Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
Real Property Operations Home Sales and Rentals Consolidated Real Property Operations Home Sales and Rentals Consolidated
Revenues $ 215,280
$ 45,954
$ 261,234
$ 200,770
$ 43,242
$ 244,012
Operating expenses/Cost of sales 82,295
31,869
114,164
78,922
28,285
107,207
Net operating income/Gross profit 132,985
14,085
147,070
121,848
14,957
136,805
Adjustments to arrive at net income / (loss):
Interest and other revenues, net 7,011
—
7,011
5,689
—
5,689
Home selling expenses —
(3,290 ) (3,290 ) —
(2,643 ) (2,643 )
General and administrative (15,677 ) (2,590 ) (18,267 ) (14,309 ) (2,266 ) (16,575 )
Transaction costs (2,153 ) (14 ) (2,167 ) (4,171 ) (20 ) (4,191 )
Depreciation and amortization (48,624 ) (15,608 ) (64,232 ) (47,323 ) (14,160 ) (61,483 )
Interest (32,082 ) (3 ) (32,085 ) (33,797 ) (3 ) (33,800 )
Interest on mandatorily redeemable preferred OP units (790 ) —
(790 ) (789 ) —
(789 )
Catastrophic weather related charges (7,718 ) (38 ) (7,756 ) —
—
—
Other income, net 3,345
—
3,345
—
—
—
Current tax benefit / (expense) 210
(172 ) 38
(242 ) (41 ) (283 )
Deferred tax benefit 81
—
81
—
—
—
Income from affiliate transactions —
—
—
500
—
500
Net income / (loss) 36,588
(7,630 ) 28,958
27,406
(4,176 ) 23,230
Less: Preferred return to preferred OP units 1,112
—
1,112
1,257
—
1,257
Less: Amounts attributable to noncontrolling interests 2,174
(398 ) 1,776
1,133
(254 ) 879
Net income / (loss) attributable to Sun Communities, Inc. 33,302
(7,232 ) 26,070
25,016
(3,922 ) 21,094
Less: Preferred stock distributions 1,955
—
1,955
2,197
—
2,197
Net income / (loss) attributable to Sun Communities, Inc. common stockholders $ 31,347
$ (7,232 ) $ 24,115
$ 22,819
$ (3,922 ) $ 18,897

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)



	Nine Months Ended
	September 30, 2022								September 30, 2021
	MH		RV		Marina		Consolidated		MH		RV		Marina		Consolidated
Operating revenues	$	1,073.4	$	569.5	$	599.8	$	2,242.7	$	793.3	$	492.5	$	414.7	$	1,700.5
Operating expenses / Cost of sales	489.9		284.8		376.2		1,150.9		326.8		247.3		256.0		830.1
Net Operating Income / Gross Profit	$	583.5	$	284.7	$	223.6	$	1,091.8	$	466.5	$	245.2	$	158.7	$	870.4
Adjustments to arrive at net income
Interest income							25.3								8.0
Brokerage commissions and other revenues, net							27.4								21.7

General and administrative expense							(187.0)								(126.7)
Catastrophic event-related charges, net							(12.3)								(3.1)
Business combination expense, net							(23.9)								(1.0)
Depreciation and amortization							(450.0)								(378.1)

Loss on extinguishment of debt (see Note 8)							(4.4)								(8.1)
Interest expense							(162.2)								(116.2)
Interest on mandatorily redeemable preferred OP units / equity							(3.1)								(3.1)
Gain / (loss) on remeasurement of marketable securities							(74.0)								43.2
Gain / (loss) on foreign currency exchanges							21.7								(7.1)
Gain on dispositions of properties							12.5								108.1
Other income / (expense), net							2.6								(10.0)
Gain on remeasurement of notes receivable							0.1								0.6
Income from nonconsolidated affiliates (see Note 6)							3.8								2.9
Gain / (loss) on remeasurement of investment in nonconsolidated affiliates							0.1								(0.1)
Current tax expense							(12.5)								(1.4)
Deferred tax benefit / (expense)							3.9								(1.1)
Net Income							259.8								398.9
Less: Preferred return to preferred OP units / equity interests							8.6								9.0
Less: Income attributable to noncontrolling interests							13.9								22.6



Net Income Attributable to SUI Common Shareholders							$	237.3							$	367.3


	September 30, 2022								December 31, 2021
	MH		RV		Marina		Consolidated		MH		RV		Marina		Consolidated
Identifiable Assets
Investment property, net	$	6,920.1	$	3,695.9	$	2,996.1	$	13,612.1	$	5,172.2	$	3,639.0	$	2,614.3	$	11,425.5
Cash, cash equivalents and restricted cash	61.8		38.0		12.2		112.0		36.7		19.9		21.6		78.2
Marketable securities	65.0		35.4		—		100.4		121.0		65.9		—		186.9
Inventory of manufactured homes	146.2		7.3		—		153.5		44.3		6.8		—		51.1
Notes and other receivables, net	379.0		82.2		49.8		511.0		374.2		55.5		39.9		469.6
Goodwill	430.5		9.5		541.5		981.5		—		—		495.4		495.4
Other intangible assets, net	95.0		33.9		274.3		403.2		27.4		22.7		256.7		306.8
Other assets, net	327.2		58.1		225.6		610.9		198.0		63.6		219.0		480.6
Total Assets	$	8,424.8	$	3,960.3	$	4,099.5	$	16,484.6	$	5,973.8	$	3,873.4	$	3,646.9	$	13,494.1

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Real Property Operations Home Sales and Rentals Consolidated Real Property Operations Home Sales and Rentals Consolidated
Revenues $ 592,864
$ 129,093
$ 721,957
$ 482,002
$ 117,683
$ 599,685
Operating expenses/Cost of sales 220,902
84,820
305,722
176,176
76,440
252,616
Net operating income/Gross profit 371,962
44,273
416,235
305,826
41,243
347,069
Adjustments to arrive at net income / (loss):
Interest and other revenues, net 18,587
—
18,587
15,459
—
15,459
Home selling expenses —
(9,391 ) (9,391 ) —
(7,240 ) (7,240 )
General and administrative (49,082 ) (7,106 ) (56,188 ) (40,300 ) (6,610 ) (46,910 )
Transaction costs (7,001 ) 11
(6,990 ) (27,990 ) 99
(27,891 )
Depreciation and amortization (144,143 ) (45,576 ) (189,719 ) (118,296 ) (41,269 ) (159,565 )
Extinguishment of debt (759 ) —
(759 ) —
—
—
Interest (95,754 ) (11 ) (95,765 ) (88,512 ) (10 ) (88,522 )
Interest on mandatorily redeemable preferred OP units (2,361 ) —
(2,361 ) (2,363 ) —
(2,363 )
Catastrophic weather related charges (8,075 ) (49 ) (8,124 ) —
—
—
Other income, net 5,341
(1 ) 5,340
—
—
—
Current tax expense 145
(278 ) (133 ) (445 ) (122 ) (567 )
Deferred tax benefit 745
—
745
—
—
—
Income from affiliate transactions —
—
—
500
—
500
Net income / (loss) 89,605
(18,128 ) 71,477
43,879
(13,909 ) 29,970
Less: Preferred return to preferred OP units 3,482
—
3,482
3,793
—
3,793
Less: Amounts attributable to noncontrolling interests 5,163
(984 ) 4,179
1,392
(932 ) 460
Net income / (loss) attributable to Sun Communities, Inc. 80,960
(17,144 ) 63,816
38,694
(12,977 ) 25,717
Less: Preferred stock distributions 6,233
—
6,233
6,748
—
6,748
Net income / (loss) attributable to Sun Communities, Inc. common stockholders $ 74,727
$ (17,144 ) $ 57,583
$ 31,946
$ (12,977 ) $ 18,969

September 30, 2017 December 31, 2016
Real Property Operations Home Sales and Rentals Consolidated Real Property Operations Home Sales and Rentals Consolidated
Identifiable assets:
Investment property, net $ 5,112,302
$ 461,523
$ 5,573,825
$ 5,019,165
$ 450,316
$ 5,469,481
Cash and cash equivalents 124,434
13,014
137,448
3,705
4,459
8,164
Inventory of manufactured homes —
25,741
25,741
—
21,632
21,632
Notes and other receivables, net 132,748
13,012
145,760
68,901
12,278
81,179
Collateralized receivables, net 134,015
—
134,015
143,870
—
143,870
Other assets, net 137,303
3,744
141,047
143,650
2,800
146,450
Total assets $ 5,640,802
$ 517,034
$ 6,157,836
$ 5,379,291
$ 491,485
$ 5,870,776

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

~~11.~~ 12. Income Taxes

We have elected to be taxed as a real estate investment trust ~~(“REIT”~~("REIT") pursuant to Section 856(c) of the Internal Revenue Code of 1986, as amended ~~(“Code”~~("Code"). In order for us to qualify as a REIT, at least 95 percent of our gross income in any year must be derived from qualifying sources. In addition, a REIT must distribute annually at least 90 percent of its REIT taxable income (calculated without any deduction for dividends paid and excluding capital gain) to its ~~stockholders~~shareholders and meet other tests.

Qualification as a REIT involves the satisfaction of numerous requirements (on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are limited judicial or administrative interpretations and involves the determination of various factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation, which requires us to continually monitor our tax status. We analyzed the various REIT tests and confirmed that we continued to qualify as a REIT for the ~~quarter~~nine months ended September 30, ~~2017~~.2022.

As a REIT, we generally will not be subject to ~~United States (“~~U.S.”) federal income taxes at the corporate level on the ordinary taxable income we distribute to our ~~stockholders~~shareholders as dividends. If we fail to qualify as a REIT in any taxable year, our taxable income could be subject to U.S. federal income tax at regular corporate ~~rates (including any applicable alternative minimum tax).~~rates. Even if we qualify as a REIT, we may be subject to certain state and local income taxes, as well as U.S. federal income and excise taxes on our undistributed income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state and local income taxes. ~~The Company is~~We are also subject to local income taxes in Canada, ~~as a result of~~Puerto Rico and the ~~acquisition of Carefree~~United Kingdom due to certain properties located in ~~2016.~~those jurisdictions. We do not provide for withholding taxes on our undistributed earnings from our Canadian subsidiaries as they are reinvested and will continue to be reinvested indefinitely outside of the U.S.

~~Our taxable REIT subsidiaries~~ However, we are subject to ~~U.S. federal income~~Australian withholding taxes ~~as well as state and local income and franchise taxes. In addition,~~on distributions from our ~~Canadian subsidiaries~~investment in Ingenia Communities Group. As currently structured, we are not subject to ~~income tax in Canada.~~UK withholding taxes on distributions from our United Kingdom properties.

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~~basis 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. Our temporary differences primarily relate to net operating loss carryforwards, depreciation and basis differences between tax and ~~U.S. GAAP on our Canadian investments. Generally,~~GAAP. Our deferred tax assets that have a full valuation ~~allowances are recorded against all U.S. federal~~allowance relate to our taxable REIT subsidiaries. As of September 30, 2022, we had $287.1 million of net deferred tax ~~assets. For Canadian purposes, a~~liabilities, comprised of deferred tax assets, net of valuation allowance of $2.3 million, and deferred tax liabilities of $289.4 million. The deferred tax liability balance is comprised primarily of ~~$22.5~~basis differences in our foreign investment in properties in the United Kingdom and Canada. As of December 31, 2021, we had $20.7 million ~~has been~~of net deferred tax liabilities, comprised of deferred tax assets, net of valuation allowance of $3.0 million, and deferred tax liabilities of $23.7 million. These balances include a net deferred tax asset, net of valuation allowance, in the United States of $1.2 million as of September 30, 2022 and December 31, 2021. The net deferred tax assets and deferred tax liabilities are recorded ~~in relation to a corporate entity~~within Other Assets and ~~included in “Other liabilities” in~~Other Liabilities, respectively, on our Consolidated Balance Sheets as of September 30, ~~2017. There are no U.S. federal deferred tax assets or liabilities included in our Consolidated Balance Sheets as of September 30, 2017~~2022 and December 31, ~~2016.~~2021.

We had no unrecognized tax benefits as of September 30, ~~2017~~2022 and ~~2016.~~2021. We do not expect significant ~~increases or decreases~~changes in tax positions that would result in unrecognized tax benefits ~~due to changes in tax positions~~ within one year of September 30, ~~2017.~~2022.

~~We recorded a current tax benefit for federal, state, and Canadian income taxes of approximately $0.1 million, and current tax expense of $0.3 million for~~For the three ~~months ended September 30, 2017 and 2016, respectively, and $0.1 million and $0.6 million of current tax expense for the nine months ended September 30, 2017 and 2016, respectively.~~

~~We recorded $0.1 million and $0.7 million of deferred tax benefit in our Consolidated Statements of Operations for the three months~~ and nine months ended September 30, ~~2017,~~2022, we recorded current tax expense for federal, state, Canadian, Puerto Rican, and UK income taxes and Australian withholding taxes totaling $7.3 million and $12.5 million, respectively. ~~There was no deferred~~For the three and nine months ended September 30, 2021, we recorded current tax ~~benefit or~~ expense ~~recorded~~ for federal, state, Canadian income taxes and Australian withholding taxes totaling $0.4 million and $1.4 million, respectively.

For the three ~~months or~~and nine months ended September 30, ~~2016.~~2022, we recorded a deferred tax benefit of $3.6 million and $3.9 million, respectively. For the three and nine months ended September 30, 2021, we recorded deferred tax expense of $1.2 million and $1.1 million, respectively.

~~SHS is currently under audit by the Internal Revenue Service for the tax year 2015.~~

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

~~12.~~ 13. Earnings Per Share

Earnings per share ("EPS") is computed by dividing net income by the weighted average number of common shares outstanding during the period on a basic and diluted basis. We calculate diluted EPS using the more dilutive of the treasury stock method and the two-class method for stock option and restricted common shares, the treasury stock method for forward equity sales and the if converted method for convertible units.

From time to time, we enter into forward equity sales agreements, which are discussed in Note 9, "Equity and Temporary Equity." We considered the potential dilution resulting from the forward equity sales agreements on the EPS calculations. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered unless there is a physical settlement. Common shares issued upon the physical settlement of the forward equity sales agreements, weighted for the period these common shares are outstanding, are included in the denominator of basic EPS. To determine the dilution resulting from the forward equity sales agreements during the period of time prior to settlement, we calculate the number of weighted-average shares outstanding - diluted in accordance with the treasury stock ~~options,~~method.

Our potentially dilutive securities include our potential common shares related to our forward equity offerings, our unvested restricted common shares, ~~Series A Preferred Stock, and Series A-4 Preferred Stock,~~ and our Operating Partnership ~~has:~~ outstanding common OP ~~units;~~units, Series A-1 preferred OP ~~units;~~units, Series A-3 preferred OP ~~units; Series A-4 preferred OP units;~~units, Series C preferred OP ~~units;~~units, Series D preferred OP units, Series E preferred OP units, Series F preferred OP units, Series G preferred OP units, Series H preferred OP units, Series J preferred OP units and Aspen preferred OP Units, which, if converted or exercised, may impact dilution.

Diluted EPS considers the impact of potentially dilutive securities except when the potential common shares have an anti-dilutive effect. Our unvested restricted stock common shares contain rights to receive non-forfeitable distributions and participate equally with common stock with respect to distributions issued or declared, and thus, are participating securities, requiring the two-class method of computing EPS. In calculating the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average number of shares outstanding during the period. The two-class method determines EPS by (1) dividing the sum of distributed earnings allocated to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of shares of common stock outstanding for the period; and (2) dividing the sum of distributed earnings allocated to participating securities and undistributed earnings allocated to participating securities by the weighted average number of shares of participating securities for the period. The remaining potentially dilutive common shares do not contain rights to distributions and are included in the computation of diluted EPS.

Computations of basic and diluted ~~earnings / (loss) per share~~EPS were as follows (in ~~thousands,~~millions, except for per share data):


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Numerator
Net Income Attributable to SUI Common Shareholders	$	162.6	$	231.7	$	237.3	$	367.3
Less: allocation to restricted stock awards	1.1		1.5		1.5		2.4
Basic earnings - Net Income attributable to common shareholders after allocation to restricted stock awards	$	161.5	$	230.2	$	235.8	$	364.9


Add: allocation to common and preferred OP units dilutive effect	0.5		5.7		4.9		8.3
Diluted earnings - Net income attributable to common shareholders after allocation to common and preferred OP units	$	162.0	$	235.9	$	240.7	$	373.2


Denominator
Weighted average common shares outstanding	122.4		115.1		119.2		111.7
Add: common shares dilutive effect: Forward Equity Offering	—		—		0.2		—

Add: dilutive restricted stock	—		—		—		—
Add: common and preferred OP units dilutive effect	0.4		3.0		2.5		2.6
Diluted weighted average common shares and securities(1)	122.8		118.1		121.9		114.3
EPS Available to Common Shareholders After Allocation
Basic EPS	$	1.32	$	2.00	$	1.98	$	3.27
Diluted EPS(1)	$	1.32	$	2.00	$	1.97	$	3.27

(1)For the three and nine months ended September 30, 2022 and 2021, diluted earnings per share was calculated using the two-class method for restricted stock awards as the application of this method resulted in a more diluted earnings per share during those periods.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
Numerator 2017 2016 2017 2016
Net income attributable to common stockholders $ 24,115
$ 18,897
$ 57,583
$ 18,969
Allocation to restricted stock awards (189 ) (135 ) (461 ) (22 )
Basic earnings: Net income attributable to common stockholders after allocation 23,926
18,762
57,122
18,947
Allocation to restricted stock awards 189
135
461
22
Diluted earnings: Net income attributable to common stockholders after allocation $ 24,115
$ 18,897
$ 57,583
$ 18,969

Denominator
Weighted average common shares outstanding 78,369
68,655
75,234
63,716
Add: dilutive stock options 2
8
2
10
Add: dilutive restricted stock 437
406
610
420
Diluted weighted average common shares and securities 78,808
69,069
75,846
64,146
Earnings per share available to common stockholders after allocation:
Basic $ 0.31
$ 0.27
$ 0.76
$ 0.30
Diluted $ 0.31
$ 0.27
$ 0.76
$ 0.30

We have excluded certain convertible securities from the computation of diluted ~~earnings per share~~EPS because the inclusion of ~~these~~those securities would have been anti-dilutive for the periods presented. The following table presents the outstanding securities that were excluded from the computation of diluted ~~earnings per share~~EPS as of September 30, ~~2017~~2022 and ~~2016~~2021 (in thousands):


	As of
	September 30, 2022		September 30, 2021
Common OP units	2,429	(1)	—
A-1 preferred OP units	270		275
A-3 preferred OP units	40		40

Aspen preferred OP units	1,284	(2)	1,284	(2)

Series C preferred OP units	306		306
Series D preferred OP units	489		489
Series E preferred OP units	80		90
Series F preferred OP units	90		90
Series G preferred OP units	241		241
Series H preferred OP units	581		581
Series I preferred OP units	—		922
Series J preferred OP units	240		240
Total Securities	6,050		4,558

(1) For the three months ended September 30, 2022, Common OP units were excluded from the computation of diluted earnings per share because the inclusion of those securities would have been anti-dilutive for the period. For the nine months ended September 30, 2022, Common OP units were included in the computation of diluted earnings per share because the inclusion of those securities was dilutive for the period.

(2) For the three months ended September 30, 2022 and 2021, Aspen preferred OP units were included in the computation of diluted earnings per share because the inclusion of those securities was dilutive for the period. For the nine months ended September 30, 2022 and 2021, Aspen preferred OP units were excluded from the computation of diluted earnings per share because the inclusion of those securities would have been anti-dilutive for the period.

14. Derivative Financial Instruments

As of September 30,
2017 2016
Common OP units 2,757
2,838
Series A-1 preferred OP units 349
376
Series A-3 preferred OP units 40
40
Series A-4 preferred OP units 425
743
Series A-4 preferred stock 1,085
1,682
Series C preferred OP units 316
333
Aspen preferred OP units 1,284
1,284
Total securities 6,256
7,296

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

13. ~~Derivative Instruments and Hedging Activities~~

Our objective and strategy in using interest rate derivatives is to manage exposure to interest rate movements, thereby minimizing the effect of interest rate changes and the effect itthey could have on future cash ~~flows. Interest~~outflows (forecasted interest payments) on a forecasted issuance of long-term debt or on outstanding floating rate ~~caps~~debt. Treasury locks and interest rate swaps are used to accomplish this objective. We do not enter into derivative instruments for speculative ~~purposes nor do~~purposes.

We have designated the treasury lock contracts and interest rate swap contracts as cash flow hedges under ASC Topic 815, "Derivatives and Hedging." The risk being hedged is the interest rate risk related to forecasted transactions and outstanding floating rate debt. The benchmark interest rate used is the on-the-run 10-year U.S. Treasury rate and the daily weighted average Daily SONIA Rate for the treasury locks and interest rate swaps, respectively.

As of March 31, 2022, we ~~have any~~held four Treasury lock contracts with an aggregate notional amount of $600.0 million that were designated as cash flow hedges of interest rate risk. The unrealized gains or losses on the Treasury lock contracts were recorded in Accumulated other comprehensive income ("AOCI") within the Consolidated Balance Sheets. During the three months ended June 30, 2022, in connection with the 2032 Notes issuance, we settled the four 10-year Treasury rate lock contracts totaling $600.0 million and received a settlement payment of $35.3 million. As of the settlement date, the net accumulated gain included in AOCI is being reclassified into earnings as a reduction to interest expense on a straight-line basis over the 10-year term of the hedged transaction.

