. The adoption of SFAS 160 resulted in ~~a material~~an impact on the presentation of noncontrolling interest in ~~the Company’s consolidated financial statements~~our Consolidated Financial Statements and related notes. See Note 1413 for additional information regarding the impact of adopting SFAS 160 on ~~the Company’s~~our results of operations and financial position.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”), an amendment of FASB Statement No. 133 “Accounting for Derivative Instruments and Hedging Activities”. SFAS 161 provided for enhanced disclosures about how and why an entity uses derivatives and how and where those derivatives and related hedged items are reported in the entity’s financial statements. The statement was effective for fiscal years and interim periods beginning after November 15, 2008. Because SFAS 161 impacted the disclosure requirements, and not the accounting treatment for derivative instruments and related hedged items, the adoption of SFAS 161 did not impact ~~on the Company’s~~our results of operations or financial condition. See Note 1211 for disclosures regarding ~~the Company’s~~our derivative instruments and hedging activities.

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS 142-3”). FSP FAS 142-3 amended the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets”. FSP FAS 142-3 is intended to improve the consistency between the useful life of an intangible asset determined under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R, and other U.S. generally accepted accounting principles. The FSP is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008, and is applied prospectively to intangible assets acquired after the effective date. ~~The Company~~We will apply FSP FAS 142-3 prospectively to material intangible assets for which the acquisition date is on or after January 1, 2009. Disclosure requirements are applied prospectively to all material intangible assets recognized as of, and subsequent to, the effective date.

In May 2008 the FASB ratified FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”), which required issuers of convertible debt securities within its scope to separate these securities into a debt component and an equity component, resulting in the debt component being recorded at fair value without consideration given to the conversion feature. Issuance costs were also allocated between the debt and equity components. FSP APB 14-1 required that convertible debt within its scope reflect a company’s nonconvertible debt borrowing rate when interest expense is recognized. FSP APB 14-1 was effective fiscal years and interim periods beginning after December 15, 2008, and applies retrospectively to all prior periods. The adoption of FSP No. APB 14-1 did not have an impact on ~~the Company’s~~our results of operations or financial condition because the conversion feature associated with ~~the Company’s~~our convertible debt instrument does not provide for any cash settlement.

In June 2008, the FASB issued FSP No. Emerging Issues Task Force (“EITF”) 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 clarified that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are to be included in the computation of earnings per share under the two-class method described in SFAS No. 128, “Earnings Per Share” (“SFAS 128”). FSP EITF 03-6-1 was effective for fiscal years beginning after December 15, 2008 and required that all presented prior-period earnings per share data to be adjusted retrospectively. The adoption of FSP EITF 03-6-1 did not have a significant impact on ~~the Company’s~~our results of operations or financial condition, but resulted in a change to the calculation of basic and diluted earnings (loss) per share. See Note 1514 for additional information regarding the impact of adopting FSP EITF 03-6-1 on the calculation of earnings (loss) per share.

In November 2008, the Emerging Issues Task Force issued EITF No. 08-6, “Equity Method Investment Accounting Considerations” (“EITF 08-6)” which addressed how the initial carrying value of an equity method investment should be determined, how an impairment assessment of an underlying indefinite-lived intangible asset of an equity method investment should be performed, how an equity method investee’s issuance of shares should be accounted for, and how to account for a change in an investment from the equity method to the cost method. EITF 08-6 was effective for fiscal years and interim periods beginning after December 15, 2008 and is applied prospectively. Earlier application was prohibited. The adoption of EITF 08-6 did not have ~~a material~~any impact on ~~the Company’s~~our results of operations or financial condition.

In December 2008, the FASB issued FSP FAS No. 140-4 and FIN No. 46R-8, “Disclosures about Transfers of Financial Assets and Interests in Variable Interest Entities: An Amendment to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (“FSP FAS 140-4 and FIN 46R-8”). FSP FAS 140-4 and FIN 46R-8 required public entities to provide additional disclosures about transfers of financial assets. It also amended FASB Interpretation No. 46, “Consolidation of Variable Interest Entities”, to require public enterprises to provide additional disclosures about their involvement with VIEs. Additionally, this FSP required certain disclosures to be provided by a public enterprise that is a sponsor that has a variable interest in a VIE and an enterprise that holds a significant variable interest in a QSPE but was not the transferor of financial assets to the QSPE. The disclosures were intended to provide greater transparency to financial statement users about a transferor’s continuing involvement with transferred financial assets and enterprise’s involvement with VIEs. FSP FAS 140-4 and FIN 46R-8 were effective for the first reporting period ending after December 15, 2008. Because FSP FAS 140 140-4 and FIN 46R-8 impacted the disclosure (and not the accounting treatment) for transferred financial assets and consolidation of VIES, the adoption of this FSP did not have an impact on our results of operations or financial condition. See Note 4 for disclosures regarding ~~the Company’s~~our transfer of financial assets and related secured borrowing obligation.

~~The FSPs are~~APB 28-1 were effective for interim ~~and annual~~ periods ending after June 15, 2009 ~~but entities may early adopt~~and apply prospectively. Because FSP SFAS 107-1 and APB 28-1 impacted the ~~FSPs~~disclosure requirements, and not the accounting treatment for the ~~interim~~fair value of financial instruments, the adoption of FSP SFAS 107-1 and ~~annual~~APB 28-1 did not impact our results of operations or financial condition. See Note 15 for disclosures regarding the fair value of financial instruments.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165 established principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. SFAS 165 also required disclosure of the date through which subsequent events are evaluated by management. SFAS 165 was effective for interim periods ending after ~~March~~June 15, ~~2009. The Company is currently evaluating~~2009 and applies prospectively. Because SFAS 165 impacted the disclosure requirements, and not the accounting treatment for subsequent events, the adoption of SFAS 165 did not impact ~~to its~~our results of operations or financial ~~condition, and disclosure requirements. The Company will apply the provisions of these accounting standards after the effective date.~~condition. See Note 18 for disclosures regarding our subsequent events.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 removes the concept of a qualifying special-purpose entity and eliminates the exception for qualifying special-purpose entities from consolidation guidance. In addition, SFAS 166 establishes specific conditions for reporting a transfer of a portion of a financial asset as a sale. If the transfer does not meet established sale conditions, sale accounting can be achieved only if the transferor transfers an entire financial asset or a group of entire financial assets and surrenders control over the entire transferred asset(s). SFAS 166 is effective for fiscal years beginning after November 15, 2009. We are currently evaluating the potential impact, if any, of the adoption of SFAS 166 on our results of operations or financial condition.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”). This Statement amends FIN 46(R) to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics, among others: (a) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity, or the right to receive benefits from the entity, that could potentially be significant to the variable interest entity. Under SFAS 167, ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity are required. SFAS 167 is effective as of the beginning of an entity’s first annual reporting period that begins after November 15, 2009. We are currently evaluating the potential impact, if any, of the adoption of SFAS 167 on our results of operations or financial condition.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification^TM and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162” (“SFAS 168”). SFAS 168 modifies the hierarchy to include only two levels of GAAP: authoritative and non-authoritative. All of the content included in the FASB Accounting Standards Codification^TM (the “Codification”) will be considered authoritative. SFAS 168 is not intended to amend GAAP but codifies previous accounting literature. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. SFAS 168 is effective for our third quarter 2009 Consolidated Financial Statements and we will change the referencing of authoritative accounting literature to conform to the Codification.