During the three months ended September 30, 2022, we entered into two treasury rate lock contracts with an aggregate notional value of $200.0 million to hedge interest rate risk associated with the future issuance of long-term fixed rate debt. We also entered into two interest rate swap agreements to hedge variable rate borrowings of £400.0 million (equivalent to $445.3 million as of September 30, 2022) under the term loan on our Senior Credit Facility. The interest rate swaps locked in a ~~hedging arrangement.~~total fixed rate, inclusive of spread, of 3.67 percent through the term loan maturity date of April 7, 2025. The cash flow hedge unrealized gains or losses included in the assessment of hedge effectiveness are recorded in AOCI and will be reclassified to interest expense in the same period during which the hedged transaction affects earnings. We estimate that $13.0 million will be reclassified as a reduction to interest expense over the next 12 months for all of our outstanding cash flow hedges.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table ~~provides~~presents the ~~terms~~gross fair value amounts of our ~~interestrate~~ derivative ~~contracts that were in effect as of~~ ~~September 30, 2017~~financial instruments and the associated notional amounts (in millions):

Type Purpose Effective Date Maturity Date
Notional
(in millions)
Based on Variable Rate Cap Rate Spread Effective Fixed Rate
Cap Cap Floating Rate 4/1/2015 4/1/2018 $ 150.1
3 Month LIBOR 3.1690% 9.0000% —% N/A
Cap Cap Floating Rate 10/3/2016 5/1/2023 $ 9.6
3 Month LIBOR 3.9690% 11.0200% —% N/A


	September 30, 2022						December 31, 2021
Derivatives designated as cash flow hedges	Notional		Fair Value of Assets(1)		Fair Value of Liabilities		Notional		Fair Value of Assets(1)		Fair Value of Liabilities
Interest rate derivatives	$	645.3	$	41.4	$	—	$	150.0	$	0.4	$	—

~~In accordance with ASC Topic 815, “Derivatives and Hedging,~~”~~derivative instruments are recorded at fair value in “Other assets, net” or “Other liabilities”~~(1)Included within Other Assets, net on the Consolidated Balance Sheets. As

Refer to Note 15, "Fair Value of ~~September 30, 2017 and December 31, 2016,~~Financial Instruments," for additional information related to the fair value methodology used for derivative financial instruments.

The following table presents the gains on derivatives in cash flow hedging relationships recognized in Other Comprehensive Income (in millions):


	Three Months Ended				Nine Months Ended
Derivatives designated as cash flow hedges	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Interest rate derivatives	$	40.7	$	—	$	75.7	$	—

The following table presents the amount of ~~our derivatives was zero.~~gains / (losses) on derivative instruments reclassified from Accumulated Other Comprehensive Income into earnings (in millions):


		Three Months Ended				Nine Months Ended
Derivatives designated as cash flow hedges	Financial Statement Classification	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Interest rate derivatives	Interest expense	$	(0.2)	$	—	$	0.6	$	—

14.

15. Fair Value of Financial Instruments

Our financial instruments consist primarily of cash, ~~and~~ cash equivalents ~~accounts~~ and restricted cash, marketable securities, notes ~~receivable, accounts payable, derivative instruments,~~ and ~~debt.~~

other receivables, derivatives assets, debt, warrants and other liabilities. We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures, pursuant to ASC ~~Topic~~ 820, “"Fair Value Measurements and Disclosures”." The following methods and assumptions were used in order to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

ASC 820, "Fair Value Measurements and Disclosures," requires disclosure regarding determination of fair value for assets and liabilities and establishes a hierarchy under which these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect ~~the Company’s~~our market assumption. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair value hierarchy:

Level 1—1 - Quoted unadjusted prices for identical instruments in active ~~markets;~~markets that we have the ability to access;

Level 2—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 significant inputs and significant value drivers are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severity, etc.) in active ~~markets;~~markets or can be corroborated by observable market data; and

Level 3—3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The unobservable inputs reflect our assumptions about the assumptions that market participants would use.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Assets by Hierarchy Level

The table below sets forth our financial assets and liabilities (in millions) that required disclosure of fair value on a recurring basis as of September 30, 2022. The table presents the carrying values and fair values of our financial instruments as of September 30, 2022 and December 31, 2021, that were measured using the valuation techniques described above. The table excludes other financial instruments such as other receivables and accounts payable as the carrying values associated with these instruments approximate their fair value since their maturities are less than one year. These are classified as Level 1 in the hierarchy.



	September 30, 2022
	Carrying Value		Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
Financial Assets
Cash, cash equivalents and restricted cash	$	112.0	$	112.0	$	—	$	—	$	112.0
Marketable securities	100.4		100.4		—		—		100.4
Installment notes receivable on manufactured homes, net	69.4		—		—		69.4		69.4

Notes receivable from real estate developers and operators	288.3		—		—		288.3		288.3

Derivative assets	41.4		—		41.4		—		41.4
Total assets measured at fair value	$	611.5	$	212.4	$	41.4	$	357.7	$	611.5

Financial Liabilities
Secured debt	$	3,006.0	$	—	$	3,006.0	$	—	$	2,598.5


Unsecured debt
Senior unsecured notes	1,779.1		—		1,779.1		—		1,423.8

Line of credit and other unsecured debt	1,925.9		—		1,925.9		—		1,925.9
Total unsecured debt	3,705.0		—		3,705.0		—		3,349.7

Other financial liabilities (contingent consideration)	20.2		—		—		20.2		20.2
Total liabilities measured at fair value	$	6,731.2	$	—	$	6,711.0	$	20.2	$	5,968.4



	December 31, 2021
	Carrying Value		Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
Financial Assets
Cash, cash equivalents and restricted cash	$	78.2	$	78.2	$	—	$	—	$	78.2
Marketable securities	186.9		186.9		—		—		186.9
Installment notes receivable on manufactured homes, net	79.1		—		—		79.1		79.1

Notes receivable from real estate developers and operators	284.0		—		—		284.0		284.0

Derivative assets	0.4		—		0.4		—		0.4
Total assets measured at fair value	$	628.6	$	265.1	$	0.4	$	363.1	$	628.6

Financial Liabilities
Secured debt	$	3,380.7	$	—	$	3,380.7	$	—	$	3,405.9



Unsecured debt
Senior unsecured notes	1,186.4		—		1,186.4		—		1,201.8
Line of credit and other unsecured debt	1,104.7		—		1,104.7		—		1,104.7
Total unsecured debt	2,291.1		—		2,291.1		—		2,306.5


Other financial liabilities (contingent consideration)(1)	20.2		—		—		20.2		20.2
Total liabilities measured at fair value	$	5,692.0	$	—	$	5,671.8	$	20.2	$	5,732.6

(1)Balance updated during the three months ended March 31, 2022 to include contingent consideration related to a marina acquisition. This contingent consideration was included within Other liabilities on the Consolidated Balance Sheets at December 31, 2021.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

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 in order to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

~~Derivative Instruments~~Cash, Cash Equivalents and Restricted Cash

The ~~derivative instruments~~carrying values of cash, cash equivalents and restricted cash approximate their fair market values due to the short-term nature of the instruments. These are classified as Level 1 in the hierarchy.

Marketable Securities

Marketable securities held by us and accounted for under ASC 321, "Investments - Equity Securities," are ~~interest rate cap agreements for~~measured at fair value. Any change in fair value is recognized in the Consolidated Statement of Operations in the Gain / (loss) on remeasurement of marketable securities in accordance with ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and measurement of financial assets and financial liabilities." The fair value is measured by the quoted unadjusted share price which ~~quoted market prices are indirectly available. For those derivatives, we use model-derived valuations in which all significant inputs and significant value drivers are observable~~is readily available in active markets ~~provided by brokers or dealers to determine~~(Level 1).

The change in the ~~fair value of derivative instruments on a recurring basis (Level 2). Refer to Note~~ 13~~, “Derivative Instruments and Hedging Activities.”~~marketable securities balance was as follows (in millions):



	Nine Months Ended		Year Ended
	September 30, 2022		December 31, 2021
Beginning Balance	$	186.9	$	124.7
Additional purchases	—		35.5
Change in fair value measurement	(74.0)		33.4
Foreign currency translation adjustment	(14.0)		(9.2)
Dividend reinvestment, net of tax	1.5		2.5

Ending Balance	$	100.4	$	186.9

Installment Notes Receivable on Manufactured Homes

~~The net carrying value of the installment~~Installment notes receivable on manufactured homes ~~estimates the~~are recorded at fair value ~~as the~~and are measured using model-derived indicative pricing using primarily unobservable inputs, inclusive of default rates, interest rates ~~in the portfolio are comparable to current prevailing market~~and recovery rates (Level 2)3). Refer to Note 4,~~, “Notes~~ "Notes and Other ~~Receivables.”~~Receivables," for additional information.

~~SUN COMMUNITIES, INC.~~Notes Receivable from Real Estate Developers and Operators

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~Notes receivable from real estate developers and operators are recorded at fair value and are measured using model-derived indicative pricing using primarily unobservable inputs including interest rates and counterparty performance (Level 3). The carrying values of the notes generally approximate their fair market values either due to the nature of the note and / or the note being secured by underlying collateral and / or personal guarantees. Refer to Note 4, "Notes and Other Receivables," for additional information.

Derivative Assets - Interest Rate Derivatives

~~Long-Term Debt~~

Interest rate derivatives are recorded at fair value and ~~Lines~~consist of ~~Credit~~

Treasury locks and interest rate swaps. The fair value of ~~long-term~~the Treasury locks and interest rate swaps are measured using observable inputs based on the 10-year Treasury note rate and the weighted average Daily SONIA Rate, respectively (Level 2).

Secured Debt

Secured debt ~~(excluding the secured borrowing)~~consists primarily of our mortgage term loans. The fair value of mortgage term loans is based on the estimates of management and on rates currently quoted, rates currently prevailing for comparable loans and instruments of comparable maturities (Level 2). Refer to Note ~~7, “Debt~~8, "Debt and ~~Lines~~Line of ~~Credit.”~~Credit," for additional information.

~~Collateralized Receivables~~

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Unsecured Debt

Senior unsecured notes - the fair value of senior unsecured notes is based on the estimates of management and ~~Secured Borrowings~~on rates currently quoted, rates currently prevailing for comparable loans and instruments of comparable maturities (Level 2). Refer to Note 8, "Debt and Line of Credit," for additional information.

Line of credit and other unsecured debt - consists primarily of our Senior Credit Facility. We have variable rates on our Senior Credit Facility. 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 on the Consolidated Balance Sheets. The net~~debt with variable rates approximates carrying ~~value of the collateralized receivables estimates the fair~~ value as the interest rates ~~in the portfolio are comparable to current prevailing~~of these amounts approximate market ~~rates (Level 2). Refer to Note 3, “Collateralized Receivables and Transfers~~rates. The estimated fair value of ~~Financial Assets.”~~our indebtedness as of September 30, 2022 approximated its gross carrying value.

Other Financial Liabilities

We estimate the fair value of ~~our~~ contingent consideration ~~liability~~liabilities based on valuation models using significant unobservable inputs that generally consider discounting of future cash flows using market interest rates and adjusting for non-performance risk over the remaining term of the liability (Level 2)3).

~~Other Financial Instruments~~Level 3 Reconciliation, Measurements and Transfers

~~The carrying values~~We review the fair value hierarchy classifications each reporting period. Changes in the observability of ~~cash and cash equivalents, accounts receivable, and accounts payable approximate their fair market values due to~~ the ~~short-term nature~~valuation attributes may result in a reclassification of ~~these instruments.~~

~~The table below sets forth our~~certain financial assets or liabilities. Such reclassifications are reported as transfers in and ~~liabilities that required disclosure~~out of Level 3 at the beginning fair value ~~on a recurring basis~~for the reporting period in which the changes occur. Availability of secondary market activity and consistency of pricing from third-party sources impacts our ability to classify securities as Level 2 or Level 3. There were no transfers into or out of Level 3 during the nine months ended September 30, ~~2017. The table presents the carrying values and fair values of our financial instruments as of September 30, 2017 and~~ ~~December 31, 2016~~, that were measured using the valuation techniques described above (in thousands). The table excludes other financial instruments such as cash and cash equivalents, accounts receivable, and accounts payable as the carrying values associated with these instruments approximate fair value since their maturities are less than one year.2022.

September 30, 2017 December 31, 2016
Financial assets Carrying Value Fair Value Carrying Value Fair Value
Installment notes receivable on manufactured homes, net $ 97,990
$ 97,990
$ 59,320
$ 59,320
Collateralized receivables, net 134,015
134,015
143,870
143,870
Financial liabilities
Debt (excluding secured borrowings) $ 2,868,543
$ 2,837,449
$ 2,865,470
$ 2,820,680
Secured borrowings 134,884
134,884
144,477
144,477
Lines of credit —
—
100,095
98,640
Other liabilities (contingent consideration) 11,115
11,115
10,011
10,011

~~15.~~ ~~Recent Accounting Pronouncements~~

~~In May 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-09~~ ~~“Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.”~~ This update provides clarity and reduces diversity in practice and cost and complexity when applying the guidance in Topic 718, regarding a change to the terms or conditions of a share-based payment award. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within that year. We will apply this guidance to modifications that occur on or after the effective date.

~~In January 2017, the FASB issued ASU 2017-01~~ ~~“Business Combinations (Topic 805): Clarifying the Definition of a Business.”~~ This update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within that year, with early application allowed for certain transactions. Upon adoption of this standard, we expect that a majority of our future property acquisitions will be considered asset acquisitions.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table summarizes changes to our financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the three and nine months ended September 30, 2022 and 2021 (in millions):

~~In November 2016,~~


	Three Months Ended
	September 30, 2022						September 30, 2021
Assets:	Installment Notes Receivable on MH, net		Notes Receivable From Real Estate Developers and Operators		Warrants		Installment Notes Receivable on MH, net		Notes Receivable From Real Estate Developers and Operators
Level 3 beginning balance at June 30, 2022 and 2021	$	73.1	$	292.3	$	—	$	82.5	$	62.0

Realized gains / (losses)(1)	(0.1)		—		(0.6)		0.1		—
Purchases and issuances	—		17.8		0.6		3.3		3.4
Sales and settlements	(3.6)		(4.3)		—		(3.4)		(0.6)
Dispositions of properties	—		—		—		(1.9)		—
Foreign currency exchange losses	—		(17.5)		—		—		—
Other adjustments	—		—		—		0.4		(0.2)
Level 3 ending balance at September 30, 2022 and 2021	$	69.4	$	288.3	$	—	$	81.0	$	64.6


	Nine Months Ended
	September 30, 2022						September 30, 2021
Assets:	Installment Notes Receivable on MH, net		Notes Receivable From Real Estate Developers and Operators		Warrants		Installment Notes Receivable on MH, net		Notes Receivable From Real Estate Developers and Operators
Level 3 beginning balance at December 31, 2021 and 2020	$	79.1	$	284.0	$	—	$	—	$	—
Transfer to level 3	—		—		—		85.9		52.6
Realized gains / (losses)(1)	0.1		—		(2.6)		0.5		—
Purchases and issuances	1.0		65.6		2.6		7.2		14.5
Sales and settlements	(10.8)		(21.1)		—		(11.2)		(1.1)
Dispositions of properties	—		—		—		(1.9)		—
Foreign currency exchange losses	—		(40.2)		—		—		—
Other adjustments	—		—		—		0.5		(1.4)
Level 3 ending balance at September 30, 2022 and 2021	$	69.4	$	288.3	$	—	$	81.0	$	64.6


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Liabilities:	Contingent Consideration		Contingent Consideration		Contingent Consideration		Contingent Consideration
Level 3 beginning balance at June 30, 2022 and 2021, and December 31, 2021 and 2020	$	20.2	$	18.1	$	20.2	$	15.8

Realized losses(1)	—		9.2		—		9.3
Purchases and issuances	—		11.9		—		15.4


Other adjustments	—		(0.2)		—		(1.5)
Level 3 ending balance at September 30, 2022 and 2021	$	20.2	$	39.0	$	20.2	$	39.0

(1) Includes realized gains / losses recorded in earnings within the ~~FASB issued ASU 2016-18~~ ~~“Statement of Cash Flows (Topic 230): Restricted Cash.”~~ ~~This update requires inclusion of restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown~~following line items on the ~~statement~~Consolidated Income Statements: Warrants - Income from nonconsolidated affiliates; Installment Notes Receivable on MH, net - Gain on remeasurement of ~~cash flows.~~notes receivable; Contingent Consideration - Other income / (expense), net.

Although we have determined the estimated fair value amounts using available market information and commonly accepted valuation methodologies, considerable judgment is required in interpreting market data to develop fair value estimates. The ~~guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within that year. Upon adoption~~fair value estimates are based on information available as of this guidance, we will include restricted cash and restricted cash equivalents within the reconciliation of the net change in cash and cash equivalents on our Consolidated Statements of Cash Flows. Restricted cash and restricted cash equivalents, which are included within Other assets, net in our Consolidated Balance Sheets, were $19.9 million and $17.1 million at September 30, ~~2017 and December 31, 2016, respectively.~~2022. As such, our estimates of fair value could differ significantly from the actual carrying value.

~~In October 2016, the FASB issued ASU 2016-16~~ ~~“Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.”~~ This update requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within that year. Upon adoption of this standard, there will be no material impact to our Consolidated Financial Statements.

~~In August 2016, the FASB issued ASU 2016-15~~ ~~“Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.”~~ This update addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within that year. Upon adoption of this standard, there will be no material impact to our Consolidated Financial Statements.

~~In June 2016, the FASB issued ASU 2016-13~~ ~~“Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”~~ This update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are in the initial phases of evaluating how this guidance will impact our accounting policies regarding assessment of, and allowance for, loan losses.

~~In March 2016, the FASB issued ASU 2016-09 “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.~~” The amendments in this update are intended to simplify several aspects of the accounting for share-based payments. We adopted these amendments as of January 1, 2017. The main provisions of this update regarding excess tax benefits did not have an impact on our Consolidated Financial Statements due to our status as a REIT for taxation purposes. We have elected to continue estimating the number of shares expected to vest in order to determine compensation cost, and were previously classifying, as financing activity, cash paid by us for employee taxes when shares were withheld to cover minimum statutory requirements.

~~In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).~~” The core principle of this update is that a lessee should recognize the assets and liabilities that arise from leases while the accounting by a lessor is largely unchanged from that applied under previous GAAP. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Our income from real property and rental home revenue streams is derived from rental agreements where we are the lessor. As noted above, the lessor accounting model is largely unchanged by this update. We are the lessee in other arrangements, primarily for our executive offices, ground leases at five communities, and certain equipment. We are currently evaluating our inventory of such leases to determine which will require recognition of right of use assets and corresponding lease liabilities, and the related disclosure requirements thereto.

~~In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)~~” (“ASU 2014-09”). The objective of this amendment is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying this amendment, companies will perform a five-step analysis of transactions to determine when and how revenue is recognized. This amendment applies to all contracts with customers except those that are within the scope of other topics in the FASB ASC. An entity should apply the amendments using either the full retrospective approach or retrospectively with a cumulative effect of initially applying the amendments recognized at the date of initial application. In July 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

We anticipate adopting ASU 2014-09 and the related updates subsequently issued by the FASB in January 2018, via the modified retrospective approach. Applicability of the standard updates to our revenue streams and other considerations are summarized below.

~~Income from real property~~ ~~- is derived from rental agreements whereby we lease land to residents in our communities. We account for the lease components of these rental agreements pursuant to ASC 840~~ ~~“Leases”~~ ~~and the non-lease components under ASC 605~~ ~~“Revenue Recognition.”~~

~~Revenue from home sales~~ ~~- is recognized pursuant to ASC 605~~ ~~“Revenue Recognition,”~~ as the manufactured homes are tangible personal property that can be located on any parcel of land. The manufactured homes are not permanent fixtures or improvements to the underlying real estate, and are therefore not considered by us to be subject to the guidance in ASC 360-20 ~~“Real Estate Sales.”~~

~~Rental home revenue~~ ~~- is comprised of rental agreements whereby we lease homes to residents in our communities. We account for these revenues pursuant to ASC 840~~ ~~“Leases.”~~

~~Ancillary revenues~~ ~~- are primarily comprised of restaurant, golf, merchandise and other activities at our RV communities. These revenues are recognized pursuant to ASC 605~~ ~~“Revenue Recognition,”~~ ~~at point of sale to customers as our performance obligations are then satisfied.~~

~~Interest income~~ - on our notes receivable will continue to be recognized as revenue, but presented separately from revenue from contracts with customers, as interest income is not in the scope of ASU 2014-09 and the related updates subsequently issued by the FASB.

~~Broker commissions and other revenues, net~~ ~~- is primarily comprised of (i) brokerage commissions that we account for on a net basis pursuant to ASC 605~~ ~~“Revenue Recognition,”~~ ~~as our performance obligation is to arrange for a third party to transfer a home to a customer; and (ii) notes receivable loss reserves.~~

As detailed above, our revenues from home sales, ancillary revenues, and broker commissions will be in the scope of the new guidance. Upon adoption, we will present contract assets and liabilities, as applicable, when one party to a transaction has performed and the other has not. Further, we will expand our disclosures regarding these revenue streams, as applicable, to discuss our contract balances and performance obligations and satisfaction thereof. Adoption of this standard will have no material impact to our Consolidated Financial Statements.