On April 9, 2003, T.J. Holdings, LLC (“TJ Holdings”), a member of Sun/Forest, LLC (“Sun/Forest”) (which, in turn, owns an equity interest in ~~SunChamp LLC), (“SunChamp”)~~SunChamp), filed a complaint against ~~the Company,~~us, SunChamp, certain other ~~affiliates~~ of ~~the Company,~~our affiliates, including two ~~directors~~ of ~~the Company.~~our directors, in the Superior Court of Guilford County, North Carolina. The complaint alleges that the defendants wrongfully deprived the plaintiff of economic opportunities that they took for themselves in contravention of duties allegedly owed to the plaintiff and purports to claim damages of $13.0 million plus an unspecified amount for punitive damages. ~~The Company believes~~We believe the complaint and the claims threatened therein have no merit and will defend it vigorously. These proceedings were stayed by the Superior Court of Guilford County, North Carolina in 2004 pending final determination by the Circuit Court of Oakland County, Michigan as to whether the dispute should be submitted to arbitration and the conclusion of all appeals therefrom. On March 13, 2007, the Michigan Court of Appeals issued an order compelling arbitration of all claims brought in the North Carolina case. TJ Holdings has filed an application for review in the Michigan Supreme Court which has been denied and, accordingly, the North Carolina case is permanently stayed. TJ Holdings has now filed an arbitration demand in Southfield, Michigan based on the same claims. ~~The Company intends~~We intend to vigorously defend against the allegations.

We have evaluated our financial statements through the date the financial statements were issued, August 7, 2009, for subsequent events.

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and the notes thereto, along with ~~the Company’s~~our 2008 Annual Report. Capitalized terms are used as defined elsewhere in this Form 10-Q.

We are a self-administered and self-managed real estate investment trust, or REIT. We own, operate, and develop manufactured housing communities concentrated in the midwestern, southern, and southeastern United States. We are fully integrated real estate companies which, together with our affiliates and predecessors, have been in the business of acquiring, operating, and expanding manufactured housing communities since 1975. As ~~of March 31,~~June 30, 2009, we owned and operated a portfolio of 136 properties located in 18 states (the “Properties” or “Property”), including 124 manufactured housing communities, 4 recreational vehicle communities, and 8 properties containing both manufactured housing and recreational vehicle sites. As of ~~March 31,~~June 30, 2009, the Properties contained an aggregate of ~~47,605~~47,594 developed sites comprised of ~~42,297~~42,300 developed manufactured home sites and ~~5,308~~5,294 recreational vehicle sites and an additional 6,081 manufactured home sites suitable for development. We lease individual parcels of land (“sites”) with utility access for placement of manufactured homes (“MHs”) and recreational vehicles (“RVs”) to our customers. The Properties are designed to offer affordable housing to individuals and families, while also providing certain amenities.

We are engaged through a taxable subsidiary, SHS, in the marketing, selling, and leasing of new and pre-owned homes to current and future residents in our communities. The operations of SHS support and enhance ~~the Company’s~~our occupancy levels, property performance, and cash flows.

~~The Company has~~We have identified significant accounting policies that, as a result of the judgments, uncertainties, and complexities of the underlying accounting standards and operations involved, could result in material changes to ~~its~~our financial condition or results of operations under different conditions or using different assumptions. Details regarding significant accounting policies are described fully in ~~the Company’s~~our 2008 Annual Report.

~~The Company~~We adopted several new accounting standards in the year beginning January 1, 2009. The adoption of the accounting standards that had an impact on ~~the Company’s~~our results of operations and financial condition is discussed below:

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 160, Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”) and FASB Staff Position Emerging Issues Task Force (“EITF”) No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (“FSP EITF 03-6-1”) in the first quarter of 2009 which required reclassification and adjustments to prior period financial information.

The adoption of SFAS 160 resulted in the presentation of noncontrolling interest, previously referred to as minority interest, be reported as a separate component of equity in ~~the~~our Consolidated Financial Statements, and that losses be allocated to the noncontrolling interest even if the allocation resulted in a deficit balance. See Note 1413 in the Notes to Consolidated Financial Information for additional information regarding the impact of adopting SFAS 160 on ~~the Company’s~~our results of operations and financial position.

The adoption of FSP EITF 03-6-1 did not have a significant impact on ~~the Company’s~~our results of operations or financial condition, but resulted in a change to the calculation of basic and diluted earnings (loss) per share. See Note 1514 in the Notes to Consolidated Financial Information for additional information regarding the impact of adopting FSP EITF 03-6-1 on the calculation of ~~earnings (loss)~~loss per share.

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED~~

In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP), we have provided information regarding Net Operating Income (“NOI”) in the following tables. NOI is derived from revenues (determined in accordance with GAAP) minus property operating expenses and real estate taxes (determined in accordance with GAAP). We use NOI as the primary basis to evaluate the performance of our operations. A reconciliation of NOI to net income (loss) attributable to Sun Communities, Inc. is included in “Results of Operations” below.

The Company believes that NOI is helpful to investors and analysts 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. The Company believes that these costs included in net income (loss) 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.

NOI should not be considered a substitute for the reported results prepared in accordance with GAAP. NOI should not be considered as an alternative to net income (loss) as an indicator of our financial performance, or to cash flows as a measure of liquidity; nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions. NOI, as determined and presented by the Company, may not be comparable to related or similarly titled measures reported by other companies.

The Company also provides information regarding Funds From Operations (“FFO”). A definition of FFO and a reconciliation of net income (loss) attributable to Sun Communities, Inc. to FFO are included in the presentation of FFO in “Results of Operations” following the “Comparison of the Three Months ended March 31, 2009 and 2008”.

The Company reports operating results under two segments: Real Property Operations and Home Sales and Rentals. The Real Property Operations segment owns, operates, and develops manufactured housing communities concentrated in the midwestern, southern, and southeastern United States and is in the business of acquiring, operating, and expanding manufactured housing communities. The Home Sales and Rentals segment offers manufactured home sales and leasing services to tenants and prospective tenants of our communities. The Company evaluates segment operating performance based on NOI.

The accounting policies of the segments are the same as those applied in the consolidated financial statements, except for the use of NOI. The Company may allocate certain common costs, primarily corporate functions, between the segments differently than the Company would for stand alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal, and human resources. The Company does not allocate interest expense and certain other corporate costs not directly associated with the segments’ NOI.

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED~~

~~The following tables reflect certain financial and statistical information for all properties owned and operated during the three months ended March 31, 2009 and 2008:~~

NOI increased by $0.1 million from $34.1 million to $34.2 million, or 0.3 percent. The growth in income from real property of $0.7 million is due to a weighted average rental rate increase of 3.0 percent that resulted from increased manufactured home rental income (net of vacancies and rent discounts). Income from our recreational vehicle portfolio and miscellaneous other property revenues remained constant. Miscellaneous other property revenues primarily consist of revenues from the re-billing of various utility costs to residents, late fees, and returned check fees.

The growth in real property operating expenses of $0.6 million was due to several factors. Property and casualty insurance increased by $0.1 million due to an increase in reserves for current claims. Utility costs, primarily related to water and electricity charges, increased $0.2 million (both of which are partially re-billed to the resident). Supply and repair costs related to community maintenance increased by $0.1 million. Legal fees related to delinquency, bad debt expense, and other property matters increased by $0.1 million. Other expenses related to administrative costs such as postage and advertising increased by $0.1 million.

We believe that NOI is helpful to investors and analysts 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. We use 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 our properties rather than of the company overall. We believe that these costs included in net income (loss) often have no effect on the market value of our 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.

NOI should not be considered a substitute for the reported results prepared in accordance with GAAP. NOI should not be considered as an alternative to net income (loss) as an indicator of our financial performance, or to cash flows as a measure of liquidity; nor is it indicative of funds available for our cash needs, including our ability to make cash distributions. NOI, as determined and presented by us, may not be comparable to related or similarly titled measures reported by other companies.

We also provide information regarding Funds From Operations (“FFO”). A definition of FFO and a reconciliation of net loss attributable to Sun Communities, Inc. to FFO are included in the presentation of FFO in “Results of Operations” following the “Comparison of the Six Months ended June 30, 2009 and 2008”.

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND~~ RESULTS OF OPERATIONS ~~CONTINUED~~

We report operating results under two segments: Real Property Operations and Home Sales and Rentals. The Real Property Operations segment owns, operates, and develops manufactured housing communities concentrated in the midwestern, southern, and southeastern United States and is in the business of acquiring, operating, and expanding manufactured housing communities. The Home Sales and Rentals segment offers manufactured home sales and leasing services to tenants and prospective tenants of our communities. We evaluate segment operating performance based on NOI.