16. 16. Commitments and Contingencies

Legal Proceedings

We are involved in various legal proceedings arising in the ordinary course of business. All such proceedings, taken together, are not expected to have a material adverse impact on our results of operations or financial condition.

Catastrophic Event-Related Charges

~~17.~~ ~~Subsequent Event~~

On ~~October 4, 2017, we entered into a Second Amendment to Rights Agreement (the “Amendment”), which amended~~September 28, 2022, Hurricane Ian made landfall on Florida's western coast. The storm primarily affected four properties in the ~~Rights Agreement dated June 2, 2008, as amended, between~~Fort Myers area. Three RV properties comprising approximately 2,500 sites, sustained significant flooding and wind damage from the ~~Company~~hurricane, and ~~Computershare Trust Company, N.A., as~~ the ~~rights agent. The Amendment accelerated the scheduled expiration date~~sea wall and certain docks at one marina were damaged. At other affected MH and RV properties, most of the ~~rights issued pursuant~~damage was limited to trees, roofs, fences, skirting and carports. At other affected marina properties, docks, buildings, and landscaping sustained limited wind and water damage.

We recognized $29.9 million for impaired assets. We expect these charges to be partially offset by insurance recoveries, currently estimated at $17.7 million. The estimated net charges of $12.2 million related to Hurricane Ian were recognized as Catastrophic event-related charges, net in our Consolidated Statements of Operations for the Rights Agreement, commonly referred to as a “poison pill,” (the “Rights”) from June 9, 2018 to October 4, 2017. At the time of the termination of the Rights Agreement, all of the Rights distributed to holders of the Company’s common stock pursuant to the Rights Agreement expired and are no longer outstanding.

On October 13, 2017, we announced a notice of redemption to the holders of our 7.125% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”), which we have elected to redeem on November 14, 2017. Holders of the Series A Preferred Stock will receive cash in the amount of $25.00, plus all accrued and unpaid dividends, which is equal to an aggregate payment of $25.143490 per share. In the aggregate, we will pay $85.5 million to redeem all of the Series A Preferred stock.three months ended September 30, 2022. As of September 30, ~~2017,~~2022, we had not received any insurance recoveries. We maintain property, casualty, flood and business interruption insurance for our properties, subject to customary deductibles and limits. Expected insurance recoveries for loss of income and redevelopment costs greater than the impairment charge cannot be estimated at this time.

The foregoing impairment, expected insurance recovery, and net charge estimates are based on current information available to the Company. We continue to assess these estimates. The actual final impairment, insurance recoveries and net charges could vary significantly from these estimates. Any changes to these estimates will be recognized in the period(s) in which they are determined.

17. Leases

Lessee Accounting

We lease land under non-cancelable operating leases at certain MH, RV and Marina properties expiring at various dates through 2100. The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of revenues at those properties. We also have other operating leases, primarily office space and equipment expiring at various dates through 2042.

Future minimum lease payments under non-cancellable leases as of September 30, 2022 where we are the lessee include:



Maturity of Lease Liabilities (in millions)	Operating Leases		Finance Leases		Total
2022 (excluding nine months ended September 30, 2022)	$	3.3	$	0.3	$	3.6
2023	12.6		0.8		13.4
2024	12.6		4.4		17.0
2025	12.2		0.3		12.5
2026	10.6		0.3		10.9
Thereafter	233.4		11.7		245.1
Total Lease Payments	$	284.7	$	17.8	$	302.5
Less: Imputed interest	(132.0)		(7.6)		(139.6)
Present Value of Lease Liabilities	$	152.7	$	10.2	$	162.9

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Right-of-use ("ROU") assets and lease liabilities for finance and operating leases as included in our Consolidated Balance Sheets are as follows (in millions):


	Financial Statement Classification	As of
Description		September 30, 2022		December 31, 2021
Lease Assets
Finance lease, right-of-use asset, net of accumulated amortization	Investment property, net	$	47.8	$	4.3
Operating lease, right-of-use asset, net	Other assets, net	$	173.7	$	138.2
Below market operating leases, net	Other assets, net	$	91.4	$	93.1
Lease Liabilities
Finance lease liabilities	Other liabilities	$	10.2	$	4.2
Operating lease liabilities	Other liabilities	$	152.7	$	129.2

Lease expense for finance and operating leases as included in our Consolidated Statements of Operations are as follows (in millions):


		Three Months Ended				Nine Months Ended
Description	Financial Statement Classification	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Finance Lease Expense
Amortization of ROU assets	Depreciation and amortization	$	1.3	$	—	$	2.2	$	—
Interest on lease liabilities	Interest expense	0.2		—		0.3		0.1
Operating lease cost	General and administrative expense, Property operating and maintenance, Depreciation and amortization	4.8		2.7		12.6		7.2
Variable lease cost	Property operating and maintenance	2.0		1.9		5.4		5.0

Total Lease Expense		$	8.3	$	4.6	$	20.5	$	12.3

Lease term, discount rates and additional information for finance and operating leases are as follows:


	As of
	September 30, 2022
Lease Term and Discount Rate
Weighted-average Remaining Lease Terms (years)
Finance lease	27.81
Operating lease	32.93
Weighted-average Discount Rate
Finance lease	3.05	%
Operating lease	3.81	%


	Nine Months Ended
	September 30, 2022		September 30, 2021
Other Information (in millions)
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating cash flow from operating leases	$	8.3	$	4.5

Financing cash flow from finance leases	4.7		0.1
Total Cash Paid On Lease Liabilities	$	13.0	$	4.6

Lessor Accounting

We are not the lessor for any finance leases at our MH, RV or Marina properties as of September 30, 2022.

Nearly all of our operating leases at our MH and RV properties where we are the lessor are either month-to-month or for a time period not to exceed one year. As of September 30, 2022, future minimum lease payments would not exceed 12 months.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Future minimum lease payments under non-cancellable leases at our RV communities and marinas as of September 30, 2022 where we are the lessor include:


Maturity of Lease Payments (in millions)	Operating Leases
2022 (excluding the nine months ended September 30, 2022)	$	6.9
2023	25.9
2024	16.1
2025	8.6
2026	5.0
Thereafter	42.1
Total Undiscounted Cash Flows	$	104.6

The components of lease income for our operating leases, as included in our Consolidated Statement of Operations are as follows (in millions):


		Three Months Ended				Nine Months Ended
Description	Financial Statement Classification	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Operating Leases

Fixed lease income	Income from real property; Brokerage commissions and other revenue, net	$	7.0	$	5.3	$	21.0	$	14.3
Variable lease income(1)	Income from real property; Brokerage commissions and other revenue, net	$	0.8	$	1.3	$	2.3	$	3.6

(1)Consists of rent primarily based on a percentage of acquisition costs and net operating income.

Failed Sale Leaseback

In connection with our acquisition of Park Holidays, we assumed ground lease arrangements for 34 UK properties that we concluded to be failed sale-leaseback transactions under ASC Topic 842, "Leases." The arrangements have maturities ranging from 2117 through 2197 with an option to repurchase for £1.00 at the end of the term. The obligation related to the underlying ground leases has been recorded as a financial liability of $310.4 million as of September 30, 2022. The financial liability is recorded within Other Liabilities on the Consolidated Balance Sheets. The following table presents the future minimum rental payments for this financial liability as of September 30, 2022:


Maturity of Financial Liability (in millions)	September 30, 2022
2022 (excluding nine months ended September 30, 2022)	$	0.7
2023	10.2
2024	10.3
2025	10.4
2026	10.4
Thereafter	1,560.6
Total Payments	$	1,602.6
Less: Imputed interest	(1,292.2)
Present Value of Financial Liability	$	310.4

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

18. Recent Accounting Pronouncements

Recent Accounting Pronouncements - Adopted

In August 2020, the FASB issued ASU 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity."This update simplifies the accounting for convertible instruments by eliminating the models that require separation of a cash conversion or beneficial conversion feature from the host contract. Under the amended guidance, a convertible debt instrument is treated as one liability accounted for at its amortized cost and convertible preferred stock is considered one equity instrument accounted for at its historical cost, unless (a) there ~~were 3,400,000 shares~~are other features that require bifurcation as a derivative, or (b) convertible debt was issued at a substantial premium. This update also eliminates several triggers for derivative accounting, including a requirement to settle certain contracts by delivering registered shares. Additionally, this update provides clarifications to improve the consistency of ~~Series A Preferred Stock outstanding. After~~EPS calculations. We adopted the ~~redemption, no Series A Preferred Stock~~ASU on January 1, 2022. The adoption of this ASU did not have an impact on our Consolidated Financial Statements.

Recent Accounting Pronouncements - Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional guidance for accounting for contracts, hedging relationships and other transactions affected by the reference rate reform, if certain criteria are met. The provisions of this standard are available for election through December 31, 2022. As of September 30, 2022, we do not expect the transition from LIBOR to alternative reference interest rates will ~~remain outstanding.~~have a material impact on our Consolidated Financial Statements as the majority of our debt has fixed interest rates.

19. Subsequent Events

Acquisitions

Subsequent to the three months ended September 30, 2022, we acquired one land parcel located in the United Kingdom for a purchase price of $1.1 million.

We have evaluated our Consolidated Financial Statements for subsequent events through the date that this Form 10-Q was issued.

SUN COMMUNITIES, INC.


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

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 accompanying Notes, ~~filed herewith,~~ along with our ~~2016~~2021 Annual Report. ~~Capitalized terms are used as defined elsewhere in this Quarterly Report on Form 10-Q.~~

OVERVIEW

We are a fully integrated, self-administered and self-managed REIT. As of September 30, ~~2017,~~2022, we owned and operated or ~~had~~held an interest in a portfolio of ~~348~~662 developed properties located in 2939 states throughout the ~~U.S.~~United States, the United Kingdom, Ontario, Canada and ~~one province in Canada,~~Puerto Rico, including ~~229~~340 MH ~~communities, 89~~and 160 RV communities, ~~and 30 properties~~31 communities containing both MH and RV ~~sites.~~

sites, and 131 marinas. We have been in the business of acquiring, operating, developing and expanding MH and RV communities since ~~1975.~~1975 and marinas since 2020. We lease individual sites with ~~utility~~utilities access for placement of manufactured homes, ~~and~~ RVs or boats to our customers. We are also engaged ~~through SHS~~ in the marketing, selling and leasing of new and pre-owned homes to current and future residents in our MH communities. The Rental Program operations ~~of SHS~~within our MH communities support and enhance our occupancy levels, property performance and cash flows.

SIGNIFICANT ACCOUNTING POLICIES

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 our financial condition or results of operations under different conditions or using different assumptions. Details regarding significant accounting policies are described fully in our ~~2016~~2021 Annual Report.

NON-GAAP FINANCIAL MEASURES

In addition to the results reported in accordance with GAAP in our ~~“Results~~"Results of ~~Operations”~~Operations" below, we have provided information regarding net operating income ~~(“NOI”~~("NOI") and funds from operations ~~(“FFO”~~("FFO") as supplemental performance measures. We believe NOI and FFO are appropriate measures given their wide use by and relevance to investors and analysts following the real estate industry. NOI provides a measure of rental operations and does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses. FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of GAAP ~~depreciation/~~depreciation / amortization of real estate assets. In addition, NOI and FFO are commonly used in various ratios, pricing ~~multiples/~~multiples / yields and returns and valuation calculations used to measure financial position, performance and value.

NOI is derived from operating revenues minus property operating expenses and real estate taxes. NOI ~~does not represent cash generated from~~is a non-GAAP financial measure that we believe is helpful to investors as a supplemental measure of operating ~~activities in accordance with~~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 measure when evaluating performance and growth of particular properties and / or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense and non-property specific expenses such as general and administrative expenses, all of which are significant costs. Therefore, NOI is a measure of the operating performance of our properties rather than of the Company overall.

We believe that GAAP ~~and~~net income (loss) is the most directly comparable measure to NOI. NOI should not be considered to be an alternative to GAAP net income (loss) ~~(determined in accordance with GAAP)~~ as an indication of ~~the Company’s~~our financial performance or ~~to be an alternative to~~GAAP cash flow from operating activities ~~(determined in accordance with GAAP)~~ as a measure of ~~the Company’s~~our liquidity; nor is it indicative of funds available for ~~the Company’s~~our cash needs, including ~~its~~our ability to make cash distributions. ~~The Company believes that net income (loss) is the most directly comparable GAAP measurement to NOI.~~ Because of the inclusion of items such as interest, depreciation and amortization, the use of GAAP net income (loss) as a performance measure is limited as these items may not accurately reflect the actual change in market value of a property, in the case of depreciation and in the case of interest, may not necessarily be linked to the operating performance of a real estate asset, as it is often incurred at a parent company level and not at a property level. ~~The Company believes~~In addition, we calculate Constant Currency NOI for our UK Operations by translating the operating results from the UK at the foreign currency exchange rate used for guidance. We believe that NOI ~~is helpful to investors as a measure~~and Constant Currency NOI provide enhanced comparability for investor evaluation 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. Therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.period-over-period results.

SUN COMMUNITIES, INC.

FFO is defined by the National Association of Real Estate Investment Trusts ~~(“NAREIT”~~("Nareit") as GAAP net income (loss) ~~computed in accordance with GAAP,~~, excluding gains ~~or losses~~(or losses) from sales of depreciable operating property, plus real ~~estate-related~~estate related depreciation and amortization, real estate related impairments, and after adjustments for unconsolidated partnerships and joint ventures. ~~The Company considers~~ FFO ~~to be~~is a non-GAAP financial measure that management believes is a useful supplemental measure ~~for reviewing comparative~~of our operating ~~and financial performance because, by~~performance. By excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates).

~~SUN COMMUNITIES, INC.~~

, FFO provides a performance measure that, when compared ~~period over period,~~period-over-period, reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from GAAP net income (loss). Management believes ~~that~~ the use of FFO has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. FFO is computed in accordance with the Company’s interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company. The CompanyWe also ~~uses~~use FFO excluding ~~certain items, which excludes~~ certain gain and loss items that management considers unrelated to the operational and financial performance of our core ~~business.~~business ("Core FFO").In addition, we calculate Constant Currency Core FFO by translating the operating results from the UK, Canada and Australia at the foreign currency exchange rates used for guidance. We believe that ~~this provides investors with another financial~~Core FFO and Constant Currency Core FFO provide enhanced comparability for investor evaluations of period-over-period results.

We believe that GAAP net income (loss) is the most directly comparable measure to FFO. The principal limitation of ~~our operating~~FFO is that it does not replace GAAP net income (loss) as a performance ~~that is more comparable when evaluating period over period results.~~

measure or GAAP cash flow from operations as a liquidity measure. Because FFO excludes significant economic components of GAAP net income (loss) including depreciation and amortization, FFO should be used as ~~an adjunct~~a supplement to GAAP net income (loss) and not as an alternative to net income (loss). The principal limitation of FFO is that it does not represent cash flow from operations as defined by GAAP and is a supplemental measure of performance that does not replace net income (loss) as a measure of performance or net cash provided by operating activities as a measure of liquidity. In addition,it. Furthermore, FFO is not intended as a measure of a ~~REIT’s~~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 that, when combined with measures computed~~is calculated in accordance with ~~GAAP such as net income (loss), cash flow from operating activities, investing activities and financing activities, provide investors with an indication~~our interpretation of ~~our ability to service debt and to fund acquisitions and other expenditures. Other REITs may use different methods for calculating FFO, accordingly, our FFO~~standards established by Nareit, which may not be comparable to FFO reported by other ~~REITs.~~REITs that interpret the Nareit definition differently.

Catastrophic Event-Related Charges

~~SUN COMMUNITIES, INC.~~

~~RESULTS OF OPERATIONS~~

~~We report operating results under two segments: Real Property Operations~~On September 28, 2022, Hurricane Ian made landfall on Florida's western coast. The storm primarily affected four properties in the Fort Myers area. Three RV properties comprising approximately 2,500 sites, sustained significant flooding and ~~Home Sales~~wind damage from the hurricane, and ~~Rentals. The Real Property Operations segment owns, operates, develops, or has an interest in, a portfolio of~~the sea wall and certain docks at one marina were damaged. At other affected MH and RV ~~communities throughout~~properties, most of the ~~U.S.~~damage was limited to trees, roofs, fences, skirting and ~~in Canada,~~carports. At other affected marina properties, docks, buildings, and ~~is in the business~~landscaping sustained limited wind and water damage.

We recognized $29.9 million for impaired assets. We expect these charges to be partially offset by insurance recoveries, currently estimated at $17.7 million. The estimated net charges of ~~acquiring, operating, and expanding MH and RV communities. The Home Sales and Rentals segment offers MH and RV park model sales and leasing services~~$12.2 million related to ~~tenants and prospective tenants of our communities. We evaluate segment operating performance based on NOI and gross profit. Refer to Note 10, “Segment Reporting,”~~Hurricane Ian were recognized as Catastrophic event-related charges, net in our ~~accompanying~~ Consolidated ~~Financial~~ Statements ~~for additional information.~~

~~COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016~~

~~SUMMARY STATEMENTS OF OPERATIONS~~

~~The following table summarizes our consolidated financial results and reconciles net income to NOI~~of Operations for the three months ended September 30, ~~2017~~2022. As of September 30, 2022, we had not received any insurance recoveries. We maintain property, casualty, flood and ~~2016~~ ~~(in thousands):~~business interruption insurance for our properties, subject to customary deductibles and limits. Expected insurance recoveries for loss of income and redevelopment costs greater than the impairment charge cannot be estimated at this time.

Three Months Ended September 30,
2017 2016
Net income attributable to Sun Communities, Inc., common stockholders: $ 24,115
$ 18,897
Other revenues (7,011 ) (5,689 )
Home selling expenses 3,290
2,643
General and administrative 18,267
16,575
Transaction costs 2,167
4,191
Depreciation and amortization 64,232
61,483
Interest expense 32,875
34,589
Catastrophic weather related charges 7,756
—
Other income, net (3,345 ) —
Current tax benefit / (expense) (38 ) 283
Deferred tax benefit (81 ) —
Income from affiliate transactions —
(500 )
Preferred return to preferred OP units 1,112
1,257
Amounts attributable to noncontrolling interests 1,776
879
Preferred stock distributions 1,955
2,197
NOI / Gross profit $ 147,070

$ 136,805

Three Months Ended September 30,
2017 2016
Real Property NOI $ 125,961
$ 114,851
Rental Program NOI 22,060
21,213
Home Sales NOI / Gross profit 8,103
9,276
Ancillary NOI / Gross profit 7,024
6,997
Site rent from Rental Program (included in Real Property NOI) ⁽¹⁾
(16,078 ) (15,532 )
NOI / Gross profit $ 147,070
$ 136,805

⁽¹⁾The ~~renter’s monthly payment includes the site rent~~foregoing impairment, expected insurance recovery, and ~~an amount attributable~~net charge estimates are based on current information available to the ~~leasing of the home.~~Company. We continue to assess these estimates. The ~~site rent is reflected~~actual final impairment, insurance recoveries and net charges could vary significantly from these estimates. Any changes to these estimates will be recognized in the ~~Real Property Operations segment. For purposes of management analysis, the site rent is included~~period(s) in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the Rental Program, and to assess the overall growth and performance of Rental Program and financial impact on our operations.which they are determined.

SUN COMMUNITIES, INC.

RESULTS OF OPERATIONS

The following tables reconcile the Net income attributable to SUI common shareholders to NOI and summarize our consolidated financial results for the three and nine months ended September 30, 2022 and 2021 (in millions):


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Net Income Attributable to SUI Common Shareholders	$	162.6	$	231.7	$	237.3	$	367.3
Interest income	(11.2)		(2.6)		(25.3)		(8.0)
Brokerage commissions and other revenues, net	(10.8)		(8.8)		(27.4)		(21.7)
General and administrative	69.1		43.2		187.0		126.7
Catastrophic event-related charges, net	12.2		0.3		12.3		3.1
Business combination expense	8.4		—		23.9		1.0
Depreciation and amortization	151.3		127.1		450.0		378.1

Loss on extinguishment of debt (see Note 8)	4.0		—		4.4		8.1
Interest expense	61.7		39.0		162.2		116.2
Interest on mandatorily redeemable preferred OP units / equity	1.0		1.1		3.1		3.1
(Gain) / loss on remeasurement of marketable securities (see Note 15)	7.2		(12.0)		74.0		(43.2)
(Gain) / loss on foreign currency exchanges	(14.9)		7.0		(21.7)		7.1
(Gain) / loss on disposition of properties	0.8		(108.1)		(12.5)		(108.1)
Other (income) / expense, net	(2.8)		9.3		(2.6)		10.0
(Gain) / loss on remeasurement of notes receivable (see Note 4)	0.1		(0.1)		(0.1)		(0.6)
Income from nonconsolidated affiliates (see Note 6)	(2.0)		(0.9)		(3.8)		(2.9)
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates (see Note 6)	0.4		0.1		(0.1)		0.1
Current tax expense (see Note 12)	7.3		0.4		12.5		1.4
Deferred tax expense / (benefit) (see Note 12)	(3.6)		1.2		(3.9)		1.1
Preferred return to preferred OP units / equity interests	2.5		3.1		8.6		9.0
Add: Income attributable to noncontrolling interests	11.9		15.3		13.9		22.6


NOI	$	455.2	$	346.3	$	1,091.8	$	870.4


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Real property NOI	$	371.6	$	302.5	$	909.2	$	768.3
Home sales NOI	54.3		24.6		122.9		58.2

Service, retail, dining and entertainment expenses NOI	29.3		19.2		59.7		43.9

NOI	$	455.2	$	346.3	$	1,091.8	$	870.4

SUN COMMUNITIES, INC.

Seasonality of Revenue

~~REAL PROPERTY OPERATIONS – TOTAL PORTFOLIO~~

The RV and Marina industries are seasonal in nature, and the results of operations in any one period may not be indicative of results in future periods.

In the RV segment, certain properties maintain higher occupancy during the summer months, while other properties maintain higher occupancy during the winter months. Based on the location of our properties with transient RV sites, our portfolio generally produces higher revenues between April and September than between October and March. Real property - transient revenue is included in RV segment revenue. As of September 30, 2022, we recognized Real property - transient revenue of $42.7 million in the first quarter, $93.1 million in the second quarter and $153.4 million in the third quarter. Real property - transient revenue was $266.6 million for the year ended December 31, 2021. In 2021, Real property - transient revenue was recognized 11.9 percent in the first quarter, 27.3 percent in the second quarter, 44.9 percent in the third quarter and 15.9 percent in the fourth quarter.

In the Marina segment, demand for wet slip storage increases during the summer months as customers contract for the summer boating season, which also drives non-storage revenue streams such as service, fuel and on-premise restaurants or convenience stores. Demand for dry storage increases during the winter season as seasonal weather patterns require boat owners to store their vessels on dry docks and within covered racks. As of September 30, 2022, we recognized seasonal Real property revenue of $62.4 million in the first quarter, $79.4 million in the second quarter and $90.0 million in the third quarter. Seasonal Real property revenue was $246.6 million for the year ended December 31, 2021. In 2021, seasonal Real property revenue was recognized 17.7 percent in the first quarter, 25.0 percent in the second quarter, 29.9 percent in the third quarter and 27.4 percent in the fourth quarter.

SUN COMMUNITIES, INC.

Comparison of the Three and Nine Months Ended September 30, 2022 and 2021

Real Property Operations - Total Portfolio

The following tables reflect certain financial and other information for our Total Portfolio as of and for the three and nine months ended September 30, 2022 and 2021 (in millions, except for statistical information):


	Three Months Ended								Nine Months Ended
	September 30, 2022		September 30, 2021		Change		% Change		September 30, 2022		September 30, 2021		Change		% Change
Financial Information
Revenue


Real property (excluding transient)	$	359.8	$	303.4	$	56.4	18.6	%	$	1,008.2	$	861.7	$	146.5	17.0	%
Real property - transient	160.4		126.4		34.0		26.9	%	303.5		235.8		67.7		28.7	%
Other	65.5		48.3		17.2		35.6	%	149.9		116.4		33.5		28.8	%
Total Operating	585.7		478.1		107.6		22.5	%	1,461.6		1,213.9		247.7		20.4	%
Expense






Property Operating	214.1		175.6		38.5		21.9	%	552.4		445.6		106.8		24.0	%
Real Property NOI	$	371.6	$	302.5	$	69.1	22.8	%	$	909.2	$	768.3	$	140.9	18.3	%


	As of
	September 30, 2022			September 30, 2021				Change
Other Information
Number of properties(1)	662			584				78

MH occupancy	95.5		%
RV occupancy(2)	100.0		%
MH & RV blended occupancy(3)	96.5		%	97.4		%		(0.9)		%





Sites available for MH & RV development	16,078			10,312				5,766

Monthly base rent per site - MH	$	624		$	599		(5)	$	25
Monthly base rent per site - RV(4)	$	549		$	515		(5)	$	34
Monthly base rent per site - Total	$	605		$	579		(5)	$	26

Weighted average monthly rental rate - MH Rental Program	$	1,192		$	1,085			$	107

(1)Includes MH communities, RV communities and marinas.

(2)Occupancy percentages include annual RV sites and exclude transient RV sites.

(3)Occupancy percentages include MH and annual RV sites and exclude transient RV sites.

(4)Monthly base rent pertains to annual RV sites and excludes transient RV sites.

(5)Canadian currency figures included within the nine months ended September 30, 2021 have been translated at 2022 average exchange rates.

For the three months ended September 30, ~~2017~~ ~~and~~ ~~2016~~:

Three Months Ended September 30,
Financial Information (in thousands) 2017 2016 Change % Change
Income from real property $ 198,263
$ 184,324
$ 13,939
7.6 %
Property operating expenses:
Payroll and benefits 19,168
18,436
732
4.0 %
Legal, taxes, and insurance 1,921
1,475
446
30.2 %
Utilities 23,765
21,710
2,055
9.5 %
Supplies and repair 7,701
7,394
307
4.2 %
Other 6,694
8,074
(1,380 ) (17.1 )%
Real estate taxes 13,053
12,384
669
5.4 %
Property operating expenses 72,302
69,473
2,829
4.1 %
Real Property NOI $ 125,961
$ 114,851
$ 11,110
9.7 %

As of September 30,
Other Information 2017 2016 Change
Number of properties 348
339
9

MH occupancy 95.2 %
RV occupancy 100.0 %
MH & RV blended occupancy ⁽¹⁾
96.2 % 96.2 % — %

Sites available for development 10,389
10,425
(36 )

Monthly base rent per site - MH $ 528
$ 511
$ 17
Monthly base rent per site - RV ⁽²⁾
$ 430
$ 419
$ 11
Monthly base rent per site - Total $ 507
$ 491
$ 16


⁽¹⁾	~~Overall occupancy (percent) includes MH and annual RV sites, and excludes transient RV sites.~~


⁽²⁾	~~Monthly base rent pertains to annual RV sites and excludes transient RV sites.~~

~~The $11.1~~2022, the $69.1 million increase in Real Property NOI as compared to the same period in 2021, consists of ~~$3.9 million from newly acquired properties and $7.2~~$15.0 million from Same ~~Communities~~Property MH and RV, $4.4 million from Same Property Marina, $25.2 million from the UK operations and $24.5 million from other recently acquired or developed properties.

For the nine months ended September 30, 2022, the $140.9 million increase in Real Property NOI as ~~detailed below.~~compared to the same period in 2021, consists of $35.7 million from Same Property MH and RV, $7.6 million from Same Property Marina, $40.6 million from the UK operations and $57.0 million from other recently acquired or developed properties.

SUN COMMUNITIES, INC.

Real Property Operations - Same Property

~~REAL PROPERTY OPERATIONS – SAME COMMUNITY~~

A key management tool used when evaluating performance and growth of our properties is a comparison of ~~our~~the Same ~~Communities.~~Property portfolio. Same ~~Communities consist~~Property refers to properties that we have owned for at least the preceding year, exclusive of properties ~~owned~~recently completed or under construction, and ~~operated throughout 2017 and 2016.~~other properties as determined by management. The Same ~~Community~~Property data may change from time-to-time depending on acquisitions, dispositions, management discretion, significant transactions or unique situations. The Same Community data in this Form 10-Q includes all properties which we have owned and operated continuously since January 1, 2016. All communities from the American Land Lease portfolio acquisition are included within Same Communities.

In order to evaluate the growth of the Same ~~Communities,~~Property portfolio, management has classified certain items differently than our GAAP ~~statements.~~statement. The reclassification difference between our GAAP statements and our Same ~~Community~~Property portfolio is the reclassification of ~~water and sewer~~utility revenues ~~from income~~ from real property revenue to ~~utilities.~~operating expenses. A significant portion of our utility charges are re-billed to our residents. ~~We reclassify these amounts to reflect the utility expenses associated with our~~Additionally, prior period Canadian currency figures have been translated at 2022 average exchange rates for constant currency comparability.

SUN COMMUNITIES, INC.

Real Property Operations - Same ~~Community portfolio net of recovery.~~Property - MH and RV United States and Canada

The following tables reflect certain financial and other information for our Same ~~Communities~~Property MH and RV portfolio as of and for the three and nine months ended September 30, 2022 and 2021 (in millions, except for statistical information).


	Three Months Ended
	Total Same Property - MH and RV								MH								RV
	September 30, 2022		September 30, 2021		Change		% Change(1)		September 30, 2022		September 30, 2021		Change		% Change(1)		September 30, 2022		September 30, 2021		Change		% Change(1)
Financial Information
Revenue
Real property (excluding transient)	$	239.5	$	225.0	$	14.5	6.5	%	$	185.7	$	177.6	$	8.1	4.6	%	$	53.8	$	47.4	$	6.4	13.4	%
Real property - transient	107.1		106.5		0.6		0.6	%	0.2		0.2		—		7.5	%	106.9		106.3		0.6		0.6	%
Other	16.0		14.9		1.1		7.2	%	5.1		4.9		0.2		3.1	%	10.9		10.0		0.9		9.2	%
Total Operating	362.6		346.4		16.2		4.7	%	191.0		182.7		8.3		4.6	%	171.6		163.7		7.9		4.8	%
Expense








Property Operating	114.3		113.1		1.2		1.0	%	52.6		50.8		1.8		3.7	%	61.7		62.3		(0.6)		(1.1)	%
Real Property NOI	$	248.3	$	233.3	$	15.0	6.4	%	$	138.4	$	131.9	$	6.5	4.9	%	$	109.9	$	101.4	$	8.5	8.4	%

(1) Percentages are calculated based on unrounded numbers.



	Nine Months Ended
	Total Same Property - MH and RV								MH								RV
	September 30, 2022		September 30, 2021		Change		% Change(1)		September 30, 2022		September 30, 2021		Change		% Change(1)		September 30, 2022		September 30, 2021		Change		% Change(1)
Financial Information
Revenue
Real property (excluding transient)	$	708.3	$	666.3	$	42.0	6.3	%	$	552.3	$	528.9	$	23.4	4.4	%	$	156.0	$	137.4	$	18.6	13.6	%
Real property - transient	211.5		201.8		9.7		4.8	%	0.9		1.2		(0.3)		(23.5)	%	210.6		200.6		10.0		4.9	%
Other	36.0		33.8		2.2		6.6	%	15.4		14.2		1.2		8.8	%	20.6		19.6		1.0		5.0	%
Total Operating	955.8		901.9		53.9		6.0	%	568.6		544.3		24.3		4.5	%	387.2		357.6		29.6		8.3	%
Expense








Property Operating	305.9		287.7		18.2		6.3	%	149.9		140.5		9.4		6.8	%	156.0		147.2		8.8		5.9	%
Real Property NOI	$	649.9	$	614.2	$	35.7	5.8	%	$	418.7	$	403.8	$	14.9	3.7	%	$	231.2	$	210.4	$	20.8	9.9	%

(1) Percentages are calculated based on unrounded numbers.

The amounts in the tables above reflect constant currency for comparative purposes. Canadian currency figures in the prior comparative period have been translated at the 2022 average exchange rate of $0.7664 USD per Canadian dollar. We have reclassified utilities revenues of $22.1 million and $19.8 million for the three months ended September 30, ~~2017~~2022 and ~~2016~~:2021, and $60.6 million and $54.4 million for the nine months ended September 30, 2022 and 2021, respectively, to reflect the utility expenses associated with our Same Property portfolio net of recovery.

Three Months Ended September 30,
Financial Information (in thousands) 2017 2016 Change % Change
Income from real property $ 144,589

$ 136,137
$ 8,452
6.2 %
Property operating expenses:

Payroll and benefits 13,070

12,596
474
3.8 %
Legal, taxes, and insurance 1,325

1,178
147
12.5 %
Utilities 8,961

8,821
140
1.6 %
Supplies and repair 5,702

5,862
(160 ) (2.7 )%
Other 4,078

3,955
123
3.1 %
Real estate taxes 9,631

9,148
483
5.3 %
Property operating expenses 42,767
41,560
1,207
2.9 %
Real Property NOI $ 101,822
$ 94,577
$ 7,245
7.7 %

SUN COMMUNITIES, INC.


												As of
	As of September 30,											September 30, 2022				September 30, 2021					Change
Other Information	2017			2016			Change			Other Information
Number of properties(1)	231			231			—				424				424					—

MH occupancy ⁽¹⁾	96.7		%								97.3	%
RV occupancy ⁽¹⁾⁽²⁾	100.0		%								100.0	%
MH & RV blended occupancy ^{(1) (2)}	97.2		%	95.6		%	1.6		%
MH & RV blended occupancy(3)										MH & RV blended occupancy(3)		97.9		%

Adjusted MH occupancy(4)										Adjusted MH occupancy(4)		98.0		%
Adjusted RV occupancy(5)										Adjusted RV occupancy(5)		100.0		%
Adjusted MH & RV blended occupancy(6)										Adjusted MH & RV blended occupancy(6)		98.5		%		96.5		%	(7)		2.0		%

Sites available for development	6,003			7,177			(1,174		)	Sites available for development		7,920				8,081					(161)

Monthly base rent per site - MH	$	514		$	497		$	17		Monthly base rent per site - MH		$	629			$	604		(9)		$	25
Monthly base rent per site - RV ⁽³⁾	$	448		$	433		$	15
Monthly base rent per site - RV(8)										Monthly base rent per site - RV(8)		$	560			$	524		(9)		$	36
Monthly base rent per site - Total	$	506		$	489		$	17		Monthly base rent per site - Total		$	613			$	585		(9)		$	28

Monthly base rent per site - MH Rental Program										Monthly base rent per site - MH Rental Program		$	1,198			$	1,091				$	107

(1)Financial results from properties disposed of during the year have been removed from Same Property reporting.

⁽¹⁾

~~The occupancy percentage includes~~

(2)Occupancy percentages include annual RV sites and exclude transient RV sites.

(3)Occupancy percentages include MH and annual RV sites and exclude transient RV sites.

(4)Adjusted occupancy percentages include MH sites and exclude recently completed but vacant MH expansion sites.

(5)Adjusted occupancy percentages include annual RV sites and exclude transient RV sites.

(6)Adjusted occupancy percentages include MH and annual RV sites and exclude transient RV sites and recently completed but vacant expansion sites.

(7)The occupancy percentages for 2021 have been adjusted to reflect incremental growth period-over-period from newly rented MH ~~and annual RV sites, and excludes recently completed but vacant expansion sites and transient RV sites.~~

⁽²⁾

~~The occupancy percentage for 2016 has been adjusted to reflect incremental growth period-over-period from filled~~ expansion sites and the conversion of transient RV sites to annual RV sites.

(8)Monthly base rent pertains to annual RV sites and excludes transient RV sites.

(9)Canadian currency figures included within three months ended September 30, 2021 have been translated at 2022 average exchange rates.

For the three months ended September 30, 2022 and 2021:

•The MH segment increase in NOI of $6.5 million, or 4.9 percent, when compared to the same period in 2021 is primarily due to an increase in Real property (excluding transient) revenue of $8.1 million, or 4.6 percent, partially offset by increased property operating expenses. Real property (excluding transient) revenue increased primarily due to a 4.3 percent increase in monthly base rent.

•The RV segment increase in NOI of $8.5 million, or 8.4 percent, when compared to the same period in 2021 is primarily due to an increase in Real property (excluding transient) revenue of $6.4 million, or 13.4 percent, combined with a reduction in property operating expenses. The increase in Real property - (excluding transient) revenue was primarily due to a 7.0 percent increase in monthly base rent and conversions of transient RV sites to annual RV sites.

For the nine months ended September 30, 2022 and 2021:

•The MH segment increase in NOI of $14.9 million, or 3.7 percent, when compared to the same period in 2021 is primarily due to an increase in Real property (excluding transient) revenue of $23.4 million, or 4.4 percent, partially offset by increased property operating expenses. Real property (excluding transient) revenue increased primarily due to a 4.3 percent increase in monthly base rent.

•The RV segment increase in NOI of $20.8 million, or 9.9 percent, when compared to the same period in 2021 is primarily due to an increase in Real property (excluding transient) revenue of $18.6 million, or 13.6 percent, primarily due to a 7.0 percent increase in monthly base rent and conversions of transient RV sites to annual RV sites.


⁽³⁾	~~Monthly base rent pertains to annual RV sites and excludes transient RV sites.~~

Real property NOI growth of 7.7 percent is primarily due to increased Income from real property of $8.5 million, or 6.2 percent. The 6.2 percent increase is attributable to the 1.6 percent increase in occupancy, 3.5 percent increase in total monthly base rent per site, and a 1.1 percent increase in transient and other revenue. This increase was partially offset by ~~a $1.2 million, or 2.9 percent,~~an increase in ~~Property~~property operating ~~expenses, primarily attributable to increases in payroll and benefits expenses, and real estate taxes.~~expenses.

SUN COMMUNITIES, INC.

Real Property Operations - Same Property - Marina

The following tables reflect certain financial and other information for our Same Property Marina as of and for the three and nine months ended September 30, 2022 and 2021 (in millions, except for statistical information).


	Three Months Ended								Nine Months Ended
	September 30, 2022		September 30, 2021		Change		% Change(1)		September 30, 2022		September 30, 2021		Change		% Change(1)
Financial Information
Revenue
Real property (excluding transient)	$	64.0	$	58.6	$	5.4	9.1	%	$	167.3	$	155.6	$	11.7	7.5	%
Real property - transient	4.4		5.4		(1.0)		(17.4)	%	9.5		10.4		(0.9)		(7.8)	%
Other	3.9		3.9		—		0.3	%	9.5		8.8		0.7		8.0	%
Total Operating	72.3		67.9		4.4		6.5	%	186.3		174.8		11.5		6.7	%
Expense








Property Operating	21.9		21.9		—		—	%	63.5		59.6		3.9		6.3	%
Real Property NOI	$	50.4	$	46.0	$	4.4	9.6	%	$	122.8	$	115.2	$	7.6	6.8	%

(1) Percentages are calculated based on unrounded numbers.


	As of
	September 30, 2022	September 30, 2021	Change	% Change
Other Information
Number of properties	101	101	—	—	%
Wet slip and dry storage spaces	35,621	35,744	(123)	(0.3)	%

We have reclassified utility revenues of $2.9 million for the three months ended September 30, 2022 and 2021, and $8.3 million and $8.4 million for the nine months ended September 30, 2022 and 2021, respectively, to reflect the utility expenses associated with our Same Property Marina net of recovery.

For the three months ended September 30, 2022 and 2021, the $4.4 million, or 9.6 percent, increase in Marina Real Property NOI is primarily due to the $5.4 million, or 9.1 percent, increase in Real property (excluding transient) revenue.

For the nine months ended September 30, 2022 and 2021, the $7.6 million, or 6.8 percent, increase in Marina Real Property NOI is primarily due to the $11.7 million, or 7.5 percent, increase in Real property (excluding transient) revenue, partially offset by increased property operating expenses.

SUN COMMUNITIES, INC.

~~HOME SALES AND RENTALS~~UK Operations Summary

The following table reflects certain financial and other information for our ~~Rental Program~~UK operations as of and for ~~the~~ ~~three months ended September 30, 2017~~ ~~and~~ ~~2016~~ ~~(in thousands, except for statistical information):~~

Three Months Ended September 30,
Financial Information 2017 2016 Change % Change
Rental home revenue $ 12,757
$ 12,031
$ 726
6.0 %
Site rent from Rental Program ⁽¹⁾
16,078
15,532
546
3.5 %
Rental Program revenue 28,835
27,563
1,272
4.6 %
Expenses
Commissions 891
551
340
61.7 %
Repairs and refurbishment 3,306
3,349
(43 ) (1.3 )%
Taxes and insurance 1,546
1,446
100
6.9 %
Marketing and other 1,032
1,004
28
2.8 %
Rental Program operating and maintenance 6,775
6,350
425
6.7 %
Rental Program NOI $ 22,060
$ 21,213
$ 847
4.0 %

Other Information
Number of occupied rentals, end of period 10,960
10,797
163
1.5 %
Investment in occupied rental homes, end of period $ 482,591
$ 453,521
$ 29,070
6.4 %
Number of sold rental homes 286
286
—
— %
Weighted average monthly rental rate, end of period $ 908
$ 879
$ 29
3.3 %

⁽¹⁾

The renter’s monthly payment includes the site rent and an amount attributable to the leasing of the home. The site rent is reflected in the Real Property Operations segment. For purposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the Rental Program, and assess the overall growth and performance of the Rental Program and financial impact to our operations.