The accounting policies of the segments are the same as those applied in the Consolidated Financial Statements, except for the use of NOI. We may allocate certain common costs, primarily corporate functions, between the segments differently than we would for stand alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal, and human resources. We do not allocate interest expense and certain other corporate costs not directly associated with the segments’ NOI.

The following tables reflect certain financial and statistical information for all properties owned and operated as of and during the three months ended June 30, 2009 and 2008:

NOI increased by $0.4 million from $31.2 million to $31.6 million, or 1.4 percent due to increased revenue of $0.8 million, partially offset by increased expenses of $0.4 million. Income from real property consists of three main revenue streams: manufactured home site rent, recreational vehicle site rent, and miscellaneous other property revenues. Revenue from our manufactured home and recreational vehicle portfolio increased by $0.8 million due to an average rental rate increase of 3.0 percent, and an increase in the number of occupied home sites. Our miscellaneous other property revenues remained constant. Miscellaneous other property revenues primarily consist of revenues from the re-billing of various utility costs to residents, late fees, and returned check fees.

The increased property operating expenses of $0.4 million was due to two main factors Utility costs, primarily related to water, electricity charges, and rubbish removal (water charges are partially re-billed to the resident), increased $0.3 million due to increased rates on these services. Property and casualty insurance increased by $0.1 million due to an increase in reserves for current claims. Other property operating expenses related to payroll and benefits, supply and repairs, legal fees, real estate taxes, and administrative costs (such as postage and advertising) remained relatively flat.

A key management tool ~~the Company uses~~we use when evaluating performance and growth of particular properties is a comparison of Same Site communities. The Same Site data may change from time-to-time depending on acquisitions, dispositions, management discretion, significant transactions, or unique situations. The following tables reflect certain financial and statistical information for particular properties owned and operated for the same period in both years as of and for the three months ended ~~March 31,~~June 30, 2009 and 2008:

	Three Months Ended March 31,									Three Months Ended June 30,
Financial Information (in thousands)	2009		2008		Change			% Change		2009		2008		Change			% Change
Income from real property, net	$	48,149	$	47,656	$	493		1.0	%	$	45,863	$	45,173	$	690		1.5	%
Property operating expenses:
Payroll and benefits		3,694		3,721		(27	)	-0.7	%		3,761		3,719		42		1.1	%
Legal, taxes, & insurance		774		649		125		19.3	%
Legal, taxes and insurance											890		811		79		9.7	%
Utilities, net		3,508		3,388		120		3.5	%		3,001		2,819		182		6.5	%
Supplies and repair		1,194		1,145		49		4.3	%		2,058		2,054		4		0.2	%
Other		576		469		107		22.8	%		450		419		31		7.4	%
Real estate taxes		4,184		4,169		15		0.4	%		4,119		4,170		(51	)	-1.2	%
Property operating expenses		13,930		13,541		389		2.9	%		14,279		13,992		287		2.1	%
Real property net operating income	$	34,219	$	34,115	$	104		0.3	%
Real property NOI										$	31,584	$	31,181	$	403		1.3	%

	Three Months Ended March 31,									As of June 30,
Statistical Information	2009			2008			Change			2009			2008			Change
Number of properties		136			136			—			136			136			—
Developed sites		47,605			47,611			(6	)		47,594			47,606			(12	)
Occupied sites ⁽¹⁾		37,877			37,780			97			38,000			37,883			117
Occupancy % ⁽²⁾		82.2	%		82.2	%		0.0	%		82.4	%		82.4	%		0.0	%
Weighted average monthly rent per site ⁽²⁾	$	397		$	385		$	12
Average monthly rent per site ⁽²⁾										$	399		$	388		$	11
Sites available for development		5,583			6,083			(500	)		5,583			5,688			(105	)

As indicated above this is an analytical measure used by management to determine the growth of our communities on a year over year basis that may have items classified differently than our GAAP statements.

The primary differences between our total portfolio and same site portfolio are the reclassification of water and sewer revenues from income from real property to utilities to reflect the expenses, net of recovery; and the exclusion of certain corporate items from the same site portfolio.

~~The Company acquires~~We acquire repossessed manufactured homes (generally, that are within ~~its~~our communities) from lenders at substantial discounts. ~~The Company leases~~We lease or ~~sells~~sell these value priced homes to current and prospective residents. ~~The Company~~We also ~~purchases~~purchase new homes to lease and sell to current and prospective residents. The programs ~~the Company has~~we have established for ~~its~~our customers to lease or buy new and ~~preowned~~pre-owned homes have helped to ~~prevent additional occupancy loss.~~stabilize portfolio occupancy.

The following table reflects certain financial and statistical information for ~~the Company’s~~our Rental Program as of and for the three months ended ~~March 31,~~June 30, 2009 and 2008 (in thousands, except for certain statistical marked with *):

	Three Months Ended March 31,									Three Months Ended June 30,
Financial Information	2009		2008		Change			% Change		2009		2008		Change			% Change
Rental home revenue	$	5,200	$	4,996	$	204		4.1	%	$	5,187	$	5,136	$	51		1.0	%
Site rent from Rental Program ⁽¹⁾		6,450		5,981		469		7.8	%		6,673		6,147		526		8.6	%
Rental Program revenue		11,650		10,977		673		6.1	%		11,860		11,283		577		5.1	%
Expenses
Payroll and commissions		783		523		260		49.7	%		596		554		42		7.6	%
Repairs and refurbishment		1,991		1,523		468		30.7	%		1,977		1,846		131		7.1	%
Taxes and insurance		770		691		79		11.4	%		776		702		74		10.5	%
Marketing and other		993		729		264		36.2	%		673		863		(190	)	-22.0	%
Rental Program operating and maintenance		4,537		3,466		1,071		30.9	%		4,022		3,965		57		1.4	%
Net operating income	$	7,113	$	7,511	$	(398	)	-5.3	%
Rental Program NOI										$	7,838	$	7,318	$	520		7.1	%

Statistical Information
Number of occupied rentals, end of period*		5,698		5,442		256		4.7	%		5,780		5,480		300		5.5	%
Investment in occupied rental homes	$	177,755	$	164,712	$	13,043		7.9	%	$	180,967	$	167,304	$	13,663		8.2	%
Number of sold rental homes*		168		136		32		23.5	%		178		156		22		14.1	%
Weighted average monthly rental rate*	$	730	$	722	$	8		1.1	%	$	726	$	727	$	(1	)	-0.1	%

NOI increased $0.5 million from $7.3 million to $7.8 million, or 7.1 percent due to increased revenues of approximately $0.5 million, while expenses were relatively flat. Revenues increased primarily due to an increase in the number of occupied rental homes in the Rental Program as indicated in the table above. Although expenses were flat, total repair and refurbishment costs increased by $0.1 million due to an increase in the number of homes and moveouts in the Rental Program. Taxes and insurance expenses increased by $0.1 million as these costs generally increase as the number of homes in the Rental Program increase. These additional costs were offset by reductions in marketing and other costs of $0.2 million primarily due to a decrease in bad debt expense.

The following table reflects certain financial and statistical information for our Home Sales Program for the three months ended June 30, 2009 and 2008 (in thousands, except for statistical information):

	Three Months Ended June 30,
Financial Information	2009			2008			Change			% Change
New home sales	$	1,064		$	2,796		$	(1,732	)	-61.9	%
Pre-owned home sales		7,154			5,972			1,182		19.8	%
Revenue from homes sales		8,218			8,768			(550	)	-6.3	%

New home cost of sales		917			2,528			(1,611	)	-63.7	%
Pre-owned home cost of sales		4,927			4,453			474		10.6	%
Cost of home sales		5,844			6,981			(1,137	)	-16.3	%

NOI / Gross profit	$	2,374		$	1,787		$	587		32.8	%

Gross profit – new homes	$	147		$	268		$	(121	)
Gross margin % – new homes		13.8	%		9.6	%				4.2	%

Gross profit – pre-owned homes	$	2,227		$	1,519		$	708
Gross margin % – pre-owned homes		31.1	%		25.4	%				5.7	%

Statistical Information
Home sales volume:
New home sales		15			41			(26	)	-63.4	%
Pre-owned home sales		255			223			32		14.3	%
Total homes sold		270			264			6		2.3	%

Gross profit from home sales increased by $0.6 million, or 32.8 percent, primarily due to improved profit margins based on a comparable number of total homes sold. Gross profit from pre-owned home sales increased by $0.7 million offset by decreased gross profit from new home sales of $0.1 million.

The gross profit margin on new home sales increased from 9.6 percent to 13.8 percent, or 4.2 percent. Although the gross profit margin has increased, the overall gross profit on new home sales declined by $0.1 million. The decline in new home sales profit was due to a 63.4 percent decline in sales volume.

The gross profit margin on pre-owned home sales increased from 25.4 percent to 31.1 percent, or 5.7 percent. Pre-owned home sales include the sale of homes that have been utilized in our Rental Program. The cost basis of a rental home is depreciated and therefore, the gross profit margin on the sale of these homes increases the longer the home has been in the Rental Program. An increase in the volume of rental home sales is the primary reason for the overall increase in pre-owned home sales and therefore the principal contributor to the increase in gross profit on pre-owned home sales.

Other revenuesinclude other income (loss), interest income, and ancillary revenues, net. Other revenues decreased by $2.3 million, from $3.7 million to $1.4 million, or 62.2 percent. This decrease was due to reduced income realized from a gain on sale of land and other assets of $2.8 million that occurred in the prior year, along with reduced commission and ancillary revenue of $0.1 million, offset by increased interest income of $0.6 million. The increase in interest income was primarily due to the additional installment notes recognized in association with the transfer of financial assets that are recorded as collateralized receivables in the Consolidated Balance Sheets. The interest income on these collateralized receivables is offset by the same amount of interest expense recognized on the secured debt recorded in association with this transaction. See Note 4 – Secured Borrowing and Collateralized Receivables for additional information.

General and administrative costs increased by $0.3 million, from $6.4 million to $6.7 million, or 4.7 percent due to increased salary and other compensation costs of $0.4 million, partially offset by a decrease in other expenses of $0.1 million. The compensation cost increase is primarily due to an increase in amortization of deferred compensation related to the vesting of restricted stock in May 2009.

Depreciation and amortizationcosts decreased by $0.3 million, from $16.2 million to $15.9 million, or 1.9 percent primarily due to the reduction of amortization expenses associated with promotional costs.

Interest expenseon debt, including interest on mandatorily redeemable debt, increased by $0.2 million, from $15.4 million to $15.6 million, or 1.3 percent due to an increase in expense of $0.9 million associated with our secured borrowing arrangements, partially offset by a reduction in expense of $0.7 million mostly related to lower interest rates charged on variable rate debt. The interest expense on our secured borrowing is offset completely by the interest income recognized on our collateralized receivables. See Note 4 – Secured Borrowing and Collateralized Receivables in our Notes to Consolidated Financial Statements included herein for additional information.

Equity loss from affiliatesdecreased by $7.2 million, from a loss of $7.7 million to a loss of $0.5 million. Our affiliate, Origen, reported losses in the second quarter of 2008 which included charges for impairment, loan loss reserves, and loss on sale of loan portfolio.

Benefit (provision) for state income taxesremained flat with a provision of $0.1 million based on the effective tax rate in effect used to calculate the deferred tax liability related to the Michigan Business Tax for the three months ended June 30, 2009 and 2008.

The following is a summary of our consolidated financial results which were discussed in more detail in the preceding paragraphs (in thousands):

The following tables reflect certain financial and statistical information for all properties owned and operated as of and during the six months ended June 30, 2009 and 2008:

NOI increased by $0.5 million from $65.3 million to $65.8 million, or 0.8 percent due to increased revenue of $1.5 million, partially offset by increased expenses of $1.0 million. Income from real property consists of three main revenue streams: manufactured home site rent, recreational vehicle site rent, and miscellaneous other property revenues. Revenue from our manufactured home and recreational vehicle portfolio increased by $1.5 million due to an average rental rate increase of 3.0 percent, and an increase in the number of occupied home sites. Our miscellaneous other property revenues remained constant. Miscellaneous other property revenues primarily consist of revenues from the re-billing of various utility costs to residents, late fees, and returned check fees.

The growth in real property operating expenses of $1.0 million was due to several factors. Property and casualty insurance increased by $0.2 million due to an increase in reserves for current claims. Utility costs, primarily related to water, electricity charges, and rubbish removal (water charges are partially re-billed to the resident), increased $0.6 million due to increased rates on these services. Other expenses related to administrative costs such, such advertising and office expenses, increased by $0.2 million.

A key management tool we use when evaluating performance and growth of particular properties is a comparison of Same Site communities. The Same Site data may change from time-to-time depending on acquisitions, dispositions, management discretion, significant transactions, or unique situations. The following tables reflect certain financial and statistical information for particular properties owned and operated for the same period in both years as of and for the six months ended June 30, 2009 and 2008:

We acquire repossessed manufactured homes (generally, that are within our communities) from lenders at substantial discounts. We lease or sell these value priced homes to current and prospective residents. We also purchase new homes to lease and sell to current and prospective residents. The programs we have established for our customers to lease or buy new and pre-owned homes have helped to stabilize portfolio occupancy.

The following table reflects certain financial and statistical information for our Rental Program as of and for the six months ended June 30, 2009 and 2008 (in thousands, except for certain statistical marked with *):

	Six Months Ended June 30,
Financial Information	2009		2008		Change			% Change
Rental home revenue	$	10,387	$	10,132	$	255		2.5	%
Site rent from Rental Program ⁽¹⁾		13,123		12,128		995		8.2	%
Rental Program revenue		23,510		22,260		1,250		5.6	%
Expenses
Payroll and commissions		1,379		1,077		302		28.0	%
Repairs and refurbishment		3,968		3,369		599		17.8	%
Taxes and insurance		1,546		1,393		153		11.0	%
Marketing and other		1,666		1,592		74		4.6	%
Rental Program operating and maintenance		8,559		7,431		1,128		15.2	%
Rental Program NOI	$	14,951	$	14,829	$	122		0.8	%

Statistical Information
Number of occupied rentals, end of period*		5,780		5,480		300		5.5	%
Investment in occupied rental homes	$	180,967	$	167,304	$	13,663		8.2	%
Number of sold rental homes*		346		292		54		18.5	%
Weighted average monthly rental rate*	$	726	$	727	$	(1	)	-0.1	%

Net operating income from the Rental Program ~~decreased $0.4~~increased $0.1 million from ~~$7.5~~$14.8 million to ~~$7.1~~$14.9 million, or ~~5.3~~0.8 percent ~~as a result~~due to increased revenues of ~~a $0.7~~$1.2 million, ~~increase in revenue~~ offset ~~by a~~increased expenses of $1.1 ~~million increase in expenses.~~million. Revenues increased $1.2 million due to the ~~increase~~increased number of residents participating in the ~~number of leased homes in the Company’s~~ Rental Program ~~and due to the increase in average rental rates (as~~as indicated in the table ~~above).~~above.

The growth in operating and maintenance expenses of $1.1 million was due to several factors. Commissions increased by $0.3 million due to an increase in the number of new and renewed leases on which commissions were paid. Total repair and refurbishment costs increased by ~~$0.5~~$0.6 million due to an increase in the number of homes and moveouts in the Rental Program. Taxes and insurance expenses increased by $0.1 million as these costs generally increase as the number of homes in the Rental Program increase. Marketing and other costs increased by ~~$0.2~~$0.1 million primarily due to ~~advertising and promotion costs.~~additional utility costs associated with unoccupied rental homes.