Rental program NOI increased 4.0 percent due to an increase in revenues of 4.6 percent, or $1.3 million, partially offset by an increase in operating and maintenance expenses of 6.7 percent, or $0.4 million. The increase in revenues is attributable to a 3.3 percent increase in the weighted average monthly rental rate and a 1.5 percent increase in the number of occupied rentals. The increase in operating and maintenance expenses of $0.4 million is primarily the result of increased commissions and increased taxes and insurance expenditures in the three months ended September 30, ~~2017 as compared~~2022 and the period from date of acquisition to September 30, 2022 (in millions, except for statistical information):


	Three Months Ended		YTD Since Acquisition September 30, 2022
	September 30, 2022
Financial Information
Revenues
Real property (excluding transient)	$	21.2		$	38.1
Real property - transient	21.8			34.7
Other	0.4			1.0
Total Operating	43.4			73.8
Expenses
Property Operating	18.2			33.2
Real Property NOI	25.2			40.6

Home Sales
Revenue	84.1			144.7
Cost of home sales	43.6			75.7
Home selling expenses	1.3			3.6
NOI	39.2			65.4

Retail, dining and entertainment
Revenue	16.3			27.8
Expense	16.2			28.8
Net Operating Gain / (Loss)	0.1			(1.0)

UK Operations NOI	$	64.5		$	105.0
Adjustment
Foreign currency translation impact	8.8			11.9
UK Operations NOI - Constant Currency	$	73.3		$	116.9

Other information
Number of properties				54
Developed sites				17,952
Occupied sites				16,463
Occupancy				91.7%
Sites available for development				3,047

Home Sales
New home sales volume	319			574
Pre-owned home sales volume	566			1,046
Total home sales volume	885			1,620

UK Operations NOI, a component of our MH segment, is separately reviewed to assess the ~~same~~overall growth and performance of the UK Operations portfolio and its financial impact on our operations.

We have reclassified utility revenue of $3.1 million and $5.6 million for the three months ended September 30, 2022 and for the period ~~in 2016.~~from date of acquisition through September 30, 2022, respectively, to reflect the utility expenses associated with our UK Operations portfolio net of recovery.

SUN COMMUNITIES, INC.

Home Sales Summary (excluding UK home sales)

We purchase new homes and acquire pre-owned and repossessed manufactured homes, generally located within our communities, from lenders, dealers, and former residents to ~~lease~~sell or ~~sell~~lease to current and prospective residents.

The following table reflects certain financial and statistical information for our Home Sales Program for the three and nine months ended September 30, 2022 and 2021 (in millions, except for average selling price and statistical information):


	Three Months Ended											Nine Months Ended
	September 30, 2022			September 30, 2021			Change			% Change		September 30, 2022			September 30, 2021			Change			% Change
Financial Information
New Homes
New home sales	$	31.7		$	31.5		$	0.2		0.6	%	$	95.4		$	89.2		$	6.2		7.0	%
New home cost of sales	26.8			25.9			0.9			3.5	%	78.3			72.8			5.5			7.6	%
Gross profit – new homes	4.9			5.6			(0.7)			(12.5)	%	17.1			16.4			0.7			4.3	%
Gross margin % – new homes	15.5		%	17.7		%	(2.2)		%			17.9		%	18.4		%	(0.5)		%
Average selling price – new homes	$	183,237		$	151,850		$	31,387		20.7	%	$	174,406		$	152,943		$	21,463		14.0	%

Pre-owned Homes
Pre-owned home sales	$	34.9		$	49.6		$	(14.7)		(29.6)	%	$	118.0		$	125.9		$	(7.9)		(6.3)	%
Pre-owned home cost of sales	19.4			25.8			(6.4)			(24.8)	%	63.4			70.4			(7.0)			(9.9)	%
Gross Profit – pre-owned homes	15.5			23.8			(8.3)			(34.9)	%	54.6			55.5			(0.9)			(1.6)	%
Gross margin % – pre-owned homes	44.4		%	48.0		%	(3.6)		%			46.3		%	44.1		%	2.2		%
Average selling price – pre-owned homes	$	63,339		$	52,006		$	11,333		21.8	%	$	59,267		$	48,981		$	10,286		21.0	%

Total Home Sales
Revenue from home sales	$	66.6		$	81.1		$	(14.5)		(17.9)	%	$	213.4		$	215.1		$	(1.7)		(0.8)	%
Cost of home sales	46.2			51.7			(5.5)			(10.6)	%	141.7			143.2			(1.5)			(1.0)	%
Home selling expenses	5.3			4.8			0.5			10.4	%	14.2			13.7			0.5			3.6	%
Home Sales NOI	$	15.1		$	24.6		$	(9.5)		(38.6)	%	$	57.5		$	58.2		$	(0.7)		(1.2)	%

Other Information
New home sales volume	173			207			(34)			(16.4)	%	547			583			(36)			(6.2)	%
Pre-owned home sales volume	551			955			(404)			(42.3)	%	1,991			2,572			(581)			(22.6)	%
Total home sales volume	724			1,162			(438)			(37.7)	%	2,538			3,155			(617)			(19.6)	%

Gross Profit - New Homes

For the three months ended September 30, ~~2017~~ ~~and~~ ~~2016~~ ~~(in thousands, except for average selling prices and statistical information):~~

Three Months Ended September 30,
Financial Information 2017 2016 Change % Change
New home sales $ 10,331
$ 9,391
$ 940
10.0 %
Pre-owned home sales 22,866
21,820
1,046
4.8 %
Revenue from home sales 33,197
31,211
1,986
6.4 %

New home cost of sales 8,699
7,896
803
10.2 %
Pre-owned home cost of sales 16,395
14,039
2,356
16.8 %
Cost of home sales 25,094
21,935
3,159
14.4 %
NOI / Gross profit $ 8,103
$ 9,276
$ (1,173 ) (12.7 )%

Gross profit – new homes $ 1,632

$ 1,495
$ 137
9.2 %
Gross margin % – new homes 15.8 %
15.9 % (0.1 )%

Average selling price – new homes $ 101,284

$ 90,298
$ 10,986
12.2 %

Gross profit – pre-owned homes $ 6,471

$ 7,781
$ (1,310 ) (16.8 )%
Gross margin % – pre-owned homes 28.3 %
35.7 % (7.4 )%

Average selling price – pre-owned homes $ 32,526

$ 27,585
$ 4,941
17.9 %

Statistical Information
Home sales volume:
New home sales 102

104
(2 ) (1.9 )%
Pre-owned home sales 703

791
(88 ) (11.1 )%
Total homes sold 805
895
(90 ) (10.1 )%

~~Gross~~2022, the 12.5 percent decrease in gross profit ~~on new home sales increased by 9.2 percent,~~is primarily ~~as a result of a 12.2 percent increase in the average selling price of news homes, partially offset~~driven by a ~~1.9~~16.4 percent decrease in new home sales ~~volumes.~~

Gross profit on pre-owned home sales decreased by 16.8 percent, primarily as a result of a 11.1 percent decrease in pre-owned home sales volumes as compared to the third quarter of 2016, which had elevated sales due to extensive inventory purchased in the Carefree acquisition.

~~SUN COMMUNITIES, INC.~~

~~OTHER ITEMS - STATEMENTS OF OPERATIONS~~

~~The following table summarizes other income and expenses for the three months ended September 30, 2017 and 2016 (amounts in thousands):~~

Three Months Ended September 30,
2017 2016 Change % Change
Ancillary revenues, net $ 7,024
$ 6,997
$ 27
0.4 %
Interest income $ 5,920
$ 4,705
$ 1,215
25.8 %
Brokerage commissions and other revenues, net $ 1,091
$ 984
$ 107
10.9 %
Home selling expenses $ 3,290
$ 2,643
$ 647
24.5 %
General and administrative expenses $ 18,267
$ 16,575
$ 1,692
10.2 %
Transaction costs $ 2,167
$ 4,191
$ (2,024 ) (48.3 )%
Depreciation and amortization $ 64,232
$ 61,483
$ 2,749
4.5 %
Interest expense $ 32,875
$ 34,589
$ (1,714 ) (5.0 )%
Catastrophic weather related charges $ 7,756
$ —
$ 7,756
N/A
Other income, net $ 3,345
$ —
$ 3,345
N/A
Current tax benefit / (expense) $ 38
$ (283 ) $ 321
113.4 %
Deferred tax benefit $ 81
$ —
$ 81
N/A
Income from affiliate transactions $ —
$ 500
(500 ) 100.0 %

~~Interest income~~ for the three months ended September 30, 2017, increased primarily due to an increase in our installment notes receivables, partially offset by a decrease in our collateralized receivables, as compared to September 30, 2016.

~~Home selling expenses~~ ~~increased primarily due to increased commissions on home sales in the three months ended September 30, 2017,~~volume as compared to the same period in ~~2016.~~2021, partially offset by a 20.7 percent increase in new home average selling price.

For the nine months ended September 30, 2022, the 4.3 percent increase in gross profit is primarily the result of a 14.0 percent increase in new home average selling price, partially offset by a decrease of 6.2 percent in new home sales volume.

Gross Profit - Pre-owned Homes ~~sold during~~

For the three months ended September 30, ~~2017 had higher average selling prices than~~2022, the 34.9 percent decrease in ~~the same period~~gross profit is primarily driven by a 42.3 percent decrease in ~~2016, which resulted in higher commissions.~~

~~General and administrative expenses~~ ~~increased primarily due to additional employee related costs as headcount increased in connection with our growth through acquisitions.~~

~~Transaction costs~~ ~~relate to diligence and other expenses incurred in connection with our acquisitions. These costs were lower in the three months ended September 30, 2017~~pre-owned home sales volume as compared to the same period in ~~2016, due to~~2021.

For the ~~acquisition of Carefree in June 2016. Refer to Note 2, “Real Estate Acquisitions,” in our accompanying Consolidated Financial Statements for additional information.~~

~~Depreciation and amortization~~ increased as a result of our acquisitions in 2017 and the three months ended December 31, 2016. Refer to Note 2, "Real Estate Acquisitions," of our accompanying Consolidated Financial Statements for additional information.

~~Interest expense~~ decreased primarily due to repayment of all borrowings on our revolving loan and term loan under our Previous Facility during the three months ended June 30, 2017. Refer to Note 7, “Debt and Lines of Credit,” in our accompanying Consolidated Financial Statements for additional information.

~~Catastrophic weather related charges~~ - On September 10, 2017, Hurricane Irma hit Florida as a Category 4 hurricane and impacted 121 of our communities in Florida and three in Georgia. We recognized charges totaling $23.1 million comprised of $12.7 million for debris and tree removal, common area repairs and minor flooding damage, as well as $10.4 million for impaired assets at three communities containing 190 total sites located in the Florida Keys. These charges, which include management’s best estimate of the total repair expense the Company will incur, were partially offset by estimated insurance recoveries of $15.3 million. The net charges of $7.8 million have been classified as “Catastrophic weather related charges” in the Consolidated Statements of Operations in our accompanying Consolidated Financial Statements. Expected insurance recoveries for loss of revenue and redevelopment costs greater than the impairment charge related to the three Florida Key communities cannot be estimated at this time and are excluded from the insurance recovery estimate recorded at September 30, 2017. The Company maintains property, casualty, flood and business interruption insurance for its community portfolio, subject to customary deductibles and limits.

~~SUN COMMUNITIES, INC.~~

~~Other income, net~~ ~~for the three months ended September 30, 2017, is comprised of a foreign currency translation gain of $3.4 million partially offset by contingent liability re-measurement of $0.1 million.~~

~~Income from affiliate transactions~~ of $0.5 million in the three months ended September 30, 2016, was due to the sale of our entire interest in Origen Financial, Inc. (“Origen”). Prior to the sale, the carrying value of our investment in Origen was zero.

~~SUN COMMUNITIES, INC.~~

~~COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016~~

~~SUMMARY STATEMENTS OF OPERATIONS~~

~~The following table summarizes our consolidated financial results and reconciles net income to NOI for the~~ nine months ended September 30, ~~2017~~ ~~and~~ ~~2016~~ ~~(in thousands):~~

Nine Months Ended September 30,
2017 2016
Net income attributable to Sun Communities, Inc., common stockholders: 57,583
18,969
Other revenues (18,587 ) (15,459 )
Home selling expenses 9,391
7,240
General and administrative 56,188
46,910
Transaction costs 6,990
27,891
Depreciation and amortization 189,719
159,565
Extinguishment of debt 759
—
Interest expense 98,126
90,885
Catastrophic weather related charges 8,124
—
Other income, net (5,340 ) —
Current tax expense 133
567
Deferred tax benefit (745 ) —
Income from affiliate transactions —
(500 )
Preferred return to preferred OP units 3,482
3,793
Amounts attributable to noncontrolling interests 4,179
460
Preferred stock distributions 6,233
6,748
NOI / Gross profit $ 416,235
$ 347,069

Nine Months Ended September 30,
2017 2016
Real Property NOI $ 361,595
$ 296,081
Rental Program NOI 68,759
64,223
Home Sales NOI / Gross profit 23,320
23,184
Ancillary NOI / Gross profit 10,367
9,745
Site rent from Rental Program (included in Real Property NOI) ⁽¹⁾
(47,806 ) (46,164 )
NOI / Gross profit $ 416,235
$ 347,069

⁽¹⁾ ~~The renter’s monthly payment includes~~2022, the ~~site rent and an amount attributable~~1.6 percent decrease in gross profit is primarily the result of a 22.6 percent decrease in pre-owned home sales volume, as compared to the ~~leasing of~~same period in 2021, partially offset by a 21.0 percent increase in average pre-owned home selling price.

Refer to the ~~home. The site rent is reflected~~UK Operations summary on page 54 for financial information related to our home sales in the Real Property Operations segment. For purposes of management analysis, the site rent is included in the Rental Program revenue to evaluate the incremental revenue gains associated with implementation of the Rental Program, and to assess the overall growth and performance of Rental Program and financial impact on our operations.UK.

SUN COMMUNITIES, INC.

Rental Program Summary

~~REAL PROPERTY OPERATIONS – TOTAL PORTFOLIO~~

~~The following tables reflect certain financial and other information for our Total Portfolio as of and for the~~ ~~nine months ended September 30, 2017~~ ~~and 2016:~~

Nine Months Ended September 30,
Financial Information (in thousands) 2017 2016 Change % Change
Income from Real Property $ 560,778
$ 453,560
$ 107,218
23.6 %
Property operating expenses:
Payroll and benefits 51,140
40,572
10,568
26.1 %
Legal, taxes, and insurance 5,339
4,387
952
21.7 %
Utilities 63,641
48,841
14,800
30.3 %
Supplies and repair 19,712
15,074
4,638
30.8 %
Other 20,029
16,483
3,546
21.5 %
Real estate taxes 39,322
32,122
7,200
22.4 %
Property operating expenses 199,183
157,479
41,704
26.5 %
Real Property NOI $ 361,595
$ 296,081
$ 65,514
22.1 %


⁽¹⁾	~~Overall occupancy (%) includes MH and annual RV sites, and excludes transient RV sites.~~


⁽²⁾	~~Weighted average rent pertains to annual RV sites and excludes transient RV sites.~~

~~The $65.5 million increase in Real Property NOI consists of $47.0 million from newly acquired properties and $18.5 million from Same Communities as detailed below.~~

~~SUN COMMUNITIES, INC.~~

~~REAL PROPERTY OPERATIONS – SAME COMMUNITY~~

~~The following tables reflect certain financial and other information for our Same Communities as of and for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~:

Nine Months Ended September 30,
Financial Information (in thousands) 2017 2016 Change % Change
Income from real property $ 404,353

$ 381,979
$ 22,374
5.9 %
Property operating expenses:
Payroll and benefits 34,780

33,407
1,373
4.1 %
Legal, taxes, and insurance 4,073

3,895
178
4.6 %
Utilities 22,905

22,082
823
3.7 %
Supplies and repair 14,712

14,474
238
1.6 %
Other 10,550

10,412
138
1.3 %
Real estate taxes 29,104

27,943
1,161
4.2 %
Property operating expenses 116,124
112,213
3,911
3.5 %
Real Property NOI $ 288,229
$ 269,766
$ 18,463
6.8 %

As of September 30,
Other Information 2017 2016 Change
Number of properties 231
231
—

MH occupancy ⁽¹⁾
96.7 %
RV occupancy ⁽¹⁾
100.0 %
MH & RV blended occupancy ^{(1) (2)}
97.2 % 95.6 % 1.6 %

Sites available for development 6,003
7,177
(1,174 )

Monthly base rent per site - MH $ 514
$ 497
$ 17
Monthly base rent per site - RV ⁽³⁾
$ 448
$ 433
$ 15
Monthly base rent per site - Total $ 506
$ 489
$ 17


⁽¹⁾	~~The occupancy percentage includes MH and annual RV sites, and excludes recently completed but vacant expansion sites and transient RV sites.~~


⁽²⁾	~~The occupancy percentage for 2016 has been adjusted to reflect incremental growth period-over-period from filled expansion sites and the conversion of transient RV sites to annual RV sites.~~


⁽³⁾	~~Monthly base rent pertains to annual RV sites and excludes transient RV sites.~~

Real property NOI growth of 6.8 percent is primarily due to increased Income from real property of $22.4 million, or 5.9 percent. The 5.9 percent increase is attributable to the 1.6 percent increase in occupancy, 3.5 percent increase in total monthly base rent per site, and a 0.8 percent increase in transient and other revenue. This increase was partially offset by a $3.9 million, or 3.5 percent, increase in Property operating expenses, primarily attributable to increases in payroll and benefits expenses, and real estate taxes.

~~SUN COMMUNITIES, INC.~~

~~HOME SALES AND RENTALS~~

The following table reflects certain financial and other information for our Rental Program as of and for the three and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 (in ~~thousands,~~millions, except for ~~statistical information):~~

Nine Months Ended September 30,
Financial Information 2017 2016 Change % Change
Rental home revenue $ 37,774
$ 35,696
$ 2,078
5.8 %
Site rent from Rental Program ⁽¹⁾
47,806
46,164
1,642
3.6 %
Rental Program revenue 85,580
81,860
3,720
4.5 %
Expenses
Commissions 1,902
1,710
192
11.2 %
Repairs and refurbishment 7,950
9,288
(1,338 ) (14.4 )%
Taxes and insurance 4,489
4,178
311
7.4 %
Marketing and other 2,480
2,461
19
0.8 %
Rental Program operating and maintenance 16,821
17,637
(816 ) (4.6 )%
Rental Program NOI $ 68,759
$ 64,223
$ 4,536
7.1 %

Other Information
Number of occupied rentals, end of period 10,960
10,797
163
1.5 %
Investment in occupied rental homes, end of period $ 482,591
$ 453,521
$ 29,070
6.4 %
Number of sold rental homes 828
858
(30 ) (3.5 )%
Weighted average monthly rental rate, end of period $ 908
$ 879
$ 29
3.3 %

⁽¹⁾

Rental program NOI increased 7.1 percent due to an increase in revenues of 4.5 percent, or $3.7 million, combined with a decrease in operating and maintenance expenses of 4.6 percent, or $0.8 million. The increase in revenues is attributable to a 3.3 percent increase in the weighted average monthly rental rate and ~~a 1.5 percent increase~~statistical information):


	Three Months Ended								Nine Months Ended
	September 30, 2022		September 30, 2021		Change		% Change		September 30, 2022		September 30, 2021		Change		% Change
Financial Information


Revenues	$	31.4	$	33.9	$	(2.5)	(7.4)	%	$	95.7	$	105.8	$	(10.1)	(9.5)	%



Expenses	6.0		5.5		0.5		9.1	%	15.9		15.3		0.6		3.9	%
Rental Program NOI	$	25.4	$	28.4	$	(3.0)	(10.6)	%	$	79.8	$	90.5	$	(10.7)	(11.8)	%

Other Information
Number of sold rental homes	138		307		(169)		(55.0)	%	508		799		(291)		(36.4)	%
Number of occupied rentals, end of period									9,126		10,123		(997)		(9.8)	%
Investment in occupied rental homes, end of period									$	543.8	$	559.0	$	(15.2)	(2.7)	%
Weighted average monthly rental rate, end of period									$	1,192	$	1,085	$	107	9.9	%

The Rental Program NOI is included in Real Property NOI. The Rental Program NOI is separately reviewed to assess the ~~number~~overall growth and performance of ~~occupied rentals. The decrease in operating~~the Rental Program and ~~maintenance expenses of $0.8 million is primarily~~its financial impact on our operations.

For the ~~result of decreased repairs and refurbishment partially offset by increased taxes and insurance and commissions in the nine~~three months ended September 30, ~~2017~~2022, Rental Program NOI decreased $3.0 million, or 10.6 percent, as compared to the same period in ~~2016.~~2021. The decrease is primarily due to a 9.8 percent decrease in the number of occupied rental homes, as compared to the same period in 2021.

For the nine months ended September 30, 2022, Rental Program NOI decreased $10.7 million, or 11.8 percent, as compared to the same period in 2021. The decrease is primarily due to a $10.1 million, or 9.5 percent, decrease in revenue, driven by a 9.8 percent decrease in number of occupied rental homes, as compared to the same period in 2021.

SUN COMMUNITIES, INC.