The Rental Program has proven to be an effective response to the adverse factors that the Company faced during the industry downturn and now draws more than 14,000 applications per year to live in our communities. The Rental Program has replaced the independent dealer network, a majority of which were forced to go out of business during the early part of the decade, which formerly directed potential residents to our communities.

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED~~

The following table reflects certain financial and statistical information for ~~the Company’s~~our Home Sales Program for the ~~three~~six months ended ~~March 31,~~June 30, 2009 and 2008 (in thousands, except for statistical information):

	Three Months Ended March 31,											Six Months Ended June 30,
Financial Information	2009			2008			Change			% Change		2009			2008			Change			% Change
New home sales	$	1,288		$	2,404		$	(1,116	)	-46.4	%	$	2,352		$	5,200		$	(2,848	)	-54.8	%
Pre-owned home sales		6,173			5,099			1,074		21.1	%		13,327			11,071			2,256		20.4	%
Revenue from homes sales		7,461			7,503			(42	)	-0.6	%		15,679			16,271			(592	)	-3.6	%

New home cost of sales		1,116			2,034			(918	)	-45.1	%		2,033			4,562			(2,529	)	-55.4	%
Pre-owned home cost of sales		4,307			3,805			502		13.2	%		9,234			8,258			976		11.8	%
Cost of home sales		5,423			5,839			(416	)	-7.1	%		11,267			12,820			(1,553	)	-12.1	%

Net operating income / gross profit		2,038			1,664			374		22.5	%
NOI / Gross profit												$	4,412		$	3,451		$	961		27.8	%

Gross profit – new homes		172			370			(198	)			$	319		$	638		$	(319	)
Gross margin % – new homes		13.4	%		15.4	%				-2.0	%		13.6	%		12.3	%				1.3	%

Gross profit – pre-owned homes		1,866			1,294			572				$	4,093		$	2,813		$	1,280
Gross margin % – pre-owned homes		30.2	%		25.4	%				4.8	%		30.7	%		25.4	%				5.3	%

Statistical Information
Home sales volume:
New home sales		19			30			(11	)	-36.7	%		34			71			(37	)	-52.1	%
Pre-owned home sales		229			197			32		16.2	%		484			420			64		15.2	%
Total homes sold		248			227			21		9.3	%		518			491			27		5.5	%

Gross profit from home sales increased by ~~$0.4~~$1.0 million, or ~~22.5~~27.8 percent, ~~as the Company sold 21 more~~primarily due to improved profit margins on an increased number of total homes ~~in the first quarter of 2009 than during the same period in 2008.~~sold. Gross profit from pre-owned home sales increased by ~~$0.6~~$1.3 million ~~while~~offset by decreased gross profit from new home sales ~~declined by $0.2~~of $0.3 million.

The gross profit margin on new home sales increased from 12.3 percent to 13.6 percent, or 1.3 percent. Although the gross profit margin has increased, the overall gross profit on new home sales declined by $0.3 million. The decline in new home sales profit was due to a 52.1 percent decline in sales volume.

The gross profit margin on pre-owned home sales increased from 25.4 percent to 30.7 percent, or 5.3 percent. Pre-owned home sales include the sale of homes that have been utilized in ~~the Company’s~~our Rental Program. The cost basis of a rental home is depreciated and therefore, the gross profit margin on the sale of these homes increases the longer the home has been in the Rental Program. An increase in the volume of rental home sales is the primary reason for the overall increase in pre-owned home sales and therefore the principal contributor to the increase in gross profit on pre-owned home sales.

~~The decline in new home sales profit was due to a 36.7 percent decline in sales volume and a 15.4 percent decline in average selling price primarily in our Florida market.~~

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED~~

Other revenues include other income (loss), interest income, and ancillary revenues, net. Other revenues decreased by ~~$0.3~~$2.6 million, from ~~$1.9~~$5.6 million to ~~$1.6~~$3.0 million, or ~~15.8~~46.4 percent. This decrease was due to reduced income realized from a gain on sale of land and other assets of ~~$0.7~~$3.5 million that occurred in the prior year, along with reduced commission and ancillary revenue of $0.1 million, offset by increased interest income of ~~$0.5~~$1.0 million. The increase in interest income was primarily due to the additional installment notes receivable recognized in association with the transfer of financial assets that are recorded as collateralized receivables in the ~~consolidated balance sheet.~~Consolidated Balance Sheets. The interest income on these collateralized receivables is offset by the same amount of interest expense recognized on the secured debt recorded in association with this transaction. See Note 4 – Secured Borrowing and Collateralized Receivables for additional information.

General and administrative costs increased by ~~$0.2~~$0.5 million, from ~~$5.8~~$12.2 million to ~~$6.0~~$12.7 million, or ~~3.4~~4.1 percent due to increased salary ~~benefit,~~ and other compensation costs of ~~$0.3 million and increased advertising costs of $0.1~~$0.7 million, partially offset by a decrease in legal expenses of $0.2 million. The compensation cost increase is primarily due to an increase in amortization of deferred compensation related to the vesting of restricted stock in May 2009.

Depreciation and amortization costs ~~increased by $0.3 million, from $15.9 million to $16.2 million, or 1.9 percent primarily~~remained flat due to ~~the additional homes added to the Company’s~~decreased amortization of promotions and other depreciation of $0.5 million offset by an increase in depreciation on investment property for use in ~~the Company’s~~our Rental ~~Program.~~Program of $0.5 million.

Interest expense on debt, including interest on mandatorily redeemable debt, decreased by ~~$1.1~~$0.9 million, from ~~$16.2~~$31.6 million to ~~$15.1~~$30.7 million, or ~~6.8~~2.8 percent due to a reduction in expense of $2.6 million mostly related to lower interest rates charged on variable rate debt, partially offset by ~~an increase in fixed rate debt interest expense. The increase in fixed rate debt~~increased expense ~~is primarily due to the Company’s additional secured debt recognized in association~~of $1.7 million associated with ~~the transfer of financial assets that was recorded as a~~our secured borrowing ~~in the Consolidated Balance Sheets (and~~arrangements. The interest expense on our secured borrowing is offset completely by the ~~same amount of~~ interest income ~~recorded~~recognized on our collateralized ~~receivables in relation to this transaction).~~receivables. See Note 4 – Secured Borrowing and Collateralized Receivables in ~~the Company’s~~our Notes to Consolidated Financial Statements included herein.

Equity ~~income (loss)~~loss from affiliates ~~net~~ decreased by ~~$4.8~~$12.1 million, from a loss of ~~$4.8~~$12.6 million to ~~income~~loss of ~~a nominal amount. The Company’s~~$0.5 million. Our affiliate, Origen, reported losses in the first ~~quarter~~six months of 2008 which included charges for impairment, loan loss reserves, and loss on sale of loan portfolio.

Benefit (provision) for state income taxes changed by ~~$0.3~~$0.4 million, from a benefit of ~~$0.2~~$0.1 million to an expense of ~~$0.1~~$0.3 million, due to a change in the effective tax rate used to calculate the deferred tax liability related to the Michigan Business Tax which reduced tax expense in 2008.