Marina Segment Summary

The following table reflects certain financial and ~~statistical~~other information for our ~~Home Sales Program~~marinas as of and for the three and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 (in ~~thousands,~~millions, except for ~~average selling prices and~~ statistical information):

Nine Months Ended September 30,
Financial Information 2017 2016 Change % Change
New home sales $ 24,760
$ 20,472
$ 4,288
21.0 %
Pre-owned home sales 66,559
61,515
5,044
8.2 %
Revenue from homes sales 91,319
81,987
9,332
11.4 %

New home cost of sales 21,044
17,513
3,531
20.2 %
Pre-owned home cost of sales 46,955
41,290
5,665
13.7 %
Cost of home sales 67,999
58,803
9,196
15.6 %
NOI / Gross profit $ 23,320
$ 23,184
$ 136
0.6 %

Gross profit – new homes $ 3,716
$ 2,959
$ 757
25.6 %
Gross margin % – new homes 15.0 %
14.5 % 0.5 %

Average selling price – new homes $ 95,598

$ 89,397
$ 6,201
6.9 %

Gross profit – pre-owned homes $ 19,604
$ 20,225
$ (621 ) (3.1 )%
Gross margin % – pre-owned homes 29.5 %
32.9 % (3.4 )%

Average selling price – pre-owned homes $ 30,630

$ 28,205
$ 2,425
8.6 %

Statistical Information
Home sales volume:
New home sales 259
229
30
13.1 %
Pre-owned home sales 2,173
2,181
(8 ) (0.4 )%
Total homes sold 2,432
2,410
22
0.9 %


	Three Months Ended								Nine Months Ended
	September 30, 2022		September 30, 2021		Change		% Change		September 30, 2022		September 30, 2021		Change		% Change
Financial Information
Revenues
Real property (excluding transient)	$	91.1	$	72.9	$	18.2	25.0	%	$	240.1	$	180.9	$	59.2	32.7	%
Real property - transient	7.1		6.3		0.8		12.7	%	14.7		11.4		3.3		28.9	%
Other	11.9		5.2		6.7		128.8	%	19.3		9.8		9.5		96.9	%
Total Operating	110.1		84.4		25.7		30.5	%	274.1		202.1		72.0		35.6	%
Expenses
Property Operating	32.3		26.6		5.7		21.4	%	89.3		69.3		20.0		28.9	%
Real Property NOI	77.8		57.8		20.0		34.6	%	184.8		132.8		52.0		39.2	%

Service, retail, dining and entertainment
Revenue	112.3		74.7		37.6		50.3	%	310.9		202.0		108.9		53.9	%
Expense	98.8		68.0		30.8		45.3	%	272.1		176.1		96.0		54.5	%
NOI	13.5		6.7		6.8		101.5	%	38.8		25.9		12.9		49.8	%

Marina NOI	$	91.3	$	64.5	$	26.8	41.6	%	$	223.6	$	158.7	$	64.9	40.9	%

Other information
Number of properties									131		120		11		9.2	%


Total wet slips and dry storage									46,185		43,615		2,570		5.9	%

~~Gross profit~~The Marina NOI is separately reviewed to assess the overall growth and performance of the Marina segment and its financial impact on ~~new home sales increased 25.6 percent in~~our results of operations.

We have reclassified utility revenues of $5.6 million and $4.3 million for the three months ended September 30, 2022 and 2021, and $14.8 million and $10.5 million for the nine months ended September 30, ~~2017, as~~2022 and 2021, respectively, to reflect the utility expenses associated with our Marina portfolio net of recovery.

For the three months ended September 30, 2022 and 2021:

•The $26.8 million, or 41.6 percent increase in Marina NOI is primarily due to a $20.0 million, or 34.6 percent, increase in Marina Real Property NOI and a $6.8 million, or 101.5 percent, increase in Service, Retail, Dining and Entertainment NOI.

•The $20.0 million, or 34.6 percent growth in Marina Real Property NOI is due to an increase in the number of owned Marina properties compared to the same period in ~~2016. This increase is primarily~~2021.

For the ~~result of a 13.1~~nine months ended September 30, 2022 and 2021:

•The $64.9 million, or 40.9 percent increase in ~~new home sales volumes combined with~~Marina NOI is due to a ~~6.9~~$52.0 million, or 39.2 percent, increase in Marina Real Property NOI and a $12.9 million, or 49.8 percent increase, in Service, Retail, Dining and Entertainment NOI.

•The $52.0 million, or 39.2 percent, increase in Marina Real Property NOI is due primarily to an increase in the ~~average selling price~~number of ~~new homes.~~owned Marina properties compared to the same period in 2021.

•The $12.9 million, or 49.8 percent, increase in Service, Retail, Dining and Entertainment NOI is due primarily to an increase in the number of owned marina properties offering service compared to the same period in 2021.

~~Gross profit on pre-owned home sales decreased 3.1 percent due to lower margins.~~

SUN COMMUNITIES, INC.

Other Items - Statements of Operations(1)

~~OTHER ITEMS - STATEMENTS OF OPERATIONS~~

The following table summarizes other income and expenses for the three and nine months ended September 30, ~~2017~~2022 and ~~2016 (amounts~~2021 (in millions):


	Three Months Ended								Nine Months Ended
	September 30, 2022		September 30, 2021		Change		% Change		September 30, 2022		September 30, 2021		Change		% Change
Service, retail, dining and entertainment, net	$	29.3	$	19.2	$	10.1	52.6	%	$	59.7	$	43.9	$	15.8	36.0	%
Interest income	$	11.2	$	2.6	$	8.6	330.8	%	$	25.3	$	8.0	$	17.3	216.3	%
Brokerage commissions and other, net	$	10.8	$	8.8	$	2.0	22.7	%	$	27.4	$	21.7	$	5.7	26.3	%
General and administrative expense	$	69.1	$	43.2	$	25.9	60.0	%	$	187.0	$	126.7	$	60.3	47.6	%
Catastrophic event-related charges, net	$	12.2	$	0.3	$	11.9	N/M		$	12.3	$	3.1	$	9.2	296.8	%
Business combinations	$	8.4	$	—	$	8.4	N/A		$	23.9	$	1.0	$	22.9	N/M
Depreciation and amortization	$	151.3	$	127.1	$	24.2	19.0	%	$	450.0	$	378.1	$	71.9	19.0	%

Loss on extinguishment of debt (see Note 8)	$	4.0	$	—	$	4.0	N/A		$	4.4	$	8.1	$	(3.7)	(45.7)	%
Interest expense	$	61.7	$	39.0	$	22.7	58.2	%	$	162.2	$	116.2	$	46.0	39.6	%
Interest on mandatorily redeemable preferred OP units / equity	$	1.0	$	1.1	$	(0.1)	(9.1)	%	$	3.1	$	3.1	$	—	—	%
Gain / (loss) on remeasurement of marketable securities (see Note 15)	$	(7.2)	$	12.0	$	(19.2)	(160.0)	%	$	(74.0)	$	43.2	$	(117.2)	N/M
Gain / (loss) on foreign currency exchanges	$	14.9	$	(7.0)	$	21.9	N/M		$	21.7	$	(7.1)	$	28.8	N/M
Gain / (loss) on dispositions of properties	$	(0.8)	$	108.1	$	(108.9)	N/M		$	12.5	$	108.1	$	(95.6)	(88.4)	%
Other income / (expense), net	$	2.8	$	(9.3)	$	12.1	N/M		$	2.6	$	(10.0)	$	12.6	N/M
Gain / (loss) on remeasurement of notes receivable (see Note 4)	$	(0.1)	$	0.1	$	(0.2)	N/M		$	0.1	$	0.6	$	(0.5)	83.3	%
Income from nonconsolidated affiliates (see Note 6)	$	2.0	$	0.9	$	1.1	122.2	%	$	3.8	$	2.9	$	0.9	31.0	%
Gain / (loss) on remeasurement of investment in nonconsolidated affiliates (see Note 6)	$	(0.4)	$	(0.1)	$	(0.3)	300.0	%	$	0.1	$	(0.1)	$	0.2	N/M
Current tax expense (see Note 12)	$	(7.3)	$	(0.4)	$	(6.9)	N/M		$	(12.5)	$	(1.4)	$	(11.1)	N/M
Deferred tax benefit / (expense) (see Note 12)	$	3.6	$	(1.2)	$	4.8	N/M		$	3.9	$	(1.1)	$	5.0	N/M
Preferred return to preferred OP units / equity interests	$	2.5	$	3.1	$	(0.6)	(19.4)	%	$	8.6	$	9.0	$	(0.4)	(4.4)	%
Income attributable to noncontrolling interests	$	11.9	$	15.3	$	(3.4)	(22.2)	%	$	13.9	$	22.6	$	(8.7)	(38.5)	%

(1)Only items determined by management to be material, of interest, or unique to the periods disclosed above are explained below.

N/M = Percentage change is not meaningful.

N/A = Percentage change is not applicable.

Service, retail, dining and entertainment, net - for the three and nine months ended September 30, 2022, increased primarily due to increased service rates at our marinas and the addition of service revenue from the acquisition of additional marinas.

Interest income - for the three and nine months ended September 30, 2022, increased primarily due to interest income on a loan provided to a real estate operator to finance its acquisition and development costs in ~~thousands):~~the current period as compared to the same periods in 2021.

Nine Months Ended September 30,
2017 2016 Change % Change
Ancillary revenues, net $ 10,367
$ 9,745
$ 622
6.4 %
Interest income $ 15,609
$ 13,322
2,287
17.2 %
Brokerage commissions and other revenues, net $ 2,978
$ 2,137
841
39.4 %
Home selling expenses $ 9,391
$ 7,240
2,151
29.7 %
General and administrative expenses $ 56,188
$ 46,910
9,278
19.8 %
Transaction costs $ 6,990
$ 27,891
(20,901 ) (74.9 )%
Depreciation and amortization $ 189,719
$ 159,565
30,154
18.9 %
Extinguishment of debt $ 759
$ —
759
N/A
Interest expense $ 98,126
$ 90,885
7,241
8.0 %
Catastrophic weather related charges $ 8,124
$ —
8,124
N/A
Other income, net $ 5,340
$ —
5,340
N/A
Current tax expense $ (133 ) $ (567 ) 434
76.5 %
Deferred tax benefit $ 745
$ —
745
N/A
Income from affiliate transactions $ —
$ 500
(500 ) 100.0 %

~~Ancillary revenues,~~Brokerage commissions and other, net - for the three and nine months ended September 30, 2022, increased primarily due to an increase in ~~RV vacation rental income in the nine months ended September 30, 2017,~~price of brokered home sales, as compared to the same period in ~~2016.~~2021.

~~Interest income~~ General and administrative expenses - for the three and nine months ended September 30, ~~2017,~~2022, increased primarily due to the acquisition of Park Holidays, and an increase in ~~our installment notes receivables, partially offset~~wages and incentives driven by ~~a decrease~~growth in ~~our collateralized receivables,~~strategic initiatives as compared to ~~September 30, 2016.~~the same periods in 2021.

~~Brokerage commissions~~

SUN COMMUNITIES, INC.

Catastrophic event-related charges - for the three and ~~other revenues~~ ~~increased primarily due to a higher number of brokered homes sold in the~~ nine months ended September 30, ~~2017, as compared to the same period in 2016.~~

~~Home selling expenses~~ 2022, increased primarily due to ~~increased commissions on home sales~~net impairment charges of $12.2 million for properties located in the nine months ended September 30, 2017 as compared to the same period in 2016. There was a higher volume of new homes sold, coupled with higher average selling prices for both new and used, in the nine months ended September 30, 2017, as compared to the same period in 2016,Fort Myers, Florida, which ~~resulted in higher commissions.~~

~~General and administrativeexpenses~~ ~~increased primarily due to additional employee related costs as headcount increased in connection with our growth through acquisitions.~~

~~Transaction costs~~ ~~relate to diligence~~sustained significant flooding, wind and other expenses incurred in connection with our acquisitions. These costs were significantly lower in the nine months ended September 30, 2017, as compared to the same period in 2016, due to the acquisition of Carefree in June 2016.damage from Hurricane Ian. Refer to Note ~~2, “Real Estate Acquisitions,”~~16, "Commitments and Contingencies," in our accompanying Consolidated Financial Statements for additional information.

Business combination expense, net - for the three and nine months ended September 30, 2022, increased primarily as a result of the acquisition of Park Holidays. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for additional information.

Depreciation and amortization~~expenses~~ - for the three and nine months ended September 30, 2022, increased as a result of ~~our acquisition of Carefree in June 2016,~~property acquisitions during 2021 and ~~other acquisitions.~~2022. Refer to Note ~~2, “Real~~3, "Real Estate Acquisitions” and Dispositions," in our accompanying Consolidated Financial Statements for additional information.

Loss on extinguishment of debt - for the three and nine months ended September 30, 2022 were $4.0 million, and $4.4 million respectively, primarily related to term loan repayments during the third quarter. Loss on extinguishment of debt - for the nine months ended September 30, 2021, was due primarily to the termination of the Safe Harbor line of credit and financing activities. Refer to Note 8, "Debt and Line of Credit," in our accompanying Consolidated Financial Statements for additional information.

Interest expense -for the three and nine months ended September 30, 2022, increased due to the higher carrying balance of debt and increased interest rates as compared to the same periods in 2021. Refer to Note 8, "Debt and Line of Credit," of our accompanying Consolidated Financial Statements for additional information.

~~Extinguishment~~Gain / (loss) on remeasurement of ~~debt~~ marketable securities - for the three and nine months ended September 30, ~~2017, is comprised~~2022 was a loss of ~~$0.5~~$7.2 million and $74.0 million, respectively, as compared to a gain of $12.0 million and $43.2 million during the same period in ~~connection with defeasement~~2021 due to the fluctuation in the price of ~~an $18.9 million collateralized term loan and $0.3 million in connection with repayment of a $3.9 million collateralized term loan.~~our publicly traded marketable securities. Refer to Note ~~7, “Debt and Lines~~15, "Fair Value of ~~Credit,”~~Financial Instruments," in our accompanying Consolidated Financial Statements for additional information.

~~Interest expense~~ ~~increased~~Gain / (loss) on foreign currency exchanges - for the three and nine months ended September 30, 2022, was a gain of $14.9 million and $21.7 million, respectively, primarily due to ~~incremental borrowings~~the impact of ~~$338.0 million, $405.0~~the U.S. Dollar strengthening against the Pound Sterling on our line of credit. There were losses of $7.0 million and ~~$197.5~~$7.1 million, in ~~connection with our Fannie Mae Financing, NML Financing~~the same period in 2021, respectively, primarily due to the strengthening of the U.S. Dollar against the Australian Dollar and ~~Freddie Mac Financing arrangements, respectively.~~a higher balance on the marketable securities compared to the line of credit balance denominated in Australian Dollars.

Gain / (loss) on dispositions of properties - for the three and nine months ended September 30, 2022, decreased due to a lower net gain on the sale of four properties as compared to a gain on the sale of six properties during the same period in 2021. Refer to Note ~~7, “Debt~~3, "Real Estate Acquisitions and ~~Lines of Credit,”~~Dispositions," in our accompanying Consolidated Financial Statements for additional information.

~~SUN COMMUNITIES, INC.~~

~~Catastrophic weather related charges~~ ~~- refer above to~~ ~~Results of Operations - Other Items - Statements of Operations~~ ~~for the three months ended September 30, 2017.~~

Other income / (expense), net for- for thethree and nine months ended September 30, ~~2017, is comprised of~~2022 was a ~~foreign currency translation~~ gain of ~~$6.4~~$2.8 million ~~partially offset by~~and $2.6 million, respectively, compared to a loss of $9.3 million and $10.0 million, respectively, for the three and nine months ended September 30, 2021, primarily due to a gain from a litigation settlement in 2022 and contingent ~~liability re-measurement of $1.1 million.~~consideration expense in 2021.

~~Deferred~~Current tax ~~benefit~~ expense - for the three and nine months ended September 30, ~~2017, was recognized in connection with certain~~2022, increased due to incremental taxable income from the acquisition of ~~our communities acquired~~Park Holidays in the ~~Carefree transaction that are subject to Canadian income tax.~~UK. Refer to Note ~~11, “Income~~12, "Income Taxes,”" in our accompanying Consolidated Financial Statements for additional information.

~~Income from affiliate transactions~~ ~~of $0.5 million in~~Deferred tax benefit / (expense) - for the three and nine months ended September 30, ~~2016,~~2022, deferred tax benefit was ~~due~~$3.6 million and $3.9 million, respectively, resulting from the acquisition of Park Holidays in the UK as compared to deferred tax expense of $1.2 million and $1.1 million, for the ~~sale of~~three and nine months ended September 30, 2021, respectively. Refer to Note 12, "Income Taxes," in our ~~entire interest in Origen~~accompanying Consolidated Financial ~~Inc. (“Origen”). Prior to the sale, the carrying value of our investment in Origen was zero.~~Statements for additional information.

SUN COMMUNITIES, INC.

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO SUI COMMON SHAREHOLDERS TO FFO

~~FUNDS FROM OPERATIONS~~

The following table reconciles ~~net~~Net income attributable to SUI common shareholders to FFO ~~data for diluted purposes~~ for the three and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 (in ~~thousands,~~millions, except for per share amounts):

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net income attributable to Sun Communities, Inc. common stockholders $ 24,115
$ 18,897
$ 57,583
$ 18,969
Adjustments:
Depreciation and amortization 64,484
61,809
190,143
159,225
Amounts attributable to noncontrolling interests 1,608
685
3,710
255
Preferred return to preferred OP units 578
616
1,750
1,858
Preferred distribution to Series A-4 preferred stock 441
683
1,666
—
Gain on disposition of assets, net (4,309 ) (4,667 ) (11,342 ) (12,226 )
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities ⁽¹⁾

86,917
78,023
243,510
168,081
Adjustments:
Transaction costs 2,167
4,191
6,990
27,891
Other acquisition related costs⁽²⁾
343
1,467
2,712
1,467
Extinguishment of debt —
—
759
—
Catastrophic weather related charges 7,756
—
8,124
—
Other income, net (3,345 ) —
(5,340 ) —
Income from affiliate transactions —
(500 ) —
(500 )
Debt premium write-off —
—
(438 ) —
Deferred tax benefit (81 ) —
(745 ) —
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities excluding certain items ⁽¹⁾
$ 93,757
$ 83,181
$ 255,572
$ 196,939

Weighted average common shares outstanding - basic: 78,369
68,655
75,234
63,716
Add:
Common stock issuable upon conversion of stock options 2
8
2
10
Restricted stock 437
406
610
437
Common OP units 2,761
2,856
2,758
2,861
Common stock issuable upon conversion of Series A-1 preferred OP units 858
920
877
932
Common stock issuable upon conversion of Series A-3 preferred OP units 75
75
75
75
Common stock issuable upon conversion of Series A-4 preferred stock 482
747
620
—
Weighted average common shares outstanding - fully diluted 82,984
73,667
80,176
68,031

FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per share - fully diluted

$ 1.05
$ 1.06
$ 3.04
$ 2.47
FFO attributable to Sun Communities, Inc. common stockholders and dilutive convertible securities per share excluding certain items - fully diluted

$ 1.13
$ 1.13
$ 3.19
$ 2.89


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Net Income Attributable to SUI Common Shareholders	$	162.6	$	231.7	$	237.3	$	367.3
Adjustments
Depreciation and amortization	150.8		126.8		448.6		377.4
Depreciation on nonconsolidated affiliates	—		—		0.1		0.1

(Gain) / loss on remeasurement of marketable securities	7.2		(12.0)		74.0		(43.2)
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates	0.4		0.1		(0.1)		0.1
(Gain) / loss on remeasurement of notes receivable	0.1		(0.1)		(0.1)		(0.6)



(Gain) / loss on dispositions of properties	0.8		(108.1)		(12.5)		(108.1)

Add: Returns on preferred OP units	1.3		0.5		9.5		1.5
Add: Income attributable to noncontrolling interests	10.5		4.6		14.1		13.7
Gain on dispositions of assets, net	(11.9)		(20.4)		(44.2)		(46.2)
FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities(1)	$	321.8	$	223.1	$	726.7	$	562.0

Adjustments

Business combination expense and other acquisition related costs(2)	19.2		2.5		40.1		6.7

Loss on extinguishment of debt	4.0		—		4.4		8.1

Catastrophic event-related charges, net	12.2		0.3		12.3		3.1
Earnings - catastrophic event-related charges(3)	0.2		0.2		0.2		0.4

(Gain) / loss on foreign currency exchanges	(14.9)		7.0		(21.7)		7.1


Other adjustments, net(4)	(6.5)		11.4		(5.1)		11.5







Core FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities(1)	$	336.0	$	244.5	$	756.9	$	598.9
Adjustment
Foreign currency translation impact(5)	7.3		—		9.3		—
Constant Currency Core FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities	$	343.3	$	244.5	$	766.2	$	598.9

Weighted Average Common Shares Outstanding - Basic	122.4		115.1		119.2		111.7
Add
Common shares dilutive effect from forward equity sale	—		—		0.2		—

Restricted stock	0.3		0.4		0.4		0.4
Common OP units	2.5		—		2.5		2.6

Common stock issuable upon conversion of certain preferred OP units	1.5		0.5		3.1		0.4






Weighted Average Common Shares Outstanding - Diluted	126.7		116.0		125.4		115.1

FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities Per Share	$	2.54	$	1.92	$	5.80	$	4.88

Core FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities Per Share	$	2.65	$	2.11	$	6.04	$	5.20

Constant Currency Core FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities per Share	$	2.71	$	2.11	$	6.11	$	5.20

⁽¹⁾The effect of certain anti-dilutive convertible securities is excluded from these items.


⁽²⁾	These costs represent first year expenses incurred to bring acquired properties up to the Company's operating standards, including items such as tree trimming and painting costs that did not meet the Company's capitalization policy.