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED~~

The following is a summary of ~~the Company’s~~our consolidated financial results which were discussed in more detail in the preceding paragraphs (in thousands):

	Three Months Ended March 31,						Six Months Ended June 30,
	2009			2008			2009			2008
Revenues	$	63,660		$	62,848		$	125,562		$	124,407
Operating expenses/Cost of sales		26,749			25,548			53,520			52,978
Net operating income/gross profit		36,911			37,300
Adjustments to arrive at net income (loss):
NOI/gross profit								72,042			71,429
Adjustments to arrive at net loss:
Other revenues		1,624			1,902			2,994			5,626
General and administrative		(5,992	)		(5,770	)		(12,708	)		(12,182	)
Depreciation and amortization		(16,204	)		(15,861	)		(32,119	)		(32,072	)
Interest expense		(15,080	)		(16,224	)		(30,654	)		(31,638	)
Equity income (loss) from affiliates, net		27			(4,830	)
Equity loss from affiliates								(490	)		(12,550	)
Benefit (provision) for state income taxes		(133	)		235			(279	)		107
Income (loss) from continuing operations		1,153			(3,248	)
Loss from continuing operations								(1,214	)		(11,280	)
Loss from discontinued operations		(172	)		(241	)		(332	)		(511	)
Net income (loss)		981			(3,489	)
Less: Net income (loss) attributable to noncontrolling interest		104			(394	)
Net income (loss) attributable to Sun Communities, Inc.	$	877		$	(3,095	)
Net loss								(1,546	)		(11,791	)
Less: Net loss attributable to noncontrolling interest								(164	)		(1,328	)
Net loss attributable to Sun Communities, Inc.							$	(1,382	)	$	(10,463	)

We provide information regarding FFO as a supplemental measure of operating performance. FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as net income (computed in accordance 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. Due to the variety among owners of identical assets in similar condition (based on historical cost accounting and useful life estimates), ~~the Company believes~~we believe excluding gains and losses related to sales of previously depreciated operating real estate assets, and excluding real estate asset depreciation and amortization, provides a better indicator of ~~the Company’s~~our operating performance. FFO is a useful supplemental measure of ~~the Company’s~~our operating performance because it reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from net income. Management, the investment community, and banking institutions routinely use FFO, together with other measures, to measure operating performance in our industry. Further, management uses FFO for planning and forecasting future periods.

Because FFO excludes significant economic components of net income including depreciation and amortization, FFO should be used as an adjunct to net income (loss) and not as an alternative to net income. 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 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. Other REITS may use different methods for calculating FFO and, accordingly, ~~the Company’s~~our FFO may not be comparable to other REITs.

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED~~

The following table reconciles net ~~income (loss)~~loss to FFO and calculates FFO data for both basic and diluted purposes for the ~~three months~~periods ended ~~March 31,~~June 30, 2009 and 2008:

	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008			2009			2008
Net income (loss)	$	981		$	(3,489	)
Net loss							$	(2,527	)	$	(8,302	)	$	(1,546	)	$	(11,791	)
Adjustments:
Depreciation and amortization		16,621			16,449			16,414			16,814			33,035			33,263
Benefit for state income taxes ⁽¹⁾		(13	)		(389	)		—			(9	)		(13	)		(398	)
Gain on disposition of assets, net		(1,328	)		(1,542	)		(1,368	)		(3,727	)		(2,696	)		(5,269	)
Funds from operations (FFO)	$	16,261		$	11,029		$	12,519		$	4,776		$	28,780		$	15,805

Weighted average Common Shares/OP Units outstanding:
Basic		20,698			20,379			20,806			20,463			20,752			20,421
Diluted		20,698			20,436			20,806			20,514			20,752			20,473

FFO per weighted average common share/OP Unit - Basic	$	0.79		$	0.54
FFO per weighted average common share/OP Unit - Diluted	$	0.79		$	0.54
FFO per weighted average Common Share/OP Unit - Basic							$	0.60		$	0.23		$	1.39		$	0.77
FFO per weighted average Common Share/OP Unit - Diluted							$	0.60		$	0.23		$	1.39		$	0.77

The table below adjusts FFO to exclude equity loss from affiliate (Origen), and severance charges, in thousands.

		Three Months Ended March 31, 2008		Three Months Ended June 30,						Six Months Ended June 30,
Net income (loss)	$	(3,489	)
				2009			2008			2009			2008
Net loss				$	(2,527	)	$	(8,302	)	$	(1,546	)	$	(11,791	)
Equity affiliate adjustment		4,830			474			7,720			375			12,550
Adjusted net income	$	1,341
Severance charges					—			888			—			888
Adjusted net income (loss)					(2,053	)		306			(1,171	)		1,647
Depreciation and amortization		16,449			16,414			16,814			33,035			33,263
Benefit for state income taxes ⁽¹⁾		(389	)		—			(9	)		(13	)		(398	)
Gain on disposition of assets, net		(1,542	)		(1,368	)		(3,727	)		(2,696	)		(5,269	)
Adjusted funds from operations (FFO)	$	15,859		$	12,993		$	13,384		$	29,155		$	29,243
Adjusted FFO per weighted avg. common share/OP Unit - Diluted	$	0.78

Adjusted FFO per weighted average Common Share/OP Unit - Diluted				$	0.62		$	0.65		$	1.40		$	1.43

⁽¹⁾ The tax benefit for the ~~three months~~periods ended ~~March 31,~~June 30, 2009 and 2008 represents the reversal of a tax provision for potential taxes payable on the sale of company assets related to the enactment of the Michigan Business Tax. These taxes do not impact Funds from Operations and would be payable from prospective proceeds of such sales.

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED~~

~~The Company’s~~Our principal liquidity demands have historically been, and are expected to continue to be, distributions to ~~the Company’s~~our stockholders and the unitholders of the Operating Partnership, capital improvements of properties, the purchase of new and pre-owned homes, property acquisitions, development and expansion of properties, and debt repayment.

~~The Company expects~~We expect to meet ~~its~~our short-term liquidity requirements through working capital provided by operating activities and through borrowings on ~~its~~our lines of credit. ~~The Company considers~~We consider these resources to be adequate to meet all operating requirements, including recurring capital improvements, routinely amortizing debt and other normally recurring expenditures of a capital nature, payment of dividends to ~~its~~our stockholders to maintain qualification as a REIT in accordance with the Internal Revenue Code, and payment of distributions to ~~the~~our Operating Partnership’s unitholders. Due to the limited amount of taxable income that ~~the Company has~~we have reported for the past few years, dividend payments to shareholders and unitholders of ~~the~~our Operating Partnership have been largely discretionary rather than required to maintain qualification as a REIT.

From time to time, ~~the Company evaluates~~we evaluate acquisition opportunities that meet ~~the Company’s~~our criteria for acquisition. Should such investment opportunities arise in 2009, ~~the Company~~we will finance the acquisitions though secured financing, the assumption of existing debt on the properties or the issuance of certain equity securities. The difficulty in obtaining financing in the current credit markets may make the acquisition of properties unlikely.

~~The Company has~~We have invested approximately ~~$3.6~~$10.6 million related to the acquisition of homes intended for ~~its~~our rental program during the ~~three~~six months ended ~~March 31,~~June 30, 2009. Expenditures for 2009 will be dependent upon the condition of the markets for repossessions and new home sales, as well as rental homes. ~~The Company has~~We have a $10.0 million floor plan facility. ~~The Company’s~~Our ability to purchase homes for sale or rent may be limited by cash received from third party financing of ~~its~~our home sales, available floor plan financing and working capital available on ~~its~~our unsecured line of credit.

Cash and cash equivalents ~~increased~~decreased by ~~$0.4~~$1.6 million from $6.2 million at December 31, 2008, to ~~$6.6~~$4.6 million at ~~March 31,~~June 30, 2009. Net cash provided by operating activities from continuing operations increased by ~~$3.8~~$2.8 million from ~~$12.0~~$31.5 million for the ~~three~~six months ended ~~March 31,~~June 30, 2008 to ~~$15.8~~$34.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2009.

~~The Company’s~~Our net cash flows provided by operating activities from continuing operations may be adversely impacted by, among other things: (a) the market and economic conditions in ~~the Company’s~~our current markets generally, and specifically in metropolitan areas of ~~the Company’s~~our current markets; (b) lower occupancy and rental rates of ~~the Company’s~~our properties (the “Properties”); (c) increased operating costs, such as wage and benefit costs, insurance premiums, real estate taxes and utilities, that cannot be passed on to ~~the Company’s~~our tenants; (d) decreased sales of manufactured homes and (e) current volatility in economic conditions and the financial markets. See “Risk Factors” in Item 1A of ~~the Company’s~~our 2008 Annual Report.