(2)These costs represent (i) nonrecurring integration expenses associated with new acquisitions and first year acquisition deferred costs for the three and nine months ended September 30, 2022 and 2021, (ii) costs associated with potential acquisitions that will not close, (iii) costs associated with the termination of the bridge loan commitment during the three months ended March 31, 2022 related to the acquisition of Park Holidays and (iv) business combination expenses and expenses incurred to bring recently acquired properties up to our operating standards, including items such as tree trimming and painting costs that do not meet our capitalization policy.

(3)Adjustment related to estimated loss of earnings in excess of the applicable business interruption deductible in relation to our three Florida Keys communities that were impaired by Hurricane Irma which had not yet been received from our insurer.

(4)Other adjustments, net include (i) deferred tax (benefit) / expense and RV rebranding non-recurring cost for the three and nine months ended September 30, 2022 and 2021, (ii) accelerated deferred compensation amortization, gain from litigation settlement and long-term lease termination (benefit) / expense for the three and nine months ended September 30, 2022, (iii) gain on sale of investment in nonconsolidated affiliate for the nine months ended September 30, 2022., and (iv) change in estimated contingent consideration for the three and nine months ended September 30, 2021.

SUN COMMUNITIES, INC.

(5)We calculated the foreign currency translation impact by comparing the actual weighted average foreign currency rates with the weighted average foreign currency rates used for guidance, as follows:


	Three Months Ended				Nine Months Ended
	September 30, 2022				September 30, 2022
	Actual		Guidance		Actual		Guidance
U.S. Dollars per Pounds Sterling	$	1.1821	$	1.330	$	1.2116	$	1.330
U.S. Dollars per Canadian Dollars	$	0.7691	$	0.770	$	0.7769	$	0.770
U.S. Dollars per Australian Dollars	$	0.6977	$	0.756	$	0.7096	$	0.756

SUN COMMUNITIES, INC.

LIQUIDITY AND CAPITAL RESOURCES

Short-term Liquidity

Our principal short-term liquidity demands historically have ~~historically~~ been, and are expected to continue to be, distributions to our ~~stockholders~~shareholders and the unit holders of the Operating Partnership, property acquisitions, development and expansion of our properties, capital improvement of our properties, the purchase of new and pre-owned homes, ~~development and expansion of properties,~~ and debt repayment.

~~During~~ We intend to meet our short-term liquidity requirements through available cash balances, cash flows generated from operations, draws on our Senior Credit Facility, and the ~~nine months ended September 30, 2017, we acquired seven communities~~use of debt and ~~one undeveloped parcel~~equity offerings under our shelf registration statement. Refer to Note 8, "Debt and Line of ~~land. See~~Credit," and Note ~~2, “Real Estate Acquisitions”~~9, "Equity and Temporary Equity," in our accompanying Consolidated Financial Statements for additional information regarding our acquisitions in 2017. Subject to market conditions, we intend to continue to look for opportunities to expand our development pipeline and acquire existing communities. We finance the acquisitions through available cash, secured financing, draws on our lines of credit, the assumption of existing debt on properties, and the issuance of certain equity securities. We will continue to evaluate acquisition opportunities that meet our criteria for acquisition.information.

We also intend to continue to strengthen our capital and liquidity positions by focusing on our core fundamentals, which are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We ~~intend~~take a disciplined approach to selecting the optimal mix of financing sources to meet our liquidity ~~requirements~~demands and minimize our overall cost of capital. In June 2021, we received investment grade ratings of BBB and Baa3 with a stable outlook from S&P Global and Moody's, respectively. We plan on continuing to capitalize on our advantage in the credit markets to access a greater proportion of unsecured debt to optimize our cost of capital and increase our financial flexibility.

Current market and economic conditions, including relating to, among other things, interest rates, currency fluctuations, equity valuations and inflation, may adversely affect our ability to obtain debt and equity capital in the short term on attractive terms.

Acquisitions and development

Subject to market conditions, we intend to continue to identify opportunities to expand our development pipeline and acquire existing properties. We finance acquisitions through available cash, ~~balances, cash flows generated from operations,~~secured financing, draws on our ~~credit facility,~~Senior Credit Facility, the assumption of existing debt on properties and the ~~use~~issuance of debt and equity ~~offerings under~~securities. We will continue to evaluate acquisition opportunities that meet our ~~shelf registration statement.~~criteria. Refer to Note ~~7, “Debt~~3, "Real Estate Acquisitions and ~~Lines of Credit” and Note 8, “Equity and Mezzanine Securities”~~Dispositions," in ~~our~~the accompanying Consolidated Financial Statements for information regarding recent property acquisitions.

In April 2022, we completed our announced acquisition of Park Holidays at an enterprise value of £950.0 million (or approximately $1.2 billion). As consideration for the acquisition, we (i) issued an aggregate of 186,044 shares of our common stock with a value of approximately $34.0 million as of the closing to certain individual sellers who are also members of Park Holidays' senior management team, and (ii) paid the remainder of the purchase price in cash.

During the three and nine months ended September 30, 2022, we completed the construction of over 170 sites and over 300 sites, respectively, at two ground-up developments and six expansion properties.

Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional ~~information.~~detail on acquisitions completed to date.

SUN COMMUNITIES, INC.

Capital Expenditures

Our capital expenditures include expansion sites and development ~~lot modifications,~~construction costs, recurring capital expenditures, ~~and~~lot modifications, growth projects, acquisition-related capital expenditures, rental home ~~purchases. For the nine months ended September 30, 2017~~purchases and ~~2016, expansion~~rebranding costs.

Our capital expenditure activity is summarized as follows (in millions):


	Nine Months Ended
	September 30, 2022		September 30, 2021
Expansion and Development Expenditures	$	176.7	$	145.6
Recurring Capital Expenditures	50.7		41.8
Lot Modifications Expenditures	25.9		20.3
Growth Projects	73.1		57.7
Acquisition-related Capital Expenditures	220.9		124.2
Rental Program	100.9		84.7
Rebranding Cost	12.7		2.0
Other	(4.3)		0.2
Total capital expenditures activity	$	656.6	$	476.5

Expansion and development ~~activities of $55.9 million and $34.3 million, respectively, related to costs consisting~~expenditures - consist primarily of construction ~~of sites~~costs such as roads, activities and ~~other~~amenities, and costs necessary to complete home and RV site ~~improvements.~~

~~For the nine months ended September 30, 2017~~improvements, such as driveways, sidewalks and ~~2016, lot modification expenditures were $18.1 million and $13.8 million, respectively. These expenditures improve asset quality in~~landscaping at our MH communities and ~~are~~RV communities. Expenditures also include costs to rebuild after damage has been incurred ~~when an existing home is removed~~at MH, RV or Marina properties, and ~~the site is prepared for a new home (more often than not, a multi-sectional home). These activities which are mandated by strict manufacturer’s installation requirements~~research and ~~state building codes, include items such as new foundations, driveways, and utility upgrades.~~development.

~~For the nine months ended September 30, 2017 and 2016, recurring~~Recurring capital expenditures ~~of $12.6 million and $13.3 million, respectively, related~~ - relate to our continued commitment to the upkeep of our ~~properties.~~MH and RV properties and include items such as dredging, dock repairs and improvements, and equipment maintenance and upgrades related to our marinas.

~~We invest~~Lot modification capital expenditures - are incurred to modify the foundational structures required to set a new home after a previous home has been removed. These expenditures are necessary to create a revenue stream from a new site renter and often improve the quality of the community. Other lot modification expenditures include land improvements added to annual RV sites to aid in the conversion of transient RV guests to annual contracts.

Growth projects - consist of revenue generating or expense reducing activities at MH communities, RV communities and Marinas. This includes, but is not limited to, utility efficiency and renewable energy projects, site, slip or amenity upgrades such as the addition of a garage, shed or boat lift, and other special capital projects that substantiate an incremental rental increase.

Acquisition-related capital expenditures - consist of capital improvements identified during due diligence that are necessary to bring our communities and marinas up to our operating standards. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters and furniture; new maintenance facilities; lot modifications; and new signage.

Rental program - investment in the acquisition of homes intended for the Rental ~~Program.~~Program and the purchase of vacation rental homes at our RV communities. Expenditures for these investments depend upon ~~market conditions~~the condition of the markets for repossessions and new home sales, ~~repossessions~~rental homes and vacation rental homes. ~~We finance~~

Rebranding cost - includes new ~~home purchases with a $12.0 million manufactured home floor plan facility. Our ability to purchase homes intended for sale or rent may be limited by cash received from third-party financing~~signage at our RV communities and costs of ~~our home sales, available manufactured home floor plan financing~~building an RV mobile application and ~~working capital available on our lines of credit.~~updated website.

SUN COMMUNITIES, INC.

Cash Flow Activities

Our cash flow activities are summarized as follows (in ~~thousands)~~millions):


	Nine Months Ended September 30,							Nine Months Ended
	2017			2016				September 30, 2022		September 30, 2021
Net Cash Provided by Operating Activities	$	223,348		$	190,279		Net Cash Provided by Operating Activities	$	654.5	$	656.0
Net Cash Used for Investing Activities	$	(267,685	)	$	(1,540,899	)	Net Cash Used for Investing Activities	$	(2,740.8)	$	(1,363.1)
Net Cash Provided by Financing Activities	$	173,368		$	1,375,470		Net Cash Provided by Financing Activities	$	2,130.8	$	700.4
Effect of Exchange Rate on Cash and Cash Equivalents	$	253		$	(107	)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash							Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	$	(10.7)	$	(0.3)



Maryland	1-12616	38-2730780
(State of Incorporation)	Commission file number	(I.R.S. Employer Identification No.)




PART I – FINANCIAL INFORMATION
Item 1.		Consolidated Financial ~~Statements:~~Statements
		Consolidated Balance Sheets as of September 30, ~~2017~~2022 (Unaudited) and December 31, ~~2016~~ 2021		31
		Consolidated Statements of Operations for the Three and Nine Months Ended September 30, ~~2017~~2022 and ~~2016~~2021 (Unaudited)		42
		Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, ~~2017~~2022 and ~~2016~~2021 (Unaudited)		53
		Consolidated ~~Statement~~Statements of ~~Stockholders’~~ Equity for the Three and Nine Months Ended September 30, ~~2017~~2022 and 2021 (Unaudited)		64
		Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2022 and ~~2016~~2021 (Unaudited)		76
		Notes to Consolidated Financial Statements (Unaudited)		8
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		2845
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		5070
Item 4.		Controls and Procedures		5071

PART II – OTHER INFORMATION
Item 1.		Legal Proceedings		72
Item 1. 1A.		Risk Factors		~~Legal Proceedings~~72	50
~~Item 1A.~~		~~Risk Factors~~	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		5273
Item 6.		Exhibits		~~Exhibits~~ 74	53
		~~Signatures~~		54
		~~Exhibit Index~~Signatures		5575



	(unaudited) September 30, 2017			December 31, 2016
ASSETS
Land	$	1,079,708		$	1,051,536
Land improvements and buildings	5,024,937			4,825,043
Rental homes and improvements	516,618			489,633
Furniture, fixtures and equipment	140,894			130,127
Investment property	6,762,157			6,496,339
Accumulated depreciation	(1,188,332		)	(1,026,858		)
Investment property, net (including $50,655 and $88,987 for consolidated variable interest entities at September 30, 2017 and December 31, 2016; see Note 6)	5,573,825			5,469,481
Cash and cash equivalents	137,448			8,164
Inventory of manufactured homes	25,741			21,632
Notes and other receivables, net	145,760			81,179
Collateralized receivables, net	134,015			143,870
Other assets, net (including $1,638 and $3,054 for consolidated variable interest entities at September 30, 2017 and December 31, 2016; see Note 6)	141,047			146,450
TOTAL ASSETS	$	6,157,836		$	5,870,776
LIABILITIES
Mortgage loans payable (including $42,177 and $62,111 for consolidated variable interest entities at September 30, 2017 and December 31, 2016; see Note 6)	$	2,822,640		$	2,819,567
Secured borrowings on collateralized receivables	134,884			144,477
Preferred OP units - mandatorily redeemable	45,903			45,903
Lines of credit	—			100,095
Distributions payable	56,520			51,896
Other liabilities (including $1,258 and $1,998 for consolidated variable interest entities at September 30, 2017 and December 31, 2016; see Note 6)	291,074			279,667
TOTAL LIABILITIES	3,351,021			3,441,605
Commitments and contingencies
Series A-4 preferred stock, $0.01 par value. Issued and outstanding: 1,085 shares at September 30, 2017 and 1,681 shares at December 31, 2016	32,414			50,227
Series A-4 preferred OP units	10,832			16,717
STOCKHOLDERS’ EQUITY
Series A preferred stock, $0.01 par value. Issued and outstanding: 3,400 shares at September 30, 2017 and December 31, 2016	34			34
Common stock, $0.01 par value. Authorized: 180,000 shares; Issued and outstanding: 79,341 shares at September 30, 2017 and 73,206 shares at December 31, 2016	793			732
Additional paid-in capital	3,810,930			3,321,441
Accumulated other comprehensive income (loss)	1,531			(3,181		)
Distributions in excess of accumulated earnings	(1,117,228		)	(1,023,415		)
Total Sun Communities, Inc. stockholders’ equity	2,696,060			2,295,611
Noncontrolling interests:
Common and preferred OP units	63,668			69,598
Consolidated variable interest entities	3,841			(2,982		)
Total noncontrolling interests	67,509			66,616
TOTAL STOCKHOLDERS’ EQUITY	2,763,569			2,362,227
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,157,836		$	5,870,776


	(Unaudited)
	September 30, 2022		December 31, 2021
Assets
Land	$	4,173.1	$	2,556.3
Land improvements and buildings	10,632.6		9,958.3
Rental homes and improvements	604.4		591.7
Furniture, fixtures and equipment	813.8		656.4
Investment property	16,223.9		13,762.7
Accumulated depreciation	(2,611.8)		(2,337.2)
Investment property, net (see Note 7 at VIEs)	13,612.1		11,425.5
Cash, cash equivalents and restricted cash (see Note 7 at VIEs)	112.0		78.2
Marketable securities (see Note 15)	100.4		186.9
Inventory of manufactured homes	153.5		51.1
Notes and other receivables, net	511.0		469.6

Goodwill	981.5		495.4
Other intangible assets, net (see Note 7 at VIEs)	403.2		306.8
Other assets, net (see Note 7 at VIEs)	610.9		480.6
Total Assets	$	16,484.6	$	13,494.1
Liabilities
Secured debt (see Note 8; Note 7 at VIEs)	$	3,006.0	$	3,380.7
Unsecured debt (see Note 8; Note 7 at VIEs)	3,705.0		2,291.1






Distributions payable	111.2		98.4
Advanced reservation deposits and rent (see Note 7 at VIEs)	294.2		242.8
Accrued expenses and accounts payable (see Note 7 at VIEs)	392.8		237.5
Other liabilities (see Note 7 at VIEs)	845.4		224.1
Total Liabilities	8,354.6		6,474.6
Commitments and contingencies (see Note 16)
Temporary equity (see Note 9; Note 7 at VIEs)	206.8		288.9









Shareholders' Equity

Common stock, $0.01 par value. Authorized: 180.0 shares; Issued and outstanding: 123.9 at September 30, 2022 and 116.0 at December 31, 2021	1.2		1.2
Additional paid-in capital	9,536.4		8,175.6
Accumulated other comprehensive income / (loss)	(69.9)		3.1
Distributions in excess of accumulated earnings	(1,628.9)		(1,556.0)
Total SUI shareholders' equity	7,838.8		6,623.9
Noncontrolling interests
Common and preferred OP units	83.8		86.8
Consolidated entities (see Note 7 at VIEs)	0.6		19.9
Total noncontrolling interests	84.4		106.7
Total Shareholders' Equity	7,923.2		6,730.6
Total Liabilities, Temporary Equity and Shareholders' Equity	$	16,484.6	$	13,494.1



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017		2016
Net income	$	28,958	$	23,230		$	71,477	$	29,970
Foreign currency translation adjustment	2,648		(5,227		)	4,977		(5,226		)
Total comprehensive income	31,606		18,003			76,454		24,744
Less: Comprehensive income attributable to noncontrolling interests	1,912		553			4,444		110
Comprehensive income attributable to Sun Communities, Inc.	$	29,694	$	17,450		$	72,010	$	24,634



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
REVENUES
Income from real property	$	198,263		$	184,324		$	560,778		$	453,560
Revenue from home sales	33,197			31,211			91,319			81,987
Rental home revenue	12,757			12,031			37,774			35,696
Ancillary revenues	17,017			16,446			32,086			28,442
Interest	5,920			4,705			15,609			13,322
Brokerage commissions and other revenues, net	1,091			984			2,978			2,137
Total revenues	268,245			249,701			740,544			615,144
EXPENSES
Property operating and maintenance	59,249			57,089			159,861			125,357
Real estate taxes	13,053			12,384			39,322			32,122
Cost of home sales	25,094			21,935			67,999			58,803
Rental home operating and maintenance	6,775			6,350			16,821			17,637
Ancillary expenses	9,993			9,449			21,719			18,697
Home selling expenses	3,290			2,643			9,391			7,240
General and administrative	18,267			16,575			56,188			46,910
Transaction costs	2,167			4,191			6,990			27,891
Depreciation and amortization	64,232			61,483			189,719			159,565
Extinguishment of debt	—			—			759			—
Interest	32,085			33,800			95,765			88,522
Interest on mandatorily redeemable preferred OP units	790			789			2,361			2,363
Total expenses	234,995			226,688			666,895			585,107
Income before other items	33,250			23,013			73,649			30,037
Catastrophic weather related charges	(7,756		)	—			(8,124		)	—
Other income, net	3,345			—			5,340			—
Current tax benefit / (expense)	38			(283		)	(133		)	(567		)
Deferred tax benefit	81			—			745			—
Income from affiliate transactions	—			500			—			500
Net income	28,958			23,230			71,477			29,970
Less: Preferred return to preferred OP units	(1,112		)	(1,257		)	(3,482		)	(3,793		)
Less: Amounts attributable to noncontrolling interests	(1,776		)	(879		)	(4,179		)	(460		)
Net income attributable to Sun Communities, Inc.	26,070			21,094			63,816			25,717
Less: Preferred stock distributions	(1,955		)	(2,197		)	(6,233		)	(6,748		)
Net income attributable to Sun Communities, Inc. common stockholders	$	24,115		$	18,897		$	57,583		$	18,969
Weighted average common shares outstanding:
Basic	78,369			68,655			75,234			63,716
Diluted	78,808			69,069			75,846			64,146
Earnings per share (See Note 12):
Basic	$	0.31		$	0.27		$	0.76		$	0.30
Diluted	$	0.31		$	0.27		$	0.76		$	0.30



	7.125% Series A Cumulative Redeemable Preferred Stock		Common Stock		Additional Paid-in Capital			Distributions in Excess of Accumulated Earnings			Accumulated Other Comprehensive Income / (Loss)			Non-controlling Interests			Total Stockholders’ Equity
Balance at December 31, 2016	$	34	$	732	$	3,321,441		$	(1,023,415	)	$	(3,181	)	$	66,616		$	2,362,227
Issuance of common stock and common OP units, net	—		59		484,499			—			—			2,001			486,559
Conversion of OP units	—		1		3,240			—			—			(3,008		)	233
Conversion of Series A-4 preferred stock	—		1		4,719			—			—			—			4,720
Redemption of Series A-4 preferred stock	—		—		(3,867		)	—			—			—			(3,867		)
Redemption of Series A-4 OP units	—		—		(2,571		)	—			—			—			(2,571		)
Share-based compensation - amortization and forfeitures	—		—		9,670			223			—			—			9,893
Acquisition of noncontrolling interests	—		—		(6,201		)	—			—			6,101			(100		)
Foreign currency exchange	—		—		—			—			4,712			265			4,977
Net income	—		—		—			67,298			—			3,991			71,289
Distributions	—		—		—			(161,334		)	—			(8,457		)	(169,791		)
Balance at September 30, 2017	$	34	$	793	$	3,810,930		$	(1,117,228	)	$	1,531		$	67,509		$	2,763,569


			Shareholders' Equity
	Temporary Equity		Common Stock		Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income / (loss)		Noncontrolling Interests		Total Shareholders' Equity		Total Equity
Balance at December 31, 2021	$	288.9	$	1.2	$	8,175.6	$	(1,556.0)	$	3.1	$	106.7	$	6,730.6	$	7,019.5
Issuance of common stock and common OP units, net	—		—		(0.2)		—		—		2.8		2.6		2.6
Common stock withheld to satisfy income tax obligations related to vesting of restricted stock awards	—		—		(16.4)		—		—		—		(16.4)		(16.4)
Conversion of OP units	—		—		0.7		—		—		(0.7)		—		—




Share-based compensation - amortization and forfeitures	—		—		9.7		0.1		—		—		9.8		9.8









Other comprehensive income	—		—		—		—		22.8		1.1		23.9		23.9
Net income / (loss)	(3.1)		—		—		3.7		—		0.9		4.6		1.5
Distributions	(2.1)		—		—		(102.3)		—		(3.1)		(105.4)		(107.5)
OP Units accretion	0.2		—		—		(0.1)		—		—		(0.1)		0.1
Balance at March 31, 2022	$	283.9	$	1.2	$	8,169.4	$	(1,654.6)	$	25.9	$	107.7	$	6,649.6	$	6,933.5
Issuance of common stock and common OP units, net	—		—		968.6		—		—		2.7		971.3		971.3
Common stock withheld to satisfy income tax obligations related to vesting of restricted stock awards	—		—		(1.2)		—		—		—		(1.2)		(1.2)