~~The Company has~~We have an unsecured revolving line of credit facility with a maximum borrowing capacity of $115.0 million, subject to certain borrowing base calculations. The outstanding balance on the line of credit at ~~March 31,~~June 30, 2009 and December 31, 2008 was ~~$83.0~~$81.2 million and $85.8 million, respectively. In addition, $3.3 million of availability was used to back standby letters of credit as of ~~March 31,~~June 30, 2009 and December 31, 2008. Borrowings under the line of credit bear an interest rate of LIBOR plus 165 basis points, or prime plus 40 basis points. ~~The Company has~~We have the option to borrow at either rate. The weighted average interest rate on the outstanding borrowings was ~~2.20~~2.0 percent as of ~~March 31,~~June 30, 2009. The borrowings under the line of credit mature October 1, 2011, assuming an election of a one-year extension that is available at ~~the Company’s~~our discretion. As of ~~March 31,~~June 30, 2009, ~~$28.7~~$30.5 million was available to be drawn under the facility based on the calculation of the borrowing base. During 2009, the highest balance on the line of credit was ~~$97.6 million leaving $17.4 million of available credit during this peak period.~~$105.0 million. Although the unsecured revolving line of credit is a committed facility, the financial failure of one or more of the participating financial institutions may reduce the amount of available credit for use by ~~the Company..~~us.

The line of credit facility contains various leverage, debt service coverage, net worth maintenance and other customary covenants all of which were complied with as of ~~March 31,~~June 30, 2009. The most limiting covenants contained in the line of credit are the distribution coverage and debt service coverage ratios. The distribution coverage covenant requires that distributions be no more than 90 percent of FFO. The debt service coverage covenant requires a minimum ratio of 1.45:1. As of ~~March 31,~~June 30, 2009, the distribution coverage was ~~81.9~~85.5 percent and the debt service coverage was ~~1.70:~~1.69:1.

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED~~

The sub-prime credit crisis and ensuing decline in credit availability have caused turmoil in US and foreign markets. Many industries with no direct involvement with sub-prime lending, securitizations, home building, or mortgages have suffered share price declines as economic uncertainty has derailed investor confidence. While many of ~~the~~our fundamentals, and those of the ~~Company, and~~ manufactured housing industry, have been improving over recent years, ~~the Company’s~~our share price has suffered. For ~~the Company,~~us, the most relevant consequence of this financial turmoil is the uncertainty of the availability of new secured credit, floor plan financing, credit for refinancing properties, and the limited credit availability on ~~its~~our current unsecured line of credit. ~~The Company believes~~We believe this risk is somewhat mitigated because ~~the Company has~~we have adequate working capital provided by operating activities as noted above and ~~the Company has~~we have only limited debt maturities until July 2011. Specifically, ~~the Company’s~~our debt maturities (excluding normal amortization payments and assuming the election of certain extension provisions which are at ~~the discretion of the Company)~~our discretion) for 2009 through ~~2012~~2013 are as follows:

~~The Company anticipates~~We anticipate meeting ~~its~~our long-term liquidity requirements, such as scheduled debt maturities, large property acquisitions, and Operating Partnership unit redemptions through the collateralization of ~~its~~our properties. ~~The Company~~We currently ~~has 31~~have 30 unencumbered properties with an estimated market value of ~~$217.6~~$198.3 million, 2928 of which support the borrowing base for ~~the Company’s~~our $115.0 million unsecured line of credit. As of ~~March 31,~~June 30, 2009, the borrowing base was in excess of $115.0 million by ~~$14.7~~$4.1 million, which would allow ~~the Company~~us to remove properties from the borrowing base at ~~its~~our discretion for collateralization. From time to time, ~~the Company~~we may also issue shares of ~~its~~our capital stock or preferred stock, issue equity units in ~~the~~our Operating Partnership or sell selected assets. ~~The~~Our ability ~~of the Company~~ to finance ~~its~~our long-term liquidity requirements in such a manner will be affected by numerous economic factors affecting the manufactured housing community industry at the time, including the availability and cost of mortgage debt, ~~the~~our financial condition, ~~of the Company,~~ the operating history of the properties, the state of the debt and equity markets, and the general national, regional, and local economic conditions. If it were to become necessary for ~~the Company~~us to approach the credit markets, the current volatility in the credit markets could make borrowing more difficult to secure and more expensive. See “Risk Factors” in Item 1A of ~~the Company’s~~our 2008 Annual Report. If ~~the Company is~~we are unable to obtain additional debt or equity financing on acceptable terms, ~~the Company’s~~our business, results of operations and financial condition would be adversely impacted.

As of ~~March 31,~~June 30, 2009, ~~the Company’s~~our debt to total market capitalization approximated ~~83.3~~81.2 percent (assuming conversion of all Common Operating Partnership Units to shares of common stock). The debt has a weighted average maturity of approximately ~~5.6~~5.4 years and a weighted average interest rate of ~~4.83~~5.0 percent.

Capital expenditures for the ~~three~~six months ended ~~March 31,~~June 30, 2009 and 2008 included recurring capital expenditures of ~~$1.3 million. The Company is~~$3.4 million and $2.9 million, respectively. We are committed to the continued upkeep of ~~its~~our Properties and therefore ~~does~~do not expect a significant decline in ~~its~~our recurring capital expenditures during 2009.

Net cash used for investing activities was ~~$2.9~~$13.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2009, compared to ~~$3.2~~$12.5 million for the ~~three~~six months ended ~~March 31,~~June 30, 2008. The difference is due to a $6.5 million decrease in cash received from the disposition on land and other assets, offset by decreased investment in property of ~~$0.3~~$1.9 million and an increase from the principal repayment of an officer’s note and ~~another note~~other notes receivable of ~~$2.8 million, offset by a $2.8 million decrease in cash received from the disposition on land and other assets.~~$3.3 million.

Net cash used for financing activities was ~~$12.4~~$22.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2009, compared to ~~$9.2~~$20.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2008. The difference is due to a ~~$7.6~~$5.8 million ~~increase in proceeds received from secured borrowings, offset by an $8.8 million net decrease in borrowings on the lines of credit, an~~ increase in repayments on notes payable and other debt, ~~of $1.9 million, and~~ increased costs associated with transactions related to ~~the Company’s stock~~our debt of $0.2 million, and increased distributions to our stockholders and OP unit holders of $0.1 ~~million.~~million, partially offset by a $4.1 million net increase in borrowings on the lines of credit.

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED~~

This Form 10-Q contains various “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and ~~the Company intends~~we intend that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this filing that relate to prospective events or developments are deemed to be forward-looking statements. Words such as “believes,” “forecasts,” “anticipates,” “intends,” “plans,” “expects,” “may”, “will” and similar expressions are intended to identify forward-looking statements. These forward-looking statements reflect ~~the Company’s~~our current views with respect to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this filing. These risks and uncertainties may cause ~~the~~our 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 the national, regional and local economic climates, the ability to maintain rental rates and occupancy levels, competitive market forces, 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 ~~the Company’s~~our 2008 Annual Report, and ~~the Company’s~~our filings with the SEC. The forward-looking statements contained in this Quarterly Report on Form 10-Q speak only as of the date hereof and ~~the Company~~we expressly ~~disclaims~~disclaim any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in ~~the Company’s~~our expectations of future events.

~~The Company’s~~Our principal market risk exposure is interest rate risk. ~~The Company mitigates~~We mitigate this risk by maintaining prudent amounts of leverage, minimizing capital costs and interest expense while continuously evaluating all available debt and equity resources and following established risk management policies and procedures, which include the periodic use of derivatives. ~~The Company’s~~Our primary strategy in entering into derivative contracts is to minimize the variability that changes in interest rates could have on ~~its~~our future cash flows. ~~The Company~~We generally ~~employs~~employ derivative instruments that effectively convert a portion of ~~its~~our variable rate debt to fixed rate debt. ~~The Company does~~We do not enter into derivative instruments for speculative purposes.

~~The Company currently has~~We had five derivative contracts consisting of four interest rate swap agreements with a total notional amount of $95.0 million, and an interest rate cap agreement with a notional amount of $152.4 ~~million.~~million as of June 30, 2009. The first swap agreement fixes $25.0 million of variable rate borrowings at ~~4.84~~6.26 percent through July 2009; the second swap agreement fixes $25.0 million of variable rate borrowings at ~~5.28~~6.70 percent through July 2012. The third swap agreement, entered into in January 2009, fixes $20.0 million of variable rate borrowings at ~~2.73~~4.15 percent through January 2014. The fourth swap agreement, entered into in February 2009, fixes $25.0 million of variable rate borrowing at 3.62 percent through February 2011 and is based upon 30-day LIBOR. ~~The interest rate cap agreement had a cap rate of 9.9 percent, a notional amount of $152.4 million and a termination date of April 28, 2009.~~ In April 2009, ~~the Company~~we entered into a new interest cap agreement with a cap rate of 11.0 percent, a notional amount of $152.4 million, and a termination date of May 1, 2012. Each of these derivative contracts is based upon 90-day LIBOR unless noted otherwise.

~~The Company’s~~Our remaining variable rate debt totals ~~$194.4~~$208.8 million and ~~$216.5~~$226.4 million as of ~~March 31,~~June 30, 2009 and 2008, respectively, which bear interest at prime, various LIBOR or Fannie Mae Discounted Mortgage Backed Securities (“DMBS”) rates. If prime, LIBOR, or DMBS increased or decreased by 1.0 percent during the ~~three~~six months ended ~~March 31,~~June 30, 2009 and 2008, ~~the Company believes its~~we believe our interest expense would have increased or decreased by approximately ~~$0.5~~$1.0 million and $1.1 million, respectively, based on the ~~$209.7~~$205.1 million and ~~$213.5~~$218.9 million average balances outstanding under ~~the Company’s~~our variable rate debt facilities for the ~~three~~six months ended ~~March 31,~~June 30, 2009 and 2008, respectively. A portion of ~~the Company’s~~our variable debt is floating on DMBS rates. If the credit markets tighten, and there are fewer or no buyers of this security, the interest rate may be negatively impacted resulting in higher interest expense.

You should review our Annual Report on Form 10-K for the year ended December 31, 2008, which contains a detailed description of risk factors that may materially affect our business, financial condition, or results of operations.

There are no material changes to the disclosure on these matters set forth in such Form 10-K.

In November 2004, the Board of Directors authorized ~~the Company~~us to repurchase up to 1,000,000 shares of ~~its~~our common stock. ~~The Company has~~We have 400,000 common shares remaining in the repurchase program. No common shares were

In March 2009, ~~the~~our Operating Partnership issued 110,444 Common OP Units to Water Oak, Ltd. which were immediately converted to common stock. In May 2009, a holder of Common OP Units converted 1,824 units to common stock.

All of the above partnership units and shares of common stock were issued in private placements in reliance on Section 4(2) of the Securities Act of 1933, as amended, including Regulation D promulgated there under. No

There were no matters submitted to a vote of security holders during the ~~first~~second quarter ended ~~March 31,~~June 30, 2009.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Maryland		38-2730780
(State of Incorporation)		(I.R.S. Employer Identification No.)
27777 Franklin Rd.
Suite 200
Southfield, Michigan		48034
(Address of Principal Executive Offices)		(Zip Code)

		Pages
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):
	Consolidated Balance Sheets ─ ~~March 31,~~June 30, 2009 and December 31, 2008	3
	Consolidated Statements of Operations ─ ~~Three Months~~Periods Ended ~~March 31,~~June 30, 2009 and 2008	4
	Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss ─ ~~Three Months~~Periods Ended ~~March 31,~~June 30, 2009 and 2008	5
	Consolidated Statement of Stockholders’ Deficit ─ ~~Three~~Six Months Ended ~~March 31,~~June 30, 2009	5
	Consolidated Statements of Cash Flows ─ ~~Three~~Six Months Ended ~~March 31,~~June 30, 2009 and 2008	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2427
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3645
Item 4.	Controls and Procedures	3746
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	3847
Item 1A.	Risk Factors	3847
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3847
Item 4.	Submission of Matters to a Vote of Security Holders	3847
Item 6.	Exhibits	3847
	Signatures	3948

Number of Payments	Recourse %
Less than or equal to 15	100	%
Greater than 15 but less than 64	90	%
64 or more	65	%

Beginning balance as of December 31, 2008	$	26,211

Financed sales of manufactured homes		12,570
Principal payments and payoffs from our customers		(1,156	)
Repurchases		(1,084	)
Total activity		10,330

Ending balance as of June 30, 2009	$	36,541

	March 31, 2009		December 31, 2008
Collateralized term loans - CMBS, due July 1, 2011-2016 interest at 4.93-5.32% as of March 31, 2009 and December 31, 2008.	$	476,957	$	478,907
Collateralized term loans - FNMA, due May 1, 2014 and January 1, 2015, interest at 2.68 - 5.20% and 4.51 - 5.20% as of March 31, 2009 and December 31, 2008, respectively.		376,607		377,651
Preferred OP Units, redeemable at various dates from December 1, 2009 through January 5, 2014, average interest at 6.8% as of March 31, 2009 and December 31, 2008.		48,947		49,447
Secured borrowing, maturing at various dates from May 30, 2010 through December 9, 2029, average interest at 10.4% and 10.1% as of March 31, 2009 and December 31, 2008, respectively (see Note 4).		32,592		26,211
Mortgage notes, other, maturing at various dates from June 1, 2009 through May 1, 2017, average interest at 5.43% as of March 31, 2009 and December 31, 2008.		206,808		206,936
Total debt	$	1,141,911	$	1,139,152

	June 30, 2009
	Carrying Value		Fair Value
Financial assets
Derivative instruments	$	607	$	607
Installment notes on manufactured homes		20,146		20,146
Collateralized receivables		36,412		—

Financial liabilities
Derivative instruments	$	2,135	$	2,135
Long term debt (excluding secured borrowing)		1,113,657		1,054,309
Secured borrowing		36,541		—
Lines of credit		84,323		84,323

Remaining 2009	$~~12.2~~0.5 million
2010	$0.8 million and any balance outstanding on the floor plan facility
2011	$103.7 million and any balance outstanding on the unsecured line of credit
2012	$~~18.4~~35.9 million
2013	$30.1 million

Exhibit No.		Description
10.1		~~Letter Agreement~~Promissory Note dated ~~April 20,~~June 29, 2009, by and among Knollwood Estates Operating Company, LLC, Sun ~~Secured Financing LLC, Aspen – Ft. Collins~~River Ridge Limited Partnership, Sun ~~Secured Financing Houston Limited Partnership, Sun Communities finance, LLC, Sun Holly Forest LLC, Sun Saddle Oak~~Countryside Gwinnett, LLC, and ~~PNC ARCS LLC.~~Bank of America, N.A.
10.2		~~Second Amendment to Amended and Restated Master Credit Facility~~Guaranty Agreement dated ~~April 28,~~June 29, 2009, by and among Sun ~~Secured Financing~~Communities Operating Limited Partnership on behalf of Knollwood Estates Operating Company, LLC, ~~Aspen – Ft. Collins~~Sun River Ridge Limited Partnership, Sun ~~Secured Financing Houston Limited Partnership, Sun Communities finance,~~Countryside Gwinnett, LLC, ~~Sun Holly Forest LLC, Sun Saddle Oak LLC and PNC ARCS LLC.~~in favor of Bank of America, N.A.
10.3		~~Interest Rate Cap Security, Pledge and Assignment~~Term Loan Agreement dated ~~April 28,~~June 29, 2009, by and among Knollwood Estates Operating Company, LLC, Sun ~~Secured Financing LLC, Aspen – Ft. Collins~~River Ridge Limited Partnership, Sun ~~Secured Financing Houston Limited Partnership, Sun Communities finance, LLC, Sun Holly Forest LLC, Sun Saddle Oak~~Countryside Gwinnett, LLC, and ~~PNC ARCS LLC.~~Bank of America, N.A.
31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002