Third party equity interest in consolidated entities	9.7		—		—		—		—		—		—		9.7

Other redeemable noncontrolling interests	0.1		—		—		(0.1)		—		—		(0.1)		—
Acquisition of third parties equity interest in consolidated entities	—		—		13.2		—		—		(16.5)		(3.3)		(3.3)

Share-based compensation - amortization and forfeitures	—		—		9.1		0.1		—		—		9.2		9.2









Other comprehensive loss	—		—		—		—		(54.2)		(2.5)		(56.7)		(56.7)
Net income	1.5		—		—		77.1		—		2.7		79.8		81.3
Distributions	(2.0)		—		—		(107.0)		—		(3.2)		(110.2)		(112.2)
OP Units accretion	0.1		—		—		(0.2)		—		—		(0.2)		(0.1)
Balance at June 30, 2022	$	293.3	$	1.2	$	9,159.1	$	(1,684.7)	$	(28.3)	$	90.9	$	7,538.2	$	7,831.5
Issuance of common stock and common OP units, net	—		—		275.3		—		—		—		275.3		275.3
Common stock withheld to satisfy income tax obligations related to vesting of restricted stock awards	—		—		(0.8)		—		—		—		(0.8)		(0.8)
Conversion of OP units	(92.6)		—		95.0		—		—		(2.4)		92.6		—




Acquisition of third party equity interest in consolidated entities	—		—		(1.5)		—		—		(4.1)		(5.6)		(5.6)
Share-based compensation - amortization and forfeitures	—		—		9.3		—		—		—		9.3		9.3









Other comprehensive loss	—		—		—		—		(41.6)		(1.7)		(43.3)		(43.3)
Net income	7.1		—		—		165.1		—		4.8		169.9		177.0
Distributions	(1.2)		—		—		(109.0)		—		(3.1)		(112.1)		(113.3)
OP Units accretion	0.2		—		—		(0.3)		—		—		(0.3)		(0.1)
Balance at September 30, 2022	$	206.8	$	1.2	$	9,536.4	$	(1,628.9)	$	(69.9)	$	84.4	$	7,923.2	$	8,130.0



At Acquisition Date	Lazy J Ranch ⁽¹⁾		Ocean West ⁽¹⁾		Caliente Sands ⁽¹⁾		Pismo Dunes ⁽¹⁾			Arbor Woods ⁽¹⁾		Sunset Lakes ⁽¹⁾		49er Village ⁽¹⁾		Total
Investment in property	$	14,300	$	9,673	$	8,850	$	21,260		$	15,725	$	7,835	$	12,890	$	90,533
Notes receivable	—		—		—		—			23		—		—		23
Inventory of manufactured homes	—		—		21		—			465		—		—		486
In-place leases	—		—		—		660			730		210		110		1,710
Total identifiable assets acquired net of liabilities assumed	$	14,300	$	9,673	$	8,871	$	21,920		$	16,943	$	8,045	$	13,000	$	92,752


Consideration
Cash	$	14,300	$	5,081	$	8,871	$	—		$	14,943	$	8,045	$	13,000	64,240
Equity	—		—		—		26,410			2,000		—		—		28,410
Liabilities assumed	—		4,592		—		510			—		—		—		5,102
Receivable due from seller	—		—		—		(5,000		)	—		—		—		(5,000		)
Total consideration	$	14,300	$	9,673	$	8,871	$	21,920		$	16,943	$	8,045	$	13,000	$	92,752



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
	(unaudited)		(unaudited)
Total revenues	$	3,178	$	4,493
Net income	$	935	$	1,418



	Three Months Ended (unaudited)				Nine Months Ended (unaudited)
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Total revenues	$	932.6	$	869.3	$	2,380.3	$	2,057.9
Net income attributable to SUI common shareholders	$	162.6	$	259.3	$	226.8	$	403.7
Net income per share attributable to SUI common shareholders - basic	$	1.32	$	2.24	$	1.89	$	3.59
Net income per share attributable to SUI common shareholders - diluted	$	1.32	$	2.23	$	1.89	$	3.58


	Year Ended (unaudited)
	December 31, 2021
Total revenues	$	2,330.0
Net income attributable to SUI common shareholders	$	390.9
Net income per share attributable to SUI common shareholders - basic	$	3.47
Net income per share attributable to SUI common shareholders - diluted	$	3.40



At Acquisition Date	Carefree
Investment in property	$	1,670,981
Ground leases	33,270
In-place leases	35,010
Deferred tax liability	(23,637		)
Other liabilities	(15,665		)
Inventory of manufactured homes	13,521
Below market lease	(29,340		)
Total identifiable assets acquired and liabilities assumed	$	1,684,140

Consideration
Cash and equity	$	1,684,140



~~Number of Payments~~	~~Repurchase Percentage~~
~~Fewer than or equal to 15~~	~~100~~	%
~~Greater than 15 but fewer than 64~~	90	%
~~Equal to or greater than 64 but fewer than 120~~	65	%
~~120 or more~~	50	%



	Nine Months Ended
	September 30, 2017
Beginning balance	$	144,477
Financed sales of manufactured homes	8,081
Principal payments and payoffs from our customers	(9,233		)
Principal reduction from repurchased homes	(8,441		)
Total activity	(9,593		)
Ending balance	$	134,884


	September 30, 2022		December 31, 2021
Home sale proceeds	$	34.4	$	33.5
Marina customers for storage, service and lease payments, net(1)	37.5		29.3
MH and annual RV residents for rent, utility charges, fees and other pass-through charges, net(2)	17.3		10.0
Insurance receivables	21.8		9.0
Other receivables(3)	42.3		24.7
Total Other Receivables, net	$	153.3	$	106.5


	December 31, 2021		Acquisitions(1)		Currency Translation Adjustment		Other(2)		September 30, 2022
Segment
MH	$	—	$	465.0	$	(73.8)	$	39.3	$	430.5
RV	—		9.5		—		—		9.5
Marina	495.4		41.5		—		4.6		541.5
Total	$	495.4	$	516.0	$	(73.8)	$	43.9	$	981.5	(3)



		September 30, 2017					December 31, 2016
Intangible Asset	Useful Life	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Ground leases	8-57 years	$	33,270	$	(1,371	)	$	33,270	$	(600	)
In-place leases	7 years	99,954		(42,090		)	98,235		(31,796		)
Franchise fees and other intangible assets	15 years	1,880		(1,432		)	1,880		(1,155		)
Total		$	135,104	$	(44,893	)	$	133,385	$	(33,551	)


		September 30, 2022				December 31, 2021
Other Intangible Asset	Useful Life	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
In-place leases	2 months - 13 years	$	164.5	$	(131.8)	$	162.6	$	(120.8)
Non-competition agreements	5 years	10.5		(3.6)		10.0		(2.0)
Trademarks and trade names	3 - 15 years	74.8		(3.7)		5.8		(0.9)
Customer relationships	4 - 17 years	131.4		(21.4)		122.4		(12.3)
Franchise agreements and other intangible assets	3 - 27 years	47.5		(8.1)		31.1		(5.8)
Total finite-lived assets		$	428.7	$	(168.6)	$	331.9	$	(141.8)
Indefinite-lived assets - Trademarks and trade names	N/A	140.6		—		114.2		—
Indefinite-lived assets - Other	N/A	2.5		—		2.5		—
Total indefinite-lived assets		$	143.1	$	—	$	116.7	$	—
Total		$	571.8	$	(168.6)	$	448.6	$	(141.8)


										Three Months Ended				Nine Months Ended
	Three Months Ended September 30,				Nine Months Ended September 30,
Intangible Asset	2017		2016		2017		2016
Ground leases	$	257	$	368	$	771	$	368
Other Intangible Asset Amortization Expense									Other Intangible Asset Amortization Expense	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
In-place leases	3,478		3,824		10,322		8,142		In-place leases	$	3.4	$	5.7	$	11.8	$	22.5
Non-competition agreements									Non-competition agreements	0.5		0.5		1.5		1.5
Trademarks and trade names									Trademarks and trade names	1.7		0.2		3.0		0.6
Customer relationships									Customer relationships	3.2		2.7		9.1		7.0
Franchise fees and other intangible assets	19		129		277		387		Franchise fees and other intangible assets	0.7		0.7		2.0		1.7
Total	$	3,754	$	4,321	$	11,370	$	8,897	Total	$	9.5	$	9.8	$	27.4	$	33.3


	Remainder 2022		2023		2024		2025		2026
In-place leases	$	3.4	$	10.0	$	7.0	$	6.1	$	3.4
Non-competition agreements	0.5		2.1		2.1		2.1		0.1
Trademarks and trade names	1.4		5.9		5.1		5.1		5.1
Customer relationships	3.2		12.6		12.6		12.6		12.4
Franchise agreements and other intangible assets	0.8		3.3		3.2		3.1		2.8
Total	$	9.3	$	33.9	$	30.0	$	29.0	$	23.8



	Year
	Remainder of 2017		2018		2019		2020		2021
Estimated expense	$	3,819	$	14,514	$	13,598	$	11,870	$	11,478



Investment	September 30, 2022		December 31, 2021
Investment in RezPlot	$	—	$	0.1
Investment in Sungenia JV	45.7		36.2
Investment in GTSC	49.9		35.7
Investment in OFS	—		0.2
Investment in SV Lift	2.5		2.9
Total	$	98.1	$	75.1


	Three Months Ended				Nine Months Ended
Income / (Loss) from Nonconsolidated Affiliates	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
RezPlot equity loss	$	(0.9)	$	(0.8)	$	(3.0)	$	(1.7)
Sungenia JV equity income	1.6		0.4		2.6		1.2
GTSC equity income	1.6		1.7		4.6		4.2
OFS equity income	—		—		0.3		0.2
SV Lift equity loss	(0.3)		(0.4)		(0.7)		(1.0)
Total Income from Nonconsolidated Affiliates	$	2.0	$	0.9	$	3.8	$	2.9


	Carrying Amount				Weighted Average Years to Maturity		Weighted Average Interest Rates
	September 30, 2022		December 31, 2021		September 30, 2022	December 31, 2021	September 30, 2022		December 31, 2021








Secured Debt(1)	$	3,006.0	$	3,380.7	10.9	10.6	3.665	%	3.779	%

Unsecured Debt
Senior unsecured notes(2)	1,779.1		1,186.4		8.4	8.5	2.9	%	2.55	%

Line of credit and other debt(3)	1,856.0		1,034.8		3.0	3.5	3.261	%	0.978	%
Preferred equity - Sun NG Resorts - mandatorily redeemable	35.2		35.2		2.0	2.8	6.0	%	6.0	%
Preferred OP units - mandatorily redeemable	34.7		34.7		3.4	4.1	5.932	%	5.932	%
Total Unsecured Debt	3,705.0		2,291.1
Total Debt	$	6,711.0	$	5,671.8	8.8	8.8	3.374	%	3.038	%


Period	Repayment Amount			Fixed Interest Rate		Maturity Date	Loss on Extinguishment of Debt
Three months ended September 30, 2022	$	318.0	(1)	4.81	%	December 6, 2022 - September 6, 2024	$	4.0
Three months ended June 30, 2022	$	15.8		3.89	%	October 1, 2022	$	—
Three months ended December 31, 2021	$	11.6	(2)	4.3	%	February 1, 2022	$	—


Description	OP Units Outstanding	Exchange Rate(1)	Annual Distribution Rate(2)		Cash Redemption(3)	Redemption Period	September 30, 2022		December 31, 2021
Series D preferred OP units	488,958	0.8000	4.0	%	Holder's Option	Any time after earlier of January 31, 2024 or death of holder	$	48.4	$	49.0
Series F preferred OP units	90,000	0.6250	3.0	%	Holder's Option	Any time after earlier of May 14, 2025 or death of holder	8.8		8.8
Series G preferred OP units	240,710	0.6452	3.2	%	Holder's Option	Any time after earlier of September 30, 2025 or death of holder	24.6		24.8
Series H preferred OP units	581,407	0.6098	3.0	%	Holder's Option	Any time after earlier of October 30, 2025 or death of holder	57.0		57.4
Series I preferred OP units(4)	—	0.6098	3.0	%	Holder's Option	Any time after earlier of December 31, 2025 or death of holder	—		93.7
Series J preferred OP units	240,000	0.6061	2.85	%	Holder's Option	During the 30-day period following a change of control of the Company or any time after April 21, 2026	23.8		23.9
Total	1,641,075						$	162.6	$	257.6


Equity Interest	Description	September 30, 2022		December 31, 2021
FPG Sun Moreno Valley 66 LLC	In connection with the investment in land for future development in the city of Moreno Valley, California, at the property known as FPG Sun Moreno Valley 66 LLC	$	0.1	$	0.1
Sun Solar Energy Project CA II	A joint venture that operates and maintains solar energy equipment in select California communities	4.2		0.5
Sun Solar JV	A joint venture that operates and maintains solar energy equipment in select California communities	1.8		1.6
FPG Sun Menifee 80 LLC	In connection with the investment in land for future development in the city of Menifee in California, at the property known as FPG Sun Menifee 80 LLC	0.1		0.1
NG Sun Whitewater LLC	In connection with the investment in land at the property known as Whitewater	3.8		4.3
NG Sun LLC	In connection with the investment in Sun NG Resorts, a joint venture that operates a portfolio of RV communities in the United States	33.6		24.7
NG Sun Beaver Brook LLC	In connection with the investment in Sun NG Beaver Brook LLC, a joint venture that operates one RV communities in the United States	0.6		—
Total		$	44.2	$	31.3



Quarter Ended	Common Stock Issued	Weighted Average Sales Price		Net Proceeds ($ millions)
June 30, 2017	400,000	$	85.01	$	33.6
March 31, 2017	280,502	$	76.47	$	21.2



		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016
Series	Conversion Rate	Units/Shares Converted	Common Stock	Units/Shares Converted	Common Stock
Common OP unit	1	25,238	25,238	24,896	24,896
Series A-1 preferred OP unit	2.439	18,319	44,676	11,490	28,021
Series A-4 preferred OP unit	0.4444	9,000	3,996	12,389	5,505
Series A-4 preferred stock	0.4444	158,036	70,238	385,242	171,218
Series C preferred OP unit	1.11	16,806	18,651	7,000	7,768



Dividend	Record Date	Payment Date	Distribution per Share		Total Distribution (thousands)
Common Stock, Common OP units and Restricted Stock	9/29/2017	10/16/2017	$	0.67	$	55,006
Series A Preferred Stock	9/29/2017	10/16/2017	$	0.4453125	$	441
Series A-4 Preferred Stock	9/15/2017	10/2/2017	$	0.40625	$	1,514



Grant Period	Type	Plan	Shares Granted	Grant Date Fair Value Per Share			Vesting Type	Vesting Anniversary	Percentage

Q3 2017	Directors	2004 Non-Employee Director Option Plan	1,300	$	87.11	⁽¹⁾	Time Based	August 11, 2020	100.0	%

Q2 2017	Key Employees	2015 Equity Incentive Plan	2,500	$	84.18	⁽¹⁾	Time Based	April 24, 2019	35.0	%
								April 24, 2020	35.0	%
								April 24, 2021	20.0	%
								April 24, 2022	5.0	%
								April 24, 2023	5.0	%

Q1 2017	Executive Officers	2015 Equity Incentive Plan	100,000	$	79.30	⁽²⁾	Time Based	March 14, 2020	20.0	%
								March 14, 2021	30.0	%
								March 14, 2022	35.0	%
								March 14, 2023	10.0	%
								March 14, 2024	5.0	%

Q1 2017	Executive Officers	2015 Equity Incentive Plan	100,000	$	79.30	⁽²⁾	Market & Performance Conditions	Multiple tranches through March 2022

Q1 2017	Directors	2004 Non-Employee Director Option Plan	15,600	$	79.02	⁽¹⁾	Time Based	February 8, 2020	100.0	%



	Three Months Ended September 30, 2017									Three Months Ended September 30, 2016
	Real Property Operations			Home Sales and Rentals			Consolidated			Real Property Operations			Home Sales and Rentals			Consolidated
Revenues	$	215,280		$	45,954		$	261,234		$	200,770		$	43,242		$	244,012
Operating expenses/Cost of sales	82,295			31,869			114,164			78,922			28,285			107,207
Net operating income/Gross profit	132,985			14,085			147,070			121,848			14,957			136,805
Adjustments to arrive at net income / (loss):
Interest and other revenues, net	7,011			—			7,011			5,689			—			5,689
Home selling expenses	—			(3,290		)	(3,290		)	—			(2,643		)	(2,643		)
General and administrative	(15,677		)	(2,590		)	(18,267		)	(14,309		)	(2,266		)	(16,575		)
Transaction costs	(2,153		)	(14		)	(2,167		)	(4,171		)	(20		)	(4,191		)
Depreciation and amortization	(48,624		)	(15,608		)	(64,232		)	(47,323		)	(14,160		)	(61,483		)
Interest	(32,082		)	(3		)	(32,085		)	(33,797		)	(3		)	(33,800		)
Interest on mandatorily redeemable preferred OP units	(790		)	—			(790		)	(789		)	—			(789		)
Catastrophic weather related charges	(7,718		)	(38		)	(7,756		)	—			—			—
Other income, net	3,345			—			3,345			—			—			—
Current tax benefit / (expense)	210			(172		)	38			(242		)	(41		)	(283		)
Deferred tax benefit	81			—			81			—			—			—
Income from affiliate transactions	—			—			—			500			—			500
Net income / (loss)	36,588			(7,630		)	28,958			27,406			(4,176		)	23,230
Less: Preferred return to preferred OP units	1,112			—			1,112			1,257			—			1,257
Less: Amounts attributable to noncontrolling interests	2,174			(398		)	1,776			1,133			(254		)	879
Net income / (loss) attributable to Sun Communities, Inc.	33,302			(7,232		)	26,070			25,016			(3,922		)	21,094
Less: Preferred stock distributions	1,955			—			1,955			2,197			—			2,197
Net income / (loss) attributable to Sun Communities, Inc. common stockholders	$	31,347		$	(7,232	)	$	24,115		$	22,819		$	(3,922	)	$	18,897



	Nine Months Ended September 30, 2017									Nine Months Ended September 30, 2016
	Real Property Operations			Home Sales and Rentals			Consolidated			Real Property Operations			Home Sales and Rentals			Consolidated
Revenues	$	592,864		$	129,093		$	721,957		$	482,002		$	117,683		$	599,685
Operating expenses/Cost of sales	220,902			84,820			305,722			176,176			76,440			252,616
Net operating income/Gross profit	371,962			44,273			416,235			305,826			41,243			347,069
Adjustments to arrive at net income / (loss):
Interest and other revenues, net	18,587			—			18,587			15,459			—			15,459
Home selling expenses	—			(9,391		)	(9,391		)	—			(7,240		)	(7,240		)
General and administrative	(49,082		)	(7,106		)	(56,188		)	(40,300		)	(6,610		)	(46,910		)
Transaction costs	(7,001		)	11			(6,990		)	(27,990		)	99			(27,891		)
Depreciation and amortization	(144,143		)	(45,576		)	(189,719		)	(118,296		)	(41,269		)	(159,565		)
Extinguishment of debt	(759		)	—			(759		)	—			—			—
Interest	(95,754		)	(11		)	(95,765		)	(88,512		)	(10		)	(88,522		)
Interest on mandatorily redeemable preferred OP units	(2,361		)	—			(2,361		)	(2,363		)	—			(2,363		)
Catastrophic weather related charges	(8,075		)	(49		)	(8,124		)	—			—			—
Other income, net	5,341			(1		)	5,340			—			—			—
Current tax expense	145			(278		)	(133		)	(445		)	(122		)	(567		)
Deferred tax benefit	745			—			745			—			—			—
Income from affiliate transactions	—			—			—			500			—			500
Net income / (loss)	89,605			(18,128		)	71,477			43,879			(13,909		)	29,970
Less: Preferred return to preferred OP units	3,482			—			3,482			3,793			—			3,793
Less: Amounts attributable to noncontrolling interests	5,163			(984		)	4,179			1,392			(932		)	460
Net income / (loss) attributable to Sun Communities, Inc.	80,960			(17,144		)	63,816			38,694			(12,977		)	25,717
Less: Preferred stock distributions	6,233			—			6,233			6,748			—			6,748
Net income / (loss) attributable to Sun Communities, Inc. common stockholders	$	74,727		$	(17,144	)	$	57,583		$	31,946		$	(12,977	)	$	18,969



	Three Months Ended September 30,
Financial Information (in thousands)	2017		2016		Change			% Change
Income from real property	$	198,263	$	184,324	$	13,939		7.6	%
Property operating expenses:
Payroll and benefits	19,168		18,436		732			4.0	%
Legal, taxes, and insurance	1,921		1,475		446			30.2	%
Utilities	23,765		21,710		2,055			9.5	%
Supplies and repair	7,701		7,394		307			4.2	%
Other	6,694		8,074		(1,380		)	(17.1	)%
Real estate taxes	13,053		12,384		669			5.4	%
Property operating expenses	72,302		69,473		2,829			4.1	%
Real Property NOI	$	125,961	$	114,851	$	11,110		9.7	%